UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended ~~June~~September 30, 2025

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

For the transition period from ________ to ________

Commission File Number 001-40379

FIVE STAR BANCORP

(Exact name of Registrant as specified in its charter)


California						75-3100966
(State or other jurisdiction of incorporation or organization)						(IRS Employer Identification No.)

3100 Zinfandel Drive, Suite 100 Rancho Cordova, CA 95670

(Address of principal executive office) (Zip Code)

Registrant’s telephone number, including area code: (916) 626-5000

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


Title of each class	Trading symbol	Name of each exchange on which registered
Common stock, no par value per share	FSBC	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes x No o

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


Large accelerated filer	o	Accelerated filer	x
Non-accelerated filer	o	Smaller reporting company	o
Emerging growth company	x

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No x

As of ~~August~~October 131, 2025, there were 21,~~368~~367,~~053~~387 shares of the registrant’s common stock, no par value, outstanding.

Table of Contents

TABLE OF CONTENTS

FIVE STAR BANCORP AND SUBSIDIARY

Quarterly Report on Form 10-Q

~~June~~September 30, 2025

PART I	FINANCIAL INFORMATION	1
ITEM 1.	Financial Statements (unaudited)	1
	Consolidated Balance Sheets	1
	Consolidated Statements of Income	2
	Consolidated Statements of Comprehensive Income	3
	Consolidated Statements of Shareholders’ Equity	4
	Consolidated Statements of Cash Flows	6
	Notes to Consolidated Financial Statements	78
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2930
ITEM 3.	Quantitative and Qualitative Disclosure About Market Risk	6566
ITEM 4.	Controls and Procedures	6667
PART II	OTHER INFORMATION	6768
ITEM 1.	Legal Proceedings	6768
ITEM 1A.	Risk Factors	6768
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	6768
ITEM 3.	Defaults Upon Senior Securities	6768
ITEM 4.	Mine Safety Disclosures	6768
ITEM 5.	Other Information	6768
ITEM 6.	Exhibits	6869
SIGNATURES		6970

Table of Contents

PART I FINANCIAL INFORMATION

ITEM 1. Financial Statements

FIVE STAR BANCORP AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in thousands, except share amounts)	~~June~~September 30, 2025		December 31, 2024
ASSETS
Cash and due from financial institutions	$	5344,~~724~~147	$	33,882
Interest-bearing deposits in banks	~~430~~536,~~086~~300		318,461
Cash and cash equivalents	~~483~~580,~~810~~447		352,343
Time deposits in banks	~~849~~100		4,121
Securities available-for-sale, at fair value, net of allowance for credit losses of $0 at June 30, 2025 and December 31, 2024 (amortized cost of $111,332 and $115,757 at June 30, 2025 and December 31, 2024, respectively)	94,990		98,194
Securities available-for-sale, at fair value, net of allowance for credit losses of $0 at September 30, 2025 and December 31, 2024 (amortized cost of $109,135 and $115,757 at September 30, 2025 and December 31, 2024, respectively)	95,635		98,194
Securities held-to-maturity, at amortized cost, net of allowance for credit losses of $20 at June 30, 2025 and December 31, 2024 (fair value of $2,270 and $2,353 at June 30, 2025 and December 31, 2024, respectively)	2,585		2,720
Securities held-to-maturity, at amortized cost, net of allowance for credit losses of $20 at September 30, 2025 and December 31, 2024 (fair value of $1,996 and $2,353 at September 30, 2025 and December 31, 2024, respectively)	2,190		2,720
Loans held for sale	~~309~~—		3,247
Loans held for investment	3,~~758~~887,~~025~~259		3,532,686
Allowance for credit losses	(4042,~~167~~061)		(37,791)
Loans held for investment, net of allowance for credit losses	3,~~717~~845,~~858~~198		3,494,895
FHLB stock	15,000		15,000
Operating leases, right-of-use asset, net	79,~~094~~751		6,245
Premises and equipment, net	1,~~606~~656		1,584
Bank-owned life insurance	23,~~466~~676		19,375
Interest receivable and other assets	6568,~~906~~117		55,554
Total assets	$	4,~~413~~641,~~473~~770	$	4,053,278
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits:
Non-interest-bearing	$	1,~~004~~059,~~061~~082	$	922,629
Interest-bearing	23,~~890~~044,~~561~~356		2,635,365
Total deposits	34,~~894~~103,~~622~~438		3,557,994
Borrowings:
Subordinated notes, net	7374,~~968~~004		73,895
Other borrowings	—		—
Operating lease liability	710,~~744~~431		6,857
Interest payable and other liabilities	2022,~~397~~589		17,908
Total liabilities	34,~~996~~210,~~731~~462		3,656,654
Commitments and contingencies (Note 8)
Shareholders’ equity:
Preferred stock, no par value; 10,000,000 shares authorized; zero issued and outstanding at June 30, 2025 and December 31, 2024	—		—
Preferred stock, no par value; 10,000,000 shares authorized; zero issued and outstanding at September 30, 2025 and December 31, 2024	—		—
Common stock, no par value; 100,000,000 shares authorized; 21,360,991 shares issued and outstanding at June 30, 2025; 21,319,083 shares issued and outstanding at December 31, 2024	303,155		302,531
Common stock, no par value; 100,000,000 shares authorized; 21,367,387 shares issued and outstanding at September 30, 2025; 21,319,083 shares issued and outstanding at December 31, 2024	303,571		302,531
Retained earnings	~~125~~137,~~545~~615		106,464
Accumulated other comprehensive loss, net of taxes	(119,~~958~~878)		(12,371)
Total shareholders’ equity	~~416~~431,~~742~~308		396,624
Total liabilities and shareholders’ equity	$	4,~~413~~641,~~473~~770	$	4,053,278

See accompanying notes to the unaudited consolidated financial statements.

FIVE STAR BANCORP AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

Three Months EndedJune 30,

Six Months EndedJune 30,

Three Months EndedSeptember 30,

Nine Months EndedSeptember 30,

(in thousands, except per share amounts)

2025

2024

2025

2024

Interest and fee income:

Loans, including fees

5659,~~016~~257

4650,~~362~~390

~~108~~168,~~947~~204

90140,~~148~~538

Taxable securities

~~403~~415

~~474~~445

~~810~~1,225

~~951~~1,396

Nontaxable securities

~~174~~164

~~176~~175

~~348~~512

~~352~~527

Interest-bearing deposits in banks

35,~~987~~009

1,~~986~~657

712,~~562~~571

56,~~088~~745

Total interest and fee income

6064,~~580~~845

4852,~~998~~667

~~117~~182,~~667~~512

96149,~~539~~206

Interest expense:

Deposits

2224,~~904~~336

1821,~~717~~076

4469,~~852~~188

3859,~~228~~304

Subordinated notes

1,161

1,~~162~~161

23,~~323~~484

Other borrowings

—

2744

—

~~152~~196

Total interest expense

2425,~~065~~497

1922,~~906~~281

4772,~~175~~672

4062,~~703~~984

Net interest income

3639,~~515~~348

2930,~~092~~386

70109,~~492~~840

5586,~~836~~222

Provision for credit losses

2,500

2,~~000~~750

46,~~400~~900

25,~~900~~650

Net interest income after provision for credit losses

3436,~~015~~848

27,~~092~~636

66102,~~092~~940

5280,~~936~~572

Non-interest income:

Service charges on deposit accounts

~~196~~185

~~189~~165

~~411~~596

~~377~~542

Gain on sale of loans

~~119~~—

~~449~~306

244

~~818~~1,124

Loan-related fees

~~468~~683

~~370~~406

~~916~~1,599

~~799~~1,205

FHLB stock dividends

~~325~~329

~~329~~327

~~656~~985

~~661~~988

Earnings on BOLI

~~220~~209

~~158~~162

~~381~~590

~~300~~462

Other

~~482~~560

7815

~~561~~1,121

~~451~~466

Total non-interest income

1,~~810~~966

1,~~573~~381

35,~~169~~135

34,~~406~~787

Non-interest expense:

Salaries and employee benefits

89,~~910~~716

7,~~803~~969

1827,~~044~~760

1523,~~380~~349

Occupancy and equipment

~~657~~700

~~646~~626

1,~~294~~994

1,~~272~~898

Data processing and software

1,~~508~~559

1,~~235~~327

24,~~965~~524

23,~~392~~719

FDIC insurance

~~470~~500

~~390~~405

~~925~~1,425

~~790~~1,195

Professional services

~~918~~932

~~767~~830

12,~~831~~763

12,~~474~~304

Advertising and promotional

~~865~~803

~~615~~584

12,~~387~~190

1,~~075~~659

Loan-related expenses

~~423~~317

~~297~~292

~~742~~1,059

~~594~~886

Other operating expenses

12,~~975~~053

1,~~760~~743

35,~~583~~636

34,~~252~~995

Total non-interest expense

1516,~~726~~580

13,~~513~~776

3047,~~771~~351

2640,~~229~~005

Income before provision for income taxes

2022,~~099~~234

15,~~152~~241

3860,~~490~~724

3045,~~113~~354

Provision for income taxes

5,~~591~~890

4,~~370~~300

1016,~~871~~761

813,~~700~~000

Net income

1416,~~508~~344

10,~~782~~941

2743,~~619~~963

2132,~~413~~354

Basic earnings per common share

0.6877

0.5152

12.3007

1.1263

Diluted earnings per common share

0.6877

0.5152

12.3007

1.1263

See accompanying notes to unaudited consolidated financial statements.

FIVE STAR BANCORP AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

	Three Months EndedJune 30,				Six Months EndedJune 30,
	Three Months EndedSeptember 30,				Nine Months EndedSeptember 30,
(in thousands)	2025		2024		2025		2024
Net income	$	1416,~~508~~344	$	10,~~782~~941	$	2743,~~619~~963	$	2132,~~413~~354
Unrealized gain (loss) on securities:
Unrealized gain on securities:
Net unrealized holding gain (loss) on securities available-for-sale during the period	190		295		1,220		(660)
Net unrealized holding gain on securities available-for-sale during the period	2,843		3,549		4,063		2,889
Less: Income tax expense (benefit) related to items of other comprehensive (loss) income	502		87		807		(195)
Less: Income tax expense related to items of other comprehensive income	763		1,049		1,570		854
Other comprehensive (loss) income	(312)		208		413		(465)
Other comprehensive income	2,080		2,500		2,493		2,035
Total comprehensive income	$	1418,~~196~~424	$	1013,~~990~~441	$	2846,~~032~~456	$	2034,~~948~~389

See accompanying notes to the unaudited consolidated financial statements.

FIVE STAR BANCORP AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

For the Three Months Ended ~~June~~September 30, 2025 and 2024

(Unaudited)

	Common Stock			Retained Earnings		Accumulated Other Comprehensive Loss		Total Shareholders’ Equity
(in thousands, except per share amounts)	Shares	Amount
Balance at March 31, 2024	17,353,251	$	220,804	$	84,216	$	(12,440)	$	292,580
Net income	—	—		10,782		—		10,782
Other comprehensive income	—	—		—		208		208
Common stock issued	3,967,500	80,870		—		—		80,870
Stock compensation expense	—	294		—		—		294
Stock forfeitures	(1,168)	—		—		—		—
Cash dividends paid ($0.20 per share)	—	—		(4,264)		—		(4,264)
Balance at June 30, 2024	21,319,583	$	301,968	$	90,734	$	(12,232)	$	380,470
Balance at March 31, 2025	21,329,235	$	302,788	$	115,309	$	(11,646)	$	406,451
Net income	—	—		10,941		—		10,941
Net income	—	—		14,508		—		14,508
Other comprehensive income	—	—		—		2,500		2,500
Other comprehensive loss	—	—		—		(312)		(312)
Stock compensation expense	—	283		—		—		283
Stock issued under stock award plans	31,756	—		—		—		—
Cash dividends paid ($0.20 per share)	—	—		(4,264)		—		(4,264)
Stock compensation expense	—	367		—		—		367
Balance at September 30, 2024	21,319,583	$	302,251	$	97,411	$	(9,732)	$	389,930
Cash dividends paid ($0.20 per share)	—	—		(4,272)		—		(4,272)
Balance at June 30, 2025	21,360,991	$	303,155	$	125,545	$	(11,958)	$	416,742
Net income	—	—		16,344		—		16,344
Other comprehensive income	—	—		—		2,080		2,080
Stock issued under stock award plans	7,062	—		—		—		—
Stock compensation expense	—	416		—		—		416
Stock forfeitures	(666)	—		—		—		—
Cash dividends paid ($0.20 per share)	—	—		(4,274)		—		(4,274)
Balance at September 30, 2025	21,367,387	$	303,571	$	137,615	$	(9,878)	$	431,308

See accompanying notes to the unaudited consolidated financial statements.

FIVE STAR BANCORP AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

For the ~~Six~~Nine Months Ended ~~June~~September 30, 2025 and 2024

(Unaudited)

	Common Stock			Retained Earnings		Accumulated Other Comprehensive Loss		Total Shareholders’ Equity
(in thousands, except per share amounts)	Shares	Amount
Balance at December 31, 2023	17,256,989	$	220,505	$	77,036	$	(11,767)	$	285,774
Net income	—	—		2132,~~413~~354		—		2132,~~413~~354
Other comprehensive loss	—	—		—		(465)		(465)
Other comprehensive income	—	—		—		2,035		2,035
Common stock issued	3,967,500	80,870		—		—		80,870
Stock issued under stock award plans	96,380	—		—		—		—
Stock compensation expense	—	~~593~~876		—		—		~~593~~876
Stock forfeitures	(1,286)	—		—		—		—
Cash dividends paid ($0.40 per share)	—	—		(7,715)		—		(7,715)
Cash dividends paid ($0.60 per share)	—	—		(11,979)		—		(11,979)
Balance at June 30, 2024	21,319,583	$	301,968	$	90,734	$	(12,232)	$	380,470
Balance at September 30, 2024	21,319,583	$	302,251	$	97,411	$	(9,732)	$	389,930
Balance at December 31, 2024	21,319,083	$	302,531	$	106,464	$	(12,371)	$	396,624
Net income	—	—		2743,~~619~~963		—		2743,~~619~~963
Other comprehensive income	—	—		—		~~413~~2,493		~~413~~2,493
Stock issued under stock award plans	4249,~~241~~303	—		—		—		—
Stock compensation expense	—	~~624~~1,040		—		—		~~624~~1,040
Stock forfeitures	(~~333~~999)	—		—		—		—
Cash dividends paid ($0.40 per share)	—	—		(8,538)		—		(8,538)
Cash dividends paid ($0.60 per share)	—	—		(12,812)		—		(12,812)
Balance at June 30, 2025	21,360,991	$	303,155	$	125,545	$	(11,958)	$	416,742
Balance at September 30, 2025	21,367,387	$	303,571	$	137,615	$	(9,878)	$	431,308

See accompanying notes to unaudited consolidated financial statements.

FIVE STAR BANCORP AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Six Months Ended June 30,
	Nine Months Ended September 30,
(in thousands)	2025		2024
Cash flows from operating activities:
Net income	$	2743,~~619~~963	$	2132,~~413~~354
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses	46,~~400~~900		25,~~900~~650
Depreciation and amortization	~~906~~(50)		~~938~~1,407
Amortization of deferred loan fees and costs	~~331~~370		9(272)
Amortization of premiums and discounts on securities	~~425~~609		~~478~~721
Amortization of subordinated note issuance costs	73109		73109
Amortization of low income housing tax credits	~~681~~1,239		—386
Stock compensation expense	~~624~~1,040		~~593~~876
Earnings on BOLI	(~~381~~590)		(~~300~~462)
Deferred tax provision	~~712~~722		1524
Loans originated for sale	(1,384)		(1719,~~414~~358)
Gain on sale of loans	(244)		(~~818~~1,124)
Gross proceeds from sale of loans	3,531		1217,~~909~~572
Gain on equity investment	(399)		(300)
Gain on equity investments	845		(242)
Net changes in:
Interest receivable and other assets	(~~955~~5,672)		41,~~067~~073
Interest payable and other liabilities	~~(2,131)~~62		(74,~~808~~195)
Operating lease liability	~~(546)~~605		(~~484~~727)
Net cash provided by operating activities	3352,~~262~~055		1633,~~271~~792
Cash flows from investing activities:
Maturities, prepayments, and calls of securities available-for-sale	47,~~135~~574		36,~~844~~370
Capital call for equity investment	(1,285)		(1,269)
Purchases of securities available-for-sale	(1,030)		—
Proceeds received from equity investment	—		300
Capital call for equity investments	(1,638)		(2,802)
Low income housing tax credits	(5,381)		(1,160)
Proceeds received from equity investments	283		530
Net change in time deposits in banks	3,272		1,761
Low income housing tax credits	(5,381)		(10,559)
Loan originations, net of repayments	(226,659)		(174,992)
Net change in time deposits in banks	4,021		1,740
Purchase of premises and equipment	(344)		(312)
Loan originations, net of repayments	(356,230)		(369,697)
Purchase of premises and equipment	(559)		(522)
Purchase of BOLI	(3,710)		(1,550)
Other real estate sale proceeds	87		—
Net cash used in investing activities	(~~229~~356,~~885~~583)		(~~173~~376,~~378~~490)
Cash flows from financing activities:
Net change in deposits	~~336~~545,~~628~~444		~~122~~373,~~735~~083
Proceeds from issuance of stock, net of issuance costs	—		80,870
Advances (payments) on other borrowings	—		(170,000)
Cash dividends paid	(812,~~538~~812)		(711,~~715~~979)
Net cash provided by financing activities	~~328~~532,~~090~~632		25271,~~890~~974
Net change in cash and cash equivalents	~~131~~228,~~467~~104		(~~131~~70,~~217~~724)
Cash and cash equivalents at beginning of period	352,343		321,576
Cash and cash equivalents at end of period	$	~~483~~580,~~810~~447	$	~~190~~250,~~359~~852
Supplemental disclosure of cash flow information:
Interest paid	$	45,966	$	41,904
Income taxes paid	13,165		9,391
Supplemental disclosure of noncash items:
Transfer from loans held for sale to loans held for investment	1,035		11,464
Unrealized gain (loss) on securities	1,220		(660)
Operating lease liabilities exchanged for ROUA	1,433		1,958
ROUA acquired	(1,433)		(1,958)
Net change in commitment for low income housing tax credits	(10,000)		—

See accompanying notes to the unaudited consolidated financial statements.


	Nine Months Ended September 30,
(in thousands)	2025		2024
Supplemental disclosure of cash flow information:
Interest paid	$	71,925	$	65,223
Income taxes paid	18,011		11,388
Supplemental disclosure of noncash items:
Transfer from loans held for sale to loans held for investment	1,344		11,464
Unrealized gain on securities	4,063		2,889
Operating lease liabilities exchanged for ROUA	2,970		2,225
ROUA acquired	(2,970)		(2,225)
Net change in commitment for low income housing tax credits	(10,000)		191

See accompanying notes to the unaudited consolidated financial statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 1: Basis of Presentation and Summary of Significant Accounting Policies

(a) Organization

Five Star Bank (the “Bank”) was chartered on October 26, 1999 and began operations on December 20, 1999. Five Star Bancorp (“Bancorp” or the “Company”) was incorporated on September 16, 2002 and subsequently obtained approval from the Federal Reserve to become a bank holding company in connection with its acquisition of the Bank. The Company became the sole shareholder of the Bank on June 2, 2003 in a statutory merger, pursuant to which each outstanding share of the Bank’s common stock was exchanged for one share of common stock of the Company.

The Company, through the Bank, provides financial services to customers who are predominately small and middle-market businesses, professionals, and individuals residing in the Northern California region. The Company’s primary loan products are commercial real estate loans, land development loans, construction loans, and operating lines of credit, and its primary deposit products are checking accounts, savings accounts, money market accounts, and term certificate accounts. The Bank currently has ~~eight~~nine branch offices in Roseville, Natomas, Rancho Cordova, Redding, Elk Grove, Chico, Yuba City, ~~and~~ San Francisco, and Walnut Creek.

(b) Basis of Financial Statement Presentation and Consolidation

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) as contained within the Financial Accounting Standards Board’s (“FASB”) ASC and the rules and regulations of the SEC, including the instructions to Regulation S-X. These interim unaudited consolidated financial statements reflect all adjustments (consisting solely of normal recurring adjustments and accruals) which, in the opinion of management, are necessary for a fair presentation of financial position, results of operations and comprehensive income, changes in shareholders’ equity, and cash flows for the interim periods presented. These unaudited consolidated financial statements have been prepared on a basis consistent with, and should be read in conjunction with, the audited consolidated financial statements as of and for the year ended December 31, 2024, and the notes thereto, included in the Company’s Annual Report on Form 10-K (the “2024 Annual Report on Form 10-K”), which was filed with the SEC on February 28, 2025.

The unaudited consolidated financial statements include Bancorp and its wholly owned subsidiary, the Bank. All significant intercompany transactions and balances are eliminated in consolidation.

The results of operations for the three and ~~six~~nine months ended ~~June~~September 30, 2025 are not necessarily indicative of the results of operations that may be expected for any other interim period or for the year ending December 31, 2025.

The Company’s accounting and reporting policies conform to GAAP and to general practices within the banking industry.

The Company has one reportable operating segment: banking. The banking segment derives its revenues through the Bank, which provides a broad range of banking products and services to customers who are predominantly small to medium-sized businesses, professionals, and individuals primarily in Northern California. The Company manages the business activities on a consolidated basis.

The Company’s chief operating decision maker (“CODM”) is its Chief Executive Officer, who reviews financial information presented on a consolidated basis. The CODM assesses performance for the operating segment and decides how to allocate resources based on net income that also is reported on the income statement as consolidated net income. The measure of segment assets is reported on the balance sheet as total consolidated assets.

These financial metrics are used by the CODM to make key operating decisions, such as determination of the rate at which the Company seeks to grow, loan and deposit pricing, and the allocation of budget for non-interest expenses. Net income is used to monitor budget versus actual results. Discrete financial information is not available other than on a Company-wide basis.

(d) Emerging Growth Company

The Company qualifies as an emerging growth company as defined in the Jumpstart Our Business Startups Act of 2012, and, as such, may take advantage of specified reduced reporting requirements and deferred adoption dates for accounting standards, and is relieved of other significant requirements that are otherwise generally applicable to other public companies. The Company will remain an emerging growth company for five years after its IPO date of May 5, 2021, unless one of the following occurs: (i) total annual gross revenues are $1.235 billion or more; (ii) the Company issues more than $1.0 billion in non-convertible debt; or (iii) the Company becomes a large accelerated filer with a public float of more than $0.7 billion, as measured at June 30 annually.

(e) Significant Accounting Policies

The Company’s significant accounting policies are included in Note 1, Basis of Presentation in the notes to our audited consolidated financial statements included in the 2024 Annual Report on Form 10-K.

(f) Recently Issued Accounting Standards

The following information reflects recent accounting standards that have been adopted or are pending adoption by the Company. The Company qualifies as an emerging growth company and, as such, has elected not to opt out of the extended transition period for complying with new or revised accounting standards and is not subject to the new or revised accounting standards applicable to public companies during the extended transition period. The accounting standards discussed below indicate effective dates for the Company as an emerging growth company using the extended transition period.

Accounting Standards Adopted in 2025

None.

Accounting Standards Issued But Not Yet Adopted

In October 2023, the FASB issued ASU No. 2023-06, Disclosure Improvements - Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative (“ASU 2023-06”), amending disclosure or presentation requirements related to various subtopics in the FASB’s ASC. ASU 2023-06 was issued in response to the SEC’s initiative to update and simplify disclosure requirements. The SEC identified 27 disclosure requirements that were incremental to those in the ASC and referred them to the FASB for potential incorporation into GAAP. To avoid duplication, the SEC intended to eliminate those disclosure requirements from existing SEC regulations as the FASB incorporated them into the relevant ASC subtopics. ASU 2023-06 adds 14 of the 27 identified disclosure or presentation requirements to the ASC. ASU 2023-06 is to be applied prospectively, and early adoption is prohibited. For reporting entities subject to the SEC’s existing disclosure requirements, the effective dates of ASU 2023-06 will be the date on which the SEC’s removal of that related disclosure requirement from Regulation S-X or Regulation S-K becomes effective. If by June 30, 2027, the SEC has not removed the applicable requirement from Regulation S-X or Regulation S-K, the pending content of the related amendment will be removed from the ASC and will not become effective for any entities. ASU 2023-06 is not expected to have a significant impact on the Company’s consolidated financial statements.

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740) - Improvements to Income Tax Disclosures (“ASU 2023-09”), which enhances the transparency and decision usefulness of income tax disclosures. ASU 2023-09 will require disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. Entities will also be required to disclose income/(loss) from continuing operations before income tax expense/(benefit) disaggregated between domestic and foreign operations, as well as income tax expense/(benefit) from continuing operations disaggregated by federal, state, and foreign operations. ASU 2023-09 is effective January 1, 2026 for emerging growth companies electing not to opt out of the extended transition period and is not expected to have a significant impact on the Company’s consolidated financial statements.

In March 2024, the FASB issued ASU 2024-02, Codification Improvements - Amendments to Remove References to the Concepts Statements (“ASU 2024-02”). ASU 2024-02 contains amendments to the ASC that remove references to various Concepts Statements. In most instances, the references are extraneous and not required to understand or apply the guidance. In other instances, the references were used in prior Statements to provide guidance in certain topical areas. FASB Concepts Statements are nonauthoritative. Removing all references to Concepts Statements in the guidance is intended to

simplify the ASC and draw a distinction between authoritative and nonauthoritative literature. ASU 2024-02 is effective January 1, 2026 for emerging growth companies electing not to opt out of the extended transition period and is not expected to have a significant impact on the Company’s consolidated financial statements.

On November 4, 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (“Subtopic 220-40”): Disaggregation of Income Statement Expenses (“ASU 2024-03”) and in January 2025 the FASB issued ASU 2025-01, Clarifying the Effective Date. This standard responds to investor input by requiring public companies to disclose, in interim and annual reporting periods, additional information about certain expenses in the notes to the financial statements. This standard is effective for all entities that are subject to Subtopic 220-40, for annual periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027, but early adoption is permitted. ASU 2024-03 is not expected to have a significant impact on the Company’s consolidated financial statements.

(g) Reclassifications

Certain amounts reported in previous consolidated financial statements have been reclassified to conform to current period presentation. These reclassifications did not affect previously reported amounts of net income, total assets, or total shareholders’ equity.

Note 2: Fair Value of Assets and Liabilities

Fair Value Hierarchy and Fair Value Measurement

Accounting standards require the Company to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:

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

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

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

The fair values of securities are determined by obtaining quoted prices on nationally recognized securities exchanges (Level 1 inputs) or matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities, but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs).

910

Table 2.1 summarizes the Company’s assets and liabilities required to be recorded at fair value on a recurring basis.

Table 2.1: Fair Value on a Recurring Basis
(in thousands)	Carrying Value		Quoted Prices in Active Markets for Identical Assets(Level 1)		Significant Other Observable Inputs(Level 2)		Significant Unobservable Inputs(Level 3)		Measurement Categories: Changes in Fair Value Recorded In
June 30, 2025
September 30, 2025
Assets:
Securities available-for-sale:
U.S. government agency securities, mortgage-backed securities, obligations of states and political subdivisions, collateralized mortgage obligations, and corporate bonds	$	9495,~~990~~635	$	—	$	9495,~~990~~635	$	—	OCI
December 31, 2024
Assets:
Securities available-for-sale:
U.S. government agency securities, mortgage-backed securities, obligations of states and political subdivisions, collateralized mortgage obligations, and corporate bonds	$	98,194	$	—	$	98,194	$	—	OCI

Available-for-sale securities are recorded at fair value on a recurring basis. When available, quoted market prices (Level 1 inputs) are used to determine the fair value of available-for-sale securities. If quoted market prices are not available, management obtains pricing information from a reputable third-party service provider, who may utilize valuation techniques that use current market-based or independently sourced parameters, such as bid/ask prices, dealer-quoted prices, interest rates, benchmark yield curves, prepayment speeds, probability of default, loss severity, and credit spreads (Level 2 inputs). Level 2 securities include U.S. agencies’ or government-sponsored agencies’ debt securities, mortgage-backed securities, government agency-issued bonds, privately issued collateralized mortgage obligations, and corporate bonds. Level 3 securities are based on unobservable inputs that are supported by little or no market activity. In addition, values use discounted cash flow models and may include significant management judgment and estimation. As of ~~June~~September 30, 2025 and December 31, 2024, there were no Level 1 available-for-sale securities and no transfers between Level 1 and Level 2 classifications for assets or liabilities measured at fair value on a recurring basis.

Certain financial assets may be measured at fair value on a non-recurring basis. These assets are subject to fair value adjustments that result from the application of the lower of cost or fair value accounting or write-downs of individual assets, such as collateral dependent loans and other real estate owned. As of ~~June~~September 30, 2025 and December 31, 2024, the carrying amount of assets measured at fair value on a non-recurring basis was immaterial to the Company.

Disclosures about Fair Value of Financial Instruments

Table 2.2 is a summary of fair value estimates for financial instruments as of ~~June~~September 30, 2025 and December 31, 2024. The carrying amounts in Table 2.2 are recorded in the consolidated balance sheets under the indicated captions. Further, management has not disclosed the fair value of financial instruments specifically excluded from disclosure requirements, such as BOLI.

1011

Table 2.2: Fair Value Estimates for Financial Instruments

June 30, 2025

December 31, 2024

September 30, 2025

December 31, 2024

(in thousands)

Carrying Amounts

Fair Value

Fair Value Hierarchy

Carrying Amounts

Fair Value

Fair Value Hierarchy

Financial assets:

Cash and cash equivalents

~~483~~580,~~810~~447

Level 1

352,343

Level 1

Time deposits in banks

~~849~~100

Level 1

4,121

Level 1

Securities available-for-sale

9495,~~990~~635

Level 2

98,194

Level 2

Securities held-to-maturity

2,~~585~~190

21,~~270~~996

Level 3

2,720

2,353

Level 3

Loans held for sale

~~309~~—

~~342~~—

Level 2

3,247

3,597

Level 2

Loans held for investment, net of allowance for credit losses

3,~~717~~845,~~858~~198

3,~~654~~786,~~853~~585

Level 3

3,494,895

3,412,032

Level 3

Financial liabilities:

Time deposits

~~772~~625,~~085~~580

~~770~~624,~~872~~992

Level 2

670,154

669,078

Level 2

Subordinated notes

7374,~~968~~004

73,~~533~~546

Level 3

73,895

73,371

Level 3

The Company used the following methods and assumptions to estimate the fair value of its financial instruments at ~~June~~September 30, 2025 and December 31, 2024:

Cash and cash equivalents and time deposits in banks: The carrying amount is estimated to be fair value due to the liquid nature of the assets and their short-term maturities.

Investment securities: See discussion above for the methods and assumptions used by the Company to estimate the fair value of available-for-sale investment securities. ~~Fair~~The fair value of held-to-maturity securities is estimated by calculating the net present value of future cash flows based on observable market data, such as interest rates and yield curves (observable at commonly quoted intervals) as provided by an independent third party.

Loans held for sale: The fair value is based on what secondary markets are currently offering for portfolios with similar characteristics.

Loans held for investment, net of allowance for credit losses: For variable rate loans that reprice frequently with no significant change in credit risk, fair values are based on carrying values. Fair values for other loans are estimated using discounted cash flow analyses, which use interest rates being offered at each reporting date for loans with similar terms to borrowers of comparable creditworthiness without considering widening credit spreads due to market illiquidity, which approximates the exit price notion. The allowance for credit losses is considered to be a reasonable estimate of loan discount for credit quality concerns.

Commitments to extend credit: These are primarily for adjustable rate loans, and there are no differences between the committed amounts and their fair values. Commitments to fund fixed rate loans are at rates which approximate fair value at each reporting date.

Time deposits: The fair value is estimated using a discounted cash flow analysis that uses interest rates offered at each reporting date by the Company for certificates with similar remaining maturities, resulting in a Level 2 classification.

Subordinated notes: The fair value is estimated by discounting the future cash flow using the current three-month CME Term SOFR. The Company’s subordinated notes are not registered securities and were issued through private placements, resulting in a Level 3 classification. ~~The notes are recorded at carrying value.~~

Other borrowings: The carrying amount is estimated to be fair value.

1112

Note 3: Investment Securities

The Company’s investment securities portfolio includes obligations of states and political subdivisions, securities issued by U.S. federal government agencies, such as the SBA, and securities issued by U.S. GSEs, such as the FNMA, the FHLMC, and the FHLB. The Company also invests in residential and commercial mortgage-backed securities, collateralized mortgage obligations issued or guaranteed by GSEs, and corporate bonds, as reflected in Tables 3.1 and 3.2.

A summary of the amortized cost and fair value related to securities held-to-maturity as of ~~June~~September 30, 2025 and December 31, 2024 is presented in Table 3.1. Securities held-to-maturity, at amortized cost, had a $20.0 thousand allowance for credit losses as of ~~June~~September 30, 2025 and December 31, 2024.

Table 3.1: Securities Held-to-Maturity
(in thousands)	Amortized Cost		Gross Unrealized				Fair Value
			Gains		(Losses)
June 30, 2025
September 30, 2025
Obligations of states and political subdivisions	$	2,~~585~~190	$	—	$	(~~315~~194)	$	21,~~270~~996
Total held-to-maturity	$	2,~~585~~190	$	—	$	(~~315~~194)	$	21,~~270~~996
December 31, 2024
Obligations of states and political subdivisions	$	2,720	$	—	$	(367)	$	2,353
Total held-to-maturity	$	2,720	$	—	$	(367)	$	2,353

For securities issued by states and political subdivisions, for purposes of evaluating whether to recognize credit loss expense, management considers: (i) issuer and/or guarantor credit ratings; (ii) historical probability of default and loss given default rates for given bond ratings and remaining maturity; (iii) whether issuers continue to make timely principal and interest payments under the contractual terms of the securities; (iv) internal credit review of the financial information; and (v) whether or not such securities have credit enhancements such as guarantees, contain a defeasance clause, or are pre-refunded by the issuers.

As of June 30, 2025 and December 31, 2024, the allowance for credit losses on held-to-maturity securities, at amortized cost, was $20.0 thousand. The Company did not record an allowance for credit losses on available-for-sale securities as of June 30, 2025 or December 31, 2024.

A summary of the amortized cost and fair value related to securities available-for-sale as of June 30, 2025 and December 31, 2024 is presented in Table 3.2. Securities available-for-sale did not have an allowance for credit losses as of June 30, 2025 or December 31, 2024.

Table 3.2: Securities Available-for-Sale
(in thousands)	Amortized Cost		Gross Unrealized				Fair Value
			Gains		(Losses)
June 30, 2025
U.S. government agency securities	$	6,909	$	154	$	(61)	$	7,002
Mortgage-backed securities	59,650		15		(10,447)		49,218
Obligations of states and political subdivisions	42,498		1		(5,911)		36,588
Collateralized mortgage obligations	275		—		(19)		256
Corporate bonds	2,000		—		(74)		1,926
Total available-for-sale	$	111,332	$	170	$	(16,512)	$	94,990
December 31, 2024
U.S. government agency securities	$	8,293	$	152	$	(100)	$	8,345
Mortgage-backed securities	62,397		6		(11,833)		50,570
Obligations of states and political subdivisions	42,762		1		(5,626)		37,137
Collateralized mortgage obligations	305		—		(26)		279
Corporate bonds	2,000		—		(137)		1,863
Total available-for-sale	$	115,757	$	159	$	(17,722)	$	98,194

~~The~~As ~~amortized cost and fair value~~ of ~~investment securities by contractual maturity at June~~September 30, 2025 and December 31, 2024, ~~are~~the ~~shown~~allowance infor ~~Table~~credit ~~3.3.~~losses ~~Expected~~on ~~maturities~~held-to-maturity ~~may~~securities, ~~differ~~at ~~from~~amortized ~~contractual~~cost, ~~maturities~~was if$20.0 ~~the~~thousand. ~~issuers~~The ofCompany ~~the~~did ~~securities~~not ~~have~~record ~~the~~an ~~right~~allowance tofor ~~call~~credit orlosses ~~prepay~~on ~~obligations~~available-for-sale ~~with~~securities oras ~~without~~of ~~call~~September 30, 2025 or ~~prepayment~~December 31, ~~penalties~~2024.

Table 3.3: Contractual Maturities - Investment Securities
(in thousands)	June 30, 2025								December 31, 2024
	Held-to-Maturity				Available-for-Sale				Held-to-Maturity				Available-for-Sale
	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
Within one year	$	195	$	171	$	—	$	—	$	210	$	182	$	—	$	—
After one but within five years	905		795		1,267		1,181		945		818		798		737
After five years through ten years	1,315		1,155		10,863		9,582		1,380		1,193		9,221		8,108
After ten years	170		149		30,368		25,825		185		160		32,743		28,292
Investment securities not due at a single maturity date:
U.S. government agency securities	—		—		6,909		7,002		—		—		8,293		8,345
Mortgage-backed securities	—		—		59,650		49,218		—		—		62,397		50,570
Collateralized mortgage obligations	—		—		275		256		—		—		305		279
Corporate bonds	—		—		2,000		1,926		—		—		2,000		1,863
Total	$	2,585	$	2,270	$	111,332	$	94,990	$	2,720	$	2,353	$	115,757	$	98,194

A summary of the amortized cost and fair value related to securities available-for-sale as of September 30, 2025 and December 31, 2024 is presented in Table 3.2. Securities available-for-sale did not have an allowance for credit losses as of September 30, 2025 or December 31, 2024.


Table 3.2: Securities Available-for-Sale
(in thousands)	Amortized Cost		Gross Unrealized				Fair Value
			Gains		(Losses)
September 30, 2025
U.S. government agency securities	$	7,620	$	132	$	(68)	$	7,684
Mortgage-backed securities	58,389		26		(9,099)		49,316
Obligations of states and political subdivisions	40,866		—		(4,421)		36,445
Collateralized mortgage obligations	260		—		(16)		244
Corporate bonds	2,000		—		(54)		1,946
Total available-for-sale	$	109,135	$	158	$	(13,658)	$	95,635
December 31, 2024
U.S. government agency securities	$	8,293	$	152	$	(100)	$	8,345
Mortgage-backed securities	62,397		6		(11,833)		50,570
Obligations of states and political subdivisions	42,762		1		(5,626)		37,137
Collateralized mortgage obligations	305		—		(26)		279
Corporate bonds	2,000		—		(137)		1,863
Total available-for-sale	$	115,757	$	159	$	(17,722)	$	98,194

~~There~~The ~~were~~amortized nocost ~~purchases~~and orfair ~~sales~~value of investment securities ~~during~~by ~~the~~contractual ~~three~~maturity ~~and~~at ~~six months ended June~~September 30, 2025 and ~~June~~December 3031, 2024 are shown in Table 3.3. Expected maturities may differ from contractual maturities if the issuers of the securities have the right to call or prepay obligations with or without call or prepayment penalties.

Table 3.4: Pledged Investment Securities
Table 3.3: Contractual Maturities - Investment Securities
(in thousands)	~~June~~September 30, 2025		~~December 31, 2024~~						December 31, 2024
Pledged to:
	Held-to-Maturity				Available-for-Sale				Held-to-Maturity				Available-for-Sale
The State of California, securing deposits of public funds and borrowings	$	48,127	$	49,477
	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
The Federal Reserve Discount Window, increasing borrowing capacity	42,930		45,576
Within one year	$	170	$	155	$	—	$	—	$	210	$	182	$	—	$	—
Total pledged investment securities	$	91,057	$	95,053
After one but within five years	865		788		1,262		1,209		945		818		798		737
After five years through ten years	1,155		1,053		12,269		11,259		1,380		1,193		9,221		8,108
After ten years	—		—		27,335		23,977		185		160		32,743		28,292
Investment securities not due at a single maturity date:
U.S. government agency securities	—		—		7,620		7,684		—		—		8,293		8,345
Mortgage-backed securities	—		—		58,389		49,316		—		—		62,397		50,570
Collateralized mortgage obligations	—		—		260		244		—		—		305		279
Corporate bonds	—		—		2,000		1,946		—		—		2,000		1,863
Total	$	2,190	$	1,996	$	109,135	$	95,635	$	2,720	$	2,353	$	115,757	$	98,194

Table 3.5 details the gross unrealized losses and fair values aggregated by investment category and length of time that individual available-for-sale securities have been in a continuous unrealized loss position at June 30, 2025 and December 31, 2024.

Table 3.5: Securities Available-for-Sale in Continuous Unrealized Loss Positions
(in thousands)	Less than 12 months				12 months or more				Total securities in a loss position
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
June 30, 2025
U.S. government agency securities	$	935	$	(8)	$	1,918	$	(53)	$	2,853	$	(61)
Mortgage-backed securities	—		—		48,126		(10,447)		48,126		(10,447)
Obligations of states and political subdivisions	347		(36)		34,738		(5,875)		35,085		(5,911)
Collateralized mortgage obligations	—		—		256		(19)		256		(19)
Corporate bonds	—		—		1,926		(74)		1,926		(74)
Total temporarily impaired securities	$	1,282	$	(44)	$	86,964	$	(16,468)	$	88,246	$	(16,512)
December 31, 2024
U.S. government agency securities	$	2,316	$	(11)	$	4,082	$	(89)	$	6,398	$	(100)
Mortgage-backed securities	—		—		49,476		(11,833)		49,476		(11,833)
Obligations of states and political subdivisions	—		—		35,630		(5,626)		35,630		(5,626)
Collateralized mortgage obligations	—		—		279		(26)		279		(26)
Corporate bonds	—		—		1,863		(137)		1,863		(137)
Total temporarily impaired securities	$	2,316	$	(11)	$	91,330	$	(17,711)	$	93,646	$	(17,722)

There were 144 and 147 available-for-sale securities in unrealized loss positions at June 30, 2025 and December 31, 2024, respectively. As of June 30, 2025, the investment portfolio included 139 investment securities that had been in a continuous loss position for twelve months or more and five investment securities that had been in a loss position for less than twelve months.

There was one held-to-maturity security in a continuous unrealized loss position at both June 30, 2025 and December 31, 2024, which at December 31, 2024 had been in a continuous loss position for more than twelve months.

Obligations issued or guaranteed by government agencies such as the GNMA and the SBA or GSEs under conservatorship such as the FNMA and the FHLMC, are guaranteed or sponsored by agencies of the U.S. government and have strong credit profiles. The Company therefore expects to receive all contractual interest payments on time and believes the risk of credit losses on these securities is remote.

During the three and nine months ended September 30, 2025, one investment security was purchased for $1.0 million, as compared to no securities purchased during the three and nine months ended September 30, 2024. There were no sales of investment securities during the three and nine months ended September 30, 2025 or September 30, 2024.


Table 3.4: Pledged Investment Securities
(in thousands)	September 30, 2025		December 31, 2024
Pledged to:
The State of California, securing deposits of public funds and borrowings	$	48,221	$	49,477
The Federal Reserve Discount Window, increasing borrowing capacity	42,398		45,576
Total pledged investment securities	$	90,619	$	95,053


Table 3.5: Securities Available-for-Sale in Continuous Unrealized Loss Positions
(in thousands)	Less than 12 months				12 months or more				Total securities in a loss position
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
September 30, 2025
U.S. government agency securities	$	4,182	$	(17)	$	2,091	$	(51)	$	6,273	$	(68)
Mortgage-backed securities	—		—		48,220		(9,099)		48,220		(9,099)
Obligations of states and political subdivisions	357		(24)		36,087		(4,397)		36,444		(4,421)
Collateralized mortgage obligations	—		—		244		(16)		244		(16)
Corporate bonds	—		—		1,946		(54)		1,946		(54)
Total temporarily impaired securities	$	4,539	$	(41)	$	88,588	$	(13,617)	$	93,127	$	(13,658)

December 31, 2024
U.S. government agency securities	$	2,316	$	(11)	$	4,082	$	(89)	$	6,398	$	(100)
Mortgage-backed securities	—		—		49,476		(11,833)		49,476		(11,833)
Obligations of states and political subdivisions	—		—		35,630		(5,626)		35,630		(5,626)
Collateralized mortgage obligations	—		—		279		(26)		279		(26)
Corporate bonds	—		—		1,863		(137)		1,863		(137)
Total temporarily impaired securities	$	2,316	$	(11)	$	91,330	$	(17,711)	$	93,646	$	(17,722)

There were 149 and 147 available-for-sale securities in unrealized loss positions at September 30, 2025 and December 31, 2024, respectively. As of September 30, 2025, the investment portfolio included 140 investment securities that had been in a continuous loss position for twelve months or more and nine investment securities that had been in a loss position for less than twelve months.

There was one held-to-maturity security in a continuous unrealized loss position at both September 30, 2025 and December 31, 2024, which at December 31, 2024 had been in a continuous loss position for more than twelve months.

Obligations issued or guaranteed by government agencies such as the GNMA and the SBA, or GSEs under conservatorship such as the FNMA and the FHLMC, are guaranteed or sponsored by agencies of the U.S. government and have strong credit profiles. The Company therefore expects to receive all contractual interest payments on time and believes the risk of credit losses on these securities is remote.

The Company’s investment in obligations of states and political subdivisions is deemed credit worthy after management’s comprehensive analysis of the issuers’ latest financial information, credit ratings by major credit agencies, and/or credit enhancements.

Non-Marketable Securities

FHLB capital stock: As a member of the FHLB, the Company is required to maintain a minimum investment in FHLB capital stock determined by the board of directors of the FHLB. The minimum investment requirements can increase in the event the Company increases its total asset size or borrowings with the FHLB. Shares cannot be purchased or sold except between the FHLB and its members at the $100 per share par value. The Company held $15.0 million of FHLB stock at both ~~June~~September 30, 2025 and December 31, 2024. The carrying amounts of these investments are reasonable estimates of fair value because the securities are restricted to member banks and do not have a readily determinable market value. Based on management’s analysis of the FHLB’s financial condition and certain qualitative factors, management determined that the FHLB stock was not impaired at ~~June~~September 30, 2025 or December 31, 2024.

Equity investments: The Company is a limited partner in certain venture-backed capital funds. The Company held $1411.56 million and $109.83 million of equity investments at ~~June~~September 30, 2025 and December 31, 2024, respectively., ~~The~~included ~~carrying~~in ~~amounts~~“Interest ofreceivable ~~these~~and ~~investments~~other ~~are~~assets” ~~reasonable~~in ~~estimates of fair value because~~ the ~~investments~~unaudited ~~reflect~~consolidated ~~the~~balance ~~Company's share of earnings and losses of each fund~~sheets.

1617

Note 4: Loans and Allowance for Credit Losses

The Company’s loan portfolio is its largest class of earning assets and typically provides higher yields than other types of earning assets. Associated with the higher yields is an inherent amount of credit risk which the Company attempts to mitigate through strong underwriting practices. Table 4.1 presents the balance of each major product type within the Company’s portfolio as of the dates indicated.

Table 4.1: Loans Outstanding

(in thousands)

~~June~~September 30, 2025

December 31, 2024

Real estate:

Commercial

3,~~066~~144,~~627~~303

2,857,173

Commercial land and development

~~1,422~~934

3,849

Commercial construction

~~112~~136,~~399~~988

111,318

Residential construction

5,~~479~~976

4,561

Residential

3335,~~132~~739

32,774

Farmland

5157,~~579~~572

47,241

Commercial:

Secured

~~173~~191,~~855~~170

170,548

Unsecured

3738,~~568~~658

27,558

Consumer and other

278,~~215~~209

279,584

Subtotal

3,~~760~~889,~~276~~549

3,534,606

Net deferred loan fees

(2,~~251~~290)

(1,920)

Loans held for investment

3,~~758~~887,~~025~~259

3,532,686

Allowance for credit losses

(4042,~~167~~061)

(37,791)

Loans held for investment, net of allowance for credit losses

3,~~717~~845,~~858~~198

3,494,895

Underwriting

Real estate loans: Real estate loans are subject to underwriting standards and processes similar to those for commercial loans. These loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate. Commercial real estate lending typically involves higher loan principal amounts, and the repayment of these loans is generally largely dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan. Commercial real estate loans may be more adversely affected than other loans by conditions in the real estate market or in the general economy. The properties securing the Company’s commercial real estate portfolio are diverse in terms of type. This diversity helps reduce the Company’s exposure to adverse economic events that affect any single market or industry. Management monitors and evaluates commercial real estate loans based on collateral, geography, and risk grade criteria.

Construction loans: With respect to construction loans that the Company may originate from time to time, the Company generally requires the borrower to have had an existing relationship with the Company and have a proven record of success. Construction loans may be underwritten utilizing feasibility studies, independent appraisal reviews, sensitivity analysis of absorption and lease rates, and financial analysis of the developers and property owners. Construction loans are generally based upon estimates of costs and value associated with the completed project. These estimates may be inaccurate. Construction loans often involve the disbursement of substantial funds with repayment substantially dependent on the ultimate success of the project. Sources of repayment for these types of loans may be pre-committed permanent loans from approved long-term lenders, sales of developed property, or an interim loan commitment from the Company until permanent financing is obtained. These loans are closely monitored using on-site inspections and are generally considered to have higher risks than other real estate loans due to their ultimate repayment being sensitive to interest rate changes, governmental regulation of real property, general economic conditions, and the availability of long-term financing.

Residential real estate loans: Residential real estate loans are underwritten based upon the borrower’s income, credit history, and collateral. To monitor and manage residential loan risk, policies and procedures are developed and modified,

1718

as needed. This activity, coupled with relatively small loan amounts that are spread across many individual borrowers, minimizes risk. Underwriting standards for home loans are heavily influenced by statutory requirements, which include, but are not limited to, a maximum loan-to-value percentage, collection remedies, the number of such loans a borrower can have at one time, and documentation requirements.

Farmland loans: Farmland loans are generally made to producers and processors of crops and livestock. Repayment is primarily from the sale of an agricultural product or service. Farmland loans are secured by real property and are susceptible to changes in market demand for specific commodities. This may be exacerbated by, among other things, industry changes, changes in the individual financial capacity of the business owner, general economic conditions, ~~and~~ changes in business cycles, asand ~~well as~~ adverse weather conditions.

Commercial loans: Commercial loans are underwritten after evaluating and understanding the borrower’s ability to operate profitably and prudently expand its business. Underwriting standards are designed to promote relationship banking rather than transactional banking. Once it is determined that the borrower’s management possesses sound ethics and solid business acumen, the Company’s management examines current and projected cash flows to determine the ability of the borrower to repay its obligations as agreed. Commercial loans are primarily made based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower. The cash flows of borrowers, however, may not be as expected, and the collateral securing these loans may fluctuate in value. Most commercial loans are secured by the assets being financed or other business assets such as accounts receivable or inventory and may incorporate a personal guarantee; however, some short-term loans may be made on an unsecured basis. In the case of loans secured by accounts receivable, the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts due from its customers.

Consumer loans: The Company purchased consumer loans underwritten utilizing credit scoring analysis to supplement the underwriting process. To monitor and manage consumer loan risk, policies and procedures are developed and modified, as needed. This activity, coupled with relatively small loan amounts that are spread across many individual borrowers, minimizes risk. Underwriting standards for home equity loans are heavily influenced by statutory requirements, which include, but are not limited to, a maximum loan-to-value percentage, collection remedies, the number of such loans a borrower can have at one time, and documentation requirements.

Credit Quality Indicators

The Company has established a loan risk rating system to measure and monitor the quality of the loan portfolio. All loans are assigned a risk rating from the inception of the loan until the loan is paid off. The primary loan grades are as follows:

Loans rated pass: These are loans to borrowers with satisfactory financial support, repayment capacity, and credit strength. Borrowers in this category demonstrate fundamentally sound financial positions, repayment capacity, credit history, and management expertise. Loans in this category must have an identifiable and stable source of repayment and meet the Company’s policy regarding debt service coverage ratios. These borrowers are capable of sustaining normal economic, market, or operational setbacks without significant financial impacts and their financial ratios and trends are acceptable. Negative external industry factors are generally not present. The loan may be secured, unsecured, or supported by non-real estate collateral for which the value is more difficult to determine and/or marketability is more uncertain.

Loans rated watch: These are loans which have deficient loan quality and potentially significant issues, but losses do not appear to be imminent, and the issues may be temporary in nature. The significant issues are typically: (i) a history of losses or events that threaten the borrower’s viability; (ii) a property with significant depreciation and/or marketability concerns; or (iii) poor or deteriorating credit, occasional late payments, and/or limited reserves but the loan is generally kept current. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the Company’s credit position at some future date.

Loans rated substandard: These are loans which are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged (if any). Loans so classified exhibit a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. Loans are characterized by the distinct possibility that the Company may sustain some loss if the deficiencies are not corrected.

Loans rated doubtful: These are loans for which the collection or liquidation of the entire debt is highly questionable or improbable. Typically, the possibility of loss is extremely high. The losses on these loans are deferred until all pending factors have been addressed.

1819

Table 4.2 presents the amortized cost basis of the Company’s loans by origination year, where origination is defined as the later of origination or renewal date, and credit quality indicator as of the periods indicated.


Table 4.2: Loans by Risk Category and Vintage

Amortized Cost Basis by Origination Year as of June 30, 2025

Amortized Cost Basis by Origination Year as of September 30, 2025

(in thousands)

2025

2024

2023

2022

2021

Prior

Revolving Loans

Revolving Converted to Term

Total

Real estate:

Commercial

Pass

~~305~~451,~~408~~963

~~417~~415,~~308~~445

~~300~~299,~~350~~100

~~865~~850,~~475~~562

~~598~~591,~~910~~702

~~472~~428,~~297~~277

65,~~758~~554

—

23,~~966~~042,~~506~~603

Watch

—1,048

~~639~~637

104,~~858~~287

3127,~~993~~435

2420,~~931~~534

2324,~~206~~456

1,~~391~~806

—200

9380,~~018~~403

Substandard

—

~~1,101~~—

~~561~~3,722

214,~~508~~674

—

418,~~170~~396

Total

~~305~~453,~~408~~011

~~417~~416,~~947~~082

~~311~~303,~~208~~387

~~898~~877,~~569~~997

~~624~~615,~~402~~958

~~498~~467,~~011~~407

87,~~149~~360

—200

3,~~063~~141,~~694~~402

Commercial land and development

Pass

~~397~~405

~~393~~139

—

~~631~~387

—

~~1,421~~931

Total

~~397~~405

~~393~~139

—

~~631~~387

—

~~1,421~~931

Commercial construction

Pass

~~996~~13,728

2125,~~502~~464

8996,~~128~~907

~~525~~524

—

~~112~~136,~~151~~623

Total

~~996~~13,728

2125,~~502~~464

8996,~~128~~907

~~525~~524

—

~~112~~136,~~151~~623

Residential construction

Pass

—96

5,~~410~~817

—

5,~~410~~913

Total

—96

5,~~410~~817

—

5,~~410~~913

Residential

Pass

~~408~~4,260

6,~~101~~017

4,~~755~~740

2,~~833~~814

9,~~379~~024

87,~~271~~637

1,~~407~~272

—

3335,~~154~~764

Total

~~408~~4,260

6,~~101~~017

4,~~755~~740

2,~~833~~814

9,~~379~~024

87,~~271~~637

1,~~407~~272

—

3335,~~154~~764

Farmland

Pass

915,~~457~~961

1,~~473~~446

2,~~027~~019

6,~~248~~138

8,~~433~~239

23,~~313~~732

—

5057,~~951~~535

Watch

—

594

—

594

Total

15,961

1,446

2,019

6,138

8,239

23,732

—

57,535

Total

9,457

1,473

2,027

6,248

8,433

23,907

—

51,545

Commercial:

Secured

Pass

1826,~~827~~611

3028,~~995~~678

1716,~~668~~498

1817,~~751~~261

87,~~056~~406

1817,~~986~~424

4865,~~518~~707

—

~~161~~179,~~801~~585

Watch

—182

9997

~~525~~713

6,~~944~~932

21,~~560~~798

1,~~220~~143

1,~~491~~490

—

12,~~839~~355

Substandard

—

—85

—

3821

—

38106

Total

1826,~~827~~793

3128,~~094~~775

1817,~~193~~211

2524,~~695~~278

109,~~616~~204

2018,~~244~~588

5067,~~009~~197

—

~~174~~192,~~678~~046

Unsecured

Pass

710,~~555~~852

8,~~981~~328

32,~~004~~850

1,~~557~~400

21,~~106~~971

3,~~410~~202

10,~~982~~086

—

3738,~~595~~689

Total

710,~~555~~852

8,~~981~~328

32,~~004~~850

1,~~557~~400

21,~~106~~971

3,~~410~~202

10,~~982~~086

—

3738,~~595~~689

Consumer and other

Pass

3256,~~156~~013

~~207~~187,~~449~~480

2724,~~102~~237

65,~~378~~716

4,~~923~~550

~~181~~166

~~181~~187

—

278,~~370~~349

Substandard

—

Total

3256,~~156~~013

~~207~~187,~~449~~480

2724,~~102~~237

65,~~385~~723

4,~~923~~550

~~181~~166

~~181~~187

—

278,~~377~~356

Total

Pass

~~375~~579,~~204~~889

~~699~~678,~~612~~814

~~444~~446,~~034~~351

~~901~~884,~~767~~415

~~631~~622,~~807~~892

~~527~~480,~~089~~825

6782,~~846~~806

—

3,~~647~~775,~~359~~992

Watch

—1,230

~~738~~734

115,~~383~~000

3834,~~937~~367

2722,~~491~~332

25,~~020~~599

23,~~882~~296

—200

~~106~~92,~~451~~758

Substandard

—

~~1,108~~92

~~561~~3,722

214,~~546~~695

—

418,~~215~~509

Total

~~375~~581,~~204~~119

~~700~~679,~~350~~548

~~455~~451,~~417~~351

~~941~~918,~~812~~874

~~659~~648,~~859~~946

~~554~~521,~~655~~119

7086,~~728~~102

—200

3,~~758~~887,~~025~~259

1920


Table 4.2: Loans by Risk Category and Vintage (continued)


	Amortized Cost Basis by Origination Year as of December 31, 2024
(in thousands)	2024		2023		2022		2021		2020		Prior		Revolving Loans		Revolving Converted to Term		Total
Real estate:
Commercial
Pass	$	427,209	$	298,408	$	881,675	$	618,052	$	202,356	$	312,622	$	3,688	$	—	$	2,744,010
Watch	641		8,193		42,531		31,895		16,969		6,316		1,391		—		107,936
Substandard	—		—		—		—		—		2,585		—		—		2,585

Total	427,850		306,601		924,206		649,947		219,325		321,523		5,079		—		2,854,531
Commercial land and development
Pass	1,781		—		1,237		—		180		656		—		—		3,854



Total	1,781		—		1,237		—		180		656		—		—		3,854
Commercial construction
Pass	13,757		72,933		13,112		—		11,231		—		—		—		111,033



Total	13,757		72,933		13,112		—		11,231		—		—		—		111,033
Residential construction
Pass	4,560		—		—		—		—		—		—		—		4,560



Total	4,560		—		—		—		—		—		—		—		4,560
Residential
Pass	6,080		4,783		2,869		9,483		2,201		6,246		1,134		—		32,796



Total	6,080		4,783		2,869		9,483		2,201		6,246		1,134		—		32,796
Farmland
Pass	1,054		2,042		7,032		11,467		6,960		17,373		—		—		45,928
Watch	501		—		791		—		—		—		—		—		1,292


Total	1,555		2,042		7,823		11,467		6,960		17,373		—		—		47,220
Commercial:
Secured
Pass	26,536		20,427		21,142		9,607		9,144		14,400		55,914		—		157,170
Watch	—		301		9,840		2,581		107		1,289		—		—		14,118
Substandard	—		—		—		—		—		48		—		—		48

Total	26,536		20,728		30,982		12,188		9,251		15,737		55,914		—		171,336
Unsecured
Pass	8,071		4,499		2,815		3,494		4,817		1,364		2,515		—		27,575



Total	8,071		4,499		2,815		3,494		4,817		1,364		2,515		—		27,575
Consumer and other
Pass	232,420		33,453		7,874		5,812		6		207		—		—		279,772

Substandard	—		—		9		—		—		—		—		—		9

Total	232,420		33,453		7,883		5,812		6		207		—		—		279,781
Total
Pass	721,468		436,545		937,756		657,915		236,895		352,868		63,251		—		3,406,698
Watch	1,142		8,494		53,162		34,476		17,076		7,605		1,391		—		123,346
Substandard	—		—		9		—		—		2,633		—		—		2,642

Total	$	722,610	$	445,039	$	990,927	$	692,391	$	253,971	$	363,106	$	64,642	$	—	$	3,532,686

Management regularly reviews the Company’s loans for accuracy of risk grades whenever new information is received. Borrowers are generally required to submit financial information at regular intervals. Typically, commercial borrowers with lines of credit are required to submit financial information with reporting intervals generally ranging from monthly to annually depending on credit size, risk, and complexity. All commercial borrowers with loans exceeding a certain dollar threshold are usually required to submit financials annually for review, which includes business financial statements, rent rolls, property income statements, and tax returns. Management monitors construction loans monthly and reviews consumer loans based on delinquency. Management also reviews loans graded “watch” or worse, regardless of loan type, no less than quarterly.

Table 4.3 shows the age analysis of past due loans by class as of the dates shown.

Table 4.3: Age Analysis of Past Due Loans by Class
(in thousands)	Past Due
	30-59 Days		60-89 Days		Greater Than 90 Days		Total Past Due		Current		Total Loans Receivable
June 30, 2025
Real estate:
Commercial	$	—	$	—	$	—	$	—	$	3,063,694	$	3,063,694
Commercial land and development	—		—		—		—		1,421		1,421
Commercial construction	—		—		—		—		112,151		112,151
Residential construction	—		—		—		—		5,410		5,410
Residential	—		—		—		—		33,154		33,154
Farmland	—		—		—		—		51,545		51,545
Commercial:
Secured	304		319		—		623		174,055		174,678
Unsecured	—		—		—		—		37,595		37,595
Consumer and other	72		—		—		72		278,305		278,377
Total	$	376	$	319	$	—	$	695	$	3,757,330	$	3,758,025
December 31, 2024
Real estate:
Commercial	$	—	$	—	$	—	$	—	$	2,854,531	$	2,854,531
Commercial land and development	—		—		—		—		3,854		3,854
Commercial construction	—		—		—		—		111,033		111,033
Residential construction	—		—		—		—		4,560		4,560
Residential	—		—		—		—		32,796		32,796
Farmland	—		—		—		—		47,220		47,220
Commercial:
Secured	1,107		—		—		1,107		170,229		171,336
Unsecured	—		—		—		—		27,575		27,575
Consumer and other	67		—		—		67		279,714		279,781
Total	$	1,174	$	—	$	—	$	1,174	$	3,531,512	$	3,532,686

There were no loans greater than 90 days past due and still accruing interest income as of June 30, 2025 or December 31, 2024.

One collateral dependent loan was in process of foreclosure at June 30, 2025: a commercial real estate loan in the amount of $0.8 million rated substandard. No collateral dependent loans were in process of foreclosure at December 31, 2024. The Company had one collateral dependent commercial real estate loan outstanding as of June 30, 2025 and December 31, 2024 in the amount of $1.7 million and $1.8 million, respectively, for which the applicable borrower was experiencing financial difficulty.

~~Non-accrual~~Table ~~loans,~~4.3 ~~segregated~~shows bythe ~~class,~~age asanalysis of ~~June 30,~~past ~~2025~~due ~~and~~loans ~~December 31,~~by ~~2024~~class ~~are~~as ~~shown~~of inthe ~~Table~~dates 4shown.4.

Table 4.4: Non-accrual Loans
Table 4.3: Age Analysis of Past Due Loans by Class
(in thousands)	~~June~~Past ~~30, 2025~~Due		~~December 31, 2024~~
Real estate:
	30-59 Days		60-89 Days		Greater Than 90 Days		Total Past Due		Current		Total Loans Receivable
Commercial	$	2,240	$	1,750
September 30, 2025
Commercial:
Real estate:
Secured	38		48
Commercial	$	—	$	—	$	—	$	—	$	3,141,402	$	3,141,402
Total non-accrual loans	$	2,278	$	1,798
Commercial land and development	—		—		—		—		931		931
Commercial construction	—		—		—		—		136,623		136,623
Residential construction	—		—		—		—		5,913		5,913
Residential	—		—		—		—		35,764		35,764
Farmland	—		—		—		—		57,535		57,535
Commercial:
Secured	1,217		48		—		1,265		190,781		192,046
Unsecured	—		—		—		—		38,689		38,689
Consumer and other	71		6		—		77		278,279		278,356
Total	$	1,288	$	54	$	—	$	1,342	$	3,885,917	$	3,887,259
December 31, 2024
Real estate:
Commercial	$	—	$	—	$	—	$	—	$	2,854,531	$	2,854,531
Commercial land and development	—		—		—		—		3,854		3,854
Commercial construction	—		—		—		—		111,033		111,033
Residential construction	—		—		—		—		4,560		4,560
Residential	—		—		—		—		32,796		32,796
Farmland	—		—		—		—		47,220		47,220
Commercial:
Secured	1,107		—		—		1,107		170,229		171,336
Unsecured	—		—		—		—		27,575		27,575
Consumer and other	67		—		—		67		279,714		279,781
Total	$	1,174	$	—	$	—	$	1,174	$	3,531,512	$	3,532,686

NoThere ~~interest~~were ~~income~~no ~~was~~loans ~~recognized~~greater onthan ~~non-accrual~~90 ~~loans~~days inpast ~~the~~due ~~three~~ and ~~six~~still ~~months~~accruing ~~ended~~interest ~~June 30,~~income ~~2025 or June 30, 2024. Non-accrual real estate loans did not have an allowance for credit losses~~ as of ~~June~~September 30, 2025. ~~Interest income can be recognized on non-accrual loans in cases where resolution occurs through a sale~~ or ~~full~~December 31, ~~payment is received on the non-accrual loan~~2024.

~~The~~No ~~amount~~collateral ofdependent ~~foregone~~loans ~~interest~~were ~~income~~in ~~related~~process toof ~~non-accrual~~foreclosure ~~loans~~at ~~was~~September 30, ~~$35.6~~2025 ~~thousand~~or ~~and~~December 31, ~~$70~~2024.9 ~~thousand~~The ~~for~~Company ~~the~~had ~~three~~one ~~and~~collateral ~~six~~dependent ~~months~~commercial ~~ended~~real ~~June~~estate loan outstanding as of September 30, 2025, ~~respectively~~and December 31, as2024 ~~compared~~in tothe amount of $381.26 ~~thousand~~million and $771.48 ~~thousand~~million, respectively, for which the ~~three~~applicable ~~and~~borrower ~~six~~was ~~months~~experiencing ~~ended~~financial ~~June 30, 2024, respectively~~difficulty.

Non-accrual loans, segregated by class, as of September 30, 2025 and December 31, 2024 are shown in Table 4.4.


Table 4.4: Non-accrual Loans
(in thousands)	September 30, 2025		December 31, 2024
Real estate:
Commercial	$	1,873	$	1,750

Commercial:
Secured	256		48

Total non-accrual loans	$	2,129	$	1,798

No interest income was recognized on non-accrual loans in the three and nine months ended September 30, 2025 or September 30, 2024. Non-accrual real estate loans did not have an allowance for credit losses as of September 30, 2025. Interest income can be recognized on non-accrual loans in cases where resolution occurs through a sale or full payment is received on the non-accrual loan.

The amount of foregone interest income related to non-accrual loans was $42.5 thousand and $112.6 thousand for the three and nine months ended September 30, 2025, respectively, as compared to $37.8 thousand and $115.2 thousand for the three and nine months ended September 30, 2024, respectively.

Allowance for Credit Losses

Table 4.5 discloses activity in the allowance for credit losses for the periods indicated.

Table 4.5: Allowance for Credit Losses
(in thousands)	Beginning Balance		Charge-offs		Recoveries		Provision (Benefit)		Ending Balance
Three months ended June 30, 2025
Three months ended September 30, 2025
Real estate:
Commercial	$	27,~~027~~792	$	—(280)	$	—	$	~~765~~(4,039)	$	2723,~~792~~473
Commercial land and development	7033		—		—		(373)		3330
Commercial construction	2,~~227~~575		—		—		~~348~~1,780		24,~~575~~355
Residential construction	7875		—		—		~~(3)~~33		75108
Residential	~~279~~334		—		—		5517		~~334~~351
Farmland	~~598~~723		—		—		~~125~~(298)		~~723~~425
Commercial:
Secured	5,~~905~~623		(~~1,516~~503)		96150		15,~~138~~130		510,~~623~~400
Unsecured	~~403~~417		~~(50)~~—		—		6421		~~417~~438
Consumer and other	2,~~637~~595		(7268)		8595		(55141)		2,~~595~~481
Total	$	3940,~~224~~167	$	(~~1,638~~851)	$	~~181~~245	$	2,~~400~~500	$	4042,~~167~~061

Table 4.5: Allowance for Credit Losses (continued)
(in thousands)	Beginning Balance		Charge-offs		Recoveries		Provision (Benefit)		Ending Balance
Three months ended June 30, 2024
Real estate:
Commercial	$	28,895	$	—	$	—	$	(4,187)	$	24,708
Commercial land and development	164		—		—		(92)		72
Commercial construction	697		—		—		400		1,097
Residential construction	114		—		—		(14)		100
Residential	164		—		—		31		195
Farmland	438		—		—		(36)		402
Commercial:
Secured	3,262		(1,239)		57		5,306		7,386
Unsecured	259		(36)		—		(9)		214
Consumer and other	660		(72)		93		551		1,232
Total	$	34,653	$	(1,347)	$	150	$	1,950	$	35,406
Six months ended June 30, 2025
Real estate:
Commercial	$	25,864	$	—	$	—	$	1,928	$	27,792
Commercial land and development	78		—		—		(45)		33
Commercial construction	2,268		—		—		307		2,575
Residential construction	64		—		—		11		75
Residential	270		—		—		64		334
Farmland	607		—		—		116		723
Commercial:
Secured	5,866		(2,261)		160		1,858		5,623
Unsecured	278		(50)		—		189		417
Consumer and other	2,496		(143)		120		122		2,595
Total	$	37,791	$	(2,454)	$	280	$	4,550	$	40,167
Six months ended June 30, 2024
Real estate:
Commercial	$	29,015	$	—	$	—	$	(4,307)	$	24,708
Commercial land and development	178		—		—		(106)		72
Commercial construction	718		—		—		379		1,097
Residential construction	89		—		—		11		100
Residential	151		—		—		44		195
Farmland	399		—		—		3		402
Commercial:
Secured	3,314		(2,237)		239		6,070		7,386
Unsecured	189		(70)		—		95		214
Consumer and other	378		(143)		186		811		1,232
Total	$	34,431	$	(2,450)	$	425	$	3,000	$	35,406


Table 4.5: Allowance for Credit Losses (continued)
(in thousands)	Beginning Balance		Charge-offs		Recoveries		Provision (Benefit)		Ending Balance
Three months ended September 30, 2024
Real estate:
Commercial	$	24,708	$	—	$	—	$	1,509	$	26,217
Commercial land and development	72		—		—		17		89
Commercial construction	1,097		—		—		659		1,756
Residential construction	100		—		—		(53)		47
Residential	195		—		—		89		284
Farmland	402		—		—		179		581
Commercial:
Secured	7,386		(837)		53		(553)		6,049
Unsecured	214		(5)		34		8		251

Consumer and other	1,232		(59)		41		1,095		2,309

Total	$	35,406	$	(901)	$	128	$	2,950	$	37,583

Nine months ended September 30, 2025
Real estate:
Commercial	$	25,864	$	(280)	$	—	$	(2,111)	$	23,473
Commercial land and development	78		—		—		(48)		30
Commercial construction	2,268		—		—		2,087		4,355
Residential construction	64		—		—		44		108
Residential	270		—		—		81		351
Farmland	607		—		—		(182)		425
Commercial:
Secured	5,866		(2,764)		310		6,988		10,400
Unsecured	278		(50)		—		210		438

Consumer and other	2,496		(211)		215		(19)		2,481

Total	$	37,791	$	(3,305)	$	525	$	7,050	$	42,061

Nine months ended September 30, 2024
Real estate:
Commercial	$	29,015	$	—	$	—	$	(2,798)	$	26,217
Commercial land and development	178		—		—		(89)		89
Commercial construction	718		—		—		1,038		1,756
Residential construction	89		—		—		(42)		47
Residential	151		—		—		133		284
Farmland	399		—		—		182		581
Commercial:
Secured	3,314		(3,075)		292		5,518		6,049
Unsecured	189		(75)		34		103		251

Consumer and other	378		(202)		228		1,905		2,309

Total	$	34,431	$	(3,352)	$	554	$	5,950	$	37,583

Unfunded Loan Commitment Reserves

Unfunded loan commitment reserves are included in “Interest payable and other liabilities” in the unaudited consolidated balance sheets. Provisions for unfunded loan commitments are included in “Provision for credit losses” in the unaudited consolidated statements of income.

Table 4.6: Unfunded Loan Commitment Reserves
	Three months ended				~~Six~~Nine months ended
(in thousands)	~~June~~September 30, 2025		~~June~~September 30, 2024		~~June~~September 30, 2025		~~June~~September 30, 2024
Balance at beginning of period	$	~~497~~597	$	1,~~097~~147	$	747	$	1,247
Provision (benefit)	~~100~~—		50(200)		(150)		(~~100~~300)
Balance at end of period	$	597	$	~~1,147~~947	$	597	$	~~1,147~~947

Pledged Loans

The Company’s FHLB line of credit is secured under terms of a collateral agreement by a pledge of certain qualifying loans with unpaid principal balances of $2.1 billion and $1.9 billion at ~~June~~September 30, 2025 and December 31, 2024, respectively. In addition, the Company pledges eligible tenants in common loans, which totaled $1.3 billion and $1.2 billion at ~~June~~September 30, 2025 and December 31, 2024, respectively, to secure its borrowing capacity with the Federal Reserve Discount Window. See Note 6, Subordinated Notes and Other Borrowings, for further discussion of these borrowings.

Note 5: Interest-Bearing Deposits

Table 5.1 shows the composition of interest-bearing deposits as of ~~June~~September 30, 2025 and December 31, 2024.

Table 5.1: Interest-Bearing Deposits

(in thousands)

~~June~~September 30, 2025

December 31, 2024

Interest-bearing transaction accounts

~~292~~309,~~257~~118

315,217

Savings accounts

~~121~~137,~~567~~500

124,702

Money market accounts

1,~~704~~972,~~652~~158

1,525,292

Time accounts, $250 or more

~~377~~379,~~441~~368

344,129

Other time accounts

~~394~~246,~~644~~212

326,025

Total interest-bearing deposits

23,~~890~~044,~~561~~356

2,635,365

Time deposits totaled $~~772~~625.16 million and $670.2 million as of ~~June~~September 30, 2025 and December 31, 2024, respectively. Scheduled maturities of time deposits as of ~~June~~September 30, 2025 for the next five years are shown in Table 5.2.

Table 5.2: Scheduled Maturities of Time Deposits
(in thousands)
2025	$	~~723~~563,~~140~~810
2026	4760,~~741~~596
2027	1,~~103~~113
2028	~~101~~61
2029	—
Total time deposits	$	~~772~~625,~~085~~580

2425

Total deposits include deposits offered through the IntraFi 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 and interest-bearing transaction deposits. Through this network, the Company offers customers access to FDIC-insured deposit products in aggregate amounts exceeding current insurance limits. When funds are deposited through CDARS and ICS on behalf of a customer, the Company has the option of receiving matching deposits through the network’s reciprocal deposit program or placing deposits “one-way,” for which the Company receives no matching deposits. The Company considers the reciprocal deposits to be in-market deposits, as distinguished from traditional out-of-market brokered deposits. There were no one-way deposits at ~~June~~September 30, 2025 or December 31, 2024. The composition of network deposits as of ~~June~~September 30, 2025 and December 31, 2024 is shown in Table 5.3.

Table 5.3: Network Deposits
(in thousands)	~~June~~September 30, 2025		December 31, 2024
CDARS	$	2122,~~518~~129	$	19,292
ICS	~~766~~903,~~972~~354		674,453
Total network deposits	$	~~788~~925,~~490~~483	$	693,745

Table 5.4 presents interest expense recognized on interest-bearing deposits for the periods ended ~~June~~September 30, 2025 and 2024.

Table 5.4: Interest Expense Recognized on Interest-Bearing Deposits

Three months ended

~~Six~~Nine months ended

(in thousands)

~~June~~September 30, 2025

~~June~~September 30, 2024

~~June~~September 30, 2025

~~June~~September 30, 2024

Interest-bearing transaction accounts

1,~~043~~194

1,~~104~~237

23,~~155~~350

23,~~230~~467

Savings accounts

~~801~~895

~~856~~979

12,~~573~~468

12,~~718~~697

Money market accounts

1315,~~270~~348

1314,~~388~~688

2541,~~705~~052

2540,~~543~~231

Time accounts, $250 or more

34,~~945~~015

2,~~412~~387

711,~~701~~716

68,~~235~~622

Other time accounts

32,~~845~~884

~~957~~1,785

710,~~718~~602

24,~~502~~287

Total interest expense on interest-bearing deposits

2224,~~904~~336

1821,~~717~~076

4469,~~852~~188

3859,~~228~~304

Note 6: Subordinated Notes and Other Borrowings

Subordinated notes: On August 17, 2022, the Company completed a private placement of $75.0 million of fixed-to-floating rate subordinated notes to certain qualified investors, of which $19.3 million was purchased by existing or former members of the board of directors and their affiliates. The notes will be used for capital management and general corporate purposes, including, without limitation, the redemption of existing subordinated notes. The subordinated notes have a maturity date of September 1, 2032 and bear interest, payable semi-annually, at the rate of 6.00% per annum until September 1, 2027. On that date, the interest rate will be adjusted to float at a rate equal to the three-month Term SOFR plus 329.0 basis points (7.5061% as of ~~June~~September 30, 2025) until maturity. The notes include a right of prepayment, on or after August 17, 2027 or, in certain limited circumstances, before that date. The indebtedness evidenced by the subordinated notes, including principal and interest, is unsecured and subordinate and junior in right to payment to general and secured creditors and depositors of the Company.

The subordinated notes have been structured to qualify as Tier 2 capital for the Company for regulatory capital purposes. Eligible amounts will be phased out by 20% per year beginning five years before the maturity date of the notes. Debt issuance costs incurred in conjunction with the notes were $1.5 million, of which $0.45 million has been amortized as of ~~June~~September 30, 2025. The Company reflects debt issuance costs as a direct deduction from the face of the note. The debt issuance costs are amortized into interest expense through the maturity period. At ~~June~~September 30, 2025 and December 31, 2024, the carrying value of the Company’s subordinated notes outstanding was $74.0 million and $73.9 million, respectively.

Other borrowings: The Company entered into an agreement with the FHLB which granted the FHLB a blanket lien on certain loans receivable as collateral for a borrowing line. The Company’s total financing availability is based on the dollar volume of qualifying loan collateral. The Company’s total financing availability with the FHLB is decreased by outstanding borrowings and letters of credit (“LCs”) issued on behalf of the Company, as shown in Table 6.1.

Table 6.1: Financing Availability with the FHLB
(in thousands)	June 30, 2025		December 31, 2024
Total financing ability from the FHLB	$	1,290,446	$	1,212,209
Less: outstanding borrowings	—		—
Less: LCs pledged to secure State of California deposits	312,500		281,500
Less: LCs pledged to secure local agency deposits	420,000		420,000
Total LCs issued	732,500		701,500
Available borrowing capacity with the FHLB	$	557,946	$	510,709

volume of qualifying loan collateral. The Company’s total financing availability with the FHLB is decreased by outstanding borrowings and letters of credit (“LCs”) issued on behalf of the Company, as shown in Table 6.1.

As of June 30, 2025 and December 31, 2024, the Company had the ability to borrow from the Federal Reserve Discount Window. The borrowings were available at an interest rate of 4.50% as of June 30, 2025. At June 30, 2025 and December 31, 2024, the borrowing capacity under this arrangement was $926.6 million and $862.1 million, respectively. There were no amounts outstanding at June 30, 2025 or December 31, 2024. The borrowing line is secured by certain liens on the Company’s loans and certain available-for-sale securities.


Table 6.1: Financing Availability with the FHLB
(in thousands)	September 30, 2025		December 31, 2024
Total financing ability from the FHLB	$	1,420,987	$	1,212,209
Less: outstanding borrowings	—		—
Less: LCs pledged to secure State of California deposits	312,500		281,500
Less: LCs pledged to secure local agency deposits	450,000		420,000
Total LCs issued	762,500		701,500
Available borrowing capacity with the FHLB	$	658,487	$	510,709

AtAs ~~June~~of September 30, 2025 ~~the~~and ~~Company had five unsecured federal funds lines of credit totaling $185.0 million with five of its correspondent banks. At~~ December 31, 2024, the Company had ~~five~~the ~~unsecured~~ability ~~federal~~to ~~funds~~borrow ~~lines~~from ofthe ~~credit~~Federal ~~totaling~~Reserve ~~$175.0~~Discount ~~million with five of its correspondent banks~~Window. The borrowings were available at an interest ~~rates~~rate ~~ranging~~of ~~from~~ 4.5025% ~~to 5.70%~~ as of ~~June~~September 30, 2025. At September 30, 2025 and December 31, 2024, the borrowing capacity under this arrangement was $918.4 million and $862.1 million, respectively. There were no amounts outstanding at ~~June~~September 30, 2025 or December 31, 2024. The borrowing line is secured by certain liens on the Company’s loans and certain available-for-sale securities.

At September 30, 2025 the Company had five unsecured federal funds lines of credit totaling $185.0 million with five of its correspondent banks. At December 31, 2024, the Company had five unsecured federal funds lines of credit totaling $175.0 million with five of its correspondent banks. The borrowings were available at interest rates ranging from 4.25% to 5.45% as of September 30, 2025. There were no amounts outstanding at September 30, 2025 or December 31, 2024.

Note 7: Shareholders’ Equity

(a) EPS

Basic EPS is net income divided by the weighted average number of common shares outstanding during the period less average unvested restricted stock awards (“RSAs”). Diluted EPS includes the dilutive effect of additional potential common shares related to unvested RSAs using the treasury stock method. The Company has two forms of outstanding common stock: common stock and unvested RSAs. Holders of unvested RSAs receive non-forfeitable dividends at the same rate as common shareholders and they both share equally in undistributed earnings, and therefore the RSAs are considered participating securities. However, under the two-class method, the difference in EPS is not significant for these participating securities.

Table 7.1: EPS

Three months ended

~~Six~~Nine months ended

(in thousands, except share count and earnings per common share)

~~June~~September 30, 2025

~~June~~September 30, 2024

~~June~~September 30, 2025

~~June~~September 30, 2024

Net income

1416,~~508~~344

10,~~782~~941

2743,~~619~~963

2132,~~413~~354

Basic weighted average common shares outstanding

21,~~225~~231,~~831~~563

21,~~039~~182,~~798~~143

21,~~217~~222,~~900~~504

19,~~115~~809,~~333~~298

Add: Dilutive effects of assumed vesting of restricted stock

4350,~~434~~255

1850,~~287~~615

4345,~~570~~823

50,~~207~~344

Total dilutive weighted average common shares outstanding

21,~~269~~281,~~265~~818

21,~~058~~232,~~085~~758

21,~~261~~268,~~470~~327

19,~~165~~859,~~540~~642

Earnings per common share:

Basic EPS

0.6877

0.5152

12.3007

1.1263

Diluted EPS

0.6877

0.5152

12.3007

1.1263

The Company did not have any anti-dilutive shares at ~~June~~September 30, 2025 or ~~June~~September 30, 2024.

(b) Dividends

The board of directors declared on ~~April~~July 17, 2025, and the Company subsequently paid, a cash dividend of $0.20 per share, totaling $4.3 million.

The Company’s stock-based compensation consists of RSAs granted under its historical stock-based incentive arrangement (the “Historical Incentive Plan”) and RSAs and performance stock awards (“PSUs”) issued under the Five Star Bancorp 2021 Equity Incentive Plan (the “Equity Incentive Plan”). The Historical Incentive Plan consisted of RSAs for certain executive officers of the Company. The arrangement provided that these executive officers would receive shares of restricted common stock of the Company that vested over three years, with the number of shares granted based upon achieving certain performance objectives. These objectives included, but were not limited to, net income adjusted for the provision for credit losses, deposit growth, efficiency ratio, net interest margin, and asset quality. Compensation expense for RSAs granted under the Historical Incentive Plan is recognized over the service period, which is equal to the vesting period of the shares based on the fair value of the shares at issue date.

The Historical Incentive Plan consisted of RSAs for certain executive officers of the Company. The arrangement provided that these executive officers would receive shares of restricted common stock of the Company that vested over three years, with the number of shares granted based upon achieving certain performance objectives. These objectives included, but were not limited to, net income adjusted for the provision for credit losses, deposit growth, efficiency ratio, net interest margin, and asset quality. Compensation expense for RSAs granted under the Historical Incentive Plan is recognized over the service period, which is equal to the vesting period of the shares based on the fair value of the shares at issue date.

In connection with its IPO in May 2021, the Company granted RSAs under the Equity Incentive Plan to certain employees, officers, executives, and non-employee directors. Shares granted to non-employee directors vested immediately upon grant, while shares granted to certain employees, officers, and executives vest ratably over three, five, or seven years (as defined in the respective agreements). Since the completion of the IPO, the Company has granted RSAs under the Equity Incentive Plan to certain executives, which vest ratably over three or five years (as defined in the respective agreements), and to directors, which vest over one year. All RSAs were granted at the fair value of common stock at the time of the award. The RSAs are considered fixed awards, as the number of shares and fair value are known at the date of grant and the fair value at the grant date is amortized over the service period.

~~The~~Beginning in 2025, the Company ~~recognized~~granted $0PSUs under the Equity Incentive Plan to certain executives.4 ~~million~~Performance is measured over a three-year period and $0cliff vested.3 ~~million~~Based on the achievement of ~~non~~the pre-~~cash~~established ~~stock~~goals, ~~compensation~~actual ~~expense~~payouts ~~for~~can range from 0% to 150% of the ~~three~~target ~~months~~award. ~~ended~~As ~~June 30~~such, ~~2025~~the ~~and~~PSUs ~~June 30,~~are ~~2024~~considered variable awards, ~~respectively.~~as ~~The~~the ~~Company~~number ~~recognized~~of $0shares and fair value are not known at the date of grant.6 ~~million~~An estimate is made of ~~non~~the number of shares expected to vest based on the probability that the performance criteria will be achieved to determine the amount of compensation expense to be recognized. This estimate is re-~~cash~~evaluated ~~stock~~quarterly, and total compensation expense is adjusted for ~~both~~any change in the ~~six~~current ~~months~~period. ~~ended~~The ~~June 30,~~estimate ~~2025~~of ~~and~~the ~~June 30,~~number ~~2024,~~of ~~respectively~~shares expected to vest is also used to accrue for dividends to be paid at the end of the vesting period.

AsThe ofCompany ~~June 30,~~recognized ~~2025, there was approximately~~ $20.94 million ofand ~~unrecognized compensation expense related to the 129,448 unvested restricted shares~~$0.3 ~~The~~million ~~holders~~ of ~~unvested RSAs are entitled to dividends at the same per~~non-~~share~~cash ~~ratio as holders of common~~ stock. ~~Tax~~compensation ~~benefits~~expense for ~~dividends paid on unvested RSAs are recorded as tax benefits in~~ the ~~consolidated~~three ~~statements~~months ofended ~~income~~September 30, ~~with~~2025 aand ~~corresponding~~September 30, ~~decrease~~2024, ~~to current taxes payable~~respectively. ~~Such~~The ~~tax~~Company ~~benefits and related expense are expected to be~~ recognized ~~over the weighted average term remaining on the unvested restricted shares of 2~~$1.990 ~~years~~million asand ~~of June 30, 2025~~$0.9 ~~The~~million ~~impact~~ of ~~tax~~non-cash ~~benefits for dividends paid on unvested restricted~~ stock oncompensation ~~the~~expense ~~Company’s unaudited consolidated statements of income~~ for the ~~three~~nine ~~and six~~ months ended ~~June~~September 30, 2025 and ~~June~~September 30, 2024, ~~was immaterial~~respectively.

As of September 30, 2025, there was approximately $2.5 million of unrecognized compensation expense related to the 135,844 unvested RSAs. The holders of unvested RSAs are entitled to dividends at the same per-share ratio as holders of common stock. Tax benefits for dividends paid on unvested RSAs are recorded as tax benefits in the consolidated statements of income with a corresponding decrease to current taxes payable. Such tax benefits and related expense are expected to be recognized over the weighted average term remaining on the unvested RSAs of 2.85 years as of September 30, 2025. The impact of tax benefits for dividends paid on unvested RSAs on the Company’s unaudited consolidated statements of income for the three and nine months ended September 30, 2025 and September 30, 2024 was immaterial.

Table 7.2 summarizes activity related to restricted shares for the periods indicated.

Table 7.2: Unvested Restricted Share Activity
	For the three months ended June 30,						For the six months ended June 30,
	For the three months ended September 30,						For the nine months ended September 30,
	2025			2024			2025			2024
	Shares	Weighted Average Grant Date Fair Value		Shares	Weighted Average Grant Date Fair Value		Shares	Weighted Average Grant Date Fair Value		Shares	Weighted Average Grant Date Fair Value
Beginning of the period balance	~~111~~129,~~786~~448	$	22.08	~~162~~137,~~348~~457	$	21.2243	120,577	$	21.36	69,338	$	20.53
Shares granted	317,~~756~~062	27.55		—	—		4249,~~241~~303	28.3826		96,380	21.97
Shares vested	~~(14,094)~~—	~~20.00~~—		~~(23,723)~~—	~~20.00~~—		(33,037)	21.33		(26,975)	21.03
Shares forfeited	—(666)	—21.97		~~(1,168)~~—	~~21.69~~—		(~~333~~999)	21.97		(1,286)	21.54
End of the period balance	~~129~~135,~~448~~844	$	23.6586	137,457	$	21.43	~~129~~135,~~448~~844	$	23.6586	137,457	$	21.43

Note 8: Commitments and Contingencies

Financial Instruments with Off-Balance Sheet Risk

Some financial instruments, such as loan commitments, credit lines, letters of credit, and overdraft protection, are issued to meet customer financing needs. These are agreements to provide credit or to support the credit of others, as long as conditions established in the contract are met, and usually have expiration dates. Commitments may expire without being used. Substantially all of these commitments are at variable interest rates, based on an index, and have fixed expiration dates.

conditions established in the contract are met, and usually have expiration dates. Commitments may expire without being used. Substantially all of these commitments are at variable interest rates, based on an index, and have fixed expiration dates.

Off-balance sheet risk to loan loss exists up to the face amount of these instruments, although material losses are not anticipated. The Company uses the same credit policies in making commitments to originate loans and lines of credit as it does for on-balance sheet instruments, including obtaining collateral at exercise of the commitment. The contractual amounts of unfunded loan commitments and standby letters of credit not reflected in the unaudited consolidated balance sheets at the dates indicated are presented in Table 8.1.

Table 8.1: Unfunded Loan Commitments and Standby Letters of Credit
(in thousands)	~~June~~September 30, 2025		December 31, 2024
Commercial lines of credit	$	~~242~~259,~~896~~629	$	230,063
Undisbursed commercial real estate loans	~~105~~92,~~207~~742		98,508
Undisbursed construction loans	7591,~~691~~531		74,671
Agricultural lines of credit	2225,~~813~~065		21,155
Undisbursed residential real estate loans	76,~~145~~838		7,225
Undisbursed agricultural real estate loans	2		—
Other	1,800		1,973
Other	1,657		1,973
Total commitments and standby letters of credit	$	477,605	$	433,595
Total commitments and standby letters of credit	$	455,411	$	433,595

The Company records an allowance for credit losses on unfunded loan commitments at the consolidated balance sheet date based on estimates of the probability that these commitments will be drawn upon according to historical utilization experience of the different types of commitments and historical loss rates determined for pooled funded loans. The allowance for credit losses on unfunded commitments totaled $0.6 million as of ~~June~~September 30, 2025 and $0.7 million as of December 31, 2024, which is recorded in “Interest payable and other liabilities” in the unaudited consolidated balance sheets.

Concentrations of credit risk: The Company grants real estate mortgage, real estate construction, commercial, and consumer loans to customers primarily in Northern California. Although the Company has a diversified loan portfolio, a substantial portion is secured by commercial and residential real estate.

In management’s judgment, a concentration of loans exists in real estate related loans, which represented approximately 86.97% of the Company’s loan portfolio at June 30, 2025 and 86.41% of the Company’s loan portfolio at December 31, 2024. Although management believes such concentrations have no more than the normal risk of collectability, a substantial decline in the economy in general, or a decline in real estate values in the Company’s primary market areas in particular, could have an adverse impact on the collectability of these loans. Personal and business incomes represent the primary source of repayment for the majority of these loans.28

~~Deposit~~In ~~concentrations:~~management’s ~~At June 30~~judgment, ~~2025,~~a ~~the~~concentration ~~Company~~of ~~had~~loans ~~105~~exists ~~deposit~~in ~~relationships~~real ~~that~~estate ~~exceeded~~related ~~$5.0 million each~~loans, ~~totaling~~which ~~$2.3~~represented ~~billion, or~~ approximately 5986.9194% of ~~total~~the ~~deposits. The~~ Company’s ~~largest~~loan ~~single~~portfolio ~~deposit relationship~~ at ~~June~~September 30, 2025 ~~totaled~~and ~~$366~~86.441% ~~million,~~of orthe ~~approximately~~Company’s 9loan portfolio at December 31, 2024.~~41%~~ Although management believes such concentrations have no more than the normal risk of ~~total~~collectability, ~~deposits.~~a ~~Management~~substantial ~~maintains~~decline in the economy in general, or a decline in real estate values in the Company’s ~~liquidity~~primary ~~position~~market ~~and~~areas ~~lines~~in ofparticular, ~~credit~~could ~~with~~have ~~correspondent~~an ~~banks~~adverse toimpact ~~mitigate~~on the ~~risk~~collectability of ~~large~~these ~~withdrawals~~loans. byPersonal ~~this~~and ~~group~~business incomes represent the primary source of ~~large~~repayment ~~depositors~~for the majority of these loans.

Deposit concentrations: At September 30, 2025, the Company had 120 deposit relationships that exceeded $5.0 million each, totaling $2.5 billion, or approximately 60.14% of total deposits. The Company’s largest single deposit relationship at September 30, 2025 totaled $290.0 million, or approximately 7.07% of total deposits. Management maintains the Company’s liquidity position and lines of credit with correspondent banks to mitigate the risk of large withdrawals by this group of large depositors.

Contingencies: The Company is subject to legal proceedings and claims which arise in the ordinary course of business. In the opinion of management, the amount of ultimate liability with respect to such actions will not materially adversely affect the consolidated financial position or results of operations of the Company.

Correspondent banking agreements: The Company maintains funds on deposit with other FDIC-insured financial institutions under correspondent banking agreements. Uninsured deposits through these agreements totaled approximately $4738.95 million and $29.2 million at ~~June~~September 30, 2025 and December 31, 2024, respectively.

27Equity investments: The Company is a limited partner and has committed to and is invested in a limited number of venture-backed capital funds. As of September 30, 2025 and December 31, 2024, the balance of these investments totaled approximately $11.6 million and $9.3 million, respectively. As of September 30, 2025 and December 31, 2024, the estimated remaining commitment for these funds totaled $14.2 million and $10.8 million, respectively.

Equity investments: The Company has committed to and is invested in a limited number of venture funds. As of June 30, 2025 and December 31, 2024, the estimated remaining commitment for these funds totaled $14.5 million and $10.8 million, respectively.

Litigation Matters

The Company is subject to legal proceedings and claims which arise in the ordinary course of business. In the opinion of management, the amount of ultimate liability with respect to such actions will not materially adversely affect the consolidated financial position or results of operations of the Company.

Note 9: Subsequent Events

On ~~July 4~~October 16, 2025, the ~~President~~board ~~signed~~of ~~H.R.~~directors 1,of the ~~“One~~Company ~~Big~~declared ~~Beautiful~~a ~~Bill~~cash ~~Act,”~~dividend ~~into~~of ~~law~~$0.20 ~~The~~per ~~legislation~~common ~~includes several changes to federal tax law that generally allow for more favorable deductibility of certain business expenses beginning in 2025~~share, ~~including~~which the ~~restoration~~Company ofexpects ~~immediate~~to ~~expensing~~pay ofon ~~domestic R&D expenditures~~November 10, ~~reinstatement~~2025 ~~of 100% bonus depreciation, and more favorable rules for determining the limitation on business interest expense. The Act also made certain changes~~ to ~~the~~shareholders ~~deductibility~~ of ~~the~~record ~~cost~~as of ~~meals and charitable contributions that are effective for tax years beginning after December 31~~November 3, 2025. These changes were not reflected in the income tax provision for the period ended June 30, 2025, as enactment occurred after the balance sheet date. The Company is currently evaluating the impact on future periods.

On July 17, 2025, the board of directors of the Company declared a cash dividend of $0.20 per common share, which the Company expects to pay on August 11, 2025 to shareholders of record as of August 4, 2025.29

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

The following discussion presents management’s perspective on our results of operations and financial condition on a consolidated basis. However, because we conduct all of our material business operations through our bank subsidiary, Five Star Bank (the “Bank”), the discussion and analysis relates to activities primarily conducted by the Bank.

Management’s discussion of the financial condition and results of operations, which is unaudited, should be read in conjunction with the related unaudited consolidated financial statements and accompanying notes in this Quarterly Report on Form 10-Q and the audited consolidated financial statements and accompanying notes included in the 2024 Annual Report on Form 10-K, which was filed with the SEC on February 28, 2025. Average balances, including balances used in calculating certain financial ratios, are generally comprised of average daily balances.

Unless otherwise indicated, references in this report to “we,” “our,” “us,” “the Company,” or “Bancorp” refer to Five Star Bancorp and our consolidated subsidiary. All references to “the Bank” refer to Five Star Bank, our wholly owned subsidiary.

Cautionary Note Regarding Forward-Looking Statements

This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements represent plans, estimates, objectives, goals, guidelines, expectations, intentions, projections, and statements of our beliefs concerning future events, business plans, objectives, expected operating results, and the assumptions upon which those statements are based. Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate, or imply future results, performance, or achievements, and are typically identified with words such as “may,” “could,” “should,” “will,” “would,” “believe,” “anticipate,” “estimate,” “expect,” “aim,” “intend,” “plan,” or words or phases of similar meaning. To the extent that this discussion describes prior performance, the descriptions relate only to the periods listed, which may not be indicative of our future financial outcomes. We caution that the forward-looking statements are based largely on our expectations and are subject to a number of known and unknown risks and uncertainties that are subject to change based on factors which are, in many instances, beyond our control. Such forward-looking statements are based on various assumptions (some of which may be beyond our control) and are subject to risks and uncertainties, which change over time, and other factors which could cause actual results to differ materially from those currently anticipated. Such risks and uncertainties include, but are not limited to:

•risks related to the concentration of our business in California, and specifically within Northern California, including risks associated with any downturn in the real estate sector;

•changes in market interest rates that affect the pricing of our loans and deposits, our net interest income, and our borrowers’ ability to repay loans;

•changes in the U.S. economy, including an economic slowdown, recession, inflation, deflation, tariffs, housing prices, employment levels, rate of growth, and general business conditions;

•uncertain market conditions and economic trends nationally, regionally, and particularly in Northern California and California;

•the soundness of other financial institutions and the impacts related to or resulting from bank failures and other economic and industry volatility, including increased regulatory requirements and costs and potential impacts to macroeconomic conditions;

•the impact of recent and future legislative and regulatory changes, including changes in banking, securities, and tax laws and regulations and their application by our regulators;

•the effects of increased competition from a wide variety of local, regional, national, and other providers of financial and investment services;

•the risks associated with our loan portfolios, and specifically with our commercial real estate loans;

•our ability to maintain adequate liquidity and to maintain capital necessary to fund our growth strategy and operations and to satisfy minimum regulatory capital levels;

•risks related to our strategic focus on lending to small to medium-sized businesses;

•the sufficiency of the assumptions and estimates we make in establishing reserves for potential credit losses and the value of loan collateral and securities;

•our level of nonperforming assets and the costs associated with resolving problem loans, if any;

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•our ability to comply with various governmental and regulatory requirements applicable to financial institutions, including supervisory actions by federal and state banking agencies;

•governmental monetary and fiscal policies, including the policies of the Federal Reserve;

•risks associated with unauthorized access, cybersecurity breaches, cyber-crime, and other threats and disruptions to data security;

•our ability to implement, maintain, and improve effective risk management framework, disclosure controls and procedures, and internal controls over financial reporting;

•our ability to adopt and successfully integrate new initiatives or technologies into our business in a strategic manner;

•our ability to attract and retain executive officers and key employees and their customer and community relationships;

•the impact of the current or any future U.S. federal government shutdown and uncertainty regarding the U.S. federal government’s debt limit and credit rating;

•the occurrence or impact of climate change or natural or man-made disasters or calamities, such as wildfires, droughts, mudslides, floods, and earthquakes, and particularly in California, and specifically Northern California;

•changes in and impact of local, regional, and global business, economic, and political conditions and geopolitical events, such as pandemics, civil unrest, wars, and acts of terrorism; and

•other factors that are discussed in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

The foregoing factors could cause results or performance to materially differ from those expressed in our forward-looking statements, should not be considered exhaustive, and should be read together with other cautionary statements that are included in this report and those discussed in the section entitled “Risk Factors” of our 2024 Annual Report on Form 10-K, our Quarterly ~~Report~~Reports on Form 10-Q for the three months ended March 31, 2025 and June 30, 2025, and other filings we may make with the SEC, copies of which are available from us at no charge. New risks and uncertainties may emerge from time to time, and it is not possible for us to predict their occurrence or how they will affect us. If one or more of the factors affecting our forward-looking information and statements proves incorrect, then our actual results, performance, or achievements could differ materially from those expressed in, or implied by, forward-looking information and statements contained in this Quarterly Report on Form 10-Q. Therefore, we caution you not to place undue reliance on our forward-looking information and statements. We disclaim any duty to revise or update the forward-looking statements, whether written or oral, to reflect actual results or changes in the factors affecting the forward-looking statements, except as specifically required by law.

Company Overview

Headquartered in the greater Sacramento metropolitan area of California, Five Star Bancorp is a bank holding company that operates through its wholly owned subsidiary, Five Star Bank, a California state-chartered non-member bank. We provide a broad range of banking products and services to small and medium-sized businesses, professionals, and individuals primarily in Northern California through ~~eight~~nine branch offices. Our mission is to strive to become the top business bank in all markets we serve through exceptional service, deep connectivity, and customer empathy. We are dedicated to serving real estate, agricultural, faith-based, and small to medium-sized enterprises. We aim to consistently deliver value that meets or exceeds the expectations of our shareholders, customers, employees, business partners, and community. We refer to our mission as “purpose-driven and integrity-centered banking.” At ~~June~~September 30, 2025, we had total assets of $4.46 billion, total loans held for investment of $3.89 billion, and total deposits of $34.91 billion.

Critical Accounting Estimates

The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Quarterly Reports on Form 10-Q and, therefore, do not include all footnotes as would be necessary for a fair presentation of financial position, results of operations and comprehensive income, changes in shareholders’ equity, and cash flows in conformity with GAAP as contained within the FASB’s ASC and the rules and regulations of the SEC, including the instructions to Regulation S-X. However, these interim unaudited consolidated financial statements reflect all adjustments (consisting solely of normal recurring adjustments and accruals) which, in the opinion of management, are necessary for a fair presentation of financial position, results of operations and comprehensive income, changes in shareholders’ equity, and cash flows for the interim periods presented. These unaudited consolidated financial statements have been prepared on ~~a basis consistent with, and should be read in conjunction with, the audited consolidated financial statements as filed in our 2024 Annual Report on Form 10-K and the notes thereto.~~

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a basis consistent with, and should be read in conjunction with, the audited consolidated financial statements as filed in our 2024 Annual Report on Form 10-K and the notes thereto.

Our most significant accounting policies and our critical accounting estimates are described in greater detail in Note 1, Basis of Presentation, in our audited consolidated financial statements and Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Estimates included in our 2024 Annual Report on Form 10-K. We have identified accounting policies and estimates that, due to the difficult, subjective, or complex judgments and assumptions inherent in those policies and estimates and the potential sensitivity of our unaudited consolidated financial statements to those judgments and assumptions, are critical to an understanding of our consolidated financial condition and results of operations. We believe that the judgments, estimates, and assumptions used in the preparation of our financial statements are reasonable and appropriate, based on the information available at the time they were made. However, actual results may differ from those estimates, and these differences may be material. With the exception of the changes to the ACL described below, there have been no significant changes concerning our critical accounting estimates as described in our 2024 Annual Report on Form 10-K.

Pursuant to the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), as an emerging growth company, we can elect to opt out of the extended transition period for adopting any new or revised accounting standards. We have elected not to opt out of the extended transition period, which means that when a standard is issued or revised and it has different application dates for public and private companies, we may adopt the standard on the application date for private companies.

We have elected to take advantage of the scaled disclosures and other relief under the JOBS Act, and we may take advantage of some or all of the reduced regulatory and reporting requirements that will be available to us under the JOBS Act, so long as we qualify as an emerging growth company.

ACL

The ACL represents the estimated ~~probable~~expected credit losses in our loan and investment portfolios and is estimated as of ~~June~~September 30, 2025 using CECL. The ACL is established through a provision for credit losses charged to operations. Loans and investments are charged against the ACL when management believes that the collectability of the principal is unlikely. Subsequent recoveries of previously charged-off amounts, if any, are credited to the ACL.

The ACL is evaluated on a regular basis by management in consideration of optimistic, moderate, and pessimistic current conditions, and is based on management’s periodic review of the collectability of the loans in light of historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral, prevailing economic conditions specifically impacting each loan type by purpose and by geography, and concentrations within the loan portfolio. This evaluation is inherently subjective, as it requires estimates that are susceptible to significant revision as more information becomes available.

A significant amount of the ACL is measured on a collective (pool) basis by loan and investment security type when similar risk characteristics exist. Pools are determined based primarily on regulatory reporting codes as the loans and investment securities within each pool share similar risk characteristics and there is sufficient historical peer loss data from the FFIEC to provide statistically meaningful support in the models developed. Reserves for credit losses identified on a pooled basis are then adjusted for qualitative and other environmental factors to reflect current conditions. The most significant components of the qualitative and environmental factors used to estimate the allowance for credit losses are adjustments relating to prevailing economic conditions, concentrations within the loan portfolio, and external factors. The prevailing economic conditions factor is estimated based on a range of potential economic conditions and is applied at both the portfolio and individual concentration level based on various factors. The factor concerning concentrations within the loan portfolio is estimated based on concentrations at the loan pool level. The external factor is estimated based on current external factors, such as environmental factors, which could impact the loan portfolio.

During the twelve months ended December 31, 2024, we refined our methodology of measuring the ACL on three pools of loans: Multifamily, C&I SBA, and CRE Non-Owner Occupied loans. Within the Multifamily pool, Manufactured Home Community (“MHC”) loans were segregated from traditional Multifamily as we identified a data source to provide sufficient historical peer loss data specific to MHC loans. This segregation now adjusts for differences in the risk characteristics and performance of MHCs compared to traditional Multifamily properties. Losses are estimated using a discounted cash flow analysis using individual probability of default and loss given default rates on a loan-by-loan basis. Applying this adjusted loss rate led to a decrease in the ACL for the MHC pool as of June 30, 2024 of approximately $5.8 million. During routine monitoring of charge-off activity within the C&I SBA pool, we identified an increased level of charge-offs during the first six months of 2024, reflecting a change in the credit quality of the pool. In response to this, we increased the expected loss rates to be more in line with net charge-off rates during the first six months of 2024, as this time

period reflects what is expected based on our current economic outlook for loans in the C&I SBA pool. This adjustment reflects our estimate for future loss rates and increased the required reserves related to the C&I SBA pool by approximately $4.6 million as of June 30, 2024. Within the CRE Non-Owner Occupied portfolio, RV Park loans were segregated from traditional CRE Non-Owner Occupied as we identified a data source to provide sufficient historical peer loss data specific to RV Park loans. This segregation now adjusts for differences in the risk characteristics and performance of RV Park loans compared to traditional CRE Non-Owner Occupied properties. We used calculations of individual probability of default and loss given default on a loan-by-loan basis to derive an estimated loss rate. Applying this adjusted loss rate led to a decrease in the ACL for the RV Park pool of approximately $3.3 million as of September 30, 2024.

Executive Summary

Net income for the three and ~~six~~nine months ended ~~June~~September 30, 2025 totaled $1416.53 million and $2744.60 million, respectively, as compared to net income of $10.89 million and $2132.4 million for the three and ~~six~~nine months ended ~~June~~September 30, 2024, respectively.

The following are highlights of our operating and financial performance, and financial condition for the dates and periods presented:

•Deposits. Total deposits increased by $~~336~~545.64 million, or 915.4633%, from $3.6 billion at December 31, 2024 to $34.91 billion at ~~June~~September 30, 2025. Non-wholesale deposits increased by $~~240~~599.0 million in the first ~~six~~nine months of 2025 to $3.26 billion at ~~June~~September 30, 2025. Wholesale deposits, which the Company defines as brokered deposits and California Time Deposit Program deposits, ~~increased~~decreased by $9653.6 million in the first ~~six~~nine months of 2025 to $~~656~~506.64 million. Non-interest-bearing deposits increased by $81136.45 million in the first ~~six~~nine months of 2025 to $1.01 billion, and represented 25.7881% of total deposits at ~~June~~September 30, 2025, as compared to 25.93% of total deposits at December 31, 2024. Our loan to deposit ratio was 9694.5073% at ~~June~~September 30, 2025, as compared to 99.38% at December 31, 2024.

•Assets. Total assets were $4.46 billion at ~~June~~September 30, 2025, representing a $~~360~~588.25 million, or 814.8952%, increase compared to $4.1 billion at December 31, 2024.

•Loans. Total loans held for investment were $3.89 billion at ~~June~~September 30, 2025, as compared to $3.5 billion at December 31, 2024, an increase of $~~225~~354.36 million, or 610.3804%. The increase was a result of $~~578~~931.8 million in loan originations and advances, partially offset by $~~130~~219.38 million and $~~223~~357.15 million in loan payoffs and paydowns, respectively. The $~~225~~354.36 million increase in total loans held for investment included $4370.97 million in purchases of loans within the consumer concentration of the loan portfolio.

•Credit Quality. Credit quality remains strong, with non-accrual loans representing $2.31 million, or 0.0605% of total loans held for investment at ~~June~~September 30, 2025, as compared to $1.8 million, or 0.05% of total loans held for investment at December 31, 2024. The ratio of the allowance for credit losses to total loans held for investment was 1.0708% at ~~June~~September 30, 2025 and 1.07% at December 31, 2024.

•Net Interest Margin. Net interest margin was 3.5356% and 3.4952%, respectively, for the three and ~~six~~nine months ended ~~June~~September 30, 2025, and 3.3937% and 3.2730%, respectively, for the three and ~~six~~nine months ended ~~June~~September 30, 2024. The increase in net interest margin for the three months ended ~~June~~September 30, 2025 compared to the three months ended ~~June~~September 30, 2024 is primarily due to loan growth and an improvement in the average yield on loans, partially offset by an increase in interest expense driven by deposit growth. The increase in net interest margin for the ~~six~~nine months ended ~~June~~September 30, 2025 compared to the ~~six~~nine months ended ~~June~~September 30, 2024 is primarily due to loan growth and an improvement in the average yield on loans, partially offset by an increase in interest expense driven by deposit growth.

•Efficiency Ratio. Efficiency ratio was 4140.0313% for the three months ended ~~June~~September 30, 2025, down from 4443.0737% for the corresponding period of 2024, mainly due to a $79.40 million, or 2529.5249%, increase in net interest income during the same period. Additionally, efficiency ratio was 41.7718% for the ~~six~~nine months ended ~~June~~September 30, 2025, down from 4443.2796% for the corresponding period of 2024, mainly due to a $1423.76 million, or 2627.2539%, increase in net interest income during the same period.

•Capital Ratios. All capital ratios were above well-capitalized regulatory thresholds as of ~~June~~September 30, 2025. The total risk-based capital ratio for the Company was 13.7359% at ~~June~~September 30, 2025, as compared to 13.99% at December 31, 2024. The Tier 1 leverage ratio was 109.0378% at ~~June~~September 30, 2025, as compared to 10.05% at December 31, 2024. For additional information about the regulatory capital requirements applicable to the Company and the Bank, see the section entitled “—Financial Condition Summary—Capital Adequacy” below.

•Dividends. The board of directors declared a cash dividend of $0.20 per share on ~~April~~July 17, 2025.

Highlights of our financial results are presented in the following tables:

Table 1: Highlights of Financial Results
(dollars in thousands)	~~June~~September 30, 2025			December 31, 2024
Selected financial condition data:
Total assets	$	4,~~413~~641,~~473~~770		$	4,053,278
Total loans held for investment	3,~~758~~887,~~025~~259			3,532,686
Total deposits	34,~~894~~103,~~622~~438			3,557,994
Total subordinated notes, net	7374,~~968~~004			73,895
Total shareholders’ equity	~~416~~431,~~742~~308			396,624
Asset quality ratios:
Allowance for credit losses to total loans held for investment	1.0708		%	1.07		%
Allowance for credit losses to nonperforming loans	1,~~763~~975.2662		%	2,101.78		%
Nonperforming loans to total loans held for investment	0.0605		%	0.05		%
Capital ratios:
Total capital (to risk-weighted assets)	13.7359		%	13.99		%
Tier 1 capital (to risk-weighted assets)	10.8577		%	11.02		%
Common equity Tier 1 capital (to risk-weighted assets)	10.8577		%	11.02		%
Tier 1 leverage	109.0378		%	10.05		%
Total shareholders’ equity to total assets	9.4429		%	9.79		%
Tangible shareholders’ equity to tangible assets1	9.4429		%	9.79		%

Table 2: Highlights of Financial Results (continued)
	For the three months ended						For the ~~six~~nine months ended
(dollars in thousands, except per share data)	~~June~~September 30, 2025			~~June~~September 30, 2024			~~June~~September 30, 2025			~~June~~September 30, 2024
Selected operating data:
Net interest income	$	3639,~~515~~348		$	2930,~~092~~386		$	70109,~~492~~840		$	5586,~~836~~222
Provision for credit losses	2,500			2,~~000~~750			46,~~400~~900			25,~~900~~650
Non-interest income	1,~~810~~966			1,~~573~~381			35,~~169~~135			34,~~406~~787
Non-interest expense	1516,~~726~~580			13,~~513~~776			3047,~~771~~351			2640,~~229~~005
Net income	1416,~~508~~344			10,~~782~~941			2743,~~619~~963			2132,~~413~~354
Per common share data:
Earnings per common share:
Basic	$	0.6877		$	0.5152		$	12.3007		$	1.1263
Diluted	$	0.6877		$	0.5152		$	12.3007		$	1.1263
Book value per share	$	1920.5119		$	1718.8529		$	1920.5119		$	1718.8529
Tangible book value per share2	$	1920.5119		$	1718.8529		$	1920.5119		$	1718.8529
Performance and other financial ratios:
ROAA	1.3744		%	1.2318		%	1.3337		%	1.2221		%
ROAE	1415.1735		%	11.7231		%	1314.7329		%	1312.0843		%
Net interest margin	3.5356		%	3.3937		%	3.4952		%	3.2730		%
Cost of funds	2.5351		%	2.5672		%	2.5553		%	2.5964		%
Efficiency ratio	4140.0313		%	4443.0737		%	41.7718		%	4443.2796		%
Cash dividend payout ratio on common stock3	2925.4197		%	3938.2246		%	3028.7799		%	3536.7181		%

1Tangible shareholders’ equity to tangible assets is considered a non-GAAP financial measure. See the section entitled “Non-GAAP Financial Measures” for a reconciliation of our non-GAAP financial measures to the most directly comparable GAAP financial measure. Tangible shareholders’ equity to tangible assets is defined as total equity less goodwill and other intangible assets, divided by total assets less goodwill and other intangible assets. The most directly comparable GAAP financial measure is total shareholders’ equity to total assets. We had no goodwill or other intangible assets at the end of any period indicated. As a result, tangible shareholders’ equity to tangible assets is the same as total shareholders’ equity to total assets at the end of each of the periods indicated.

2Tangible book value per share is considered a non-GAAP financial measure. See the section entitled “Non-GAAP Financial Measures” for a reconciliation of our non-GAAP financial measures to the most directly comparable GAAP financial measure. Tangible book value per share is defined as total shareholders’ equity less goodwill and other intangible assets, divided by the outstanding number of common shares at the end of the period. The most directly comparable GAAP financial measure is book value per share. We had no goodwill or other intangible assets at the end of any period indicated. As a result, tangible book value per share is the same as book value per share at the end of each of the periods indicated.

3Cash dividend payout ratio on common stock is calculated as dividends on common shares divided by basic earnings per common share.

RESULTS OF OPERATIONS

The following discussion of our results of operations compares the three and ~~six~~nine months ended ~~June~~September 30, 2025 to the three and ~~six~~nine months ended ~~June~~September 30, 2024. The results of operations for the three and ~~six~~nine months ended ~~June~~September 30, 2025 are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2025.

Net Interest Income

Net interest income is the most significant contributor to our net income. Net interest income represents interest income from interest-earning assets, such as loans and investments, less interest expense on interest-bearing liabilities, such as deposits, subordinated notes, and other borrowings, which are used to fund those assets. In evaluating our net interest income, we measure and monitor yields on our interest-earning assets and interest-bearing liabilities as well as trends in our net interest margin. Net interest margin is a ratio calculated as net interest income divided by total interest-earning assets for the same period. We manage our earning assets and funding sources in order to maximize this margin while limiting credit risk and interest rate sensitivity to our established risk appetite levels. Changes in market interest rates and competition in our market typically have the largest impact on periodic changes in our net interest margin.

Three months ended ~~June~~September 30, 2025 compared to three months ended ~~June~~September 30, 2024

Net interest income increased by $79.40 million, or 2529.5249%, for the three months ended ~~June~~September 30, 2025 compared to the three months ended ~~June~~September 30, 2024, and our net interest margin increased 1419 basis points during the same period. The increase in net interest income is primarily attributable to an increase in interest income driven by loan growth and an improvement in the average yield on loans, partially offset by an increase in interest expense driven by deposit growth. Additional detail relating to net interest margin in each period is provided below.

Average balance sheet, interest, and yield/rate analysis. Table 3 presents average balance sheet information, interest income, interest expense, and the corresponding average yield earned or rate paid for each period reported. The average balances are daily averages and include both performing and nonperforming loans.

Table 3: Average Balances, Interest, and Yield/Rate
	For the three months endedJune 30, 2025						For the three months endedJune 30, 2024
	For the three months endedSeptember 30, 2025						For the three months endedSeptember 30, 2024
(dollars in thousands)	Average Balance		Interest Income/Expense		Average Yield/Rate		Average Balance		Interest Income/Expense		Average Yield/Rate
Assets
Interest-earning deposits in banks1	$	~~361~~451,~~866~~534	$	35,~~987~~009	4.4240	%	$	~~148~~126,~~936~~266	$	1,~~986~~657	5.3622	%
Investment securities1,2	9796,~~886~~806		~~577~~579		2.3738	%	~~105~~106,~~819~~256		~~650~~620		2.4732	%
Loans held for investment and sale1,3	3,~~691~~831,~~616~~851		5659,~~016~~257		6.0914	%	3,~~197~~354,~~921~~050		4650,~~362~~390		5.8398	%
Total interest-earning assets1	4,~~151~~380,~~368~~191		6064,~~580~~845		5.8587	%	3,~~452~~586,~~676~~572		4852,~~998~~667		5.7184	%
Interest receivable and other assets, net4	~~101~~110,~~632~~118						8491,~~554~~965
Total assets	$	4,~~253~~490,~~000~~309					$	3,~~537~~678,~~230~~537
Liabilities and shareholders’ equity
Interest-bearing transaction accounts1	$	~~283~~300,~~369~~642	$	1,~~043~~194	1.4858	%	$	~~291~~302,~~470~~188	$	1,~~104~~237	1.5263	%
Savings accounts1	~~121~~130,~~692~~973		~~801~~895		2.6471	%	~~120~~124,~~080~~851		~~856~~979		23.8712	%
Money market accounts1	1,~~647~~874,~~628~~089		1315,~~270~~348		3.2325	%	1,~~547~~578,~~814~~244		1314,~~388~~688		3.4870	%
Time accounts1	~~726~~639,~~295~~434		76,~~790~~899		4.3028	%	~~272~~326,~~887~~640		34,~~369~~172		45.9608	%
Subordinated notes and other borrowings1	73,~~967~~981		1,161		6.3023	%	7576,~~747~~988		1,~~189~~205		6.3123	%
Total interest-bearing liabilities	23,~~852~~019,~~951~~119		2425,~~065~~497		3.3835	%	2,~~307~~408,~~998~~911		1922,~~906~~281		3.4768	%
Demand accounts	~~957~~1,~~034~~016,560						~~817~~852,~~668~~872
Interest payable and other liabilities	32,~~406~~210						4132,~~429~~062
Shareholders’ equity	~~410~~422,~~609~~420						~~370~~384,~~135~~692
Total liabilities and shareholders’ equity	$	4,~~253~~490,~~000~~309					$	3,~~537~~678,~~230~~537
Net interest spread5					2.4752	%					2.2416	%
Net interest income/margin6			$	3639,~~515~~348	3.5356	%			$	2930,~~092~~386	3.3937	%

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

2Yields on available-for-sale securities are calculated based on fair value. Investment security interest is earned monthly on a 30/360 day basis. Yields are not calculated on a tax-equivalent basis.

3Non-accrual loans are included in total loan balances. No adjustment has been made for these loans in the yield calculations. Interest income on loans includes amortization of deferred loan fees, net of deferred loan costs. Allowance for credit losses is not included in total loan balances.

4Allowance for credit losses is included in interest receivable and other assets, net.

5Net interest spread represents the average yield earned on interest-earning assets minus the average rate paid on interest-bearing liabilities.

6Net interest margin is computed by calculating the difference between interest income and interest expense, divided by the average balance of interest-earning assets, then annualized based on the number of days in the given period.

Analysis of changes in interest income and expenses. Increases and decreases in interest income and interest expense result from changes in average balances (volume) of interest-earning assets and interest-bearing liabilities, as well as changes in average yields/rates. Table 4 shows the effect that these factors had on the interest earned from our interest-earning assets and interest incurred on our interest-bearing liabilities. The effect of changes in volume is determined by multiplying the change in volume by the current period’s average yield/rate. The effect of rate changes is calculated by multiplying the change in average yield/rate by the previous period’s volume. Changes not solely attributable to volume or yields/rates have been allocated in proportion to the respective volume and yield/rate components.

Table 4: Interest Income and Expense Change Analysis

For the three months endedJune 30, 2025 compared tothe three months ended June 30, 2024

For the three months endedSeptember 30, 2025 compared tothe three months ended September 30, 2024

(dollars in thousands)

Volume

Yield/Rate

Total Increase (Decrease)

Interest-earning deposits in banks

23,~~351~~613

(~~350~~261)

23,~~001~~352

Investment securities

(4755)

~~(26)~~14

(7341)

Loans held for investment and sale

7,~~595~~509

21,~~059~~358

98,~~654~~867

Total interest-earning assets

911,~~899~~067

1,~~683~~111

1112,~~582~~178

Interest-bearing transaction accounts

(286)

(3337)

(6143)

Savings accounts

1041

(65125)

(5584)

Money market accounts

~~625~~2,560

(~~743~~1,900)

~~(118)~~660

Time accounts

43,~~872~~387

(~~451~~660)

42,~~421~~727

Subordinated notes and other borrowings

(2644)

~~(2)~~—

(2844)

Total interest-bearing liabilities

5,~~453~~938

(12,~~294~~722)

43,~~159~~216

Changes in net interest income/margin

45,~~446~~129

23,~~977~~833

78,~~423~~962

Net interest income during the three months ended ~~June~~September 30, 2025 increased to $3639.53 million compared to $2930.14 million during the three months ended ~~June~~September 30, 2024. Net interest margin totaled 3.5356% for the three months ended ~~June~~September 30, 2025, compared to 3.3937% in the same quarter of the prior year. The increase in net interest income is primarily attributable to an additional $1112.62 million in interest income, mainly due to a $~~493~~477.78 million, or 1514.4425%, increase in the average balance of loans and a 2616 basis point improvement in the average yield on loans during the three months ended ~~June~~September 30, 2025 compared to the same quarter of the prior year. The increase in interest income was partially offset by an additional $43.2 million in interest expense compared to the same quarter of the prior year. The increase in interest expense is mainly attributable to a $~~686~~776.19 million, or 2224.5039%, increase in the average balance of deposits at an average rate of ~~one~~19 basis ~~point~~points lower during the three months ended ~~June~~September 30, 2025 compared to the same quarter of the prior year. In addition, the average balance of non-interest-bearing deposits increased by $163.7 million, or 19.19%, compared to the same period of the prior year.

~~Six~~Nine months ended ~~June~~September 30, 2025 compared to ~~six~~nine months ended ~~June~~September 30, 2024

Net interest income increased by $1423.76 million, or 2627.2539%, for the ~~six~~nine months ended ~~June~~September 30, 2025 compared to the ~~six~~nine months ended ~~June~~September 30, 2024, and our net interest margin increased 22 basis points when compared to the same period in 2024. The increase in net interest income is primarily attributable to an increase in interest income driven by loan growth and an improvement in the average yield on loans, partially offset by an increase in interest expense driven by deposit growth. Additional detail relating to net interest margin in each period is provided below.

Average balance sheet, interest, and yield/rate analysis. Table 5 presents average balance sheet information, interest income, interest expense, and the corresponding average yield earned or rate paid for each period reported. The average balances are daily averages and include both performing and nonperforming loans.

Table 5: Average Balances, Interest, and Yield/Rate
(dollars in thousands)	For the ~~six~~nine months ~~endedJune~~endedSeptember 30, 2025						For the ~~six~~nine months ended ~~June~~September 30, 2024
	Average Balance		Interest Income/Expense		Average Yield/Rate		Average Balance		Interest Income/Expense		Average Yield/Rate
Assets
Interest-earning deposits in banks1	$	~~345~~381,~~310~~107	$	712,~~562~~571	4.4241	%	$	~~190~~169,~~969~~244	$	56,~~088~~745	5.3632	%
Investment securities1,2	9998,~~173~~375		1,~~158~~737		2.3536	%	107,~~498~~081		1,~~303~~923		2.4440	%
Loans held for investment and sale1,3	3,~~630~~698,~~146~~120		~~108~~168,~~947~~204		6.0508	%	3,~~140~~211,~~106~~941		90140,~~148~~538		5.7784	%
Total interest-earning assets1	4,~~074~~177,~~629~~602		~~117~~182,~~667~~512		5.8284	%	3,~~438~~488,~~573~~266		96149,~~539~~206		5.6571	%
Interest receivable and other assets, net4	97101,~~610~~825						89,~~268~~499
Total assets	$	4,~~172~~279,~~239~~427					$	3,~~527~~577,~~841~~765
Liabilities and shareholders’ equity
Interest-bearing transaction accounts1	$	~~293~~295,~~539~~933	$	23,~~155~~350	1.4851	%	$	~~295~~298,~~897~~010	$	23,~~230~~467	1.5255	%
Savings accounts1	~~122~~125,~~641~~449		12,~~573~~468		2.5963	%	~~122~~123,~~320~~170		12,~~718~~697		2.8292	%
Money market accounts1	1,~~594~~688,~~548~~753		2541,~~705~~052		3.25	%	1,~~479~~512,~~039~~349		2540,~~543~~231		3.4755	%
Time accounts1	~~716~~690,~~466~~506		1522,~~419~~318		4.3432	%	~~351~~342,~~237~~978		812,~~737~~909		5.0003	%
Subordinated notes and other borrowings1	73,~~938~~952		23,~~323~~484		6.3430	%	7978,~~261~~498		23,~~475~~680		6.2826	%
Total interest-bearing liabilities	2,~~801~~874,~~132~~593		4772,~~175~~672		3.4038	%	2,~~327~~355,~~754~~005		4062,~~703~~984		3.5257	%
Demand accounts	~~934~~961,~~121~~903						~~829~~837,~~887~~604
Interest payable and other liabilities	31,~~403~~674						4137,~~080~~377
Shareholders’ equity	~~405~~411,~~583~~257						~~329~~347,~~120~~779
Total liabilities and shareholders’ equity	$	4,~~172~~279,~~239~~427					$	3,~~527~~577,~~841~~765
Net interest spread5					2.4246	%					2.1314	%
Net interest income/margin6			$	70109,~~492~~840	3.4952	%			$	5586,~~836~~222	3.2730	%

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

2Yields on available-for-sale securities are calculated based on fair value. Investment security interest is earned monthly on a 30/360 day basis. Yields are not calculated on a tax-equivalent basis.

4Allowance for credit losses is included in interest receivable and other assets, net.

5Net interest spread represents the average yield earned on interest-earning assets minus the average rate paid on interest-bearing liabilities.

Analysis of changes in interest income and expenses. Increases and decreases in interest income and interest expense result from changes in average balances (volume) of interest-earning assets and interest-bearing liabilities, as well as changes in average yields/rates. Table 6 shows the effect that these factors had on the interest earned from our interest-earning assets and interest incurred on our interest-bearing liabilities. The effect of changes in volume is determined by multiplying the change in volume by the current period’s average yield/rate. The effect of rate changes is calculated by multiplying the change in average yield/rate by the previous period’s volume. Changes not solely attributable to volume or yields/rates have been allocated in proportion to the respective volume and yield/rate components.

Table 6: Interest Income and Expense Change Analysis

(In thousands)

For the ~~six~~nine months ended ~~June~~September 30, 2025 compared to the ~~six~~nine months ended ~~June~~September 30, 2024

Volume

Yield/Rate

Total Increase (Decrease)

Interest-earning deposits in banks

36,~~364~~983

(~~890~~1,157)

25,~~474~~826

Investment securities

(99156)

(4630)

(~~145~~186)

Loans held for investment and sale

1422,~~505~~006

45,~~294~~660

1827,~~799~~666

Total interest-earning assets

1728,~~770~~833

34,~~358~~473

2133,~~128~~306

Interest-bearing transaction accounts

(1924)

(5693)

(75117)

Savings accounts

445

(~~149~~274)

(~~145~~229)

Money market accounts

14,~~320~~119

(13,~~158~~298)

~~162~~821

Time accounts

711,~~836~~221

(1,~~154~~812)

69,~~682~~409

Subordinated notes and other borrowings

(~~176~~219)

2423

(~~152~~196)

Total interest-bearing liabilities

815,~~965~~142

(25,~~493~~454)

69,~~472~~688

Changes in net interest income/margin

813,~~805~~691

59,~~851~~927

1423,~~656~~618

Net interest income during the ~~six~~nine months ended ~~June~~September 30, 2025 increased to $70109.58 million compared to $5586.82 million during the ~~six~~nine months ended ~~June~~September 30, 2024. Net interest margin totaled 3.4952% for the ~~six~~nine months ended ~~June~~September 30, 2025, compared to 3.2730% for the same period of the prior year. ~~Interest~~The ~~income~~increase ~~increased~~in bynet ~~$21.1~~interest ~~million~~income ~~compared~~is toprimarily ~~the~~attributable ~~same~~to ~~period~~an ofadditional ~~the~~$33.3 ~~prior~~million ~~year.~~in ~~The~~interest ~~average~~income, ~~yield~~mainly ondue ~~loans~~to ~~increased~~a 28$486.2 ~~basis~~million, ~~points~~or ~~compared~~15.14%, toincrease in the ~~same~~average ~~period~~balance of ~~the~~loans ~~prior~~and ~~year~~a ~~due~~24 tobasis anpoint ~~increase~~improvement in the average ~~balances~~yield ofon ~~$490.0~~loans ~~million,~~during orthe ~~15.61%~~nine months ended September 30, ~~and~~2025 ~~increased~~compared ~~interest~~to ~~rates~~the onsame ~~new~~period ~~and~~of ~~repriced~~the ~~loans~~prior year. The increase in interest income was partially offset by an additional $69.57 million in interest expense compared to the same period of the prior year. The increase in interest expense was primarily due to an increase in the average balance of interest-bearing deposits of $~~478~~524.71 million, or 2123.2902%, compared to the same period of the prior year. The cost of interest-bearing deposits decreased 1018 basis points. In addition, the average balance of non-interest-bearing deposits increased by $~~104~~124.23 million, or 1214.5684%, compared to the same period of the prior year.

Provision for Credit Losses

The provision for credit losses is based on management’s assessment of the adequacy of our allowance for credit losses. Factors impacting the provision include inherent risk characteristics in our loan portfolio, the level of nonperforming loans and net charge-offs, both current and historic, local economic and credit conditions, the direction of the change in collateral values, and the funding probability on unfunded lending commitments. The provision for credit losses is charged against earnings in order to maintain our allowance for credit losses, which reflects management’s best estimate of expected life of loan losses in our loan portfolio at the balance sheet date.

Three months ended ~~June~~September 30, 2025 compared to three months ended ~~June~~September 30, 2024

We recorded a $2.5 million provision for credit losses in the ~~second~~third quarter of 2025, compared to a $2.08 million provision for credit losses for the same period of 2024. The ~~increase~~decrease in the provision for credit losses in the ~~second~~third quarter of 2025 is mainly due to loan growth and an overall increase in loss rates related to the annual CECL model refresh. These increases were partially offset by lower net charge-offs recorded in the third quarter of 2025.

~~Six~~Nine months ended ~~June~~September 30, 2025 compared to ~~six~~nine months ended ~~June~~September 30, 2024

We recorded a $46.49 million provision for credit losses in the first ~~six~~nine months of 2025, as compared to a $25.97 million provision for credit losses for the same period of 2024. The increase in the provision for credit losses recorded during the first ~~six~~nine months of 2025 is mainly due to increases in loan growth and ~~net~~an ~~charge-offs~~overall increase in loss rates related to the annual CECL model refresh.

Non-interest Income

Non-interest income is a secondary contributor to our net income, following interest income. Non-interest income consists of service charges on deposit accounts, net gain on sale of securities, gain on sale of loans, loan-related fees, FHLB stock dividends, earnings on BOLI, and other income.

Three months ended ~~June~~September 30, 2025 compared to three months ended ~~June~~September 30, 2024

Table 7 details the components of non-interest income for the periods indicated.

Table 7: Non-interest Income
	For the three months ended
(dollars in thousands)	~~June~~September 30, 2025		~~June~~September 30, 2024		$ Change		% Change
Service charges on deposit accounts	$	~~196~~185	$	~~189~~165	$	720	312.7012	%
Gain on sale of loans	~~119~~—		~~449~~306		(~~330~~306)		(73100.5000)	%
Loan-related fees	~~468~~683		~~370~~406		98277		2668.4923	%
FHLB stock dividends	~~325~~329		~~329~~327		~~(4)~~2		(10.~~22)~~61	%
Earnings on BOLI	~~220~~209		~~158~~162		6247		3929.2401	%
Other income	~~482~~560		7815		~~404~~545		~~517~~3,633.9533	%
Total non-interest income	$	1,~~810~~966	$	1,~~573~~381	$	~~237~~585	1542.0736	%

Gain on sale of loans. The decrease related ~~primarily~~ to an overall decline in the volume of loans sold, ~~partially~~due ~~offset~~to bya anstrategic, ~~improvement~~intentional reduction in ~~the~~originations ~~effective yield~~ of loans ~~sold~~held for sale. During the three months ended ~~June~~September 30, 2025, ~~approximately~~no ~~$1.6 million of~~ loans were sold ~~with an effective yield of 7.60%~~, as compared to approximately $64.84 million of loans sold with an effective yield of 67.6003% during the three months ended ~~June~~September 30, 2024.

~~Other~~Loan-related ~~income~~fees. The increase ~~related~~resulted primarily tofrom an ~~overall~~increase ~~improvement~~of in$0.3 ~~earnings~~million ~~related~~in toswap ~~investments~~referral infees ~~venture-backed~~recognized ~~funds~~ during the three months ended ~~June~~September 30, 2025, as compared to the three months ended ~~June~~September 30, 2024.

~~Six~~Other income. The increase related primarily to an overall improvement in earnings related to equity investments in venture-backed funds during the three months ended ~~June~~September 30, 2025, as compared to ~~six~~the three months ended ~~June~~September 30, 2024.

Table 8 details the components of non-interest income for the periods indicated.

Table 8: Non-interest Income
	For the six months ended
(dollars in thousands)	June 30, 2025		June 30, 2024		$ Change		% Change
Service charges on deposit accounts	$	411	$	377	$	34	9.02	%
Gain on sale of loans	244		818		(574)		(70.17)	%
Loan-related fees	916		799		117		14.64	%
FHLB stock dividends	656		661		(5)		(0.76)	%
Earnings on BOLI	381		300		81		27.00	%
Other income	561		451		110		24.39	%
Total non-interest income	$	3,169	$	3,406	$	(237)	(6.96)	%

Gain on sale of loans. The decrease related primarily to an overall decline in the volume of loans sold, partially offset by an improvement in the effective yield of loans sold period-over-period. During the six months ended June 30, 2025,

~~approximately~~Nine ~~$3.3~~months ~~million~~ended ~~of loans were sold with an effective yield of 7.41%~~September 30, as2025 compared to ~~approximately~~nine ~~$12.0 million of loans sold with an effective yield of 6.81% during the six~~ months ended ~~June~~September 30, 2024.

~~Loan-related~~Table ~~fees.~~8 ~~The~~details ~~increase~~the ~~related~~components ~~primarily~~of ~~to individually immaterial increases in credit card~~non-~~related~~interest ~~fees,~~income ~~swap~~for ~~fees,~~the ~~rate~~periods ~~lock fees, late fees, and loan referral income~~indicated.

Other income. The increase resulted primarily from a $0.5 million improvement in earnings related to investments in venture-backed funds, partially offset by a decrease in income received on equity investments in venture-backed funds from a gain of $0.3 million for the six months ended June 30, 2024 to a loss of $0.1 million for the six months ended June 30, 2025.


Table 8: Non-interest Income
	For the nine months ended
(dollars in thousands)	September 30, 2025		September 30, 2024		$ Change		% Change
Service charges on deposit accounts	$	596	$	542	$	54	9.96	%

Gain on sale of loans	244		1,124		(880)		(78.29)	%
Loan-related fees	1,599		1,205		394		32.70	%
FHLB stock dividends	985		988		(3)		(0.30)	%
Earnings on BOLI	590		462		128		27.71	%
Other income	1,121		466		655		140.56	%
Total non-interest income	$	5,135	$	4,787	$	348	7.27	%

Gain on sale of loans. The decrease related primarily to an overall decline in the volume of loans sold due to a strategic, intentional reduction in originations of loans held for sale, partially offset by an improvement in the effective yield of loans sold period-over-period. During the nine months ended September 30, 2025, approximately $3.3 million of loans were sold with an effective yield of 7.41%, as compared to approximately $16.4 million of loans sold with an effective yield of 6.87% during the nine months ended September 30, 2024.

Loan-related fees. The increase related primarily to a $0.3 million increase in swap fees and a $0.1 million increase in credit card-related fees.

Earnings on BOLI. The increase related primarily to an increase in BOLI balances between September 30, 2024 and September 30, 2025 due to the addition of a new policy.

Other income. The increase resulted primarily from a $1.0 million improvement in earnings related to equity investments in venture-backed funds, partially offset by a decrease in income received on equity investments in venture-backed funds from a gain of $0.2 million for the nine months ended September 30, 2024 to a loss of $0.1 million for the nine months ended September 30, 2025.

Non-interest Expense

Non-interest expense includes salaries and employee benefits, occupancy and equipment, data processing and software, FDIC insurance, professional services, advertising and promotional, loan-related expenses, and other operating expenses. In evaluating our level of non-interest expense, we closely monitor the Company’s efficiency ratio, which is calculated as non-interest expense divided by the sum of net interest income and non-interest income. We constantly seek to identify ways to streamline our business and operate more efficiently in order to reduce our non-interest expense over time as a percentage of our revenue, while continuing to achieve growth in total loans and assets.

Over the past several years, we have continued to invest significant resources in personnel, technology, and infrastructure. As we execute initiatives based on growth, we expect non-interest expense to continue to grow. Non-interest expense has increased throughout the periods presented below; however, we expect our efficiency ratio will continue to improve going forward due, in part, to our past investment in infrastructure.

~~Three months ended June 30, 2025 compared to three months ended June 30, 2024~~42

Three months ended September 30, 2025 compared to three months ended September 30, 2024

Table 9 details the components of non-interest expense for the periods indicated.

Table 9: Non-interest Expense

For the three months ended

(dollars in thousands)

~~June~~September 30, 2025

~~June~~September 30, 2024

$ Change

% Change

Salaries and employee benefits

89,~~910~~716

7,~~803~~969

1,~~107~~747

1421.1992

Occupancy and equipment

~~657~~700

~~646~~626

1174

111.7082

Data processing and software

1,~~508~~559

1,~~235~~327

~~273~~232

2217.1148

FDIC insurance

~~470~~500

~~390~~405

8095

2023.5146

Professional services

~~918~~932

~~767~~830

~~151~~102

1912.6929

Advertising and promotional

~~865~~803

~~615~~584

~~250~~219

4037.6550

Loan-related expenses

~~423~~317

~~297~~292

~~126~~25

428.4256

Other operating expenses

12,~~975~~053

1,~~760~~743

~~215~~310

1217.2279

Total non-interest expense

1516,~~726~~580

13,~~513~~776

2,~~213~~804

1620.3835

Salaries and employee benefits. The increase related primarily to: (i) a $1.27 million increase in salaries, benefits, and bonus expense, mainly related to a 1613.5833% increase in headcount between ~~June~~September 30, 2024 and ~~June~~September 30, 2025; and (ii) a $0.15 million increase in commissions paid. This increase was partially offset by a $0.25 million increase in deferred loan origination costs due to a greater number of loan originations, net of purchased consumer loans, period-over-period.

Data processing and software. The increase was primarily due to: (i) increased usage of our digital banking platform; (ii) higher transaction volumes related to the increased number of loan and deposit accounts; and (iii) an increased number of licenses required for new users on our loan origination and documentation system.

Professional services. The increase was primarily due to a $0.1 million increase in fees paid for ~~compensation and~~ business development consulting services.

42Advertising and promotional. The increase related primarily to additional expenses incurred to support the expansion of the Bank’s business development teams, including a $0.1 million increase in expenses related to sponsored events and partnerships and a $0.1 million increase related to client and prospective client development expenses.

~~Advertising~~Other ~~and~~operating ~~promotional~~expenses. The increase ~~related~~was primarily due to: ~~additional~~(i) ~~expenses~~a ~~incurred~~$0.1 tomillion ~~support~~increase ~~the~~in ~~expansion~~administrative ofcharges, ~~the~~including ~~Bank’s~~subscription ~~business~~services ~~development~~and ~~teams,~~bank ~~including~~charges; (ii) a $0.1 million increase in ~~expenses~~IntraFi ~~related~~Network tofees ~~sponsored~~resulting ~~events~~from ~~and~~an ~~partnerships~~overall increase in balances carried in the network; and (iii) a $0.1 million increase ~~related~~in toarmored ~~business~~car ~~development~~and courier expenses.

~~Loan-related expenses. The increase related primarily to a $0.1 million increase in expenses related to inspections to support the increase in loan originations and annual loan reviews.~~43

~~Other~~Nine ~~operating~~months ~~expenses.~~ended ~~The~~September 30, ~~increase~~2025 ~~was~~compared ~~primarily due~~ to anine ~~$0.1~~months ~~million~~ended ~~increase in travel expense and a $0.1 million increase in expenses related to conferences~~September 30, ~~trainings, and professional association memberships.~~2024

Six months ended June 30, 2025 compared to six months ended June 30, 2024

Table 10 details the components of non-interest expense for the periods indicated.

Table 10: Non-interest Expense

For the six months ended

For the nine months ended

(dollars in thousands)

~~June~~September 30, 2025

~~June~~September 30, 2024

$ Change

% Change

Salaries and employee benefits

1827,~~044~~760

1523,~~380~~349

24,~~664~~411

1718.3289

Occupancy and equipment

1,~~294~~994

1,~~272~~898

2296

15.7306

Data processing and software

24,~~965~~524

23,~~392~~719

~~573~~805

2321.9565

FDIC insurance

~~925~~1,425

~~790~~1,195

~~135~~230

1719.0925

Professional services

12,~~831~~763

12,~~474~~304

~~357~~459

2419.2292

Advertising and promotional

12,~~387~~190

1,~~075~~659

~~312~~531

2932.0201

Loan-related expenses

~~742~~1,059

~~594~~886

~~148~~173

2419.9253

Other operating expenses

35,~~583~~636

34,~~252~~995

~~331~~641

1012.1883

Total non-interest expense

3047,~~771~~351

2640,~~229~~005

47,~~542~~346

1718.3236

Salaries and employee benefits. The increase was primarily a result of: (i) a $24.86 million increase in salaries, benefits, and bonus expense, mainly related to a 1613.5833% increase in headcount between ~~June~~September 30, 2024 and ~~June~~September 30, 2025; and (ii) a $0.27 million increase in commission expense. This increase was partially offset by a $0.39 million increase in deferred loan origination costs due to greater loan originations, net of purchased consumer loans, period-over-period.

FDIC insurance. The increase was primarily due to a $0.78 million increase in the assessment base period-over-period.

Professional services. The increase was primarily due to: ~~(i)~~ $0.1 million in fees paid for compensation consulting services that did not occur during the first ~~six~~nine months of 2024; ~~(ii)~~and a $0.12 million increase in expenses related to business development consulting services~~; and (iii) a $0~~.~~1 million increase in recruiter fees.~~

Advertising and promotional. The increase was primarily due to a $0.23 million increase in expenses related to business development and a $0.1 million increase in expenses related to sponsored events and partnerships.

Loan-related expenses. The increase was primarily related to a $0.1 million increase in loan legal fees, asand ~~well~~a as$0.1 million ~~individually~~increase ~~immaterial increases~~ in ~~inspection~~ expenses, ~~UCC~~related ~~fees,~~to ~~referral fees, and letter of credit fees~~inspections.

Other operating expenses. The increase was primarily due to: (i) a $0.12 million increase in travel expense,; (ii) a $0.1 million increase in expenses related to conferences, training, and professional association membership,; ~~and~~(iii) a $0.1 million increase in ~~operational~~administrative expenses, ~~which~~including ~~include~~subscription ~~expenses~~services ~~related~~and tobank ~~program~~charges; ~~administration~~(iv) ~~and~~a $0.1 million increase in armored car and courier services; and (v) a $0.1 million increase in IntraFi Network fees resulting from an overall increase in balances carried in the network.

Provision for Income Taxes

On July 4, 2025, the President signed H.R. 1, the “One Big Beautiful Bill Act,” into law. The legislation includes several changes to federal tax law that generally allow for more favorable deductibility of certain business expenses beginning in 2025, including the restoration of immediate expensing of domestic R&D expenditures, reinstatement of 100% bonus depreciation, and more favorable rules for determining the limitation on business interest expense. The Act also made certain changes to the deductibility of the cost of meals and charitable contributions that are effective for tax years beginning after December 31, 2025. These changes were not reflected in the income tax provision for the period ended ~~June~~September 30, 2025,. asThe ~~enactment~~Company ~~occurred~~evaluated ~~after~~ the ~~balance~~impact ~~sheet~~on ~~date.~~future ~~The~~periods ~~Company~~and the legislation is ~~currently~~not ~~evaluating~~expected ~~the~~to have a significant impact on ~~future~~the ~~periods~~Company's consolidated financial statements.

~~Three months ended June 30, 2025 compared to three months ended June 30, 2024~~44

~~The~~Three ~~provision for income taxes was $5.6 million for the three~~ months ended ~~June~~September 30, 2025, acompared $1.2 million increase from the three months ended June 30, 2024. This increase was primarily driven by an increase in taxable income. This increase was partially offset by a net $0.2 million reduction to ~~the provision recorded during the~~ three months ended June 30, 2025. This adjustment related to a tax law change for the state of California effective as of June 30, 2025, which requires a transition from a three-factor apportionment formula to a single-sales-factor formula for determining state income tax. As such, the Company recorded a net benefit of approximately $0.9 million relating to the current year provision, which was partially offset by a $0.7 million expense relating to the remeasuring of the deferred tax assets and liabilities as of June 30, 2025. No such adjustment was recorded during the three months ended June 30, 2024. The effective tax rates were 27.82% and 28.84% for the three months ended JuneSeptember 30, ~~2025 and June 30,~~ 2024~~, respectively.~~

~~Six~~The provision for income taxes was $5.9 million for the three months ended ~~June~~September 30, 2025, ~~compared~~a to$1.6 million ~~six~~increase from the three months ended ~~June~~September 30, 2024. This increase was primarily driven by an increase in taxable income. The effective tax rates were 26.49% and 28.21% for the three months ended September 30, 2025 and September 30, 2024, respectively.

~~The~~Nine ~~provision for income taxes was $10.9 million for the six~~ months ended ~~June~~September 30, 2025, as compared to ~~$8.7~~nine ~~million for the six~~ months ended ~~June~~September 30, 2024. The increase was primarily due to an overall increase in pre-tax income period-over-period. This increase was partially offset by a net $0.2 million reduction to the provision recorded during the six months ended June 30, 2025. This adjustment related to a tax law change for the state of California effective as of June 30, 2025, which requires a transition from a three-factor apportionment formula to a single-sales-factor formula for determining state income tax. As such, the Company recorded a net benefit of approximately $0.9 million relating to the current year provision, which was partially offset by a $0.7 million expense relating to the remeasuring of the deferred tax assets and liabilities as of June 30, 2025. No such adjustment was recorded during the six months ended June 30, 2024. The effective tax rates for the six months ended June 30, 2025 and 2024 were 28.24% and 28.89%, respectively.

The provision for income taxes was $16.8 million for the nine months ended September 30, 2025, as compared to $13.0 million for the nine months ended September 30, 2024. The increase was primarily due to an overall increase in pre-tax income period-over-period. This increase was partially offset by a net $0.2 million reduction to the provision recorded during the six months ended June 30, 2025. This adjustment related to a tax law change for the state of California effective as of June 30, 2025, which requires a transition from a three-factor apportionment formula to a single-sales-factor formula for determining state income tax. As such, the Company recorded a net benefit of approximately $0.9 million relating to the current year provision, which was partially offset by a $0.7 million expense relating to the remeasuring of the deferred tax assets and liabilities as of June 30, 2025. No such adjustment was recorded during the nine months ended September 30, 2024. The effective tax rates for the nine months ended September 30, 2025 and 2024 were 27.60% and 28.66%, respectively.

FINANCIAL CONDITION SUMMARY

The following discussion compares our financial condition as of ~~June~~September 30, 2025 to our financial condition as of December 31, 2024. Table 11 summarizes selected components of our unaudited consolidated balance sheets as of ~~June~~September 30, 2025 and December 31, 2024.

Table 11: Selected Components of Consolidated Balance Sheets (Unaudited)

(dollars in thousands)

~~June~~September 30, 2025

December 31, 2024

Total assets

4,~~413~~641,~~473~~770

4,053,278

Cash and cash equivalents

~~483~~580,~~810~~447

352,343

Total investments

97,~~575~~825

100,914

Loans held for investment

3,~~758~~887,~~025~~259

3,532,686

Total deposits

34,~~894~~103,~~622~~438

3,557,994

Subordinated notes, net

7374,~~968~~004

73,895

Total shareholders’ equity

~~416~~431,~~742~~308

396,624

Total Assets

At ~~June~~September 30, 2025, total assets were $4.46 billion, an increase of $~~360~~588.25 million from $4.1 billion at December 31, 2024. The increase was primarily comprised of a $~~225~~354.36 million increase in total loans held for investment and a $~~131~~228.51 million increase in cash and cash equivalents. The $~~225~~354.36 million increase in total loans held for investment between December 31, 2024 and September 30, 2025 was a result of $931.8 million in loan originations and advances, partially offset by $219.8 million and $357.5 million in loan payoffs and paydowns, respectively. The $354.6 million increase in total loans held for investment included $70.7 million in purchases of loans within the consumer concentration of the loan portfolio.

2024 and June 30, 2025 was a result of $578.8 million in loan originations and advances, partially offset by $130.3 million and $223.1 million in loan payoffs and paydowns, respectively. The $225.3 million increase in total loans held for investment included $43.9 million in purchases of loans within the consumer concentration of the loan portfolio.

Cash and Cash Equivalents

Total cash and cash equivalents were $~~483~~580.84 million at ~~June~~September 30, 2025, an increase of $~~131~~228.51 million from $352.3 million at December 31, 2024. The increase in cash and cash equivalents primarily resulted from ~~net~~a ~~cash inflows related to financing and operating activities of~~ $~~328~~217.18 million ~~and~~increase ~~$33.3~~in ~~million,~~interest-bearing ~~respectively,~~deposits ~~partially~~in ~~offset by net cash outflows related to investing activities of $229~~banks.~~9 million.~~

Investment Portfolio

Our investment portfolio is primarily comprised of U.S. government agency securities, mortgage-backed securities, and obligations of states and political subdivisions, which are high-quality liquid investments. We manage our investment portfolio according to written investment policies approved by our board of directors. Our investment strategy is designed to maximize earnings while maintaining liquidity with minimal credit and interest rate risk. Most of our securities are classified as available-for-sale, although we have one long-term, fixed rate municipal security classified as held-to-maturity.

Our total securities available-for-sale and held-to-maturity amounted to $97.6 million at June 30, 2025 and $100.9 million at December 31, 2024, representing a decrease of $3.3 million during the same period. The decrease to available-for-sale securities was primarily due to maturities, prepayments, and calls of $4.1 million, partially offset by an unrealized gain on securities of $1.2 million, with the remainder of the change due to amortization of premiums. For the six months ended June 30, 2025, other comprehensive gain was $0.4 million, primarily due to rate changes and other market conditions on securities during that period.

Table 12 presents the carrying value of our investment portfolio as of the dates indicated.

Table 12: Carrying Value of Investment Securities
	As of
	June 30, 2025				December 31, 2024
(dollars in thousands)	Carrying Value		% of Total		Carrying Value		% of Total
Available-for-sale (at fair value):
U.S. government agency securities	$	7,002	7.18	%	$	8,345	8.27	%
Mortgage-backed securities	49,218		50.44	%	50,570		50.10	%
Obligations of states and political subdivisions	36,588		37.50	%	37,137		36.80	%
Collateralized mortgage obligations	256		0.26	%	279		0.28	%
Corporate bonds	1,926		1.97	%	1,863		1.85	%
Total available-for-sale	94,990		97.35	%	98,194		97.30	%
Held-to-maturity (at amortized cost):
Obligations of states and political subdivisions	2,585		2.65	%	2,720		2.70	%
Total	$	97,575	100.00	%	$	100,914	100.00	%

portfolio according to written investment policies approved by our board of directors. Our investment strategy is designed to maximize earnings while maintaining liquidity with minimal credit and interest rate risk. Most of our securities are classified as available-for-sale, although we have one long-term, fixed rate municipal security classified as held-to-maturity.

Our total securities available-for-sale and held-to-maturity amounted to $97.8 million at September 30, 2025 and $100.9 million at December 31, 2024, representing a decrease of $3.1 million during the same period. The decrease to available-for-sale securities was primarily due to maturities, prepayments, and calls of $7.6 million, partially offset by a purchase of a $1.0 million security and an unrealized gain on securities of $4.1 million, with the remainder of the change due to amortization of premiums. For the nine months ended September 30, 2025, other comprehensive gain was $2.5 million, primarily due to rate changes and other market conditions on securities during that period.

Table 12 presents the carrying value of our investment portfolio as of the dates indicated.


Table 12: Carrying Value of Investment Securities
	As of
	September 30, 2025				December 31, 2024
(dollars in thousands)	Carrying Value		% of Total		Carrying Value		% of Total
Available-for-sale (at fair value):
U.S. government agency securities	$	7,684	7.85	%	$	8,345	8.27	%
Mortgage-backed securities	49,316		50.41	%	50,570		50.10	%
Obligations of states and political subdivisions	36,445		37.26	%	37,137		36.80	%
Collateralized mortgage obligations	244		0.25	%	279		0.28	%
Corporate bonds	1,946		1.99	%	1,863		1.85	%
Total available-for-sale	95,635		97.76	%	98,194		97.30	%

Held-to-maturity (at amortized cost):
Obligations of states and political subdivisions	2,190		2.24	%	2,720		2.70	%
Total	$	97,825	100.00	%	$	100,914	100.00	%

Table 13 presents the carrying value of our securities by their stated maturities, as well as the weighted average yields for each maturity range, as of the dates shown.

Table 13: Stated Maturities and Weighted Average Yields - Investment Securities
	Due in one year or less				Due after one year through five years				Due after five years through ten years				Due after ten years				Total
(dollars in thousands)	Carrying Value		Weighted Average Yield		Carrying Value		Weighted Average Yield		Carrying Value		Weighted Average Yield		Carrying Value		Weighted Average Yield		Carrying Value		Weighted Average Yield
June 30, 2025
September 30, 2025
Available-for-sale:
U.S. government agency securities	$	69197	21.0898	%	$	~~1,066~~722	35.7230	%	$	~~319~~323	2.01	%	$	56,~~548~~442	56.4215	%	$	7,~~002~~684	45.9779	%
Mortgage-backed securities	—		—	%	—		—	%	12,~~488~~926		1.8249	%	4746,~~730~~390		1.7577	%	49,~~218~~316		1.75	%
Obligations of states and political subdivisions	—		—	%	1,~~181~~209		1.26	%	911,~~582~~259		1.7061	%	2523,~~825~~977		1.7871	%	36,~~588~~445		1.7467	%
Collateralized mortgage obligations	—		—	%	—		—	%	~~256~~244		1.76	%	—		—	%	~~256~~244		1.76	%
Corporate bonds	—1,946		—1.25	%	~~1,926~~—		~~1.25~~—	%	—		—	%	—		—	%	1,~~926~~946		1.25	%
Total available-for-sale	692,143		21.0832	%	41,~~173~~931		12.8877	%	1114,~~645~~752		1.7360	%	7976,~~103~~809		2.0212	%	9495,~~990~~635		12.9803	%
Held-to-maturity:
Obligations of states and political subdivisions	~~195~~170		6.00	%	~~905~~865		6.00	%	1,~~315~~155		6.00	%	~~170~~—		~~6.00~~—	%	2,~~585~~190		6.00	%
Total	$	~~264~~2,313	41.9866	%	$	52,~~078~~796	23.6277	%	$	1215,~~960~~907	21.1691	%	$	7976,~~273~~809	2.0312	%	$	97,~~575~~825	2.0812	%
December 31, 2024
Available-for-sale:
U.S. government agency securities	$	—	—	%	$	1,583	5.00	%	$	338	2.01	%	$	6,424	5.65	%	$	8,345	5.38	%
Mortgage-backed securities	—		—	%	—		—	%	508		2.74	%	50,062		1.74	%	50,570		1.75	%
Obligations of states and political subdivisions	—		—	%	737		1.17	%	8,108		1.62	%	28,292		1.79	%	37,137		1.74	%
Collateralized mortgage obligations	—		—	%	—		—	%	279		1.76	%	—		—	%	279		1.76	%
Corporate bonds	—		—	%	1,863		1.25	%	—		—	%	—		—	%	1,863		1.25	%
Total available-for-sale	—		—	%	4,183		2.65	%	9,233		1.70	%	84,778		2.05	%	98,194		2.04	%
Held-to-maturity:
Obligations of states and political subdivisions	210		6.00	%	945		6.00	%	1,380		6.00	%	185		6.00	%	2,720		6.00	%
Total	$	210	6.00	%	$	5,128	3.27	%	$	10,613	2.26	%	$	84,963	2.06	%	$	100,914	2.15	%

Weighted average yield for securities available-for-sale is the projected yield to maturity given current cash flow projections for U.S. government agency securities, mortgage-backed securities, and collateralized mortgage obligations. For callable municipal securities and corporate bonds, weighted average yield is a yield to worst. Weighted average yield for securities held-to-maturity is the stated coupon of the bond.

4647

Loan Portfolio

Our loan portfolio is our largest class of interest-earning assets and typically provides higher yields than other types of interest-earning assets. Associated with the higher yields is an inherent amount of credit risk, which we attempt to mitigate with strong underwriting standards. As of ~~June~~September 30, 2025 and December 31, 2024, our total loans amounted to $3.89 billion and $3.5 billion, respectively. Table 14 presents the balance and associated percentage of each major product type within our portfolio as of the dates indicated.

Table 14: Loans Outstanding
	As of
	June 30, 2025				December 31, 2024
	September 30, 2025				December 31, 2024
(dollars in thousands)	Amount		% of Loans		Amount		% of Loans
Loans held for investment:
Real estate:
Commercial	$	3,~~066~~144,~~627~~303	8180.5486	%	$	2,857,173	80.75	%
Commercial land and development	~~1,422~~934		0.0402	%	3,849		0.11	%
Commercial construction	~~112~~136,~~399~~988		23.9952	%	111,318		3.15	%
Residential construction	5,~~479~~976		0.15	%	4,561		0.13	%
Residential	3335,~~132~~739		0.8892	%	32,774		0.93	%
Farmland	5157,~~579~~572		1.3748	%	47,241		1.34	%
Commercial:
Secured	~~173~~191,~~855~~170		4.6291	%	170,548		4.82	%
Unsecured	3738,~~568~~658		10.0099	%	27,558		0.78	%
Consumer and other	278,~~215~~209		7.4015	%	279,584		7.90	%
Loans held for investment, gross	3,~~760~~889,~~276~~549		99100.9900	%	3,534,606		99.91	%
Loans held for sale:
Commercial	~~309~~—		~~0.01~~—	%	3,247		0.09	%
Total loans, gross	3,~~760~~889,~~585~~549		100.00	%	3,537,853		100.00	%
Net deferred loan fees	(2,~~251~~290)				(1,920)
Total loans	$	3,~~758~~887,~~334~~259			$	3,535,933

Commercial real estate loans consist of term loans secured by a mortgage lien on the real property, such as office and industrial buildings, manufactured home communities, self-storage facilities, hospitality properties, faith-based properties, retail shopping centers, and apartment buildings, as well as commercial real estate construction loans that are offered to builders and developers.

Commercial land and development and commercial construction loans consist of loans made to fund commercial land acquisition and development and commercial construction, respectively. The real estate purchased with these loans is generally located in or near our market.

Residential real estate and construction real estate loans consist of loans secured by single-family and multifamily residential properties, which are both owner-occupied and investor-owned.

Farmland loans consist of loans used to purchase, refinance, or improve farmland secured by farming properties themselves. The farmland is generally located in or near our market.

Commercial loans consist of financing for commercial purposes in various lines of business, including manufacturing, service industry, and professional service areas. Commercial loans can be secured or unsecured but are generally secured with the assets of the company and/or the personal guaranty of the business owner(s).

4748

Consumer and other loans consist primarily of loans purchased in a loan purchase program with a non-bank lender, generally made to professionals for the purpose of large personal or household purchases. The loans are unsecured, fixed rate loans. Consumer and other loans also include loans purchased or originated through financing partnerships which are no longer active.

Table 15 presents the commercial real estate loan balance, associated percentage of commercial real estate concentrations, estimated real estate collateral values, and related loan-to-value (“LTV”) ranges by collateral type as of the dates indicated. Revolving lines of credit with zero balance and 0.00% LTV are excluded from this table. Collateral values are determined at origination using third-party real estate appraisals or evaluations. Updated appraisals, which are included in Table 15, may be obtained for loans that are downgraded to watch or substandard. Loans over $2.0 million are reviewed annually, at which time an internal assessment of collateral values is completed.

Table 15: Commercial Real Estate Loans
(dollars in thousands)	Loan Balance		% of Commercial Real Estate		Collateral Value		Minimum LTV		Maximum LTV
June 30, 2025
September 30, 2025
Manufactured home community	$	~~936~~980,~~047~~499	3031.5218	%	$	1,~~659~~732,~~757~~112	16.3424	%	74.5246	%
RV Park	~~388~~384,~~531~~290		12.6722	%	693,~~232~~932		17.7868	%	7274.9676	%
Retail	~~282~~303,~~336~~509		9.2165	%	~~575~~622,~~879~~971		40.1269	%	7274.1255	%
Industrial	~~238~~243,~~907~~585		7.7975	%	~~545~~555,~~188~~875		21.7990	%	91.7152	%
Multifamily	~~228~~240,~~793~~777		7.4666	%	~~488~~521,~~424~~088		1311.4774	%	8579.0049	%
Mini storage	~~195~~190,~~044~~342		6.3605	%	~~404~~381,~~330~~810		14.7670	%	6870.7200	%
Faith-based	~~190~~189,~~900~~371		6.2302	%	~~503~~506,~~174~~973		9.2317	%	7473.0979	%
Office	~~158~~161,~~007~~482		5.1514	%	~~364~~375,~~026~~374		4.8373	%	73.64	%
All other types1	~~448~~450,~~062~~448		14.6133	%	~~938~~949,~~659~~198		~~4.00~~—	%	134.7765	%
Total2	$	3,~~066~~144,~~627~~303	100.00	%	$	6,~~172~~339,~~669~~333
December 31, 2024
Manufactured home community	$	891,935	31.22	%	$	1,586,109	14.24	%	74.52	%
RV Park	371,733		13.01<

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