QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2026
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________
Commission File Number: 001-43397
PRIVATE BANCORP OF AMERICA, INC.
(Exact Name of Registrant as Specified in its Charter)
California
80-0769276
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer Identification No.)
9404 Genesee Ave., Suite 100La Jolla, California
92037
(Address of principal executive offices)
(Zip Code)
Registrant’s telephone number, including area code: (858)-875-6900
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading
Symbol(s)
Name of each exchange on which registered
Common Stock, no par value per share
PBAM
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 ☐ No☒
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☐
Accelerated filer
☐
Non-accelerated filer
☒
Smaller reporting company
☐
Emerging growth company
☒
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. ☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of August 31, 2026, the registrant had 5,729,788 shares of common stock, no par value per share, outstanding.
Interest-bearing deposits in other financial institutions
22,275
13,523
Interest-bearing deposits at Federal Reserve Bank
245,869
130,344
Cash and Cash Equivalents
300,355
155,015
Interest-bearing time deposits with other financial institutions
4,344
4,355
Debt securities available for sale (amortized cost of $245,967 and $224,794, net of allowance for credit losses of $0 and $0)
237,074
217,837
Loans held for sale
—
2,330
Loans held for investment
2,132,724
2,126,147
Allowance for loan losses
(30,462
)
(29,323
)
Loans held for investment, net
2,102,262
2,096,824
Federal Home Loan Bank stock, at cost
11,251
10,652
Premises and equipment, net
2,525
2,783
Other real estate owned (“OREO”)
13,637
8,568
Deferred tax asset, net
11,931
10,508
Servicing assets, net
1,717
1,913
Accrued interest receivable
8,248
8,284
Other assets
14,958
15,988
Total Assets
$
2,708,302
$
2,535,057
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities
Deposits:
Noninterest-bearing deposits
$
663,200
$
606,105
Interest-bearing deposits
1,718,037
1,617,776
Total Deposits
2,381,237
2,223,881
Borrowings
25,979
28,976
Accrued interest payable and other liabilities
15,570
18,236
Total Liabilities
2,422,786
2,271,093
Commitments and Contingencies (Note 8)
Shareholders’ Equity
Common stock, no par value, 20,000,000 shares authorized; 5,725,696 and 5,728,187 shares issued and outstanding for June 30, 2026 and December 31, 2025, respectively
78,214
76,972
Additional paid-in-capital
4,264
4,389
Retained earnings
209,263
187,473
Accumulated other comprehensive income (loss)
(6,225
)
(4,870
)
Total Shareholders’ Equity
285,516
263,964
Total Liabilities and Shareholders’ Equity
$
2,708,302
$
2,535,057
Accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
1
PRIVATE BANCORP OF AMERICA, INC., AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended June 30,
Six Months Ended June 30,
(in thousands, except per share data)
2026
2025
2026
2025
Interest and Dividend Income
Interest and fees on loans
$
39,038
$
38,004
$
77,005
$
74,569
Interest-bearing deposits at the Federal Reserve Bank
1,823
2,026
3,477
4,076
Interest on investment securities
2,255
1,593
4,376
2,887
Dividends on Federal Home Loan Bank stock
129
207
669
418
Interest on deposits with other financial institutions
130
158
261
306
Total Interest and Dividend Income
43,375
41,988
85,788
82,256
Interest Expense
Deposits
9,413
11,376
18,773
23,275
Borrowings
417
499
861
1,136
Total Interest Expense
9,830
11,875
19,634
24,411
Net Interest Income
33,545
30,113
66,154
57,845
Provision (reversal) for credit losses
(204
)
1,293
1,815
1,592
Net Interest Income After Provision (Reversal) for Credit Losses
33,749
28,820
64,339
56,253
Noninterest Income
Service charges on deposit accounts
533
591
1,077
1,148
Gain on sale of Small Business Administration (“SBA”) loans
4
523
911
992
Servicing income, net
116
168
270
305
Other fees and miscellaneous income
348
448
678
898
Total Noninterest Income
1,001
1,730
2,936
3,343
Noninterest Expense
Compensation and employee benefits
11,142
10,319
21,953
20,067
Occupancy and equipment
876
840
1,734
1,684
Data processing
1,491
1,396
2,860
2,722
Professional services
1,061
939
1,671
1,447
Director compensation and expenses
352
221
630
511
Regulatory assessments
348
338
742
706
Administrative and other expense
1,593
1,636
2,953
2,607
Total Noninterest Expense
16,863
15,689
32,543
29,744
Income Before Provision for Income Taxes
17,887
14,861
34,732
29,852
Provision for Income Taxes
4,769
4,412
9,587
8,841
Net Income
$
13,118
$
10,449
$
25,145
$
21,011
Net income per common share information
Basic Earnings Per Share
$
2.29
$
1.80
$
4.39
$
3.63
Diluted Earnings Per Share
2.27
1.77
4.34
3.57
Accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
2
PRIVATE BANCORP OF AMERICA, INC., AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
Three Months Ended June 30,
Six Months Ended June 30,
(in thousands)
2026
2025
2026
2025
Net income
$
13,118
$
10,449
$
25,145
$
21,011
OTHER COMPREHENSIVE INCOME (LOSS):
Unrealized gains (losses) on securities available-for-sale:
Change in unrealized gains (losses)
(950
)
1,112
(1,936
)
3,101
(950
)
1,112
(1,936
)
3,101
Related income tax effect:
Change in unrealized (gains) losses
285
(334
)
581
(930
)
285
(334
)
581
(930
)
TOTAL OTHER COMPREHENSIVE INCOME (LOSS)
(665
)
778
(1,355
)
2,171
TOTAL COMPREHENSIVE INCOME
$
12,453
$
11,227
$
23,790
$
23,182
Accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3
PRIVATE BANCORP OF AMERICA, INC., AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
For the three months ended June 30, 2026 and 2025
(Unaudited)
Accumulated
Common Stock
Other
Total
Shares
Additional
Retained
Comprehensive
Shareholders’
(in thousands, except share data)
Outstanding
Amount
Paid-In-Capital
Earnings
Income (Loss)
Equity
Balance, April 1, 2025
5,801,129
$
76,156
$
3,712
$
162,462
$
(7,095
)
$
235,235
Net income
—
—
—
10,449
—
10,449
Share-based compensation
—
—
548
—
—
548
Exercise of stock options, net settled
5,000
75
—
—
—
75
Issuance of restricted shares
1,875
—
—
—
—
—
Vesting of restricted shares
—
167
(167
)
—
—
—
Vesting of restricted stock units
—
—
—
—
—
—
Forfeitures of restricted stock
(1,525
)
—
—
—
—
—
Repurchase of restricted stock for taxes
(2,770
)
—
(84
)
(62
)
—
(146
)
Repurchase of restricted stock units for taxes
—
—
—
—
—
—
Issuance of common shares to non-employee directors
—
—
—
—
—
—
Other comprehensive income (loss)
—
—
—
—
778
778
Balance, June 30, 2025
5,803,709
$
76,398
$
4,009
$
172,849
$
(6,317
)
$
246,939
Balance, April 1, 2026
5,715,049
78,053
3,992
196,247
(5,560
)
$
272,732
Net income
—
—
—
13,118
—
13,118
Share-based compensation
—
—
512
—
—
512
Common stock repurchased
—
—
—
—
—
—
Exercise of stock options, net settled
—
—
—
—
—
—
Issuance of restricted shares
12,900
—
—
—
—
—
Vesting of restricted shares
—
161
(161
)
—
—
—
Vesting of restricted stock units
—
—
—
—
—
—
Forfeitures of restricted stock
—
—
—
—
—
—
Repurchase of restricted stock for taxes
(2,253
)
—
(79
)
(102
)
—
(181
)
Repurchase of restricted stock units for taxes
—
—
—
—
—
—
Issuance of common shares to non-employee directors
—
—
—
—
—
—
Other comprehensive income (loss)
—
—
—
—
(665
)
(665
)
Balance, June 30, 2026
5,725,696
$
78,214
$
4,264
$
209,263
$
(6,225
)
$
285,516
Accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4
PRIVATE BANCORP OF AMERICA, INC., AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
For the six months ended June 30, 2026 and 2025
(Unaudited)
Accumulated
Common Stock
Other
Total
Shares
Additional
Retained
Comprehensive
Shareholders’
(in thousands, except share data)
Outstanding
Amount
Paid-In-Capital
Earnings
Income (Loss)
Equity
Balance, January 1, 2025
5,766,810
75,377
4,393
152,252
(8,488
)
$
223,534
Net income
—
—
—
21,011
—
21,011
Share-based compensation
—
—
1,040
—
—
1,040
Exercise of stock options, net settled
5,000
75
—
—
—
75
Issuance of restricted shares
15,550
—
—
—
—
—
Vesting of restricted shares
—
251
(251
)
—
—
—
Vesting of restricted stock units
22,077
695
(695
)
—
—
—
Forfeitures of restricted stock
(1,525
)
—
—
—
—
—
Repurchase of restricted stock for taxes
(4,203
)
—
(127
)
(414
)
—
(541
)
Repurchase of restricted stock units for taxes
—
—
(351
)
—
—
(351
)
Other comprehensive income (loss)
—
—
—
—
2,171
2,171
Balance, June 30, 2025
5,803,709
$
76,398
$
4,009
$
172,849
$
(6,317
)
$
246,939
Balance, January 1, 2026
5,728,187
76,972
4,389
187,473
(4,870
)
$
263,964
Net income
—
—
—
25,145
—
25,145
Share-based compensation
—
—
1,042
—
—
1,042
Common stock repurchased
(44,214
)
—
—
(3,000
)
—
(3,000
)
Exercise of stock options, net settled
22,174
478
(25
)
—
—
453
Issuance of restricted shares
12,900
—
—
—
—
—
Vesting of restricted shares
—
365
(365
)
—
—
—
Vesting of restricted stock units
12,141
399
(399
)
—
—
—
Forfeitures of restricted stock
(883
)
—
—
—
—
—
Repurchase of restricted stock for taxes
(4,609
)
—
(169
)
(355
)
—
(524
)
Repurchase of restricted stock units for taxes
—
—
(209
)
—
—
(209
)
Other comprehensive income (loss)
—
—
—
—
(1,355
)
(1,355
)
Balance, June 30, 2026
5,725,696
$
78,214
$
4,264
$
209,263
$
(6,225
)
$
285,516
Accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5
PRIVATE BANCORP OF AMERICA, INC., AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended June 30,
(in thousands)
2026
2025
Cash Flows From Operating Activities
Net income
$
25,145
$
21,011
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of premises and equipment
470
628
Provision (reversal) for credit losses
1,815
1,592
Net premium amortization on investment securities
(60
)
(40
)
Gain on sale of SBA loans
(911
)
(992
)
Proceeds from sale of SBA loans
21,565
19,652
Loans originated for sale
(18,682
)
(24,815
)
Amortization of servicing assets
554
461
Noncash interest on loans transferred to OREO
(497
)
(617
)
Amortization of deferred loan fees, costs, premiums and discounts
(1,852
)
(1,253
)
Amortization of debt issuance costs
4
4
Amortization of low-income housing tax credit investments
244
197
Share-based compensation expense
1,042
1,040
Change in accrued interest receivable and other assets
1,548
652
Change in accrued interest payable and other liabilities
(3,836
)
(4,642
)
Net Cash Provided by Operating Activities
26,549
12,878
Cash Flows From Investing Activities
Change in time deposits with other banks
11
(81
)
Purchases of securities
(52,286
)
(63,545
)
Maturities and principal paydowns of securities
30,913
22,364
Purchase of Federal Home Loan Bank stock
(599
)
(1,066
)
Net (increase) decrease in loans
(10,112
)
(3,906
)
Purchases of property and equipment
(212
)
(506
)
Net Cash Used in Investing Activities
(32,285
)
(46,740
)
Cash Flows From Financing Activities
Net increase in deposits
157,356
28,420
Net increase in (repayment of) borrowings
(3,000
)
(17,000
)
Share repurchases
(3,000
)
—
Repurchase of restricted shares for taxes
(733
)
(892
)
Proceeds from exercise of stock options
453
75
Net Cash Provided by Financing Activities
151,076
10,603
Net (Decrease) Increase in Cash and Cash Equivalents
145,340
(23,259
)
Cash and Cash Equivalents, Beginning of Period
155,015
163,878
Cash and Cash Equivalents, End of Period
$
300,355
$
140,619
Supplemental Cash Flow Information
Interest paid
$
19,852
$
25,282
Taxes paid
$
11,404
$
10,919
Loans transferred to OREO
$
4,572
$
7,951
Lease liabilities arising from obtaining right-of-use assets
$
1,307
$
1,291
Accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
6
PRIVATE BANCORP OF AMERICA, INC., AND SUBSIDIARY
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1 – Basis of Presentation and Summary of Significant Accounting Policies
Organization and Nature of Operations
The accompanying unaudited condensed consolidated financial statements include the accounts of Private Bancorp of America, Inc. and its wholly-owned subsidiary CalPrivate Bank (the “Bank”), collectively referred to herein as the “Company.” All significant intercompany balances and transactions have been eliminated in consolidation. Private Bancorp of America, Inc. was formed in August 2015 as a bank holding company.
The Bank is a commercial bank chartered by the State of California. Deposits held at the Bank are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to applicable statutory limits. The Bank provides comprehensive banking services, including deposit accounts, treasury management services, and lending solutions tailored primarily to high-net-worth individuals, real estate entrepreneurs, professionals, closely-held businesses, and for-profit and nonprofit businesses. Lending activities include commercial real estate loans, commercial and industrial loans, and government-guaranteed lending programs.
The Company is headquartered in La Jolla, California, with additional branches located in downtown San Diego, Coronado, Newport Beach, Beverly Hills, El Segundo, and Montecito, California. The Company also maintains administrative locations in Brea, Temecula, Mission Valley, and Redlands, California. The Bank also provides digital banking services to enhance client accessibility and efficiency.
At June 30, 2026, the Company’s common stock was quoted on the OTC Markets Group OTCQX marketplace under the symbol “PBAM.” Effective July 30, 2026, the Company’s common stock was no longer quoted on the OTCQX marketplace and began trading on the Nasdaq Global Select Market (“NASDAQ”) under the same symbol. The Company is considered a public business entity for financial reporting purposes.
Basis of Presentation
The accounting and reporting policies of the Company are in accordance with the accounting principles generally accepted in the United States of America and conform to practices within the banking industry. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the Company’s financial position, results of operations, comprehensive income, changes in shareholders’ equity and cash flows for the periods presented.
Reclassifications
Some items in the prior year financial statements were reclassified to conform to the current presentation. Reclassification had no effect on prior year net income or shareholders’ equity.
Use of Estimates
In preparing financial statements in conformity with accounting principles generally accepted in the United States of America, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the dates of the balance sheets, and the reported amounts of revenues and expenses during the reporting periods covered. Actual results could differ from those estimates. Estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for credit losses, the fair value of servicing assets, and the valuation of deferred tax assets and liabilities.
Other Real Estate Owned
Assets acquired through or instead of loan foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. Loan balances in excess of the fair value less costs to sell of the real estate acquired at the date of acquisition are charged-off against the allowance for loan losses. These assets are subsequently accounted for at lower of cost or fair value less estimated costs to sell. If fair value less costs to sell declines subsequent to foreclosure, a valuation allowance is recorded through expense. Operating costs after acquisition are expensed.
7
OREO totaled $13.6 million at June 30, 2026 and $8.6 million at December 31, 2025. During the six months ended June 30, 2026 and 2025, the Company recorded additions to OREO of $5.1 million and $8.6 million, respectively. The Company recorded OREO expenses of $0.2 million and $0.1 million, respectively, during those periods. There were no valuation allowances or write-downs of OREO during the six months ended June 30, 2026 or 2025.
Significant Accounting Policies
The Company’s significant accounting policies are included in Note 1, Summary of Significant Accounting Policies to the audited consolidated financial statements for the fiscal year ended December 31, 2025, included in the Company’s Registration Statement on Form 10, initially filed with the Securities and Exchange Commission on July 13, 2026, as amended, and declared effective on July 29, 2026.
Operating Segments
The Company’s Chief Operating Decision Maker (“CODM”) is the Chief Executive Officer. While the Company’s CODM monitors multiple of the Company’s revenue sources, operations are managed, and financial performance is evaluated, on a Company-wide basis. Discrete operating results are not reviewed to make resource allocation or performance decisions. Accordingly, all of the Company’s operations are considered to be one operating segment. The Company’s single reportable segment consists of the consolidated operations of Private Bancorp of America, Inc. and its wholly owned subsidiary, CalPrivate Bank. The Bank provides deposit accounts, treasury management services, commercial real estate loans, commercial and industrial loans, SBA lending, and other banking services. The Company does not manage its operations through multiple operating segments, and discrete operating results are not reviewed by the CODM by product, service line, branch, or business line for purposes of assessing segment performance or allocating resources.
The CODM assesses performance and allocates resources on a consolidated basis using consolidated net income. The significant expense categories regularly provided to the CODM and included in consolidated net income are the same categories presented in the Consolidated Statements of Income. Because the Company has one reportable segment, the segment revenues, significant segment expense categories, reported measure of segment profit or loss, and total assets are the same as the corresponding consolidated amounts presented in the consolidated financial statements.
The following table presents the Company’s segment revenues, significant segment expense categories, other segment items, reported measure of segment profit or loss, and total assets for its single reportable segment:
Three Months Ended June 30,
Six Months Ended June 30,
2026
2025
2026
2025
Segment Revenues:
Interest and Dividend Income
$
43,375
$
41,988
$
85,788
$
82,256
Noninterest Income
1,001
1,730
2,936
3,343
Total Segment Revenues
44,376
43,718
88,724
85,599
Segment Expenses:
Interest expense on deposits
9,413
11,376
18,773
23,275
Interest expense on borrowings
417
499
861
1,136
Provision (reversal) for credit losses
(204
)
1,293
1,815
1,592
Compensation and employee benefits
11,142
10,319
21,953
20,067
Occupancy and equipment
876
840
1,734
1,684
Data processing
1,491
1,396
2,860
2,722
Professional services
1,061
939
1,671
1,447
Director compensation and expenses
352
221
630
511
Regulatory assessments
348
338
742
706
Administrative and other expense
1,593
1,636
2,953
2,607
Provision for income taxes
4,769
4,412
9,587
8,841
Total Segment Expenses
31,258
33,269
63,579
64,588
Segment Net Income
$
13,118
$
10,449
$
25,145
$
21,011
8
June 30, 2026
December 31, 2025
Segment Assets
$
2,708,302
$
2,535,057
Recent Accounting Guidance Not Yet Effective
In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40), which requires additional disclosure of the nature of expenses included in the income statement. The new standard requires disclosures about specific types of expenses included in the expense captions presented on the face of the income statement, as well as disclosures about selling expenses. The new standard is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods within annual reporting periods beginning after December 15, 2027. The requirements will be applied prospectively, with the option for retrospective application. Early adoption is permitted. The Company is currently evaluating the potential impact of this standard on its consolidated financial statements, as well as the planned date of adoption.
In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software, which amends the cost capitalization guidance by removing references to software development project stages to better align with current development methods. The new standard requires software cost capitalization to begin when management has authorized and committed to funding the software project and it is probable that the software will be completed and used to perform its intended function. The standard is effective for annual reporting periods beginning after December 15, 2027, including interim reporting periods within those annual reporting periods. The requirements may be applied on a prospective, modified, or retrospective transition basis, and early adoption is permitted. The Company is currently evaluating the potential impact of this standard on its consolidated financial statements, as well as the planned date of adoption.
In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements, which clarifies the applicability of interim reporting guidance and improves the organization of interim disclosure requirements. The new standard requires entities that provide interim financial statements in accordance with GAAP to disclose material events and changes since the end of the most recent annual reporting period and consolidates certain interim disclosure requirements within Topic 270. The new standard is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. The requirements may be applied prospectively or retrospectively, and early adoption is permitted. The Company is currently evaluating the potential impact of this standard on its interim consolidated financial statements, as well as the planned date of adoption.
Note 2 – DEBT SECURITIES
The following table summarizes the amortized cost and fair value of securities available for sale at June 30, 2026 and December 31, 2025, and the corresponding amounts of gross unrealizedgains and losses (in thousands):
Gross
Gross
Amortized
Unrealized
Unrealized
June 30, 2026
Cost
Gains
Losses
Fair Value
Securities Available for Sale:
U.S. Agency securities
$
2,493
$
—
$
(24
)
$
2,469
Municipal securities
2,374
—
(57
)
2,317
SBA Loan Pool securities
5,223
—
(163
)
5,060
Mortgage-backed securities
234,127
620
(9,162
)
225,585
Corporate debt securities
1,750
—
(107
)
1,643
Total
$
245,967
$
620
$
(9,513
)
$
237,074
December 31, 2025
Securities Available for Sale:
U.S. Agency securities
$
6,500
$
14
$
—
$
6,514
Municipal securities
2,308
—
(5
)
2,303
SBA Loan Pool securities
2,941
—
(127
)
2,814
Mortgage-backed securities
211,295
1,077
(7,779
)
204,593
Corporate debt securities
1,750
—
(137
)
1,613
Total
$
224,794
$
1,091
$
(8,048
)
$
217,837
9
At June 30, 2026 and December 31, 2025, there were no holdings of any one issuer, other than the U.S. Government and its agencies, in an amount greater than 10% of our shareholders’ equity.
The amortized cost and fair value of the investment securities portfolio as of June 30, 2026 are shown by contractual maturity below. Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date are presented separately.
Available for Sale
Amortized
Fair
(in thousands)
Cost
Value
Due within one year
$
353
$
349
Due after one year through five years
—
—
Due after five years through ten years
11,487
11,140
Mortgage-backed securities
234,127
225,585
Total debt securities
$
245,967
$
237,074
The following table summarizes the investment securities with unrealized losses by security type and length of time in a continuous, unrealized loss position as of the dates indicated (in thousands):
Less than 12 Months
12 Months or Greater
Total
Gross
Gross
Gross
Fair
Unrealized
Fair
Unrealized
Fair
Unrealized
June 30, 2026
Value
Losses
Value
Losses
Value
Losses
U.S. Agency securities
$
2,469
$
(24
)
$
—
$
—
$
2,469
$
(24
)
Municipal securities
2,317
(57
)
—
—
2,317
(57
)
SBA Loan Pool securities
2,476
(13
)
2,584
(150
)
5,060
(163
)
Mortgage-backed securities
85,926
(1,153
)
66,960
(8,009
)
152,886
(9,162
)
Corporate debt securities
—
—
1,643
(107
)
1,643
(107
)
Total
$
93,188
$
(1,247
)
$
71,187
$
(8,266
)
$
164,375
$
(9,513
)
December 31, 2025
U.S. Agency securities
$
—
$
—
$
—
$
—
$
—
$
—
Municipal securities
2,303
(5
)
—
—
2,303
(5
)
SBA Loan Pool securities
—
—
2,814
(127
)
2,814
(127
)
Mortgage-backed securities
42,629
(271
)
83,128
(7,508
)
125,757
(7,779
)
Corporate debt securities
—
—
1,613
(137
)
1,613
(137
)
Total
$
44,932
$
(276
)
$
87,555
$
(7,772
)
$
132,487
$
(8,048
)
As of June 30, 2026, there were 41 securities (1 SBA Loan Pool security, 1 U.S. agency security, 2 municipal securities and 37 mortgage-backed securities) with unrealized losses of $1.2 million that had been in a continuous loss position for less than 12 months and 36 securities (2 SBA Loan Pool securities, 32 mortgage-backed securities and 2 corporate securities) with unrealized losses of $8.3 million that had been in a continuous loss position for more than 12 months. As of December 31, 2025, there were 19 securities (1 municipal security and 18 mortgage-backed securities) with unrealized losses of $276 thousand that had been in a continuous loss position for less than 12 months and 43 securities (2 SBA Loan Pool securities, 39 mortgage-backed securities and 2 corporate securities) with unrealized losses of $7.8 million that had been in a continuous loss position for more than 12 months. Unrealized losses on debt securities have not been recognized in earnings because the issuers are of high credit quality, management does not intend to sell and it is not likely that management will be required to sell the securities prior to their anticipated recovery, and the decline in fair value is due to changes in interest rates and other market conditions and are not due to credit concerns. The fair value of these securities in unrealized loss positions are expected to recover as the securities approach maturity. The Company had no realized gains or losses on sales of securities in the three and six months ended June 30, 2026 and 2025.
The Company had pledged debt securities with a fair value of $5.0 million and $5.3 million to secure borrowing arrangements discussed in Note 7, as of June 30, 2026 and December 31, 2025, respectively.
At June 30, 2026 and December 31, 2025, the Company did not hold any held-to-maturity or trading securities.
10
Note 3 – LOANS AND Allowance for cREDIT Losses
The Company’s loan portfolio is divided into three portfolio segments, which are the same segments used to estimate the allowance for credit losses: Commercial Real Estate (“CRE”), which uses the CRE lifetime loss rate model; Commercial Business, which uses the Commercial and Industrial (“C&I”) lifetime loss rate model; and Consumer, which uses the Consumer lifetime loss rate model. Within each portfolio segment the Company monitors and assesses the credit risk in the following classes of loans, based on the risk characteristics of each loan class, and the Company may apply qualitative adjustments to an individual loan class where appropriate.
Commercial Real Estate
Commercial Business
Consumer
• Investor owned • Owner occupied • Multifamily • Secured by single family • Land and construction • SBA secured by real estate
• Commercial and Industrial • SBA non-real estate secured
• Consumer
The following is a summary of the loans and allowance for loan losses as of June 30, 2026 and December 31, 2025 (in thousands):
June 30, 2026
December 31, 2025
CRE:
Investor owned
$
570,865
$
577,730
Owner occupied
223,442
236,623
Multifamily
184,005
155,941
Secured by single family
205,365
198,743
Land and construction
48,782
47,029
SBA secured by real estate
409,467
403,609
Total CRE
1,641,926
1,619,675
Commercial business:
C&I
453,854
471,526
SBA non-real estate secured
34,935
32,853
Total commercial business
488,789
504,379
Consumer
2,009
2,093
Loans held for investment(1)
2,132,724
2,126,147
Allowance for loan losses
(30,462
)
(29,323
)
Loans held for investment, net(1)
$
2,102,262
$
2,096,824
(1)
Net of deferred loan origination fees and costs and unamortized discounts and premiums of $0.4 million and $0.1 million at June 30, 2026 and December 31, 2025, respectively.
11
The following table summarizes the allocation of the allowance as well as the activity in the allowance attributed to the loan portfolio segments and unfunded commitments as of and for the three months ended June 30, 2026 and 2025 (in thousands):
Three Months Ended June 30, 2026
CRE
Commercial Business
Consumer
Total
Allowance for Loan Losses:
Beginning of Period
$
21,244
$
8,975
$
17
$
30,236
Provision for (reversal of) credit losses
(545
)
458
14
(73
)
Gross charge-offs
—
—
—
—
Gross recoveries
—
299
—
299
End of Period
20,699
9,732
31
30,462
Allowance for Unfunded Commitments:
Beginning of Period
677
—
—
677
Provision for (reversal of) credit losses
(131
)
—
—
(131
)
End of Period
546
—
—
546
Allowance for Credit Losses
$
21,245
$
9,732
$
31
$
31,008
Allowance for Loan Losses by Methodology:
Individually evaluated
$
—
$
1,750
$
—
$
1,750
Collectively evaluated
20,699
7,982
31
28,712
$
20,699
$
9,732
$
31
$
30,462
Three Months Ended June 30, 2025
CRE
Commercial Business
Consumer
Total
Allowance for Loan Losses:
Beginning of Period
$
20,819
$
5,587
$
31
$
26,437
Provision for (reversal of) credit losses
936
806
(1
)
1,741
Gross charge-offs
—
—
—
—
Gross recoveries
—
—
—
—
End of Period
21,755
6,393
30
28,178
Allowance for Unfunded Commitments:
Beginning of Period
1,203
120
25
1,348
Provision for (reversal of) credit losses
(398
)
(25
)
(25
)
(448
)
End of Period
805
95
—
900
Allowance for Credit Losses
$
22,560
$
6,488
$
30
$
29,078
Allowance for Loan Losses by Methodology:
Individually evaluated
$
1,061
$
1,189
$
—
$
2,250
Collectively evaluated
20,694
5,204
30
25,928
$
21,755
$
6,393
$
30
$
28,178
12
Six Months Ended June 30, 2026
CRE
Commercial Business
Consumer
Total
Allowance for Loan Losses:
Beginning of Period
$
19,703
$
9,596
$
24
$
29,323
Provision for (reversal of) credit losses
996
950
7
1,953
Gross charge-offs
—
(1,578
)
—
(1,578
)
Gross recoveries
—
764
—
764
End of Period
20,699
9,732
31
30,462
Allowance for Unfunded Commitments:
Beginning of Period
684
—
—
684
Provision for (reversal of) credit losses
(138
)
—
—
(138
)
End of Period
546
—
—
546
Allowance for Credit Losses
$
21,245
$
9,732
$
31
$
31,008
Allowance for Loan Losses by Methodology:
Individually evaluated
$
—
$
1,750
$
—
$
1,750
Collectively evaluated
20,699
7,982
31
28,712
$
20,699
$
9,732
$
31
$
30,462
Six Months Ended June 30, 2025
CRE
Commercial Business
Consumer
Total
Allowance for Loan Losses:
Beginning of Period
$
20,724
$
6,507
$
36
$
27,267
Provision for (reversal of) credit losses
1,031
1,176
(6
)
2,201
Gross charge-offs
—
(1,290
)
—
(1,290
)
Gross recoveries
—
—
—
—
End of Period
21,755
6,393
30
28,178
Allowance for Unfunded Commitments:
Beginning of Period
1,412
96
1
1,509
Provision for (reversal of) credit losses
(607
)
(1
)
(1
)
(609
)
End of Period
805
95
—
900
Allowance for Credit Losses
$
22,560
$
6,488
$
30
$
29,078
Allowance for Loan Losses by Methodology:
Individually evaluated
$
1,061
$
1,189
$
—
$
2,250
Collectively evaluated
20,694
5,204
30
25,928
$
21,755
$
6,393
$
30
$
28,178
The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as current financial information, historical payment experience, collateral adequacy, credit documentation, and current economic trends, among other factors. For the purpose of assigning internal risk ratings, we generally analyze larger, non-homogeneous loans (e.g., CRE and C&I) on an individual basis, classifying them according to common credit-risk characteristics. This analysis is performed on an ongoing basis as new information is obtained.
For real estate collateral, the Bank typically relies on external appraisals from licensed or certified appraisers. We regularly reassess these values whenever borrower performance, market conditions, or new loan terms signal a potential change in collateral value. When necessary, we supplement these real estate valuations with broker price opinions or other market data. When a loan is secured by business assets or equipment (rather than real estate), the Bank uses standard underwriting practices—such as reviewing current financial statements, performing lien searches, or relying on recognized valuation sources—to confirm that collateral coverage remains sufficient.
13
The Company uses the following definitions for risk ratings:
Special Mention – Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date.
Substandard – Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.
Nonaccrual – Loans on which the accrual of interest has been discontinued are designated as nonaccrual loans. The accrual of interest on loans is discontinued when principal or interest is past due 90 days based on the contractual terms of the loan or when, in management’s judgment, there is reasonable doubt as to collectability.
Loans listed as pass include larger non-homogeneous loans not meeting the risk rating definitions above and smaller, homogeneous loans not assessed on an individual basis.
14
The amortized cost basis of loans by risk category and class of loans was as follows as of June 30, 2026 and December 31, 2025 (in thousands):
Term Loans by Origination Year
Revolving Loans
June 30, 2026
2026
2025
2024
2023
2022
Prior
Revolving Period
Converted to Term
Total
CRE:
Investor owned
Pass
$
70,109
$
62,315
$
30,277
$
61,248
$
142,423
$
175,953
$
13,002
$
13,075
$
568,402
Substandard – Still accruing
—
—
—
—
2,032
431
—
—
2,463
Total
70,109
62,315
30,277
61,248
144,455
176,384
13,002
13,075
570,865
Owner occupied
Pass
32,308
10,381
22,272
27,383
37,652
61,270
17,061
5,031
213,358
Substandard – Still accruing
—
—
—
—
—
7,977
—
—
7,977
Substandard – Nonaccrual
—
—
—
—
—
2,107
—
—
2,107
Total
32,308
10,381
22,272
27,383
37,652
71,354
17,061
5,031
223,442
Multifamily
Pass
10,343
28,384
13,690
15,085
51,153
46,734
17,915
701
184,005
Total
10,343
28,384
13,690
15,085
51,153
46,734
17,915
701
184,005
Secured by single family
Pass
21,157
8,223
40,277
14,087
16,602
38,615
44,337
3,314
186,612
Substandard – Still accruing
186
—
—
—
348
—
202
819
1,555
Substandard – Nonaccrual
—
—
3,960
3,877
5,361
—
—
4,000
17,198
Total
21,343
8,223
44,237
17,964
22,311
38,615
44,539
8,133
205,365
Land and construction
Pass
3,078
8,183
11,723
12,931
6,947
361
3,860
—
47,083
Substandard – Nonaccrual
—
—
—
—
—
1,699
—
—
1,699
Total
3,078
8,183
11,723
12,931
6,947
2,060
3,860
—
48,782
SBA secured by real estate
Pass
43,928
40,865
77,774
73,907
59,222
97,719
—
—
393,415
Special Mention
—
—
604
5,412
—
412
—
—
6,428
Substandard – Still accruing
—
—
1,291
1,690
2,009
2,759
—
—
7,749
Substandard – Nonaccrual
—
—
669
1,206
—
—
—
—
1,875
Total
43,928
40,865
80,338
82,215
61,231
100,890
—
—
409,467
Total CRE
Pass
180,923
158,351
196,013
204,641
313,999
420,652
96,175
22,121
1,592,875
Special Mention
—
—
604
5,412
—
412
—
—
6,428
Substandard – Still accruing
186
—
1,291
1,690
4,389
11,167
202
819
19,744
Substandard – Nonaccrual
—
—
4,629
5,083
5,361
3,806
—
4,000
22,879
Total
181,109
158,351
202,537
216,826
323,749
436,037
96,377
26,940
1,641,926
Commercial business:
C&I
Pass
5,318
15,086
23,019
2,258
31,050
20,385
324,195
26,480
447,791
Special Mention
—
—
—
—
—
—
225
313
538
Substandard – Still accruing
—
—
—
—
—
2,051
—
2,204
4,255
Substandard – Nonaccrual
—
—
—
—
—
—
420
850
1,270
Total
5,318
15,086
23,019
2,258
31,050
22,436
324,840
29,847
453,854
SBA non-real estate secured
Pass
5,385
10,466
7,032
4,850
985
3,360
—
—
32,078
Substandard – Still accruing
—
—
—
—
—
112
—
—
112
Substandard – Nonaccrual
—
—
—
2,745
—
—
—
—
2,745
Total
5,385
10,466
7,032
7,595
985
3,472
—
—
34,935
Total commercial business
Pass
10,703
25,552
30,051
7,108
32,035
23,745
324,195
26,480
479,869
Special Mention
—
—
—
—
—
—
225
313
538
Substandard – Still accruing
—
—
—
—
—
2,163
—
2,204
4,367
Substandard – Nonaccrual
—
—
—
2,745
—
—
420
850
4,015
Total
10,703
25,552
30,051
9,853
32,035
25,908
324,840
29,847
488,789
Consumer:
Total consumer
Pass
—
—
—
594
—
—
1,415
—
2,009
Total
—
—
—
594
—
—
1,415
—
2,009
Total loans:
Pass
191,626
183,903
226,064
212,343
346,034
444,397
421,785
48,601
2,074,753
Special Mention
—
—
604
5,412
—
412
225
313
6,966
Substandard – Still accruing
186
—
1,291
1,690
4,389
13,330
202
3,023
24,111
Substandard – Nonaccrual
—
—
4,629
7,828
5,361
3,806
420
4,850
26,894
Total
$
191,812
$
183,903
$
232,588
$
227,273
$
355,784
$
461,945
$
422,632
$
56,787
$
2,132,724
15
Term Loans by Origination Year
Revolving Loans
December 31, 2025
2025
2024
2023
2022
2021
Prior
Revolving Period
Converted to Term
Total
CRE:
Investor owned
Pass
$
69,674
$
47,701
$
64,383
$
158,733
$
92,012
$
123,112
$
11,187
$
6,467
$
573,269
Substandard – Still accruing
—
—
—
2,049
—
835
—
—
2,884
Substandard – Nonaccrual
—
—
1,577
—
—
—
—
—
1,577
Total
69,674
47,701
65,960
160,782
92,012
123,947
11,187
6,467
577,730
Owner occupied
Pass
21,582
23,453
27,588
38,342
41,485
46,402
22,525
5,084
226,461
Substandard – Still accruing
—
—
—
—
—
8,055
—
—
8,055
Substandard – Nonaccrual
—
—
—
—
—
2,107
—
—
2,107
Total
21,582
23,453
27,588
38,342
41,485
56,564
22,525
5,084
236,623
Multifamily
Pass
10,268
13,726
15,152
51,326
31,931
15,244
17,590
704
155,941
Total
10,268
13,726
15,152
51,326
31,931
15,244
17,590
704
155,941
Secured by single family
Pass
17,882
50,369
14,880
17,824
24,631
16,053
41,528
2,466
185,633
Substandard – Still accruing
—
—
—
352
—
—
—
—
352
Substandard – Nonaccrual
—
3,960
3,876
4,922
—
—
—
—
12,758
Total
17,882
54,329
18,756
23,098
24,631
16,053
41,528
2,466
198,743
Land and construction
Pass
442
13,062
12,843
14,748
—
373
3,862
—
45,330
Substandard – Nonaccrual
—
—
—
—
1,699
—
—
—
1,699
Total
442
13,062
12,843
14,748
1,699
373
3,862
—
47,029
SBA secured by real estate
Pass
48,528
81,598
79,285
64,429
46,792
64,809
—
—
385,441
Special Mention
—
606
5,443
1,461
415
591
—
—
8,516
Substandard – Still accruing
—
1,297
—
1,360
145
2,278
—
—
5,080
Substandard – Nonaccrual
—
—
4,572
—
—
—
—
—
4,572
Total
48,528
83,501
89,300
67,250
47,352
67,678
—
—
403,609
Total CRE
Pass
168,376
229,909
214,131
345,402
236,851
265,993
96,692
14,721
1,572,075
Special Mention
—
606
5,443
1,461
415
591
—
—
8,516
Substandard – Still accruing
—
1,297
—
3,761
145
11,168
—
—
16,371
Substandard – Nonaccrual
—
3,960
10,025
4,922
1,699
2,107
—
—
22,713
Total
168,376
235,772
229,599
355,546
239,110
279,859
96,692
14,721
1,619,675
Commercial business:
C&I
Pass
23,596
37,142
2,655
33,660
12,519
9,467
325,040
5,451
449,530
Special Mention
—
221
—
—
—
—
—
170
391
Substandard – Still accruing
—
—
—
—
2,229
1,328
2,000
—
5,557
Substandard – Nonaccrual
—
4,600
350
4,165
4,073
—
450
—
13,638
Doubtful – Nonaccrual
—
—
—
—
—
—
2,410
—
2,410
Total
23,596
41,963
3,005
37,825
18,821
10,795
329,900
5,621
471,526
SBA non-real estate secured
Pass
10,296
8,738
5,444
1,041
275
3,473
—
—
29,267
Substandard – Still accruing
—
—
—
—
—
120
—
—
120
Substandard – Nonaccrual
—
607
2,859
—
—
—
—
—
3,466
Total
10,296
9,345
8,303
1,041
275
3,593
—
—
32,853
Total commercial business
Pass
33,892
45,880
8,099
34,701
12,794
12,940
325,040
5,451
478,797
Special Mention
—
221
—
—
—
—
—
170
391
Substandard – Still accruing
—
—
—
—
2,229
1,448
2,000
—
5,677
Substandard – Nonaccrual
—
5,207
3,209
4,165
4,073
—
450
—
17,104
Doubtful – Nonaccrual
—
—
—
—
—
—
2,410
—
2,410
Total
33,892
51,308
11,308
38,866
19,096
14,388
329,900
5,621
504,379
Consumer:
Total consumer
Pass
—
—
634
—
—
—
1,459
—
2,093
Total
—
—
634
—
—
—
1,459
—
2,093
Total loans:
Pass
202,268
275,789
222,864
380,103
249,645
278,933
423,191
20,172
2,052,965
Special Mention
—
827
5,443
1,461
415
591
—
170
8,907
Substandard – Still accruing
—
1,297
—
3,761
2,374
12,616
2,000
—
22,048
Substandard – Nonaccrual
—
9,167
13,234
9,087
5,772
2,107
450
—
39,817
Doubtful – Nonaccrual
—
—
—
—
—
—
2,410
—
2,410
Total
$
202,268
$
287,080
$
241,541
$
394,412
$
258,206
$
294,247
$
428,051
$
20,342
$
2,126,147
16
Charge offs of loans by class of loans for the six months ended June 30, 2026 and the year ended December 31, 2025 were as follows (in thousands):
Charge Offs by Loan Origination Year
Six Months Ended June 30, 2026
2026
2025
2024
2023
2022
Prior
Total
Gross charge offs:
Commercial business:
C&I
$
—
$
—
$
—
$
—
$
—
$
1,441
$
1,441
SBA non-real estate secured
—
—
137
—
—
—
137
Total commercial business
—
—
137
—
—
1,441
1,578
Total gross charge offs
$
—
$
—
$
137
$
—
$
—
$
1,441
$
1,578
Charge Offs by Loan Origination Year
Year Ended December 31, 2025
2025
2024
2023
2022
2021
Prior
Total
Gross charge offs:
CRE:
Owner occupied
$
—
$
—
$
1,061
$
—
$
—
$
—
$
1,061
Total CRE
—
—
1,061
—
—
—
1,061
Commercial business:
C&I
$
—
$
—
$
—
$
2,600
$
—
$
1,050
$
3,650
Total commercial business
—
—
—
2,600
—
1,050
3,650
Total gross charge offs
$
—
$
—
$
1,061
$
2,600
$
—
$
1,050
$
4,711
Past due and nonaccrual loans presented by loan class were as follows as of June 30, 2026 and December 31, 2025 (in thousands):
June 30, 2026
Total Nonaccrual
Nonaccrual With No Allowance for Credit Loss
Loans Past Due 90 or more Days and Still Accruing
CRE:
Investor owned
$
—
$
—
$
—
Owner occupied
2,107
2,107
—
Multifamily
—
—
—
Secured by single family
17,198
17,198
—
Land and construction
1,699
1,699
—
SBA secured by real estate
1,875
1,875
—
Total CRE
22,879
22,879
—
Commercial business:
C&I
1,270
—
—
SBA non-real estate secured
2,745
—
—
Total commercial business
4,015
—
—
Consumer
—
—
—
Total
$
26,894
$
22,879
$
—
17
Total Nonaccrual
Nonaccrual With No Allowance for Credit Loss
Loans Past Due 90 or more Days and Still Accruing
December 31, 2025
CRE:
Investor owned
$
1,577
$
1,577
$
—
Owner occupied
2,107
2,107
—
Multifamily
—
—
—
Secured by single family
12,758
12,758
—
Land and construction
1,699
1,699
—
SBA secured by real estate
4,572
4,572
—
Total CRE
22,713
22,713
—
Commercial business:
C&I
16,048
12,788
—
SBA non-real estate secured
3,466
—
—
Total commercial business
19,514
12,788
—
Consumer
—
—
—
Total
$
42,227
$
35,501
$
—
No interest income was recognized on loans while on nonaccrual status during the three and six months ended June 30, 2026 and 2025.
Upon payoff of loans that had been on nonaccrual status, the Company recorded contractual interest income of $705 thousand and $1.2 million during the three and six months ended June 30, 2026, respectively, and $654 thousand during both the three and six months ended June 30, 2025. The Company also recorded $265 thousand of late fees during both the three and six months ended June 30, 2026 upon payoff of a loan that had been on nonaccrual status, compared with none during the three and six months ended June 30, 2025.
18
The following table presents the amortized cost basis of collateral-dependent loans by class of loans and type of collateral as of June 30, 2026 and December 31, 2025 (in thousands).
June 30, 2026
Real Estate
Equipment
Business Blanket Lien
Total
CRE:
Investor owned
$
—
$
—
$
—
$
—
Owner occupied
2,107
—
—
2,107
Multifamily
—
—
—
—
Secured by single family
17,198
—
—
17,198
Land and construction
1,699
—
—
1,699
SBA secured by real estate
1,875
—
—
1,875
Total CRE
22,879
—
—
22,879
Commercial business:
C&I
—
—
—
—
SBA non-real estate secured
—
—
—
—
Total commercial business
—
—
—
—
Consumer
—
—
—
—
Total
$
22,879
$
—
$
—
$
22,879
December 31, 2025
Real Estate
Equipment
Business Blanket Lien
Total
CRE:
Investor owned
$
1,577
$
—
$
—
$
1,577
Owner occupied
2,107
—
—
2,107
Multifamily
—
—
—
—
Secured by single family
12,758
—
—
12,758
Land and construction
1,699
—
—
1,699
SBA secured by real estate
4,572
—
—
4,572
Total CRE
22,713
—
—
22,713
Commercial business:
C&I
—
—
7,074
7,074
SBA non-real estate secured
1,363
—
2,103
3,466
Total commercial business
1,363
—
9,177
10,540
Consumer
—
—
—
—
Total
$
24,076
$
—
$
9,177
$
33,253
19
The following table presents the aging of the amortized cost basis in past-due loans as of June 30, 2026 and December 31, 2025 (in thousands).
June 30, 2026
Current
30 - 59 Days Past due
60 - 89 Days Past Due
90+ Days Past Due
Total Past Due
Total
CRE:
Investor owned
$
570,865
$
—
$
—
$
—
$
—
$
570,865
Owner occupied
221,335
—
—
2,107
2,107
223,442
Multifamily
184,005
—
—
—
—
184,005
Secured by single family
188,168
—
—
17,197
17,197
205,365
Land and construction
47,083
—
—
1,699
1,699
48,782
SBA secured by real estate
408,261
1,206
—
—
1,206
409,467
Total CRE
1,619,717
1,206
—
21,003
22,209
1,641,926
Commercial business:
C&I
452,561
442
—
851
1,293
453,854
SBA non-real estate secured
33,132
438
—
1,365
1,803
34,935
Total commercial business
485,693
880
—
2,216
3,096
488,789
Consumer
2,009
—
—
—
—
2,009
Total
$
2,107,419
$
2,086
$
—
$
23,219
$
25,305
$
2,132,724
December 31, 2025
Current
30 - 59 Days Past due
60 - 89 Days Past Due
90+ Days Past Due
Total Past Due
Total
CRE:
Investor owned
$
576,153
$
1,577
$
—
$
—
$
1,577
$
577,730
Owner occupied
234,516
—
—
2,107
2,107
236,623
Multifamily
155,941
—
—
—
—
155,941
Secured by single family
197,746
416
303
278
997
198,743
Land and construction
47,029
—
—
—
—
47,029
SBA secured by real estate
397,308
1,729
—
4,572
6,301
403,609
Total CRE
1,608,693
3,722
303
6,957
10,982
1,619,675
Commercial business:
C&I
457,453
3,498
—
10,575
14,073
471,526
SBA non-real estate secured
29,387
—
1,495
1,971
3,466
32,853
Total commercial business
486,840
3,498
1,495
12,546
17,539
504,379
Consumer
2,093
—
—
—
—
2,093
Total
$
2,097,626
$
7,220
$
1,798
$
19,503
$
28,521
$
2,126,147
The Company may grant certain modifications of loans to borrowers experiencing financial difficulty on a case-by-case basis. The following presents the amortized cost basis of loans at June 30, 2026 and 2025 that were both experiencing financial difficulty and modified during the six months ended June 30, 2026 and the three and six months ended June 30, 2025. There were no modifications to borrowers experiencing financial difficulty during the three months ended June 30, 2026. The percentage of the amortized cost basis of loans that were modified to borrowers in financial distress as compared to the amortized cost basis of each class of financing receivable is also presented below:
20
Three Months Ended June 30, 2025
Principal Forgiveness
Payment Deferral
Term Extension
Interest Rate Reduction
Payment Deferral and Interest Rate Reduction
Total
Percentage of Class of Financing Receivable
CRE:
Investor owned
$
—
$
—
$
—
$
—
$
—
$
—
0.0
%
Owner occupied
—
—
—
—
—
—
0.0
%
Multifamily
—
—
—
—
—
—
0.0
%
Secured by single family
—
8,349
—
—
—
8,349
4.2
%
Land and construction
—
1,699
—
—
—
1,699
3.3
%
SBA secured by real estate
—
—
—
—
—
—
0.0
%
Total CRE
—
10,048
—
—
—
10,048
0.6
%
Commercial business:
C&I
—
4,950
—
—
—
4,950
1.2
%
SBA non-real estate secured
—
—
—
—
—
—
0.0
%
Total commercial business
—
4,950
—
—
—
4,950
1.1
%
Consumer
—
—
—
—
—
—
0.0
%
Total
$
—
$
14,998
$
—
$
—
$
—
$
14,998
0.7
%
Six Months Ended June 30, 2026
Principal Forgiveness
Payment Deferral
Term Extension
Interest Rate Reduction
Term Extension and Interest Rate Reduction
Total
Percentage of Class of Financing Receivable
CRE:
Investor owned
$
—
$
—
$
—
$
—
$
—
$
—
0.0
%
Owner occupied
—
—
—
—
—
—
0.0
%
Multifamily
—
—
—
—
—
—
0.0
%
Secured by single family
—
—
819
—
388
1,207
0.6
%
Land and construction
—
—
—
—
—
—
0.0
%
SBA secured by real estate
—
—
—
—
—
—
0.0
%
Total CRE
—
—
819
—
388
1,207
0.1
%
Commercial business:
C&I
—
—
4,255
—
—
4,255
0.9
%
SBA non-real estate secured
—
—
—
—
—
—
0.0
%
Total commercial business
—
—
4,255
—
—
4,255
0.9
%
Consumer
—
—
—
—
—
—
0.0
%
Total
$
—
$
—
$
5,074
$
—
$
388
$
5,462
0.3
%
21
Six Months Ended June 30, 2025
Principal Forgiveness
Payment Deferral
Term Extension
Interest Rate Reduction
Payment Deferral and Interest Rate Reduction
Total
Percentage of Class of Financing Receivable
CRE:
Investor owned
$
—
$
—
$
—
$
—
$
—
$
—
0.0
%
Owner occupied
—
—
—
—
—
—
0.0
%
Multifamily
—
—
—
—
—
—
0.0
%
Secured by single family
—
8,349
—
—
—
8,349
4.2
%
Land and construction
—
1,699
—
—
—
1,699
3.3
%
SBA secured by real estate
—
—
—
—
—
—
0.0
%
Total CRE
—
10,048
—
—
—
10,048
0.6
%
Commercial business:
C&I
—
13,119
—
—
—
13,119
3.2
%
SBA non-real estate secured
—
—
—
—
—
—
0.0
%
Total commercial business
—
13,119
—
—
—
13,119
3.0
%
Consumer
—
—
—
—
—
—
0.0
%
Total
$
—
$
23,167
$
—
$
—
$
—
$
23,167
1.1
%
The Company has not committed to lend any additional amounts to the borrowers included in the previous tables.
The following table presents the performance of such loans that have been modified in the preceding 12 months:
June 30, 2026
30 - 59 Days Past due
60 - 89 Days Past Due
90+ Days Past Due
Total Past Due
CRE:
Investor owned
$
—
$
—
$
—
$
—
Owner occupied
—
—
—
—
Multifamily
—
—
—
—
Secured by single family
—
—
4,473
4,473
Land and construction
—
—
—
—
SBA secured by real estate
—
—
—
—
Total CRE
—
—
4,473
4,473
Commercial business:
C&I
—
—
850
850
SBA non-real estate secured
—
—
—
—
Total commercial business
—
—
850
850
Consumer
—
—
—
—
Total
$
—
$
—
$
5,323
$
5,323
22
At June 30, 2025, none of the loans modified during the preceding 12 months to borrowers experiencing financial difficulty were past due.
The following table presents the financial effect of the loan modifications presented above to borrowers experiencing financial difficulty for the six months ended June 30, 2026 and the three and six months ended June 30, 2025. There were no modifications to borrowers experiencing financial difficulty during the three months ended June 30, 2026:
Three Months Ended June 30, 2025
Principal Forgiveness (In Dollars)
Weighted- Average Interest Rate Reduction (In Percentage Points)
Weighted- Average Deferral or Extension (In Months)
Amortized Cost Basis Modified
CRE:
Secured by single family:
Payment deferral
—
—
7
$
8,349
Land and construction - payment deferral
—
—
7
1,699
Commercial business:
C&I:
Payment deferral
—
—
7
4,950
Total
$
14,998
Six Months Ended June 30, 2026
Principal Forgiveness (In Dollars)
Weighted- Average Interest Rate Reduction (In Percentage Points)
Weighted- Average Deferral or Extension (In Months)
Amortized Cost Basis Modified
CRE:
Term extension
—
—
3
$
819
Interest rate reduction and term extension
—
0.8
%
35
388
Commercial business:
C&I - term extension
—
—
9
4,255
Total
$
5,462
Six Months Ended June 30, 2025
Principal Forgiveness (In Dollars)
Weighted- Average Interest Rate Reduction (In Percentage Points)
Weighted- Average Deferral or Extension (In Months)
Amortized Cost Basis Modified
CRE:
Secured by single family:
Payment deferral
—
—
7
$
8,349
Land and construction - payment deferral
—
—
7
1,699
Commercial business:
C&I:
Payment deferral
—
—
8
13,119
Total
$
23,167
The following table presents loans purchased and the carrying value of loans sold during the three and six months ended June 30, 2026 and 2025 by portfolio segment (in thousands):
23
Commercial Real Estate
Commercial Business
Consumer
Total
Three months ended June 30, 2026:
Purchases
$
—
$
—
$
—
$
—
Sales
$
628
$
2,962
$
—
$
3,590
Three months ended June 30, 2025:
Purchases
$
—
$
2,012
$
—
$
2,012
Sales
$
4,967
$
5,207
$
—
$
10,174
Six months ended June 30, 2026:
Purchases
$
—
$
—
$
—
$
—
Sales
$
9,052
$
11,799
$
—
$
20,851
Six months ended June 30, 2025:
Purchases
$
1,160
$
2,012
$
—
$
3,172
Sales
$
11,658
$
7,357
$
—
$
19,015
Loan purchases during the periods presented above consisted entirely of repurchases of the guaranteed portions of previously sold SBA 7(a) loans in connection with borrower defaults or other circumstances requiring repurchase under applicable SBA program or secondary-market requirements.
NOTE 4 – TRANSFERS AND SERVICING
The Company sells the guaranteed portion of certain SBA loans in the secondary market and retains the servicing responsibility for those loans subsequent to the sale. The loans serviced for others are accounted for as sales and are therefore not included in the accompanying consolidated balance sheets. The carrying value of loans sold was $3.6 million and $10.2 million during the three months ended June 30, 2026 and 2025, respectively, and $20.9 million and $19.0 million during the six months ended June 30, 2026 and 2025, respectively. Loans serviced for others totaled $162.3 million and $188.0 million at June 30, 2026 and December 31, 2025, respectively.
Consideration for each SBA loan sale includes the cash received and the fair value of the related servicing asset. The Company receives servicing fees ranging from 0.25% to 1.00% for the services provided over the life of the loan. The servicing asset is based on the estimated fair value of these future cash flows to be collected. The risks inherent in SBA servicing assets primarily relate to accelerated prepayment of loans in excess of what was originally modeled driven by changes in interest rates and a reduction in the estimated future cash flows.
The activity in servicing assets during the period includes additions from loan sales with servicing retained and reductions from amortization as the serviced loans are repaid and the servicing fees are earned. The servicing asset activity for the three and six months ended June 30, 2026 and 2025 is summarized below (in thousands):
Three Months Ended June 30,
Six Months Ended June 30,
2026
2025
2026
2025
Balance, beginning of period
$
1,957
$
1,993
$
1,913
$
2,087
Additions
53
182
358
338
Amortization
(293
)
(211
)
(554
)
(461
)
Reversal (Impairment)
—
—
—
—
Balance, end of period
$
1,717
$
1,964
$
1,717
$
1,964
Key economic assumptions used in measuring the initial fair value of servicing assets were as follows for the three and six months ended June 30, 2026 and 2025:
Three Months Ended June 30,
Six Months Ended June 30,
(weighted average rates per annum)
2026
2025
2026
2025
Constant prepayment rates (level 3)
26.57
%
22.92
%
23.54
%
22.54
%
Discount rates (level 3)
11.00
%
11.00
%
11.00
%
11.00
%
24
Note 5 – leases
The components of total lease costs were as follows for the three and six months ended June 30, 2026 and 2025 (in thousands):
Three Months Ended June 30,
Six Months Ended June 30,
2026
2025
2026
2025
Operating lease cost
$
573
$
566
$
1,144
$
1,121
Right-of-use assets and lease liabilities and the associated balance sheet classifications are as follows (in thousands):
Balance Sheet Classification
June 30, 2026
December 31, 2025
Right-of-use assets:
Operating leases
Other assets
$
6,733
$
6,352
Total right-of-use assets
$
6,733
$
6,352
Lease liabilities:
Operating leases
Accrued interest payable and other liabilities
$
7,091
$
6,698
Total lease liabilities
$
7,091
$
6,698
In February 2026, the Company entered into an amendment to extend the lease agreement for its office space in La Jolla, California by 60 months. As a result of this amendment, the Company obtained operating lease right-of-use assets in exchange for lease obligations of $1.3 million during the six months ended June 30, 2026.
In May 2026, the Company entered into a lease agreement for administrative office space in Brea, California. The initial lease term is 39 months, commencing after completion of certain tenant improvements and ending on the last day of the calendar month that occurs three years and three months after the commencement date. The final commencement and expiration dates are expected to be confirmed in a start date amendment. The lease includes aggregate fixed base rent payments of approximately $0.5 million, net of scheduled rent abatements. Upon lease commencement, the Company expects to recognize an operating lease right-of-use asset and corresponding lease liability based on the present value of the remaining fixed lease payments.
Note 6 – Deposits
Deposits at June 30, 2026 and December 31, 2025 consist of the following (in thousands):
June 30, 2026
December 31, 2025
Noninterest-bearing deposits
$
663,200
$
606,105
Interest-bearing checking accounts
308,561
309,013
Savings and money market
1,136,611
1,025,393
Time deposit accounts under $250,000
102,375
122,518
Time deposit accounts $250,000 and over
170,490
160,852
Total deposits
$
2,381,237
$
2,223,881
As of June 30, 2026 and December 31, 2025, all noninterest-bearing deposits are demand deposits.
The Company participates in the IntraFi Network, which provides deposit placement services through Insured Cash Sweep (“ICS”) and Certificate of Deposit Account Registry Service (“CDARS”) reciprocal deposits. These services allocate deposits across multiple banks within the IntraFi network in amounts that do not exceed the standard FDIC insurance limit at each receiving institution. At June 30, 2026 and December 31, 2025, interest-bearing checking accounts included ICS reciprocal deposits of $8.2 million and $18.0 million, respectively, savings and money market accounts included ICS reciprocal deposits of $148.4 million and $168.7 million, respectively, and time deposits under $250,000 included CDARS reciprocal deposits of $88.8 million and $108.3 million, respectively.
25
Total deposits shown in the table above included the following brokered deposit balances (in thousands):
June 30, 2026
December 31, 2025
Brokered deposits:
Savings and money market
$
563
$
563
Time deposit accounts under $250,000
997
1,245
Time deposit accounts $250,000 and over
47,741
63,255
Total brokered deposits
$
49,301
$
65,063
The maturity of time deposits as of June 30, 2026 is as follows (in thousands):
Amount
2026
$
162,242
2027
86,229
2028
21,670
2029
2,229
2030 and thereafter
495
$
272,865
Note 7 – borrowing arrangements
The Company’s borrowings include advances from the Federal Home Loan Bank (“FHLB”) of San Francisco and subordinated debt issued by the parent company, Private Bancorp of America, Inc.
A summary of FHLB borrowings as of June 30, 2026 and December 31, 2025, is as follows (in thousands):
Lender
Maturity
Rate of Interest
June 30, 2026
December 31, 2025
Federal Home Loan Bank
March 12, 2026
4.77%
$
—
$
3,000
Federal Home Loan Bank
March 12, 2027
4.56%
3,000
3,000
Federal Home Loan Bank
March 17, 2028
3.96%
5,000
5,000
Total
$
8,000
$
11,000
At June 30, 2026 and December 31, 2025, loans with a principal balance of approximately $741.8 million and $746.5 million and securities with a principal balance of approximately $5.7 million and $5.3 million were pledged as collateral to the FHLB for the borrowings, respectively. At June 30, 2026 and December 31, 2025, the Company had remaining financing availability of approximately $521.4 million and $535.0 million based on the level of pledged loans and securities, respectively, after consideration of FHLB borrowings outstanding and a $6.0 million letter of credit to secure deposits at both June 30, 2026 and December 31, 2025, respectively.
As of June 30, 2026 and December 31, 2025, loans with a principal balance of approximately $824.2 million and $817.3 million were pledged as collateral to the Federal Reserve Bank on a secured borrowing arrangement with related borrowing capacity of approximately $620.1 million and $607.4 million, respectively. There was no balance outstanding on this borrowing arrangement at June 30, 2026 and December 31, 2025.
The Company has borrowing lines with correspondent banks totaling $115.0 million as of June 30, 2026 and $100.0 million as of December 31, 2025. There were no balances outstanding on these borrowing lines as of June 30, 2026 and December 31, 2025.
On April 24, 2019, Private Bancorp of America, Inc. issued $18.0 million of Fixed-to-Floating Subordinated Notes (“Notes”), which mature on April 25, 2029. The Notes accrued interest at a 6.00% fixed rate for the first five years until April 25, 2024 with quarterly interest payments. After April 25, 2024, interest on the Notes accrues at a variable rate at the three-month Secured Overnight Financing Rate (“SOFR”) plus3.42%. The total variable rate on the Notes was 7.35% and 7.54% as of June 30, 2026 and December 31, 2025, respectively. Debt issuance costs were $0.1 million and are being amortized through the maturity date. The balance net of issuance cost is $18.0 million as of June 30, 2026 and December 31, 2025.
26
Note 8 – Commitments AND CONTINGENCIES
Commitments
The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated balance sheets.
The Company’s exposure to credit losses in the event of nonperformance by the other parties for commitments to extend credit and standby letters of credit is represented by the contractual amount of these instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments.
The following is a summary of contractual or notional amounts of off-balance sheet financial instruments that represent credit risk at June 30, 2026 and December 31, 2025 (in thousands).
Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any conditions established in the contract. Commitments generally have fixed expiration dates of not more than 12 months and may require payment of a fee. Since many of the commitments are not expected to be drawn upon, the total commitment amounts may not represent future cash requirements. The Company evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on management’s credit evaluation. Collateral held varies but may include marketable investment securities, accounts receivable, inventory, property, plant, and equipment, real properties and deposits.
Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Those letters of credit are primarily used in public and private borrowing arrangements. Essentially all letters of credit issued have expiration dates within one year. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. The Company holds collateral supporting those commitments if deemed necessary.
The Company has committed to invest in partnerships that sponsor affordable housing projects utilizing the Low-Income Housing Tax Credit (“LIHTC”) pursuant to Section 42 of the Internal Revenue Code. The purpose of these investments is to achieve a satisfactory return on capital, to facilitate the sale of additional affordable housing projects, and to assist in achieving goals associated with the Community Reinvestment Act (“CRA”). Capital contributions are called for up to an amount specified in the partnership agreements. In addition, the Company invests in other CRA investments including Small Business Investment Companies. At June 30, 2026 and December 31, 2025, the Company had unfunded commitments to contribute capital to these LIHTC and other CRA investments totaling $1.3 million and $2.4million, respectively.
Contingencies
The Company is subject to legal proceedings arising in the ordinary course of business. The Company accrues losses for a legal proceeding when it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. However, the uncertainties inherent in legal proceedings make it difficult to reasonably estimate the costs and effects of resolving these matters. Accordingly, actual costs incurred may differ materially from amounts accrued and could adversely affect the Company’s business, cash flows, results of operations, financial condition and prospects. Unless otherwise indicated, the Company is unable to estimate reasonably possible losses in excess of any amounts accrued. As of June 30, 2026 and December 31, 2025, there were no material loss contingency accruals nor are there matters that would have a material effect on the financial statements if accrued.
27
NOTE 9 – EARNINGS PER SHARE (“EPS”)
The two-class method is used in the calculation of basic and diluted earnings per share. Under the two-class method, earnings available to common shareholders for the period are allocated between common shareholders and participating securities according to participation rights in undistributed earnings. The following is a reconciliation (in thousands):
Three Months Ended June 30,
2026
2025
Net
Net
Income
Shares
Income
Shares
Net income as reported
$
13,118
$
10,449
Less: Earnings allocated to participating securities
(100
)
(88
)
Net income available to common shareholders
13,018
10,361
Weighted average common shares outstanding
5,725
5,804
Less unvested restricted shares
(44
)
(49
)
Total weighted-average basic shares outstanding
5,681
5,755
Dilutive effect of outstanding stock options and unvested restricted stock units
60
83
Total weighted-average diluted shares outstanding
$
13,018
5,741
$
10,361
5,838
Six Months Ended June 30,
2026
2025
Net
Net
Income
Shares
Income
Shares
Net income as reported
$
25,145
$
21,011
Less: Earnings allocated to participating securities
(186
)
(177
)
Net income available to common shareholders
24,959
20,834
Weighted average common shares outstanding
5,730
5,794
Less unvested restricted shares
(42
)
(49
)
Total weighted-average basic shares outstanding
5,688
5,745
Dilutive effect of outstanding stock options and unvested restricted stock units
69
86
Total weighted-average diluted shares outstanding
$
24,959
5,757
$
20,834
5,831
There were no anti-dilutive options and unvested RSUs for the three and six months ended June 30, 2026 and 2025.
NOTE 10 – FAIR VALUE MEASUREMENTS
The following is a description of valuation methodologies used for assets measured at fair value on a recurring basis:
Securities available for sale: The fair values of securities available for sale are determined using quoted market prices, when available (Level 1), or matrix pricing (Level 2). Matrix pricing is a valuation technique widely used in the industry to value debt securities based on their relationship to benchmark securities with quoted market prices.
The following table provides the hierarchy and fair value for each major category of assets and liabilities measured at fair value at June 30, 2026 and December 31, 2025 (in thousands):
Fair Value Measurements Using:
June 30, 2026
Level 1
Level 2
Level 3
Total
Assets Measured at Fair Value:
On a Recurring Basis:
Securities available for sale
$
—
$
237,074
$
—
$
237,074
December 31, 2025
Assets Measured at Fair Value:
On a Recurring Basis:
Securities available for sale
$
—
$
217,837
$
—
$
217,837
28
The Company had no assets or liabilities for which a nonrecurring fair value remeasurement was recognized after initial recognition during thethree and six months ended June 30, 2026 and the year ended December 31, 2025.
Note 11 – FAIR VALUES OF FINANCIAL INSTRUMENTS
The fair value of a financial instrument is the amount at which the asset or obligation could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The fair value of financial instruments fulfills the accounting requirements per the FASB ASC Topic 825 - Financial Instruments. The fair value estimates are made at a specific point in time based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the entire holdings of a particular financial instrument. Because no market value exists for a significant portion of the financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature, involve uncertainties and matters of judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.
Fair value estimates are based on financial instruments both on and off the balance sheet without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. Additionally, tax consequences related to the realization of the unrealized gains and losses can have a potential effect on fair value estimates and have not been considered in many of the estimates.
The fair value hierarchy level and estimated fair value of financial instruments is summarized as follows (in thousands):
June 30, 2026
December 31, 2025
Fair Value
Carrying
Fair
Carrying
Fair
Hierarchy
Amount
Value
Amount
Value
Assets
Cash and due from banks
Level 1
$
32,211
$
32,211
$
11,148
$
11,148
Interest-bearing deposits-other
Level 1
22,275
22,275
13,523
13,523
Interest-bearing deposits at Federal Reserve Bank
Level 1
245,869
245,869
130,344
130,344
Interest-bearing time deposits with other financial institutions
Level 1
4,344
4,344
4,355
4,355
Debt securities available for sale
Level 2
237,074
237,074
217,837
217,837
Loans held for sale
Level 3
—
—
2,330
2,330
Loans held for investment, net
Level 3
2,102,262
2,126,808
2,096,824
2,126,101
Servicing assets
Level 3
1,717
2,701
1,913
2,796
Accrued interest receivable
Level 1
8,248
8,248
8,284
8,284
Liabilities
Time deposits
Level 2
$
272,865
$
272,039
$
283,370
$
283,422
Other deposits(1)
Level 2
2,108,372
2,108,372
1,940,511
1,940,511
Borrowings
Level 2
25,979
25,939
28,976
29,113
Accrued interest payable
Level 1
865
865
1,087
1,087
(1)Includes non-interest bearing deposits, interest bearing checking deposits, savings and money market deposits that have no stated maturities and are assumed to have a fair value equal to the carrying value.
NOTE 12 – SHAREHOLDERS’ EQUITY
Stock Repurchase Program
On March 19, 2026, the Company’s Board of Directors authorized up to $3 million in aggregate consideration for the repurchase of shares in privately-negotiated transactions and in the open market. On March 31, 2026, the authorized stock repurchases concluded with repurchases totaling 44,214 shares at an average price per share of $67.80, excluding brokerage commissions and other execution costs. The stock repurchases resulted in a $3.0 million reduction to the Company’s retained earnings in the three months ended March 31, 2026. All repurchased shares were retired and canceled, returning them to the status of authorized but unissued shares.
29
On April 29, 2026, our Board authorized a stock repurchase program, whereby the Company may repurchase an aggregate amount of up to $10.0 million of shares of its common stock. As of June 30, 2026, no shares of the Company’s common stock were repurchased under the plan.
30
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
All references to “we,” “us,” “our,” or the “Company” means Private Bancorp of America, Inc. and its wholly-owned subsidiary CalPrivate Bank. All references to the “Bank” refer to CalPrivate Bank.
This Quarterly Report on Form 10-Q contains information and statements that are considered “forward looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). 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,” “intend,” “plan,” or words or phrases of similar meaning.
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. Actual results, performance or achievements could differ materially from those contemplated, expressed, or implied by the forward-looking statements.
The following factors, among others, could cause our financial performance to differ materially from that expressed in such forward-looking statements:
•
The strength of the U.S. economy in general and the strength of the local economies in which we conduct operations;
•
Adverse developments in the banking industry and the potential impact of such developments on customer confidence, liquidity, and regulatory responses to these developments;
•
The effects of, and changes in, trade, monetary, and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System (the “Federal Reserve”);
•
Interest rate, liquidity, economic, market, credit, operational, and inflation risks associated with our business, including the speed and predictability of changes in these risks;
•
Our ability to attract and retain deposits and to access other sources of liquidity, particularly in a higher interest rate environment, and the quality and composition of our deposits;
•
Business and economic conditions generally and in the financial services industry, nationally and within our current and future geographic markets, including the tight labor market, ineffective management of the U.S. federal budget or debt, or turbulence or uncertainty in domestic or foreign financial markets;
•
The effects of concentrations in our loan portfolio, including Small Business Administration (“SBA”) loans, commercial real estate (“CRE”) and the risks of geographic and industry concentrations;
•
Possible credit-related impairments of securities held by us;
•
Changes in the level of our nonperforming assets and charge-offs;
•
The timely development of competitive new products and services and the acceptance of these products and services by new and existing customers;
•
The ability to attract and retain essential personnel or changes in our essential personnel;
•
The impact of changes in financial services policies, laws and regulations, including those concerning taxes, banking, securities and insurance, and the application thereof by regulatory bodies;
•
Compliance risks, including the costs of monitoring, testing, and maintaining compliance with complex laws and regulations;
•
The effectiveness of our risk management framework and quantitative models;
31
•
The effect of changes in accounting policies and practices or accounting standards, as may be adopted from time to time by bank regulatory agencies, the U.S. Securities and Exchange Commission (the “SEC”), the Public Company Accounting Oversight Board, the Financial Accounting Standards Board, or other accounting standards setters;
•
The impact of governmental efforts to restructure or modify the U.S. financial regulatory system;
•
The impact of changes in the Federal Deposit Insurance Corporation (“FDIC”) insurance assessment rate or the rules and regulations related to the calculation of the FDIC insurance assessment amount;
•
Changes in consumer spending, borrowing, and savings habits;
•
Changes in the financial performance and/or condition of our borrowers;
•
Our ability to effectively compete with banks, nonbank financial institutions and financial technology companies and the effects of competition in the financial services industry on our business;
•
The effects of disruptions or instability in the financial system, including as a result of the failure of a financial institution or other participants in it, or geopolitical instability, including war, terrorist attacks, pandemics and man-made and natural disasters;
•
Cybersecurity threats and the cost of defending against them;
•
Uncertainty around, and disruption from, new and emerging technologies, including the adoption and utilization of artificial intelligence (“AI”) and generative AI;
•
Climate change, including the enhanced regulatory, compliance, credit, and reputational risks and costs;
•
Unanticipated regulatory, legal, or judicial proceedings;
•
The one-time and incremental costs of operating as a public company;
•
Our ability to meet our obligations as a public company, including our obligation under Section 404 of the Sarbanes-Oxley Act of 2002; and
•
Our ability to manage the risks involved in the foregoing.
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 and other reports and registration statements filed by us with the SEC. Therefore, we caution you not to place undue reliance on our forward-looking information and statements. We will not update the forward-looking information and statements to reflect actual results or changes in the factors affecting the forward-looking information and statements. For information on the factors that could cause actual results to differ from the expectations stated in the forward-looking statements, see Item 1A. Risk Factors of our Registration Statement on Form 10 (File No. 001-43397), initially filed with the SEC on July 13, 2026, as amended by Amendment No. 1, filed with the SEC on July 17, 2026 (together, the “Form 10”), which was declared effective by the SEC on July 29, 2026, and other reports as filed with the SEC.
Forward-looking information and statements should not be viewed as predictions, and should not be the primary basis upon which investors evaluate us. Any investor in our common stock should consider all risks and uncertainties disclosed in our filings with the SEC, all of which are accessible on the SEC’s website at http://www.sec.gov.
General
Management’s discussion and analysis of financial condition and results of operations is intended to provide a better understanding of the significant changes in trends relating to the Company’s financial condition, results of operations, liquidity, and capital resources. This discussion should be read in conjunction with our Form 10, plus the unaudited condensed consolidated financial statements and the notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q. The results for the three and six months ended June 30, 2026 are not necessarily indicative of the results expected for the year ending December 31, 2026.
Overview
The Company was incorporated in California in 2015 and is a registered bank holding company headquartered in La Jolla, California. Our wholly owned subsidiary, CalPrivate Bank, was founded in 2006 and is a California state-chartered commercial bank with deposits insured by the FDIC.
32
We are a relationship-based bank that specializes in serving the unique needs of our private banking clients, the businesses they own and operate, and the advisors that serve them. We organize our business development activities and operations around three categories - private banking, business banking, and SBA lending. We leverage our deep understanding of our clients’ banking needs, coupled with innovative technology, to deliver customized banking products and services for our private and business banking clients, which include high-net-worth individuals, real estate entrepreneurs, professionals, closely-held businesses, and for-profit and nonprofit businesses. At June 30, 2026, we served our clients from our seven branches located throughout coastal Southern California, specifically Beverly Hills, Coronado, La Jolla, Montecito, Newport Beach, San Diego and El Segundo, California. At June 30, 2026, we had total assets of $2.7 billion, total deposits of $2.4 billion, and total equity of $285.5 million, and the Bank was considered “well capitalized” for regulatory capital purposes at that date.
Critical Accounting Policies and Estimates
Management has established various accounting policies that govern the application of accounting principles generally accepted in the United States (“GAAP”) in the preparation of our financial statements. Certain accounting policies require management to make estimates and assumptions that involve a significant level of estimation uncertainty and are reasonably likely to have a material impact on the carrying value of certain assets and liabilities as well as the Company’s results of operations, which management considers to be critical accounting policies. The estimates and assumptions management uses are based on historical experience and other factors, which management believes to be reasonable under the circumstances. Actual results could differ significantly from these estimates and assumptions, which could have a material impact on the carrying value of the Company’s assets and liabilities as well as the Company’s results of operations in future reporting periods. The Company’s critical accounting policies consist of the allowance for credit losses and deferred tax assets and income taxes. Please see Item 2. Financial Information in the Company’s Form 10 for additional discussion concerning these critical accounting policies. Also, our significant accounting policies are described in Note 1. Summary of Significant Accounting Policies of the audited consolidated financial statements in our Form 10.
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 to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we will adopt the standard on the application date for public companies.
We have elected to take advantage of certain 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.
The following is a discussion of these critical accounting policies and significant estimates that require us to make complex and subjective judgments.
Allowance for Credit Losses
We account for credit losses on loans held for investment under the current expected credit loss (“CECL”) methodology. The allowance for credit losses represents management’s estimate of expected lifetime credit losses in the loan portfolio and expected losses on unfunded lending commitments as of the balance sheet date. The estimate is based on relevant available information, including historical credit loss experience, current portfolio conditions, reasonable and supportable economic forecasts, loan risk characteristics, collateral values, borrower-specific information, and qualitative factors.
For loans that share similar risk characteristics, management estimates expected credit losses on a collective basis using third-party lifetime loss rate models for CRE, commercial business, and consumer loans. The models consider exposure at default, loan attributes, prepayment assumptions, expected utilization assumptions, and reasonable and supportable economic forecasts. Key assumptions include portfolio segmentation, risk ratings, prepayment assumptions, economic scenario weighting, and calibration scalars. The economic scenarios include various projections of gross domestic product, interest rates, property price indices, and employment measures. Scenario weighting and model parameters are reviewed each reporting period and are subject to change as economic conditions, portfolio composition and credit quality change.
Management also applies qualitative adjustments when the model output does not fully capture expected credit losses. These adjustments may reflect management’s assessment of current and expected economic conditions, credit concentrations, collateral-specific risks, regulatory and external factors, model limitations, underwriting changes, portfolio segmentation, and other factors that may affect expected credit losses. Because these judgments are inherently subjective, changes in the underlying assumptions or in management’s assessment of credit risk could materially affect the allowance for credit losses and provision for credit losses.
33
Loans that do not share risk characteristics with other loans are evaluated individually. These loans generally include nonaccrual loans and collateral-dependent loans. For collateral-dependent loans, expected credit losses are measured based on the fair value of the collateral, less estimated costs to sell when applicable. This estimate is sensitive to changes in collateral values, appraisal assumptions, market conditions, expected liquidation timing and estimated selling costs.
The provision for credit losses is directly affected by changes in the allowance for credit losses. The allowance for credit losses is sensitive to changes in portfolio composition, borrower risk ratings, nonaccrual and past due loans, collateral values, charge-off experience, economic forecasts, probability weighting of economic scenarios, qualitative factors and model calibration.
Deferred Tax Assets and Income Taxes
Deferred tax assets and liabilities are recognized for temporary differences between the financial statement carrying amounts of assets and liabilities and their tax bases. Management evaluates deferred tax assets for realizability and records a valuation allowance when, based on available evidence, it is more likely than not that some portion or all of the deferred tax asset will not be realized. This assessment requires judgment regarding future taxable income, the timing of reversals of temporary differences, tax planning strategies, tax credit utilization, and changes in applicable tax laws and rates.
The estimate is subject to uncertainty because future taxable income, tax law changes, state apportionment, utilization of tax credits and discrete tax items may differ from management’s assumptions. Changes in those assumptions could affect the amount of deferred tax assets recognized and the provision for income taxes.
Non-GAAP Financial Measures
The Company uses certain non-GAAP financial measures to provide meaningful supplemental information regarding the Company’s operational performance and to enhance investors’ overall understanding of such financial performance. Generally, a non-GAAP financial measure is a numerical measure of a company’s financial performance, financial position, or cash flows that exclude (or include) amounts that are included in (or excluded from) the most directly comparable measure calculated and presented in accordance with GAAP. However, these non-GAAP financial measures are supplemental and are not a substitute for an analysis based on GAAP measures and may not be comparable to non-GAAP financial measures that may be presented by other companies. Management believes that these non-GAAP financial measures provide useful information to gain an understanding of the operating results of our core business.
Efficiency Ratio
For the periods presented below, efficiency ratio is a non-GAAP financial measure derived from GAAP-based amounts. This figure is calculated by dividing noninterest expense by total net interest income and noninterest income. Management believes this measure provides investors with useful supplemental information regarding our operating efficiency by showing the portion of revenue used to support noninterest expense.
Three Months Ended June 30,
Six Months Ended June 30,
(Dollars in thousands except per share data)
2026
2025
2026
2025
Efficiency Ratio
Noninterest expense
$
16,863
$
15,689
$
32,543
$
29,744
Net interest income
33,545
30,113
66,154
57,845
Noninterest income
1,001
1,730
2,936
3,343
Total net interest income and noninterest income
$
34,546
$
31,843
$
69,090
$
61,188
Efficiency ratio (non-GAAP)
48.81
%
49.27
%
47.10
%
48.61
%
Pre-tax Pre-Provision Net Revenue
For the periods presented below, pre-tax pre-provision net revenue is a non-GAAP financial measure derived from GAAP-based amounts. This figure is calculated as net interest income plus noninterest income, less noninterest expense, before provision for credit
34
losses and income tax expense. Management believes this measure provides investors with useful supplemental information regarding our ability to generate earnings from operations before the effects of credit loss provisioning and income taxes.
Three Months Ended June 30,
Six Months Ended June 30,
(Dollars in thousands except per share data)
2026
2025
2026
2025
Pretax pre-provision net revenue
Net interest income
$
33,545
$
30,113
$
66,154
$
57,845
Noninterest income
1,001
1,730
2,936
3,343
Total net interest income and noninterest income
34,546
31,843
69,090
61,188
Less: Noninterest expense
16,863
15,689
32,543
29,744
Pretax pre-provision net revenue (non-GAAP)
$
17,683
$
16,154
$
36,547
$
31,444
Return on Average Tangible Common Equity
For the periods presented below, return on average tangible common equity is a non-GAAP financial measure derived from GAAP-based amounts. This figure is calculated by dividing net income, annualized for interim periods, by average tangible common equity, which is average shareholders’ equity less average intangible assets. Management believes this measure provides investors with useful supplemental information regarding returns generated on tangible common equity.
Three Months Ended June 30,
Six Months Ended June 30,
(Dollars in thousands except per share data)
2026
2025
2026
2025
Return on Average Tangible Equity
Net income
$
13,118
$
10,449
$
25,145
$
21,011
Average shareholders’ equity
$
280,149
$
242,235
$
276,032
$
236,517
Less: Average intangible assets
1,819
1,953
1,865
1,953
Average tangible common equity (non-GAAP)
$
278,330
$
240,282
$
274,167
$
234,564
Return on average equity
18.78
%
17.30
%
18.37
%
17.91
%
Return on average tangible common equity (non-GAAP)
18.90
%
17.44
%
18.49
%
18.06
%
Tangible Book Value Per Share
For the periods presented below, tangible book value per share is a non-GAAP financial measure derived from GAAP-based amounts. This figure is calculated by dividing total tangible equity, which is total equity less total intangible assets, by shares outstanding. Management believes this measure provides investors with useful supplemental information regarding the Company’s tangible net asset value on a per share basis.
(Dollars in thousands except per share data)
June 30, 2026
December 31, 2025
Tangible book value per share
Total equity
$
285,516
$
263,964
Less: Total intangible assets
1,717
1,913
Total tangible equity
$
283,799
$
262,051
Shares outstanding
5,725,696
5,728,187
Book value per common share
$
49.87
$
46.08
Tangible book value per share (non-GAAP)
$
49.57
$
45.75
35
Results of Operations
The following is a discussion and analysis of our results of operations for the three and six months ended June 30, 2026 and 2025. The results of operations for the three and six months ended June 30, 2026 are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2026.
Net income and Profitability
Net income was $13.1 million for the three months ended June 30, 2026, compared to $10.4 million for the three months ended June 30, 2025. The increase was primarily due to a $3.4 million increase in net interest income and a $1.5 million favorable change in provision for credit losses, partially offset by a $729 thousand decrease in noninterest income, a $1.2 million increase in noninterest expense and a $357 thousand increase in provision for income taxes. Diluted earnings per common share were $2.27 for the three months ended June 30, 2026, compared to $1.77 for the same period in 2025. Return on average assets was 1.99% for the three months ended June 30, 2026, compared to 1.69% for the same period in 2025, and return on average equity was 18.78%, compared to 17.30%. Return on average tangible common equity, a non-GAAP financial measure, was 18.90% for the three months ended June 30, 2026, compared to 17.44% for the same period in 2025. The increases in return on average equity and return on average tangible common equity were primarily due to higher net income, partially offset by growth in average shareholders’ equity and average tangible common equity. See the section entitled “Non-GAAP Financial Measures” for a reconciliation of return on average tangible common equity to the most directly comparable GAAP measure.
Pre-tax pre-provision net revenue, a non-GAAP financial measure, was $17.7 million for the three months ended June 30, 2026, compared to $16.2 million for the three months ended June 30, 2025. The increase was primarily due to higher net interest income, driven by higher interest income from loans and investment securities and lower interest expense on deposits. The increase in net interest income was partially offset by lower noninterest income, primarily due to lower gain on sale of SBA loans, and higher noninterest expense, primarily due to higher compensation and employee benefits. See the section entitled “Non-GAAP Financial Measures” for a reconciliation of pre-tax pre-provision net revenue to the most directly comparable GAAP measure.
Net income was $25.1 million for the six months ended June 30, 2026, compared to $21.0 million for the six months ended June 30, 2025. The increase was primarily due to an $8.3 million increase in net interest income, partially offset by a $223 thousand increase in provision for credit losses, a $407 thousand decrease in noninterest income, a $2.8 million increase in noninterest expense and a $746 thousand increase in provision for income taxes. Diluted earnings per common share were $4.34 for the six months ended June 30, 2026, compared to $3.57 for the same period in 2025. Return on average assets was 1.94% for the six months ended June 30, 2026, compared to 1.71% for the same period in 2025, and return on average equity was 18.37%, compared to 17.91%. Return on average tangible common equity, a non-GAAP financial measure, was 18.49% for the six months ended June 30, 2026, compared to 18.06% for the same period in 2025. See the section entitled “Non-GAAP Financial Measures” for a reconciliation of return on average tangible common equity to the most directly comparable GAAP measure.
Pre-tax pre-provision net revenue, a non-GAAP financial measure, was $36.5 million for the six months ended June 30, 2026, compared to $31.4 million for the six months ended June 30, 2025. The increase was primarily due to higher net interest income, driven by higher interest income from loans and investment securities and lower interest expense on deposits and borrowings. The increase in net interest income was partially offset by lower noninterest income and higher noninterest expense, primarily due to higher compensation and employee benefits and administrative and other expense. See the section entitled “Non-GAAP Financial Measures” for a reconciliation of pre-tax pre-provision net revenue to the most directly comparable GAAP measure.
Net Interest Income
Our primary source of revenue is net interest income, which is the difference between the interest and fees earned on loans and investments (“interest-earning assets”) and the interest paid on deposits and borrowed funds (“interest-bearing liabilities”). Net interest margin is annualized net interest income as a percentage of average interest-earning assets for the period. Net interest income is affected by changes in volume, mix, and rates of interest-earning assets and interest-bearing liabilities, as well as days in a period.
36
Three months ended June 30, 2026 compared to three months ended June 30, 2025
Average Balance Sheet, Interest and Yield/Rate Analysis
The following table presents average balance sheet information, interest income, interest expense and the corresponding average yield earned and rates paid for the periods indicated. The average balances are daily averages and include both performing and nonperforming loans.
Savings and money market accounts, excluding brokered
1,114,162
6,765
2.44
%
1,002,820
7,130
2.85
%
Time deposits, excluding brokered
213,426
1,818
3.42
%
218,900
2,097
3.84
%
Total deposits, excluding brokered
1,620,758
8,902
2.20
%
1,464,649
10,041
2.75
%
Total brokered deposits
49,514
511
4.14
%
120,935
1,335
4.43
%
Total Interest-Bearing Deposits
1,670,272
9,413
2.26
%
1,585,584
11,376
2.88
%
FHLB advances
8,000
83
4.16
%
12,868
139
4.33
%
Other borrowings
17,981
334
7.45
%
17,973
360
8.03
%
Total Interest-Bearing Liabilities
1,696,253
9,830
2.32
%
1,616,425
11,875
2.95
%
Noninterest-bearing deposits
649,135
609,760
Total Funding Sources
2,345,388
9,830
1.68
%
2,226,185
11,875
2.14
%
Noninterest-bearing liabilities
17,583
18,804
Shareholders’ equity
280,149
242,235
Total Liabilities and Shareholders’ Equity
$
2,643,120
$
2,487,224
Net interest income/spread(3)
$
33,545
5.02
%
$
30,113
4.75
%
Net interest margin(4)
5.18
%
4.94
%
(1) Loan balances presented above include both loans held for investment and loans held for sale. Nonaccrual loans are included in total loan balances. No adjustment has been made for these loans in the yield calculations.
(2) Interest income on loans includes amortization of deferred loan fees, net of deferred loan costs, and prepayment penalties.
(3) Net interest spread is the average yield on total interest-earning assets minus the average rate on total interest-bearing liabilities.
(4) Net interest margin is calculated by dividing annualized net interest income by average interest-earning assets.
Net interest income increased $3.4 million, or 11.4%, to $33.5 million for the three months ended June 30, 2026, compared to $30.1 million for the three months ended June 30, 2025. Net interest margin increased 24 basis points to 5.18% for the three months ended June 30, 2026, compared to 4.94% for the same period in 2025. The increase in net interest income was driven by a $1.4 million increase in total interest income and a $2.0 million decrease in total interest expense, primarily due to higher average balances of loans and investment securities, together with lower funding costs, including lower rates paid on deposits and a lower average balance of brokered deposits. The improvement in net interest margin reflected lower funding costs, which more than offset a lower average yield on interest-earning assets.
37
Analysis of Changes in Interest Income and Expenses
Changes in our net interest income are a function of changes in volume and rates of interest-earning assets and interest-bearing liabilities. Changes in net interest income that are not a function of changes in volume and rates of interest-earning assets and interest-bearing liabilities are allocated proportionately to the change due to volume and the change due to rate. The following table presents the impact the volume and rate changes have had on our net interest income for the period indicated. For each category of interest-earning assets and interest-bearing liabilities, we have provided information on changes to our net interest income with respect to:
•
Changes in volume (changes in volume multiplied by the prior period rate);
•
Changes in interest rates (changes in interest rates multiplied by the prior period volume and includes the recognition of discounts/premiums and deferred fees/costs); and
•
The total change or the combined impact of volume and rate changes allocated proportionately to changes in volume and changes in interest rates.
Savings and money market accounts, excluding brokered
1,159
(1,524
)
(365
)
Time deposits, excluding brokered
(51
)
(228
)
(279
)
Total deposits, excluding brokered
1,327
(2,466
)
(1,139
)
Total brokered deposits
(742
)
(82
)
(824
)
Total Interest-Bearing Deposits
585
(2,548
)
(1,963
)
FHLB advances
(51
)
(5
)
(56
)
Other borrowings
—
(26
)
(26
)
Total Interest-Bearing Liabilities
534
(2,579
)
(2,045
)
Net interest income/margin
$
1,668
$
1,764
$
3,432
Total interest income increased $1.4 million, or 3.3%, to $43.4 million for the three months ended June 30, 2026, compared to $42.0 million for the same period in 2025. The increase was primarily due to higher interest income from loans and investment securities. Interest income on loans increased $1.0 million, reflecting a $79.5 million increase in average loan balances, partially offset by an 8 basis point decrease in loan yield. Interest income on investment securities increased $0.6 million, reflecting a $58.3 million increase in average investment securities balances. These increases were partially offset by a $0.2 million decrease in interest income on deposits in other financial institutions, primarily reflecting a 77 basis point decrease in yield.
Total interest expense decreased $2.0 million, or 17.2%, to $9.8 million for the three months ended June 30, 2026, compared to $11.9 million for the same period in 2025. The decrease was primarily driven by lower deposit costs, including a $0.8 million decrease in interest expense on brokered deposits as average brokered deposits decreased $71.4 million. The total cost of deposits decreased 45 basis points to 1.63% for the three months ended June 30, 2026, compared to 2.08% for the same period in 2025. The decrease in total cost of deposits was primarily due to lower rates paid on interest-bearing deposit products and a reduction in average brokered deposits.
38
Six months ended June 30, 2026 compared to six months ended June 30, 2025
Average Balance Sheet, Interest and Yield/Rate Analysis
The following table presents average balance sheet information, interest income, interest expense and the corresponding average yield earned and rates paid for the periods indicated. The average balances are daily averages and include both performing and nonperforming loans.
Savings and money market accounts, excluding brokered
1,086,121
13,043
2.42
%
979,170
13,960
2.88
%
Time deposits, excluding brokered
215,034
3,670
3.44
%
207,699
4,053
3.94
%
Total deposits, excluding brokered
1,596,411
17,608
2.22
%
1,430,480
19,797
2.79
%
Total brokered deposits
55,698
1,165
4.22
%
151,825
3,478
4.62
%
Total Interest-Bearing Deposits
1,652,109
18,773
2.29
%
1,582,305
23,275
2.97
%
FHLB advances
9,160
193
4.25
%
18,464
411
4.49
%
Other borrowings
17,979
668
7.49
%
17,977
725
8.13
%
Total Interest-Bearing Liabilities
1,679,248
19,634
2.36
%
1,618,746
24,411
3.04
%
Noninterest-bearing deposits
644,631
602,126
Total Funding Sources
2,323,879
19,634
1.70
%
2,220,872
24,411
2.22
%
Noninterest-bearing liabilities
18,522
20,165
Shareholders’ equity
276,032
236,517
Total Liabilities and Shareholders’ Equity
$
2,618,433
$
2,477,554
Net interest income/spread(3)
$
66,154
5.04
%
$
57,845
4.57
%
Net interest margin(4)
5.19
%
4.78
%
(1) Loan balances presented above include both loans held for investment and loans held for sale. Nonaccrual loans are included in total loan balances. No adjustment has been made for these loans in the yield calculations.
(2) Interest income on loans includes amortization of deferred loan fees, net of deferred loan costs, and prepayment penalties.
(3) Net interest spread is the average yield on total interest-earning assets minus the average rate on total interest-bearing liabilities.
(4) Net interest margin is calculated by dividing annualized net interest income by average interest-earning assets.
Net interest income increased $8.3 million, or 14.4%, to $66.2 million for the six months ended June 30, 2026, compared to $57.8 million for the six months ended June 30, 2025. Net interest margin increased 41 basis points to 5.19% for the six months ended June 30, 2026, compared to 4.78% for the same period in 2025. The increase in net interest income was driven by a $3.5 million increase in total interest income and a $4.8 million decrease in total interest expense. Total interest income increased primarily due to higher average
39
balances of loans and investment securities and higher yields on investment securities. Total interest expense decreased primarily due to lower rates paid on interest-bearing deposits and a lower average balance of brokered deposits. The improvement in net interest margin reflected lower funding costs, which more than offset a modest decrease in the average yield on interest-earning assets.
Analysis of Changes in Interest Income and Expenses
Changes in our net interest income are a function of changes in volume and rates of interest-earning assets and interest-bearing liabilities. Changes in net interest income that are not a function of changes in volume and rates of interest-earning assets and interest-bearing liabilities are allocated proportionately to the change due to volume and the change due to rate. The following table presents the impact the volume and rate changes have had on our net interest income for the period indicated. For each category of interest-earning assets and interest-bearing liabilities, we have provided information on changes to our net interest income with respect to:
•
Changes in volume (changes in volume multiplied by the prior period rate);
•
Changes in interest rates (changes in interest rates multiplied by the prior period volume and includes the recognition of discounts/premiums and deferred fees/costs); and
•
The total change or the combined impact of volume and rate changes allocated proportionately to changes in volume and changes in interest rates.
Savings and money market accounts, excluding brokered
2,067
(2,984
)
(917
)
Time deposits, excluding brokered
150
(533
)
(383
)
Total deposits, excluding brokered
2,721
(4,910
)
(2,189
)
Total brokered deposits
(2,034
)
(279
)
(2,313
)
Total Interest-Bearing Deposits
687
(5,189
)
(4,502
)
FHLB advances
(197
)
(21
)
(218
)
Other borrowings
—
(57
)
(57
)
Total Interest-Bearing Liabilities
490
(5,267
)
(4,777
)
Net interest income/margin
$
3,119
$
5,190
$
8,309
Total interest income increased $3.5 million, or 4.3%, to $85.8 million for the six months ended June 30, 2026, compared to $82.3 million for the same period in 2025. The increase was primarily due to higher interest income from loans and investment securities. Interest income on loans increased $2.4 million, reflecting a $63.2 million increase in average loan balances and a 2 basis point increase in loan yield. Interest income on investment securities increased $1.7 million, reflecting a $65.3 million increase in average investment securities balances and a 41 basis point increase in investment securities yield. These increases were partially offset by a $0.6 million decrease in interest income on deposits in other financial institutions, primarily reflecting a 63 basis point decrease in yield.
Total interest expense decreased $4.8 million, or 19.6%, to $19.6 million for the six months ended June 30, 2026, compared to $24.4 million for the same period in 2025. The decrease was primarily driven by lower deposit costs, including a $2.3 million decrease in interest expense on brokered deposits as average brokered deposits decreased $96.1 million. The total cost of deposits decreased 50 basis points to 1.65% for the six months ended June 30, 2026, compared to 2.15% for the same period in 2025. The decrease in total cost of deposits was primarily due to lower rates paid on interest-bearing deposit products and a reduction in average brokered deposits.
40
Provision for Credit Losses
The allowance for credit losses represents management’s estimate of expected credit losses in the loan portfolio and unfunded lending commitments as of the balance sheet date. Factors impacting the allowance for credit losses include the risk characteristics of the loan portfolio, the level of nonperforming loans, net charge-offs, current and historical credit experience, local economic and credit conditions, collateral values, reasonable and supportable economic forecasts, and expected funding of lending commitments. The provision for credit losses is charged or reversed against earnings to maintain the allowance for credit losses at a level management believes is appropriate.
Three months ended June 30, 2026 compared to three months ended June 30, 2025
For the three months ended June 30, 2026, we recorded a reversal of provision for credit losses of $204 thousand, compared to a provision for credit losses of $1.3 million for the three months ended June 30, 2025. The reversal was primarily driven by loan payoffs, improvements in delinquency status and net recoveries of $300 thousand. These factors were partially offset by higher reserves resulting from annual updates to certain CECL model calibration assumptions and qualitative factors, particularly for multifamily and commercial and industrial loans, as well as higher reserves for individually evaluated loans.
Six months ended June 30, 2026 compared to six months ended June 30, 2025
For the six months ended June 30, 2026, we recorded a provision for credit losses of $1.8 million, compared to $1.6 million for the six months ended June 30, 2025. The increase primarily reflected higher levels of past due loans, loan growth, net charge-offs, increased weighting toward the downside economic scenario and annual updates to certain CECL model calibration assumptions and qualitative factors, particularly for multifamily and commercial and industrial loans. These factors were partially offset by loan payoffs, improvements in delinquency status and lower reserves for certain individually evaluated loans.
Noninterest Income
Noninterest income consists primarily of service charges on deposit accounts, net gains on sales of the guaranteed portions of SBA 7(a) loans, servicing income related to loans sold, and other fee income. The level and composition of noninterest income may fluctuate from period to period based on the volume and pricing of SBA loan sales and other fee-generating activities.
Three months ended June 30, 2026 compared to three months ended June 30, 2025
Noninterest income decreased $729 thousand, or 42.1%, to $1.0 million for the three months ended June 30, 2026, compared to $1.7 million for the three months ended June 30, 2025. The decrease was primarily due to lower gain on sale of SBA loans.
The following table presents the major components of our noninterest income for the periods indicated:
Three Months Ended
(Dollars in thousands)
June 30, 2026
June 30, 2025
$ change
% change
Service charges on deposit accounts
$
533
$
591
$
(58
)
(9.8
)%
Gain on sale of SBA loans
4
523
(519
)
(99.2
)%
Servicing income, net
116
168
(52
)
(31.0
)%
Other fees and miscellaneous income
348
448
(100
)
(22.3
)%
Total noninterest income
$
1,001
$
1,730
$
(729
)
(42.1
)%
Service charges on deposit accounts. Service charges on deposit accounts decreased $58 thousand, or 9.8%, to $533 thousand for the three months ended June 30, 2026, compared to $591 thousand for the same period in 2025.
Gain on sale of SBA loans. Gain on sale of SBA loans decreased $519 thousand, or 99.2%, to $4 thousand for the three months ended June 30, 2026, compared to $523 thousand for the same period in 2025. The aggregate principal balance of SBA 7(a) guaranteed portions sold was $3.4 million for the three months ended June 30, 2026, compared to $9.5 million for the same period in 2025. The weighted average premium received was 10.5% for the three months ended June 30, 2026, compared to 10.0% for the same period in 2025. Gain on sale of SBA loans for the three months ended June 30, 2026 was also reduced by a $162 thousand premium reimbursement related to a prior loan sale.
Servicing income, net. Servicing income, net decreased $52 thousand, or 31.0%, to $116 thousand for the three months ended June 30, 2026, compared to $168 thousand for the same period in 2025, primarily due to higher servicing asset amortization, partially offset by higher servicing fee income.
41
Other fees and miscellaneous income. Other fees and miscellaneous income decreased $100 thousand, or 22.3%, to $348 thousand for the three months ended June 30, 2026, compared to $448 thousand for the same period in 2025, primarily due to lower loan referral fees and other non-customer income.
Six months ended June 30, 2026 compared to six months ended June 30, 2025
Noninterest income decreased $407 thousand, or 12.2%, to $2.9 million for the six months ended June 30, 2026, compared to $3.3 million for the six months ended June 30, 2025. The decrease was primarily due to lower other fees and miscellaneous income and lower gain on sale of SBA loans.
The following table presents the major components of our noninterest income for the periods indicated:
Six Months Ended
(Dollars in thousands)
June 30, 2026
June 30, 2025
$ change
% change
Service charges on deposit accounts
$
1,077
$
1,148
$
(71
)
(6.2
)%
Gain on sale of SBA loans
911
992
(81
)
(8.2
)%
Servicing income, net
270
305
(35
)
(11.5
)%
Other fees and miscellaneous income
678
898
(220
)
(24.5
)%
Total noninterest income
$
2,936
$
3,343
$
(407
)
(12.2
)%
Service charges on deposit accounts. Service charges on deposit accounts decreased $71 thousand, or 6.2%, to $1.1 million for the six months ended June 30, 2026, compared to $1.1 million for the same period in 2025.
Gain on sale of SBA loans. Gain on sale of SBA loans decreased $81 thousand, or 8.2%, to $911 thousand for the six months ended June 30, 2026, compared to $992 thousand for the same period in 2025. The aggregate principal balance of SBA 7(a) guaranteed portions sold was approximately $19.5 million for the six months ended June 30, 2026, compared to approximately $17.8 million for the same period in 2025. Gain on sale of SBA loans for the six months ended June 30, 2026 was reduced by the $162 thousand premium reimbursement recognized during the second quarter of 2026.
Servicing income, net. Servicing income, net decreased $35 thousand, or 11.5%, to $270 thousand for the six months ended June 30, 2026, compared to $305 thousand for the same period in 2025, primarily due to higher servicing asset amortization and lower servicing fees on non-real estate secured loans, partially offset by higher servicing fees on commercial and industrial loans.
Other fees and miscellaneous income. Other fees and miscellaneous income decreased $220 thousand, or 24.5%, to $678 thousand for the six months ended June 30, 2026, compared to $898 thousand for the same period in 2025, primarily due to lower loan referral fees and other non-customer income.
Noninterest Expense
Noninterest expense consists primarily of compensation and employee benefits, occupancy and equipment expense, data processing expense, professional services, and other operating expenses. The level and composition of noninterest expense are influenced by the Company’s staffing levels, investments in technology and infrastructure, professional services needs, and other costs associated with operating and growing the business.
Noninterest expense was $16.9 million for the three months ended June 30, 2026, compared to $15.7 million for the three months ended June 30, 2025. Noninterest expense as a percentage of average assets was 2.56% for the three months ended June 30, 2026, compared to 2.53% for the same period in 2025. The efficiency ratio, a non-GAAP financial measure, was 48.81% for the three months ended June 30, 2026, compared to 49.27% for the same period in 2025. The improvement in the efficiency ratio was primarily due to growth in net interest income that outpaced the increase in noninterest expense and the decrease in noninterest income. The Company continues to invest in people, processes and technology to scale the business and enhance its capabilities. See the section entitled “Non-GAAP Financial Measures” for a reconciliation of this measure to the most directly comparable GAAP measure.
Noninterest expense was $32.5 million for the six months ended June 30, 2026, compared to $29.7 million for the six months ended June 30, 2025. Noninterest expense as a percentage of average assets was 2.51% for the six months ended June 30, 2026, compared to 2.42% for the same period in 2025. The efficiency ratio, a non-GAAP financial measure, was 47.10% for the six months ended June 30, 2026, compared to 48.61% for the same period in 2025. The improvement in the efficiency ratio was primarily due to growth in net interest income that outpaced the increase in noninterest expense and the decrease in noninterest income. See the section entitled “Non-GAAP Financial Measures” for a reconciliation of this measure to the most directly comparable GAAP measure.
42
Three months ended June 30, 2026 compared to three months ended June 30, 2025
Noninterest expense increased $1.2 million, or 7.5%, to $16.9 million for the three months ended June 30, 2026, compared to $15.7 million for the three months ended June 30, 2025. The increase was primarily due to higher compensation and employee benefits, director compensation and expenses and professional services, reflecting continued investment in personnel and capabilities to support the Company’s growth and scale the business, as well as costs associated with becoming an SEC reporting company and listing the Company’s common stock on NASDAQ.
The following table presents the primary components of our noninterest expense for the periods indicated:
Three Months Ended
(Dollars in thousands)
June 30, 2026
June 30, 2025
$ change
% change
Compensation and employee benefits
$
11,142
$
10,319
$
823
8.0
%
Occupancy and equipment
876
840
36
4.3
%
Data processing
1,491
1,396
95
6.8
%
Professional services
1,061
939
122
13.0
%
Director compensation and expenses
352
221
131
59.3
%
Regulatory assessments
348
338
10
3.0
%
Administrative and other expense
1,593
1,636
(43
)
(2.6
%)
Total noninterest expense
$
16,863
$
15,689
$
1,174
7.5
%
Compensation and employee benefits. Compensation and employee benefits increased $823 thousand, or 8.0%, to $11.1 million for the three months ended June 30, 2026, compared to $10.3 million for the same period in 2025. The increase was primarily due to higher salaries and employee-related costs, reflecting continued investment in personnel and capabilities to support the Company’s growth and scale the business.
Occupancy and equipment. Occupancy and equipment expense increased $36 thousand, or 4.3%, to $876 thousand for the three months ended June 30, 2026, compared to $840 thousand for the same period in 2025.
Data processing. Data processing expense increased $95 thousand, or 6.8%, to $1.5 million for the three months ended June 30, 2026, compared to $1.4 million for the same period in 2025.
Professional services. Professional services expense increased $122 thousand, or 13.0%, to $1.1 million for the three months ended June 30, 2026, compared to $939 thousand for the same period in 2025. The increase was primarily due to higher legal fees associated with the Company’s initiative to become an SEC reporting company and list its common stock on NASDAQ, partially offset by lower consulting and other professional fees.
Director compensation and expenses. Director compensation and expenses increased $131 thousand, or 59.3%, to $352 thousand for the three months ended June 30, 2026, compared to $221 thousand for the same period in 2025. The increase was primarily due to a change in the compensation structure for the Chair of both the Board and Bank Board. In 2025, compensation for services provided by the Chair as a non-employee director was paid separately under the Director Services Agreement and recognized in professional services. Following the expiration of that agreement, compensation for those services is included in director fees in 2026. The increase also reflected higher expenses related to director travel and attendance at Board and Bank Board meetings.
Regulatory assessments. Regulatory assessments increased $10 thousand, or 3.0%, to $348 thousand for the three months ended June 30, 2026, compared to $338 thousand for the same period in 2025. Regulatory assessments principally consist of FDIC deposit insurance and state regulatory assessments. The increase primarily reflected growth in the Bank’s regulatory assessment bases.
Administrative and other expense. Administrative and other expense decreased $43 thousand, or 2.6%, to $1.6 million for the three months ended June 30, 2026, compared to $1.6 million for the same period in 2025. The decrease was primarily due to lower loan collection costs, partially offset by higher subscription expense and other operating costs.
Six months ended June 30, 2026 compared to six months ended June 30, 2025
Noninterest expense increased $2.8 million, or 9.4%, to $32.5 million for the six months ended June 30, 2026, compared to $29.7 million for the six months ended June 30, 2025. The increase was primarily due to higher compensation and employee benefits, administrative and other expense and professional services, reflecting continued investment in personnel and capabilities to support the Company’s growth and scale the business, as well as costs associated with becoming an SEC reporting company and listing the Company’s common stock on NASDAQ.
43
The following table presents the primary components of our noninterest expense for the periods indicated:
Six Months Ended
(Dollars in thousands)
June 30, 2026
June 30, 2025
$ change
% change
Compensation and employee benefits
$
21,953
$
20,067
$
1,886
9.4
%
Occupancy and equipment
1,734
1,684
50
3.0
%
Data processing
2,860
2,722
138
5.1
%
Professional services
1,671
1,447
224
15.5
%
Director compensation and expenses
630
511
119
23.3
%
Regulatory assessments
742
706
36
5.1
%
Administrative and other expense
2,953
2,607
346
13.3
%
Total noninterest expense
$
32,543
$
29,744
$
2,799
9.4
%
Compensation and employee benefits. Compensation and employee benefits increased $1.9 million, or 9.4%, to $22.0 million for the six months ended June 30, 2026, compared to $20.1 million for the same period in 2025. The increase was primarily due to higher salaries and employee-related costs, reflecting continued investment in personnel and capabilities to support the Company’s growth and scale the business.
Occupancy and equipment. Occupancy and equipment expense increased $50 thousand, or 3.0%, to $1.7 million for the six months ended June 30, 2026, compared to $1.7 million for the same period in 2025.
Data processing. Data processing expense increased $138 thousand, or 5.1%, to $2.9 million for the six months ended June 30, 2026, compared to $2.7 million for the same period in 2025.
Professional services. Professional services expense increased $224 thousand, or 15.5%, to $1.7 million for the six months ended June 30, 2026, compared to $1.4 million for the same period in 2025. The increase was primarily due to higher legal fees associated with the Company’s initiative to become an SEC reporting company and list its common stock on NASDAQ, partially offset by lower consulting and other professional fees.
Director compensation and expenses. Director compensation and expenses increased $119 thousand, or 23.3%, to $630 thousand for the six months ended June 30, 2026, compared to $511 thousand for the same period in 2025. The increase was primarily due to a change in the compensation structure for the Chair of both the Board and Bank Board. In 2025, compensation for services provided by the Chair as a non-employee director was paid separately under the Director Services Agreement and recognized in professional services. Following the expiration of that agreement, compensation for those services is included in director fees in 2026. The increase also reflected higher expenses related to director travel and attendance at Board and Bank Board meetings.
Regulatory assessments. Regulatory assessments increased $36 thousand, or 5.1%, to $742 thousand for the six months ended June 30, 2026, compared to $706 thousand for the same period in 2025. Regulatory assessments principally consist of FDIC deposit insurance and state regulatory assessments. The increase primarily reflected growth in the Bank’s regulatory assessment bases.
Administrative and other expense. Administrative and other expense increased $346 thousand, or 13.3%, to $3.0 million for the six months ended June 30, 2026, compared to $2.6 million for the same period in 2025. The increase was primarily due to higher subscription, OREO-related, and travel and lodging expenses, partially offset by lower loan collection costs.
Provision for Income Tax Expense
The Company is subject to federal income taxes and state and local income taxes, primarily California franchise taxes. The Company’s effective tax rate generally differs from the federal statutory income tax rate primarily due to California state income taxes, tax credits, and other permanent and discrete tax items.
Three months ended June 30, 2026 compared to three months ended June 30, 2025
Provision for income tax expense was $4.8 million for the three months ended June 30, 2026, compared to $4.4 million for the three months ended June 30, 2025. The effective tax rate was 26.7% for the three months ended June 30, 2026, compared to 29.7% for the same period in 2025. The decrease in the effective tax rate was primarily due to discrete tax benefits associated with equity compensation.
44
Six months ended June 30, 2026 compared to six months ended June 30, 2025
Provision for income tax expense was $9.6 million for the six months ended June 30, 2026, compared to $8.8 million for the six months ended June 30, 2025. The effective tax rate was 27.6% for the six months ended June 30, 2026, compared to 29.6% for the same period in 2025. The decrease in the effective tax rate was primarily due to discrete tax benefits associated with equity compensation.
Financial Condition
The following table summarizes selected components of our balance sheet as of the periods indicated:
(Dollars in thousands)
June 30, 2026
December 31, 2025
Total assets
$
2,708,302
$
2,535,057
Total loans, including loans held for sale
$
2,132,724
$
2,128,477
Total investment securities
$
237,074
$
217,837
Total deposits
$
2,381,237
$
2,223,881
Total borrowings
$
25,979
$
28,976
Total shareholders’ equity
$
285,516
$
263,964
Total Assets
Total assets were $2.71 billion at June 30, 2026, compared to $2.54 billion at December 31, 2025, an increase of $173.2 million, or 6.8%. The increase was primarily due to a $145.3 million increase in cash and cash equivalents, a $19.2 million increase in investment securities available for sale, a $6.6 million increase in loans held for investment and a $5.1 million increase in other real estate owned. The increase in cash and cash equivalents was primarily driven by deposit growth during the period. Investment securities available for sale increased $19.2 million, or 8.8%, to $237.1 million at June 30, 2026, compared to $217.8 million at December 31, 2025, primarily reflecting securities purchases partially offset by principal paydowns.
Loan Portfolio
Our loan portfolio is our largest category of earning assets and typically provides higher yields than other types of earning assets. These higher yields are accompanied by inherent credit risk, which we seek to manage through disciplined underwriting, ongoing portfolio monitoring and active credit administration.
Total loans, consisting of loans held for investment and loans held for sale, were $2.13 billion at June 30, 2026 and December 31, 2025. Loans held for investment were $2.13 billion at June 30, 2026, an increase of $6.6 million, or 0.3%, from December 31, 2025. The increase was primarily due to growth in CRE loans, particularly multifamily loans, partially offset by a decrease in commercial business loans, primarily commercial and industrial (“C&I”) loans.
During the second quarter of 2026, loans held for investment decreased $8.2 million, or 0.4%, from March 31, 2026, as elevated maturities and prepayments more than offset strong loan origination volume. The decrease during the quarter primarily reflected lower SBA 504, owner-occupied CRE and C&I balances, partially offset by increases in investor-owned CRE, single-family-secured and multifamily loans. We continue to emphasize disciplined pricing, credit quality and loan retention while balancing loan growth against appropriate risk-adjusted returns.
45
The following table presents the balance and percentage of each major loan category within our portfolio as of the dates indicated:
June 30, 2026
December 31, 2025
(Dollars in thousands)
Amount
% of Loans
Amount
% of Loans
CRE:
Investor owned
$
570,865
26.8
%
$
577,730
27.1
%
Owner occupied
223,442
10.5
%
236,623
11.1
%
Multifamily
184,005
8.6
%
155,941
7.3
%
Secured by single family
205,365
9.6
%
198,743
9.3
%
Land and construction
48,782
2.3
%
47,029
2.2
%
SBA secured by real estate
409,467
19.2
%
403,609
19.0
%
Total CRE
1,641,926
77.0
%
1,619,675
76.1
%
Commercial business:
C&I
453,854
21.3
%
471,526
22.2
%
SBA non-real estate secured
34,935
1.6
%
32,853
1.5
%
Total commercial business
488,789
22.9
%
504,379
23.7
%
Consumer
2,009
0.1
%
2,093
0.1
%
Total loans held for investment
2,132,724
100.0
%
2,126,147
99.9
%
Loans held for sale
—
—
2,330
0.1
%
Total loans
$
2,132,724
100.0
%
$
2,128,477
100.0
%
Our loan portfolio is concentrated in CRE and commercial business lending, including SBA 7(a) and SBA 504 loans. CRE loans represented 77.0% and 76.1% of total loans at June 30, 2026 and December 31, 2025, respectively. Commercial business loans represented 22.9% and 23.7% of total loans at those same dates. Consumer loans represented less than 1.0% of loans held for investment for each period presented. We generally sell the guaranteed portion of SBA 7(a) loans in the secondary market when market conditions are favorable.
The following table presents the CRE loan balance and associated percentage of CRE concentrations by collateral type, as of the dates indicated:
June 30, 2026
(Dollars in thousands)
Loan Balance
% of CRE
Office
$
170,139
10.4
%
Retail
166,209
10.1
%
Hotel and motel
151,415
9.2
%
Multifamily
178,288
10.9
%
Single family
209,561
12.8
%
Industrial
278,899
17.0
%
Mixed use
146,597
8.9
%
Land
41,802
2.5
%
Medical
10,428
0.6
%
Commercial and other
288,588
17.6
%
Total
$
1,641,926
100.0
%
46
December 31, 2025
(Dollars in thousands)
Loan Balance
% of CRE
Office
$
173,196
10.7
%
Retail
144,620
8.9
%
Hotel and motel
153,792
9.5
%
Multifamily
167,969
10.4
%
Single family
204,713
12.6
%
Industrial
238,232
14.7
%
Mixed use
174,678
10.8
%
Land
39,190
2.4
%
Medical
11,446
0.7
%
Commercial and other
311,839
19.3
%
Total
$
1,619,675
100.0
%
The following table presents the total number of loans, total loan balances and average loan size of investor-owned CRE concentrations by collateral type along with the percentage of the total CRE portfolio as of the dates indicated.
June 30, 2026
(Dollars in thousands)
Number of loans
Loan Balance
Average Loan Size
% of CRE Loans
Investor-owned CRE:
Office
17
$
67,629
$
3,978
4.1
%
Retail
34
91,338
2,686
5.6
%
Hotel and motel
14
116,486
8,320
7.1
%
Industrial
32
114,938
3,592
7.0
%
Mixed use
26
84,693
3,257
5.2
%
Land
1
2,603
2,603
0.2
%
Medical
4
8,216
2,054
0.5
%
Commercial and other
46
84,962
1,847
5.2
%
Total investor-owned CRE
174
$
570,865
3,281
34.8
%
December 31, 2025
(Dollars in thousands)
Number of loans
Loan Balance
Average Loan Size
% of CRE Loans
Investor-owned CRE:
Office
17
$
70,619
$
4,154
4.4
%
Retail
29
79,181
2,730
4.9
%
Hotel and motel
16
121,922
7,620
7.5
%
Industrial
28
64,126
2,290
4.0
%
Mixed use
32
129,054
4,033
8.0
%
Land
1
2,642
2,642
0.2
%
Medical
4
8,544
2,136
0.5
%
Commercial and other
53
101,642
1,918
6.3
%
Total investor-owned CRE
180
$
577,730
3,210
35.7
%
47
The following table presents the balance, associated percentage of real estate loan concentrations and total count of CRE loans collateralized by properties outside of California as of the dates indicated:
June 30, 2026
(Dollars in thousands)
Loan Balance
% of Loans Collateralized by non-CA Property
% of CRE
# of Loans
Office
$
12,238
8.9
%
0.7
%
8
Retail
12,478
9.1
%
0.8
%
4
Hotel and motel
8,849
6.5
%
0.5
%
3
Multifamily
1,058
0.8
%
0.1
%
1
Single family
17,946
13.1
%
1.1
%
16
Industrial
28,054
20.5
%
1.7
%
7
Mixed use
6,482
4.7
%
0.4
%
1
Commercial and other
49,961
36.4
%
3.0
%
33
Total
$
137,066
100.0
%
8.3
%
73
December 31, 2025
(Dollars in thousands)
Loan Balance
% of Loans Collateralized by non-CA Property
% of CRE
# of Loans
Office
$
9,505
8.3
%
0.6
%
8
Retail
2,782
2.4
%
0.2
%
4
Hotel and motel
8,891
7.7
%
0.5
%
3
Multifamily
1,067
0.9
%
0.1
%
1
Single family
21,227
18.5
%
1.3
%
14
Industrial
7,292
6.3
%
0.5
%
8
Mixed use
6,480
5.6
%
0.4
%
1
Land
1,932
1.7
%
0.1
%
1
Commercial and other
55,748
48.6
%
3.4
%
37
Total
$
114,924
100.0
%
7.1
%
77
Our lending activities are concentrated primarily in California, particularly coastal Southern California. At June 30, 2026 and December 31, 2025, 8.3% and 7.1%, respectively, of our CRE loans were collateralized by properties located outside California. We monitor geographic concentrations as part of our credit risk management process and maintain internal limits and reporting designed to identify changes in the geographic distribution of the portfolio.
48
The following table sets forth the contractual maturities of our loans held for investment as of the dates indicated. Contractual maturities are based on scheduled repayment dates and do not reflect expected prepayments, renewals or extensions.
June 30, 2026
(Dollars in thousands)
Due in 1 year or less
Due after 1 year through 5 years
Due after 5 years through 15 years
Due after 15 years
Total
CRE:
Investor owned
$
81,805
$
318,235
$
170,825
$
—
$
570,865
Owner occupied
19,073
80,493
110,099
13,777
223,442
Multifamily
48,538
94,317
39,522
1,628
184,005
Secured by single family
103,635
63,779
26,543
11,408
205,365
Land and construction
28,800
17,397
2,585
—
48,782
SBA secured by real estate
9,632
19
4,939
394,877
409,467
Commercial business:
C&I
307,651
119,966
26,237
—
453,854
SBA non-real estate secured
1,323
1,682
31,930
—
34,935
Consumer
911
497
593
8
2,009
Total Loans
$
601,368
$
696,385
$
413,273
$
421,698
$
2,132,724
December 31, 2025
(Dollars in thousands)
Due in 1 year or less
Due after 1 year through 5 years
Due after 5 years through 15 years
Due after 15 years
Total
CRE:
Investor owned
$
98,999
$
262,288
$
216,443
$
—
$
577,730
Owner occupied
32,860
76,236
113,448
14,079
236,623
Multifamily
39,165
74,121
42,050
605
155,941
Secured by single family
76,666
68,514
41,235
12,328
198,743
Land and construction
45,371
1,658
—
—
47,029
SBA secured by real estate
12,660
313
5,012
385,624
403,609
Commercial business:
C&I
314,173
131,882
25,471
—
471,526
SBA non-real estate secured
121
1,734
30,317
681
32,853
Consumer
903
549
634
7
2,093
Total Loans
$
620,918
$
617,295
$
474,610
$
413,324
$
2,126,147
The following table presents the fixed-rate and floating- or adjustable-rate composition of our loans held for investment as of the dates indicated:
June 30, 2026
(Dollars in thousands)
Fixed Interest Rates
Floating or Adjustable Rates
Total
CRE:
Investor owned
$
317,025
$
253,840
$
570,865
Owner occupied
73,087
150,355
223,442
Multifamily
110,272
73,733
184,005
Secured by single family
75,413
129,952
205,365
Land and construction
20,566
28,216
48,782
SBA secured by real estate
9,632
399,835
409,467
Commercial business:
C&I
89,297
364,557
453,854
SBA non-real estate secured
1,305
33,630
34,935
Consumer
594
1,415
2,009
Total Loans
$
697,191
$
1,435,533
$
2,132,724
49
December 31, 2025
(Dollars in thousands)
Fixed Interest Rates
Floating or Adjustable Rates
Total
CRE:
Investor owned
$
296,573
$
281,157
$
577,730
Owner occupied
73,191
163,432
236,623
Multifamily
90,365
65,576
155,941
Secured by single family
72,894
125,849
198,743
Land and construction
16,444
30,585
47,029
SBA secured by real estate
12,660
390,949
403,609
Commercial business:
C&I
125,737
345,789
471,526
SBA non-real estate secured
121
32,732
32,853
Consumer
634
1,459
2,093
Total Loans
$
688,619
$
1,437,528
$
2,126,147
A substantial portion of our loan portfolio consists of floating- or adjustable-rate loans. Floating- and adjustable-rate loans may reprice as market interest rates change, which can affect interest income, borrower debt service requirements, and credit risk. We monitor the interest rate characteristics of the loan portfolio as part of our overall asset-liability management and credit risk management processes.
Asset Quality
Our primary objective is to maintain strong asset quality through disciplined underwriting, active credit administration and ongoing portfolio monitoring. We assign risk ratings to loans at origination based on the underlying characteristics of the transaction, including borrower strength, repayment capacity, collateral cash flow, and collateral coverage. As part of our internal periodic loan review, risk ratings are reviewed and updated as new information becomes available, including updated borrower financial information, collateral performance, payment patterns, delinquency status, and changes in collateral condition. Particular emphasis is placed on the commercial portfolio, where risk assessments are reevaluated through ongoing review of commercial property operating statements, borrower financial statements, payment performance, delinquencies, and tax and insurance compliance. Assigned risk ratings are an integral part of management’s assessment of the adequacy of the allowance for credit losses. Like other financial institutions, we are subject to the risk that our loan portfolio may experience increased credit pressure due to changes in borrower performance, collateral values, market conditions, or general economic conditions.
Nonperforming Assets
Nonperforming assets consist of nonperforming loans and other real estate owned (“OREO”). Loans are generally placed on nonaccrual status when reasonable doubt exists as to the full and timely collection of principal or interest, or when a loan becomes contractually past due 90 days or more, unless the loan is both well secured and in the process of collection. When a loan is placed on nonaccrual status, previously accrued but uncollected interest is reversed against current period interest income. Income on nonaccrual loans is subsequently recognized only to the extent cash is received and collection of the remaining principal is probable. A loan is returned to accrual status when it is brought current as to principal and interest and, in management’s judgment, the borrower has demonstrated a sustained ability to perform and the loan is estimated to be fully collectible.
50
The following table provides details of our nonperforming assets and related asset quality ratios as of the dates indicated:
(Dollars in thousands)
June 30, 2026
December 31, 2025
Nonaccrual loans
CRE:
Investor owned
$
—
$
1,577
Owner occupied
2,107
2,107
Multifamily
—
—
Secured by single family
17,198
12,758
Land and construction
1,699
1,699
SBA secured by real estate
1,875
4,572
Commercial business:
C&I
1,270
16,048
SBA non-real estate secured
2,745
3,466
Consumer
—
—
Total nonaccrual loans
26,894
42,227
Loans past due 90 days or more and still accruing
CRE:
Investor owned
—
—
Owner occupied
—
—
Multifamily
—
—
Secured by single family
—
—
Land and construction
—
—
SBA secured by real estate
—
—
Commercial business:
C&I
—
—
SBA non-real estate secured
—
—
Consumer
—
—
Total loans past due 90 days or more and still accruing
—
—
Total nonperforming loans
26,894
42,227
Other real estate owned
13,637
8,568
Total nonperforming assets
$
40,531
$
50,795
Allowance for loan losses to nonaccrual loans
113.27
%
69.44
%
Nonperforming loans to total loans held-for-investment
1.26
%
1.99
%
Nonperforming assets to total assets
1.50
%
2.00
%
Total assets
2,708,302
2,535,057
Total loans held for investment
2,132,724
2,126,147
Allowance for loan losses
30,462
29,323
Total nonperforming assets were $40.5 million, or 1.50% of total assets, at June 30, 2026, compared to $50.8 million, or 2.00% of total assets, at December 31, 2025. The $10.3 million, or 20.2%, decrease was driven by a $15.3 million decrease in nonperforming loans, partially offset by a $5.1 million increase in OREO. The increase in OREO primarily reflected the transfer of a $4.6 million nonperforming loan to OREO during the second quarter of 2026. Nonperforming loans decreased to $26.9 million, or 1.26% of loans held for investment, at June 30, 2026, compared to $42.2 million, or 1.99% of loans held for investment, at December 31, 2025.
As of June 30, 2026, specific reserves of $1.8 million were held against nonaccrual loan balances of $4.0 million. The remaining $22.9 million of nonaccrual loans were collateral-dependent and did not require specific reserves because the underlying collateral values supported the respective loan balances.
Potential Problem Loans
We utilize a risk grading system to evaluate the credit quality of our loan portfolio and to assist in assessing the adequacy of the allowance for credit losses. All loans are assigned a risk category at origination, and risk ratings are reviewed and updated as new information becomes available. Our primary risk ratings include Pass, Special Mention, Substandard, Doubtful, and Loss.
51
Loans graded Substandard, Doubtful, or Loss are collectively referred to as classified loans. Loans graded Special Mention, Substandard, Doubtful, or Loss are collectively referred to as criticized loans.
The following tables show our levels of classified and special mention loans as of the dates indicated:
June 30, 2026
(Dollars in thousands)
Special Mention
Substandard
Doubtful
Loss
Total
CRE:
Investor owned
$
—
$
2,463
$
—
$
—
$
2,463
Owner occupied
—
10,084
—
—
10,084
Multifamily
—
—
—
—
—
Secured by single family
—
18,753
—
—
18,753
Land and construction
—
1,699
—
—
1,699
SBA secured by real estate
6,428
9,624
—
—
16,052
Commercial business:
C&I
538
5,525
—
—
6,063
SBA non-real estate secured
—
2,857
—
—
2,857
Consumer
—
—
—
—
—
Total Loans
$
6,966
$
51,005
$
—
$
—
$
57,971
December 31, 2025
(Dollars in thousands)
Special Mention
Substandard
Doubtful
Loss
Total
CRE:
Investor owned
$
—
$
4,461
$
—
$
—
$
4,461
Owner occupied
—
10,162
—
—
10,162
Multifamily
—
—
—
—
—
Secured by single family
—
13,110
—
—
13,110
Land and construction
—
1,699
—
—
1,699
SBA secured by real estate
8,516
9,652
—
—
18,168
Commercial business:
C&I
391
19,195
2,410
—
21,996
SBA non-real estate secured
—
3,586
—
—
3,586
Consumer
—
—
—
—
—
Total Loans
$
8,907
$
61,865
$
2,410
$
—
$
73,182
Criticized loans were $58.0 million at June 30, 2026, compared to $73.2 million at December 31, 2025. Classified loans were $51.0 million at June 30, 2026, compared to $64.3 million at December 31, 2025, while Special Mention loans decreased to $7.0 million from $8.9 million over the same period. The decrease in criticized and classified loans primarily reflected payments, paydowns and other credit resolutions, including reductions in classified commercial and industrial loans and the transfer to OREO of a $4.6 million SBA real estate-secured loan that was classified as Substandard and on nonaccrual status at December 31, 2025, partially offset by increases in certain other classified loans. There were no loans classified as Doubtful or Loss at June 30, 2026.
Allowance for Credit Losses
The allowance for credit losses is a valuation allowance for management’s estimate of expected credit losses in the loan portfolio as of the balance sheet date. The allowance is established through a provision for credit losses charged to earnings. Loans are charged against the allowance for credit losses when management believes the collectability of the principal is unlikely. Subsequent recoveries of previously charged-off amounts are credited to the allowance for credit losses.
Our allowance for credit losses methodology is based on the CECL accounting standard. We estimate the allowance for credit losses using a methodology that considers historical loss experience, current conditions, and reasonable and supportable forecasts over the contractual life of the loans. This evaluation is inherently subjective, as it requires estimates that are susceptible to significant revision as more information becomes available. The total allowance for credit losses is available to absorb losses from any loan in the portfolio.
52
The following table presents management’s allocation of the allowance for credit losses by loan category as of the dates indicated:
June 30, 2026
December 31, 2025
(Dollars in thousands)
Balance
% of Total
Balance
% of Total
Collectively Evaluated Reserve:
CRE:
Investor owned
$
8,100
26.6
%
$
8,358
28.5
%
Owner occupied
2,230
7.3
%
2,194
7.5
%
Multifamily
2,777
9.1
%
1,610
5.5
%
Secured by single family
2,567
8.4
%
2,672
9.1
%
Land and construction
561
1.8
%
621
2.1
%
SBA secured by real estate
4,464
14.7
%
4,248
14.5
%
Commercial business:
C&I
6,961
22.9
%
6,592
22.5
%
SBA non-real estate secured
1,021
3.4
%
809
2.8
%
Consumer
31
0.1
%
24
0.1
%
Total Collectively Evaluated
28,712
94.3
%
27,128
92.5
%
Individually Evaluated Reserve:
CRE
—
0.0
%
—
0.0
%
Commercial business
1,750
5.7
%
2,195
7.5
%
Consumer
—
0.0
%
—
0.0
%
Total individually evaluated
1,750
5.7
%
2,195
7.5
%
Allowance for loan losses
$
30,462
100.0
%
$
29,323
100.0
%
The allowance for loan losses was $30.5 million, or 1.43% of loans held for investment, at June 30, 2026, compared to $29.3 million, or 1.38% of loans held for investment, at December 31, 2025. The increase primarily reflected higher collectively evaluated reserves, including higher reserves for multifamily and commercial and industrial loans. The increase was driven by higher levels of past due loans and increased weighting toward the downside economic scenario during the first quarter of 2026, as well as annual updates to certain CECL model calibration assumptions and qualitative factors during the second quarter of 2026, particularly for multifamily and commercial and industrial loans. These increases were partially offset by improved delinquency trends during the second quarter and lower reserves for individually evaluated loans, primarily reflecting loan paydowns and other credit resolutions.
53
The following table provides information on the activity within the allowance for loan losses as of and for the periods indicated:
Three Months Ended June 30,
Six Months Ended June 30,
2026
2025
2026
2025
(Dollars in thousands)
Balance
Balance
Balance
Balance
Loans held for investment
$
2,132,724
$
2,081,063
$
2,132,724
$
2,081,063
Allowance for loan losses (Beginning of Period)
$
30,236
$
26,437
$
29,323
$
27,267
Cumulative effect of change in accounting principle
—
—
—
—
Net (charge-offs) recoveries:
CRE:
Investor owned
—
—
—
—
Owner occupied
—
—
—
—
Multifamily
—
—
—
—
Secured by single family
—
—
—
—
Land and construction
—
—
—
—
SBA secured by real estate
—
—
—
—
Commercial business:
—
—
C&I
299
—
(677
)
(1,290
)
SBA non-real estate secured
—
—
(137
)
—
Consumer
—
—
—
—
Net (charge-offs) recoveries:
299
—
(814
)
(1,290
)
Provision for (reversal of) loan losses
(73
)
1,741
1,953
2,201
Allowance for loan losses
$
30,462
$
28,178
$
30,462
$
28,178
Allowance for loan losses to loans held for investment
1.43
%
1.35
%
1.43
%
1.35
%
During the three months ended June 30, 2026, we recorded net recoveries of $299 thousand, compared to no net charge-offs or recoveries for the same period in 2025, and a reversal of provision for loan losses of $73 thousand, compared to a provision for loan losses of $1.7 million for the same period in 2025. For the six months ended June 30, 2026 net charge-offs were $814 thousand compared to $1.3 million for the same period in 2025. Provision for loan losses was $2.0 million for the six months ended June 30, 2026, compared to $2.2 million for the same period in 2025. Net charge-offs during the six months ended June 30, 2026 were limited to commercial business loans and reflected $1.6 million of gross charge-offs, partially offset by $764 thousand of recoveries. See the section entitled “— Results of Operations — Provision for Credit Losses” above for additional information regarding the factors affecting the provision for credit losses.
Investment Portfolio
Our investment portfolio is managed in accordance with board-approved policies that emphasize liquidity, high credit quality and disciplined interest rate risk management. We primarily invest in U.S. government agency mortgage-backed securities, U.S. Treasury and agency securities, SBA loan pool securities, municipal securities and a limited amount of investment-grade corporate obligations. Securities are classified as available for sale and carried at fair value, with unrealized gains and losses recorded in accumulated other comprehensive income. We did not hold any securities classified as held to maturity or trading securities as of June 30, 2026 or December 31, 2025.
The following table presents the carrying value of our investment portfolio as of the dates indicated:
June 30, 2026
December 31, 2025
(Dollars in thousands)
Carrying Value
% of Total
Carrying Value
% of Total
Securities Available for Sale:
U.S. Agency
2,469
1.0
%
6,514
3.0
%
Municipal securities
2,317
1.0
%
2,303
1.1
%
SBA Loan Pool securities
5,060
2.1
%
2,814
1.3
%
Mortgage-backed securities
225,585
95.2
%
204,593
93.9
%
Corporate debt securities
1,643
0.7
%
1,613
0.7
%
Total
$
237,074
100.0
%
$
217,837
100.0
%
54
The carrying value of available for sale securities was $237.1 million at June 30, 2026, compared to $217.8 million at December 31, 2025, an increase of $19.2 million, or 8.8%. The increase was primarily due to purchases of securities, partially offset by principal paydowns and a $1.9 million increase in the net unrealized loss on the portfolio, which reduced the carrying value of the portfolio by a corresponding amount. The net unrealized loss was $8.9 million at June 30, 2026, compared to $7.0 million at December 31, 2025, primarily reflecting changes in market interest rates. The purchases reflected continued deployment of excess liquidity into the investment portfolio. Mortgage-backed securities increased $21.0 million to $225.6 million at June 30, 2026, compared to $204.6 million at December 31, 2025, and represented 95.2% and 93.9% of the available for sale securities portfolio at those dates, respectively. We monitor the portfolio’s duration, cash flow characteristics and unrealized loss position as part of our asset-liability management and liquidity risk management processes.
The following table presents the book value of our investment securities by their stated maturities, as well as the weighted average yields for each maturity range for the periods indicated. Weighted-average yields are an arithmetic computation of income within each maturity range based on the amortized cost of securities.
June 30, 2026
Due in one year or less
Due after one year through five years
Due after five years through ten years
Due after ten years
(Dollars in thousands)
Carrying Value
Weighted Avg Yield
Carrying Value
Weighted Avg Yield
Carrying Value
Weighted Avg Yield
Carrying Value
Weighted Avg Yield
Securities Available for Sale:
U.S. Agency
—
0.00
%
—
0.00
%
2,469
4.59
%
—
0.00
%
Municipal securities
—
0.00
%
—
0.00
%
2,317
4.47
%
—
0.00
%
SBA Loan Pool securities
349
2.49
%
—
0.00
%
4,711
3.92
%
—
0.00
%
Mortgage-backed securities
—
0.00
%
162
2.53
%
54,628
2.69
%
170,795
4.45
%
Corporate debt securities
—
0.00
%
—
0.00
%
1,643
4.14
%
—
0.00
%
Total
$
349
2.49
%
$
162
2.53
%
$
65,768
2.95
%
$
170,795
4.45
%
December 31, 2025
Due in one year or less
Due after one year through five years
Due after five years through ten years
Due after ten years
(Dollars in thousands)
Carrying Value
Weighted Avg Yield
Carrying Value
Weighted Avg Yield
Carrying Value
Weighted Avg Yield
Carrying Value
Weighted Avg Yield
Securities Available for Sale:
U.S. Agency
—
0.00
%
2,506
4.61
%
4,008
5.07
%
—
0.00
%
Municipal securities
—
0.00
%
—
0.00
%
2,303
4.36
%
—
0.00
%
SBA Loan Pool securities
—
0.00
%
348
2.53
%
2,467
2.97
%
—
0.00
%
Mortgage-backed securities
—
0.00
%
—
0.00
%
11,462
2.12
%
193,130
4.06
%
Corporate debt securities
—
0.00
%
—
0.00
%
1,613
4.22
%
—
0.00
%
Total
$
—
0.00
%
$
2,854
4.36
%
$
21,853
3.15
%
$
193,130
4.06
%
The contractual maturity of mortgage-backed securities does not necessarily reflect their expected lives because borrowers may prepay the underlying loans. As a result, mortgage-backed securities are presented based on contractual maturity, while management also evaluates expected cash flows, prepayment assumptions and duration as part of its investment portfolio and interest rate risk management processes.
At June 30, 2026, securities with contractual maturities greater than ten years totaled $170.8 million, or 72.0% of the available for sale securities portfolio, compared to $193.1 million, or 88.7%, at December 31, 2025. Securities with contractual maturities greater than ten years consisted entirely of mortgage-backed securities at both dates. The average duration of the Bank’s available for sale securities portfolio was 4.0 years at June 30, 2026, compared to 3.6 years at December 31, 2025.
55
The following table presents the fair value of our securities as of the dates indicated:
(Dollars in thousands)
Gross
Gross
Amortized
Unrealized
Unrealized
Fair
June 30, 2026
Cost
Gains
Losses
Value
Securities Available for Sale:
U.S. Agency
$
2,493
$
—
$
(24
)
$
2,469
Municipal securities
2,374
—
(57
)
2,317
SBA Loan Pool securities
5,223
—
(163
)
5,060
Mortgage-backed securities
234,127
620
(9,162
)
225,585
Corporate debt securities
1,750
—
(107
)
1,643
Total
$
245,967
$
620
$
(9,513
)
$
237,074
Amortized
Gross
Gross
Fair
December 31, 2025
Cost
Unrealized Gains
Unrealized Losses
Value
Securities Available for Sale:
U.S. Agency
$
6,500
$
14
$
—
$
6,514
Municipal securities
2,308
—
(5
)
2,303
SBA Loan Pool securities
2,941
—
(127
)
2,814
Mortgage-backed securities
211,295
1,077
(7,779
)
204,593
Corporate debt securities
1,750
—
(137
)
1,613
Total
$
224,794
$
1,091
$
(8,048
)
$
217,837
At June 30, 2026, the net unrealized loss on the available-for-sale securities portfolio was $8.9 million, compared to $7.0 million at December 31, 2025. The increase primarily reflected changes in market interest rates. Management determined that the unrealized losses were not attributable to credit deterioration and does not intend to sell, and it is not more likely than not that the Company will be required to sell, the affected securities before recovery of their amortized cost. Accordingly, no credit-related impairment was recognized in earnings.
Liabilities
Deposits are our primary source of funding and represented 98.3% of our total liabilities as of June 30, 2026, compared to 97.9% as of December 31, 2025.
Total liabilities were $2.42 billion at June 30, 2026, compared to $2.27 billion at December 31, 2025, an increase of $151.7 million, or 6.7%. The increase was primarily driven by a $157.4 million increase in total deposits, partially offset by a $3.0 million decrease in borrowings and a $2.7 million decrease in accrued interest payable and other liabilities.
Deposits
We are focused on growing deposits by deepening relationships with our existing clients and expanding our client base. We believe our relationship-based strategy has been key to our historical deposit growth and ability to maintain a stable funding base. Our loan-to-deposit ratio was 89.6% at June 30, 2026, compared to 95.7% at December 31, 2025. We calculate the loan-to-deposit ratio as total loans held for investment and loans held for sale, before allowance for credit losses, divided by total deposits.
Total deposits were $2.38 billion at June 30, 2026, compared to $2.22 billion at December 31, 2025, an increase of $157.4 million, or 7.1%. The increase was driven by a $173.1 million increase in non-brokered deposits, reflecting growth in core client-related deposits, partially offset by a $15.8 million decrease in brokered deposits. This change in deposit mix was consistent with the Company’s strategy to fund growth through core client deposits and reduce reliance on higher-cost brokered funding. Noninterest-bearing deposits increased $57.1 million during the period, while interest-bearing non-brokered deposits increased $116.0 million.
56
The following tables present our deposit composition, average balances and average rates paid for the periods indicated:
Savings and money market accounts, excluding brokered
1,086,121
2.42
%
47.3
%
979,170
2.88
%
44.8
%
Time deposits, excluding brokered
215,034
3.44
%
9.4
%
207,699
3.94
%
9.5
%
Total brokered deposits
55,698
4.22
%
2.4
%
151,825
4.62
%
7.0
%
Total interest bearing deposits
1,652,109
2.29
%
71.9
%
1,582,305
2.97
%
72.4
%
Total deposits
$
2,296,740
1.65
%
100.0
%
$
2,184,431
2.15
%
100.0
%
Average total deposits increased $124.1 million, or 5.7%, to $2.32 billion for the three months ended June 30, 2026, compared to $2.20 billion for the same period in 2025. The cost of total deposits decreased 45 basis points to 1.63% for the three months ended June 30, 2026, compared to 2.08% for the same period in 2025. The decrease in the cost of total deposits was primarily due to lower rates paid on interest-bearing deposit products and a lower average balance of brokered deposits.
Average total deposits increased $112.3 million, or 5.1%, to $2.30 billion for the six months ended June 30, 2026, compared to $2.18 billion for the same period in 2025. The cost of total deposits decreased 50 basis points to 1.65% for the six months ended June 30, 2026, compared to 2.15% for the same period in 2025. The decrease in the cost of total deposits was primarily due to lower rates paid on interest-bearing deposit products and a lower average balance of brokered deposits.
The following table sets forth the estimated deposits exceeding the FDIC insurance limit:
(Dollars in thousands)
June 30, 2026
December 31, 2025
Uninsured deposits
$
1,380,008
$
1,162,936
57
At June 30, 2026, estimated uninsured deposits represented 57.9% of the Bank's total deposits, compared to 52.2% at December 31, 2025. Uninsured deposits, net of collateralized and fiduciary deposit accounts, represented 53.8% of the Bank's total deposits at June 30, 2026, compared to 49.4% at December 31, 2025.
The Bank is a member of the IntraFi Network (“IntraFi”), which offers deposit placement services, including both the Certificate of Deposit Account Registry Service (“CDARS”) and Insured Cash Service (“ICS”) programs, that qualify large deposits for FDIC insurance. These reciprocal deposit structures offer protection to depositors by fully insuring deposits with other network banks, thereby helping the Bank retain the full amount of the deposits on its balance sheet and enhancing the Company’s funding stability.
The estimated aggregate amount of time deposits in excess of the FDIC insurance limit was $99.7 million at June 30, 2026 and $73.3 million at December 31, 2025. The following tables set forth the maturity of time deposits as of June 30, 2026 and December 31, 2025:
June 30, 2026
(Dollars in thousands)
$250,000 or Greater
Less than $250,000
Total
Uninsured Portion
Three months or less
$
39,180
$
42,838
$
82,018
$
28,930
Over three through six months
60,899
19,324
80,223
45,901
Over six through twelve months
39,227
36,711
75,938
15,961
Over twelve months
31,184
3,502
34,686
8,957
Total
$
170,490
$
102,375
$
272,865
$
99,749
December 31, 2025
(Dollars in thousands)
$250,000 or Greater
Less than $250,000
Total
Uninsured Portion
Three months or less
$
45,391
$
63,900
$
109,291
$
25,891
Over three through six months
21,963
28,707
50,670
17,213
Over six through twelve months
35,841
26,348
62,189
18,694
Over twelve months
57,657
3,563
61,220
11,549
Total
$
160,852
$
122,518
$
283,370
$
73,347
FHLB Advances and Other Borrowings
We utilize collateralized advances from the FHLB of San Francisco, as well as other borrowing sources, to supplement liquidity and manage funding needs. Total borrowings were $26.0 million at June 30, 2026, compared to $29.0 million at December 31, 2025, a decrease of $3.0 million, or 10.3%. The decrease was due to the maturity of a $3.0 million FHLB advance during the six months ended June 30, 2026. FHLB advances totaled $8.0 million at June 30, 2026, compared to $11.0 million at December 31, 2025. Other borrowings, consisting primarily of subordinated notes, were $18.0 million at both June 30, 2026 and December 31, 2025.
At June 30, 2026, loans with a principal balance of approximately $741.8 million and securities with a principal balance of approximately $5.7 million were pledged as collateral to the FHLB. At June 30, 2026, the Company had remaining FHLB financing availability of approximately $521.4 million, after consideration of FHLB borrowings outstanding and a $6.0 million letter of credit to secure deposits.
The Company also maintains borrowing capacity through the Federal Reserve Bank and correspondent bank lines. As of June 30, 2026, loans with a principal balance of approximately $824.2 million were pledged as collateral to the Federal Reserve Bank, with related borrowing capacity of approximately $620.1 million. There was no balance outstanding under this arrangement at June 30, 2026. The Company also had borrowing lines with correspondent banks totaling $115.0 million at June 30, 2026, with no balances outstanding.
On April 24, 2019, Private Bancorp of America, Inc. issued $18.0 million of Fixed-to-Floating Subordinated Notes (“Notes”), which mature on April 25, 2029. The Notes accrued interest at a 6.00% fixed rate for the first five years until April 25, 2024 with quarterly interest payments. After April 25, 2024, interest on the Notes accrues at a variable rate at the three-month Secured Overnight Financing Rate (“SOFR”) plus 3.42%. The total variable rate on the Notes was 7.35% and 7.54% as of June 30, 2026 and December 31, 2025, respectively. Debt issuance costs were $0.1 million and are being amortized through the maturity date. The balance net of issuance cost is $18.0 million as of June 30, 2026 and December 31, 2025.
58
Off-Balance Sheet Arrangements
In the normal course of business, we enter into financial instruments with off-balance sheet risk to meet the financing needs of our customers. These instruments include commitments to extend credit and standby letters of credit. These instruments involve, to varying degrees, elements of credit and interest rate risk in excess of amounts recognized in our consolidated balance sheets.
Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates and may require payment of a fee. Because many commitments are expected to expire without being fully drawn, the total commitment amounts do not necessarily represent future cash requirements. Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. The credit risk involved in issuing standby letters of credit is generally the same as the credit risk involved in extending loan facilities to customers.
Because many commitments are expected to expire unused or only partially funded, the contractual amounts do not necessarily represent future cash requirements; however, the Company considers these commitments in its liquidity management and maintains a reserve for expected credit losses on unfunded commitments.
The following table summarizes our off-balance sheet financial instruments whose contractual amounts represent credit risk as of the dates indicated:
At June 30, 2026, commitments to extend credit totaled $304.9 million, compared to $315.2 million at December 31, 2025. Standby letters of credit totaled $8.4 million at June 30, 2026, compared to $7.5 million at December 31, 2025.
We evaluate each customer’s creditworthiness on a case-by-case basis and use the same credit policies in making commitments and conditional obligations as we do for on-balance sheet loans. The amount and type of collateral obtained, if deemed necessary, is based on management’s credit evaluation. Collateral may include marketable investment securities, accounts receivable, inventory, equipment, real estate and deposits.
In addition, we had unfunded commitments to contribute capital to LIHTC and other CRA-related investments totaling $1.3 million at June 30, 2026, compared to $2.4 million at December 31, 2025. These commitments are not expected to have a material effect on our liquidity, capital resources or results of operations.
Other than the commitments described above, we did not have off-balance sheet arrangements that have, or are reasonably likely to have, a material current or future effect on our financial condition, results of operations, liquidity, capital expenditures or capital resources.
Liquidity and Capital Resources
Liquidity Management
Our primary sources of funds are deposits, principal and interest payments on loans, Federal Home Loan Bank (“FHLB”) advances and other borrowings, and income from investments to meet our financial obligations, which arise primarily from the withdrawal of deposits, extension of credit, and payment of operating expenses. While maturities and scheduled amortization of loans are a predictable source of funds, deposit flows and loan prepayments are greatly influenced by market interest rates, economic conditions, and competition.
The Bank’s Board of Directors (the “Bank Board”) and the Company’s Board of Directors (the “Board”) are ultimately responsible for ensuring policies and procedures are in place that provide for the safety and soundness management of assets and liabilities of the Bank, including liquidity management and interest rate risk policies to ensure these policies are effectively implemented. At the management level, the Bank’s Asset Liability Management Working Group (the “ALM Working Group”) is responsible for the ongoing monitoring and management of liquidity and interest rate risk in accordance with policies and limits approved by the Bank Board and
59
the Board. The Bank Board’s Asset Liability Committee (the “ALCO”) provides board-level oversight of these activities and reviews compliance with applicable policies and limits.
The objective of liquidity management is to ensure liquidity risk is monitored and controlled. Liquidity risk is the possibility that the Company will not be able to fund present and future obligations as they come due because of an inability to liquidate assets or obtain adequate funding at a reasonable cost. The Bank and the Company have developed tools to appropriately identify, measure, monitor, and control funding and liquidity risk. These tools include daily, monthly, and quarterly reports and risk measures, cash flow projections, stress testing, and a formalized Contingency Funding Plan (“CFP”) as primary tools for measuring and managing liquidity risk. The CFP provides a framework for the Company to evaluate increasingly severe illiquid situations and monitor the availability of funding over these scenarios and addresses the actions that the Company would take in response to both a short-term and long-term funding crisis.
We seek to maintain a level of liquid assets to ensure a safe and sound operation. Our liquid assets are comprised of unrestricted cash, short-term investments, and unpledged available for sale investments securities. The levels of these assets are dependent on our operating, lending, and investing activities during any given period. We endeavor to take a prudent, proactive approach to liquidity management and we believe our level of liquid assets is sufficient to meet current anticipated funding needs. As part of our daily monitoring, we calculate a liquidity ratio by dividing the sum of unrestricted cash balances plus unpledged available for sale securities by the sum of total deposits, plus FHLB advances. At June 30, 2026, our liquidity ratio was 22.3%, which is above the Company’s minimum policy requirement of 12.0%. The Company regularly monitors liquidity, models liquidity stress scenarios to ensure that adequate liquidity is available, and has contingency funding plans in place, which are reviewed and tested on a regular, recurring basis.
At June 30, 2026, cash and cash equivalents totaled $300.4 million. If additional liquidity is needed or otherwise desired as part of our liquidity management strategy, we have additional sources of liquidity that can be accessed, including FHLB advances, federal fund lines, the Federal Reserve discount window, brokered deposits, as well as loan and investment securities sales.
At June 30, 2026, total available liquidity was $2.4 billion, or 190.8% of uninsured deposits, net of collateralized and fiduciary deposit accounts. Total available liquidity is comprised of $524.5 million of on-balance sheet liquidity, consisting of primarily cash and investment securities, and $1.9 billion of unused borrowing capacity (FHLB available borrowing capacity, Federal Reserve discount window line, unsecured fed funds lines of credit with correspondent banks and available brokered deposits up to policy limit).
The Company’s primary source of funding is from our ability to generate low-cost commercial and consumer deposits, which totaled $2.4 billion as of June 30, 2026. Through our commercial banking teams, relationship managers, seven branches and electronic banking delivery channels, we offer a broad array of deposit and treasury management products and services. In addition, we are able to generate low-cost deposits through our specialty business lines. The Bank’s participation in IntraFi’s CDARS and ICS programs provides our depositors with full deposit insurance coverage of excess balances, while the Bank receives reciprocal deposits from other FDIC-insured banks, and helps the Bank to retain the full amount of the deposits on its balance sheet, enhancing the Company’s funding stability. Our noninterest-bearing deposits as a percentage of total deposits was 27.9% as of June 30, 2026, reflecting our strong client relationship model.
A substantial portion of our loans were funded by our deposits. At June 30, 2026, the Company’s loan-to-deposit ratio was 89.6%. Certificates of deposit, including CDARS, that are scheduled to mature in one year or less from June 30, 2026 totaled $238.2 million and are comprised of $28.8 million in brokered certificates of deposit and $209.4 million in retail certificates of deposit. We anticipate both reducing our higher cost brokered deposits and that the majority of our retail certificates of deposit will renew or transfer to other deposit products of the Bank at prevailing rates, although no assurance can be given. To the extent that retail deposit growth is not sufficient to satisfy our ongoing commitments to fund maturing and withdrawable deposits, repay maturing borrowings, fund existing and future loans, or make investments, we may access funds through brokered deposit channels, our FHLB borrowing arrangement, Federal Reserve discount window, or other sources.
The Bank maintains liquidity guidelines in the Asset Liability Management Policy that permits the purchase of brokered deposit funds, in an amount not to exceed 30% of total deposits as a secondary source for funding. At June 30, 2026, the Company had $49.3 million in brokered deposits, which constituted 2.1% of total deposits.
The Company is a corporate entity separate and apart from the Bank that must provide for its own liquidity. The Company’s primary sources of liquidity are dividends from the Bank. There are statutory and regulatory provisions that limit the ability of the Bank to pay dividends to the Company. Management believes that such restrictions will not have a material impact on the ability of the Company to meet its ongoing cash obligations. The Bank paid dividends to the Company of $3.6 million during the six months ended June 30, 2026.
The Company had borrowing lines with correspondent banks totaling $115.0 million at June 30, 2026, with no balances outstanding.
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The Company should serve as a source of managerial and financial strength to its subsidiary bank, and consistent with this premise, hold capital commensurate with its overall risk profile. The board of directors of a bank holding company should assess carefully, among other things, capital adequacy and ensure that the dividend level is prudent relative to the organization’s financial position and is not based on overly optimistic earnings scenarios. We have paid no cash dividends to common shareholders since our inception. We anticipate that the majority of our future earnings will be retained to support our operations and finance the growth and development of our business. Whether or not dividends, either cash or stock, will be paid in the future will be determined by our Board in its sole discretion, subject to the satisfaction of any regulatory requirements. Our profitability and regulatory capital ratios, in addition to other financial conditions, will be key factors in determining the payment of dividends.
Capital Resources
Capital adequacy is generally considered an important indicator of financial stability and performance. Our objectives include maintaining capitalization at levels that we believe are sufficient to support asset growth and to promote confidence among our depositors, investors, and regulators. We recognize that robust capital management practices are integral to addressing various financial and operational challenges, which may include managing credit risk, liquidity risk, balance sheet growth, new products, regulatory changes and competitive pressures.
From time to time, our Board authorizes us to repurchase our common stock. On April 29, 2026, our Board authorized a stock repurchase program, whereby the Company may repurchase an aggregate amount of up to $10.0 million of shares of its common stock. As of June 30, 2026, no shares of the Company’s common stock were repurchased under the plan.
Total shareholders’ equity was $285.5 million at June 30, 2026, compared to $264.0 million at December 31, 2025, an increase of $21.6 million, or 8.2%. The increase was primarily driven by net income of $25.1 million for the six months ended June 30, 2026 and share-based compensation, partially offset by $3.0 million of common stock repurchases, repurchases of restricted shares and restricted stock units for tax withholding, and a $1.4 million increase in accumulated other comprehensive loss related to changes in the fair value of the Company’s available-for-sale securities portfolio. Book value per common share was $49.87 at June 30, 2026, compared to $46.08 at December 31, 2025. Tangible book value per share, a non-GAAP financial measure, was $49.57 at June 30, 2026, compared to $45.75 at December 31, 2025. The increase in tangible book value per share was primarily driven by earnings retained during the period, partially offset by the impact of common stock repurchases at prices above tangible book value per share and the increase in accumulated other comprehensive loss. See the section entitled “Non-GAAP Financial Measures” for a reconciliation of tangible book value per share to the most directly comparable GAAP measure.
Capital Requirements
Because total assets on a consolidated basis are less than $3.0 billion, we are not subject to the consolidated capital requirements imposed by federal regulations. However, the Bank is subject to various regulatory capital requirements administered by the federal banking agencies. Certain regulatory measurements of capital adequacy are “risk based,” meaning they utilize a formula that considers the individual risk profile of the financial institution’s assets. For example, certain assets, such as cash at the Federal Reserve and investments in U.S. Treasury securities, are deemed to carry zero risk by the regulators because of explicit or implied federal government guarantees. As of June 30, 2026, 15.1% of the Bank’s total assets were invested in such zero-risk assets. The tier 1 leverage ratio, another regulatory capital measurement, does not consider the riskiness of assets. The leverage ratio is computed as tier 1 capital divided by total average assets for the quarter.
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The Bank’s capital level is characterized as “well capitalized” under the Basel III Capital Rules. A summary of the Bank’s regulatory capital ratios, and minimum requirement to be considered “well capitalized” are presented below:
To Be Well-
Capitalized
Under Prompt
For Capital
Corrective
Actual
Adequacy Purposes
Provisions
Amount
Ratio
Amount
Ratio
Amount
Ratio
As of June 30, 2026
Total capital (to risk-weighted assets)
$
332,192
14.9
%
$
178,831
8.0
%
$
223,539
10.0
%
Tier 1 capital (to risk-weighted assets)
304,212
13.6
%
134,124
6.0
%
178,831
8.0
%
CET1 capital (to risk-weighted assets)
304,212
13.6
%
100,593
4.5
%
145,301
6.5
%
Tier 1 capital (to average assets)
304,212
11.5
%
105,651
4.0
%
132,064
5.0
%
As of December 31, 2025
Total capital (to risk-weighted assets)
$
308,562
13.9
%
$
178,212
8.0
%
$
222,765
10.0
%
Tier 1 capital (to risk-weighted assets)
280,690
12.6
%
133,659
6.0
%
178,212
8.0
%
CET1 capital (to risk-weighted assets)
280,690
12.6
%
100,244
4.5
%
144,798
6.5
%
Tier 1 capital (to average assets)
280,690
10.8
%
103,505
4.0
%
129,381
5.0
%
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Asset/Liability Management and Market Risk
Market risk is the risk of loss in value or reduced earnings from adverse changes in market prices and interest rates. The Bank’s market risk arises primarily from interest rate risk in our lending, investments, and deposit taking activities. Interest rate risk primarily occurs to the degree that the Bank’s interest-bearing liabilities reprice or mature on a different basis and frequency than its interest-earning assets. The Bank actively monitors and manages its portfolios to limit the adverse effects on net interest income and economic value due to changes in interest rates. The ALCO is responsible for implementing the Bank’s interest rate risk management policy established by the Board that sets forth limits of acceptable changes in net interest income (“NII”) and economic value of equity (“EVE”) due to specified changes in interest rates. Management monitors asset and liability maturities and repricing characteristics on a regular basis and evaluates its interest rate risk as it relates to operational strategies.
Interest Rate Risk Management
The principal objective of the Company’s interest rate risk management function is to maintain an interest rate risk profile close to the desired risk profile in light of the interest rate outlook. The Bank measures the interest rate risk included in the major balance sheet portfolios and compares the current risk profile to the desired risk profile and to policy limits set by the Board. Management then implements strategies consistent with the desired risk profile. Asset duration is compared to liability, with the desired mix of fixed and floating rate determined based upon the Company’s risk profile and outlook. Likewise, the Bank seeks to raise non-maturity deposits. Management often implements these strategies through pricing actions. Finally, management structures its security portfolio and borrowings to offset some of the interest rate sensitivity created by the repricing characteristics of customer loans and deposits.
Management monitors asset and liability maturities and repricing characteristics on a regular basis and evaluates its interest rate risk as it relates to operational strategies. Management analyzes potential strategies for their impact on the interest rate risk profile. Each quarter the Board reviews the Bank’s asset/liability position and simulations showing the impact on the Bank’s EVE in various interest rate scenarios. Interest rate moves, up or down, may subject the Bank to interest rate spread compression, which adversely impacts its net interest income. This is primarily due to the lag in repricing of the indices, to which adjustable rate loans and mortgage-backed securities are tied, as well as their repricing frequencies. Furthermore, large rate moves show the impact of interest rate caps and floors on adjustable rate transactions. This is partly offset by lags in repricing for deposit products. The extent of the interest rate spread compression depends on the direction and severity of interest rate moves and features in the Bank’s product portfolios.
The Company’s interest rate sensitivity is monitored by management through the use of both a simulation model that quantifies the estimated impact to earnings (“Earnings at Risk”) for twelve- and twenty-four month periods, and a model that estimates the change in the Company’s EVE under alternative interest rate scenarios, primarily instantaneous parallel interest rate shifts in 100 basis point increments. The simulation model estimates the impact on NII from changing interest rates on interest-earning assets and interest expense paid on interest bearing liabilities. The EVE model computes the net present value of equity by discounting all expected cash flows on assets and liabilities under each rate scenario. For each scenario, the EVE is the present value of all assets less the present value of all liabilities.
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The following table shows the projected NII over the next twelve months and the EVE at June 30, 2026 and December 31, 2025, assuming instantaneous parallel interest rate shifts in the first month following each period end:
Earnings at Risk (NII)
EVE
Changes in Interest Rates (bps)
Change (%)
Change (%)
June 30, 2026
+300
2.4%
4.2%
+200
1.6%
3.4%
+100
0.7%
1.9%
-100
0.4%
(1.1)%
-200
0.4%
(2.1)%
-300
(0.6)%
(3.2)%
December 31, 2025
+300
1.4%
4.9%
+200
0.8%
3.9%
+100
0.2%
2.2%
-100
1.5%
(1.1)%
-200
2.1%
(2.5)%
-300
0.8%
(5.2)%
Based on the modeling of the impact on earnings and EVE from changes in interest rates, the Company’s sensitivity to changes in interest rates is relatively low for both rising and falling rate scenarios. At June 30, 2026, the model projected increases in net interest income under the rising-rate scenarios presented above and relatively modest changes in net interest income under the declining-rate scenarios. It is important to note the above tables are forecasts based on several assumptions and that actual results may vary. The forecasts are based on estimates of historical behavior and assumptions by management that may change over time and may turn out to be different. Factors affecting these estimates and assumptions include, but are not limited to (1) competitor behavior, (2) economic conditions both locally and nationally, (3) actions taken by the Federal Reserve, (4) customer behavior, and (5) management’s responses to the foregoing. Changes that vary significantly from the assumptions and estimates may have significant effects on the Company’s earnings and EVE. Additionally, the Company’s interest rate sensitivity may be impacted by changes in asset and liability composition, and is particularly sensitive to noninterest-bearing deposit balances that can fluctuate significantly from period to period.
The Company has minimal direct market risk from foreign exchange and no exposure from commodities.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this Quarterly Report on Form 10-Q, an evaluation was carried out by our management, with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective as of the end of the period covered by this report.
Changes in Internal Controls Over Financial Reporting
There have been no changes in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) during the quarter ended June 30, 2026 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
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PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
The Company is involved in legal proceedings occurring in the ordinary course of business. Management believes that none of the legal proceedings occurring in the ordinary course of business, individually or in the aggregate, will have a material adverse impact on the results of operations or financial condition of the Company.
Item 1A. Risk Factors.
The section entitled “Risk Factors” in Item 1A. in our Form 10 included a discussion of the many risks and uncertainties we face, any one or more of which could have a material adverse effect on our business, results of operations, financial condition (including capital and liquidity), prospects, or the value of or return on an investment in the Company. There are no material changes to our risk factors as previously described under Item 1A. of the Form 10.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
The following table provides information with respect to purchases made by or on behalf of us or any “affiliated purchaser” (as defined in Rule 10b-18(a)(3) under the Exchange Act) of our common stock during the second quarter of 2026.
Period
Total Number of Shares Purchased
Average Price Paid per Share
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(1)
Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs(1)
April 1, 2026 to April 30, 2026
—
$
—
—
$
10,000,000
May 1, 2026 to May 31, 2026
—
—
—
10,000,000
June 1, 2026 to June 30, 2026
—
—
—
10,000,000
Total
—
—
—
10,000,000
(1) On April 29, 2026, our Board authorized a stock repurchase program, whereby the Company may repurchase an aggregate amount of up to $10.0 million of shares of its common stock. The stock repurchase program expires on December 31, 2026. During the second quarter of 2026, the Company did not repurchase any shares of common stock.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
Director and Officer Trading Arrangements
During the three months ended June 30, 2026, none of our directors or officers (as defined in Rule 16a-1(f) under the Exchange Act) adopted, modified or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.
Long-term borrowing instruments are omitted pursuant to Item 601(b)(4)(iii) of Regulation S-K. The Company undertakes to furnish copies of such instruments to the SEC upon request
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* Management contract or compensatory plan or arrangement.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Private Bancorp of America, Inc.
Date: September 4, 2026
By:
/s/ Richard L. Sowers
Richard L. Sowers
President and Chief Executive Officer
(Principal Executive Officer)
Date: September 4, 2026
By:
/s/ Cory Stewart
Cory Stewart
Executive Vice President and Chief Financial Officer