Bank of Marin Bancorp (BMRC)

CIK: 0001403475. SIC: 6022 State Commercial Banks. Latest 10-K as of: 2026-03-13.

SIC breadcrumb: Finance, Insurance, And Real Estate > Depository Institutions > SIC 6022 State Commercial Banks

SEC company page: https://www.sec.gov/edgar/browse/?CIK=1403475. Latest filing source: 0001403475-26-000018.

Selected Fundamentals

Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-03-13. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001403475.json. Derived margins, ratios, and free cash flow are computed from the extracted annual SEC facts.

Flow metrics use full-year FY periods from 10-K/10-K/A filings; balance-sheet metrics use FY-end instants. Free cash flow = operating cash flow - capital expenditures. Missing metrics are omitted rather than fabricated.

Ratios

ROE and ROA use period-end equity/assets. Liabilities / equity uses total liabilities divided by stockholders' equity. Current ratio uses current assets divided by current liabilities when both are reported.

Financial Charts

Quarterly

Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-05-08. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001403475.json.

Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived.

Quarterly Charts

Macro Cross-References

• CPIAUCSL - Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
• UNRATE - Unemployment Rate
• FEDFUNDS - Federal Funds Effective Rate
• CES0500000003 - Average Hourly Earnings of All Employees, Total Private
• DFEDTARU - Federal Funds Target Range - Upper Limit
• DFEDTARL - Federal Funds Target Range - Lower Limit
• DGS3MO - Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity
• DGS2 - Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity
• DGS10 - Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
• DGS30 - Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity
• T10Y2Y - 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity
• CPILFESL - Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
• CPIUFDSL - Consumer Price Index for All Urban Consumers: Food
• CPIENGSL - Consumer Price Index for All Urban Consumers: Energy
• CUSR0000SAH1 - Consumer Price Index for All Urban Consumers: Shelter
• PCEPI - Personal Consumption Expenditures: Chain-type Price Index
• PCEPILFE - Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index
• PPIACO - Producer Price Index by Commodity: All Commodities
• T10YIE - 10-Year Breakeven Inflation Rate
• U6RATE - Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons
• PAYEMS - All Employees, Total Nonfarm
• CIVPART - Labor Force Participation Rate
• EMRATIO - Employment-Population Ratio
• UNEMPLOY - Unemployed
• CE16OV - Employment Level
• ICSA - Initial Claims
• JTSJOL - Job Openings: Total Nonfarm
• JTSQUR - Quits: Total Nonfarm
• GDPC1 - Real Gross Domestic Product
• A191RL1Q225SBEA - Real Gross Domestic Product: Percent Change from Preceding Period
• INDPRO - Industrial Production: Total Index
• TCU - Capacity Utilization: Total Index
• HOUST - New Privately-Owned Housing Units Started: Total Units
• PERMIT - New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units
• RSAFS - Advance Retail Sales: Retail Trade
• PCE - Personal Consumption Expenditures
• DSPIC96 - Real Disposable Personal Income
• PSAVERT - Personal Saving Rate
• M2SL - M2
• BOPGSTB - U.S. International Trade in Goods and Services: Balance
• MSPUS - Median Sales Price of Houses Sold for the United States
• HSN1F - New One Family Houses Sold: United States
• RHORUSQ156N - Homeownership Rate in the United States
• TTLCONS - Total Construction Spending: Total Construction in the United States
• RRVRUSQ156N - Rental Vacancy Rate in the United States
• TOTALSL - Total Consumer Credit Owned and Securitized
• REVOLSL - Revolving Consumer Credit Owned and Securitized
• DRCCLACBS - Delinquency Rate on Credit Card Loans, All Commercial Banks
• GDP - Gross Domestic Product
• GPDI - Gross Private Domestic Investment
• GCE - Government Consumption Expenditures and Gross Investment
• PCEC - Personal Consumption Expenditures
• NETEXP - Net Exports of Goods and Services
• GFDEBTN - Federal Debt: Total Public Debt
• GFDEGDQ188S - Federal Debt: Total Public Debt as Percent of Gross Domestic Product
• FYFSD - Federal Surplus or Deficit
• FGRECPT - Federal Government Current Receipts
• FGEXPND - Federal Government: Current Expenditures
• MANEMP - All Employees, Manufacturing
• USCONS - All Employees, Construction
• USTRADE - All Employees, Retail Trade
• USFIRE - All Employees, Financial Activities
• USGOVT - All Employees, Government
• AWHAETP - Average Weekly Hours of All Employees, Total Private
• DGORDER - Manufacturers' New Orders: Durable Goods
• NEWORDER - Manufacturers' New Orders: Nondefense Capital Goods Excluding Aircraft
• BUSINV - Total Business Inventories
• EXPGS - Exports of Goods and Services
• IMPGS - Imports of Goods and Services
• IR - Import Price Index (End Use): All Commodities
• PPIFIS - Producer Price Index by Commodity: Final Demand

Latest quarter (10-Q)

Latest 10-Q source: 0001403475-26-000028.

Extracted structurally from real Item 2 body heading to real Item 3/4 boundary. Confidence: high. Filing date: 2026-05-08. Report date: 2026-03-31.

ITEM 2.     Management’s Discussion and Analysis of Financial Condition and Results of Operations

Management's discussion of the financial condition and results of operations, which is unaudited, should be read in conjunction with the related unaudited consolidated interim financial statements in this Form 10-Q and with the audited consolidated financial statements and accompanying notes included in our 2025 Annual Report on Form 10-K. Average balances, including balances used in calculating certain financial ratios, are generally comprised of average daily balances.

Forward-Looking Statements

The discussion of financial results in this Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, (the "1933 Act") and Section 21E of the Securities Exchange Act of 1934, as amended, (the "1934 Act"). Those sections of the 1933 Act and 1934 Act provide a "safe harbor" for forward-looking statements to encourage companies to provide prospective information about their financial performance so long as they provide meaningful, cautionary statements identifying important factors that could cause actual results to differ significantly from projected results.

Our forward-looking statements include descriptions of plans or objectives of management for future operations, products or services, and forecasts of revenues, earnings or other measures of economic performance. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include the words "believe," "expect," "intend," "estimate" or words of similar meaning, or future or conditional verbs preceded by "will," "would," "should," "could" or "may."

Forward-looking statements are based on management's current expectations regarding economic, legislative, and regulatory issues that may impact Bancorp's earnings in future periods. Factors that could cause future results to vary materially from current management expectations include, but are not limited to, general economic conditions and the economic uncertainty in the United States and abroad, including economic or other disruptions to financial markets, acts of terrorism, war or other conflicts, impacts from inflation, supply chain disruptions, changes in interest rates (including the actions taken by the Federal Reserve to control inflation), California's unemployment rate, deposit flows, real estate values, and expected future cash flows on loans and securities; the impact of adverse developments at other banks, including bank failures, that impact general sentiment regarding the stability and liquidity of banks; costs or effects of acquisitions; competition; changes in accounting principles, policies or guidelines; changes in legislation or regulation; natural disasters (such as wildfires and earthquakes in our area); adverse weather conditions; interruptions of utility service in our markets for sustained periods; and other economic, competitive, governmental, regulatory and technological factors (including external fraud and cybersecurity threats) affecting our operations, pricing, products and services; and successful integration of acquisitions.

Important factors that could cause results or performance to differ materially from those expressed in our prior forward-looking statements are detailed in ITEM 1A, Risk Factors section of our 2025 Form 10-K as filed with the SEC, and ITEM 1A Risk Factors herein. Forward-looking statements speak only as of the date they are made. Bancorp undertakes no obligation to release publicly the result of any revisions to these forward-looking statements that may be made to reflect events or circumstances that occur after the date the forward-looking statements are made or to reflect the occurrence of unanticipated events.

Critical Accounting Estimates

Critical accounting estimates are those estimates made in accordance with generally accepted accounting principles that involve a significant level of estimation and uncertainty and have had or are reasonably likely to have a material impact on our financial condition and results of operations. We consider accounting estimates to be critical to our financial results if (i) the accounting estimate requires management to make assumptions about matters that are highly uncertain, (ii) management could have applied different assumptions during the reported period, and (iii) changes in the accounting estimate are reasonably likely to occur in the future and could have a material impact on our financial statements. Our critical estimates include: Allowance for Credit Losses on Loans and Unfunded Commitments, and Fair Value Measurements. Refer to Critical Accounting Estimates in Item 7 of our 2025 Form 10-K for more information.

Page-27

Executive Summary

Net income for the first quarter of 2026 was $8.5 million, compared to net income of $4.9 million for the same quarter in the prior year, and a quarterly loss of $39.5 million in the prior quarter. On a non-GAAP basis, excluding the losses on sale of securities of $69.5 million net of taxes, net income was $9.4 million for the prior quarter. Diluted earnings per share was $0.53 for the first quarter of 2026, compared to diluted earnings per share of $0.30 for the same quarter in the prior year. Diluted loss per share was $(2.49) for the prior quarter and on a non-GAAP basis, excluding the losses on sale of securities of $69.5 million net of taxes, diluted earnings per share was $0.59 for the prior quarter.

Comparable (non-GAAP) Excluding Loss on Sale of Securities

Three months ended

 (in thousands, except per share amounts; unaudited)

March 31, 2026

December 31, 2025

March 31, 2025

Pre-tax, pre-provision net income (loss)

Pre-tax, pre-provision net income (loss) (GAAP)

$

11,597 

$

(56,890)

$

6,556 

Comparable pre-tax, net income (non-GAAP)1

11,597 

12,576 

6,556 

Net income (loss)

Net income (loss) (GAAP)

8,510 

(39,541)

4,876 

Comparable net income (non-GAAP)1

8,510 

9,391 

4,876 

Diluted earnings (loss) per share

Diluted earnings (loss) per share (GAAP)

0.53 

(2.49)

0.30 

Comparable diluted earnings per share (non-GAAP)1

0.53 

0.59 

0.30 

1 Non-GAAP ratios exclude the loss on security sales, and all other factors unchanged. See complete Reconciliation of GAAP and Non-GAAP Financial Measures below

Related tax benefit calculated using blended statutory rate of 29.56%

The following are highlights of our operating and financial performance for the periods presented. Additional performance details can be found on the pages that follow.

•The tax-equivalent net interest margin increased to 3.24% in the first quarter of 2026 from 3.18% in the prior quarter, an improvement of 6 basis points. The increase was largely due to the effects of the securities repositioning in the fourth quarter of 2025, which provided a 21 basis point increase in annualized net interest margin for the first quarter over the prior quarter. The tax-equivalent net interest margin for the three months ended March 31, 2026 improved 47 basis points over the same period of the prior year due to the increase in deposits at a decreased average cost, higher average loan balances and rates, and the favorable impact of the securities repositioned in the second and fourth quarters of 2025, which resulted in higher yielding assets during the three months ended March 31, 2026.

•Despite a reduction in the average cost of interest bearing deposits from 2.16% to 2.10% in the first quarter of 2026 compared to the prior quarter, the average cost of total deposits remained flat at 1.35% due to a reduction in non-interest bearing deposits. Non-interest bearing deposits continued to make up a strong portion of total deposits at 35.9% as of March 31, 2026, compared to 36.7% as of December 31, 2025.

•Total deposits were $3.428 billion as of March 31, 2026, compared to $3.416 billion as of December 31, 2025, an increase of $12.6 million, due largely to inflows from existing customers as well as new relationships to the Bank in the first quarter. This growth excludes the additional $27.3 million in one-way sell deposits that were held off-balance sheet at March 31, 2026.

•Net available contingent funding sources, including unrestricted cash, unencumbered available-for-sale securities and total available borrowing capacity was $2.185 billion, or 64% of total deposits and 221% of estimated uninsured and/or uncollateralized deposits as of March 31, 2026.

•Loans totaled $2.116 billion as of March 31, 2026, a decrease of $5.1 million from December 31, 2025. Loan fundings during first quarter of 2026 were $60.8 million compared to $47.4 million in the first quarter of 2025.

Page-28

•During the quarter, we worked diligently to improve our credit quality. We sold our longest tenured classified and non-accrual loans totaling $16.3 million, which were downgraded to substandard in 2021, and moved to non-accrual in 2024. At that time, we took specific reserves of $7.3 million based on property valuations. The note sales proceeds validated our reserve assumptions, with the charge-offs equaling the specific amounts reserved. While other workouts were offset by new downgrades, the impact of the note sales on credit quality metrics was substantial: Non-accrual loans declined from 1.27% of assets to 0.41%, and the ratio of classified to total loans decreased from 1.51% to 0.85%. Notably, following the note sales virtually all remaining non-accrual balances are comprised of one non-owner occupied commercial real estate loan that has no loss expectations based on underlying valuation and cash flow.

•There was no provision for credit losses on loans in the first quarter of 2026 compared to a provision of $300 thousand in the prior quarter. The allowance for credit losses was 1.08% and 1.42% of total loans at March 31, 2026 and December 31, 2025, respectively due to the $7.2 million of charge‑offs taken against the specific reserves on the two loans sold, noted above. The charge-offs were fully offset by specific reserves already in place. All other factors considered, no provision was recorded for the period.

Performance and other financial ratios:

The following table summarizes GAAP and non-GAAP results for return on average assets ("ROA"), return on average equity ("ROE") and the efficiency ratio for comparable periods. All GAAP ratios were significantly impacted by the securities sales in the fourth quarter of 2025. Non-GAAP ratios exclude the loss on security sales, with all other factors unchanged. See Reconciliation of GAAP and Non-GAAP Financial Measures below.

Comparable (non-GAAP) Excluding Loss on Sale of Securities

Three months ended

 (unaudited)

March 31, 2026

December 31, 2025

March 31, 2025

Return on average assets

Return on average assets (GAAP)

0.87 

%

(4.00)

%

0.53 

%

Comparable return on average assets (non-GAAP)1

0.87 

%

0.95 

%

0.53 

%

Return on average equity

Return on average equity (GAAP)

8.67 

%

(36.79)

%

4.52 

%

Comparable return on average equity (non-GAAP)1

8.67 

%

8.74 

%

4.52 

%

Efficiency ratio

Efficiency ratio (GAAP)

66.03 

%

(54.31)

%

75.72 

%

Comparable efficiency ratio (non-GAAP)1

66.03 

%

61.42 

%

75.72 

%

1 Non-GAAP ratios exclude the loss on security sales, and all other factors unchanged. See complete Reconciliation of GAAP and Non-GAAP Financial Measures below

Related tax benefit calculated using blended statutory rate of 29.56%

•Return on average assets ("ROA") and return on average equity ("ROE") was 0.87%, and 8.67%, respectively, and increased on a GAAP basis from the prior quarter primarily due to increased net income. ROA and ROE on a non-GAAP basis both decreased slightly from the prior quarter mainly due to decreased non-GAAP income quarter over quarter. The efficiency ratio on a non-GAAP basis, from the prior quarter slightly worsened

[Excerpt truncated for page length; source filing is linked above.]

Latest 10-K MD&A

Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary. Confidence: high. Filing date: 2026-03-13. Report date: 2025-12-31.

ITEM 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of financial condition as of December 31, 2025 and 2024 and results of operations for each of the years in the three-year period ended December 31, 2025 should be read in conjunction with our consolidated financial statements and related notes thereto, included in Part II ITEM 8 of this report.

The Company restated its Consolidated Statements of Condition and revised its Consolidated Statements of Comprehensive (Loss) Income for the years ended December 31, 2024 and 2023, and the quarters ended September 30, 2025, June 30, 2025, March 31, 2025, September 30, 2024, June 30, 2024, and March 31, 2024, (the “Affected Periods”) for misstatements between the balance sheet and income statement that were determined, in the aggregate, to be material to previously issued financial statements. Generally, the restatements and revisions related to the misclassification of certain deposits and expenses related thereto as non-interest bearing deposits and non-interest expense when they should have been classified as interest bearing deposits and interest expense. See “Note 19, Restatement of Prior Period Financial Statements (Quarterly Information Unaudited)” in Item 8 of this Form 10-K, for additional information related to the restatement and revision, including descriptions of the misstatements and the impacts on our consolidated financial statements. All affected tables and narrative disclosures herein from the Affected Periods have likewise been corrected.

Forward-Looking Statements

The disclosures set forth in this item are qualified by important factors detailed in Part I captioned Forward-Looking Statements and ITEM 1A captioned Risk Factors of this report and other cautionary statements set forth elsewhere in the report.

Critical Accounting Estimates

Critical accounting estimates are those estimates made in accordance with generally accepted accounting principles that involve a significant level of estimation and uncertainty and have had or are reasonably likely to have a material impact on our financial condition and results of operations. We consider accounting estimates to be critical to our financial results if (i) the accounting estimate requires management to make assumptions about matters that are highly uncertain, (ii) management could have applied different assumptions during the reported period, and (iii) changes in the accounting estimate are reasonably likely to occur in the future and could have a material impact on our financial statements. Management has determined the following accounting estimates and related policies to be critical.

Allowance for Credit Losses on Loans and Unfunded Commitments

The allowance for credit losses on loans is a valuation account that is deducted from the amortized cost basis at the balance sheet date to present the net amount of loans expected to be collected. The allowance for credit losses on unfunded loan commitments is based on estimates of the probability that these commitments will be drawn upon according to historical utilization experience, expected loss severity, and loss rates as determined for pooled funded loans. The allowance for credit losses on unfunded commitments is a liability account included in interest payable and other liabilities. Management estimates these allowances quarterly using relevant available information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. Credit loss experience among the Bank and peer groups provides the basis for the estimation of expected credit losses.

The allowance for credit losses ("ACL") model utilizes a discounted cash flow ("DCF") method to measure the expected credit losses on loans collectively evaluated that are sub-segmented by loan pools with similar credit risk characteristics, which generally correspond to federal regulatory reporting codes. In addition, the DCF method incorporates assumptions for probability of default ("PD"), loss given default ("LGD"), and prepayments and curtailments over the contractual terms of the loans. Under the DCF method, the ACL reflects the difference between the amortized cost basis and the present value of the expected cash flows using the loan's effective rate.

29

Management considers whether adjustments to the quantitative portion of the ACL are needed for differences in segment-specific risk characteristics or to reflect the extent to which it expects current conditions and reasonable and supportable forecasts of economic conditions to differ from the conditions that existed during the historical period included in the development of PD and LGD.

Our allowance model is particularly sensitive to forecasted and seasonally-adjusted actual California unemployment rates, which was 5.5% at December 31, 2025 and December 31, 2024. The ACL model incorporates a one-year forecast. For periods beyond the forecast horizon, the economic factors revert to historical averages on a straight-line basis over a one-year period through the remaining lives of the loans. We performed a sensitivity analysis as of December 31, 2025, and estimated that a 100 basis point change (e.g., 5.5% to 6.5%) in the forecasted unemployment rates over the next four quarters would result in about a 5% change to our allowance for credit losses on loans. This impact does not consider changes to other assumptions for either the quantitative factors, such as probability of default, loss given default, loan mix or cash flows, prepayment/curtailment rates, and individually analyzed loans, or qualitative factors as discussed in Note 1 - Summary of Significant Accounting Policies. Additionally, because current economic conditions and forecasts can change, as future events are inherently difficult to predict, the estimated credit losses on loans and unfunded commitments could change significantly.

While we believe we use the best information available to determine the allowance for credit losses, our results of operations could be significantly affected if circumstances differ substantially from the assumptions used in determining the allowance. For information regarding critical estimates related to our allowance for credit losses methodology, the provision for credit losses, and risks to asset quality and lending activity, see ITEM 1A - Risk Factors, the Allowance for Credit Losses section in ITEM 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations, and Note 3 - Loans and Allowance for Credit Losses on Loans in ITEM 8 - Financial Statements and Supplementary Data of this Form 10-K.

Fair Value Measurements

We use fair value measurements to record certain financial instruments and to determine fair value disclosures. Available-for-sale securities and interest rate swap agreements are financial instruments recorded at fair value on a recurring basis. Additionally, we record at fair value other financial assets on a nonrecurring basis, such as collateral dependent loans and other real estate owned. These nonrecurring fair value adjustments typically involve write-downs of, or specific reserves against, individual assets. We group our assets and liabilities that are measured at fair value into three levels within the fair value hierarchy, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. The classification of assets and liabilities within the hierarchy is based on whether the inputs to the valuation methodology used in the measurement are observable or unobservable. Observable inputs reflect market-driven or market-based information obtained from independent sources, while unobservable inputs reflect our estimates about market data. The degree of management judgment involved in determining the fair value of a financial instrument is dependent upon the availability of quoted market prices or observable market data. For financial instruments that trade actively and have quoted market prices or observable market data, there is minimal subjectivity involved in measuring fair value. When observable market prices and data are not fully available, management judgment is necessary to estimate fair value. In addition, changes in market conditions may reduce the availability of quoted prices or observable data. Therefore, when market data is not available, we use valuation techniques that require more management judgment to estimate the appropriate fair value measurement. Fair value is discussed further in Note 1 - Summary of Significant Accounting Policies, and Note 9 - Fair Value of Assets and Liabilities in ITEM 8 - Financial Statements and Supplementary Data of this Form 10-K.

30

RESULTS OF OPERATIONS

Overview

This discussion should be read in conjunction with the consolidated financial statements and the related notes that appear elsewhere in this Form 10-K. As noted above, the Company restated its financial statements for the Affected Periods for misstatements between the balance sheet and income statement that were determined, in the aggregate, to be material to previously issued financial statements. Generally, the restatements related to the misclassification of certain deposits and expenses related thereto as non-interest bearing deposits and non-interest expense when they should have been classified as interest bearing deposits and interest expense. See below and “Note 19, Restatement of Prior Period Financial Statements (Quarterly Information Unaudited)” in Item 8 of this Form 10-K, for additional information related to the restatement, including descriptions of the misstatements and the impacts on our consolidated financial statements. All affected tables and narrative disclosure herein from the Affected Periods has likewise been corrected.

Financial Highlights

The following are highlights of our financial condition and results of operations. The data was derived from the audited consolidated financial statements of Bank of Marin Bancorp.

At December 31,

(dollars in thousands, except per share data)

2025

2024

Selected financial condition data:

Total assets

$

3,904,778 

$

3,701,335 

Investment securities

$

1,327,812 

$

1,266,733 

Loans, net of allowance for credit losses on loans

$

2,090,764 

$

2,052,600 

Deposits

$

3,415,542 

$

3,220,015 

Borrowings and other obligations

$

709 

$

154 

Subordinated notes, net

$

43,857 

$

— 

Stockholders' equity

$

394,654 

$

435,407 

Book value per share

$

24.51 

$

27.06 

Tangible book value per share

$

19.87 

$

22.37 

Asset quality ratios:

Allowance for credit losses to total loans

1.42 

%

1.47 

%

Allowance for credit losses to non-accrual loans

1.12x

0.90x

Non-accrual loans to total loans

1.27 

%

1.63 

%

Classified loans (graded substandard and doubtful) as a percentage of total loans

1.51 

%

2.17 

%

Capital ratios:

Equity to total assets

10.11 

%

11.76 

%

Tangible common equity to tangible assets

8.35 

%

9.93 

%

Total capital (to risk-weighted assets)

15.25 

%

16.54 

%

Tier 1 capital (to risk-weighted assets)

12.34 

%

15.32 

%

Tier 1 capital (to average assets)

8.26 

%

10.46 

%

Common equity Tier 1 capital (to risk-weighted assets)

12.34 

%

15.32 

%

Other data:

Loan-to-deposit ratio

62.09 

%

64.70 

%

Number of branches

27

27

Full-time equivalent employees

311

285

For the Years Ended December 31,

(dollars in thousands, except per share data)

2025

2024

2023

Selected operating data:

Net interest income

$

106,037 

$

91,582 

$

100,352 

Provision for credit losses on loans

375 

5,550 

2,575 

Provision for (reversal of) credit losses on unfunded loan commitments

185 

(233)

(342)

Non-interest income

(76,650)

(21,360)

4,989 

Non-interest expense

81,310 

78,740 

77,072 

Net (loss) income

(35,675)

(8,409)

19,895 

Net (loss) income per common share:

Basic

$

(2.24)

$

(0.52)

$

1.24 

Diluted

$

(2.24)

$

(0.52)

$

1.24 

31

Performance and other financial ratios:

Return on average assets

(0.94)

%

(0.22)

%

0.49 

%

Return on average equity

(8.19)

%

(1.93)

%

4.69 

%

Tax-equivalent net interest margin

2.94 

%

2.55 

%

2.56 

%

Cost of deposits

1.39 

%

1.50 

%

0.82 

%

Cost of funds

1.40 

%

1.51 

%

1.09 

%

Efficiency ratio

276.69 

%

112.13 

%

73.16 

%

Net charge-offs

$

942 

$

66 

$

386 

Net charge-offs to average loans

0.05 

%

NM

0.02 

%

Cash dividend payout ratio on common stock 1

NM

NM

80.65 

%

Cash dividends per common share

$

1.00 

$

1.00 

$

1.00 

1 Calculated as cash dividends per common share divided by basic net income per common share.

NM - Not meaningful.

32

Restatement and Revision of Prior Period Financial Statements and Financial Highlights

See below for the restated and revised prior period financial statements and affected financial highlights referred to above and in Form 8-K filed February 17, 2026.

Summary of Reclassifications and Impacts

($ in thousands)

FY 2025

FY 2024

FY 2023

Q4 2025

Q3 2025

Q2 2025

Q1 2025

Q4 2024

Q3 2024

Q2 2024

Q1 2024

Non-interest-Bearing Deposits - end of period

As reported

1,492,249

1,399,900

1,441,987

1,492,249

1,458,230

1,379,814

1,426,446

1,399,900

1,473,379

1,417,661

1,444,435

As Adjusted

1,254,416

1,274,747

1,309,711

1,254,416

1,245,247

1,218,648

1,277,505

1,274,747

1,331,853

1,285,901

1,318,261

Change

-237,833

-125,153

-132,276

-237,833

-212,983

-161,166

-148,941

-125,153

-141,526

-131,760

-126,174

Interest-Bearing Deposits - end of period

As reported

1,923,293

1,820,115

1,848,088

1,923,293

1,924,346

1,865,234

1,875,525

1,820,115

1,835,870

1,796,116

1,839,667

As Adjusted

2,161,126

1,945,268

1,980,364

2,161,126

2,137,329

2,026,400

2,024,466

1,945,268

1,977,396

1,927,876

1,965,841

Change

237,833

125,153

132,276

237,833

212,983

161,166

148,941

125,153

141,526

131,760

126,174

Non-interest-Bearing Deposits as a percentage of Total Deposits - end of period

As reported

43.7%

43.5%

43.8%

43.7%

43.1%

42.5%

43.2%

43.5%

44.5%

44.1%

44.0%

As Adjusted

36.7%

39.6%

39.8%

36.7%

36.8%

37.6%

38.7%

39.6%

40.2%

40.0%

40.1%

Change

-7.0%

-3.9%

-4.0%

-7.0%

-6.3%

-5.0%

-4.5%

-3.9%

-4.3%

-4.1%

-3.8%

Non-interest-Bearing Deposits - average

As reported

1,433,223

1,448,346

1,656,047

1,506,847

1,419,872

1,398,570

1,406,648

1,452,966

1,460,011

1,421,543

1,458,686

As Adjusted

1,261,562

1,316,737

1,544,208

1,285,578

1,254,958

1,245,025

1,260,482

1,318,943

1,321,648

1,290,874

1,335,405

Change

-171,661

-131,609

-111,839

-221,269

-164,914

-153,545

-146,166

-134,023

-138,363

-130,669

-123,281

Interest-Bearing Deposits - average

As reported

1,886,828

1,838,015

1,726,811

1,925,424

1,925,873

1,855,477

1,839,161

1,831,956

1,820,531

1,839,468

1,860,365

As Adjusted

2,058,489

1,969,624

1,838,650

2,146,693

2,090,787

2,009,022

1,985,327

1,965,979

1,958,894

1,970,137

1,983,646

Change

171,661

131,609

111,839

221,269

164,914

153,545

146,166

134,023

138,363

130,669

123,281

Interest Expense

As reported

42,196

46,613

36,733

10,651

10,876

10,376

10,293

11,246

12,050

11,865

11,452

As Adjusted

46,391

49,691

39,142

12,051

11,913

11,316

11,111

11,970

12,866

12,672

12,183

Change

4,195

3,078

2,409

1,400

1,037

940

818

724

816

807

731

Net Interest Income

As reported

110,232

94,660

102,761

31,181

28,193

25,912

24,946

25,230

24,269

22,467

22,694

As Adjusted

106,037

91,582

100,352

29,781

27,156

24,972

24,128

24,506

23,453

21,660

21,963

Change

-4,195

-3,078

-2,409

-1,400

-1,037

-940

-818

-724

-816

-807

-731

Non-interest Expense

As reported

85,505

81,818

79,481

21,423

21,328

21,490

21,264

18,338

20,417

21,894

21,169

As Adjusted

81,310

78,740

77,072

20,023

20,291

20,550

20,446

17,614

19,601

21,087

20,438

Change

-4,195

-3,078

-2,409

-1,400

-1,037

-940

-818

-724

-816

-807

-731

Net Interest Margin, reported

As reported

3.04%

2.61%

2.60%

3.31%

3.07%

2.91%

2.84%

2.78%

2.68%

2.50%

2.48%

As Adjusted

2.92%

2.53%

2.54%

3.16%

2.95%

2.81%

2.75%

2.70%

2.59%

2.41%

2.40%

Change

-0.12%

-0.08%

-0.06%

-0.15%

-0.12%

-0.10%

-0.09%

-0.08%

-0.09%

-0.09%

-0.08%

Net Interest Margin, tax-equivalent

As reported

3.06%

2.63%

2.63%

3.32%

3.08%

2.93%

2.86%

2.80%

2.70%

2.52%

2.50%

As Adjusted

2.94%

2.55%

2.56%

3.18%

2.97%

2.83%

2.77%

2.72%

2.61%

2.43%

2.42%

Change

-0.12%

-0.08%

-0.06%

-0.14%

-0.11%

-0.10%

-0.09%

-0.08%

-0.09%

-0.09%

-0.08%

Cost of Deposits

As reported

1.26%

1.41%

0.74%

1.19%

1.29%

1.28%

1.29%

1.36%

1.46%

1.45%

1.38%

As Adjusted

1.39%

1.50%

0.82%

1.35%

1.41%

1.39%

1.39%

1.45%

1.56%

1.54%

1.47%

Change

0.13%

0.09%

0.07%

0.16%

0.12%

0.11%

0.10%

0.09%

0.10%

0.09%

0.09%

Cost of Interest-Bearing Deposits

As reported

2.22%

2.52%

1.46%

2.12%

2.24%

2.24%

2.27%

2.44%

2.63%

2.56%

2.46%

As Adjusted

2.24%

2.51%

1.50%

2.16%

2.26%

2.26%

2.27%

2.42%

2.61%

2.56%

2.45%

Change

0.02%

-0.01%

0.04%

0.04%

0.02%

0.02%

0.00%

-0.02%

-0.02%

0.00%

-0.01%

Efficiency Ratio, GAAP

As reported

254.6%

111.6%

73.8%

-60.4%

68.9%

208.8%

76.4%

65.5%

75.2%

-300.4%

83.2%

As Adjusted

276.7%

112.1%

73.2%

-54.3%

67.9%

219.8%

75.7%

64.6%

74.4%

-260.5%

82.7%

Change

22.1%

0.5%

-0.6%

6.1%

-1.1%

11.0%

-0.7%

-0.9%

-0.7%

39.9%

-0.5%

Efficiency Ratio, non-GAAP excluding losses on securities sales

As reported

70.2 

%

77.3 

%

69.9 

%

63.0 

%

68.9 

%

74.0 

%

76.4 

%

65.5 

%

75.2 

%

86.7 

%

83.2 

%

As Adjusted

69.1 

%

76.6 

%

69.3 

%

61.4 

%

67.9 

%

73.2 

%

75.7 

%

64.6 

%

74.4 

%

86.3 

%

82.7 

%

Change

-1.1 

%

-0.7 

%

-0.6 

%

-1.6 

%

-1.1 

%

-0.9 

%

-0.7 

%

-0.9 

%

-0.8 

%

-0.4 

%

-0.5 

%

33

Executive Summary

Our annual loss was $35.7 million in 2025, compared to an annual loss of $8.4 million in 2024. Diluted loss was $2.24 per share in 2025, compared to a diluted loss of $0.52 per share in 2024.

Results for 2025 were significantly impacted by our strategic balance sheet repositioning which included the sale of available-for-sale ("AFS") securities with a book value of $185.8 million, resulting in a pre-tax loss of $18.7 million in the second quarter of 2025, the sale of AFS securities of $593.2 million in low yielding investment securities at a $69.5 million pre-tax loss in the fourth quarter of 2025, the purchase and origination of higher yielding loans and securities and the replenishment of our capital ratios through the issuance of $45.0 million of subordinated debt. We continue to proactively identify and manage credit risk within the loan portfolio, reflected in the percentage of non-accrual loans which decreased from the prior year, and improvements in credit quality trends during the fourth quarter. We believe the strength of our balance sheet, higher level of loan origination productivity that we are seeing from our banking teams, and positive trends in our net interest margin and operating leverage are key factors that should help mitigate any unforeseen credit quality deterioration that may arise and drive further improvement in our financial performance in the year ahead.

The following are highlights of operating and financial performance for the year ended December 31, 2025:

•Loans increased $37.6 million during the year ended December 31, 2025, to $2.121 billion, compared to $2.083 billion at December 31, 2024. The growth was spread across multiple geographic regions in Northern California and primarily within the commercial and commercial real estate sectors. Loan originations funded totaled $273.5 million for the year ended December 31, 2025, compared to $152.6 million for the prior year.

•Classified loans made up 1.51% of total loans as of December 31, 2025, compared to 2.17% as of December 31, 2024. The Bank continues to proactively identify and manage credit risk within the loan portfolio. Classified loans decreased by $13.0 million to $32.1 million as of December 31, 2025, compared to $45.1 million as of December 31, 2024. The decrease was largely due to upgrades of $6.9 million and payoffs and paydowns of $7.0 million during 2025. This was partially offset by downgrades to classified loans totaling approximately $942 thousand in 2025.

•Non-accrual loans totaled $26.9 million, or 1.27% of the loan portfolio, compared to $33.9 million, or 1.63%, as of December 31, 2025 and 2024, respectively. The decrease of $7.0 million in 2025 was primarily due to payoffs of $4.4 million, the sale of one $2.1 million commercial real estate loan which resulted in an $809 thousand charge-off, and paydowns of $1.6 million in addition to upgrades of approximately $700 thousand. Of the total non-accrual loans as of December 31, 2025, approximately 68% were paying as agreed, 97% were real estate secured, and all are being closely managed and monitored.

•We recorded a $375 thousand provision for credit losses on loans in 2025 primarily due to loan growth and a modest deterioration in the economic forecast, compared to a $5.6 million provision for credit losses on loans in 2024, including a $6.6 million specific reserve taken on a commercial real estate loan as a result of declining collateral values, partially offset by other factors. The allowance for credit losses as of December 31, 2025 was 1.42% of total loans, compared to 1.47% as of December 31, 2024.

•Total deposits increased by $195.5 million to $3.416 billion as of December 31, 2025, from $3.220 billion as of December 31, 2024. Non-interest bearing deposits continue to remain strong and made up 36.7% of total deposits as of December 31, 2025, compared to 39.6% as of December 31, 2024. We believe we are appropriately competitive in regard to deposit pricing, given our relationship banking model, which differentiates Bank of Marin through exceptional service. Estimated uninsured and/or uncollateralized deposits comprised 31% of total deposits as of December 31, 2025.

•At December 31, 2025, the Bank had no outstanding short-term borrowings compared to $26.0 million at December 31, 2024, as a result of our strategic balance sheet restructuring in 2025 and 2024. Total available funding sources, including unrestricted cash, unencumbered available-for-sale securities, and total available borrowing capacity, were $2.148 billion, or 63% of total deposits and 209% of estimated uninsured and/or uncollateralized deposits as of December 31, 2025.

34

•During the fourth quarter of 2025, we issued Fixed-to-Floating Subordinated Notes of $45.0 million with a final maturity date of December 1, 2035, to certain investors in a private placement to strengthen capital ratios as part of our fourth quarter 2025 balance sheet repositioning. The interest rate of the Bank’s subordinated notes is 6.75%, payable semi-annually in arrears on June 1 and December 1 of each year, commencing on June 1, 2026. After December 1, 2030, the interest rate will be variable and equal Three-Month Term SOFR plus 335 basis points, resetting quarterly.

•The tax-equivalent net interest margin was 2.94% for 2025, compared to 2.55% for 2024. The increase of 39 basis points was primarily attributable to the favorable impacts of the investment securities restructuring performed in 2025 and 2024, lower deposit costs and higher average deposit balances year over year, higher loan yields and loan balances, and higher interest-earning deposit balances with the Federal Reserve.

•All capital ratios were above well-capitalized regulatory requirements. Bancorp's total risk-based capital ratio was 15.25% as of December 31, 2025, compared to 16.54% as of December 31, 2024. Tangible common equity to tangible assets ("TCE ratio") decreased to 8.35% as of December 31, 2025, from 9.93% as of December 31, 2024.

•The Board of Directors declared a cash dividend of $0.25 per share on January 22, 2026, which was the 83rd consecutive quarterly dividend paid by Bancorp. The dividend was paid on February 12, 2026 to shareholders of record at the close of business on February 5, 2026.

35

Net Interest Income

Net interest income is the interest earned on loans, investments and other interest-earning assets minus interest expense incurred on deposits and other interest-bearing liabilities. Net interest income is impacted by changes in general market interest rates and by changes in the composition of interest-earning assets and interest-bearing liabilities. Interest rate changes can create fluctuations in net interest income and/or margin due to an imbalance in the timing of repricing or maturity of assets and liabilities. We manage interest rate risk exposure with the goal of minimizing the impact of interest rate volatility on net interest income.

Net interest margin is expressed as net interest income divided by average interest-earning assets. Net interest rate spread is the difference between the average rate earned on total interest-earning assets and the average rate incurred on total interest-bearing liabilities. Both of these measures are reported on a taxable-equivalent basis. Net interest margin is the higher of the two because it reflects interest income earned on assets funded with non-interest-bearing sources of funds, which include demand deposits and stockholders’ equity.

The following table compares interest income, average interest-earning assets, interest expense, and average interest-bearing liabilities for the periods presented. The table also presents net interest income, net interest margin and net interest rate spread for the years indicated.

Average Statements of Condition and Analysis of Net Interest Income

Year ended

Year ended

Year ended

December 31, 2025

December 31, 2024

December 31, 2023

Interest

Interest

Interest

Average

Income/

Yield/

Average

Income/

Yield/

Average

Income/

Yield/

(dollars in thousands; unaudited)

Balance

Expense

Rate

Balance

Expense

Rate

Balance

Expense

Rate

Assets

Interest-earning deposits with banks 1

$

222,747 

$

9,535 

4.22 

%

$

128,752 

$

6,714 

5.13 

%

$

42,864 

$

2,329 

5.36 

%

Investment securities 2, 3

1,283,380 

38,710 

3.02 

%

1,361,859 

33,349 

2.45 

%

1,753,708 

39,100 

2.23 

%

Loans 1, 3, 4, 5

2,074,565 

104,870 

4.99 

%

2,074,971 

101,912 

4.83 

%

2,099,719 

99,018 

4.65 

%

   Total interest-earning assets 1

3,580,692 

153,115 

4.22 

%

3,565,582 

141,975 

3.92 

%

3,896,291 

140,447 

3.56 

%

Cash and non-interest-bearing due from banks

37,299 

36,692 

37,868 

Bank premises and equipment, net

7,474 

7,310 

8,348 

Interest receivable and other assets, net

180,356 

164,298 

135,200 

Total assets

$

3,805,821 

$

3,773,882 

$

4,077,707 

Liabilities and Stockholders' Equity

Interest-bearing transaction accounts

$

357,877 

$

5,408 

1.51 

%

$

325,065 

$

4,279 

1.32 

%

$

352,363 

$

3,445 

0.98 

%

Savings accounts

224,428 

2,329 

1.04 

%

227,061 

2,003 

0.88 

%

281,611 

867 

0.31 

%

Money market accounts

1,257,049 

31,841 

2.53 

%

1,155,016 

33,914 

2.94 

%

1,013,620 

18,553 

1.83 

%

Time accounts, including CDARS

219,135 

6,436 

2.94 

%

262,482 

9,254 

3.53 

%

191,056 

4,715 

2.47 

%

Borrowings and other obligations 1

253 

9 

3.53 

%

4,628 

241 

5.13 

%

221,623 

11,562 

5.15 

%

Subordinated notes

5,189 

368 

7.10 

%

— 

— 

— 

%

— 

— 

— 

%

   Total interest-bearing liabilities

2,063,931 

46,391 

2.25 

%

1,974,252 

49,691 

2.52 

%

2,060,273 

39,142 

1.90 

%

Demand accounts

1,261,562 

1,316,737 

1,544,208 

Interest payable and other liabilities

44,668 

47,823 

49,442 

Stockholders' equity

435,660 

435,070 

423,784 

Total liabilities & stockholders' equity

$

3,805,821 

$

3,773,882 

$

4,077,707 

Tax-equivalent net interest income/margin 1,3

$

106,724 

2.94 

%

$

92,284 

2.55 

%

$

101,305 

2.56 

%

Reported net interest income/margin 1

$

106,037 

2.92 

%

$

91,582 

2.53 

%

$

100,352 

2.54 

%

Tax-equivalent net interest rate spread

1.97 

%

1.38 

%

1.63 

%

1 Interest income/expense is divided by actual number of days in the period times 360 days to correspond to stated interest rate terms, where applicable.

2 Yields on available-for-sale securities are calculated based on amortized cost balances rather than fair value, as changes in fair value are reflected as a component of stockholders' equity. Investment security interest is earned on 30/360 day basis monthly.

3 Yields and interest income on tax-exempt securities and loans are presented on a taxable-equivalent basis using the federal statutory rate of 21%.

4 Average balances on loans outstanding include non-performing loans. The amortized portion of net loan origination fees is included in interest income on loans, representing an adjustment to the yield.

5 Net loan origination (costs) fees included in interest income totaled $(1.7) million, $(1.6) million, and $(1.3) million in 2025, 2024, and 2023, respectively.

36

Analysis of Changes in Net Interest Income

The following table presents the effects of changes in average balances (volume) or changes in average rates on tax-equivalent net interest income for the years indicated. Volume variances are equal to the increase or decrease in average balances multiplied by prior period rates. Rate variances are equal to the increase or decrease in rates multiplied by prior period average balances. Mix variances are attributable to the change in yields or rates multiplied by the change in average balances.

2025 compared to 2024

2024 compared to 2023

(in thousands, unaudited)

Volume

Yield/Rate

Mix

Total

Volume

Yield/Rate

Mix

Total

Interest-earning deposits with banks

$

4,902 

$

(1,187)

$

(894)

$

2,821 

$

4,667 

$

(100)

$

(182)

$

4,385 

Investment securities 1

(1,922)

7,728 

(445)

5,361 

(8,737)

3,845 

(859)

(5,751)

Loans 1

(20)

3,266 

(288)

2,958 

(1,167)

3,828 

233 

2,894 

Total interest-earning assets

2,960 

9,807 

(1,627)

11,140 

(5,237)

7,573 

(808)

1,528 

Interest-bearing transaction accounts

432 

647 

50 

1,129 

(267)

1,181 

(80)

834 

Savings accounts

(23)

360 

(11)

326 

(168)

1,610 

(306)

1,136 

Money market accounts

2,996 

(4,577)

(492)

(2,073)

2,588 

11,128 

1,645 

15,361 

Time accounts, including CDARS

(1,528)

(1,524)

234 

(2,818)

1,763 

2,002 

774 

4,539 

Borrowings and other obligations

(228)

(76)

72 

(232)

(11,321)

(50)

50 

(11,321)

Subordinated notes

— 

— 

368 

368 

— 

— 

— 

— 

Total interest-bearing liabilities

1,649 

(5,170)

221 

(3,300)

(7,405)

15,871 

2,083 

10,549 

Tax-equivalent net interest income

$

1,311 

$

14,977 

$

(1,848)

$

14,440 

$

2,168 

$

(8,298)

$

(2,891)

$

(9,021)

1 Yields and interest income on tax-exempt securities and loans are presented on a taxable-equivalent basis using the federal statutory rate of 21%.

2025 Compared to 2024

Net interest income totaled $106.0 million in 2025, compared to $91.6 million in 2024. The $14.4 million increase from the prior year was primarily due to higher average yields on investment securities and loans and higher average earning asset balances on interest-bearing deposits with banks during the year contributing an increase in interest income of $11.2 million. In addition, interest-bearing deposit costs decreased by 27 basis points on an increased average balance contributing a reduction of $3.4 million in interest expense on deposits.

The tax-equivalent net interest margin was 2.94% for 2025, compared to 2.55% in 2024. The increase of 39 basis points was primarily attributable to the favorable impacts of the investment securities restructuring performed in 2025 and 2024, lower deposit costs, higher average deposit balances year over year, higher loan yields, and higher interest-earning deposit balances with the Federal Reserve.

2024 Compared to 2023

Net interest income totaled $91.6 million in 2024, compared to $100.4 million in 2023. The $8.8 million decrease from the prior year was primarily due to higher deposit costs of $21.9 million, partially offset by the reduction of $11.3 million in borrowing costs.

The tax-equivalent net interest margin was 2.55% for 2024, compared to 2.56% for 2023. Higher yields on loans increased the margin while higher deposit costs resulted in a reduction in the margin. In addition, the year's balance sheet restructuring activities affected the borrowings, interest-bearing cash and investments factors.

Market Interest Rates

Market interest rates are, in part, based on the target federal funds interest rate (the interest rate banks charge each other for short-term borrowings) implemented by the Federal Reserve Open Market Committee ("FOMC").

Primarily due to declining inflation, the Federal Reserve lowered the target for the federal funds rate by 100 basis points, to a range of 4.25% to 4.50% in the later months of 2024. At the January 2025 meeting, the FOMC left rates unchanged and signaled slower than originally anticipated rate cuts are in 2025. Due to a significant easing of inflationary pressures, the FOMC began decreasing rates in September 2025, and made a total of three rate decreases in 2025 ending the year at a range of 3.50% to 3.75%.

37

During the second and fourth quarters of 2025, we sold additional securities with relatively low yields and redeployed the proceeds to further reposition our balance sheet, by investing in higher yielding securities. Management and the Board are continuously monitoring and analyzing the impact of market rates on the Company's financial condition and results of operations to enhance performance, safety and soundness and returns to shareholders. See ITEM 7A. Quantitative and Qualitative Disclosure about Market Risk for further information.

Provision for Credit Losses on Loans

Management assesses the adequacy of the allowance for credit losses on loans quarterly based on several factors, including growth or contraction of the loan portfolio, past events, current conditions, and reasonable and supportable forecasts to estimate expected losses over the contractual terms of our loans. The allowance for credit losses on loans is increased by provisions charged to expense and loss recoveries and decreased by loans charged off.

The following table shows the activity for the periods presented.

Years ended December 31,

(dollars in thousands)

2025

2024

2023

Provision for (reversal of) credit losses on loans

$

375 

$

5,550 

$

2,575 

The provision in 2025 was due primarily to the $37.6 million net increase in loans during the year including the $92.7 million increase in non-owner occupied commercial real estate loans, partially offset by the $32.6 million decrease in other residential real estate loans. In addition to this pooled loan growth, the peer group used in our loss driver analysis was updated in 2025, and the fourth quarter of 2025 showed a modest deterioration in Moody's economic forecast over the next four quarters. Partially offsetting these increases were qualitative risk factor improvements in areas including staff experience and graded/delinquent/non-accrual loans and specific reserve adjustments.

The provision in 2024 was due primarily to increases in qualitative risk factors to account for continued uncertainty about inflation and recession risks, and from continued negative trends in adversely graded loans and/or collateral values on our non-owner occupied commercial real estate office and multi-family real estate portfolios including $5.2 million taken in the second quarter due to a $6.6 million increased individual reserve for one non-owner occupied commercial real estate loan totaling $16.7 million that, although current, had experienced a deterioration in the collateral value and, therefore, a material increase in the loan-to-value

The provision in 2023 was due primarily to adjustments to qualitative risk factors from continued uncertainty about inflation and recession risks, the potential impact of rapidly increasing interest rates and other external factors on both our non-owner-occupied commercial real estate and construction portfolios, loan and collateral concentration risks in our construction and commercial real estate portfolios, heightened portfolio management in light of current economic conditions, and continued negative trends in adversely graded loans and/or collateral values for our non-owner occupied commercial real estate office and multi-family real estate portfolios.

38

Non-interest Income

The table below details the components of non-interest income.

2025 compared to 2024

2024 compared to 2023

Years ended December 31,

Amount Increase (Decrease)

Percent Increase (Decrease)

Amount Increase (Decrease)

Percent Increase (Decrease)

(dollars in thousands; unaudited)

2025

2024

2023

Wealth management and trust services

$

2,312 

$

2,420 

$

2,145 

$

(108)

(4.5)

%

$

275 

12.8 

%

Service charges on deposit accounts

2,188 

2,164 

2,083 

24 

1.1 

%

81 

3.9 

%

Earnings on bank-owned life insurance, net

1,779 

1,714 

1,488 

65 

3.8 

%

226 

15.2 

%

Debit card interchange fees, net

1,612 

1,701 

1,831 

(89)

(5.2)

%

(130)

(7.1)

%

Dividends on Federal Home Loan Bank stock

1,475 

1,478 

1,265 

(3)

(0.2)

%

213 

16.8 

%

Merchant interchange fees, net

377 

324 

496 

53 

16.4 

%

(172)

(34.7)

%

Earnings on bank-owned life insurance death benefits

306 

— 

314 

306 

NM

(314)

(100.0)

%

Losses on sale of investment securities, net

(88,202)

(32,541)

(5,893)

(55,661)

171.0 

%

(26,648)

452.2 

%

Other income

1,503 

1,380 

1,260 

123 

8.9 

%

120 

9.5 

%

Total non-interest income

$

(76,650)

$

(21,360)

$

4,989 

$

(55,290)

258.8 

%

$

(26,349)

(528.1)

%

2025 Compared to 2024

Non-interest income showed a loss of $76.7 million for 2025, a $55.3 million decrease from a loss of $21.4 million for 2024. The decrease in 2025 was primarily due to the $88.2 million net loss on the sales of available-for-sale investment securities in the second and fourth quarters related to our balance sheet restructuring. Excluding losses on sale of securities in both years, non-interest income increased by $371 thousand, which included $306 thousand death benefit on bank-owned life insurance in 2025, partially offset by a $108 thousand year-over-year decrease in wealth management and trust services income due to decreased assets.

2024 Compared to 2023

Non-interest income showed a loss of $21.4 million for 2024, a $26.3 million decrease from income of $5.0 million for 2023. The decrease in 2024 was primarily due to the $32.5 million net loss on the sale of available-for-sale investment securities in 2024 related to our balance sheet restructuring. Excluding losses on sale of securities in both years, non-interest income increased by $300 thousand, which included a $275 thousand year-over-year increase in wealth management and trust services income due to increased assets and an increase of $226 thousand in net earnings on bank-owned life insurance due to increased rates. These were partially offset by the reduction of $314 thousand in bank-owned life insurance death benefits recorded in 2023 and not repeated in 2024.

39

Non-interest Expense

The table below details the components of non-interest expense.

2025 compared to 2024

2024 compared to 2023

Years ended December 31,

Amount Increase (Decrease)

Percent Increase (Decrease)

Amount Increase (Decrease)

Percent Increase (Decrease)

(dollars in thousands; unaudited)

2025

2024

2023

Salaries and employee benefits

$

47,458 

$

44,683 

$

43,448 

$

2,775 

6.2 

%

$

1,235 

2.8 

%

Occupancy and equipment

8,509 

8,242 

8,306 

267 

3.2 

%

(64)

(0.8)

%

Data processing

4,326 

4,222 

4,057 

104 

2.5 

%

165 

4.1 

%

Professional services

4,301 

5,129 

3,598 

(828)

(16.1)

%

1,531 

42.6 

%

Information technology

2,046 

1,686 

1,569 

360 

21.4 

%

117 

7.5 

%

Federal Deposit Insurance Corporation insurance

1,807 

1,863 

1,878 

(56)

(3.0)

%

(15)

(0.8)

%

Depreciation and amortization

1,264 

1,466 

2,098 

(202)

(13.8)

%

(632)

(30.1)

%

Directors' expense

1,115 

1,213 

1,212 

(98)

(8.1)

%

1 

0.1 

%

Amortization of core deposit intangible

875 

975 

1,350 

(100)

(10.3)

%

(375)

(27.8)

%

Charitable contributions

657 

677 

717 

(20)

(3.0)

%

(40)

(5.6)

%

Deposit network fees

476 

448 

374 

28 

6.3 

%

74 

19.8 

%

Other real estate owned

— 

— 

48 

— 

NM

(48)

(100.0)

%

Other non-interest expense:

Advertising

1,030 

1,090 

1,244 

(60)

(5.5)

%

(154)

(12.4)

%

Other expense

7,446 

7,046 

7,173 

400 

5.7 

%

(127)

(1.8)

%

Total other non-interest expense

8,476 

8,136 

8,417 

340 

4.2 

%

(281)

(3.3)

%

Total non-interest expense

$

81,310 

$

78,740 

$

77,072 

$

2,570 

3.3 

%

$

1,668 

2.2 

%

2025 Compared to 2024

Non-interest expenses increased $2.6 million to $81.3 million in 2025 from $78.7 million in 2024. Salaries and employee benefits increased by $2.8 million primarily due to an increase in annual incentives due to performance and increased employee insurance and profit share expenses. These were partially offset by an increase in deferred loan costs. Partially offsetting increases were the decrease of $828 thousand in professional services expenses, mainly from the legal resolution of a Private Attorneys General Act / putative class action lawsuit of $615 thousand and $354 thousand in the new loan operating system platform and implementation costs in the prior year.

2024 Compared to 2023

Non-interest expenses increased $1.7 million to $78.7 million in 2024 from $77.1 million in 2023. Significant fluctuations were as follows:

•Professional services expenses increased by $1.5 million, mainly from the legal resolution of a Private Attorneys General Act / putative class action lawsuit of $615 thousand and $354 thousand in the new loan operating system platform and implementation costs.

•Salaries and employee benefits increased by $1.2 million primarily due to severance and salaries paid in relation to the reduction in force in the second quarter, the filling of open positions and the hiring of several key employees and officers, higher insurance costs, and lower deferred loan origination costs. Increases to salaries and employee benefits were partially offset by a decrease in profit sharing expense mainly from accrual adjustments, a decrease in accrued incentive bonuses, and a decrease in stock-based compensation from changes in award structure and estimated performance award payouts.

•Depreciation and amortization expenses decreased by $632 thousand, mainly from the acceleration of lease-related costs for four branch closures in 2023.

•Amortization of the core deposit intangible decreased by $375 thousand as the Bank of Alameda amortization completed in 2023.

40

Provision for Income Taxes

Income tax provisions reflect accruals for taxes at the applicable rates for federal income tax and California franchise tax based upon reported pre-tax income. Provisions also reflect permanent differences between income for tax and financial reporting purposes (such as earnings on tax exempt loans and municipal securities, bank-owned life insurance ("BOLI"), low-income housing tax credits, and stock-based compensation from the exercise of stock options, disqualifying dispositions of incentive stock options and vesting of restricted stock awards).

The benefit from income taxes totaled $16.8 million at an effective tax rate of 32.0% in 2025, compared to the benefit from income taxes of $5.4 million at an effective tax rate of 39.2% in 2024 and a provision of $6.1 million at an effective tax rate of 23.6% in 2023. The increase in the benefit from income taxes in 2025 reflected the impact of the net loss before taxes in the year of $52.5 million compared to net loss before taxes of $13.8 million in 2024. The 7.2% decrease in the effective tax rate in 2025, as compared to 2024, was due to the treatment of certain permanent differences while in a larger loss position, such as in 2025. The 15.60% increase from 2023 to 2024 was primarily due to a larger proportional effect of permanent tax differences on lower pretax income and higher tax-exempt BOLI income. This increase was partially offset by a reduction in the tax-exempt interest exclusion (due to a larger IRC Section 291(e) interest expense disallowance), compared to 2023.

We file a consolidated return in the U.S. federal tax jurisdiction and a combined return in the State of California and the State of New Jersey due to interest on purchased auto loans registered in New Jersey. There were no ongoing federal or state income tax examinations at the time of the issuance of this report. As of December 31, 2025 and 2024, neither the Bank nor Bancorp had accruals for interest or penalties related to unrecognized tax benefits.

41

FINANCIAL CONDITION

Investment Securities

We maintain an investment securities portfolio to provide liquidity and generate earnings on funds that have not been loaned to customers. Management determines the maturities and types of securities to be purchased based on liquidity and interest rate risk position, and the desire to attain a reasonable investment yield balanced with risk exposure. The tables below show the composition of the debt securities portfolio by weighted average life at December 31, 2025 and 2024. Weighted average life takes into account the issuer's right to call or prepay obligations, with or without call or prepayment penalties. The weighted average life of the investment portfolio at December 31, 2025 and 2024 was approximately 4.2 and 5.9 years, respectively. The effective duration of the investment portfolio was 2.8 and 4.6 at December 31, 2025 and 2024, respectively.

In the fourth quarter of 2025, the Bank completed a balance sheet repositioning and reclassified its HTM portfolio into AFS resulting in no HTM securities at December 31, 2025.

December 31, 2025

Within 1 Year

1-5 Years

5-10 Years

After 10 Years

Total

(dollars in thousands; unaudited)

AmortizedCost1

Average Yield2

AmortizedCost1

Average Yield2

AmortizedCost1

Average Yield2

AmortizedCost1

Average Yield2

Amortized Cost1

Fair Value

Average Yield2

Available-for-sale:

CMBS/MBS/CMOs issued by U.S. government agencies

$

52,519 

4.26 

%

$

1,035,618 

4.37 

%

$

174,622 

3.43 

%

$

— 

— 

%

$

1,262,759 

$

1,250,230 

4.23 

%

Debentures of government sponsored agencies

— 

— 

— 

— 

— 

— 

29,988 

1.88 

29,988 

23,694 

1.88 

Obligations of state and political subdivisions - tax-exempt3

3,025 

5.04 

6,836 

4.37 

— 

— 

33,470 

2.82 

43,331 

39,133 

3.22 

Obligations of state and political subdivisions - taxable

— 

— 

— 

— 

7,801 

2.41 

10,082 

2.32 

17,883 

14,755 

2.36 

Total available-for-sale

$

55,544 

4.30 

%

$

1,042,454 

4.37 

%

$

182,423 

3.39 

%

$

73,540 

2.37 

%

$

1,353,961 

$

1,327,812 

4.13 

%

42

December 31, 2024

Within 1 Year

1-5 Years

5-10 Years

After 10 Years

Total

(dollars in thousands; unaudited)

AmortizedCost1

Average Yield2

AmortizedCost1

Average Yield2

AmortizedCost1

Average Yield2

AmortizedCost1

Average Yield2

Amortized Cost1

Fair Value

Average Yield2

Held-to-maturity:

CMBS/MBS/CMOs issued by U.S. government agencies

$

10,895 

2.47 

%

$

194,427 

3.29 

%

$

353,313 

2.10 

%

$

86,060 

2.07 

%

$

644,695 

$

560,812 

2.46 

%

SBA-backed securities

— 

— 

1,513 

3.16 

— 

— 

— 

— 

1,513 

1,452 

3.16 

Debentures of government-sponsored agencies

20,000 

4.25 

5,000 

5.00 

83,460 

1.83 

32,971 

1.85 

141,431 

118,737 

2.29 

Obligations of state and political subdivisions - tax-exempt3

3,041 

3.77 

2,368 

3.64 

20,067 

3.00 

5,765 

1.90 

31,241 

29,057 

2.92 

Obligations of state and political subdivisions - taxable

— 

— 

— 

— 

13,637 

2.03 

16,682 

2.36 

30,319 

24,162 

2.21 

Corporate bonds

15,000 

3.50 

15,000 

3.75 

— 

— 

— 

— 

30,000 

29,315 

3.63 

Total held-to-maturity

48,936 

3.59 

218,308 

3.36 

470,477 

2.09 

141,478 

2.05 

879,199 

763,535 

2.48 

Available-for-sale:

CMBS/MBS/CMOs issued by U.S. government agencies

100,397 

4.09

131,820 

3.29

54,857 

2.90

8,718 

2.36

295,792 

279,838 

3.46

SBA-backed securities

— 

— 

331 

2.20 

— 

— 

— 

— 

331 

308 

2.20 

Debentures of government sponsored agencies

— 

— 

— 

—

8,971 

1.36

— 

— 

8,971 

7,210 

1.36

U.S. Treasury securities

— 

— 

12,020 

0.78 

— 

— 

— 

— 

12,020 

10,815 

0.78 

Obligations of state and political subdivisions - tax-exempt3

— 

—

3,831 

0.68

43,581 

2.04

40,043 

2.73

87,455 

76,199 

2.30

Obligations of state and political subdivisions - taxable

— 

— 

2,992 

1.09 

5,731 

1.86 

— 

— 

8,723 

7,515 

1.60 

Corporate bonds

— 

—

6,000 

1.15

— 

—

— 

— 

6,000 

5,649 

1.15

Total available-for-sale

100,397 

4.09 

156,994 

2.91 

113,140 

2.40 

48,761 

2.66 

419,292 

387,534 

3.02 

Total

$

149,333 

3.93 

%

$

375,302 

3.17 

%

$

583,617 

2.15 

%

$

190,239 

2.21 

%

$

1,298,491 

$

1,151,069 

2.66 

%

1 Book value reflects cost, adjusted for accumulated amortization and accretion.

2 Weighted average calculation is based on amortized cost of securities.

3 Yields on tax-exempt municipal bonds are presented on a taxable equivalent basis, using a federal tax rate of 21%.

The amortized cost of our investment securities portfolio increased by $55.5 million, or 4.3%, in 2025. In 2025, we sold $778.9 million in available-for-sale securities with an average yield of 1.99%, as part of a balance sheet restructuring, including $279.8 million in agency collateralized mortgage obligations ("CMOs"), $270.8 million in agency mortgage-backed securities ("MBSs"), $98.1 million in debentures of government sponsored agencies, $95.7 million in obligations of state and political subdivisions, $21.0 million in corporate bonds, $12.0 million in U.S. Treasury securities and $1.5 million in SBA-backed securities. The sales of available-for-sale securities generated a net pre-tax loss of $88.2 million. Sales proceeds were deployed into securities with a higher yield and lower effective duration than the securities sold.

We consider agency debentures and CMOs issued by U.S. government sponsored entities to have low credit risk as they carry the credit support of the U.S. federal government. The debentures, CMBSs, CMOs and MBS issued by U.S. government sponsored agencies made up 95.5% of the portfolio as of December 31, 2025, compared to 85.1% at December 31, 2024. See the discussion in the section captioned “Securities May Lose Value Due to Credit Quality of the Issuers” in ITEM 1A Risk Factors above.

43

At December 31, 2025 and 2024, distribution of our investment in obligations of state and political subdivisions was as follows:

December 31, 2025

December 31, 2024

(dollars in thousands; unaudited)

Amortized Cost

Fair Value

Percent of

State and Municipal Securities

Amortized Cost

Fair Value

Percent of

State and Municipal Securities

Within California:

General obligation bonds

$

9,981 

$

8,359 

16.3 

%

$

22,913 

$

18,749 

14.5 

%

Revenue bonds

— 

— 

— 

2,060 

1,658 

1.3 

Total within California

9,981 

8,359 

16.3 

24,973 

20,407 

15.8 

Outside California:

General obligation bonds

40,352 

35,985 

65.9 

108,037 

94,748 

68.5 

Revenue bonds

10,881 

9,544 

17.8 

24,728 

21,778 

15.7 

Total outside California

51,233 

45,529 

83.7 

132,765 

116,526 

84.2 

Total obligations of state and political subdivisions

$

61,214 

$

53,888 

100.0 

%

$

157,738 

$

136,933 

100.0 

%

Percent of investment portfolio

4.5%

4.1%

12.2%

11.9%

The portion of the portfolio outside the state of California is distributed among twelve states. Of the total investment in obligations of state and political subdivisions, the largest concentrations outside California are in Texas (44.3%), Wisconsin (24.1%) and Virginia (6.7%). Our investments in obligations issued by municipal issuers in Texas are either guaranteed by the AAA-rated Texas Permanent School Fund ("PSF"), rated AAA without enhancement, or backed by revenue sources from essential services (such as utilities and transportation).

Investments in states, municipalities and political subdivisions are subject to an initial pre-purchase credit assessment and ongoing monitoring. Key considerations include:

•The soundness of a municipality’s budgetary position and the stability of its tax revenues

•Debt profile and level of unfunded liabilities, diversity of revenue sources, taxing authority of the issuer

•Local demographics and economics including unemployment data, the largest local taxpayers and employers, income indices, and home values

•For revenue bonds, the source and strength of revenue for municipal authorities, including obligors' financial condition and reserve levels, annual debt service and debt coverage ratio, and credit enhancement (such as insurers' strength)

•Credit ratings by major credit rating agencies

Loans

Loans Outstanding by Class and Percent of Total

December 31, 2025

December 31, 2024

(in thousands; unaudited)

Amortized Cost

Percent of Total

Amortized Cost

Percent of Total

Commercial and industrial

$

159,898 

7.5 

%

$

152,263 

7.3 

%

Real estate

  Commercial owner-occupied

310,219 

14.6 

321,962 

15.5 

  Commercial non-owner occupied

1,366,251 

64.5 

1,273,596 

61.1 

  Construction

15,101 

0.7 

36,970 

1.8 

  Home equity

99,222 

4.7 

88,325 

4.2 

  Other residential

110,614 

5.2 

143,207 

6.9 

Installment and other consumer

59,548 

2.8 

66,933 

3.2 

Total loans, at amortized cost

2,120,853 

100.0 

%

2,083,256 

100.0 

%

Allowance for credit losses on loans

(30,089)

(30,656)

Total loans, net of allowance for credit losses

$

2,090,764 

$

2,052,600 

Loans increased by $37.6 million in 2025, or 1.8%, to $2.121 billion as of December 31, 2025, from $2.083 billion as of December 31, 2024 and was primarily due to a $92.7 million increase in commercial non-owner occupied real estate loans, offset by a decrease of $32.6 million in residential real estate loans and a decrease of $21.9 million in

44

construction loans. Organic loan originations were $273.5 million in 2025, compared to $152.6 million in 2024. There were loan purchases of approximately $250 thousand in 2025 compared to $35.7 million in 2024. Payoffs were $145.7 million in 2025, compared to $120.6 million in 2024. The majority of the payoffs were a result of asset sales and cash payoffs. In addition, $90.2 million of loan amortization from scheduled repayments, net of credit line utilization, contributed to the change in loan balances for 2025.

Approximately 90% and 89% of total loans were secured by real estate as of December 31, 2025 and 2024, respectively. For additional information on loan concentration risk, see ITEM 1A, Risk Factors.

The following table summarizes our commercial real estate loan concentrations by the county in which the property was located as of December 31, 2025 and 2024.

Commercial Real Estate Loans Outstanding by County

(dollars in thousands; unaudited)

December 31, 2025

December 31, 2024

County

Amount

Percent of Commercial Real Estate Loans

County

Amount

Percent of Commercial Real Estate Loans

Marin

$

298,615 

18 

%

Marin

$

303,255 

19 

%

Sonoma

265,542 

16 

Sonoma

245,510 

15 

Alameda

201,558 

12 

San Francisco

211,254 

13 

San Francisco

188,372 

11 

Alameda

187,526 

12 

Sacramento

177,277 

11 

Napa

170,492 

11 

Napa

173,587 

10 

Sacramento

131,857 

8 

Contra Costa

85,559 

5 

Contra Costa

75,522 

5 

Solano

51,948 

3 

Solano

52,294 

3 

San Mateo

40,511 

2 

Placer

41,951 

2 

Placer

39,355 

2 

San Mateo

41,275 

2 

Santa Clara

37,682 

2 

Santa Clara

23,610 

2 

San Joaquin

14,278 

1 

San Joaquin

14,933 

1 

Orange

10,234 

1 

El Dorado

8,460 

1 

Other

91,952 

7 

Other

87,619 

6 

Total

$

1,676,470 

100 

%

Total

$

1,595,558 

100 

%

Commercial real estate loans increased by $80.9 million in 2025 to $1.676 billion from $1.596 billion at December 31, 2024. The increase in 2025 was comprised of the $92.7 million increase within the non-owner occupied loan portfolio, partially offset by the $11.7 million decrease within the owner-occupied loan portfolio. Of the commercial real estate loans as of December 31, 2025, 81% were non-owner occupied and 19% were owner-occupied. Almost the entire commercial real estate loan portfolio is comprised of term loans for which the primary source of repayment is either the cash flow from leasing activities of the real estate collateral or the operating cash flow of the owner occupant.

45

Non-owner and Owner Occupied Real Estate Loans by Type

(unaudited)

Percent of Non-owner Occupied Commercial Real Estate Loans

Percent of Owner-Occupied Commercial Real Estate Loans

County

December 31, 2025

December 31, 2024

December 31, 2025

December 31, 2024

Office

27 

%

27 

%

19 

%

19 

%

Retail

18 

20 

7 

7 

Multi-family

18 

16 

— 

— 

Warehouse & industrial

13 

11 

25 

23 

Mixed use

7 

9 

3 

2 

School

— 

— 

14 

15 

Wine

— 

— 

10 

10 

Church

— 

— 

5 

6 

Gas/auto

— 

— 

9 

8 

Health club

— 

— 

3 

4 

Other

17 

17 

5 

6 

Total

100 

%

100 

%

100 

%

100 

%

Commercial Real Estate Loans by Type and County

Non-owner occupied

Owner-occupied

(unaudited)

Retail

Warehouse & industrial

Multi-family

Office

Office

County

Dec 31, 2025

Dec 31, 2024

Dec 31, 2025

Dec 31

2024

Dec 31, 2025

Dec 31,

2024

Dec 31, 2025

Dec 31,

2024

Dec 31, 2025

Dec 31,

2024

Sacramento

20 

%

20 

%

26 

%

18 

%

17 

%

9 

%

5 

%

6 

%

21 

%

19 

%

Marin

16 

16 

8 

12 

9 

10 

24 

25 

21 

22 

Napa

16 

16 

7 

4 

5 

5 

8 

9 

17 

21 

Sonoma

16 

15 

25 

28 

16 

11 

17 

17 

8 

8 

Alameda

6 

6 

14 

16 

22 

20 

8 

6 

14 

6 

San Francisco

3 

3 

9 

12 

19 

30 

16 

18 

5 

18 

Other bay area

17 

16 

7 

4 

4 

5 

18 

15 

13 

— 

Other

6 

8 

4 

6 

8 

10 

4 

4 

1 

6 

Total

100 

%

100 

%

100 

%

100 

%

100 

%

100 

%

100 

%

100 

%

100 

%

100 

%

With the heightened market concern about non-owner-occupied commercial real estate, and in particular the office sector, we are providing the following additional information: We continue to maintain diversity among property types and within our geographic footprint. In particular, our office commercial real estate portfolio in the City of San Francisco represents just 3% of our total loan portfolio and 4% of our total non-owner-occupied commercial real estate portfolio.

The following table shows an analysis of construction loans by type and county as of December 31, 2025 and 2024.

Construction Loans Outstanding by Type and County

(dollars in thousands; unaudited)

December 31, 2025

December 31, 2024

Loan Type

Amount

Percent of Construction Loans

Amount

Percent of Construction Loans

Apartments and multifamily

$

3,223 

21.3 

%

$

19,057 

51.5 

%

Commercial real estate

— 

— 

2,261 

6.1 

1-4 Single family residential

11,878 

78.7 

15,652 

42.4 

Total

$

15,101 

100.0 

%

$

36,970 

100.0 

%

46

(dollars in thousands; unaudited)

December 31, 2025

December 31, 2024

County

Amount

Percent of Construction Loans

County

Amount

Percent of Construction Loans

San Francisco

$

6,272 

41.6 

%

San Francisco

$

24,706 

66.8 

%

Napa

5,468 

36.2 

Contra Costa

4,682 

12.7 

Marin

3,224 

21.3 

Marin

2,995 

8.1 

Santa Clara

137 

0.9 

Napa

2,326 

6.3 

Placer

— 

— 

Placer

2,261 

6.1 

Total

$

15,101 

100.0 

%

Total

$

36,970 

100.0 

%

Construction loans decreased by $21.9 million in 2025 to $15.1 million from $37.0 million at December 31, 2024. The decrease in 2025 was primarily due to payoffs of $28.7 million offset by $6.7 million in advances on existing construction loans.

Undisbursed construction loan commitments at December 31, 2025 and 2024 were $10.5 million and $8.3 million, respectively.

The following table presents the amortized costs and maturity distribution of our loans by portfolio class as of December 31, 2025 based on their contractual maturity dates. Maturities do not include scheduled payments or potential prepayments.

Loan Maturity Distribution

Due within 1 year

Due after 1 through 5 years

Due after 5 through 15 years

Due after 15 years

Total

(in thousands; unaudited)

Commercial and industrial

$

66,636 

$

67,607 

$

24,547 

$

1,108 

$

159,898 

Real estate

Commercial owner-occupied

26,261 

106,494 

170,782 

6,682 

310,219 

Commercial non-owner occupied

123,980 

673,083 

561,177 

8,011 

1,366,251 

Construction 1

14,313 

788 

— 

— 

15,101 

Home equity

4,366 

23,339 

66,520 

4,997 

99,222 

Other residential

6 

136 

900 

109,572 

110,614 

Installment and other consumer loans

2,822 

7,223 

49,411 

92 

59,548 

Total

$

238,384 

$

878,670 

$

873,337 

$

130,462 

$

2,120,853 

1 Construction loans that mature after 5 years are structured to convert to permanent financing after the initial construction period.

The following table shows the mix of variable-rate loans and fixed-rate loans due after one year by portfolio class as of December 31, 2025. The large majority of variable-rate loans are tied to independent indices, such as the Prime Rate or a Treasury Constant Maturity Rate. Most loans with original terms of more than five years have provisions for the fixed rates to reset, or convert to variable rates, after three, five or seven years. These loans are included in the variable-rate balances below.

47

Loan Interest Rate Sensitivity - Due After One Year

(in thousands; unaudited)

Fixed

Variable

Total

Commercial and industrial

$

81,176 

$

12,086 

$

93,262 

Real estate

Commercial owner-occupied

159,349 

124,609 

283,958 

Commercial non-owner occupied

773,596 

468,675 

1,242,271 

Construction

— 

788 

788 

Home equity

423 

94,433 

94,856 

Other residential

12,788 

97,820 

110,608 

Installment and other consumer loans

41,366 

15,360 

56,726 

Total

$

1,068,698 

$

813,771 

$

1,882,469 

Allowance for Credit Losses on Loans

The allowance for credit losses on loans is calculated in accordance with ASC 326 based on management's best estimate of current expected credit losses over the loans' contractual terms, adjusted for estimated prepayments where applicable. The contractual terms exclude anticipated extensions, renewals and modifications. Relevant available information includes historical credit loss experience, current conditions and reasonable and supportable forecasts. While historical credit loss experience provides the basis for the estimation of expected credit losses, adjustments to historical loss information may be made for differences in current portfolio-specific risk characteristics, environmental conditions or other relevant factors. All specifically identifiable and quantifiable losses are charged off against the allowance. The ultimate adequacy of the allowance depends on a variety of complex factors, some of which may be beyond management's control, such as volatility in the real estate market, changes in interest rates and economic and political environments. Based on the current conditions of the loan portfolio and reasonable and supportable forecasts, management believes that the $30.1 million allowance for credit losses at December 31, 2025 was adequate to absorb expected credit losses in our loan portfolio. For additional information on our allowance for credit losses methodology, refer to Notes 1 and 3 to the Consolidated Financial Statements in ITEM 8 of this report.

The ratio of the allowance for credit losses to total loans was 1.42% at December 31, 2025 and 1.47% at December 31, 2024.

The $567 thousand decrease in the allowance for credit losses on loans in 2025 was largely due to the $942 thousand in net charge-offs, primarily due to a $2.1 million acquired non-owner occupied commercial real estate loan with a partial charge-off in the first quarter of 2025 of $809 thousand that the Bank had previously reserved $449 thousand for as of December 31, 2024. There was an additional decline in the financial condition of the borrower and guarantor and the value of the collateral during the first quarter that led to the Bank proactively selling the note in March rather than pursuing the additional costly steps of liquidating after foreclosure. It had been on non-accrual since late 2023. This decline was partially offset by the $375 thousand provision recorded in 2025.

For further information, refer to the Provision for Credit Losses section above, and Notes 1 and 3 to the Consolidated Financial Statements in ITEM 8 of this report.

The following table presents the allowance for credit losses on loans by loan portfolio class in accordance with the methodology described in Note 1 to the Consolidated Financial Statements in ITEM 8 of this report, as well as the percentage of total loans in each of the same loan portfolio classes as of December 31, 2025 and 2024.

48

Allocation of the Allowance for Credit Losses

(dollars in thousands; unaudited)

Commercial and industrial

Commercial real estate, owner-occupied

Commercial real estate, non-owner occupied

Construction

Home equity

Other residential

Installment and other consumer

Unallocated

Total

December 31, 2025

Modeled expected credit losses

$

1,512 

$

1,553 

$

8,449 

$

38 

$

736 

$

1,059 

$

697 

$

— 

$

14,044 

Qualitative adjustments

522 

901 

5,802 

161 

67 

2 

106 

1,185 

8,746 

Specific allocations

55 

— 

7,226 

— 

— 

18 

— 

— 

7,299 

Total

$

2,089 

$

2,454 

$

21,477 

$

199 

$

803 

$

1,079 

$

803 

$

1,185 

$

30,089 

Loans as a percent of total loans

7.5 

%

14.6 

%

64.5 

%

0.7 

%

4.7 

%

5.2 

%

2.8 

%

N/A

100.0 

%

December 31, 2024

Modeled expected credit losses

$

759 

$

1,241 

$

7,632 

$

41 

$

620 

$

1,133 

$

625 

$

— 

$

12,051 

Qualitative adjustments

672 

1,120 

6,528 

597 

64 

8 

268 

1,255 

10,512 

Specific allocations

145 

— 

7,933 

— 

— 

— 

15 

— 

8,093 

Total

$

1,576 

$

2,361 

$

22,093 

$

638 

$

684 

$

1,141 

$

908 

$

1,255 

$

30,656 

Loans as a percent of total loans

7.3 

%

15.5 

%

61.1 

%

1.8 

%

4.2 

%

6.9 

%

3.2 

%

N/A

100.0 

%

The table below shows the activity in the allowance for credit losses for each of the three years presented below.

Allowance for Credit Losses on Loans Rollforward

(dollars in thousands; unaudited)

2025

2024

2023

Beginning balance

$

30,656 

$

25,172 

$

22,983 

Provision for (reversal of) credit losses

375 

5,550 

2,575 

Loans charged-off:

Commercial and industrial

(117)

(41)

(11)

Real estate:

Commercial real estate, owner-occupied

— 

— 

(406)

Commercial, non-owner occupied

(809)

— 

— 

Installment and other consumer

(16)

(58)

(24)

Total loans charged-off

(942)

(99)

(441)

Loans recovered:

Commercial and industrial

— 

21 

29 

Real estate:

Commercial, non-owner occupied

— 

8 

— 

Construction

— 

25 

Installment and other consumer

— 

4 

1 

Total loans recovered

— 

33 

55 

Net loans charged-off

(942)

(66)

(386)

Ending balance

$

30,089 

$

30,656 

$

25,172 

Total loans, at amortized cost

$

2,120,853 

$

2,083,256 

$

2,073,720 

Average total loans outstanding during year

$

2,074,565 

$

2,074,971 

$

2,099,719 

Ratio of allowance for credit losses to total loans at end of year

1.42 

%

1.47 

%

1.21 

%

Net charge-offs (recoveries) to average loans

0.05 

%

NM

0.02 

%

NM - Not meaningful.

49

The following table shows non-performing assets as of December 31, 2025 and 2024.

Non-Performing Assets

(dollars in thousands; unaudited)

December 31, 2025

December 31, 2024

Non-accrual loans:

Commercial and industrial

$

524 

$

2,845 

Real estate:

Commercial, owner-occupied

314 

1,537 

Commercial, non-owner occupied

25,387 

28,525 

Home equity

401 

752 

Other residential

72 

— 

Installment and other consumer

204 

222 

Total non-accrual loans

$

26,902 

$

33,881 

Other real estate owned

$

— 

$

— 

Repossessed personal properties

— 

1 

Total non-performing assets

$

26,902 

$

33,882 

Criticized and classified loans:

Special mention

$

118,025 

$

108,916 

Substandard

$

32,111 

$

45,104 

Doubtful

$

— 

$

— 

Allowance for credit losses to non-accrual loans

1.12x

0.90x

Non-accrual loans to total loans

1.27 

%

1.63 

%

Non-performing assets to total assets

0.69 

%

0.92 

%

Non-Accrual Loans

Non-accrual loans decreased by $7.0 million in 2025, primarily due to $4.4 million in payoffs including a $3.6 million commercial relationship paid off in full in the fourth quarter and a $2.1 million non-owner occupied real estate loan sale in the first quarter.

Non-accrual loans increased by $25.9 million in 2024, primarily due to three relationships designated as non-accrual in the second and third quarters.

Approximately 97% of the non-accrual loans as of December 31, 2025 were well-secured by either commercial or residential real estate.

Criticized and Classified Loans

Loans designated as special mention, which are not considered adversely classified, increased by $9.1 million in 2025 with downgrades from the pass or watch category of $49.3 million primarily within commercial real estate and commercial with an average balance of $2.7 million and upgrades from substandard of $6.9 million, partially offset by payoffs and paydowns of $38.7 million and $7.3 million, respectively.

Loans designated as special mention decreased by $26.3 million in 2024, primarily due to net downgrades of $2.6 million from the pass or watch category and downgrades of $25.0 million to substandard. Of the downgrades to special mention, $15.3 million was attributed to one recently completed construction loan that will be marketed for sale or paid down to a conforming debt service level. The remaining balance changes consisted of paydowns, payoffs and upgrades from substandard risk rating.

Loans classified as substandard decreased by $13.0 million in 2025 largely due to upgrades to special mention of $6.9 million mentioned above and payoffs and paydowns of $5.3 million and $1.7 million, respectively. Downgrades from pass or watch of $2.1 million in the year were offset by the $2.1 million loan that was sold.

Loans classified as substandard increased by $12.8 million in 2024, primarily due to downgrades from special mention totaling $25.0 million and from pass totaling $2.7 million, partially offset by $11.9 million in paydowns and payoffs and $2.8 million in upgrades to pass or special mention. Of the downgraded loans, $17.1 million (or 82%)

50

was secured by commercial real estate, $3.5 million was to commercial borrowers, and the remaining $222 thousand were personal loans.

Refer to Note 3 to the Consolidated Financial Statements in ITEM 8 of this report for an allocation of criticized and classified loans by loan portfolio class.

Other Assets

BOLI totaled $71.3 million as of December 31, 2025, compared to $71.0 million at December 31, 2024. The $279 thousand increase was primarily due to increased earnings from higher yields on policies in 2025.

Interest receivable and other assets totaled $84.4 million and $72.3 million at December 31, 2025 and 2024, respectively. The $12.1 million increase was primarily due to a $12.3 million increase in net deferred tax assets, as discussed below.

Net deferred tax assets totaled $42.9 million and $30.6 million at December 31, 2025 and 2024, respectively. Deferred tax assets consist primarily of tax benefits expected to be realized in future periods related to temporary differences such as allowances for credit losses and unfunded loan commitments, net operating loss carryforwards, and deferred compensation and salary continuation obligations. The $12.3 million increase in 2025 was primarily due to the $12.8 million increase in net operating loss carryforwards resulting from the Bank's higher pre-tax loss of $52.5 million in 2025 compared to $13.8 million in 2024. Also contributing to the increase were a $4.4 million increase in operating and finance lease liabilities and a $2.8 million increase in the allowance for credit losses on loans and unfunded loan commitments. The increases in net deferred tax assets were partially offset by a $4.9 million decrease in the net unrealized losses on available-for-sale securities. Management believes deferred tax assets will be realizable due to our expectation that earnings will continue to be at a level adequate to realize such tax benefits. Therefore, no valuation allowance was established as of December 31, 2025 or 2024. For additional information, refer to Note 11 to the Consolidated Financial Statements in ITEM 8 of this report.

We held $16.7 million of FHLB stock recorded at cost in other assets at both December 31, 2025 and 2024. We received $1.5 million, $1.5 million and $1.3 million in cash dividends in 2025, 2024 and 2023, respectively. For additional information, refer to Note 2 to the Consolidated Financial Statements in ITEM 8 of this report.

Deposits

Deposits increased by $195.5 million, to $3.416 billion at December 31, 2025, compared to $3.220 billion at December 31, 2024. Non-interest bearing deposits were 36.7% of total deposits at December 31, 2025, compared to 39.6% at December 31, 2024. We continued our disciplined and focused approach to relationship management and customer outreach, adding over 4,000 new accounts in 2025, 43% of which were new relationships, and 51% were non-interest bearing (excluding new reciprocal accounts).

As of December 31, 2025, 62% of deposit balances were held in business accounts, with average balances of $141 thousand per account. The remaining 38% were consumer accounts, with average balances of $40 thousand per account. The largest depositor represented 3.8% of total deposits, and the combined four largest depositors represented 7.3% of total deposits.

Balances in reciprocal deposit networks increased by $54.2 million during 2025 to $458.9 million as of December 31, 2025. Costs associated with network deposits fees are recorded as non-interest expense and totaled $476 thousand, $448 thousand, and $374 thousand for the years ended December 31, 2025, 2024 and 2023, respectively. The interest the bank pays on balances in the deposit networks is recorded in deposit interest expense.

Estimated uninsured and/or uncollateralized deposits totaled 31% of total deposits as of December 31, 2025, compared to 29% as of December 31, 2024.

Our liquidity policies require that compensating cash balances be held against concentrations over a certain level. See ITEM 1A, Risk Factors, for a discussion of potential risks associated with concentrations and volatility due to the activity of our large deposit customers.

51

Distribution of Average Deposits

The table below shows the relative composition of our average deposits for 2025 and 2024. For average rates paid on deposits, refer to the Average Statements of Condition and Analysis of Net Interest Income table in ITEM 7- Management's Discussion and Analysis of Financial Condition and Results of Operations.

For the year ended December 31,

2025

2024

(in thousands; unaudited)

     Average Amount

Percent of Total

Average Amount

Percent of Total

Non-interest bearing

$

1,261,562 

38.0 

%

$

1,316,737 

40.1 

%

Interest-bearing transaction

357,877 

10.8 

325,065 

9.9 

Savings

224,428 

6.7 

227,061 

6.9 

Money market 1

1,257,049 

37.9 

1,155,016 

35.1 

Time deposits, including CDARS

219,135 

6.6 

262,482 

8.0 

Total average deposits

$

3,320,051 

100.0 

%

$

3,286,361 

100.0 

%

1 Money market balances include Insured Cash Sweep® ("ICS") in both 2025 and 2024.

Maturities of Uninsured Time Deposits

The following table shows time deposits by account that are in excess of $250,000 by time remaining to maturity at December 31, 2025.

December 31, 2025

(in thousands; unaudited)

Total

Uninsured Portion

Three months or less

$

50,982 

$

32,482 

Over three months through six months

35,747 

20,747 

Over six months through twelve months

15,376 

8,376 

Over twelve months

1,210 

960 

Total

$

103,315 

$

62,565 

Network Deposits

Our deposit portfolio includes deposits offered through the Promontory Interfinancial Network that are comprised of Certificate of Deposit Account Registry Service® ("CDARS") balances included in time deposits and Insured Cash Sweep® ("ICS") balances included in money market deposits. In addition, we offer deposits through R&T Deposit Solutions comprised of Demand Deposit MarketplaceSM ("DDM") balances. Through these two networks we are able to offer our customers access to FDIC-insured deposit products in aggregate amounts exceeding current insurance limits. When we place funds through CDARS, ICS and DDM, on behalf of a customer, we have the option of receiving matching deposits through the network's reciprocal deposit program, or placing deposits "one-way" for which we receive no matching deposits. The following table shows the composition of our network deposits at December 31, 2025 and 2024.

(in thousands)

December 31, 2025

December 31, 2024

Reciprocal 1

One-Way 1

Reciprocal 1

One-Way 1

CDARS

$

24,774 

$

— 

$

38,885 

$

— 

ICS

196,284 

51,221 

240,661 

— 

DDM

237,833 

— 

125,153 

— 

Total network deposits

$

458,891 

$

51,221 

$

404,699 

$

— 

1 Reciprocal deposits are on-balance-sheet while one-way deposits are off-balance-sheet.

Borrowings

As of December 31, 2025 and 2024, our borrowing capacity with the Federal Home Loan Bank ("FHLB") under secured lines of credit totaled $967.2 million and $948.1 million, respectively.

52

The Bank had a line of credit through the Discount Window at the Federal Reserve Bank of San Francisco ("FRBSF") totaling $344.7 million as of December 31, 2025, secured by investment securities and residential loans. As of December 31, 2024, the Bank had a line of credit through the Discount Window totaling $358.0 million, secured by investment securities and residential loans.

In addition, as of December 31, 2025 and 2024 we had $140.0 million and $125.0 million, respectively, in unsecured lines of credit with correspondent banks to cover short-term borrowing needs.

As of December 31, 2025 and 2024, the Bank had no outstanding short-term borrowings and our bank lines of credit were not utilized as of December 31, 2025 or 2024.

For additional information, see Note 7, Borrowings and Other Obligations, in ITEM 8 of this report.

Subordinated Notes

During the fourth quarter of 2025, we issued Fixed-to-Floating Subordinated Notes of $45.0 million with a final maturity date of December 1, 2035, to certain investors in a private placement, to strengthen capital ratios as part of our balance sheet repositioning. Subordinated notes outstanding was $43.9 million, net of issuance costs, at December 31, 2025. Bancorp made a capital contribution of $30.0 million to the Bank in the fourth quarter. The subordinated notes qualify as Tier 2 capital for the consolidated Company (Bancorp) for regulatory purposes and the portion that Bancorp contributed to the Bank is treated as Tier 1 capital for the Bank. At December 31, 2025, we were in compliance with all covenants under our long-term debt subordinated notes agreement.

For additional information, see Note 13, Subordinated Notes, in ITEM 8 of this report.

Deferred Compensation Obligations

We maintain a non-qualified, unfunded deferred compensation plan for certain key management personnel. Under this plan, participating employees may defer compensation, which will entitle them to receive certain payments for up to, but not exceeding, fifteen years commencing upon retirement, death, disability or termination of employment. A similar Deferred Director Fee Plan entitles participating members of the Board of Directors to receive payments as elected by the participant upon separation from service, death, disability or termination of service. At December 31, 2025 and 2024, our aggregate payment obligations under both plans totaled $5.4 million and $6.0 million, respectively, and was recorded in interest payable and other liabilities in the consolidated statements of condition. Decreases in the deferred compensation plans in 2025 mainly resulted from increases in benefit payments to terminated employees.

We have entered into supplemental executive retirement plans ("SERPs") with a select group of executive officers, providing for certain retirement benefits at age 65 and reduced benefits upon early retirement.  The annual amount of benefits in either pre-retirement scenario is based on a vesting schedule unique to each executive. The SERP also provides for lump sum benefits in the event of a change in control followed by the termination of the executive. Payments under the SERPs are expected to be funded by income from bank-owned life insurance policies. On December 31, 2025 and 2024, our liabilities under the SERPs totaled $4.8 million and $4.6 million, respectively, and were recorded in interest payable and other liabilities in the consolidated statements of condition. The SERPs are unfunded and non-qualified for tax purposes and subject to Title I of the Employee Retirement Income Security Act of 1974.

For additional information, see Note 10 to the Consolidated Financial Statements in ITEM 8 of this report.

Capital Adequacy

As discussed in Note 15 to the Consolidated Financial Statements in ITEM 8 of this report, the Bank's capital ratios were above regulatory guidelines to be considered "well capitalized" and Bancorp's ratios exceeded the required minimum ratios for capital adequacy purposes. For further discussion of bank capital requirements, refer to the SUPERVISION AND REGULATION section in ITEM 1 of this report.

The total risk-based capital ratio for Bancorp was 15.25% at December 31, 2025, compared to 16.54% at December 31, 2024. The reduction is primarily related to losses recognized on securities sales in 2025.

53

Bancorp's tangible common equity to tangible assets ("TCE ratio") decreased to 8.35% at December 31, 2025, from 9.93% at December 31, 2024, primarily due to increases in unrealized losses attributed to the HTM securities reclassification and the subsequent loss from sales of securities during 2025. The Bank's total risk-based capital ratio decreased to 13.90% at December 31, 2025, from 16.13% at December 31, 2024.

Bancorp's share repurchase program and activity are discussed in detail in ITEM 5 and in Note 8 to the Consolidated Financial Statements in ITEM 8 of this report. We expect to maintain strong capital levels and do not expect that we will be required to raise additional capital in 2026. Our anticipated sources of capital in 2026 include future earnings and shares issued under the stock-based compensation program.

Liquidity and Capital Resources

The goal of liquidity management is to provide adequate funds to meet loan demand and to fund operating activities and deposit withdrawals. We accomplish this goal by maintaining an appropriate level of liquid assets and formal lines of credit with the FHLB, FRBSF and correspondent banks that enable us to borrow funds as seen in the table below and discussed in Note 7 to the Consolidated Financial Statements in ITEM 8 of this report. Our Asset Liability Management Committee ("ALCO"), which is comprised of Bank directors and the Bank's Chief Executive Officer, is responsible for approving and monitoring our liquidity targets and strategies. The Bank has long-established minimum liquidity requirements that are regularly monitored using metrics and tools similar to those used by larger banks, such as the liquidity coverage ratio, and multi-scenario, long-horizon stress tests. Our contingency funding plan provides for early detection of potential liquidity issues in the market or the Bank and institutes prompt responses that may prevent or alleviate a liquidity crisis. Management monitors liquidity daily and regularly adjusts our position based on current and future liquidity needs. We also have relationships with third-party deposit networks and can adjust the placement of our deposits via reciprocal or one-way sales as part of our cash management strategy as discussed in Note 6 to the Consolidated Financial Statements in ITEM 8 of this report.

Net available funding sources, including unrestricted cash, unencumbered available-for-sale securities, and total available borrowing capacity, totaled $2.148 billion, or 63% of total deposits, and 209% of estimated uninsured and/or uncollateralized deposits as of December 31, 2025.

The following table details the components of our contingent liquidity sources as of December 31, 2025.

(in thousands)

Total Available

Amount Used

Net Availability

Internal Sources

Unrestricted cash 1

$

206.6 

N/A

$

206.6 

Unencumbered securities at market value

489.6 

N/A

489.6 

External Sources

FHLB line of credit

967.2 

$

— 

967.2 

FRB line of credit

344.7 

— 

344.7 

Lines of credit at correspondent banks

140.0 

— 

140 

Total Liquidity

$

2,148.1 

$

— 

$

2,148.1 

1 Excludes cash items in transit as of December 31, 2025.

Note: Brokered deposits available through third-party networks are not included above.

We obtain funds from the repayment and maturity of loans, deposit inflows, investment securities sales, maturities and paydowns, federal funds purchases, FRBSF and FHLB advances, other borrowings, and cash flow from operations.  Although available as a liquidity source, we have not chosen to utilize brokered deposits. Our primary uses of funds are the origination of loans, the purchase of investment securities and loans, withdrawals of deposits, maturities of certificates of deposit, dividends to common stockholders, share repurchases and operating expenses.

Customer deposits are a significant component of our daily liquidity position. The attraction and retention of deposits depend upon the variety and effectiveness of our customer account products, service and convenience, rates paid to customers, and our financial strength. The cash cycles and unique business activities of some of our large commercial depositors may cause short-term fluctuations in their deposit balances held with us.

Our cash and cash equivalents increased by $88.0 million to $225.3 million at December 31, 2025, from $137.3 million at December 31, 2024. The most significant sources of liquidity during 2025 were proceeds from sales,

54

principal paydowns, calls and maturities of investment securities totaling $935.3 million, $195.5 million in increased deposits, loan payoffs of $145.7 million, $87.4 million in amortization of principal, a net $2.8 million decrease in utilization of credit lines, $45.0 million in proceeds from the issuance of subordinated notes and $39.1 million in net cash was provided by operating activities.

Significant uses of liquidity during 2025 were $1.069 billion in investment securities purchased, and $273.5 million in loan fundings. Additionally other uses included $16.1 million in cash dividends paid on common stock to our shareholders, and $3.3 million in common stock repurchases. Refer to the Consolidated Statement of Cash Flows in this Form 10-K for additional information on our sources and uses of liquidity. Management anticipates that our current strong liquidity position, as detailed in this report, and contingent funding sources are adequate to support our operational needs.

Unfunded credit commitments, as discussed in Note 17 to the Consolidated Financial Statements in ITEM 8 of this report, totaled $464.7 million at December 31, 2025. We expect to fund these commitments to the extent utilized primarily through the repayment of existing loans, principal paydowns of investment securities, and liquid assets.

Over the next twelve months, $198.2 million of time deposits will mature. We expect that a high percentage of these funds will remain with the Bank either through renewals or shifts to other deposit products. Any outflows can be absorbed by the Bank's excess liquidity. We believe our emphasis on local deposits, combined with our immediately available funding sources, provides a very stable base for our liquidity needs.

We had no outstanding short term borrowings under our credit facilities as of December 31, 2025, and 2024, as discussed in Note 7 to the Consolidated Financial Statements in ITEM 8 of this report. We issued Fixed-to-Floating Subordinated Notes of $45.0 million with a final maturity date of December 1, 2035, during 2025, to certain investors in a private placement, to strengthen our capital ratios as part of our balance sheet repositioning, as discussed in Note 13 to the Consolidated Financial Statements in ITEM 8 of this report.

Because Bancorp is a holding company and does not conduct regular banking operations, its primary sources of liquidity are dividends from the Bank. Under the California Financial Code, payment of a dividend from the Bank to Bancorp without advance regulatory approval is restricted to the lesser of the Bank’s retained earnings or the amount of the Bank’s net profits from the previous three fiscal years less the amount of dividends paid during that period. The Bank received approval from the State of California - Department of Financial Protection and Innovation on May 30, 2025, for a dividend of $32.0 million which was paid to Bancorp on May 30, 2025. The primary uses of funds for Bancorp are shareholder dividends, subordinated notes servicing, share repurchases and ordinary operating expenses. Bancorp held $35.2 million in cash as of December 31, 2025, which is expected to cover cash needs throughout 2026.

Statement Regarding Use of Non-GAAP Financial Measures

Financial results are presented in accordance with GAAP and with reference to certain non-GAAP financial measures. Management believes that, given industry turmoil that largely began in the first quarter of 2023, the presentation of Bancorp's non-GAAP TCE ratio reflecting the after tax impact of unrealized losses on held-to-maturity securities provides useful supplemental information to investors because it reflects the level of capital remaining after a hypothetical liquidation of the entire securities portfolio. In addition, management believes that providing selected financial measures excluding the loss on sale of securities discussed above is useful to investors as the strategic short-term loss taken for long-term profitability makes the operational performance difficult to compare to the prior period. Because there are limits to the usefulness of this or any other non-GAAP measure to investors, Bancorp encourages readers to consider its annual and quarterly consolidated financial statements and notes related thereto in their entirety, as filed with the Securities and Exchange Commission, and not to rely on any single financial measure. A reconciliation of the GAAP financial measures to comparable non-GAAP financial measures is presented below. There were no held-to-maturity securities held at December 31, 2025, resulting in the non-GAAP TCE ratio being equal to the GAAP TCE ratio.

55

Reconciliation of GAAP and Non-GAAP Financial Measures

(in thousands, unaudited)

December 31, 2025

December 31, 2024

Tangible Common Equity - Bancorp

Total stockholders' equity

$

394,654 

435,407 

Goodwill and core deposit intangible

(74,670)

(75,546)

Total TCE

a

319,984 

359,861 

Unrealized losses on HTM securities, net of tax1

— 

(89,171)

Unrealized losses on HTM securities included in AOCI, net of tax2

— 

7,701 

TCE, net of unrealized losses on HTM securities (non-GAAP)

b

$

319,984 

278,391 

Total assets

$

3,904,778 

3,701,335 

Goodwill and core deposit intangible

(74,670)

(75,546)

Total tangible assets

c

3,830,108 

3,625,789 

Unrealized losses on HTM securities, net of tax1

— 

(89,171)

Unrealized losses on HTM securities included in AOCI, net of tax2

— 

7,701 

Total tangible assets, net of unrealized losses on HTM securities (non-GAAP)

d

$

3,830,108 

$

3,544,319 

Bancorp TCE ratio

a / c

8.35 

%

9.93 

%

Bancorp TCE ratio, net of unrealized losses on HTM securities (non-GAAP)

b / d

8.35 

%

7.85 

%

Tangible Book Value Per Share

  Common shares outstanding

e

16,103 

16,089 

  Book value per share

$

24.51 

$

27.06 

  Tangible book value per share

a / e

$

19.87 

$

22.37 

1 There were no held-to-maturity securities as of December 31, 2025. Unrealized losses on held-to-maturity securities as of December 31, 2024 were $126.6 million including the unrealized losses that resulted from the transfer of securities from AFS to HTM, net of an estimated $37.4 million in deferred tax benefits based on a blended state and federal statutory tax rate of 29.56%. 2 The remaining unrealized losses that resulted from the transfer of securities from AFS to HTM, as of December 31, 2024, net of an estimated $3.2 million, in deferred tax benefits based on a blended state and federal statutory tax rate of 29.56% are added back as they are already included in AOCI.

56

 (in thousands, except per share amounts; unaudited)

Years ended

Net (loss) income

December 31, 2025

December 31, 2024

Net (loss) income (GAAP)

$

(35,675)

$

(8,409)

Adjustments:

Losses on sale of investment securities from portfolio repositioning

88,202 

32,541 

Related income tax benefit

(26,073)

(9,619)

Adjustments, net of taxes

62,129 

22,922 

Comparable net income (non-GAAP)

$

26,454 

$

14,513 

Diluted (loss) earnings per share

Weighted average basic and diluted shares

15,942 

16,042 

Diluted (loss) earnings per share (GAAP)

$

(2.24)

$

(0.52)

Comparable basic earnings per share (non-GAAP)

$

1.66 

$

0.90 

Return on average assets

Average assets

$

3,805,821 

$

3,773,882 

Return on average assets (GAAP)

(0.94)

%

(0.22)

%

Comparable return on average assets (non-GAAP)

0.70 

%

0.38 

%

Return on average equity

Average stockholders' equity

$

435,660 

$

435,070 

Return on average equity (GAAP)

(8.19)

%

(1.93)

%

Comparable return on average equity (non-GAAP)

6.07 

%

3.34 

%

Return on average tangible common equity

Average goodwill and intangibles

$

76,031 

$

75,115 

Average tangible common equity

$

359,629 

$

359,955 

Return on average tangible common equity (GAAP)

(9.92)

%

(2.34)

%

Comparable return on average tangible common equity (non-GAAP)

7.36 

%

4.03 

%

Efficiency ratio

Non-interest expense

$

81,310 

$

78,740 

Net interest income

$

106,037 

$

91,582 

Non-interest income (GAAP)

$

(76,650)

$

(21,360)

Losses on sale of investment securities from portfolio repositioning

88,202 

32,541 

Non-interest income (non-GAAP)

$

11,552 

$

11,181 

Efficiency ratio (GAAP)

276.69 

%

112.13 

%

Comparable efficiency ratio (non-GAAP)

69.15 

%

76.62 

%