California BanCorp BCAL Form 10-Q filing Q2 FY2026

ITEM 1 — FINANCIAL STATEMENTS

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

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

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

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

CALIFORNIA BANCORP AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the six months ended June 30, 2026 and 2025
(dollars in thousands)

(Unaudited)

CALIFORNIA BANCORP AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

For the six months ended June 30, 2026 and 2025
(dollars in thousands)

(Unaudited)

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

CALIFORNIA BANCORP AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2026

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

Nature of Operations

California BanCorp is a California corporation incorporated on October 2, 2019 and is registered with the Board of Governors of the Federal Reserve System as a bank holding company for California Bank of Commerce, N.A. under the Bank Holding Company Act of 1956, as amended. On May 15, 2020, the Company completed a reorganization whereby the Bank became a wholly owned subsidiary of the Company. California Bank of Commerce, N.A. began business operations in December 2001 under the name Ramona National Bank. The Bank changed its name to First Business Bank, N.A. in 2006, to Bank of Southern California, N.A. in 2010, and to California Bank of Commerce, N.A. on July 31, 2024. The Bank has a wholly owned subsidiary, BCAL OREO1, LLC, which was formed on February 14, 2024. BCAL OREO1, LLC is used for holding other real estate owned and other assets acquired by foreclosure. The Bank operates under a federal charter and its primary regulator is the Office of the Comptroller of the Currency (“OCC”). The words “we,” “us,” “our,” or the “Company” refer to California BanCorp and California Bank of Commerce, N.A. collectively and on a consolidated basis. References herein to “California BanCorp,” or the “holding company” refer to California BanCorp on a stand-alone basis. References to the “Bank” refer to California Bank of Commerce, N.A.

As a relationship-focused community bank, the Bank offers a range of financial products and services to individuals, professionals, and small to medium-sized businesses through its 14 branch offices, including 11 commercial banking offices, serving California.

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, 2025.

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 six months ended June 30, 2026 are not necessarily indicative of the results that may be expected for the year ending December 31, 2026.

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

Significant Accounting Policies

Our accounting and reporting policies are described in Note 1 — Basis of Presentation and Summary of Significant Accounting Policies, of our audited consolidated financial statements included in Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2025. As of June 30, 2026, there were no significant changes to accounting policies from those disclosed in our audited consolidated financial statements included in our 2025 Form 10-K.

Recently Adopted Accounting Guidance

On January 1, 2025, the Company adopted Accounting Standard Update (“ASU”) No. 2023-07, Segment Reporting (Topic 280) – Improvements to Reportable Segment Disclosures. This standard requires, among other things, that a public entity that has a single reportable segment provide enhanced disclosures about significant segment expenses. Significant expense categories are derived from expenses that are (1) regularly reported to an entity’s CODM, and (2) included in a segment’s reported measure of profit or loss. The disclosures should include an amount for "other segment items," reflecting the difference between (1) segment revenue less significant segment expenses, and (2) the reportable segment’s profit or loss measures. It requires that a public entity disclose the title and position of the CODM and how the CODM uses the reported measure of profit or loss to assess segment performance and to allocate resources. Further it clarifies that entities with a single reportable segment must disclose both new and existing segment reporting requirements. The adoption of ASU 2023-07 did not have a significant impact on the consolidated financial statements.

On January 1, 2025, the Company adopted ASU No. 2023-09, Income Taxes (Topic 740) – Improvements to Income Tax Disclosures. This standard addresses requests for improved income tax disclosures from investors, lenders, creditors and other allocators of capital that use the financial statements to make capital allocation decisions. This ASU is intended to improve the transparency of tax disclosures by requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction, in addition to certain other amendments intended to improve the effectiveness of income tax disclosures. The adoption of ASU 2023-09 did not have a material impact on the consolidated financial statements.

On January 1, 2026, the Company adopted ASU 2025-08, Financial Instruments—Credit Losses (Topic 326): Purchased Loans. This standard amends the guidance in ASC 326 on the accounting for certain purchased loans. Under this standard, entities must account for acquired loans (excluding credit cards) that meet certain

criteria at acquisition (“purchased seasoned loans”) by recognizing them at their purchase price plus an allowance for expected credit losses (often referred to as the gross-up approach). These amendments align the accounting for purchased seasoned loans with the treatment of financial assets purchased with more-than-insignificant credit deterioration since origination (“PCD assets”). Early adoption is permitted, and the standard is to be applied prospectively. The adoption of ASU 2025-08 did not have any material impact on 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 No. 2024-03, Income Statement– Reporting Comprehensive Income-Expense Disaggregation Disclosures. In November 2024, the FASB issued ASU 2024-03 which requires disclosure in the notes to the financial statements of specified information about certain costs and expenses. In January 2025, the FASB issued ASU 2025-01, Income Statement—Reporting Comprehensive Income– Expense Disaggregation Disclosures– Clarifying the Effective Date, which amends the effective date of ASU 2024-03 to clarify that all public business entities are required to adopt the guidance in annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption of ASU 2024-03 is permitted. The Company expects the adoption of this standard will not have a material impact on its consolidated financial statements.

ASU 2025-03, Business Combinations (Topic 805) and Consolidation (Topic 810)-Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity. In May 2025, the FASB issued ASU 2025-03, which revises the guidance in ASC 805 on identifying the accounting acquirer in a business combination in which the legal acquiree is a variable interest entity (“VIE”). The ASU is intended to improve comparability between business combinations that involve VIEs and those that do not. ASU 2025-03 is effective for fiscal years beginning after December 15, 2026, including interim periods within those fiscal years. Early adoption is permitted. The amendments in ASU 2025-03 must be applied prospectively to any business combination that occurs after the initial adoption date. The Company expects the adoption of this standard will not have a material impact on its consolidated financial statements.

ASU 2025-04, Compensation—Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606): Clarifications to Share-Based Consideration Payable to a Customer. In May 2025, the FASB issued ASU 2025-04 to reduce diversity in practice and improve the usefulness and operability of the guidance for share-based consideration payable to a customer in conjunction with selling goods or services. The

ASU is effective for fiscal years beginning after December 15, 2026 with updates to be applied on a retrospective or modified retrospective basis. Early adoption is permitted. The Company expects the adoption of this standard will not have a material impact on its consolidated financial statements.

ASU 2025-11, Interim Reporting (Topic 270) Narrow-Scope Improvements. In December 2025, the FASB issued ASU 2025-11 which is intended to improve the guidance in Topic 270, Interim Reporting, by improving the navigability of the required interim disclosures and clarifying when that guidance is applicable. The amendments also provide additional guidance on what disclosures should be provided in interim reporting periods. The amendments add to Topic 270 a principle that requires entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. ASU 2025-11 is not intended to change the fundamental nature of interim reporting or expand or reduce current interim disclosure requirements, rather, the objective of the amendments is to provide clarity on the current interim reporting requirements. The amendments in ASU 2025-11 are effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. The Company expects the adoption of this standard will not have a material impact on its consolidated financial statements.

NOTE 2 - 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 June 30, 2026 and December 31, 2025 were as follows:

The amortized cost of available-for-sale debt securities and their approximate fair values at June 30, 2026 and December 31, 2025 were as follows:

During the three and six months ended June 30, 2026 and 2025, there were no transfers between held-to-maturity and available-for-sale debt securities.

At June 30, 2026 and December 31, 2025, the Company did not hold securities of any single issuer, such as a corporation, municipality, or foreign entity, 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 $1.3 million and $1.1 million at June 30, 2026 and December 31, 2025, 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 June 30, 2026, available-for-sale debt securities with an amortized cost of $85.7 million were pledged to the Federal Reserve Bank (“Federal Reserve”) as collateral for secured public deposits and for other purposes as required by law or contract provisions, in addition to held-to-maturity debt securities with an amortized cost of $52.8 million that were pledged as collateral for a secured line of credit with the Federal Reserve. See Note 6 – Borrowing Arrangements for additional information regarding the FHLB and Federal Reserve secured lines of credit. The Company also pledged $14.3 million available-for-sale debt securities to another financial institution to support the collateralization requirement against certain customers’ standby lines of credit.

Contractual Maturities

The amortized cost and estimated fair value of all held-to-maturity and available-for-sale debt securities as of June 30, 2026 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.

Realized Gains and Losses

There were no gross realized gains and losses for sales and calls of available-for-sale debt securities during the three and six months ended June 30, 2026 and 2025.

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 June 30, 2026 and December 31, 2025 are summarized as follows:

As of June 30, 2026, the Company had a total of 112 available-for-sale debt securities in a gross unrealized loss position totaling $8.5 million, including 61 securities with total gross unrealized losses of $4.9 million that had been in a continual loss position for twelve months and longer. As of December 31, 2025, the Company had a total of 78 available-for-sale debt securities in a gross unrealized loss position totaling $4.8 million, including 63 securities with total gross unrealized losses of $4.4 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, net of taxes. At June 30, 2026, the Company had a net unrealized loss on available-for-sale debt securities of $7.5 million, or $5.3 million net of tax in accumulated other comprehensive loss, compared to a net unrealized loss of $2.3 million, or $1.6 million net of tax in accumulated other comprehensive loss, at December 31, 2025.

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 June 30, 2026, the total fair value of taxable municipal securities was $934 thousand, and all of these securities were rated AA and above. At December 31, 2025, the total fair value of taxable municipal securities was $938 thousand, and all of these securities were rated AA and above.

At June 30, 2026, 61 held-to-maturity debt securities with fair values totaling $49.1 million had gross unrecognized losses totaling $3.7 million, compared to 61 held-to-maturity debt securities with fair values totaling $49.3 million had gross unrecognized losses totaling $3.6 million at December 31, 2025. 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 June 30, 2026 and December 31, 2025, fair values of held-to-maturity debt securities rated AA and above totaled $45.8 million and $46.0 million, respectively and those rated AA- totaled $3.3 million and $3.3 million, respectively.

Management evaluates securities in an unrealized loss position at least on a quarterly basis, and determined that the unrealized losses at June 30, 2026 and 2025 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 six months ended June 30, 2026 and 2025.

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 June 30, 2026 and December 31, 2025:

During the three and six months ended June 30, 2026, the Company purchased $1 thousand and $9 thousand of Federal Reserve stock, and there were no purchases of FHLB stock.

Other Equity Securities Without a Readily Determinable Fair Value

The Company also has equity securities in the form of capital stock invested in two different banker’s bank stocks which totaled $819 thousand at both June 30, 2026 and December 31, 2025. These equity securities are reported in accrued interest receivable and other assets in the consolidated balance sheets. At June 30, 2026 and December 31, 2025, the Company evaluated the carrying value of these equity securities and determined that they were not impaired. During the three and six months ended June 30, 2026 and 2025, there were no losses related to changes in the fair value of these equity securities.

The Company has other equity investments and investments in a technology venture capital fund focused on the intersection of fintech and community banking. These equity investments represent variable interest entities (“VIEs”), however the Company is not the primary beneficiary. The Company’s maximum exposure to loss related to its investments in these unconsolidated VIEs is limited to the carrying value of each of the investments plus any unfunded capital commitments. At June 30, 2026 and December 31, 2025, the balance of these investments, which is included in accrued interest receivable and other assets in the consolidated balance sheets, was $8.3 million and $9.1 million, respectively. Total unfunded capital commitments for these investments were $6.7 million at June 30, 2026. These equity securities are measured using the equity method of accounting when the Company’s ownership interest in such investments exceeds 5%, or carried at cost less impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investments of the same issuer. Cash distributions that are considered a return of capital are recorded as a reduction of the Company’s investment. During the three and six months ended June 30, 2026, the Company received $882 thousand and $792 thousand, respectively, of net capital distributions related to these equity investments and recognized losses of $251 thousand and $70 thousand, respectively, which is included in other losses, charges and fees in the consolidated statements of income. During the three and six months ended June 30, 2025, the Company made $398 thousand and $330 thousand, respectively, of net capital contributions to these equity investments. At June 30, 2026 and December 31, 2025, the Company evaluated the carrying value of these equity investments and determined they were not impaired. During the three and six months ended June 30, 2026 and 2025, there were no losses recognized related to changes in fair value.

The Company has also invested in and acquired interest in limited partnerships that operate affordable housing projects that qualify for and have received an allocation of federal and/or state low-income housing tax credits. These investments represent VIEs, however the Company is not the primary beneficiary. The Company’s maximum exposure to loss related to its investments in these unconsolidated VIEs is limited to the carrying amount of the investment and previously recorded tax credits which remain subject to recapture by taxing authorities based on compliance features required to be met at the project level. At June 30, 2026 and December 31, 2025, the net amortized balance of these investments was $4.3 million and $4.8 million, respectively, and is included in accrued interest and other assets in the consolidated balance sheets. The unfunded portion of these investments totaled $295 thousand and $382 thousand at June 30, 2026 and December 31, 2025, 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 six months ended June 30, 2026 and 2025 follows:

At June 30, 2026 and December 31, 2025, the Company evaluated the carrying value of these tax credit equity investments and determined they were not impaired. During the three and six months ended June 30, 2026 and 2025, there were no losses recognized related to changes in fair value.

NOTE 3 - LOANS AND ALLOWANCE FOR CREDIT LOSSES

Loans Held for Investment (“LHFI”)

The Company’s loan portfolio consists primarily of loans to borrowers within the California market. 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 80% and 80% of total loans at June 30, 2026 and December 31, 2025, 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 LHFI portfolio at June 30, 2026 and December 31, 2025 was as follows:

(1) LHFI includes net unearned fees of $2.3 million and $2.8 million and net unearned discounts on acquired loans of $24.8 million and $31.3 million at June 30, 2026 and December 31, 2025, respectively. The Company recognized $3.9 million and $5.6 million of interest accretion of net deferred loan fees and net discounts on acquired loans for the three months ended June 30, 2026 and 2025, respectively. The Company recognized $7.9 million and $11.7 million of interest accretion of net deferred loan fees and net discounts on acquired loans for the six months ended June 30, 2026 and 2025, respectively.

The Company has pledged $2.25 billion of loans with the FHLB under a blanket lien, of which an unpaid principal balance of $1.42 billion was considered as eligible collateral under this secured borrowing arrangement and loans with an unpaid principal balance totaling $323.7 million were pledged as collateral under a secured borrowing arrangement with the Federal Reserve as of June 30, 2026. See Note 6 – Borrowing Arrangements for additional information regarding the FHLB and Federal Reserve secured lines of credit.

Loans Held for Sale

At June 30, 2026, the Company had loans held for sale totaling $15.8 million, consisting of consumer solar loans. At December 31, 2025, loans held for sale totaled $25.1 million, consisting of $7.8 million of SBA 7(a) loans and $17.3 million of consumer solar loans transferred from loans held for investment. During the three months ended June 30, 2026, the Company transferred $7.4 million of SBA 7(a) loans from held for sale to held for investment at net amortized cost.

The Company accounts for loans held for sale at the lower of carrying value or fair value. At June 30, 2026 and December 31, 2025, the fair value of loans held for sale totaled $15.8 million and $25.6 million, respectively. The Company recorded zero and $266 thousand in valuation allowance related to its consumer solar loans during the three and six months ended June 30, 2026. There were no comparable valuation write-downs for the three and six months ended June 30, 2025.

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 LHFI by class of loans and origination year as of June 30, 2026 follows:

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

LHFI Past Due and Nonaccrual Loans

A summary of LHFI past due as of June 30, 2026 and December 31, 2025 follows:

The Company had no LHFI that were over 90 days past due and were still accruing interest at June 30, 2026 and December 31, 2025.

LHFI Nonaccrual Loans

A summary of total LHFI nonaccrual loans and the amount of LHFI nonaccrual loans with no related ACL as of June 30, 2026 and December 31, 2025 follows:

Individually Evaluated Loans

The Company evaluates loans collectively for purposes of determining the ACL in accordance with ASC 326. Loans are grouped based on shared risk characteristics, such as loan type, credit rating, collateral type, and borrower industry. In certain cases, the Company may identify loans that no longer exhibit similar risk characteristics to others in the portfolio. These loans are typically assigned a substandard or worse internal risk grade, as their credit profiles become more unique with deterioration. Such loans are often nonperforming, may be modified for borrowers experiencing financial difficulty, and/or are considered collateral-dependent—where repayment is expected to come from the operation or sale of the underlying collateral. Loans deemed by management to lack shared risk characteristics are evaluated individually for ACL purposes. For individually evaluated loans, the Company generally applies a discounted cash flow method using the loan’s effective interest rate. If a loan is deemed collateral-dependent, the ACL is determined based on the estimated fair value of the collateral, net of estimated costs to sell. Adjustments to the ACL for collateral-dependent loans reflect changes in the expected fair value of the collateral. For all other individually evaluated loans with amortized balances below $200 thousand, the ACL is primarily determined using the loan pricing approach, which applies a 30% factor to the loan’s unguaranteed book balance to reflect expected credit risk and recovery assumptions.

As of June 30, 2026, $24.0 million of loans were individually evaluated with a $373 thousand ACL attributed to such loans. At June 30, 2026, $23.5 million of individually evaluated loans were evaluated based on the underlying value of the collateral, and $541 thousand were evaluated using a discounted cash flow approach. One C&I loan with a net amortized balance of $15.7 million was classified as an individually evaluated loan due in part, to ongoing third-party litigation against the guarantor. The loan was on accrual status and current on its payment obligation as of June 30, 2026. All other individually evaluated loans were on nonaccrual status at June 30, 2026.

As of December 31, 2025, $30.4 million of loans were individually evaluated with $373 thousand ACL attributed to such loans. At December 31, 2025, $29.8 million of the individually evaluated loans were evaluated based on the underlying value of the collateral, and $553 thousand were evaluated using a discounted cash flow approach. One C&I loan with net amortized balance of $16.1 million was moved to individually evaluated loans due in part, to ongoing third-party litigation against the guarantor. The loan was on accrual status and current on its payment obligation as of December 31, 2025. All other individually evaluated loans were on nonaccrual status at December 31, 2025.

Modified Loans to Borrowers Experiencing Financial Difficulty

The following table presents the period-end amortized cost basis of modified loans to borrowers experiencing financial difficulty during the three and six months ended June 30, 2026 and 2025.

The following tables present the financial effect of loans to borrowers experiencing financial difficulty that were modified during the three and six months ended June 30, 2026 and 2025.

Three Months Ended June 30, 2026

(dollars in thousands) Financial effect

Term Extension:

Real estate - other:

Commercial real estate and other Extended maturity by a weighted average of six months

Interest Rate Reduction and Term Extension:

Real estate - other:

Commercial real estate and other Extended maturity by a weighted average of six months and reduced interest rates by a weighted average of 1.38%

Commercial and industrial Extended maturity by a weighted average of six months and reduced interest rates by a weighted average of 0.97%

Six Months Ended June 30, 2026

(dollars in thousands) Financial effect

Term Extension:

Real estate - other:

Commercial real estate and other Extended maturity by a weighted average of six months

Interest Rate Reduction and Term Extension:

Real estate - other:

Commercial real estate and other Extended maturity by a weighted average of six months and reduced interest rates by a weighted average of 1.38%

Commercial and industrial Extended maturity by a weighted average of seven months and reduced interest rates by a weighted average of 1.58%

Three Months Ended June 30, 2025

(dollars in thousands) Financial effect

Term Extension:

Commercial and industrial Extended term by a weighted average of six months

Payment Delay:

Commercial and industrial Three months full payment deferrals and one year of partial payment deferrals

Term Extension and Payment Delay:

Commercial real estate and other Extended maturity by a weighted average of one year and granted one year partial payment deferrals.

Commercial and industrial Extended maturity by a weighted average of six months and granted four months of payment deferrals.

Six Months Ended June 30, 2025

(dollars in thousands) Financial effect

Term Extension:

Commercial and industrial Extended term by a weighted average of ten months

Payment Delay:

Commercial and industrial Three months full payment deferrals and one year of partial payment deferrals

Term Extension and Payment Delay:

Real estate - other:

Commercial real estate and other Extended maturity by a weighted average of one year and granted one year partial payment deferrals.

Commercial and industrial Extended maturity by a weighted average of six months and granted four months of payment deferrals.

The following tables present a payment aging analysis of the period-end amortized cost of loans to borrowers experiencing financial difficulty that were modified during the twelve month period ended June 30, 2026 and 2025.

During the three and six months ended June 30, 2026, there were no defaults of loans that had been modified within the last 12 months. During the three and six months ended June 30, 2025, there were no defaults of loans that had been modified within the last 12 months.

Collateral Dependent Loans

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

A summary of collateral dependent loans by collateral type as of June 30, 2026 and December 31, 2025 follows:

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.

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 third week of June 2026. Other sources of economic forecasts and meeting minutes of the Federal Open Market Committee (“FOMC”) meeting were also considered by the Company when determining the scenario weighting. Moody’s June 2026 U.S. baseline forecast was adjusted down materially from its March 2026 U.S. baseline forecast driven by persistent inflation, a shift away from expected Federal Reserve rate cuts, and a higher-for-longer interest rate environment. The projection of real GDP declined to 2.1% for 2026, compared to 2.8% projected in the March 2026 forecast. CPI is expected to average 3.4% in 2026, compared to 3.1% projected in the March 2026 forecast. The Conference Board forecasted GDP growth to weaken further in 2026 at 1.8% and by 1.9% in 2027 amid a fragile balance of resilient labor markets and softening consumer demand due to tariff-induced inflation and energy price shocks. It is less optimistic than Moody’s baseline scenario of 2026 GDP of 2.1%. Moody’s economic forecast anticipated no rate cuts in 2026, with the potential for further tightening if inflation persists. This change is driven by a stabilization in the labor market and a reassessment of inflation as more durable and structural rather than transitory. The 10-year Treasury yield was forecasted to remain around 4.5% through the decade, supported by persistent inflationary pressures and a deteriorating fiscal environment. The labor market shifted from steady weakness to gradual deterioration with lag. Slow job growth was already expected to continue in 2026. Despite this, the unemployment rate is still projected to peak at 4.6% in the second quarter of 2027.

Moody’s S2 downside scenario shifted to a more stagflationary profile, combining persistent inflation with recession, versus a more front-loaded shock contemplated in the March 2026 forecast. The downside is increasingly driven by structural pressures, e.g. inflation, tariffs, geopolitics, rather than a temporary shock. The most immediate change is the timing of the recession’s onset, which was pushed from the second quarter of 2026 to the third quarter of 2026. Alongside this shift, the peak unemployment rate stayed at 7.3%, now expected to occur in the second quarter of 2027 rather than the first quarter of 2027. The scenario is not less severe, but more prolonged and structurally adverse. The projected real GDP growth was revised to 1.5% in 2026, and -0.1% in 2027, compared with 2.1% and 1.9%, respectively, in Moody’s June 2026 baseline.

Moody’s economic forecasts for California suggested California gross state product (“GSP”) will grow by 1.88% on average for the next four quarters, down from 2.47% in its March 2026 baseline forecast. The forecasts for 2026 California unemployment were revised upward to 5.3%. Beacon Economics forecasted the California unemployment rate upward to 5.3% from the fourth quarter of 2026 and topping at 5.4% for the following three quarters.

Other key California economic forecasts used in the ACL calculation—including the California unemployment rate, California GSP, construction sector GSP, California Home Price Index, and the 5-Year

Treasury yield—showed mixed movements across the baseline and downside scenarios. As a result, the changes in these economic variables are expected to have a mixed impact on the Company's ACL. Relative to the March 2026 forecast, most California economic indicators reflected a more pessimistic outlook, while the California unemployment rate and California Home Price Index remained largely unchanged. California GSP was revised materially lower in both scenarios due to oil price shock undermining business activity and confidence. California GSP for the construction sector was also revised lower, and 5-year treasury yield is revised higher in both scenarios driven by the inflation fears and shifting rate outlook. The change in California GSP, California GSP for the construction sector, and 5-year treasury yield is expected to drive the ACL higher.

Based on the above reviews and analyses, the Company continues using the two probability-weighted scenario forecasts, and assigned 80% to the baseline scenario and 20% to the S2 downside scenario at June 30, 2026, shifting from 70% baseline scenario and 30% from the S2 downside scenario at March 31, 2026. The recommended weightings are based on the FOMC’s decision to hold the federal funds rate unchanged in the June 2026 meeting, the first meeting chaired by Chairman Warsh. This was the fourth consecutive meeting when the rate was held steady after a 25 basis points rate cut in December 2025. While FOMC participants acknowledged that inflationary pressures had increased and broadened beyond energy and tariff-related categories, raising concerns that inflation could prove more persistent, the Committee's updated projections reflected a balanced economic outlook. In the June 2026 meeting, the Fed increased its 2026 core inflation forecast to 3.3%, while revising GDP growth expectations to 2.2% and lowering its unemployment rate forecast to 4.3%. These revisions reflect concerns that inflationary pressures associated with the Iran conflict may persist longer than initially anticipated. Consistent with this outlook, Moody's June 2026 baseline forecast assumes no additional federal funds rate cuts during 2026, supporting management's decision to increase the weighting assigned to Moody’s baseline scenario. In June 2026, the Company initially considered using solely the base-case scenario for the ACL model; however, given recent heightened domestic and geopolitical uncertainty, uncertainty around the current administration and tariff policy, a rising inflation level that is still considerably above the Fed’s 2.0% target rate, and slowing GDP growth projection, the Company believes it is prudent to assign a weighting to a downside scenario (S2) that considers the potential for rising inflation. Inflation is a difficult economic variable to predict, as it is subject to a variety of factors and there are limited tools to control it. Incorporating the S2 scenario in our ACL model provides a hedge against the potential for increasing inflation in an uncertain economic environment.

For prepayment and curtailment rates, the Company used its own historical quarterly prepayment and curtailment experience covering the period starting February 2021 through May 2026 to estimate the ACL. During the second quarter of 2026, the Company updated its historical prepayment and curtailment rates analysis, which reflected a slight increase in prepayment rates and a slight decrease in curtailment rates.

Accrued interest receivable on loans totaled $9.7 million and $9.8 million at June 30, 2026 and December 31, 2025, respectively, and is included within accrued interest receivable and other assets in the accompanying consolidated balance sheets. Accrued interest receivable is excluded from the ACL.

Allowance for Credit Losses - Unfunded Loan Commitments

The allowance for credit losses on unfunded credit commitments is maintained at a level that management believes to be sufficient to absorb estimated expected credit losses related to unfunded credit facilities. The Company evaluates the loss exposure for unfunded loan commitments to extend credit following the same principles used for the ACL, with consideration for experienced utilization rates on client credit lines and the inherently lower risk of unfunded loan commitments relative to disbursed commitments. There was a $336 thousand reversal of credit losses for unfunded loan commitments for the three and six months ended June 30, 2026. There was a $29 thousand and $(589) thousand provision for (reversal of) credit losses for unfunded loan commitments for the three and six months ended June 30, 2025. The reversal of credit losses 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 $1.8 million and $2.1 million at June 30, 2026 and December 31, 2025. 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:

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

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 $8.6 million of foreclosed assets at June 30, 2026. There was no foreclosed assets at December 31, 2025. During the six months ended June 30, 2026, the Company foreclosed on the collateral related to a construction nonaccrual loan of $8.6 million, that was transferred to OREO at its estimated fair value, after accounting for estimated selling cost. During the three and six months ended June 30, 2025, the Company did not foreclose on any collateral. During the three and six months ended June 30, 2026, the Company did not sell any OREO. During the three and six months ended June 30, 2025, the Company sold $4.1 million of OREO and recognized a loss on sale of $862 thousand.

There was no valuation allowances due to declines in the fair value of the underlying property during the three and six months ended June 30, 2026 and 2025.

NOTE 4 - GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill, the excess purchase price over the fair value of all identifiable assets and liabilities acquired, totaled $110.9 million at June 30, 2026 and December 31, 2025. Goodwill is reviewed for impairment at least annually during the fourth quarter of each fiscal year. On an ongoing basis, we qualitatively assess whether current events or circumstances warrant the need for an interim quantitative assessment of goodwill impairment. We also monitor fluctuations in our stock price.

The Company performed a qualitative assessment for the annual impairment review at December 31, 2025, and as a result of that assessment had determined that there was no impairment to goodwill. There were no triggering events during the three and six months ended June 30, 2026 that caused management to evaluate goodwill for a quantitative impairment analysis as of June 30, 2026.

The following table presents changes in the carrying amount of goodwill for the three and six months ended June 30, 2026 and 2025:

(1) During the three months ended June 30, 2025, goodwill adjustments were related to recoveries on acquired PCD loans previously charged-off prior to the merger with the predecessor California BanCorp. During the six months ended June 30, 2025, the goodwill adjustments were related to a true-up of the low-income housing tax credit investments acquired from the merger with the predecessor California BanCorp, offset by its state net operating losses that cannot be utilized post-merger and aforementioned recoveries on acquired PCD loans previously charged-off prior to the merger with the predecessor California BanCorp.

Core deposit intangibles are amortized over remaining periods of 2.5 to 8.1 years. Trade name is amortized over a remaining period of one month. As of June 30, 2026, the weighted-average remaining amortization period for intangible assets was approximately 7.9 years.

The Company performs the annual impairment analysis for the intangible assets at least annually during the second half of each fiscal year. The Company evaluated current conditions and concluded there had been no significant changes in the economic environment or future projections since the annual intangible assets impairment test performed during the fourth quarter 2025 and therefore, believes that there was no impairment as of June 30, 2026. Management will continue to evaluate the economic conditions at future reporting periods for applicable changes. The following table presents the changes in intangible assets for the three and six months ended June 30, 2026 and 2025.

Future estimated amortization expense is as follows:

NOTE 5 - DEPOSITS

The Company is a participant in the Certificate of Deposit Account Registry Service (“CDARS”) and IntraFi Network Insured Cash Sweep (“ICS”). 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 June 30, 2026, reciprocal deposits decreased to $705.2 million, representing 21.0% of total deposits and 20.7% of Bank’s total liabilities, compared to $743.6 million, or 22.1% of total deposits at December 31, 2025. 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.

Time deposits that exceeded the FDIC insurance limit of $250,000 amounted to $53.4 million and $65.1 million as of June 30, 2026 and December 31, 2025, respectively. There were no brokered time deposits as of June 30, 2026 and $3.8 million brokered time deposits as of December 31, 2025.

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 June 30, 2026 and December 31, 2025, total collateralized deposits, including the deposits of State of California and their public agencies, were $46.0 million and $45.8 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 6 – Borrowing Arrangements for additional information regarding the FHLB secured line of credit.

At June 30, 2026, the scheduled maturities of time deposits were as follows:

NOTE 6 - BORROWING ARRANGEMENTS

A summary of outstanding borrowings as of June 30, 2026 and December 31, 2025 follows:

Federal Home Loan Bank Secured Line of Credit

At June 30, 2026, the Company had a secured line of credit of $784.8 million from the FHLB, of which $719.8 million was available. This secured borrowing arrangement is collateralized under a blanket lien on qualifying real estate loans and is subject to the Company providing adequate collateral and continued compliance with the Advances and Security Agreement and other eligibility requirements established by the FHLB. At June 30, 2026, the Company had pledged $2.25 billion of qualifying loans with the FHLB under a blanket lien, of which an unpaid principal balance of $1.42 billion was considered as eligible collateral under this secured borrowing arrangement. In addition, at June 30, 2026, the Company used $65.0 million of its secured FHLB borrowing capacity by having the FHLB issue letters of credit to meet collateral requirements for deposits from the State of California and other public agencies.

There were no borrowings at June 30, 2026 and December 31, 2025.

Federal Reserve Bank Secured Line of Credit

At June 30, 2026, the Company had credit availability of $329.7 million at the Federal Reserve discount window to the extent of collateral pledged. At June 30, 2026, the Company had pledged held-to-maturity debt securities with an amortized cost of $52.8 million as collateral, and qualifying loans with an unpaid principal balance of $323.7 million as collateral through the Borrower-in-Custody (“BIC”) program. The Company also pledged available-for-sale debt securities with an amortized cost of $85.7 million as collateral for secured public deposits and for other purposes as required by law or contract provisions. The Company had no discount window borrowings at June 30, 2026 and December 31, 2025.

Federal Funds Unsecured Lines of Credit

At June 30, 2026, the Company had four overnight unsecured credit lines from correspondent banks totaling $90.5 million. The lines are subject to annual review. There were no outstanding borrowings under these lines at June 30, 2026 and December 31, 2025.

Fixed-to-Floating Rate Subordinated Debt

In connection with the merger with the predecessor California BanCorp, the Company assumed $35 million in subordinated debt, with a fixed interest rate of 3.50% and a stated maturity of September 1, 2031. Beginning September 1, 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 June 30, 2026 and December 31, 2025, the net unamortized fair value discount was $389 thousand and $1.2 million, respectively. The net unamortized fair value discount is netted against the balance and recorded in borrowings in the consolidated balance sheets. The amortization of the fair value discount is recorded in interest expense in the consolidated statements of operations. At June 30, 2026, the Company was in compliance with all covenants and terms of these notes. See Note 13 – Subsequent Events for additional information regarding the proposed redemption of this subordinated debt.

NOTE 7 - SHAREHOLDERS’ EQUITY

Common Stock Repurchase Plan

On June 14, 2023, the Company announced an authorized common stock 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 common stock shares. On May 1, 2025, the Company announced an increase in the number of common stock shares authorized for repurchase to up to 1,600,000 shares. Repurchases under the program may occur from time to time in open market transactions, in privately negotiated transactions, or by other means in accordance with federal securities laws and other restrictions. The Company intends to fund its repurchases from available working capital and cash provided by operating activities. The timing of repurchases, as well as the number of common stock 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 102,594 and 512,509 common stock shares repurchased at a weighted average market price of $19.46 and $18.36 and a total cost of $2.0 million and $9.4 million under this common stock share repurchase plan during the three and six months ended June 30, 2026. There were no shares of common stock repurchased under this share repurchase plan during the three and six months ended June 30, 2025. The remaining maximum number of common stock shares authorized to be repurchased under this program was 875,563 shares at June 30, 2026.

NOTE 8 - EARNINGS PER SHARE (“EPS”)

The following is a reconciliation of net income and shares outstanding used to compute EPS for the three and six months ended June 30, 2026 and 2025:

For the three months ended June 30, 2026 and 2025, there were 1,673 and 227,638 restricted stock units and zero and zero stock options, respectively, that were not included in the computation of diluted earnings per share, because they were anti-dilutive. For the six months ended June 30, 2026 and 2025, there were 1,297 and 144,414 restricted stock units and zero and zero stock options, respectively, that were not included in the computation of diluted earnings per share, because they were anti-dilutive.

NOTE 9 - RELATED PARTY TRANSACTIONS

In the ordinary course of business, the Bank has made loans to certain directors, their related interests with which they are associated, and beneficial owners with more than 5% of any class of the Company’s voting securities. The balance of these loans outstanding and activity in related party loans for the three and six months ended June 30, 2026 and 2025 follows:

Directors and related interests deposits at June 30, 2026 and December 31, 2025, amounted to approximately $30.5 million and $37.5 million, respectively.

The Company leases its Ramona branch office from a beneficial owner who holds more than 5% of the Company’s voting securities and is a former member of the Company’s Board of Directors under an operating lease expiring in 2027 on terms considered to be prevailing in the market at the time of the lease. Total lease expenses for the three and six months ended June 30, 2026 and 2025 were $11 thousand and $22 thousand, respectively. Future minimum lease payments under the lease were $40 thousand and $62 thousand as of June 30, 2026 and December 31, 2025, respectively.

In April 2022, the holding company entered into an investment commitment of $2.0 million with the Castle Creek Launchpad Fund I (“Launchpad”). A director of the Company is a member of the Investment Committee for Launchpad. At June 30, 2026 and December 31, 2025, total capital contributions made to this investment were $1.6 million and $1.5 million, respectively.

NOTE 10 - 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 June 30, 2026 and December 31, 2025:

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. 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 six months ended June 30, 2026 was $180 thousand and $353 thousand, respectively. The expense incurred for these agreements for the three and six months ended June 30, 2025 was $247 thousand and $494 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 and the Company believes that liability, if any, is not likely to be material to the consolidated balance sheets or consolidated statements of operations.

NOTE 11 - STOCK-BASED COMPENSATION PLAN

In contemplation of the holding company reorganization, in November 2019 the Company’s Board of Directors adopted the California BanCorp 2019 Omnibus Equity Incentive Plan, formerly known as 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 . On May 27, 2026, at the Company’s 2026 Annual Meeting of Shareholders, shareholders approved the California BanCorp 2026 Omnibus Equity Incentive Plan (the “2026 Plan”), which authorizes the issuances of up to 1,600,000 shares of common stock. Effective May 27, 2026, no additional awards were granted under the 2019 Plan. All awards outstanding under the 2019 Plan as of that date will remain in effect and continue to be governed by the terms, conditions and procedures set forth in the 2019 Plan and any applicable award agreements.

At June 30, 2026, the maximum number of shares authorized for issuance under the 2026 Plan was 1,600,000.

The 2026 Plan provides for the granting to eligible participants of such incentive awards as determined by 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 2026 Plan provides for accelerated vesting if there is a change of control, as defined in the Plan. Restricted stock units generally vest over a period of one to five years.

Future levels of compensation cost recognized related to stock-based compensation awards may be impacted by new awards and/or modifications, repurchases and cancellations of existing awards. Under the terms of the 2026 Plan, vested options generally expire ninety days after the director or employee terminates their service affiliation with the Company.

For the three and six months ended June 30, 2026, total stock-based compensation cost related to stock options and restricted stock units was $1.3 million and $2.7 million. For the three and six months ended June 30, 2025, total stock-based compensation cost related to stock options and restricted stock units was $1.5 million and $3.0 million, respectively.

Stock Options

As of June 30, 2026, there were $4 thousand of total unrecognized compensation costs related to the outstanding stock options.

There were 7,500 stock options exercised with an intrinsic value of $54 thousand during the three months ended June 30, 2026, and 9,375 stock options exercised during the three months ended June 30, 2025 with an intrinsic value of $79 thousand. Related tax benefits for the disqualifying disposition of incentive stock options

(“ISO”) exercised were $15 thousand for the three months ended June 30, 2026. Related tax benefits for the disqualifying disposition of ISO exercised were $11 thousand for the three months ended June 30, 2025.

There were 40,750 and 14,513 stock options exercised during the six months ended June 30, 2026 and 2025, respectively. The intrinsic value of stock options exercised was approximately $424 thousand and $119 thousand for the six months ended June 30, 2026 and 2025, respectively. There were $15 thousand and $11 thousand related tax benefit for the disqualifying disposition of ISO exercised for the six months ended June 30, 2026 and 2025.

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 six months ended June 30, 2026 and 2025.

A summary of changes in outstanding stock options during the three and six months ended June 30, 2026 and 2025 are presented below:

Restricted Stock Units

A summary of the changes in outstanding unvested restricted stock units during the three and six months ended June 30, 2026 and 2025 is presented below:

As of June 30, 2026, the Company did not have any outstanding unvested restricted stock units subject to various financial performance conditions.

As of June 30, 2026, there was $10.7 million of total unrecognized compensation expense related to the outstanding restricted stock units that will be recognized over the weighted-average period of 2.4 years. The total unrecognized compensation expense included $640 thousand related to the fair value of outstanding restricted stock units that were assumed in the merger with the predecessor California BanCorp, which will be recognized over the weighted-average vesting period of 2.3 years. The total grant date fair value of restricted stock units vested was $928 thousand and $3.8 million for the three and six months ended June 30, 2026, respectively, and $923 thousand and $4.1 million for the three and six months ended June 30, 2025, respectively. Related tax expenses were approximately $87 thousand and $215 thousand for the three and six months ended June 30, 2026, respectively, and approximately zero and $5 thousand for the three and six months ended June 30, 2025, respectively.

NOTE 12 - 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 estimate the expected life of loan credit losses. The noncredit discount resulting from the acquired PCD loans was allocated to each individual asset. If an individually evaluated loan has had a charge-off or if the fair value of the collateral is less than the recorded investment in the loan, we establish a specific reserve and report the loan as nonrecurring Level 3. Loans not requiring an allowance represent loans for which the fair value of the expected repayments or collateral exceed the recorded investments in such loans. For the fair value of collateral-dependent individually evaluated loans, an asset-based approach is applied to determine the estimated fair values of the underlying collateral based on recent real estate appraisals, less costs to sell. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. New appraisals are conducted in certain circumstances, including when there has been significant deterioration in the condition of the collateral, if the foreclosure process has begun, or if the existing valuation is deemed to be outdated. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value.

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

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

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

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

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

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

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

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

The estimated fair value hierarchy level and estimated fair value of financial instruments at June 30, 2026 and December 31, 2025, is summarized as follows:

(1) Other equity securities are reported in accrued interest receivable and other assets in the consolidated balance sheets.

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:

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 June 30, 2026, the Company’s individual evaluated collateral-dependent loans were evaluated based on the estimated fair value of the underlying collateral from the Company’s internal reviews, including reviews of the most recent appraisals and the current sale market condition. There were $46 thousand partial charge-offs on certain individually evaluated loans based on recent real estate or property appraisals and no related reserves were recorded during the three and six months ended June 30, 2026.

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.

The following tables summarize the fair value of assets and liabilities measured at fair value on a nonrecurring basis as of June 30, 2026 and December 31, 2025. There was OREO of $8.6 million as of June 30, 2026. OREO is presented net of an allowance, and there were no allowances as of June 30, 2026. At December 31, 2025, there was no OREO. Only individually evaluated collateral-dependent loans with a related ACL or a partial charge off are included in the following table for purposes of fair value disclosures.

(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 June 30, 2026 and December 31, 2025.

NOTE 13 - SUBSEQUENT EVENTS

On July 23, 2026, the Company’s Board of Directors approved the regular quarterly cash dividend of $0.12 per share to holders of its common stock. The dividend is expected to be paid on October 15, 2026, to shareholders of record at the close of the business day on September 21, 2026.

In July 2026, the Company announced its intent to redeem all $35.0 million of its 3.50% fixed-to-floating rate subordinated debt due September 1, 2031, at par value during the third quarter of 2026. Starting in September 2026, the interest rate on that subordinated debt was originally scheduled to transition from a fixed rate to a quarterly variable rate equal to the then current 90-day SOFR plus 2.86%, through the contractual maturity date of September 1, 2031.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

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

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

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

Overview

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

We are a relationship-focused community bank and we offer a range of financial products and services to individuals, professionals, and small to medium-sized businesses through our 14 branch offices, including 11 commercial banking offices, serving California. We keep a steady focus on our solution-driven, relationship-based approach to banking, providing clients accessibility to decision makers and enhancing the value of our services through strong client partnerships. Our lending products consist primarily of construction and land development loans, real estate loans, C&I loans and consumer loans, and we are a Preferred SBA Lender. Our deposit products consist primarily of demand deposit, money market, and certificates of deposit. In addition, we are a participant in the Certificate of Deposit Account Registry Service (“CDARS”) and IntraFi Network Insured Cash Sweep (“ICS”) networks. We receive an equal dollar amount of deposits (“reciprocal deposits”) from other participating banks in exchange for the deposits we place into the networks to fully qualify large customer deposits for FDIC insurance. We also provide treasury management services including online banking, cash vault, sweep accounts and lock box services.

Recent Developments

Market and Banking Industry Updates

At its June 17, 2026 meeting, the Federal Open Market Committee (“FOMC”) maintained the federal funds target range at 3.50% to 3.75%, reaffirming its objective of maintaining ample reserves in the banking system. The FOMC noted that economic activity continued to expand at a solid pace despite elevated uncertainty, including uncertainty related to the conflict in the Middle East, while inflation remained above the Federal Reserve’s 2% target, partly reflecting supply shocks affecting certain sectors, including energy.

The Federal Reserve’s July 2026 Monetary Policy Report reflected a more cautious inflation outlook compared with March 2026. The June 2026 Summary of Economic Projections showed median 2026 real GDP growth of 2.2%, unemployment of 4.3%, PCE inflation of 3.6%, and core PCE inflation of 3.3%. The median projected federal funds rate for year-end 2026 increased to 3.8%, compared with the March 2026 projection of 3.4%, indicating that policymakers no longer appear positioned for near-term easing and are instead focused on persistent inflation risk.

Recent economic commentary from the Federal Reserve Bank of San Francisco noted that the U.S. economy continues to expand at a solid pace, supported by strong business investment in technology equipment and software, while consumer spending has moderated. The same report noted that elevated energy prices have pushed inflation further above the Federal Reserve’s 2% goal, although they have had limited impact on overall

economic activity to date. The most recent PCE inflation data cited in that report showed headline PCE inflation at 4.1% in May 2026, with inflation risks remaining mainly to the upside.

In California, the UCLA Anderson Forecast released in March 2026 indicated that the state’s economic output continued to outpace the national economy, supported by high-productivity sectors such as artificial intelligence and aerospace. However, the forecast also noted ongoing employment weakness, with unemployment remaining above 5% and payroll growth lagging output growth, reflecting a bifurcated state economy. The forecast projected California unemployment to average 5.6% in 2026, decline to 4.8% in 2027, and improve further to 4.4% in 2028, while total employment growth was expected to strengthen from 0.9% in 2026 to 1.8% in 2027 and 2.1% in 2028.

Overall, the latest market information supports continued caution in the economic outlook. While economic growth remains resilient and California output has continued to outperform the national economy, inflation and interest-rate uncertainty have increased since the March 2026 forecast, driven primarily by energy-price volatility, tariff and supply-chain developments, and geopolitical risks. Management has not observed a material impact on client operations from these events to date, but continues to monitor evolving conditions, including their potential effects on borrower cash flows, collateral values, interest-rate sensitivity, and broader credit risk.

Moody’s anticipates GDP growth in California to grow to 1.88% in 2026 and to have a slight decrease to 1.64% in 2027. The state has moved back up to the position of the world’s fourth-largest economy, following a decline from its previous fifth-place ranking. California’s economy is cooling off, with slower payroll growth and downward revisions widening the gap with national trends. Challenges in the tech sector are expected to persist amid ongoing uncertainty. Ongoing trade‑related uncertainty and heightened geopolitical tensions have contributed to a more cautious business and investment environment. We have observed that some clients are delaying or reassessing the timing of certain projects amid continued economic uncertainty.

Inflation has had a material impact on the growth of total assets within the banking industry, prompting the need for some institutions to raise equity capital at accelerated rates to preserve a healthy equity-to-assets ratio. It also drives increases in other operating expenses. Management views interest rate risk as the key challenge in mitigating inflation's impact. We undertake substantial efforts to maintain a strategic balance between our rate-sensitive assets and liabilities across economic cycles to reduce volatility in net interest income.

We have a strong consolidated balance sheet with diversified deposit and loan portfolios, with very little sector or individual customer concentration, other than our CRE concentration. Our relationship-based business banking model is founded on strong, ongoing relationships with our commercial clients, which represent a broad variety of industries. We have no meaningful exposure to cryptocurrency or venture capital business models, our accumulated other comprehensive loss on our available-for-sale debt securities is manageable, and our capital position is strong.

Per the regulatory definition of commercial real estate, at June 30, 2026, our concentration of such loans represented 449% of our total risk-based capital. In addition, at June 30, 2026, total loans secured by commercial real estate under construction and land development represented 25% of our total risk-based capital. The non-performing loans for these segments per the regulatory definition of commercial real estate loans at June 30, 2026 were $5.1 million and there were $122 thousand net charge-offs during the six months ended June 30, 2026. At June 30, 2026, there was $8.6 million of OREO.

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

We strategically manage an investment portfolio focused on high-quality, resilient securities. At June 30, 2026, the amortized cost of our held-to-maturity debt securities was $52.8 million, or approximately 1.3% of total assets. The fair value of our available-for-sale debt securities was $308.8 million, or approximately 7.7% of total assets. The 10-Year Treasury Bond was approximately 4.4% at June 30, 2026, compared to 4.2% at December 31, 2025. The increase in the 10-Year Treasury Bond in 2026, resulted in higher net unrealized losses on our debt securities at June 30, 2026. At June 30, 2026, our accumulated other comprehensive loss, net of taxes, increased to $5.3 million, compared to $1.6 million at December 31, 2025. If we realized all of our unrealized losses on both held-to-maturity and available-for-sale debt securities, our losses, net of taxes would be $7.9 million at

June 30, 2026. The results of our stress testing on our debt security portfolio at June 30, 2026, illustrated that our losses, net of taxes on both held-to-maturity and available-for-sale debt securities would increase to $51.1 million in a 300 basis point rate increase shock scenario. If we realized all of these unrealized losses, the Bank would continue to exceed all regulatory capital requirements necessary to be considered well capitalized.

Critical Accounting Policies and Estimates

We have chosen accounting policies that we believe are appropriate to accurately and fairly report our operating results and financial position, and we apply those accounting policies in a consistent manner. There have been no significant changes to our accounting policies since December 31, 2025. The Significant Accounting Policies are summarized in Note 1 - Basis of Presentation and Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements included in Part I - Financial Information - Item 1. Financial Statements included in the 2025 Annual Report on Form 10-K.

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.

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

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.

(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.

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

(4) Return on average tangible common equity is computed by dividing net income by average tangible common equity.

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

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

(7) 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.

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

Results of Operations

Net Income

Three Months Ended June 30, 2026 Compared to Three Months Ended March 31, 2026

Net income for the second quarter of 2026 was $14.3 million, or $0.44 per diluted share, compared with $13.8 million, or $0.42 per diluted share in the first quarter of 2026. Pre-tax, pre-provision income (non-GAAP) for the second quarter was $20.6 million, an increase of $1.9 million from the prior quarter. The $509 thousand increase in net income and $0.02 increase in diluted earnings per share were largely driven by a $1.3 million increase in net interest income and lower noninterest expense of $1.2 million, partially offset by a $1.1 million increase in provision for credit losses and a $586 thousand decrease in noninterest income.

Three Months Ended June 30, 2026 Compared to Three Months Ended June 30, 2025

Net income for the three months ended June 30, 2026 was $14.3 million, or $0.44 per diluted share, compared with $14.1 million, or $0.43 per diluted share for the same 2025 period. Pre-tax, pre-provision income (non-GAAP) for the second quarter of 2026 was $20.6 million, an increase of $1.1 million from the same 2025 period. The $201 thousand increase in net income and $0.01 increase in diluted earnings per share were primarily driven by a $1.9 million increase in the net interest income and $487 thousand decrease in noninterest expense, and a lower weighted-average diluted share count from the share repurchase program, partially offset by a $1.3 million increase in the provision for credit losses and a $1.3 million decrease in the noninterest income.

Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025

Net income for the six months ended June 30, 2026 was $28.1 million, or $0.86 per diluted share, compared to $31.0 million, or $0.95 per diluted share in the prior year. Pre-tax, pre-provision income for the six months ended June 30, 2026 was $39.3 million, a decrease of $73 thousand compared to pre-tax, pre-provision income for the six months ended June 30, 2025. The $2.9 million decrease in net income and $0.08 decrease in diluted earnings per share from the prior year was primarily due to a $4.7 million increase in the provision for credit losses, a $1.7 million decrease in noninterest income and a $105 thousand increase in noninterest expense, partially offset by a $1.8 million increase in net interest income and a $2.0 million decrease in income taxes, and a lower weighted-average diluted share count from the share repurchase program.

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:

(1) Total loans are net of deferred loan origination fees/costs and discounts/premiums, and include average balances of loans held for sale and nonperforming loans. Interest income includes accretion of net deferred loan fees and net discounts on acquired loans of $3.9 million, $3.9 million and $5.6 million for the three months ended June 30, 2026, March 31, 2026, and June 30, 2025, respectively.

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

(3) Average noninterest-bearing deposits represent 36.70%, 34.95% and 36.21% of average total deposits for the three months ended June 30, 2026, March 31, 2026, and June 30, 2025, respectively.

(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.

(1) Total loans are net of deferred loan origination fees/costs and discounts/premiums, and include average balances of loans held for sale and nonperforming loans. Interest income includes accretion of net deferred loan fees and net discounts on acquired loans of $7.9 million and $11.7 million for the six months ended June 30, 2026 and 2025, respectively.

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

(3) Average noninterest-bearing deposits represent 35.81%, and 36.80% of average total deposits for the six months ended June 30, 2026 and 2025, respectively.

(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.

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 June 30, 2026 Compared to Three Months Ended March 31, 2026

Net interest income for the second quarter of 2026 was $43.4 million, compared with $42.1 million in the prior quarter. The increase in net interest income was primarily due to a $1.1 million increase in total interest and dividend income, coupled with a $123 thousand decrease in total interest expense in the second quarter of 2026, as compared with the prior quarter. The increase in net interest income was also impacted by one additional day in the current quarter than the prior quarter.

During the second quarter of 2026, total interest income increased by $1.1 million. The increase was primarily driven by a $2.3 million increase in loan interest income, which included an increase of $98 thousand in accretion from the net purchase accounting discounts on acquired loans and $600 thousand in cash interest collections from the payoff of two nonaccrual loans, net of $56 thousand in reversals of interest income on loans placed on nonaccrual, coupled with an increase of $749 thousand in total debt securities income. These increases were partially offset by a decrease of $1.7 million in interest income from deposits in other financial institutions and a decrease of $225 thousand in dividend income from restricted stock investments and other bank stock. The increase in interest income was mainly due to a 25 basis point increase in the yield on average total interest-earning assets, including increases in average total loans of $23.6 million, and average total debt securities of $49.4 million, offset by decreases in average deposits in other financial institutions of $195.9 million and average Fed funds sold/resale agreements of $4.1 million. The decrease in interest expense for the second quarter of 2026 was primarily due to a $119 thousand decrease in interest expense on average total interest-bearing deposits, the result of lower average total interest-bearing deposits of $132.4 million, partially offset by an 8 basis point increase in the cost of average total interest-bearing deposits.

Net interest margin for the second quarter of 2026 was 4.71%, compared with 4.47% in the prior quarter. The expansion of the net interest margin by 24 basis points was primarily driven by higher loan yields, a 6 basis point increase from the resolution of certain nonaccrual loans, and continued benefit from purchase accounting accretion. Total interest-earning assets yield increased by 25 basis points, partially offset by a 2 basis point increase in the cost of funds. The yield on total average interest-earning assets in the second quarter of 2026 was 5.97%, compared with 5.72% in the prior quarter. The yield on average total loans in the second quarter of 2026 was 6.34%, an increase of 20 basis points from 6.14% in the prior quarter. The yield on average total loans in the second quarter of 2026 included the impact of the cash interest collection from the payoff of two nonaccrual loan interest, net of reversals of interest income on loans placed on nonaccrual noted above, which increased the overall loan yield by 7 basis points. There was a $479 thousand reversal of interest income in the prior quarter which negatively impacted the net interest margin by 6 basis points. Accretion income from the net purchase accounting discounts on acquired loans was $3.3 million, increasing the yield on average total loans by 44 basis points; the net amortization expense from the purchase accounting discounts on acquired subordinated debt and acquired time deposits premium increased interest expense by $389 thousand, the combination of which increased the net interest margin by 32 basis points in the second quarter of 2026. In the prior quarter, accretion income from the net purchase accounting discounts on acquired loans was $3.2 million, increasing the yield on average total loans by 44 basis points; the net amortization expense from the purchase accounting discounts on acquired subordinated debt and acquired time deposits premium increased the interest expense by $388 thousand, the combination of which increased the net interest margin by 30 basis points.

Cost of funds for the second quarter of 2026 was 1.38%, an increase of 2 basis points from 1.36% in the prior quarter. The increase was primarily driven by an 8 basis point increase in the cost of average total interest-bearing deposits. The amortization expense of $389 thousand from the purchase accounting discounts on acquired subordinated debt and acquired time deposits premium contributed five basis points to the cost of funds. Average noninterest-bearing demand deposits increased $18.6 million to $1.22 billion and represented 36.7% of total average deposits for the second quarter of 2026, compared with $1.21 billion and 34.9%, respectively, in the prior quarter; average interest-bearing deposits decreased $132.4 million to $2.11 billion during the second quarter of 2026. The total cost of deposits in the second quarter of 2026 was 1.31%, compared with 1.29% in the prior quarter. The cost of total interest-bearing deposits increased 8 basis points, driven primarily by changes in the

Company’s deposit mix and overall competition for deposits driving market deposit rates upward in the second quarter of 2026.

Average total borrowings increased $51 thousand to $34.4 million in the second quarter of 2026, primarily due to a $384 thousand increase in average subordinated debt due to accretion of discounts, partially offset by a $333 thousand decrease in average Federal Home Loan Bank (“FHLB”) advances from an overnight advance. The average cost of total borrowings was 8.10% for the second quarter of 2026, down from 8.25% in the prior quarter.

Three Months Ended June 30, 2026 Compared to Three Months Ended June 30, 2025

Net interest income for the three months ended June 30, 2026 was $43.4 million, compared with $41.4 million for the three months ended June 30, 2025. The increase in net interest income for the three months ended June 30, 2026 was primarily due to a $1.8 million increase in interest on debt securities and $2.8 million decrease in total interest expense, partially offset by a $1.1 million decrease in total loan interest income and $1.5 million decrease in interest and dividend income from other financial institutions.

Comparing to the same 2025 period, total interest income decreased by $854 thousand. The decrease was primarily driven by a $1.1 million decrease in loan interest income, which included a decrease of $1.8 million in accretion from the net purchase accounting discounts on acquired loans, coupled with a decrease of $1.5 million in interest and dividend income from other financial institutions. These decreases were partially offset by an increase of $1.8 million in interest income on debt securities. The decrease in interest income was mainly due to a 24 basis point decrease in the yield on average total interest-earning assets, coupled with decreases in the average deposits in other financial institutions of $64.7 million and average Fed funds sold/resale agreements of $34.9 million, partially offset by increases in average total debt securities of $141.1 million and average total loans of $44.7 million. The decrease in interest expense for the three months ended June 30, 2026 was primarily due to a $2.1 million decrease in interest expense on total interest-bearing deposits, coupled with a $734 thousand decrease in interest expense on total borrowings.

Net interest margin for the three months ended June 30, 2026 was 4.71%, compared with 4.61% for the same 2025 period. The expansion of the net interest margin by 10 basis point was primarily driven by a 35 basis point decrease in the cost of funds, partially offset by the 24 basis points decrease in the total average interest-earning assets yield resulting from lower accretion income from the net purchase accounting discounts on acquired loans, lower market interest rates and a change in our average interest-earning asset mix. The Federal Reserve’s reductions to the federal funds target rate by 75 basis points in the second half of 2025 resulted in lower interest income earned on deposits in other financial institutions, Fed fund sold/resale agreements, and loans, coupled with the decline in the accretion income from the net purchase accounting discounts on acquired loans, partially offset by the downward repricing of interest-bearing deposits consistent with market rates, resulting in lower interest expense on interest-bearing deposits and the redemptions of subordinated debt in June 2025 and September 2025, resulting in lower interest expense on total borrowings for the three months ended June 30, 2026 compared to the same 2025 period.

The yield on total average earning assets during the three months ended June 30, 2026 was 5.97%, compared with 6.21% for the same 2025 period. The yield on average loans decreased 24 basis points to 6.34% from 6.58% year over year. The yield on total debt securities increased to 4.36% from 3.93% for the same 2025 period. Accretion income from the net purchase accounting discounts on acquired loans was $3.3 million, increasing the yield on average total loans by 44 basis points; the net amortization expense from the purchase accounting discounts on acquired subordinated debt and acquired time deposits premium increased the interest expense by $389 thousand, the combination of which increased the net interest margin by 32 basis points in the second quarter of 2026. For the three months ended June 30, 2025, accretion income from the net purchase accounting discounts on acquired loans was $5.2 million and the amortization expense impact on interest expense was $554 thousand, the combination of which increased the net interest margin by 51 basis points.

During the three months ended June 30, 2026, total interest expense decreased by $2.8 million to $11.6 million, comprised primarily of a $2.1 million decrease in interest expense on interest-bearing deposits

primarily due to a decrease in the cost of interest-bearing deposits resulting from our deposit repricing strategy and the ongoing reduction of high cost brokered deposits, partially offset by the increase in average interest-bearing deposits between periods.

Total cost of funds for the three months ended June 30, 2026 was 1.38%, a decrease of 35 basis points from 1.73% for the same 2025 period. The decrease was primarily driven by a 43 basis point decrease in the average cost of interest-bearing deposits and a decrease of 43 basis points in the cost of total borrowings, coupled with an increase in average noninterest-bearing deposits. Average noninterest-bearing demand deposits increased $44.2 million to $1.22 billion and represented 36.7% of total average deposits for the three months ended June 30, 2026, compared with $1.18 billion and 36.2%, respectively, for the same 2025 period; average interest-bearing deposits increased $33.1 million to $2.11 billion during the three months ended June 30, 2026. The total cost of deposits for the three months ended June 30, 2026 was 1.31%, down 28 basis points from 1.59% for the same 2025 period.

Average total borrowings decreased $32.7 million to $34.4 million for the three months ended June 30, 2026 resulting from a decrease of $32.7 million in average subordinated debt from the redemption of $18 million of subordinated debt in June 2025 and $20 million of subordinated debt in September 2025. The average cost of total borrowings was 8.10% for the three months ended June 30, 2026, a 43 basis point decrease from 8.53% for the same 2025 period. The decrease was primarily attributable to the redemption of higher yielding subordinated debt.

Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025

Net interest income for the six months ended June 30, 2026 was $85.4 million, compared to $83.7 million for the six months ended June 30, 2025. The increase in net interest income was primarily due to a $5.7 million decrease in total interest expense, partially offset by a $3.9 million decrease in total interest income.

During the six months ended June 30, 2026, total interest income decreased by $3.9 million. The decrease was primarily driven by a $6.2 million decrease in loan interest income, which included a $4.3 million decrease in accretion income from the net purchase accounting discounts on acquired loans, and higher cash interest collections from the payoffs of nonaccrual loans, net of higher reversals of interest income on loans placed on nonaccrual, coupled with a $743 thousand decrease in interest and dividends from other financial institutions. These decreases were partially offset by a $3.0 million increase in interest on debt securities. The decrease in interest income was primarily driven by lower accretion income coupled with lower market interest rates and a decrease in average total loans, partially offset by the higher average debt securities balances. There was a 40 basis point decrease in yield on the total average interest-earning assets, partially offset by higher total average interest-earning assets balances for the six months ended June 30, 2026 compared to the same 2025 period. Total average interest-earning assets increased $110.6 million, which included a $129.0 million increase in total average debt securities, a $22.3 million increase in average deposits in other financial institutions, partially offset by a $25.4 million decrease in average total loans and a $15.3 million decrease in average Fed funds sold/resale agreements.

During the six months ended June 30, 2026, total interest expense decreased by $5.7 million to $23.3 million as compared to the same period in 2025, primarily due to the 49 basis point decrease in the cost of interest-bearing deposits from changes in market interest rates and lower average borrowings of $34.2 million from the redemption of subordinated debt in 2025, partially offset by higher average interest-bearing deposits of $85.8 million between periods.

Net interest margin for the six months ended June 30, 2026 was 4.59%, compared with 4.63% for the six months ended June 30, 2025. The decrease was primarily related to a 40 basis point decrease in the total interest-earning assets yield resulting from lower market interest rates and a change in our interest-earning asset mix, partially offset by a 36 basis point decrease in the cost of funds. The yield on total earning assets during the six months ended June 30, 2026 was 5.84%, compared with 6.24% for the six months ended June 30, 2025. The yield on average total loans during the six months ended June 30, 2026 was 6.24%, a 35 basis point decrease from 6.59% for the six months ended June 30, 2025. The cost on total interest-bearing liabilities during the six months ended June 30, 2026 was 2.12%, a 58 basis point decrease from 2.70% for the same 2025 period. Accretion

income from the net purchase accounting discounts on acquired loans was $6.6 million and the amortization expense impact on interest expense was $777 thousand, the combination of which increased the net interest margin by 31 basis points for the six months ended June 30, 2026. Accretion income from the net purchase accounting discounts on acquired loans increased the yield on average total loans by 44 basis points for the six months ended June 30, 2026. Accretion income from the net purchase accounting discounts on acquired loans was $10.8 million and the amortization expense impact on interest expense was $1.1 million, the combination of which increased the net interest margin by 54 basis points for the six months ended June 30, 2025. Accretion income from the net purchase accounting discounts on acquired loans increased the yield on average total loans by 72 basis points for the six months ended June 30, 2025.

Total cost of funds for the six months ended June 30, 2026 was 1.37%, a decrease of 36 basis points from 1.73% for the six months ended June 30, 2025. The decrease was primarily driven by a 49 basis point decrease in the cost of average total interest-bearing deposits, offset by decreases in average noninterest-bearing deposits, average total borrowings and average cost of total borrowings. Average noninterest-bearing demand deposits decreased $2.8 million to $1.21 billion and represented 35.8% of total average deposits for the six months ended June 30, 2026, compared with $1.22 billion and 36.8%, respectively, for the same 2025 period; average interest-bearing deposits increased $85.8 million to $2.18 billion during the six months ended June 30, 2026. The total cost of deposits for the six months ended June 30, 2026 was 1.30%, down 29 basis points from 1.59% for the same 2025 period.

Average total borrowings decreased $34.2 million to $34.4 million for the six months ended June 30, 2026, resulting primarily from a $34.4 million decrease in subordinated debt from the redemption of $18 million of subordinated debt in June 2025 and $20 million of subordinated debt in September 2025. The average cost of total borrowings was 8.17% for the six months ended June 30, 2026, a 12 basis point decrease from 8.29% for the same 2025 period. The decrease was primarily attributable to lower borrowing costs associated with the redemption of the higher yielding subordinated debt during 2025.

Provision for Credit Losses

Three Months Ended June 30, 2026 Compared to Three Months Ended March 31, 2026

The Company recorded a provision for credit losses of $714 thousand for the second quarter of 2026, compared with a reversal of provision for credit losses of $381 thousand in the prior quarter. The provision for credit losses in the second quarter of 2026 was comprised of a $1.1 million provision for credit losses on loans held for investment, partially offset by a $336 thousand reversal of provision for credit losses for unfunded loan commitments during the second quarter of 2026. Total unfunded loan commitments decreased by $28.2 million to $896.9 million at June 30, 2026, compared to $925.1 million in unfunded loan commitments at March 31, 2026.

The provision for credit losses for loans held for investment in the second quarter of 2026 was $1.1 million, an increase of $1.4 million from a reversal of provision for credit losses of $381 thousand in the prior quarter. The increase reflected updates to the reasonable and supportable economic forecasts for California, continued loan growth, changes in portfolio composition, and higher substandard accruing loan balances, partially offset by refinements to the qualitative factors and scenario weighting. The Company’s management continues to monitor macroeconomic variables including changes in interest rates, uncertainty in the current economic environment, and elevated geopolitical risks related to ongoing conflicts in the Middle East. Management believes it has appropriately provisioned for the current environment.

Three Months Ended June 30, 2026 Compared to Three Months Ended June 30, 2025

We recorded a provision for credit losses of $714 thousand for the three months ended June 30, 2026, compared to a reversal of credit losses of $634 thousand for the same 2025 period. The reversal of credit losses in the second quarter of 2025 included a $29 thousand provision for credit losses for unfunded loan commitments related to the increase in unfunded loan commitments during the second quarter of 2025, partially offset by a decrease in average funding rates used to estimate the allowance for credit losses on unfunded commitments.

Total unfunded loan commitments decreasing modestly by $4.3 million to $896.9 million at June 30, 2026, compared to $901.2 million in unfunded loan commitments at June 30, 2025.

The reversal of provision for credit losses for the loans held for investments for the three months ended June 30, 2025 was driven primarily by the decrease in the balance of loans held for investment, changes in the composition of the loans held for investment portfolio, coupled with changes in qualitative factors, partially offset by net charge-offs and changes in the reasonable and supportable forecast, primarily related to the economic outlook for California.

Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025

We recorded a provision for credit losses of $333 thousand for the six months ended June 30, 2026, compared to a reversal of provision for credit losses of $4.4 million for the same 2025 period. Total net charge-offs were $157 thousand in the six months ended June 30, 2026, which consisted of $193 thousand of gross charge-offs, partially offset by $36 thousand of gross recoveries. The net charge-offs resulted from the Company’s continuing strategy to derisk the consolidated balance sheet by reducing our exposure to criticized loans. The provision for credit losses in the six months ended June 30, 2026 included a $336 thousand reversal of provision for credit losses for unfunded loan commitments primarily related to the decreases in the loss rate used to estimate the allowance for credit losses on unfunded commitments during the six months ended June 30, 2026, partially offset by the increase in unfunded loan commitments of $10.5 million to $896.9 million at June 30, 2026 from $886.4 million at December 31, 2025.

The provision for credit losses for loans held for investment in the six months ended June 30, 2026 was $669 thousand, compared with a reversal of provision for credit losses of $3.8 million in the same 2025 period. The increase reflected updates to the reasonable and supportable economic forecasts for California, continued loan growth, changes in portfolio composition, and higher substandard accruing loan balances, partially offset by refinements to the qualitative factors and scenario weighting.

We recorded a reversal of credit losses of $4.4 million for the six months ended June 30, 2025. The reversal of credit losses for the six months ended June 30, 2025 included a $3.8 million reversal of credit losses on loans held for investment and a $589 thousand reversal credit losses for unfunded loan commitments. The reversal of provision for credit losses on loans held for investment for the six months ended June 30, 2025 was primarily due a decrease in the balance of loans held for investment, changes in the composition of the loans held for investment portfolio, and changes in qualitative factors, partially offset by the net charge-offs and changes in the reasonable and supportable forecast, primarily related to the economic outlook for California. The reversal of credit losses on unfunded loan commitments for the six months ended June 30, 2025 was primarily due to the decreases in unfunded loan commitments and loss rate used to estimate the allowance for credit losses on unfunded commitments during the six months ended June 30, 2025.

Noninterest Income

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

Three Months Ended June 30, 2026 Compared to Three Months Ended March 31, 2026

Total noninterest income was $1.6 million in the second quarter of 2026, a decrease of $586 thousand compared with $2.1 million in the first quarter of 2026. Other charges and fees decreased $534 thousand in the second quarter due primarily to a loss from equity investments of $251 thousand in the second quarter of 2026, compared to income of $181 thousand in the prior quarter.

Three Months Ended June 30, 2026 Compared to Three Months Ended June 30, 2025

Total noninterest income was $1.6 million in the second quarter of 2026, a decrease of $1.3 million compared with $2.9 million in the second quarter of 2025. The decrease was due primarily to a $1.2 million decrease in other charges and fees due primarily to lower income from equity investments of $1.2 million and lower interchange and ATM income between periods.

Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025

Total noninterest income during the six months ended June 30, 2026 was $3.7 million, a decrease of $1.7 million compared to total noninterest income of $5.4 million for the same period in the prior year. The decrease was primarily the result of decreases of $923 thousand in other charges and fees due to lower income from equity investments, and $577 thousand in gain on sale of loans in 2025. We recorded a $70 thousand loss from our equity investments for the six months ended June 30, 2026, compared to $918 thousand of income from our equity investments for the same 2025 period.

There was no gain on sale of loans during the six months ended June 30, 2026, compared to $577 thousand for the same 2025 period. In the same 2025 period, we sold eight SBA 7(a) loans with a net carrying value of $9.0 million, resulting in a gain on sale of $577 thousand at an average premium of 6.44%.

Noninterest Expense

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

Three Months Ended June 30, 2026 Compared to Three Months Ended March 31, 2026

Total noninterest expense for the second quarter of 2026 was $24.3 million, a decrease of $1.2 million from total noninterest expense of $25.5 million in the prior quarter. Salaries and employee benefits decreased $1.0 million during the second quarter of 2026 to $15.5 million primarily as a result of the previous quarter including increases in payroll taxes typically occurring in the first quarter each year, coupled with the increase in loan origination costs deferred based on increased loan origination activity. The decrease in other expenses of $424 thousand was due primarily to the decreases in loan related expenses and valuation write-downs on loans held for sale. There were no valuation write-downs on loans held for sale in the second quarter of 2026, compared with $266 thousand in the prior quarter.

Efficiency ratio (non-GAAP) for the second quarter of 2026 was 54.22%, compared with 57.69% in the prior quarter.

Three Months Ended June 30, 2026 Compared to Three Months Ended June 30, 2025

Total noninterest expense during the three months ended June 30, 2026 was $24.3 million, a decrease of $487 thousand compared with total noninterest expense of $24.8 million for the same 2025 period. The decrease was primarily due to lower occupancy and equipment, legal, audit and professional fees, intangible asset amortization and other real estate owned expense, partially offset by increases in salaries and benefits, data processing and communications and other expenses.

Salaries and employee benefits were $15.5 million during the three months ended June 30, 2026, compared to $15.3 million for the same 2025 period. The $251 thousand increase in salaries and benefits was driven primarily by higher salaries and incentive compensation.

Core deposit intangible amortization decreased $148 thousand during the three months ended June 30, 2026. The decrease in core deposit intangible amortization was primarily driven by lower amortization costs as acquired core deposit intangibles are amortized on an accelerated basis.

Other real estate owned expense was $201 thousand during the three months ended June 30, 2026, compared to $862 thousand for the same 2025 period. The $661 thousand decrease relates to the 2025 period including a $862 thousand loss from the sale of OREO, compared to no sales of OREO during the second quarter of 2026.

Our efficiency ratio for the three months ended June 30, 2026 was 54.2%, compared to 56.1% for the three months ended June 30, 2025.

Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025

Total noninterest expense during the six months ended June 30, 2026 was $49.9 million, an increase of $105 thousand compared with total noninterest expense of $49.8 million for the same 2025 period. The increase was due to increases in salaries and benefits, data processing and communications and other expenses, partially offset by decreases in various overhead expense categories and lower OREO expenses.

Salaries and employee benefits were $32.1 million during the six months ended June 30, 2026, compared to $31.2 million during the prior year. The $937 thousand increase in salaries and benefits was driven primarily by higher headcount and related costs, partially offset by an increase in loan origination costs deferred based on increased loan origination activity. The average FTE employees for the six months ended June 30, 2026 was 297 compared to 290 FTE employees for the same 2025 period.

Intangible assets amortization decreased $296 thousand during the six months ended June 30, 2026. The decrease in amortization was primarily driven by lower amortization costs as acquired core deposit intangible are amortized on an accelerated basis.

Other real estate expenses were $305 thousand during the six months ended June 30, 2026, compared to $930 thousand for the same 2025 period. The $625 thousand decrease primarily relates to the 2025 period including a $862 thousand loss from the sale of OREO, compared to no sales of OREO, partially offset by higher OREO holding costs during the six months ended June 30, 2026.

Other expenses were $4.5 million during the six months ended June 30, 2026, compared to $3.9 million for the same 2025 period. The $627 thousand increase was due primarily to the increases in customer service related expenses, travel and training expenses, valuation allowance on loans held for sale of $266 thousand and other expenses, partially offset by lower loan related expenses.

Our efficiency ratio for the six months ended June 30, 2026 and 2025 was 55.9% and 55.8%, respectively.

Income Taxes

Three Months Ended June 30, 2026 Compared to Three Months Ended March 31, 2026

In the second quarter of 2026, the Company’s income tax expense was $5.5 million, compared with $5.3 million for the first quarter of 2026. The effective rate was 27.9% for the second quarter of 2026 and 27.8% for the first quarter of 2026. The rate remained relatively stable, reflecting minimal changes in permanent tax differences.

Three Months Ended June 30, 2026 Compared to Three Months Ended June 30, 2025

Income tax expense for the three months ended June 30, 2026 was $5.5 million, compared to $6.0 million for the same 2025 period. The effective rate was 27.9% during the three months ended June 30, 2026, compared to 29.8% for the same 2025 period. The decrease in the effective tax rate between periods was primarily attributable to the impact of favorable book-to-tax differences relative to slightly lower pre-tax income.

Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025

Income tax expense for the six months ended June 30, 2026 was $10.8 million, compared to income tax expense of $12.8 million for the same 2025 period. The effective rate was 27.9% during the six months ended June 30, 2026, compared to 29.3% for the same 2025 period. The decrease in effective tax rate between periods was primarily due to the impact of favorable book-to-tax differences relative to lower pre-tax income.

Financial Condition

Summary

Total assets at June 30, 2026 were $4.03 billion, a decrease of $8.1 million or 0.2% from December 31, 2025. The decrease in total assets from December 31, 2025 was primarily related to a decrease in cash and cash equivalents of $135.0 million, partially offset by increases in available-for-sale debt securities of $73.9 million and loans, including loans held for sale, of $51.6 million as compared to year-end.

Total liabilities were $3.44 billion at June 30, 2026, a decrease of $18.2 million from $3.46 billion at December 31, 2025. The decrease in total liabilities primarily related to an $11.5 million decrease in total deposits and a $6.9 million decrease in accrued interest and other liabilities primarily due to the settlement of accrued expenses.

Shareholders’ equity was $586.6 million at June 30, 2026, an increase of $10.1 million from $576.6 million at December 31, 2025. The increase in shareholders’ equity was primarily driven by $28.1 million of net income, $2.7 million related to stock-based compensation activity, partially offset by a $3.7 million increase in net of tax unrealized losses on available-for-sale debt securities, the repurchase of common stock in settlement of restricted stock units of $1.5 million, common stock dividends of $6.5 million and the repurchase of common stock under the Company’s share repurchase program of $9.4 million during the six months ended June 30, 2026.

Debt Securities

Our debt securities portfolio consists of both held-to-maturity and available-for-sale debt securities aggregating $361.6 million and $287.8 million at June 30, 2026 and December 31, 2025, respectively. The $73.7 million increase in debt securities was primarily related to purchases of available-for-sale securities, partially offset by increases in net unrealized losses, and paydowns. There were no maturities or calls of debt securities during the six months ended ended June 30, 2026. Our held-to-maturity debt securities and available-for-sale debt securities represented 1.31% and 7.67%, respectively, of total assets at June 30, 2026, compared to 1.31% and 5.82%, respectively, at December 31, 2025.

During the six months ended June 30, 2026, there were no transfers between held-to-maturity and available-for-sale debt securities.

At June 30, 2026 and December 31, 2025, available-for-sale debt securities with an amortized cost of $85.7 million and $27.6 million, respectively, were pledged to the Federal Reserve Bank (“Federal Reserve”) as collateral for a secured public deposits and for other purposes as required by law or contract provisions, in addition to held-to-maturity debt securities with an amortized cost of $52.8 million and $52.9 million, respectively, pledged as collateral for a secured line of credit with the Federal Reserve. At June 30, 2026, we also pledged $14.3 million available-for-sale debt securities to another financial institution to support the collateralization requirement against certain customers’ standby lines of credit.

Held-to-Maturity Debt Securities

The amortized cost of held-to-maturity debt securities and their approximate fair values at June 30, 2026 and December 31, 2025 were as follows:

At June 30, 2026, we had 61 held-to-maturity debt securities in a gross unrecognized loss position with an amortized cost basis of $52.8 million with pre-tax unrecognized losses of $3.7 million, compared to 61 held-to-maturity debt securities with an amortized cost basis of $52.9 million with pre-tax unrecognized losses of $3.6 million at December 31, 2025. The effective duration of the held-to-maturity debt securities was 5.71 years and 5.94 years at June 30, 2026 and December 31, 2025, respectively. We have the intent and ability to hold the securities classified as held to maturity until they mature, at which time we will receive full value for the securities.

All held-to-maturity debt securities were municipal securities, and historically have had limited credit loss experience. At June 30, 2026 and December 31, 2025, the total fair value of taxable municipal and tax exempt bank-qualified municipal securities were $482 thousand and $492 thousand, respectively, and $48.6 million and $48.8 million, respectively. At June 30, 2026 and December 31, 2025, the total held-to-maturity debt securities rated AA and above was $45.8 million and $46.0 million, respectively, and rated AA- was $3.3 million and $3.3 million, respectively. Accordingly, we applied a zero credit loss assumption for these securities and no allowance for credit loss was recorded as of June 30, 2026 and December 31, 2025.

Available-for-Sale Debt Securities

The amortized cost of available-for-sale debt securities and their approximate fair values at June 30, 2026 and December 31, 2025 were as follows:

The estimated fair value of available-for-sale debt securities was $308.8 million at June 30, 2026, an increase of $73.9 million, from $234.9 million at December 31, 2025. The increase was primarily due to purchases of $93.6 million, partially offset by fair value market adjustments of $5.2 million, and principal reductions and amortization of discounts and premiums aggregating to $14.5 million.

At June 30, 2026, we had 112 available-for-sale debt securities in a gross unrealized loss position with an amortized cost basis and fair value of $247.3 million and $238.8 million, respectively, with pre-tax unrealized losses of $8.5 million, compared to 78 available-for-sale debt securities with an amortized cost basis and fair value of $121.9 million and $117.1 million, respectively with pre-tax unrealized holding losses of $4.8 million at December 31, 2025. The net of tax unrealized loss on available-for-sale debt securities is reflected in accumulated other comprehensive loss, net of tax. The effective duration of this portfolio was 5.24 years and 5.21 years at June 30, 2026 and December 31, 2025, 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 decrease and, consequently, the fair value of our securities may also decrease. The 10-Year Treasury Bond was approximately 4.4% at the end of June 30, 2026, compared to 4.2% at December 31, 2025. The 10‑Year Treasury yield increased slightly during the first half of 2026 due to a combination of inflation dynamics, interest‑rate expectations, and term‑premium pressures, rather than a signal of strong economic acceleration, resulted in an increase in the net unrealized losses on our debt securities at June 30, 2026. The changes in the net unrealized losses on our available-for-sale debt securities would affect our total and tangible shareholders’ equity.

We determined that the unrealized losses related to each available-for-sale debt security at June 30, 2026 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 June 30, 2026 and December 31, 2025, the total fair value of taxable municipal debt securities was $934 thousand and $938 thousand, respectively. All of these available-for-sale municipal debt securities were rated AA and above at June 30, 2026 and December 31, 2025. Accordingly, we applied a zero credit loss assumption for these securities and no ACL was recorded as of June 30, 2026 and December 31, 2025.

The following table presents the amortized cost and weighted average yields using amortized cost of held-to-maturity debt securities as of June 30, 2026, based on the contractual maturity dates:

The following table presents the fair value and weighted average yields using amortized cost of available-for-sale debt securities as of June 30, 2026, based on the contractual maturity dates:

Loans Held for Sale

At June 30, 2026, the Company had loans held for sale totaling $15.8 million, consisting of consumer solar loans. At December 31, 2025, loans held for sale totaled $25.1 million, consisting of $7.8 million of SBA 7(a) loans and $17.3 million of consumer solar loans transferred from loans held for investment. The Company accounts for loans held for sale at the lower of carrying value or fair value. At June 30, 2026 and December 31, 2025, the fair value of loans held for sale totaled $15.8 million and $25.6 million, respectively. During the three and six months ended June 30, 2026, the Company transferred $7.4 million of SBA 7(a) loans from held for sale to held for investment at net amortized cost.

The Company recorded zero and $266 thousand in valuation write-downs related to its consumer solar loans during the three and six months ended June 30, 2026. There were no comparable valuation write-downs for the three and six months ended June 30, 2025.

Loans Held for Investment (“LHFI”)

The composition of our loans held for investment at June 30, 2026 and December 31, 2025 was as follows:

(1) LHFI includes net unearned fees of $2.3 million and $2.8 million and net unearned discounts of $24.8 million and $31.3 million at June 30, 2026 and December 31, 2025, respectively. We recognized $7.9 million and $11.7 million in interest accretion of net deferred loan fees and net discounts on acquired loans for the six months ended June 30, 2026 and 2025, respectively.

Total LHFI were $3.09 billion, or 76.9% of total assets, at June 30, 2026, an increase of $60.9 million from $3.03 billion, or 75.2% of total assets, at December 31, 2025. The increase during the six months ended June 30, 2026 was partly attributable to organic loan growth, partially offset by our derisking strategy through decreasing our criticized loans. During the six months ended June 30, 2026, loan originations totaled $344.1 million and $7.4 million of SBA 7(a) loans were transferred from loans held for sale to loans held for investment at net amortized cost, partially offset by net paydowns of $9.9 million, payoffs of $271.9 million, and a loan transferred to OREO of $8.6 million.

LHFI secured by real estate, defined as construction and land development loans and real estate - other loans, increased by $41.1 million to $2.47 billion at June 30, 2026. The increase in LHFI secured by real estate was primarily driven by a $86.5 million increase in commercial real estate and other loans, partially offset by a $2.6 million decrease in 1-4 family residential loans, a $37.8 million decrease in multifamily residential loans and a $5.1 million decrease in construction and land development loans.

Commercial and industrial loans were $625.2 million at June 30, 2026, an increase of $19.4 million from $605.9 million at December 31, 2025. The increase in commercial and industrial loans during the six months ended June 30, 2026 was primarily attributable to originations of $69.6 million, including $26.5 million of short-term participation purchases in fully collateralized mortgage loans, and the transfer of $7.4 million of SBA 7(a) loans from loans held for sale to loans held for investment at net amortized cost. These increases were partially offset by $48.8 million loan payoffs, and $8.9 million in net paydowns. Our commercial and industrial includes

loans to non-depository financial institutions (“NDFIs”) totaling approximately $83.2 million at June 30, 2026, which included $26.5 million aforementioned short-term participation purchases in fully collateralized mortgage loans purchased during the second quarter of 2026, and $38.6 million NDFIs at December 31, 2025.

LHFI Maturities

The following table sets forth the amounts of gross LHFI, by maturity at June 30, 2026:

The following table sets forth the amounts of gross LHFI, due after one year, presented by fixed or floating interest rates at June 30, 2026:

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 61.3% of our total loan portfolio, including loans held for sale, was comprised of commercial real estate loans as of June 30, 2026 as presented below:

(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 June 30, 2026, and collateral value at origination or renewal.

(3) Other includes gas station, mobile home park, residential care and retirement properties.

The following table presents the percentages of our commercial real estate loans broken out by occupancy as of June 30, 2026:

(1) Balances exclude farmland loans and include 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 June 30, 2026:

(1) Weighted average LTV is based on current loan balance as of June 30, 2026, and collateral value at origination or renewal.

Delinquent LHFI

There were $4.9 million of LHFI past due loans still accruing at June 30, 2026, representing 0.16% of total LHFI, compared to 0.49% at December 31, 2025. Early stage delinquencies (accruing loans 30-89 days past due) of $4.9 million at June 30, 2026 decreased $9.8 million from December 31, 2025, and the change was largely driven by a few isolated loans. The decrease during the six months ended June 30, 2026 was primarily due to an $8.0 million multifamily loan that was repaid in full, a $5.8 million commercial real estate loan sold with a discount that resulted in a $127 thousand charge-off, a charge-off of a $20 thousand commercial and industrial loan, and an $824 thousand commercial and industrial loan that was brought current, partially offset by $4.9 million of loans that became delinquent during the second quarter of 2026.

There were no LHFI that were over 90 days past due that were accruing interest at June 30, 2026 and December 31, 2025.

A summary of LHFI past due loans, loans still accruing and nonaccrual loans as of June 30, 2026 and December 31, 2025 follows:

Total LHFI nonaccrual loans decreased $7.2 million during the six months ended June 30, 2026 to $8.9 million. The decrease was primarily driven by the transfer of an $8.6 million construction loan secured by a property for a single-family residence to OREO, net following foreclosure in the first quarter of 2026, $1.2 million of paydowns on existing LHFI nonaccrual loans, partially offset by the downgrade of a 1-4 family residential investment loan with a net carrying value of $2.7 million to nonaccrual status during the second quarter of 2026.

Three nonaccrual commercial real estate loans from two borrower relationships that were downgraded to nonaccrual status during the first quarter of 2026 were resolved in the second quarter of 2026. The resolutions included the full repayment of two loans with a combined net carrying value of $17.8 million and the discounted note sale of a $5.7 million loan, which resulted in a $127 thousand charge-off.

The following table presents the risk categories for total LHFI by class of loans as of June 30, 2026 and December 31, 2025:

Special mention loans decreased by $23.8 million during the six months ended June 30, 2026 to $48.6 million. The decrease in the special mention loans was due mostly to $28.6 million of loans downgraded to substandard, including $17.8 million related to the aforementioned two commercial real estate loans downgraded to substandard nonaccrual that were resolved in the second quarter of 2026, coupled with $11.7 million in payoffs, $1.0 million in upgrades to pass rating and $285 thousand in net paydowns, partially offset by $17.8 million of loans downgraded from a pass rating.

Substandard loans increased by $3.5 million during the six months ended June 30, 2026 to $64.2 million. The increase in the substandard loans was due primarily to $14.9 million in downgrades from pass rating to substandard, and $10.8 million in downgrades from special mention to substandard, partially offset by the transfer of an $8.6 million construction loan securing on a property for a single-family residence to OREO, net following foreclosure in the first quarter of 2026, $6.0 million in loan payoffs, $4.2 million in loans upgraded to a pass rating, and the $3.4 million in net paydowns from existing substandard loans.

There were no loans classified as doubtful or loss loans at June 30, 2026 and December 31, 2025.

Loan Modifications

We had five loan modifications with borrowers that are experiencing financial difficulty that were modified as of June 30, 2026 totaling $18.5 million. During the six months ended June 30, 2026, we modified one owner occupied CRE loan that included a combination of term extension and rate reduction. We modified one nonowner occupied CRE loan that included a term extension. We modified three C&I loans that included a combination of term extension and rate reduction. All loans were current as of June 30, 2026. These modifications allow the borrowers short-term cash relief to allow them to improve their financial condition.

At December 31, 2025, we had 19 loan modifications with borrowers that are experiencing financial difficulty totaling $54.4 million, of which $37.3 million of these loans are current and $8.0 million of a multifamily loan in early stage delinquency and fully repaid in January 2026. During the year ended December 31, 2025, we modified three owner occupied CRE loans that included a combination of partial payment delay and maturity date extension. We modified one non owner occupied CRE loan that included term extension. We modified 15 C&I loans: eight that included term extensions, and five that included payment deferments. We modified one construction loan and one multifamily loan included a combination of maturity date extension and rate reduction. These modifications allow the borrowers short-term cash relief to allow them to improve their financial condition. Refer to Note 3 - Loans and Allowances for Credit Losses - Modified Loans to Borrowers Experiencing Financial Difficulty of the Notes to Consolidated Financial Statements included in Part I - Financial Information - Item 1. Financial Statements of this filing for more information regarding loan modifications.

Nonperforming 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 June 30, 2026 and December 31, 2025:

Allowance for Credit Losses

Our ACL is an estimate of expected lifetime credit losses for loans held for investment at the time of origination or acquisition and is maintained at a level deemed appropriate by management to provide for expected lifetime credit losses in the portfolio. The ACL consists of: (i) a specific allowance established for CECL on loans individually evaluated, (ii) a quantitative allowance for current expected loan losses based on the portfolio and expected economic conditions over a reasonable and supportable forecast period that reverts back to long-term trends to cover the expected life of the loan, (iii) a qualitative allowance including management judgment to capture factors and trends that are not adequately reflected in the quantitative allowance, and (iv) the ACL for off-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 $9.7 million and $9.8 million at June 30, 2026 and December 31, 2025, 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:

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:

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 FOMC when determining the scenario weighting. At June 30, 2026 and December 31, 2025, we used a probability-weighted two-scenario forecast, representing a baseline scenario and one downside scenario, to estimate the ACL. At June 30, 2026 and December 31, 2025, we used the scenario weightings and assigned 80% to the baseline scenario and 20% to the downside scenario, based primarily on Moody’s June 2026 forecasts, supplemented by other economic outlooks and FOMC guidance. Compared with Moody’s March 2026, its June 2026 forecast reflected a more adverse outlook characterized by slower GDP growth, higher inflation, no expected Federal Reserve rate cuts, and a prolonged higher-for-longer interest rate environment. While the Moody’s S2 downside scenario shifted toward a more stagflationary and prolonged recession profile, management

concluded that the baseline scenario remained the most likely outcome following the FOMC’s June 2026 decision to maintain interest rates. We opt to utilize solely the base-case scenario for the ACL model; however, given the ongoing uncertainty surrounding inflation, tariffs, geopolitical risks, and slowing economic growth, we believe it is prudent to assign a weighting to a downside scenario (S2) that considers the potential for rising inflation. Inflation is a difficult economic variable to predict, as it is subject to a variety of factors and there are limited tools to control it. Incorporating the S2 scenario in our ACL model provides a hedge against the potential for increasing inflation in an uncertain economic environment. During the second quarter of 2026, California-specific forecasts generally became more pessimistic, particularly for GSP, construction activity, and interest rates, which are expected to increase ACL pressure, while changes in other key economic variables had a mixed impact on the reserve estimate.

We used economic forecasts released by Moody’s Analytics in the third week of June 2026 to update our ACL calculations for June 30, 2026. 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 $34.9 million at June 30, 2026, compared to $34.3 million at December 31, 2025. The $512 thousand increase in the ALL during the six months ended June 30, 2026 was driven by a number of factors, including a $1.7 million increase related to criticized loans, including an $814 thousand increase resulting from the annual update to criticized loan loss rates and an $890 thousand increase in substandard loan balances. In addition, changes in the loans held for investment volume and mix increased the ALL by $829 thousand. These increases were partially offset by changes in qualitative risk factors that decreased the ALL by $1.2 million and the economic outlook, and the historical prepayment and curtailment rates analysis that decreased the ALL by $796 thousand.

At June 30, 2026, our ratio of ALL to total loans held for investment was 1.13%, which was comparable to the 1.13% at December 31, 2025.

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 $7.0 million, or an additional 23 basis points to the ALL to total loans held for investment ratio. This sensitivity analysis and related impact on the ACL is a hypothetical analysis and is not intended to represent management’s judgments or assumptions of qualitative loss factors that were utilized at June 30, 2026.

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

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 was $1.8 million and $2.1 million at June 30, 2026 and December 31, 2025, respectively. Total unfunded loan commitments increased modestly by $10.5 million to $896.9 million at June 30, 2026, from $886.4 million at December 31, 2025.

Goodwill and Intangibles Assets, Net

Goodwill totaled $110.9 million at both June 30, 2026 and December 31, 2025. On an ongoing basis, we qualitatively assess whether current events or circumstances warrant the need for an interim quantitative assessment of goodwill impairment. We also monitor fluctuations in our stock price. At June 30, 2026, we determined that it is not likely that the fair value of the reporting unit is less than its carrying amount.

Intangible assets totaled $16.9 million and $18.5 million at June 30, 2026 and December 31, 2025, respectively, and were comprised of the following:

The $1.6 million decrease in the intangible assets between periods was the result of amortization during the period. At June 30, 2026, the intangible assets had a weighted average remaining amortization period of 7.9 years. Refer to Note 4 - Goodwill and Other Intangible Assets of the Notes to Consolidated Financial Statements included in Part I - Financial Information - Item 1. Financial Statements of this filing for more information regarding business combinations and related activity.

Deposits

The following table presents the composition of deposits, related percentage of total deposits, and spot rates, as of June 30, 2026 and December 31, 2025:

(1) Weighted average interest rates at June 30, 2026 and December 31, 2025.

(2) Included reciprocal deposit products of $675.8 million and $696.5 million at June 30, 2026 and December 31, 2025, respectively.

(3) Included reciprocal deposit products of $2.8 million and $1.7 million at June 30, 2026 and December 31, 2025, respectively.

(4) Included CDARS deposits of $26.6 million and $45.4 million at June 30, 2026 and December 31, 2025, respectively.

We offer our depositors access to the Certificate of Deposit Account Registry Service (“CDARS”) and IntraFi Network Insured Cash Sweep (“ICS”) . 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 $5.00 billion.

Our total reciprocal deposits decreased to $705.2 million, or 21.0% of total deposits and 20.7% of the Bank’s total liabilities at June 30, 2026, compared to $743.6 million, or 22.1% of total deposits at December 31, 2025. The excess over 20% increased our wholesale funding to total assets ratio and net non-core funding dependence ratio. These two ratios were within the Bank's internal policy limit.

Total deposits were $3.36 billion at June 30, 2026, a decrease of $11.5 million from $3.37 billion at December 31, 2025. During the six months ended June 30, 2026, there was a $148 thousand decrease in interest-bearing NOW accounts, excluding reciprocal deposits, a $38.4 million decrease in reciprocal deposits, $34.1 million decrease in money market and savings accounts, excluding reciprocal deposits, and an $13.6 million decrease in non-brokered time deposits, excluding CDARS, and a $3.8 million decrease in brokered time deposits, partially offset by a $78.6 million increase in noninterest-bearing demand deposits, excluding reciprocal deposits.

At June 30, 2026, noninterest-bearing demand deposits totaled $1.26 billion and represented 37.4% of total deposits, compared to $1.18 billion or 35.0% at December 31, 2025. At June 30, 2026 and December 31,

2025, total deposits exceeding FDIC deposit insured limits were $1.70 billion, or 50% of total deposits and $1.66 billion, or 49% of total deposits, respectively.

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

The decrease in the weighted average rate on deposits was primarily due to repricing deposits in the lower interest rate environment and peer bank deposit competition during the six months ended June 30, 2026.

The following table sets forth the maturities of time deposits at June 30, 2026:

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

Borrowings

Total borrowings increased $779 thousand to $34.6 million at June 30, 2026 from $33.8 million at December 31, 2025. The increase was attributable to the amortization expense of the purchase accounting discounts associated with the acquired subordinated debt. Refer to Note 6 - Borrowing Arrangements of the Notes to Consolidated Financial Statements included in Part I - Financial Information, Part 1. Financial Statements of this filing. We intend to redeem all $35.0 million of our 3.50% fixed-to-floating rate subordinated debt due September 1, 2031, at par value during the third quarter of 2026. Starting in September 2026, the interest rate on that subordinated debt is scheduled to transition from a fixed rate to a quarterly variable rate equal to the then current 90-day SOFR plus 2.86%, through the contractual maturity date of September 1, 2031.

A summary of outstanding borrowings, and related information, as of June 30, 2026 and December 31, 2025 follows:

(1) Amount includes net unamortized fair value adjustments.

(2) Average balance outstanding includes net unamortized average fair value adjustments during the periods presented.

(3) Weighted average interest rate includes fair value adjustments during the periods presented.

Shareholders’ Equity

Total shareholders’ equity was $586.6 million at June 30, 2026, compared to $576.6 million at December 31, 2025. The $10.1 million increase between periods was primarily due to net income of $28.1 million, stock-based compensation expense of $2.7 million, and stock options exercised of $316 thousand, partially offset by an increase in net of tax of unrealized losses on debt securities available-for-sale of $3.7 million, the repurchase of common stock in settlement of restricted stock units of $1.5 million, common stock dividends of $6.5 million, and the repurchase of shares of common stock under our share repurchase plan of $9.4 million.

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

There were 512,509 shares repurchased at a weighted average market price of $18.36 and a total cost of $9.4 million under this share repurchase plan during the six months ended June 30, 2026. The remaining maximum number of shares authorized to be repurchased under this program was 875,563 shares at June 30, 2026.

Tangible book value per common share at June 30, 2026 was $14.29, compared with $13.79 at December 31, 2025. The $0.50 increase in tangible book value per common share during the six months ended June 30, 2026 was primarily the result of the net income during the period, and the impact of share-based compensation activity, partially offset by other comprehensive loss related to changes in unrealized losses, net of taxes on available-for-sale debt securities, repurchases of common stock under our share repurchase plan and

common stock dividends. 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.

The Company’s leverage capital ratio and total risk-based capital ratio were 11.97% and 15.00%, respectively, at June 30, 2026. The Bank’s leverage capital ratio and total risk-based capital ratio were 12.80% and 14.94%, respectively, at June 30, 2026.

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 (federal funds sold, short term interest-bearing due from banks, fully disbursed loans held for sale, 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 13.0% at June 30, 2026 and 16.9% at December 31, 2025.

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

California Bank of Commerce, N.A.

The Bank’s primary sources of liquidity are derived from deposits from customers, principal and interest payments on loans and debt securities, FHLB advances and other borrowings. The Bank’s primary uses of liquidity include customer withdrawals of deposits, extensions of credit to borrowers, operating expenses, and repayment of FHLB advances and other borrowings. While maturities and scheduled amortization of loans and debt securities are predictable sources of funds, deposit flows and loan prepayments are greatly influenced by market interest rates, economic conditions, and competition. Dividends from the Bank to the holding company depend upon the Bank's earnings, financial position, regulatory standing, the ability to meet current and anticipated regulatory capital requirements, and other factors deemed relevant by our Board of Directors. The Bank did not pay any dividends to the holding company during the three and six months ended June 30, 2026, and paid $60.0 million in dividends to the holding company during 2025.

At June 30, 2026, we had a secured line of credit of $784.8 million from the FHLB, of which $719.8 million was available. This secured borrowing arrangement is collateralized under a blanket lien on qualifying real estate loans and is subject to us providing adequate collateral and continued compliance with the Advances and Security Agreement and other eligibility requirements established by the FHLB. At June 30, 2026, we had pledged $2.25 billion of qualifying loans with the FHLB under a blanket lien, of which an unpaid principal balance of $1.42 billion was considered as eligible collateral under this secured borrowing arrangement. In addition, at June 30, 2026, we used $65.0 million of our secured FHLB borrowing capacity by having the FHLB issue letters of credit to meet collateral requirements for deposits from the State of California and other public agencies. There were no borrowings at June 30, 2026 and December 31, 2025.

At June 30, 2026, we had credit availability of $329.7 million at the Federal Reserve discount window to the extent of collateral pledged. At June 30, 2026, we had pledged our held-to-maturity debt securities with an amortized cost of $52.8 million, and qualifying loans with an unpaid principal balance of $323.7 million as collateral through the Borrower-in-Custody (“BIC”) program. The Company also pledged available-for-sale debt securities with an amortized cost of $85.7 million as collateral for secured public deposits and for other purposes as required by law or contract provisions. We had no discount window borrowings at June 30, 2026 and

December 31, 2025.

We have four overnight unsecured credit lines from correspondent banks totaling $90.5 million at June 30, 2026. The lines are subject to annual review. There were no outstanding borrowings under these lines at June 30, 2026 and December 31, 2025.

Total Bank’s available borrowing capacity was $1.14 billion at June 30, 2026. Additionally, the Bank had unpledged liquid securities at fair value of approximately $211.0 million and cash and cash equivalents of $264.0 million at June 30, 2026.

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 June 30, 2026 and December 31, 2025, the cash and due from banks was $4.9 million and $21.4 million, respectively.

In connection with the merger with the predecessor California BanCorp, the Company assumed $35 million in subordinated debt, with a fixed interest rate of 3.50% and a stated maturity of September 1, 2031. Beginning September 1, 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 June 30, 2026 and December 31, 2025, the net unamortized fair value discount was $389 thousand and $1.2 million, respectively. The net unamortized fair value discount is netted against the balance and recorded in borrowings in the consolidated balance sheets. The amortization of the fair value discount is recorded in interest expense in the consolidated statements of operations. At June 30, 2026, the Company was in compliance with all covenants and terms of these notes.

The Company intends to redeem all $35.0 million of its 3.50% fixed-to-floating rate subordinated debt due September 1, 2031, at par value during the third quarter of 2026. Starting in September 2026, the interest rate on that subordinated debt is scheduled to transition from a fixed rate to a quarterly variable rate equal to the then current 90-day SOFR plus 2.86%, through the contractual maturity date of September 1, 2031.

At June 30, 2026, consolidated cash and cash equivalents totaled $265.0 million, a decrease of $135.0 million from $399.9 million at December 31, 2025. The decrease in cash and cash equivalents is the result of $23.4 million in net cash provided by operating cash flows, offset by $129.8 million net cash used in investing cash flows and $28.6 million of net cash flows used in financing cash flows.

Operating activities provided $23.4 million and $20.4 million for the six months ended June 30, 2026 and 2025. The primary sources of funds were net income from operations and adjustments to net income, such as other intangible amortization resulting from the prior merger, deferred income taxes, stock-based compensation, the accretion of net discount and deferred loan fees, and provision for (reversal of) credit losses.

Investing activities used $129.8 million for the six months ended June 30, 2026 and provided $127.1 million for the six months ended 2025. The $256.9 million decrease in investing cash flows was primarily due to an increase in cash used to purchase available-for-sale debt securities, restricted stocks and other equity purchases totaling $26.6 million and a decrease in net loan repayments of $219.1 million and a decrease in proceeds from debt securities maturities and paydowns of $8.4 million.

Financing activities used $28.6 million and $105.6 million for the six months ended June 30, 2026 and 2025. The $77.0 million decrease in financing cash flows was primarily due to a $75.0 million net decrease in deposit outflows and $215 thousand related to proceeds from stock option exercise, partially offset by $9.4 million related to repurchase of common shares under the authorized share repurchase plan, $6.5 million related to dividends on common stock.

We believe that our liquidity sources are stable and are adequate to meet our day-to-day cash flow requirements as of June 30, 2026.

Commitments and Contractual Obligations

The following table presents information regarding our outstanding commitments and contractual obligations as of June 30, 2026:

(1) Amounts exclude net unamortized issuance costs and fair value adjustments. We intend to redeem the $35.0 million fixed-to-floating subordinated debt at par during the third quarter of 2026.

At June 30, 2026 and December 31, 2025, we also had unfunded commitments of $7.0 million and $7.9 million, respectively, for investments in other equity investments.

Capital Resources

Maintaining adequate capital is always an important objective of the Company. Abundant and high quality capital helps weather economic downturns and market volatility, protect depositors’ funds, and support growth, such as expanding the operations or making acquisitions. Capital is also a source of funds for loan demand and enables the Company to effectively manage its assets and liabilities. We are authorized to issue 50,000,000 shares of common stock of which 32,110,117 were issued and outstanding as of June 30, 2026. We are also authorized to issue 50,000,000 shares of preferred stock, of which none have been issued as of June 30, 2026.

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.

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, which ended on December 31, 2025.

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

Basel III, the comprehensive regulatory capital rules for U.S. banking organizations, requires all banking organizations to maintain a capital conservation buffer above the minimum risk-based capital requirements in

order to avoid certain limitations on capital distributions, stock repurchases and discretionary bonus payments to executive officers. The capital conservation buffer is exclusively comprised of common equity Tier 1 capital, and it applies to each of the three risk-based capital ratios but not to the leverage ratio. Effective January 1, 2019, the capital conservation buffer increased by 0.625% to its fully phased-in 2.5%, such that the common equity Tier 1, Tier 1 and total capital ratio minimums inclusive of the capital conservation buffers were 7.0%, 8.5%, and 10.5% at June 30, 2024. At June 30, 2026, 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 June 30, 2026, the Company and the Bank continued to exceed the regulatory capital minimum requirements, and the Bank continued to exceed the regulatory capital requirements to be considered “well capitalized” under the regulatory framework for prompt corrective action (“PCA”). Management believes, as of June 30, 2026 and December 31, 2025, that the Company and the Bank met all capital adequacy requirements to which each is subject.

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

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 any dividends to the Company during the three and six months ended June 30, 2026. The Bank paid $30.0 million in dividends to the Company during the three and six months ended June 30, 2025 and $60.0 million in dividends to the Company during the twelve months ended December 31, 2025.

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 six months ended June 30, 2026, we declared $3.2 million and $6.5 million, respectively, in cash dividends, or $0.10 and $0.20 per share, on our common stock. No cash dividends were declared to shareholders by the Company during the three and six months ended June 30, 2025.