10q10k10q10k.net

What changed in RBB Bancorp's 10-K — 2024 vs 2025

vs

Paragraph-level year-over-year comparison of RBB Bancorp's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+396 added−417 removedSource: 10-K (2026-03-09) vs 10-K (2025-03-17)

Top changes in RBB Bancorp's 2025 10-K

396 paragraphs added · 417 removed · 325 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

63 edited+12 added−11 removed198 unchanged
Biggest changeIn addition, we offer 15-year and 30-year qualified mortgage loans that are sold directly to the Federal National Mortgage Association (“FNMA”) and Federal Home Loan Mortgage Corporation (“FHLMC”), and in most cases, the Bank retains the loan servicing rights and obligations and; o Small Business Administration (“SBA”) loans consisting primarily of 7(a) loans through our SBA Preferred Lender status.
Biggest changeIn addition, we offer 15-year and 30-year qualified mortgage loans that are sold directly to the Federal National Mortgage Association (“FNMA”) and Federal Home Loan Mortgage Corporation (“FHLMC”), and in most cases, the Company retains the loan servicing rights and obligations; and 5) Small Business Administration (“SBA”) loans consisting primarily of 7(a) loans through our SBA Preferred Lender status with the ability to sell the SBA guarantee portion of the loan in the secondary market subject to market conditions. 5 Table of Contents Our Competition We view the Asian-centric banking market, including the Company, as comprised of banks divided into three overlapping segments: publicly-traded banks, locally-based banks, and banks that are subsidiaries of Taiwanese or Chinese banks.
To be considered “well capitalized,” a bank holding company or bank must have the following minimum ratios: (i) a Tier 1 leverage ratio of 5.0%, (ii) a CET1 capital ratio of 6.5%, (iii) a Tier 1 risk-based capital ratio of 8.0%, and (iv) a Total risk-based capital ratio of 10.0%.
To be considered “well capitalized,” a bank holding company or bank must have the following minimum ratios: (i) a CET1 capital ratio of 6.5%, (ii) a Tier 1 risk-based capital ratio of 8.0%, (iii) a Total risk-based capital ratio of 10.0%, and (iv) a Tier 1 leverage ratio of 5.0%.
Our current strategic plan contains the following key elements: ● Maintain regulatory capital levels in excess of fully phased-in Basel III requirements; ● Provide commercial banking services and products primarily to small to midsized commercial enterprises operating within Asian-centric communities or that can benefit from our areas of core lending expertise; ● Maintain a board of directors comprised of business leaders who work closely with community leaders; ● Attract and retain an experienced management team with demonstrated industry knowledge and lending expertise; ● Focus on a target market consisting of businesses that: o are located in southern California, the San Francisco Bay area, the Chicago metropolitan area, the New York metropolitan area (including northern New Jersey), Nevada and Hawaii; o provide or receive goods or services to or from Asian countries, primarily Chinese-speaking regions, such as China, Hong Kong, Macau, Taiwan; o have loan needs of $1 million to $20 million (average loan size of $3 million to $7 million) and o prioritize using bankers with strong market knowledge who are dedicated to serving the local markets in which we operate. ● Provide five main lending products: o Commercial real estate (“CRE”) lending consisting of owner occupied and non-owner occupied commercial property, including loans secured by single-family residences for a business purposes and multi-family residential property; o Construction and land development (“C&D”) loans comprised of residential construction, commercial construction and land acquisition and development construction; o Commercial and Industrial (“C&I”) lending that emphasizes asset-based lending, trade finance, working capital lines of credit, and term loans secured by inventory, accounts receivables, fixed assets and real estate; o Single-family residential (“SFR”) mortgage lending primarily to Asian-Americans willing to provide higher down payment amounts and pay higher fees and interest rates in return for reduced documentation requirements.
Our current strategic plan contains the following key elements: ● Maintain regulatory capital levels in excess of Basel III requirements; ● Provide commercial banking services and products primarily to small to midsized commercial enterprises operating within Asian-centric communities or that can benefit from our areas of core lending expertise; ● Maintain a board of directors comprised of business leaders who work closely with community leaders; ● Attract and retain an experienced management team with demonstrated industry knowledge and lending expertise; ● Focus on a target market consisting of businesses that: o are located in southern California, the San Francisco Bay area, the Chicago metropolitan area, the New York metropolitan area (including northern New Jersey), Nevada and Hawaii; o provide or receive goods or services to or from Asian countries, primarily Chinese-speaking regions, such as China, Hong Kong, Macau, Taiwan; o have loan needs of $1 million to $20 million (average loan size of $3 million to $7 million); and o prioritize using bankers with strong market knowledge who are dedicated to serving the local markets in which we operate. ● Provide five main lending products: 1) Commercial real estate (“CRE”) lending consisting of owner occupied and non-owner occupied commercial property, including loans secured by single-family residences for a business purposes and multi-family residential property; 2) Construction and land development (“C&D”) loans comprised of residential construction, commercial construction and land acquisition and development construction; 3) Commercial and Industrial (“C&I”) lending that emphasizes asset-based lending, trade finance, working capital lines of credit, and term loans secured by inventory, accounts receivables, fixed assets and real estate; 4) Single-family residential (“SFR”) mortgage lending primarily to Asian-Americans willing to provide higher down payment amounts and pay higher fees and interest rates in return for reduced documentation requirements.
We operate as a minority depository institution (“MDI”), which is defined by the Federal Deposit Insurance Corporation (“FDIC”) as a federally insured depository institution where 51% or more of the voting stock is owned by minority individuals or a majority of the board of directors is minority and the community that the institution serves is predominantly minority.
We operate as a minority depository institution (“MDI”), which is defined by the Federal Deposit Insurance Corporation (“FDIC”) as a federally insured depository institution ("IDI") where 51% or more of the voting stock is owned by minority individuals or a majority of the board of directors is minority and the community that the institution serves is predominantly minority.
These provisions also provide that, except for certain limited exceptions, a financial institution may not provide such personal information to unaffiliated third parties unless the institution discloses to the customer that such information may be so provided and the customer is given the opportunity to opt out of such disclosure.
These provisions also provide that, except for certain limited exceptions, a financial institution may not provide such personal information to unaffiliated third parties unless the institution discloses to the customer that such information may be provided and the customer is given the opportunity to opt out of such disclosure.
Under the revised PCA provisions of the FDIA, an IDI generally will be classified in the following categories based on the capital measures indicated: PCA Category Total Risk-Based Capital Ratio Tier 1 Risk-Based Capital Ratio CET1 Risk-Based Ratio Tier 1 Leverage Ratio Well capitalized 10% 8% 6.50% 5% Adequately capitalized 8% 6% 4.50% 4% Undercapitalized Significantly undercapitalized Critically undercapitalized Tangible Equity/Total Assets = As of December 31, 2024, the Bank’s capital ratios exceeded the minimum capital adequacy guideline percentage requirements of the federal banking agencies for “well capitalized” institutions under the Basel III capital rules on a fully phased-in basis.
Under the revised PCA provisions of the FDIA, an IDI generally will be classified in the following categories based on the capital measures indicated: PCA Category Total Risk-Based Capital Ratio Tier 1 Risk-Based Capital Ratio CET1 Risk-Based Ratio Tier 1 Leverage Ratio Well capitalized 10% 8% 6.50% 5% Adequately capitalized 8% 6% 4.50% 4% Undercapitalized Significantly undercapitalized Critically undercapitalized Tangible Equity/Total Assets = As of December 31, 2025, the Bank’s capital ratios exceeded the minimum capital adequacy guideline percentage requirements of the federal banking agencies for “well capitalized” institutions under the Basel III capital rules on a fully phased-in basis.
Lending Activities We seek to be the premier provider of lending products and services in our market areas and serve the credit needs of high quality business and individual borrowers in the communities that we serve.
Lending Activities We seek to be the premier provider of lending products and services in our market areas and serve the credit needs of high quality business and individual borrowers in the communities we serve.
The terms of our junior subordinated notes also limit our ability to pay dividends on our common stock. If we are not current on our payment of interest on our Junior Subordinated Notes, we may not pay dividends on our common stock.
The terms of our subordinated notes also limit our ability to pay dividends on our common stock. If we are not current on our payment of interest on our subordinated notes, we may not pay dividends on our common stock.
The Bank did not have any loans to one borrower that exceeded either of these limits at December 31, 2024. 18 Table of Contents Safety and Soundness Standards /Risk Management The federal banking agencies have adopted guidelines that establish operational and managerial standards to promote the safety and soundness of federally insured depository institutions.
The Bank did not have any loans to one borrower that exceeded either of these limits at December 31, 2025. 18 Table of Contents Safety and Soundness Standards /Risk Management The federal banking agencies have adopted guidelines that establish operational and managerial standards to promote the safety and soundness of federally insured depository institutions.
Our ability to provide quick responses to borrowers with financial solutions, while performing appropriate underwriting if a borrower decides to move forward, is primarily due to our experienced banking professionals who understand the needs of borrowers in our target markets and their expertise in our Bank’s commercial lending practices.
Our ability to provide quick responses to borrowers with financial solutions, while performing appropriate underwriting if a borrower decides to move forward, is primarily due to our experienced banking professionals who understand the needs of borrowers in our target markets and their expertise in the Company’s commercial lending practices.
Trust preferred securities issued prior to that date will continue to count as Tier 1 capital for bank holding companies with less than $15 billion in total assets, such as Bancorp. The trust preferred securities issued by our unconsolidated subsidiary capital trusts qualify as Tier 1 capital up to a maximum limit of 25% of total Tier 1 capital.
Trust preferred securities issued prior to that date will continue to count as Tier 1 capital for bank holding companies with less than $15 billion in total assets. The trust preferred securities issued by our unconsolidated subsidiary capital trusts qualify as Tier 1 capital up to a maximum limit of 25% of total Tier 1 capital.
Our non-accrual SBA loans as of December 31, 2024 were $1.5 million, compared to $2.1 million as of December 31, 2023. 7 Table of Contents Deposits The quality of our deposit franchise and access to stable funding are key components to our success.
Our non-accrual SBA loans as of December 31, 2025, were $1.2 million, compared to $1.5 million as of December 31, 2024. 7 Table of Contents Deposits The quality of our deposit franchise and access to stable funding are key components to our success.
The proposed rule was adopted as final without change. Also, in the final rule adopted on October 18, 2022, the FDIC incorporated Accounting Standards Update (“ASU”) 2022-02, Financial Instruments - Credit Losses (ASC 326) Troubled Debt Restructurings and Vintage Disclosures in the risk-based deposit insurance assessment system applicable to all large and highly complex insured depository institutions ("IDIs").
The proposed rule was adopted as final without change. Also, in the final rule adopted on October 18, 2022, the FDIC incorporated Accounting Standards Update (“ASU”) 2022-02, Financial Instruments - Credit Losses (ASC 326) Troubled Debt Restructurings and Vintage Disclosures in the risk-based deposit insurance assessment system applicable to all large and highly complex IDIs.
Our primary source of revenue is providing loans to customers, who are predominately small and middle-market businesses and individuals. We generate our revenue primarily from interest received on loans and, to a lesser extent, from interest received on investment securities.
Our primary source of revenue is providing loans to customers, who are predominantly small and middle-market businesses and individuals. We generate our revenue primarily from interest received on loans and, to a lesser extent, from interest received on investment securities.
Our ability to gather deposits, particularly core deposits, is an important aspect of our business franchise and we believe core deposits are a significant driver of franchise value as a cost efficient and stable source of funding to support our growth.
Our ability to gather deposits, particularly stable deposits, is an important aspect of our business franchise and we believe these deposits are a significant driver of franchise value as a cost efficient and stable source of funding to support our growth.
In addition, our credit approval process is streamlined since decision-making often only requires a couple of key executive management members while any loans that exceed executive management's delegated authority is elevated to a board loan committee which meets at regularly scheduled meetings and whenever needed. We have five principal lending areas: Construction and Land Development Loans.
In addition, our credit approval process is streamlined since decision-making often only requires a couple of key executive management members while any loans that exceed executive management's delegated authority is elevated to a board loan committee which meets at regularly scheduled meetings and whenever needed. We have five principal lending areas: SFR Loans.
In connection with our 2016 acquisition of TomatoBank and its holding company, TFC, we acquired the TFC Statutory Trust (the “TFC Trust”), a statutory business trust that was established by TFC in 2006 as a wholly-owned subsidiary. FAIC Statutory Trust I.
In connection with our 2016 acquisition of TomatoBank and its holding company, TFC, we acquired the TFC Statutory Trust (the “TFC Trust”), a statutory business trust that was established by TFC in 2006 under the laws of Connecticut as a wholly-owned subsidiary. FAIC Statutory Trust I.
Of this amount, $15.2 million is attributable to subordinated debentures issued to statutory trusts in connection with prior issuances of trust preferred securities, which qualifies as Tier 1 capital, and $119.5 million is attributable to outstanding subordinated notes, which qualifies as Tier 2 capital.
Of this amount, $15.4 million is attributable to subordinated debentures issued to statutory trusts in connection with prior issuances of trust preferred securities, which qualifies as Tier 1 capital, and $119.9 million is attributable to outstanding subordinated notes, which qualifies as Tier 2 capital.
In addition, we offer retail deposit products where customers are able to achieve FDIC insurance for balances on deposit in excess of the $250,000 FDIC limit through the Certificate of Deposit Account Registry Service (“CDARS”) and Insured Cash Sweeps (“ICS”) programs. Deposits at the Bank are insured by the FDIC up to statutory limits.
In addition, we offer retail deposit products where customers are able to achieve FDIC insurance for balances on deposit in excess of the $250,000 FDIC limit through the Certificate of Deposit Account Registry Service (“CDARS”) and Insured Cash Sweep (“ICS”) programs. Deposits are insured by the FDIC up to statutory limits.
We originate qualified SFR mortgage loans and non-qualified, alternative documentation SFR mortgage loans through wholesale channels and retail channels, including our branch network, to accommodate the needs of the Asian-centric market. The qualified SFR mortgage loans are 15-year and 30-year conforming mortgages and may be sold directly to FNMA and FHLMC.
We originate qualified SFR mortgage loans and non-qualified, alternative documentation SFR mortgage loans through wholesale and retail channels, including our branch network, to accommodate the needs of the Asian-centric and selected niche markets. The qualified SFR mortgage loans are 15-year and 30-year conforming mortgages and may be sold directly to FNMA and FHLMC.
In connection with our 2018 acquisition of FAIB and its holding company, FAIC, we acquired the FAIC Statutory Trust I (the “FAIC Trust I”), a statutory business trust that was established by FAIC in 2004 under the laws of Delaware as a wholly-owned subsidiary. PGBH Trust I .
In connection with our 2018 acquisition of First American International Bank ("FAIB") and its holding company, First American International Corp. ("FAIC"), we acquired the FAIC Statutory Trust I (“FAIC Trust I”), a statutory business trust that was established by FAIC in 2004 under the laws of Delaware as a wholly-owned subsidiary. PGBH Trust I .
During the years ended December 31, 2024 and 2023, the Bank paid supervisory assessments to the DFPI totaling $303,000 and $268,000. The Bank operates branches in California, Illinois, Nevada, New York, New Jersey and Hawaii.
During the years ended December 31, 2025 and 2024, the Bank paid supervisory assessments to the DFPI totaling $310,000 and $303,000. The Bank operates branches in California, Illinois, Nevada, New York, New Jersey and Hawaii.
The Bank originates these loans through its correspondent banking relationships, and through its branch network.
The Company originates these loans through its correspondent banking relationships, and through its branch network.
Loans to One Borrower Under California law, our ability to make aggregate secured and unsecured loans-to-one-borrower is limited to 25% and 15%, respectively, of unimpaired capital and surplus. At December 31, 2024, the Bank’s regulatory limit on aggregate secured loans-to-one-borrower was $149.4 million and unsecured loans-to-one borrower was $89.6 million.
Loans to One Borrower Under California law, our ability to make aggregate secured and unsecured loans-to-one-borrower is limited to 25% and 15%, respectively, of unimpaired capital and surplus. At December 31, 2025, the Bank’s regulatory limit on aggregate secured loans-to-one-borrower was $144.4 million and unsecured loans-to-one borrower was $86.6 million.
As a result, our growth and earnings performance may be affected not only by management decisions and general economic conditions, but also by the requirements of federal and state statutes and by the regulations and policies of various bank regulatory agencies, including the Department of Financial Protection and Innovation ("DFPI"), the Board of Governors of the Federal Reserve System (“Federal Reserve”), the FDIC, and the Consumer Financial Protection Bureau (“CFPB”).
As a result, our growth and earnings performance may be affected not only by management decisions and general economic conditions, but also by the requirements of federal and state statutes and by the regulations and policies of various bank regulatory agencies, including the DFPI, the Board of Governors of the Federal Reserve System (“Federal Reserve”), the FDIC, and the CFPB.
As of December 31, 2024, we had $1.49 billion of SFR mortgage loans, representing 48.9% of our total loan portfolio compared to $1.49 billion, or 49.1% at December 31, 2023. We had $11.5 million in non-accrual SFR real estate loans as of December 31, 2024 compared to $18.1 million in non-accrual loans at December 31, 2023.
As of December 31, 2025, we had $1.66 billion of SFR mortgage loans, representing 50.0% of our total loan portfolio compared to $1.49 billion, or 48.9% at December 31, 2024. We had $2.1 million in non-accrual SFR real estate loans as of December 31, 2025, compared to $11.5 million in non-accrual loans at December 31, 2024.
We originate non-qualified SFR mortgage loans generally to hold for investment. The loans generated through our retail branch network are to our customers, many of whom establish a deposit relationship with us. During 2024, we originated $102.8 million of SFR mortgage loans through our retail channel and $80.4 million of such loans through our wholesale channels.
We originate non-qualified SFR mortgage loans generally to hold for investment. The loans generated through our retail branch network are to our customers and referrals, many of whom establish a deposit relationship with us. During 2025, we originated $202.8 million of SFR mortgage loans through our retail channel and $210.9 million of such loans through our wholesale channels.
Our success is the result of our products and market expertise. We focus on delivering high-quality, customized and quick turnaround service for our clients while maintaining an appropriate balance between disciplined underwriting and flexibility and responsiveness to our clients.
We have significant expertise in small to middle market C&I lending. Our success is the result of our products and market expertise. We focus on delivering high-quality, customized and quick turnaround service for our clients while maintaining an appropriate balance between disciplined underwriting and flexibility and responsiveness to our clients.
As of December 31, 2024, FAIB Capital Corp has $533.2 million in assets. 8 Table of Contents Human Capital Resources We believe in the value of teamwork and the power of participation and collaboration. We cultivate an environment where it is understood that we need each other to be successful.
As of December 31, 2025, FAIBCC had $533.7 million in assets. 8 Table of Contents Human Capital Resources We believe in the value of teamwork and the power of participation and collaboration. We cultivate an environment where it is understood that we need each other to be successful.
We intend to maintain our MDI designation, as it is expected that at least 51% of our issued and outstanding shares of capital shall remain owned by minority individuals. The MDI designation has been historically beneficial to us, and we continue to use the program for technical assistance. In addition, we have been designated a community development financial institution (“CDFI”).
We intend to maintain our MDI designation, as it is expected that at least 51% of our issued and outstanding shares of capital shall remain owned by minority individuals. The MDI designation has been historically beneficial to us, and we continue to use the program for technical assistance.
As of December 31, 2024, we had $3.1 billion of total deposits, with a weighted average spot rate of 3.15%. Other Subsidiaries In addition to the Bank and RAM, the holding Company has three statutory business trusts acquired through our business acquisitions as follows: TFC Statutory Trust .
As of December 31, 2025, we had $3.4 billion of total deposits, with a weighted average spot rate of 2.90%. Other Subsidiaries In addition to the Bank and RAM, the Bancorp has three statutory business trusts acquired through our business acquisitions as follows: TFC Statutory Trust .
The total CRE portfolio was $1.2 billion, or 39.3% of our total loan portfolio, at December 31, 2024 of which $160.2 million was secured by owner occupied properties compared to $1.2 billion, or 38.5% of our total loan portfolio, at December 31, 2023, of which $193.4 million was secured by owner occupied properties.
The total CRE portfolio was $1.3 billion, or 39.3% of our total loan portfolio, at December 31, 2025, of which $154.7 million was secured by owner occupied properties, compared to $1.2 billion, or 39.3% of our total loan portfolio, at December 31, 2024, of which $160.2 million was secured by owner occupied properties.
We are committed to offering a competitive total compensation package. We regularly compare compensation and benefits with peer companies and market data, making adjustments as needed to ensure compensation stays competitive.
We regularly compare compensation and benefits with peer companies and market data, making adjustments as needed to ensure compensation stays competitive.
We also offer a wide array of benefits for our associates and their families, including: ● Competitive bonus programs; ● Comprehensive medical, dental and vision benefits; ● 401(k) plan including a competitive company match; ● Flexible work schedules; ● Paid time off (PTO), holidays and bank holidays; ● Internal training and development; and ● Employee Assistance Plans (EAP) Corporate Information Our principal executive offices are located at 1055 Wilshire Blvd.
We also offer a wide array of benefits for our associates and their families, including: ● Competitive bonus programs; ● Comprehensive medical, dental and vision benefits; ● 401(k) plan including a competitive company match; ● Flexible work schedules; ● Paid time off, holidays and bank holidays; ● Internal training and development; and ● Employee Assistance Plans.
We had outstanding subordinated debentures and subordinated notes in the aggregate principal amount of $134.7 million as of December 31, 2024.
We had outstanding subordinated debentures and subordinated notes in the aggregate principal amount of $135.3 million as of December 31, 2025.
We guarantee on a limited basis the payments of distributions on the capital securities of the trusts and payments on redemption of the capital securities of the trusts. We are the owner of all the beneficial interests represented by the common securities of the trusts.
We guarantee on a limited basis the payments of distributions on the capital securities of the trusts and payments on redemption of the capital securities of the trusts. We are the owner of all the beneficial interests represented by the common securities of the trusts. In addition, the Bank has a wholly-owned subsidiary , FAIB Capital Corp.
As of December 31, 2024, our real estate construction loan portfolio totaled $173.3 million, or 5.7% of our total loan portfolio, and was divided among the following categories: $58.3 million of residential construction; $98.0 million of commercial construction; and $17.0 million of land acquisition and development.
As of December 31, 2025, our real estate construction loan portfolio totaled $155.5 million, or 4.7% of our total loan portfolio, and was divided among the following categories: $100.0 million of commercial construction; $ 51.8 million of residential construction; and $ 3.6 million of land acquisition and development.
In addition, the Bank has a wholly-owned subsidiary , FAIB Capital Corp, a real estate investment trust, which was acquired in connection with the 2018 acquisition of FAIC. FAIB Capital Corp. is a New York State corporation formed on August 28, 2013. The purpose of this real estate investment trust is to minimize New York State and local taxes.
("FAIBCC"), a real estate investment trust, which was acquired through the acquisition of FAIC in 2018. FAIBCC is a New York State corporation formed on August 28, 2013. The purpose of this real estate investment trust is to minimize New York State and local taxes.
As of December 31, 2024, we had total consolidated assets of $4.0 billion, gross consolidated loans of $3.1 billion, deposits of $3.1 billion and shareholders’ equity of $507.9 million.
As of December 31, 2025, we had total consolidated assets of $4.2 billion, gross consolidated loans of $3.3 billion, deposits of $3.4 billion and shareholders’ equity of $523.4 million.
Although we were founded by and market primarily to Chinese-Americans, we are broadening our marketing efforts to include all Asian-American communities. In certain geographic markets where we currently operate, there is an overlap between Chinese-American, Korean-American and other Asian-American banks for loan and deposit business. We aim to grow both organically and potentially through opportunistic acquisitions in these markets.
In certain geographic markets where we currently operate, there is an overlap between Chinese-American, Korean-American, and other Asian-American banks for loan and deposit business. We aim to grow both organically and potentially through opportunistic acquisitions in these markets.
As many of our customers have more than $250,000 on deposit with us, we believe that using this method reflects a more accurate assessment of the stability of our deposit base. As of December 31, 2024, $2.2 billion or 72.7% of our relationships are considered core relationships.
As many of our customers have more than $250,000 on deposit with us, we believe that using this method reflects a more accurate assessment of the stability of our deposit base.
For 2024, 2023 and 2022, we were subject to a maximum federal income tax rate of 21.00%, California state income tax rate of 10.84% and various state tax rates for other various state jurisdictions. 25 Table of Contents
For 2025, 2024, and 2023, we were subject to a maximum federal income tax rate of 21.00%, California state income tax rate of 10.84% and various other state and local tax rates, including a New York state and New York City income tax rate of 9.43% and 8.85%. 25 Table of Contents
During 2023, we originated $78.6 million of SFR mortgage loans through our retail channel and $113.7 million of such loans through our wholesale channels. We have sold non-qualified SFR mortgage loans to other Asian-American banks and other investors.
During 2024, we originated $102.8 million of SFR mortgage loans through our retail channel and $80.4 million of such loans through our wholesale channels. We have sold non-qualified SFR mortgage loans to other banks and investors.
When we refer to “we”, “us”, “our”, or the “Company”, we are referring to RBB Bancorp and its consolidated subsidiaries including the Bank, collectively. When we refer to the “parent company”, “Bancorp”, or the “holding company”, we are referring to RBB Bancorp, the parent company, on a stand-alone basis.
When we refer to the “parent company”, “Bancorp”, or the “holding company”, we are referring to RBB Bancorp, the parent company, on a stand-alone basis.
As of December 31, 2024, we had outstanding C&I loans of $129.6 million, or 4.2% of our total loan portfolio, compared to $130.1 million, or 4.3% of our total loan portfolio as of December 31, 2023. C&I loans on nonaccrual totaled $6.3 million and $854,000 at December 31, 2024 and 2023. SBA Loans.
As of December 31, 2025, we had outstanding C&I loans of $140.1 million, or 4.2% of our total loan portfolio, compared to $129.6 million, or 4.2% of our total loan portfolio as of December 31, 2024.
From time to time, we also originate SBA 504 loans. As of December 31, 2024, our SBA loan portfolio totaled $47.3 million, or 1.5% of our total loan portfolio compared to $52.1 million, or 1.7% at December 31, 2023.
As of December 31, 2025, our SBA loan portfolio totaled $56.0 million, or 1.7% of our total loan portfolio compared to $47.3 million, or 1.5% at December 31, 2024.
Bancorp is dependent on the performance of the Bank for funds, which may be received as dividends from the Bank, for use in the operation of Bancorp and the ability of Bancorp to pay dividends to its stockholders.
Bancorp is dependent on the performance of the Bank for funds, which may be received as dividends from the Bank, for use in the operation of Bancorp and the ability of Bancorp to pay dividends to its stockholders. Future cash dividends by the Bank will also depend upon management’s assessment of future capital requirements, contractual restrictions, and other factors.
SFR mortgage loans held for sale ("HFS") consist primarily of first trust deed mortgages on SFR properties located in California, New York and New Jersey. SFR mortgage loans HFS are generally sold with the servicing rights retained. Commercial and Industrial Loans. We have significant expertise in small to middle market C&I lending.
SFR mortgage loans held for sale ("HFS") consist primarily of first trust deed mortgages on SFR properties located in California, New York, Illinois, and New Jersey. SFR mortgage loans HFS are generally sold with the servicing rights retained, however most recent loan sales have been servicing released.
The majority of our staff are regular full-time employees. We also employ regular part-time associates and some seasonal/temporary associates. As of December 31, 2024, we had 372 full-time equivalent employees. We do not outsource job functions or use subcontractors to fill open positions.
The majority of our staff are regular full-time employees, however we also employ regular part-time associates. We do not outsource job functions or use subcontractors to fill open positions, and rarely use seasonal or temporary employees. None of our employees are represented by any collective bargaining unit or are parties to a collective bargaining agreement.
As of December 31, 2023, the C&D loans totaled $181.5 million and were comprised of $80.3 million of residential construction, $78.1 million of commercial construction, and $23.1 million of land acquisition and development. There were $44.6 million non-accrual C&D loans as of December 31, 2024 compared to zero as of December 31, 2023. Commercial Real Estate Loans.
As of December 31, 2024, the C&D loans totaled $173.3 million and were comprised of $98.0 million of commercial construction; $58.4 million of residential construction; and $17.0 million of land acquisition and development. There were $ 28.0 million non-accrual C&D loans as of December 31, 2025, compared to $44.6 million as of December 31, 2024. Commercial and Industrial Loans.
The federal banking agencies may take compliance with fair lending laws and practices, including CRA into account when regulating and supervising other activities. On October 24, 2023, the federal regulatory agencies jointly issued a final rule to strengthen and modernize regulations implementing the CRA.
The federal banking agencies may take compliance with fair lending laws and practices, including CRA into account when regulating and supervising other activities.
On November 16, 2023, the FDIC adopted a final rule on special assessment to recover the losses to the DIF from the protection of uninsured depositors following the closures of Silicon Valley Bank, Santa Clara, CA, and Signature Bank, New York, NY during March 2023.
The final rule became effective on January 1, 2023, and was applicable to the first quarterly assessment period of 2023. In November 2023, the FDIC issued a final rule to implement a special assessment to recover losses to the DIF arising from the protection of uninsured depositors following the closures of Silicon Valley Bank and Signature Bank in March 2023.
Our SBA loans are typically made to small-sized manufacturing, wholesale, retail, hotel/motel and service businesses for working capital needs or business expansions. SBA loans can have any maturity up to 25 years. Typically, non-real estate secured loans mature in less than 10 years. Collateral may include inventory, accounts receivable and equipment, and personal guarantees.
SBA loans can have any maturity up to 25 years. Typically, non-real estate secured loans mature in less than 10 years. Collateral may include inventory, accounts receivable and equipment, and personal guarantees. From time to time, we also originate SBA 504 loans.
These banks promote competition for attracting deposits and making loans in the markets we target. In addition to Chinese-American banks, we also compete with other banks in the region, particularly with Korean-American banks in our lending areas for SFR and SBA loans.
These banks promote competition for attracting deposits and making loans in the markets we target. In addition to Chinese-American banks, we also compete with other banks in the region for deposits, loans, and other banking products. Although we were founded by and market primarily to Chinese-Americans, we have broadened our marketing efforts to include all Asian-American communities.
None of our employees are represented by any collective bargaining unit or are parties to a collective bargaining agreement. Health & Safety. We are focused on conducting our business in a safe manner and in compliance with all local, state and federal safety and health regulations, and special safety concerns. Benefits.
As of December 31, 2025, we had 369 full-time equivalent employees. Health & Safety. We are focused on conducting our business in a safe manner and in compliance with all local, state and federal safety and health regulations, and special safety concerns. Benefits. We are committed to offering a competitive total compensation package.
Future cash dividends by the Bank will also depend upon management’s assessment of future capital requirements, contractual restrictions, and other factors. 17 Table of Contents Transactions with Affiliates and Insiders Depository institutions are subject to the restrictions contained in the Federal Reserve Act (the “FRA”) with respect to loans to directors, executive officers and principal stockholders.
Dividends on common stock during the years ended December 31, 2025 and 2024, totaled $11.3 million and $11.7 million. 17 Table of Contents Transactions with Affiliates and Insiders Depository institutions are subject to the restrictions contained in the Federal Reserve Act (the “FRA”) with respect to loans to directors, executive officers and principal stockholders.
As of December 31, 2024, we met the requirements to be “well-capitalized” based upon the aforementioned ratios for purposes of the PCA regulations, as currently in effect. 16 Table of Contents Dividend Payments Bancorp’s ability to pay dividends to its shareholders may be affected by both general corporate law considerations and the policies of the Federal Reserve applicable to bank holding companies.
The capital classification of a bank holding company and a bank affects the frequency of regulatory examinations, the bank holding company’s and the bank’s ability to engage in certain activities and the deposit insurance premium paid by a bank. 16 Table of Contents Dividend Payments Bancorp’s ability to pay dividends to its shareholders may be affected by both general corporate law considerations and the policies of the Federal Reserve applicable to bank holding companies.
The multi-family residential loan portfolio totaled $605.5 million as of December 31, 2024 compared to $573.4 million as of December 31, 2023. Non-accrual CRE loans totaled $17.1 million and $10.6 million at December 31, 2024 and 2023. 6 Table of Contents SFR Loans.
The multi-family residential loan portfolio totaled $745.3 million as of December 31, 2025, compared to $605.5 million as of December 31, 2024. Nonaccrual CRE loans totaled $8.2 million at December 31, 2025, and $17.1 million at December 31, 2024, of which $9.7 million were held for sale. Construction and Land Development Loans.
The Bank does not currently expect the CFPB’s rules to have a significant impact on its operations, except for higher compliance costs. 20 Table of Contents The Volcker Rule On December 10, 2013, the federal regulatory agencies issued final rules to implement the prohibitions required by the Volcker Rule under the Dodd-Frank Act.
The risk retention requirement generally is 5%, but could be increased or decreased by regulation. 20 Table of Contents The Volcker Rule On December 10, 2013, the federal regulatory agencies issued final rules to implement the prohibitions required by the Volcker Rule under the Dodd-Frank Act.
We are designated as a Preferred Lender under the SBA Preferred Lender Program. We offer mostly SBA 7(a) variable-rate loans. We originate all loans to hold for investment and move loans to available for sale as management decides which loans to sell. We generally sell the guaranteed portion of the SBA loans that we originate.
We originate all loans to hold for investment and move loans to available for sale as management decides which loans to sell. We generally sell the guaranteed portion of the SBA loans that we originate. Our SBA loans are typically made to small-sized manufacturing, wholesale, retail, hotel/motel and service businesses for working capital needs or business expansions.
The Basel III final framework provides for a number of deductions from and adjustments to CET1.
As of December 31, 2025, the Company's capital ratios exceeded the minimum capital adequacy guideline percentage requirements to be considered "well capitalized" under the Basel III capital rules. The Basel III final framework provides for a number of deductions from and adjustments to CET1.
“Critically undercapitalized” institutions are subject to the appointment of a receiver or conservator. The capital classification of a bank holding company and a bank affects the frequency of regulatory examinations, the bank holding company’s and the bank’s ability to engage in certain activities and the deposit insurance premium paid by the Bank.
“Critically undercapitalized” institutions are subject to the appointment of a receiver or conservator.
The assessment base for the special assessment is equal to an IDI’s estimated uninsured deposits, reported for the quarter that ended December 31, 2022, adjusted to exclude the first $5 billion in estimated uninsured deposits from the IDI, or for IDIs that are part of a holding company with one or more subsidiary IDIs, at the banking organization level.
The special assessment is based on an IDI’s estimated uninsured deposits as of December 31, 2022, adjusted to exclude the first $5.0 billion of estimated uninsured deposits and will be assessed at a quarterly rate of 3.36 bps, over eight quarterly assessment periods beginning in the first quarter of 2024.
Removed
Between 2011 and 2018, we successfully completed six whole-bank acquisitions. Most recently, on January 14, 2022, we purchased the Bank of the Orient's (“BOTO”) Honolulu, Hawaii branch (the “Hawaii Branch”).
Added
There are no problem assets at RAM or activity in this subsidiary for the fiscal years ended 2025 or 2024. When we refer to “we”, “us”, “our”, or the “Company”, we are referring to RBB Bancorp and its consolidated subsidiaries including the Bank, collectively.
Removed
We received a payment of $71.0 million to acquire all the premises and equipment at the Hawaii Branch, all deposits totaling $81.7 million and performing loans totaling $7.4 million as of the purchase date, reflecting a premium paid by us of approximately $2.3 million.
Added
Between 2011 and 2018 we successfully completed six whole-bank acquisitions and, in 2022, a bank branch acquisition in Hawaii. All of our acquisitions have been accounted for using the acquisition method of accounting and, accordingly, the operating results of the acquired entities have been included in the consolidated financial statements from their respective acquisition dates.
Removed
CDFIs are certified by the CDFI Fund at the U.S. Department of the Treasury (“Treasury”), which provide funds to CDFIs through a variety of programs. We have established a CDFI advisory board to assist the Bank in finding organizations to support low-to-moderate income individuals.
Added
In 2025, we identified new channels for secondary market sales for SFR loans that the Bank originated. We completed two sales transactions with two other counterparties, both insured US banks, in addition to other bidders for our mortgage products, which creates a lever for liquidity and additional fee income.
Removed
To date, we have received five CDFI grants in the aggregate amount of $9.4 million and have deployed the grant proceeds and satisfied all performance obligations related to the grants.
Added
As we identify additional counterparties who are able and willing to purchase our SFR mortgage loans, we expect to use this channel to grow additional fee income while increasing origination volume. 6 Table of Contents Commercial Real Estate Loans.
Removed
We sell the SBA guarantee portion of the loan in the secondary market subject to market conditions. 5 Table of Contents Our Competition We view the Asian-centric banking market, including the Company, as comprised of 25 banks divided into three overlapping segments: publicly-traded banks, locally-based banks, and banks that are subsidiaries of Taiwanese or Chinese banks.
Added
C&I loans on nonaccrual totaled $5.1 million at December 31, 2025, and $6.3 million at December 31, 2024, of which $1.5 million were held for sale. SBA Loans. We are designated as a Preferred Lender under the SBA Preferred Lender Program. We offer SBA 7(a) variable-rate loans.
Removed
On March 29, 2024, a federal district court in Texas granted a preliminary injunction barring implementation of the final rule in response to a lawsuit filed by several trade groups. We will continue to monitor the litigation until resolved. We have also begun efforts to evaluate the impact of the new rule and to develop a strategy to ensure compliance.
Added
At December 31, 2025, $2.7 billion, or 80.6%, of our relationships are less than or equal to $250,000 or are over $250,000 and meet our defined criteria to be considered a stable deposit.
Removed
The risk retention requirement generally is 5%, but could be increased or decreased by regulation.
Added
Corporate Information Our principal executive offices are located at 1055 Wilshire Blvd.
Removed
The final rule became effective on January 1, 2023, and was applicable to the first quarterly assessment period of 2023.
Added
During the years ended December 31, 2025 and 2024, the Bank paid $45.0 million and $20.0 million, respectively, of dividends to Bancorp.
Removed
The FDIC will collect the special assessment at an annual rate of approximately 13.4 basis points, over eight quarterly assessment periods.

… 6 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

50 edited+8 added−16 removed177 unchanged
Biggest changeHowever, our risk and exposure to these matters remains heightened because of, among other things, the evolving nature of these threats, the continuation of a remote work environment for our employees and service providers and our plans to continue to implement and expand digital banking services, expand operations, and use third-party information systems that includes cloud-based infrastructure, platforms, and software.
Biggest changeHowever, our exposure remains heightened due to the evolving nature of the threats, the continued use of remote work arrangements by employees and service providers, our ongoing expansion of digital banking services, and our reliance on third-party information systems including cloud-based infrastructure, platforms, and software. Recent attacks targeting financial services institutions demonstrate that the risk to our systems remains significant.
The sale of any of such shares could cause the market price of our stock to decline, and concerns that those sales may occur could cause the trading price of our common stock to decrease or to be lower than it might otherwise be.
The sale of any such shares could cause the market price of our stock to decline, and concerns that those sales may occur could cause the trading price of our common stock to decrease or to be lower than it might otherwise be.
When interest rates rise, the rate of interest we receive on our assets, such as loans, rises more quickly than the rate of interest that we pay on our interest-bearing liabilities, such as deposits, which may cause our profits to increase.
When interest rates rise, the rate of interest we receive on our assets, such as loans, may rise more quickly than the rate of interest that we pay on our interest-bearing liabilities, such as deposits, which may cause our profits to increase.
Although, we are taking steps to reduce our dependence on these banks by expanding the number of banks that we sell our non-qualified SFR mortgages to, we may not be successful in expanding our sales market for our non-qualified mortgage loans. These loans also present a pricing risk as rates change, and our sale premiums cannot be guaranteed.
We are taking steps to reduce our dependence on these banks by expanding the number of banks that we sell our non-qualified SFR mortgages to, but may not be successful in expanding our sales market for our non-qualified mortgage loans. These loans also present a pricing risk as rates change, and our sale premiums cannot be guaranteed.
Although inflation levels moved closer to the Federal Open Market Committee’s (“FOMC”) target rate of 2% in 2024, as of December 31, 2024, inflation rates remained elevated above the target rate. To the extent inflation persists, it poses a risk to the economy overall, and could pose direct or indirect challenges to our clients and to our business.
Although inflation levels moved closer to the Federal Open Market Committee’s (“FOMC”) target rate of 2% in 2025, as of December 31, 2025, inflation rates remained elevated above the target rate. To the extent inflation persists, it poses a risk to the economy overall, and could pose direct or indirect challenges to our clients and to our business.
At December 31, 2024, approximately 94.0% of our loan portfolio was comprised of loans with real estate as a primary or secondary component of collateral. The market value of real estate can fluctuate significantly in a short period of time as a result of market conditions in the area in which the real estate is located.
At December 31, 2025, approximately 94.0% of our loan portfolio was comprised of loans with real estate as a primary or secondary component of collateral. The market value of real estate can fluctuate significantly in a short period of time as a result of market conditions in the area in which the real estate is located.
Our clients may be the victims of phishing scams, providing cyber criminals access to their accounts, or credit or debit card information. In these situations, we incur costs to replace compromised cards and address fraudulent transaction activity affecting our clients. Both internal and external fraud and theft are risks.
Our clients may be the victims of phishing scams, providing cyber criminals access to their accounts, or credit or debit card information. In these situations, we incur costs to replace compromised cards and address fraudulent transaction activity affecting our clients. Both internal and external fraud and theft present significant risks.
As of that dat e, 97.0% of our SFR mortgage loans consisted of non-qualified mortgage loans, which are considered to have a higher degree of risk and are less liquid than qualified mortgage loans.
As of that dat e , 97.4% of our SFR mortgage loans consisted of non-qualified mortgage loans, which are considered to have a higher degree of risk and are less liquid than qualified mortgage loans.
We also face additional costs when our customers become the victims of cyber-attacks. For example, various retailers have reported that they have been the victims of a cyber-attack in which large amounts of their clients’ data, including debit and credit card information, is obtained.
We also incur costs when our customers become the victims of cyber-attacks. For example, various retailers have reported that they have been the victims of a cyber-attack in which large amounts of their clients’ data, including debit and credit card information, is obtained.
As the funding and sale of the guaranteed portion of SBA 7(a) loans is a portion of our business and a part of our noninterest income, any significant changes to the funding for the SBA 7(a) loan program may have an unfavorable impact on our prospects, future performance and results of operations.
As the funding and sale of the guaranteed portion of SBA 7(a) loans is a portion of our business and a part of our noninterest income, any significant changes to the funding for the SBA 7(a) loan program and any prolonged government shutdown may have an unfavorable impact on our prospects, future performance and results of operations.
Such non-qualified loans may be considered more risky than qualified mortgage loans although we attempt to address this enhanced risk through our underwriting process, including requiring larger down payments and, in some cases, interest reserves.
Since non-qualified loans may be considered more risky than qualified mortgage loans, we attempt to address this enhanced risk through our underwriting process, including requiring larger down payments and, in some cases, interest reserves.
Real estate construction loans are based upon estimates of costs and values associated with the complete project. These estimates may be inaccurate, and we may be exposed to significant losses on loans for these projects. Real estate construction loans, including land development loans, comprised approximately 5.7% of our total loan portfolio as of December 31, 2024.
Real estate construction loans are based upon estimates of costs and values associated with the complete project. These estimates may be inaccurate, and we may be exposed to significant losses on loans for these projects. Real estate construction loans, including land development loans, comprised approximately 4.7% of our total loan portfolio as of December 31, 2025.
In a declining interest rate environment, there may be an increase in prepayments on loans as borrowers refinance their mortgages and other indebtedness at lower rates. At December 31, 2024, total loans held for investment ("HFI") were 81.7% of our earning assets and exhibited a positive 4% sensitivity to rising interest rates in a 100 basis point parallel shock.
In a declining interest rate environment, there may be an increase in prepayments on loans as borrowers refinance their mortgages and other indebtedness at lower rates. At December 31, 2025, total loans held for investment ("HFI") were 84.4% of our earning assets and exhibited a positive 4% sensitivity to rising interest rates in a 100 basis point parallel shock.
As of December 31, 2024, 3.0% of our total SFR mortgage loan portfolio were loans originated to foreign nationals.
As of December 31, 2025, 3.0% of our total SFR mortgage loan portfolio were loans originated to foreign nationals.
Pursuant to the CRE Concentration Guidelines, loans secured by owner occupied commercial real estate are not included for purposes of CRE Concentration calculation. As of December 31, 2024, our CRE loans represented 207% of our Bank total risk-based capital, as compared to 183% as of December 31, 2023.
Pursuant to the CRE Concentration Guidelines, loans secured by owner occupied commercial real estate are not included for purposes of CRE Concentration calculation. As of December 31, 2025, our CRE loans represented 226% of our Bank total risk-based capital, as compared to 207% as of December 31, 2024.
Expansion of our business beyond California could have a material adverse effect on our operations and financial results. Other Risks Related to Our Business If we fail to maintain effective internal control over financial reporting, or if we fail to remediate material weaknesses previously identified, we may not be able to report our financial results accurately and timely.
Expansion of our business beyond California could have a material adverse effect on our operations and financial results. Other Risks Related to Our Business If we fail to maintain effective internal control over financial reporting, we may not be able to report our financial results accurately and timely.
This would have a material adverse effect on our net interest income and our results of operations. We could recognize losses on securities held in our securities portfolio, particularly if interest rates increase or economic and market conditions deteriorate. As of December 31, 2024, the fair value of our securities portfolio was approximately $425.1 million.
This would have a material adverse effect on our net interest income and our results of operations. We could recognize losses on securities held in our securities portfolio, particularly if interest rates increase or economic and market conditions deteriorate. As of December 31, 2025, the fair value of our securities portfolio was approximately $411.3 million.
We are based in California and at December 31, 2024, approximately 59.2% of the aggregate outstanding principal of our total loan portfolio was secured by real estate located in California or businesses in California. In addition, the computer systems that operate our Internet websites and some of their back-up systems are located in California.
We are based in California and at December 31, 2025, approximately 58.8% of the aggregate outstanding principal of our total loan portfolio was secured by real estate located in California or businesses in California. In addition, the computer systems that operate our Internet websites and some of their back-up systems are located in California.
The forecasts, assumptions, and models required by CECL are based upon third-party forecasts, subject to management’s review and adjustment in light of information currently available. 30 Table of Contents As of December 31, 2024, our ACL as a percentage of total loans HFI was 1.59% and as a percentage of total nonperforming loans HFI was 69.4%.
The forecasts, assumptions, and models required by CECL are based upon third-party forecasts, subject to management’s review and adjustment in light of information currently available. 30 Table of Contents As of December 31, 2025, our ACL as a percentage of total loans HFI was 1.32% and as a percentage of total nonperforming loans HFI was 98.3%.
We receive substantially all of our revenue from dividends from the Bank and RAM, which we use as the principal source of funds to pay our expenses. Various federal and/or state laws and regulations limit the amount of dividends that the Bank and certain of our non-bank subsidiaries may pay us.
We receive substantially all of our revenue from dividends from the Bank, which we use as the principal source of funds to pay our expenses. Various federal and/or state laws and regulations limit the amount of dividends that the Bank and certain of our non-bank subsidiaries may pay us. Such limits are also tied to the earnings of our subsidiaries.
A significant decline in our stock price could result in substantial losses for individual stockholders and could lead to costly and disruptive securities litigation. Our dividend policy may change. We have paid quarterly dividends since our initial public offering in the third quarter of 2017.
A significant decline in our stock price could result in substantial losses for individual stockholders and could lead to costly and disruptive securities litigation. Our dividend policy may change. We have paid quarterly dividends since our initial public offering in the third quarter of 2017. We paid total dividends of $0.64 per share in 2023, 2024, and 2025.
We originated $31.2 million of SBA loans for the year ended December 31, 2024. We sold $13.8 million of the guaranteed portion of our SBA loans for the year ended December 31, 2024.
We originated $27.2 million of SBA loans for the year ended December 31, 2025. We sold $10.8 million of the guaranteed portion of our SBA loans for the year ended December 31, 2025.
Our SFR loan product consists primarily of non-qualified SFR mortgage loans, which may be considered less liquid and more risky. As of December 31, 2024, our SFR mortgage loan portfolio amounted to $1.49 billion or 48.9% of our loans HFI portfolio.
Our SFR loan product consists primarily of non-qualified SFR mortgage loans, which may be considered less liquid and more risky. As of December 31, 2025, our SFR mortgage loan portfolio amounted to $1.66 billion or 50.0% of our loan portfolio.
We offer two SFR mortgage products, a low loan-to-value, alternative document hybrid non-qualified SFR mortgage loan, or non-qualified SFR mortgage loan, and a qualified SFR mortgage loan. As of December 31, 2024, our non-qualified SFR mortgage loans had an average loan-to-value of 55.9% and an average FICO score of 763.
We offer two SFR mortgage products, a low loan-to-value, alternative document hybrid non-qualified SFR mortgage loan, which we refer to as non-qualified SFR mortgage loan, and a qualified SFR mortgage loan. As of December 31, 2025, our non-qualified SFR mortgage loans had an average loan-to-value of 54.6% and an average FICO score of 763.
We also have a concentration in our SFR secondary sale market, as a substantial portion of our non-qualified mortgage loans have been historically sold to two banks; although, we are currently selling SFR mortgage loans to three banks.
We also have a concentration in our SFR secondary sale market, as a substantial portion of our non-qualified mortgage loans have been historically sold to a small number of banks.
At December 31, 2024, $420.2 million of our securities were classified as AFS with an aggregate pre-tax net unrealized loss of $29.2 million.
At December 31, 2025, $407.2 million of our securities were classified as AFS with an aggregate pre-tax net unrealized loss of $18.9 million.
Because of our large transaction volume and its necessary dependence upon automated systems to record and process these transactions, there is a risk that technical flaws, tampering, or manipulation of those automated systems, arising from events wholly or partially beyond its control, may give rise to disruption of service to customers and to financial loss or liability.
With these transactions, there is a risk that technical flaws, tampering, or manipulation of automated systems, arising from events wholly or partially beyond our control, may give rise to disruption of service to customers and to financial loss or liability.
We are exposed to the risk that our business continuity and data security systems prove to be inadequate.
We are also exposed to the risk that our business continuity and data security systems may prove inadequate under certain circumstances.
There was no other real estate owned ("OREO") at December 31, 2024. Our nonperforming assets adversely affect our net income in various ways. We do not record interest income on nonaccrual loans or OREO, thereby adversely affecting our net income and returns on assets and equity, increasing our loan administration costs and adversely affecting our efficiency ratio.
Nonaccrual loans HFI were 1.35% of our loan HFI portfolio at December 31, 2025. Our nonperforming assets adversely affect our net income in various ways. We do not record interest income on nonaccrual loans or OREO, thereby adversely affecting our net income and returns on assets and equity, increasing our loan administration costs and adversely affecting our efficiency ratio.
Consequently, as of December 31, 2024, we held $47.3 million of SBA loans on our balance sheet, of which $45.3 million or 95.9% consisted of the non-guaranteed portion of SBA loans and $2.0 million or 4.1% consisted of the guaranteed portion of SBA loans.
Consequently, as of December 31, 2025, we held $56.0 million of SBA loans on our balance sheet, of which $45.1 million or 80.5% consisted of the non-guaranteed portion of SBA loans and $10.9 million or 19.5% consisted of the guaranteed portion of SBA loans.
Related compliance costs represent hard costs beyond current regulatory costs and would also involve the cost of management and personnel resources. In addition, we have multiple stakeholders, among them stockholders, customers, federal and state regulatory authorities, and political entities, who often have differing, and sometimes conflicting, priorities and expectations regarding environmental, social and governance issues.
In addition, we have multiple stakeholders, among them stockholders, customers, federal and state regulatory authorities, and political entities, who often have differing, and sometimes conflicting, priorities and expectations regarding environmental, social and governance issues.
Holders of our common stock are only entitled to receive such cash dividends as our board of directors, in its discretion, may declare out of funds legally available for such payments.
We have no obligation to pay dividends and we may change our dividend policy at any time without notice to our shareholders. Holders of our common stock are only entitled to receive such cash dividends as our board of directors, in its discretion, may declare out of funds legally available for such payments.
If we or a critical third party vendor were to experience a cyber-attack or information security breach, we could suffer damage to our reputation, productivity losses, response costs associated with investigation and resumption of services, and incur substantial additional expenses, including remediation expenses costs associated with client notification and credit monitoring services, increased insurance premiums, regulatory penalties and fines, and costs associated civil litigation, any of which could have a materially adverse effect on our business, financial condition, and results of operations.
A successful cyber-attack or data breach involving us or a critical third-party vendor could result in reputational harm, productivity losses, remediation and response costs associated with investigation and resumption of services, client notification and credit monitoring expenses, increased insurance premiums, regulatory investigations or penalties, civil litigation, and other costs, any of which could have a material adverse effect on our business, financial condition, and results of operations.
We have outstanding options to purchase 174,500 shares of our common stock as of December 31, 2024 that may be exercised and sold (assuming all vesting requirements are met), and we have the ability to issue options exercisable for up to an additional 1,004,658 shares of common stock pursuant to our 2017 Omnibus Stock Incentive Plan.
We have outstanding options to purchase 151,000 shares of our common stock and unvested restricted stock units of 191,091 as of December 31, 2025, that may be exercised or vest and then otherwise be sold (assuming all vesting requirements are met), and we have the ability to issue equity awards for up to an additional 878,916 shares of common stock pursuant to our 2017 Omnibus Stock Incentive Plan.
Threat actors using improperly obtained personal or financial information of consumers can attempt to obtain loans, lines of credit, or other financial products from us, or attempt to fraudulently persuade our employees, clients, or other users of our systems to disclose confidential information in order to gain improper access to our information and information systems.
Threat actors using stolen personal or financial information may attempt to fraudulently obtain loans, lines of credit, or other financial products from us, or attempt to deceive our employees, clients, or other users of our systems to disclose additional information to obtain unauthorized access to our systems.
While these laws are currently subject to legal challenge and the extent to which these laws may be pre-empted by federal law is uncertain, in the absence of federal preemption the Climate-Related Financial Act would apply to us beginning in 2026 with disclosures based on 2025 data.
While these laws are currently subject to legal challenge and the extent to which these laws may be pre-empted by federal law is uncertain, in the absence of federal preemption the Climate-Related Financial Act would apply to us. Related compliance costs represent hard costs beyond current regulatory costs and would also involve the cost of management and personnel resources.
Nonperforming assets take significant time to resolve and adversely affect our results of operations and financial condition, and could result in further losses in the future. As of December 31, 2024, our nonperforming assets totaled $81.0 million, or 2.03%, of total assets.
Nonperforming assets take significant time to resolve and adversely affect our results of operations and financial condition, and could result in further losses in the future. As of December 31, 2025, our nonperforming assets totaled $53.5 million, or 1.27%, of total assets, comprised of nonperforming loans of $44.6 million and other real estate owned ("OREO") of $8.8 million.
At December 31, 2024, we had $1.5 billion of commercial loans, consisting of $1.2 billion of CRE loans, $129.6 million of C&I loans for which real estate is not the primary source of collateral and $173.3 million of C&D loans. C&I loans represented 4.2% of our total loan portfolio at December 31, 2024.
At December 31, 2025, we had $1.6 billion of commercial loans, consisting of $1.3 billion of CRE loans, $140.1 million of C&I loans for which real estate is not the primary source of collateral and $155.5 million of C&D loans. Commercial loans are often larger and involve greater risks than other types of lending.
This amounted to $1.1 billion, or approximately 34%, of the Bank’s total deposits as of December 31, 2024. In addition, our ten largest depositor relationships accounted for approximately 11% of our deposits at December 31, 2024. Our largest depositor relationship accounted for approximately 2.2% of our deposits at December 31, 2024. These deposits can and do fluctuate substantially.
In addition, our ten largest depositor relationships accounted for approximately 12.5% of our deposits at December 31, 2025. Our largest depositor relationship accounted for approximately 2.0% of our deposits at December 31, 2025. These deposits can and do fluctuate.
If the cash flow from business operations is reduced, the borrower’s ability to repay the loan may be impaired.
Inventory and equipment may depreciate over time, may be difficult to appraise and may fluctuate in value based on the success of the business. If the cash flow from business operations is reduced, the borrower’s ability to repay the loan may be impaired.
Our C&I loans are primarily made based on the identified cash flow of the borrower and secondarily on the collateral underlying the loans. Most often, this collateral consists of accounts receivable, inventory and equipment. Inventory and equipment may depreciate over time, may be difficult to appraise and may fluctuate in value based on the success of the business.
Our C&I loans, which represented 4.2% of our total loan portfolio at December 31, 2025, are primarily made based on the identified cash flow of the borrower and secondarily on the collateral underlying the loans. Most often, this collateral consists of accounts receivable, inventory and equipment.
Due to the nature of this information, and the value it has for internal and external threat actors, we, and our third-party service providers, continue to be subject to cyber-attacks and fraud activity that attempts to gain unauthorized access, misuse information and information systems, steal information, disrupt or degrade information systems, spread malicious software, and other illegal activities.
Because this information can be valuable to threat actors, we and our third-party service providers remain exposed to cyber-attacks, fraud attempts, and other malicious activities seeking to gain unauthorized access to systems or data, misuse or steal information, disrupt operations, or deploy malicious software.
We are continuously enhancing and expanding our digital products and services to meet client and business needs with desired outcomes. These digital products and services often include storing, transmitting, and processing confidential client, employee, monetary, and business information.
We continue to enhance and expand our digital products and services to meet client needs and business objectives. These digital products and services often require storing, transmitting, and processing sensitive client, employee, financial, and proprietary business information.
The occurrence of any of these risks could result in a diminished ability for us to operate our business, additional costs to correct defects, potential liability to clients, reputational intervention, any of which could adversely affect our business, financial condition and results of operations.
The occurrence of any of these risks could impair our ability to operate effectively, result in additional costs to remediate issues, expose us to client claims, or cause reputational harm, any of which could have a material adverse effect on our business, financial condition and results of operations.
In addition, our clients and vendors rely on technology and systems not managed directly by us, such as networking devices, server infrastructure, personal computers, smartphones, tablets, and other mobile devices, to contact and conduct business with us.
In addition, our clients and vendors rely on technology and systems not managed by us—such as personal computers, mobile devices, networking equipment, and software—to conduct business with us. If the technology or systems of our clients or vendors is compromised, it could result in unauthorized access to, misuse of, or loss of confidential client, employee, financial, or business information.
As a commercial bank, we provide services to a number of clients whose deposit levels vary considerably and have a significant amount of seasonality. 165 clients maintained balances (aggregating all related accounts, including multiple business entities and personal funds of business owners) in excess of $2.0 million per client at December 31, 2024.
As a commercial bank, we provide services to a number of clients whose deposit levels vary considerably and have a significant amount of seasonality.
As cybersecurity threats continue to evolve, we may be required to expend additional resources to continue to enhance, modify, and refine our protective measures against these evolving threats. To date, we have no knowledge of a successful cyber-attack or other material information security breach affecting our systems.
To date, we have no knowledge of any successful cyber-attack or material information security breach affecting our systems.
However, because the tactics and techniques used by threat actors to bypass safeguards and security controls change frequently, and often are not recognized until after an event has occurred, we may be unable to anticipate future tactics and techniques, or to implement adequate and timely protective measures.
We maintain robust preventive, detective, and administrative safeguards designed to reduce the likelihood and impact of a material cybersecurity event. However, because the tactics used by threat actors evolve rapidly and may not be identified until after an incident has occurred, we may be unable to anticipate or implement timely protections against all emerging threats.
These activities can occur in connection with the origination of loans and lines of credit, ACH transactions, wire transactions, ATM transactions, and checking transactions, and result in financial losses as well as reputational damage. Operational errors can include information system misconfiguration, clerical or record-keeping errors, or disruptions from faulty or disabled computer or telecommunications systems.
Fraud can occur in connection with loan originations, lines of credit, ACH transactions, wire transfers, ATM activity, and other transactions, or could result from unauthorized access, employee misconduct, or the interception or theft of information by third parties resulting in financial losses as well as reputational damage.
Cybersecurity, and the continued development and enhancement of controls, processes, and practices designed to protect client information, systems, computers, software, data, and networks from attack, damage, or unauthorized access remain a priority for us.
Cybersecurity remains a priority for us, and we continue to develop and enhance controls, processes, and practices designed to protect client information, systems, computers, software, data, and networks. As threats continue to evolve, we may be required to allocate additional resources to further strengthen our security measures.
Removed
W hile customer confidence in the banking system has improved considerably since the first half of 2023, risk related to disintermediation and uninsured deposits remain, and could continue to have a material effect on our operations and/or stock price.
Added
Our deposits include $1.3 billion, or approximately 40%, of the Bank's total deposits, related to 166 client relationships who maintain balances greater than $2 million, when aggregating all related accounts, including multiple business entities and personal funds of business owners, at December 31, 2025.
Removed
Several high-profile bank failures in the first half of 2023 generated significant market volatility among publicly traded bank holding companies and, in particular, regional banks. The industry has stabilized since these failures and the customer confidence in the safety and soundness of smaller regional banks has improved considerably.
Added
Mishandling or misuse of confidential client, employee, financial, or business information—whether through system errors, employee actions, or third-party misconduct—could result in regulatory consequences, reputational harm, and financial loss.
Removed
Nevertheless, risks remain that customers may choose to invest in higher yielding and higher-rated short-term fixed income securities or maintain deposits with larger more systematically important financial institutions, all of which could materially and adversely impact our liquidity, loan funding capacity, net interest margin, capital, and results of operations.
Added
Operational errors—including information system misconfiguration, clerical mistakes, or disruptions caused by technology failures—may be repeated or amplified before detection due to the high volume of transactions we process.
Removed
In addition, the banking operating environments and public trading prices of banking institutions can be highly correlated, in particular during times of stress, which could adversely impact the trading prices of our common stock and potentially, our results of operations.
Added
The development and use of new technologies, including artificial intelligence ("AI"), can present risks and uncertainties that could adversely affect our business and financial condition. Banking and financial services technology is rapidly evolving, including the development and deployment of AI.
Removed
Commercial loans are often larger and involve greater risks than other types of lending.
Added
We and our third party vendors may develop or integrate AI or other emerging technologies into certain business products, processes, or services to increase efficiency and better serve our customers at a reduced cost.
Removed
Nonperforming loans totaled $81.0 million, and consisted of $11.2 million of nonaccrual loans HFS, and $69.8 million of nonaccrual loans HFI. Nonaccrual loans HFI were 2.29% of our loan HFI portfolio. In addition, we had $22.1 million in accruing loans that were 30-89 days delinquent as of December 31, 2024.
Added
The ability to successfully deploy and manage these emerging technologies, or to integrate them into existing systems, may adversely impact operations resulting in the disruption of service to our customers and liability or financial loss.
Removed
As of January 1, 2022, we adopted ASU 2016-13 (ASC 326), “Measurement of Credit Losses on Financial Instruments,” commonly referenced as the CECL model, which changes how we estimate credit losses and increased the required level of our ACL.
Added
AI technologies may produce undesirable results such as producing false data, generating inaccurate calculations, improperly handling or leaking sensitive information, reflecting unintended bias, or otherwise failing to perform as intended. Using third-party providers may result in limited visibility and control over these risks.
Removed
Following identification of the material weaknesses, we implemented a number of controls and procedures designed to improve our control environment, which we believe will be sufficient to remediate our previously identified material weakness.
Added
Any failures in the use of AI or related-technologies, or evolving legal and regulatory requirements governing their use, could result in regulatory consequences, reputational harm, and financial loss, and could have a material adverse effect on our business, results of operations, and financial condition.
Removed
We believe we have robust preventive, detective, and administrative safeguards and security controls to minimize the probability and magnitude of a material event.
Removed
Recent instances of attacks specifically targeting financial services businesses indicate that the risk to our systems remains significant.
Removed
If the devices of our clients or vendors become the target of a cyber-attack, or information security breach, it could result in unauthorized access to, misuse of, or loss of confidential client, employee, monetary, or business information.
Removed
If confidential client, employee, monetary, or business information were to be mishandled or misused, we could suffer significant regulatory consequences, reputational damage, and financial loss.
Removed
Such mishandling or misuse could include, for example, if such information were erroneously provided to parties who are not permitted to have the information, either by fault of our systems, employees, or counterparties, or if such information were to be intercepted or otherwise inappropriately taken by third parties, or if our own employees abused their access to financial systems to commit fraud against our clients and us.
Removed
Because the nature of the financial services business involves a high volume of transactions, certain errors may be repeated or compounded before they are discovered and successfully rectified.
Removed
We paid total dividends of $0.56 per share in 2022, and $0.64 per share in 2023 and 2024. We have no obligation to pay dividends and we may change our dividend policy at any time without notice to our shareholders.
Removed
Such limits are also tied to the earnings of our subsidiaries.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

24 edited+0 added−0 removed4 unchanged
Biggest changeCybersecurity risk management strategies include, but are not limited to: consultants who assist with assessing risks, assessing systems alignment with NIST Cybersecurity Framework, and FFIEC, penetration testing, tabletop exercises and other regulatory agency requirements. The Bank maintains a process to evaluate and manage risks associated with third-party service providers.
Biggest changeCybersecurity risk management strategies include but are not limited to, consultants who assist with assessing risks, assessing systems alignment with the NIST Cybersecurity Framework and FFIEC standards, penetration testing, tabletop exercises and other regulatory agency requirements. The Company maintains a process to evaluate and manage risks associated with third -party service providers.
Third-party incidents such as system breakdowns or failures, misconduct by the employees of such parties, or cyber-attacks, including ransomware and supply-chain compromises could have a material adverse effect on the Bank, including in circumstances in which an affected third party is unable to deliver a product or service to the Bank or results in lost or compromised information of the Bank or its clients or customers.
Third-party incidents such as system breakdowns or failures, misconduct by the employees of such parties, or cyber-attacks, including ransomware and supply-chain compromises could have a material adverse effect on the Company, including in circumstances in which an affected third party is unable to deliver a product or service to the Company or results in lost or compromised information of the Company or its clients or customers.
Item 1C. Cybersecurity. Cybersecurity threats continue to evolve as the threat landscape evolves. The Bank continuously works to evolve its cybersecurity practices with the changing landscape. Significant resources are devoted to protecting and enhancing the security of networks, computer systems, data storage devices, and other systems and technology.
Item 1C. Cybersecurity. Cybersecurity threats continue to evolve as the threat landscape evolves. The Company continuously works to evolve its cybersecurity practices with the changing landscape. Significant resources are devoted to protecting and enhancing the security of networks, computer systems, data storage devices, and other systems and technology.
The Bank’s security efforts and implemented controls are designed to protect against, among other things, cybersecurity attacks that can result in unauthorized access of confidential information, the destruction of data, disruptions to or degradations of service, the sabotaging of systems or other damage.
The Company's security efforts and implemented controls are designed to protect against, among other things, cybersecurity attacks that can result in unauthorized access of confidential information, the destruction of data, disruptions to or degradations of service, the sabotaging of systems or other damage.
Both CIO and ISO have extensive experience and qualifications in various technology and information security disciplines, including relevant experience at the Bank. Additionally, the Audit Committee has oversight of the management of cybersecurity risk via validation and review of IT and cybersecurity risk assessments and audits.
Both CIO and ISO have extensive experience and qualifications in various technology and information security disciplines, including relevant experience at the Company. Additionally, the Audit Committee has oversight of the management of cybersecurity risk via validation and review of IT and cybersecurity risk assessments and audits.
The Bank’s strategy for assessing, identifying, and managing cybersecurity risks and for evaluating the effectiveness of its cybersecurity program includes periodic risk assessments and testing of its systems, processes and procedures through audits, penetration testing, vulnerability scans, tabletop exercises, and other related exercises.
The Company’s strategy for assessing, identifying, and managing cybersecurity risks and for evaluating the effectiveness of its cybersecurity program includes periodic risk assessments and testing of its systems, processes and procedures through audits, penetration testing, vulnerability scans, tabletop exercises, and other related exercises.
The security program is commensurate with the size and complexity of the Bank. Risks from cybersecurity threats, including any previous cybersecurity events, have not materially affected the Bank or its business strategy, results of operations or financial condition.
The security program is commensurate with the size and complexity of the Company. Risks from cybersecurity threats, including any previous cybersecurity events, have not materially affected the Company or its business strategy, results of operations or financial condition.
These updates generally include information regarding cybersecurity and technology developments, the Bank’s Information Security Program and recommended changes to that program, cybersecurity policies and practices, and ongoing initiatives to improve information security, as well as any significant cybersecurity incidents and the Bank's efforts to address those incidents.
These updates generally include information regarding cybersecurity and technology developments, the Company’s Information Security Program and recommended changes to that program, cybersecurity policies and practices, and ongoing initiatives to improve information security, as well as any significant cybersecurity incidents and the Company's efforts to address those incidents.
The Bank has an incident response program designed to enable the Bank to respond to cybersecurity incidents, coordinate as appropriate with law enforcement and other government agencies, notify clients and customers, as applicable, and recover from such incidents.
The Company has an incident response program designed to enable the Company to respond to cybersecurity incidents, coordinate as appropriate with law enforcement and other government agencies, notify clients and customers, as applicable, and recover from such incidents.
Governance The IT Committee and Audit Committee are the principal board committees that oversee the Bank’s assessment and management of cybersecurity risk, including oversight of the implementation and maintenance of appropriate controls in support of the Bank’s Information Security and Cybersecurity Program.
Governance The IT Committee and Audit Committee are the principal board committees that oversee the Company’s assessment and management of cybersecurity risk, including oversight of the implementation and maintenance of appropriate controls in support of the Company’s Information Security and Cybersecurity Program.
The Bank engages third parties on a regular basis to assess, test, audit or assist with the implementation of risk management strategies, policies, and procedures to enhance the detection and management of cybersecurity risks.
The Company engages third parties on a regular basis to assess, test, audit or assist with the implementation of risk management strategies, policies, and procedures to enhance the detection and management of cybersecurity risks.
As part of its oversight of management’s implementation and maintenance of the Bank’s risk management framework, the Bank’s Board of Directors receives regular updates directly from both IT and Audit Committees concerning cybersecurity matters.
As part of its oversight of management’s implementation and maintenance of the Company’s risk management framework, the Company’s Board of Directors receives regular updates directly from both IT and Audit Committees concerning cybersecurity matters.
Reporting to the Chief Risk Officer (“CRO”) and Chief Information Officer (“CIO”), the ISO and his team are responsible for identifying, assessing and managing information security and cybersecurity risks, and for implementing and maintaining controls to prevent, detect and respond to cybersecurity threats and incidents, safeguarding the confidentiality, integrity and availability of the Bank's information systems and data.
Reporting to the Chief Risk Officer (“CRO”) and Chief Information Officer (“CIO”), the ISO and his team are responsible for identifying, assessing and managing information security and cybersecurity risks, and for implementing and maintaining controls to prevent, detect and respond to cybersecurity threats and incidents, safeguarding the confidentiality, integrity and availability of the Company s information systems and data.
Notwithstanding the Bank's efforts at cybersecurity, the Bank cannot guarantee that those efforts will successfully prevent or mitigate a cybersecurity incident that could have a material adverse effect on it. To our knowledge, cybersecurity threats, including as a result of any previous cybersecurity incidents, have not materially affected the Bank, including its business strategy, results of operations or financial condition.
Notwithstanding the Company's efforts at cybersecurity, the Company cannot guarantee that those efforts will successfully prevent or mitigate a cybersecurity incident that could have a material adverse effect on it. To our knowledge, cybersecurity threats, including as a result of any previous cybersecurity incidents, have not materially affected the Company, including its business strategy, results of operations or financial condition.
Both the IT and Audit Committees are comprised of professionals with risk management and information technology expertise to manage any material risk from a cybersecurity threat standpoint. The membership of the IT Committee includes members of the executive management team as well as directors of the Bank. The CIO and ISO actively participate in all IT Committee meetings.
Both the IT and Audit Committees are comprised of professionals with risk management and information technology expertise to manage any material risk from a cybersecurity threat standpoint. The membership of the IT Committee includes members of the executive management team and directors of the Company. The CIO and ISO actively participate in all IT Committee meetings.
The Bank's policies and procedures concerning cybersecurity matters include processes to safeguard its information systems, monitor these systems, protect the confidentiality and integrity of its data, detect intrusions into its systems, and respond to cybersecurity incidents. Extensive technical controls are in place for identifying and managing cybersecurity risks and safeguarding Bank information systems and information.
The Company's policies and procedures concerning cybersecurity matters include processes to safeguard its information systems, monitor these systems, protect the confidentiality and integrity of its data, detect intrusions into its systems, and respond to cybersecurity incidents. Extensive technical controls are in place for identifying and managing cybersecurity risks and safeguarding Company information systems and information.
As part of the Information Security and Cybersecurity Program, the Bank conducts periodic employee training to educate employees on information and cybersecurity risks and to reinforce security management practices and compliance with the Bank's security policies and standards. Training is mandatory for all employees and is supplemented by testing initiatives, including periodic phishing tests.
As part of the Information Security and Cybersecurity Program, the Company conducts periodic employee training to educate employees on information and cybersecurity risks and to reinforce security management practices and compliance with the Company's security policies and standards. Training is mandatory for all employees and is supplemented by testing initiatives, including periodic phishing tests.
The Bank uses sophisticated industry-recognized monitoring and threat detection technologies that continuously monitor its information systems and provide threat detection alerts.
The Company uses sophisticated industry-recognized monitoring and threat detection technologies that continuously monitor its information systems and provide threat detection alerts.
In addition, the Bank actively partners with appropriate government and law enforcement agencies and peer industry forums to participate in threat intelligence discussions and simulations to assist with understanding the full spectrum of cybersecurity risks and enhancing defenses and improving resiliency in the Bank’s operating environment.
In addition, the Company actively partners with appropriate government and law enforcement agencies and peer industry forums to participate in threat intelligence discussions and simulations to assist with understanding the full spectrum of cybersecurity risks and enhancing defenses and improving resiliency in the Company’s operating environment.
Bank customers are also sources of cybersecurity risk to the Bank and its information assets, particularly when their activities and systems are beyond the Bank’s own security and control systems. The Bank provides information to its customers and other external parties concerning cybersecurity risks including opportunities to reduce cybersecurity risk.
Company customers are also sources of cybersecurity risk to the Company and its information assets, particularly when their activities and systems are beyond the Company’s own security and control systems. The Company provides information to its customers and other external parties concerning cybersecurity risks, including opportunities to reduce cybersecurity risk.
Third parties with which the Bank does business, which facilitate the Bank’s business activities, e.g., vendors, supply chain, exchanges, clearing houses, central depositories, and financial intermediaries are sources of cybersecurity risk to the Bank.
Third parties with which the Company does business, which facilitate the Company's business activities, e.g., vendors, supply chain, exchanges, clearing houses, central depositories, and financial intermediaries are sources of cybersecurity risk to the Company.
The information security and cybersecurity program is designed to manage risks relating to cybersecurity threats and leverages controls, best practices recommendations, and standards from the Federal Financial Institutions Examination Council (“FFIEC”) and the National institute of Standards and Technology (“NIST”) Cybersecurity Framework, and standards set by relevant legal and regulatory authorities.
The information security and cybersecurity program is designed to manage risks relating to cybersecurity threats and leverages controls, best practices recommendations, and standards from the Federal Financial Institutions Examination Council (“FFIEC”), the National Institute of Standards and Technology (“NIST”) Cybersecurity Framework (CSF) 2.0, the ISO/IEC 27001 Security Framework, and standards set by relevant legal and regulatory authorities.
The Information Security Officer (“ISO”) oversees the Bank's Information Security and Cybersecurity Program and leads the Information Security team.
The Information Security Officer (“ISO”) oversees the Company's Information Security and Cybersecurity Program and leads the Information Security team.
Cybersecurity Risk Management The Bank maintains an Information Security and Cybersecurity Program to support the management of cybersecurity risk as a component of the Bank’s Enterprise Risk Management (“ERM”) framework.
Cybersecurity Risk Management The Company maintains an Information Security and Cybersecurity Program to support the management of cybersecurity risk as a component of the Company’s Enterprise Risk Management (“ERM”) framework.

Item 2. Properties

Properties — owned and leased real estate

2 edited+1 added−1 removed4 unchanged
Biggest changeItem 2. Properties. We are headquartered in Los Angeles County, California. We currently have nine branches in Los Angeles County located in downtown Los Angeles, San Gabriel, Torrance, Rowland Heights, Monterey Park, Silver Lake, Arcadia, Cerritos, and Diamond Bar. We have one branch in Irvine, Orange County, California.
Biggest changeWe operate nine branches in Los Angeles County located in downtown Los Angeles, San Gabriel, Torrance, Rowland Heights, Monterey Park, Silver Lake, Arcadia, Cerritos, and Diamond Bar, one branch in Irvine, Orange County, California, two branches in Ventura County, California, in Westlake Village and in Oxnard.
We have ten branches in the Eastern Region, with seven branches in the New York City metropolitan area located in Manhattan, Brooklyn, and Queens, two branches in Chicago, Illinois and one branch in New Jersey.
We also operate one branch in Las Vegas, Nevada, and one branch in Honolulu, Hawaii. We have ten branches in the Eastern Region, with seven branches in the New York City metropolitan area located in Manhattan, Brooklyn, and Queens, two branches in Chicago, Illinois and one branch in New Jersey.
Removed
We operate two branches in Ventura County, California, in Westlake Village and in Oxnard. We operate one branch in Las Vegas, Nevada. We also have one branch in Honolulu, Hawaii.
Added
Item 2. Properties. We are headquartered in Los Angeles County, California. We have 14 branches in our Western Region with 12 branches in Southern California.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

5 edited+2 added−2 removed10 unchanged
Biggest changePeriod Ending Index 12/31/19 12/31/20 12/31/21 12/31/22 12/31/23 12/31/24 RBB Bancorp 100.00 74.30 129.57 105.60 100.94 112.07 Russell 2000 Index 100.00 119.96 137.74 109.59 128.14 142.93 KBW Nasdaq Regional Banking Index 100.00 91.29 124.74 116.10 115.64 130.90 Source: S&P Global Market Intelligence © 2025 Unregistered Sales and Issuer Purchases of Equity Securities On February 29, 2024, the Board of Directors approved a stock repurchase program to buy back up to an aggregate of 1,000,000 shares of Company common stock.
Biggest changePeriod Ending Index 12/31/20 12/31/21 12/31/22 12/31/23 12/31/24 12/31/25 RBB Bancorp $ 100.00 $ 174.37 $ 142.12 $ 135.84 $ 150.82 $ 157.42 Russell 2000 Index 100.00 114.82 91.35 106.82 119.14 134.40 KBW Nasdaq Regional Banking Index 100.00 136.64 127.17 126.67 143.39 152.71 Source: S&P Global Market Intelligence © 2026 Unregistered Sales and Issuer Purchases of Equity Securities On May 29, 2025, the Company announced a new stock repurchase program providing for the repurchase of up to $18.0 million of the Company's outstanding common stock.
The terms of the debentures underlying our Trust Preferred Securities also prohibit us from paying dividends on our capital stock if we are in deferral of interest payments on those debentures. There have been no events of default under the terms of the subordinated notes as of December 31, 2024.
The terms of the debentures underlying our Trust Preferred Securities also prohibit us from paying dividends on our capital stock if we are in deferral of interest payments on those debentures. There have been no events of default under the terms of the subordinated notes as of December 31, 2025.
Business— Supervision and Regulation—The Bank—Dividend Payments. 39 Table of Contents Stock Performance Graph The following graph compares the cumulative total shareholder return on our common stock from December 31, 2019 through December 31, 2024. The graph compares our common stock with the Russell 2000 Index and the SNL Bank $1B-$5B Index.
Business— Supervision and Regulation—The Bank—Dividend Payments. 39 Table of Contents Stock Performance Graph The following graph compares the cumulative total shareholder return on our common stock from December 31, 2020 through December 31, 2025. The graph compares our common stock with the Russell 2000 Index and the SNL Bank $1B-$5B Index.
The graph assumes an investment of $100.00 in our common stock and each index on December 31, 2019 and reinvestment of all quarterly dividends. Measurement points are December 31, 2019 and the last trading day of each year-end through December 31, 2024.
The graph assumes an investment of $100.00 in our common stock and each index on December 31, 2020 and reinvestment of all quarterly dividends. Measurement points are December 31, 2020 and the last trading day of each year-end through December 31, 2025.
Shareholders As of March 12, 2025, we had approximately 2,813 common stock shareholders of record, and the closing price of our common stock was $16.93 per share.
Shareholders As of February 27, 2026, we had approximately 5,075 common stock shareholders of record, and the closing price of our common stock was $21.50 per share.
Removed
On June 14, 2022, March 16, 2022 and April 22, 2021 the Board of Directors approved a stock repurchase program to buy back up to an aggregate of 500,000 shares of Company common stock for each authorization date.
Added
The stock repurchase program will expire on June 30, 2026 but may be discontinued or amended at any time. The Company did not repurchase any shares of common stock during the fourth quarter of 2025.
Removed
We repurchased zero shares of common stock during the fourth quarter of 2024 and we repurchased 1,036,750 shares of common stock during the first three quarters of 2024 completing our authorized repurchase programs. 40 Table of Contents Item 6. [Reserved.]
Added
During the year ended December 31, 2025, the Company repurchased 746,949 shares of common stock at a weighted average share price of $18.55 per share as part of the Company's stock repurchase program. 40 Table of Contents Item 6. [Reserved.]

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

168 edited+48 added−60 removed75 unchanged
Biggest changeSFR mortgage loans represent approximately 48.9% of our total loans as of December 31, 2024, and this ratio is relatively unchanged from 49.1% as of the end of 2023. 54 Table of Contents The following table presents the balance and associated percentage of each major category in our loan portfolio as of the dates indicated: As of December 31, 2024 2023 2022 2021 2020 $ % $ % $ % $ % $ % Loans HFI: (1) (dollars in thousands) Construction and land development $ 173,290 5.7 % $ 181,469 6.0 % $ 276,876 8.3 % $ 303,144 10.3 % $ 186,723 6.9 % Commercial real estate (2) 1,201,420 39.3 % 1,167,857 38.5 % 1,312,132 39.3 % 1,247,999 42.6 % 1,003,637 37.1 % Single-family residential mortgages 1,494,022 48.9 % 1,487,796 49.1 % 1,464,108 43.9 % 1,004,576 34.3 % 1,124,357 41.5 % Commercial and industrial 129,585 4.2 % 130,096 4.3 % 201,223 6.0 % 268,709 9.2 % 290,139 10.7 % SBA 47,263 1.5 % 52,074 1.7 % 61,411 1.8 % 76,136 2.6 % 97,821 3.6 % Other loans 7,650 0.4 % 12,569 0.4 % 20,699 0.7 % 30,786 1.0 % 4,089 0.2 % Total loans HFI 3,053,230 100.0 % 3,031,861 100.0 % 3,336,449 100.0 % 2,931,350 100.0 % 2,706,766 100.0 % Allowance for loan losses (47,729 ) (41,903 ) (41,076 ) (32,912 ) (29,337 ) Total loans HFI, net $ 3,005,501 $ 2,989,958 $ 3,295,373 $ 2,898,438 $ 2,677,429 (1) Net of premiums (discounts) on acquired loans and deferred (fees) and costs (2) Includes non-farm and non-residential real estate loans, multifamily residential and SFR loans originated for a business purpose The following table presents the geographic locations of loans in our loan portfolio, by loan class, as of the date indicated: As of December 31, 2024 Construction and land development Commercial real estate Single-family residential mortgages Commercial and Industrial SBA Other Total loans HFI $ $ $ $ $ $ $ % Loans HFI: (dollars in thousands) California $ 103,548 $ 843,182 $ 710,002 $ 119,089 $ 31,945 $ 1,090 $ 1,808,856 59.2 % Hawaii — — 6,317 85 — 8 6,410 0.2 % Illinois 71 22,762 49,906 949 — 62 73,750 2.4 % New Jersey — 4,648 30,991 91 508 149 36,387 1.2 % Nevada — 22,268 17,868 635 2,078 105 42,954 1.4 % New York 57,972 175,899 646,952 936 1,956 1,896 885,611 29.0 % Other 11,699 132,661 31,986 7,800 10,776 4,340 199,262 6.6 % Total loans, net $ 173,290 $ 1,201,420 $ 1,494,022 $ 129,585 $ 47,263 $ 7,650 $ 3,053,230 100.0 % The majority of our loan portfolio is based on collateral or businesses in California and New York, which represent 88% of our loan portfolio.
Biggest changeSFR mortgage loans represent approximately 50.0% of our total loans as of December 31, 2025, compared to 48.9% as of the end of 2024. 54 Table of Contents The following table presents the balance and associated percentage of each major category in our loan portfolio as of the dates indicated: As of December 31, 2025 2024 2023 2022 2021 $ % $ % $ % $ % $ % Loans HFI: (1) (dollars in thousands) Single-family residential mortgages $ 1,655,382 50.0 % $ 1,494,022 48.9 % $ 1,487,796 49.1 % $ 1,464,108 43.9 % $ 1,004,576 34.3 % Commercial real estate (2) 1,303,019 39.3 % 1,201,420 39.3 % 1,167,857 38.5 % 1,312,132 39.3 % 1,247,999 42.6 % Construction and land development 155,464 4.7 % 173,290 5.7 % 181,469 6.0 % 276,876 8.3 % 303,144 10.3 % Commercial and industrial 140,061 4.2 % 129,585 4.2 % 130,096 4.3 % 201,223 6.0 % 268,709 9.2 % SBA 55,978 1.7 % 47,263 1.5 % 52,074 1.7 % 61,411 1.8 % 76,136 2.6 % Other loans 4,397 0.1 % 7,650 0.4 % 12,569 0.4 % 20,699 0.7 % 30,786 1.0 % Total loans HFI 3,314,301 100.0 % 3,053,230 100.0 % 3,031,861 100.0 % 3,336,449 100.0 % 2,931,350 100.0 % Allowance for loan losses (43,888 ) (47,729 ) (41,903 ) (41,076 ) (32,912 ) Total loans HFI, net $ 3,270,413 $ 3,005,501 $ 2,989,958 $ 3,295,373 $ 2,898,438 (1) Net of premiums (discounts) on acquired loans and deferred (fees) and costs.
The unrealized losses on these securities were primarily attributed to changes in interest rates. The issuers of these securities have not evidenced any cause for default on these securities. These securities have fluctuated in value since their purchase dates as market interest rates have fluctuated.
The unrealized losses on these securities were primarily attributed to changes in interest rates. These securities have fluctuated in value since their purchase dates as market interest rates have fluctuated. The issuers of these securities have not evidenced any cause for default on these securities.
Operating expenses and related income of such properties and gains and losses on their disposition are included in other operating income and expenses. Gains on transfer of loans to OREO, and gains or losses on their disposition are included in gain (loss) on OREO.
Operating expenses and related income of such properties are included in other operating income and expenses. Gains on transfer of loans to OREO, and gains or losses on their disposition are included in gain (loss) on OREO.
The tangible common equity to tangible assets ratio and tangible book value per share are non-GAAP measures generally used by financial analysts and investment bankers to evaluate capital adequacy.
Tangible Common Equity to Tangible Assets Ratio and Tangible Book Value Per Share. The tangible common equity to tangible assets ratio and tangible book value per share are non-GAAP measures generally used by financial analysts and investment bankers to evaluate capital adequacy.
However, we have the ability and the intention to hold these securities until their fair values recover to cost or maturity. As such, management does not deem these securities to be impaired under the current expected credit loss model. A summary of our analysis of these securities and the unrealized losses is described more fully in Item 8.
We have the ability and the intention to hold these securities until their fair values recover to cost or maturity. As such, management does not deem these securities to be impaired under the current expected credit loss model. A summary of our analysis of these securities and the unrealized losses is described more fully in Item 8.
Bancorp's main source of funding is dividends declared and paid to Bancorp by the Bank and RAM. There are statutory, regulatory and debt covenant limitations that affect the ability of the Bank to pay dividends to Bancorp. Management believes that these limitations will not impact our ability to meet our ongoing short-term cash obligations.
Bancorp's main source of funding is dividends declared and paid to Bancorp by the Bank. There are statutory, regulatory and debt covenant limitations that affect the ability of the Bank to pay dividends to Bancorp. Management believes that these limitations will not impact our ability to meet our ongoing short-term cash obligations.
Real estate acquired by foreclosure or deed in lieu of foreclosure is recorded at fair value at the date of foreclosure, establishing a new cost basis by a charge to the allowance for credit losses, if necessary or a gain recognized through noninterest income, as appropriate.
Real estate acquired by foreclosure or deed in lieu of foreclosure is recorded at fair value at the date of foreclosure, establishing a new cost basis (carrying value) by a charge to the allowance for credit losses, if necessary, or a gain recognized through noninterest income, as appropriate.
Management measures return on average tangible common equity (“ROATCE”) to assess our capital strength and business performance. Tangible equity excludes goodwill and other intangible assets (excluding mortgage servicing rights), and is reviewed by banking and financial institution regulators when assessing a financial institution’s capital adequacy.
Management measures return on average tangible common equity (“ROATCE”) to assess our capital strength and business performance. Tangible equity excludes goodwill and other intangible assets (excluding mortgage servicing assets), and is reviewed by banking and financial institution regulators when assessing a financial institution’s capital adequacy.
We use both internal and external qualitative factors within the CECL model including: lending policies, procedures, and strategies; changes in nature and volume of the portfolio; credit and lending personnel experience; changes in volume and trends in classified, delinquent, and nonaccrual loans; concentration risk; collateral values; regulatory and business environment; loan review results; and economic conditions. 58 Table of Contents Management estimates the ACL balance required using past loan loss experience from peers with similar asset sizes and geographic locations to the Company.
We use both internal and external data to determine qualitative factors within the CECL model including: lending policies, procedures, and strategies; changes in nature and volume of the portfolio; credit and lending personnel experience; changes in volume and trends in classified, delinquent, and nonaccrual loans; concentration risk; collateral values; regulatory and business environment; loan review results; and economic conditions. 58 Table of Contents Management estimates the ACL balance required using past loan loss experience from peers with similar asset sizes and geographic locations to the Company.
Loans are considered delinquent when principal or interest payments are past due 30 days or more; delinquent loans may remain on accrual status between 30 days and 89 days past due. Loans on which the accrual of interest has been discontinued are designated as nonaccrual loans.
Problem Loans. Loans are considered delinquent when principal or interest payments are past due 30 days or more; delinquent loans may remain on accrual status between 30 days and 89 days past due. Loans on which the accrual of interest has been discontinued are designated as nonaccrual loans.
As an Asian-centric business bank that focuses on successful businesses and their owners, many of our depositors choose to leave large deposits with us. We evaluate all deposit relationships over $250,000 on a quarterly basis to identify deposits that meet certain criteria, which we then would consider to be part of our core deposit base.
As an Asian-centric business bank that focuses on successful businesses and their owners, many of our depositors choose to leave large deposits with us. We evaluate all deposit relationships over $250,000 on a quarterly basis to identify deposits that meet certain criteria, which we then would consider to be part of our stable deposit base.
As of December 31, 2024, no U.S. government agency bonds are callable. 52 Table of Contents The table below shows our investment securities’ fair value and weighted average yields by maturity in the following maturity groupings as of December 31, 2024. Weighted-average yields are calculations representing income within each maturity range based on the amortized cost of securities.
As of December 31, 2025, no U.S. government agency bonds are callable. 52 Table of Contents The table below shows our investment securities’ fair value and weighted average yields by maturity in the following maturity groupings as of December 31, 2025. Weighted-average yields are calculations representing income within each maturity range based on the amortized cost of securities.
In addition, we did not have the current intent to sell securities with a fair value below amortized cost at December 31, 2024, and it is more likely than not that we will not be required to sell such securities prior to the recovery of their amortized cost basis.
In addition, we did not have the current intent to sell securities with a fair value below amortized cost at December 31, 2025, and it is more likely than not that we will not be required to sell such securities prior to the recovery of their amortized cost basis.
An initial setup or an increase to the deferred tax asset valuation allowance would be charged to income tax expense that would negatively impact our earnings. Our significant accounting policies are described in greater detail in our 2024 audited financial statements included in Item 8.
An initial setup or an increase to the deferred tax asset valuation allowance would be charged to income tax expense that would negatively impact our earnings. Our significant accounting policies are described in greater detail in our 2025 audited financial statements included in Item 8.
Any unexpected adverse changes or uncertainties to these factors that are beyond our control could result in increases in the ACL through additional provision for credit losses. A sensitivity analysis of our ACL was performed as of December 31, 2024.
Any unexpected adverse changes or uncertainties to these factors that are beyond our control could result in increases in the ACL through additional provision for credit losses. A sensitivity analysis of our ACL was performed as of December 31, 2025.
The net interest spread is the yield on average interest earning assets minus the cost of average interest-bearing liabilities. Net interest margin and net interest spread are included on a tax equivalent (“TE”) basis by adjusting interest income utilizing the federal statutory tax rate of 21% for 2024, 2023 and 2022.
The net interest spread is the yield on average interest earning assets minus the cost of average interest-bearing liabilities. Net interest margin and net interest spread are included on a tax equivalent (“TE”) basis by adjusting interest income utilizing the federal statutory tax rate of 21% for 2025, 2024, and 2023.
The table below presents the capital requirements applicable to Bancorp and the Bank in order to be considered “well-capitalized” from a regulatory perspective, and the capital ratios for the consolidated Company and Bank as of December 31, 2024 and December 31, 2023.
The table below presents the capital requirements applicable to Bancorp and the Bank in order to be considered “well-capitalized” from a regulatory perspective, and the capital ratios for the consolidated Company and Bank as of December 31, 2025 and 2024.
We calculate: (i) tangible common equity as total shareholders’ equity less goodwill and other intangible assets (excluding mortgage servicing rights); (ii) tangible assets as total assets less goodwill and other intangible assets; and (iii) tangible book value per share as tangible common equity divided by shares of common stock outstanding. 67 Table of Contents Our management, banking regulators, many financial analysts and other investors use these measures in conjunction with more traditional bank capital ratios to compare the capital adequacy of banking organizations with significant amounts of goodwill or other intangible assets, which typically stem from the use of the purchase accounting method of accounting for mergers and acquisitions.
We calculate: (i) tangible common equity as total shareholders’ equity less goodwill and other intangible assets (excluding mortgage servicing assets); (ii) tangible assets as total assets less goodwill and other intangible assets (excluding mortgage servicing assets); and (iii) tangible book value per share as tangible common equity divided by period end shares of common stock outstanding. 66 Table of Contents Our management, banking regulators, many financial analysts and other investors use these measures in conjunction with more traditional bank capital ratios to compare the capital adequacy of banking organizations with significant amounts of goodwill or other intangible assets, which typically stem from the use of the purchase method of accounting for mergers and acquisitions.
The ACL includes the ALL and the reserve for unfunded commitments and is maintained at a level deemed appropriate by management to provide for expected credit losses in the portfolio as of the date of the consolidated balance sheet. Estimating expected credit losses requires management to use relevant forward-looking information, including the use of reasonable and supportable forecasts.
The ACL includes the ALL and the reserve for unfunded commitments ("RUC") and is maintained at a level deemed appropriate by management to provide for expected credit losses in the portfolio as of the date of the consolidated balance sheets. Estimating expected credit losses requires management to use relevant forward-looking information, including the use of reasonable and supportable forecasts.
These liquidity requirements are met primarily through cash flow from operations, redeployment of prepaying and maturing balances in our loan and investment portfolios, debt financing and increases in customer deposits. For additional information regarding our operating, investing and financing cash flows, see the consolidated statements of cash flows provided in our consolidated financial statements.
These liquidity requirements are met primarily through cash flow from operations, redeployment of prepaying and maturing balances in our loan and investment portfolios, debt financing and increases in customer deposits. For additional information regarding our operating, investing and financing cash flows, see the consolidated statements of cash flows provided in Item 8.
(2) Interest income and average rates for tax-exempt securities are presented on a tax-equivalent basis. (3) Includes average loans held for sale of $1.6 million, $627,000 and $1.3 million for the years ended December 31, 2024, 2023 and 2022. Average loan balances include nonaccrual loans.
(2) Interest income and average rates for tax-exempt securities are presented on a tax-equivalent basis. (3) Includes average loans held for sale of $639,000, $1.6 million and $627,000 for the years ended December 31, 2025, 2024, and 2023. Average loan balances include nonaccrual loans.
(2) Interest income and average rates for tax-exempt securities are presented on a tax-equivalent basis. (3) Includes average balances of loans held for sale of $1.6 million, $627,000 and $1.3 million for the years ended December 31, 2024, 2023 and 2022. Average loan balances include nonaccrual loans.
(2) Interest income and average rates for tax-exempt securities are presented on a tax-equivalent basis. (3) Includes average balances of loans held for sale of $639,000, $1.6 million and $627,000 for the years ended December 31, 2025, 2024, and 2023. Average loan balances include nonaccrual loans.
PGBH Trust I issued 5,000 units of fixed-to-floating rate capital securities with an aggregate liquidation amount of $5.0 million and all of its common securities with an aggregate liquidation amount of $155,000.
PGBH Trust I issued 5,000 units of fixed-to-floating rate capital securities with an aggregate liquidation amount of $5.0 million and 155 common securities with an aggregate liquidation amount of $155,000.
As of December 31, 2024 and 2023, we determined there was no credit impairment and accordingly there was no ACL on the HTM securities portfolio as of these dates.
As of December 31, 2025 and 2024, we determined there was no credit impairment and accordingly there was no ACL on the HTM securities portfolio as of these dates.
Loans restructured at a rate equal to or greater than that of a new loan with comparable risk at the time the loan is modified may be excluded from restructured loan disclosures in years subsequent to the restructuring if the loans are in compliance with their modified terms.
Loans modified at a rate equal to or greater than that of a new loan with comparable risk at the time the loan is modified may be excluded from modified loan disclosures in years subsequent to the modification if the loans are in compliance with their modified terms.
We exceeded all regulatory capital requirements under Basel III and were considered to be "well-capitalized" at December 31, 2024 and 2023.
We exceeded all regulatory capital requirements under Basel III and were considered to be "well-capitalized" at December 31, 2025 and 2024.
The overall funding mix for December 31, 2024 remained relatively unchanged from the prior year with a ratio of average noninterest-bearing deposits to average total funding sources of 16%. Interest Income . Total fully taxable equivalent interest income was $216.8 million in 2024 compared to $221.2 million in 2023.
The overall funding mix for December 31, 2025, remained relatively unchanged from the prior year with a ratio of average noninterest-bearing deposits to average total funding sources of 15%. Interest Income . Total fully taxable equivalent interest income was $221.2 million in 2025 compared to $216.8 million in 2024.
Our other intangible assets consist of core deposit intangibles and totaled $2.0 million at December 31, 2024 and $2.8 million at December 31, 2023. These core deposit intangible assets are amortized on an accelerated basis over their estimated useful lives, generally over a period of 3 to 10 years. Liabilities.
Our other intangible assets consist of core deposit intangibles and totaled $1.3 million at December 31, 2025, and $2.0 million at December 31, 2024. These core deposit intangible assets are amortized on an accelerated basis over their estimated useful lives, generally over a period of 3 to 10 years. Liabilities.
The weighted-average life is the average number of years that each dollar of unpaid principal due remains outstanding. Average life is computed as the weighted-average time to the receipt of all future cash flows, using as the weights the dollar amounts of the principal pay-downs.
The weighted-average life is the average number of years that each dollar of unpaid principal due remains outstanding. Average life is computed as the weighted-average time to the receipt of all future cash flows, weighted by the dollar amounts of the principal pay-downs.
We manage net interest income through affecting changes in the mix of interest-earning assets as well as the mix of interest-bearing liabilities, changes in the level of interest-bearing liabilities in proportion to interest-earning assets, and in the growth and maturity of earning assets. See Item 7.
We manage net interest income by affecting changes in the mix of interest-earning assets and interest-bearing liabilities, changes in the level of interest-bearing liabilities in proportion to the level of interest-earning assets, and through the growth and maturity of earning assets. See Item 7.
Such off-balance sheet commitments totaled $175.5 million and $190.7 million as of December 31, 2024 and 2023. Our exposure to loan loss in the event of nonperformance on these financial commitments is represented by the contractual amount of those instruments. We use the same credit policies in making commitments as it does for loans reflected in the financial statements.
Such off-balance sheet commitments totaled $113.6 million and $175.5 million as of December 31, 2025 and 2024. Our exposure to loan loss in the event of nonperformance on these financial commitments is represented by the contractual amount of those instruments. We use the same credit policies in making commitments as it does for loans reflected in the financial statements.
In addition to deposits, we have used long- and short-term borrowings, such as federal funds purchased and FHLB long-and short-term advances, as a source of funds to meet the daily liquidity needs of our customers and fund growth in earning assets. We had $200 million in FHLB advances at December 31, 2024 and $150 million at December 31, 2023.
In addition to deposits, we have used long- and short-term borrowings, such as federal funds purchased and FHLB long-and short-term advances, as a source of funds to meet the daily liquidity needs of our customers and fund growth in earning assets. FHLB advances totaled $130.0 million at December 31, 2025, and $200.0 million at December 31, 2024.
Additionally, a one percentage point increase in the unemployment rate would result in a $966,000, or 2.0%, increase to the ACL and a one percentage point decrease in the unemployment rate would result in a $1.1 million, or 2.2%, decrease to the ACL.
Additionally, a one percentage point increase in the forecasted unemployment rate would result in a $1.0 million, or 2.4%, increase to the ACL and a one percentage point decrease in the forecasted unemployment rate would result in a $943,000, or 2.1%, decrease to the ACL.
In the Moderate Stress scenario, the status of all nine risk factors across all pooled loan segments were set at “Moderate Risk.” In the Major Stress scenario, the status of all nine risk factors across all pooled loan segments were set at “Major Risk.” Under the Moderate Stress scenario, ACL increased by $8.7 million, or 18.0%, as of December 31, 2024.
In the Moderate Stress scenario, the status of all nine risk factors across all pooled loan segments were set at “Moderate Risk.” In the Major Stress scenario, the status of all nine risk factors across all pooled loan segments were set at “Major Risk.” Under the Moderate Stress scenario, ACL increased by $11.0 million, or 24.8%, as of December 31, 2025.
After an OREO value is established, it is then carried at the lower of our carrying value of the property or its fair value. Fair value is based on current appraisals less estimated selling costs. Any subsequent write-downs are charged against operating expenses and recognized as a valuation allowance.
Once classified as OREO, it is subsequently carried at the lower of our carrying value of the property or its fair value. Fair value is based on current appraisals less estimated selling costs. Any subsequent write-downs are charged against operating expenses and recognized as an OREO valuation allowance.
Nonperforming loans include nonaccrual loans, loans past due 90 days or more and still accruing interest (of which there were none during the years indicated), and modified loans. The balances of nonperforming loans included in the table below are the net investment in these assets and do not include $6.9 million in specific reserves.
Nonperforming loans include nonaccrual loans, loans past due 90 days or more and still accruing interest (of which there were none during the years indicated), and modified loans. The balances of nonperforming loans included in the table below are the net investment in these assets and do not include specific reserves included in the allowance for loan losses.
The following table presents information on our total FHLB advances during the years indicated: Year Ended December 31, 2024 2023 2022 (dollars in thousands) Outstanding at period-end $ 200,000 $ 150,000 $ 220,000 Average amount outstanding 162,705 172,219 192,438 Maximum amount outstanding at any month-end 200,000 220,000 270,000 Weighted average interest rate: During period 1.36 % 1.67 % 1.49 % End of period 1.74 % 1.18 % 2.28 % Long-Term Debt .
The following table presents information on our total FHLB advances during the years indicated: Year Ended December 31, 2025 2024 2023 (dollars in thousands) Outstanding at period-end $ 130,000 $ 200,000 $ 150,000 Average amount outstanding 162,767 162,705 172,219 Maximum amount outstanding at any month-end 200,000 200,000 220,000 Weighted average interest rate: During period 3.21 % 1.36 % 1.67 % End of period 3.49 % 1.74 % 1.18 % Long-Term Debt .
The decrease was due to a 55 basis point increase in the overall cost of funds, partially offset by a 2 basis point increase in the yield on average interest-earning assets.
The increase was due to a 38 basis point decrease in the overall cost of funds, partially offset by an 8 basis point decrease in the yield on average interest-earning assets.
As of December 31, 2024 2023 2022 2021 2020 Accruing troubled debt restructured loans (1) : (dollars in thousands) Construction and land development $ — $ — $ — $ — $ — Commercial real estate — — 894 1,328 1,434 Commercial and industrial — — 306 410 502 SBA — — — — 34 Total accruing troubled debt restructured loans — — 1,200 1,738 1,970 Nonaccrual loans: Construction and land development 44,621 — 141 149 173 Commercial real estate 17,096 10,569 13,189 4,672 1,193 Single-family residential mortgages 11,524 18,103 5,936 4,191 7,714 Commercial and industrial 6,271 854 713 3,712 1,661 SBA 1,514 2,085 2,245 6,263 6,828 Other 12 8 99 — 15 Total non-accrual loans 81,038 31,619 22,323 18,987 17,584 Total non-performing loans (2) 81,038 31,619 23,523 20,725 19,554 OREO — — 577 293 293 Nonperforming assets $ 81,038 $ 31,619 $ 24,100 $ 21,018 $ 19,847 Nonperforming loans HFI to total loans HFI 2.29 % 1.04 % 0.71 % 0.71 % 0.72 % Nonperforming assets to total assets 2.03 % 0.79 % 0.61 % 0.50 % 0.59 % Nonperforming loans to tangible common equity and ACL 16.78 % 6.60 % 5.15 % 4.77 % 4.96 % Nonperforming assets to tangible common equity and ACL 16.78 % 6.60 % 5.28 % 4.83 % 5.04 % (1) Prior to our adoption of ASU 2022-02 on January 1, 2023, loans with a concessionary modification due to a borrower experiencing financial difficulties were classified as TDRs and were made for the purpose of alleviating temporary impairments to the borrower’s financial condition.
As of December 31, 2025 2024 2023 2022 2021 Accruing troubled debt restructured loans (1) : (dollars in thousands) Commercial real estate $ — $ — $ — $ 894 $ 1,328 Commercial and industrial — — — 306 410 Total accruing troubled debt restructured loans — — — 1,200 1,738 Nonaccrual loans: Single-family residential mortgages 2,143 11,524 18,103 5,936 4,191 Commercial real estate 8,158 17,096 10,569 13,189 4,672 Construction and land development 27,994 44,621 — 141 149 Commercial and industrial 5,116 6,271 854 713 3,712 SBA 1,221 1,514 2,085 2,245 6,263 Other — 12 8 99 — Total non-accrual loans 44,632 81,038 31,619 22,323 18,987 Total non-performing loans (2) 44,632 81,038 31,619 23,523 20,725 OREO 8,830 — — 577 293 Nonperforming assets (2) $ 53,462 $ 81,038 $ 31,619 $ 24,100 $ 21,018 Nonperforming loans HFI to total loans HFI 1.35 % 2.29 % 1.04 % 0.71 % 0.71 % Nonperforming assets to total assets 1.27 % 2.03 % 0.79 % 0.61 % 0.50 % Nonperforming loans to tangible common equity and ACL 9.02 % 16.78 % 6.60 % 5.15 % 4.77 % Nonperforming assets to tangible common equity and ACL 10.80 % 16.78 % 6.60 % 5.28 % 4.83 % (1) Prior to our adoption of ASU 2022-02 on January 1, 2023, loans with a concessionary modification due to a borrower experiencing financial difficulties were classified as TDRs and were made for the purpose of alleviating temporary impairments to the borrower’s financial condition.
We originate both variable rate and fixed rate C&I loans. The loans are typically made to small- and medium-sized manufacturing, wholesale, retail and service businesses for working capital needs, business expansions and for international trade financing.
The interest rate on C&I loans are generally based on the Wall Street Journal Prime rate. We originate both variable rate and fixed rate C&I loans. The loans are typically made to small- and medium-sized manufacturing, wholesale, retail and service businesses for working capital needs, business expansions and for international trade financing.
Integral to our liquidity management is the administration of short-term borrowings. To the extent we are unable to obtain sufficient liquidity through core deposits, we seek to meet our liquidity needs through wholesale funding or other borrowings on either a short- or long-term basis.
Financial Statements and Supplementary Data - Consolidated Financial Statements . Integral to our liquidity management is the administration of short-term borrowings. To the extent we are unable to obtain sufficient liquidity through retail deposits, we seek to meet our liquidity needs through wholesale funding or other borrowings on either a short- or long-term basis.
We consider a relationship to be a core deposit relationship if it meets any three or more of the following: (i) direct relationships with us; (ii) deposits within our market area; (iii) additional services including loans; (iv) electronic banking services; (v) active demand deposit accounts; (vi) deposits at market interest rates; and (vii) longevity of the relationship with us.
We consider a relationship to be stable if it meets any three or more of the following: (i) relationships with us (as a director or shareholder); (ii) deposits within our market area; (iii) additional non-deposit services with us; (iv) electronic banking services with us; (v) active demand deposit account with us; (vi) deposits at market interest rates; and (vii) longevity of the relationship with us.
Capital Resources and Liquidity Management Capital Resources. Shareholders’ equity is influenced primarily by earnings, dividends, sales and redemptions of common stock and preferred stock and changes in accumulated other comprehensive income, net of taxes, from AFS investment securities. Shareholders’ equity decreased $3.4 million, or 0.7%, to $507.9 million as of December 31, 2024 from $511.3 million at December 31, 2023.
Capital Resources and Liquidity Management Capital Resources. Shareholders’ equity is influenced primarily by earnings, dividends, sales and redemptions of common stock and preferred stock and changes in accumulated other comprehensive income, net of taxes, from AFS investment securities. Shareholders’ equity increased $15.5 million, or 3.1%, to $523.4 million as of December 31, 2025, from $507.9 million at December 31, 2024.
Financial Statements and Supplementary Data - Note 2 — Basis of Presentation and Summary of Significant Accounting Policies , which are essential to understanding Management’s Discussion and Analysis of Financial Condition and Results of Operations OVERVIEW For the year ended December 31, 2024, we reported net earnings of $26.7 million, compared with $42.5 million for the year ended December 31, 2023.
Financial Statements and Supplementary Data - Note 2 — Basis of Presentation and Summary of Significant Accounting Policies , which are essential to understanding Management’s Discussion and Analysis of Financial Condition and Results of Operations OVERVIEW For the year ended December 31, 2025, we reported net earnings of $32.0 million, a 19.8% increase, compared to $26.7 million for the year ended December 31, 2024.
The subordinated debentures have a variable rate of interest equal to three - month CME Term SOFR plus applicable tenor spread adjustment of 0.26% plus 1.65%, which was 6.72% as of December 31, 2024, and 7.75% as of December 31, 2023. At December 31, 2024, we were in compliance with all covenants under our subordinated debenture agreements.
The PGBH Trust I subordinated debentures have a variable rate of interest equal to three - month CME Term SOFR plus applicable tenor spread adjustment of 0.26% plus 2.10%, which was 6.08% as of December 31, 2025, and 6.72% at December 31, 2024. At December 31, 2025, we were in compliance with all covenants under our subordinated debenture agreements.
This represented a decrease of $15.8 million, or 37.2%, from the prior year due to a $19.9 million decrease in net interest income, and a $6.5 million increase in the provision for credit losses, partially offset by a $1.5 million decrease in noninterest expenses and an $8.8 million decrease in income tax expense.
This represented an increase of $5.3 million, or 19.8%, from the prior year due to a $12.9 million increase in net interest income and a $1.5 million increase in noninterest income, partially offset by increases of $501,000 in the provision for credit losses, $7.5 million in noninterest expenses, and $1.2 million in income tax expense.
Approximately 24.3% of the securities in the total investment portfolio at December 31, 2024, are issued by the U.S. government or U.S. government-sponsored agencies and enterprises, which have the implied guarantee of payment of principal and interest.
Approximately 33.0% of the securities in the total investment portfolio at December 31, 2025, were issued by the U.S. government or U.S. government-sponsored agencies and enterprises, which have the implied guarantee of payment of principal and interest.
As of December 31, 2024, all of our investment securities in an unrealized loss position received an investment grade credit rating. The overall net decreases in fair value during the period were attributable to a combination of changes in interest rates and market conditions.
As of December 31, 2025, all of our investment securities in an unrealized loss position received an investment grade credit rating. The overall net unrealized losses in our securities portfolio were attributable to a combination of changes in interest rates and market conditions.
Gains on sale of loans are comprised primarily of gains on sale of SFR mortgage loans and SBA loans. Gains on sale of loans totaled $1.6 million in 2024, compared to $374,000 in 2023.
Gain on sale of loans . Gains on sale of loans are comprised primarily of gains on sale of SFR mortgage loans and SBA loans. Gains on sale of loans totaled $1.2 million in 2025, compared to $1.6 million in 2024.
At December 31, 2024, Bancorp had $32.1 million in cash, $30.8 million of which was on deposit at the Bank. Regulatory Capital Requirements We are subject to various regulatory capital requirements administered by the federal and state banking regulators.
At December 31, 2025, Bancorp had $46.6 million in cash, of which $46.3 million was on deposit at the Bank. Regulatory Capital Requirements We are subject to various regulatory capital requirements administered by the federal and state banking regulators.
Loans HFS totaled $11.2 million at December 31, 2024 compared to $1.9 million at December 31, 2023.
Loans HFS totaled $2.1 million at December 31, 2025, compared to $11.3 million at December 31, 2024.
These amounts included $22.2 million in FNMA loans, all of which were sold to FNMA. In addition, we also sold $1.9 million to FHLMC and $23.6 million of SFR mortgage loans during 2024 to other third parties.
These amounts included $6.2 million in FNMA loans, all of which were sold to FNMA. In addition, we also sold $51.9 million of SFR mortgage loans during 2025 to other third parties.
We acquired wholesale deposits from the internet listing service and other outside deposits originators as needed to supplement liquidity. The total amount of such deposits as of December 31, 2024 was $31.8 million and $52.0 million as of December 31, 2023. Brokered time deposits were $93.2 million at December 31, 2024 and $254.9 million at December 31, 2023.
We acquired wholesale deposits from the internet listing service and other outside deposits originators as needed to supplement liquidity. The total amount of such deposits was $80.2 million as of December 31, 2025, and $54.2 million as of December 31, 2024. Brokered time deposits were $145.5 million at December 31, 2025, and $93.2 million at December 31, 2024.
The increase in the participation in these programs is attributed to the general banking landscape and premium placed on liquidity in the marketplace. 63 Table of Contents FHLB Borrowings.
The increase in the participation in these programs is attributed to the general banking landscape and premium placed on liquidity in the marketplace.
The following table presents the ALL, its corresponding percentage of the loan class balance, and the percentage of loan balance to total loans HFI by loan class as of the dates indicated: As of December 31, 2024 2023 $ ALL as a % of Loan Class % of Total Loans $ ALL as a % of Loan Class % of Total Loans Loan class: (dollars in thousands) Construction and land development $ 6,053 3.49 % 5.7 % $ 1,219 0.67 % 6.0 % Commercial real estate (1) 21,879 1.82 % 39.3 % 17,826 1.53 % 38.5 % Single-family residential mortgages 17,518 1.17 % 48.9 % 20,117 1.35 % 49.1 % Commercial and industrial 1,339 1.03 % 4.2 % 1,348 1.04 % 4.3 % SBA 654 1.38 % 1.5 % 1,196 2.30 % 1.7 % Other 286 3.74 % 0.4 % 197 1.57 % 0.4 % Allowance for loan losses $ 47,729 1.56 % 100.0 % $ 41,903 1.38 % 100.0 % (1) Includes non-farm and non-residential real estate loans, multi-family residential and SFR loans originated for a business purpose.
The following table presents the ALL, its corresponding percentage of the loan class balance, and the percentage of loan balance to total loans HFI by loan class as of the dates indicated: As of December 31, 2025 2024 $ ALL as a % of Loan Class % of Total Loans $ ALL as a % of Loan Class % of Total Loans Loan class: (dollars in thousands) Single-family residential mortgages $ 21,585 1.30 % 50.0 % $ 17,518 1.17 % 48.9 % Commercial real estate (1) 18,162 1.39 % 39.3 % 21,879 1.82 % 39.3 % Construction and land development 1,502 0.97 % 4.7 % 6,053 3.49 % 5.7 % Commercial and industrial 1,647 1.18 % 4.2 % 1,339 1.03 % 4.2 % SBA 824 1.47 % 1.7 % 654 1.38 % 1.5 % Other 168 3.82 % 0.1 % 286 3.74 % 0.4 % Allowance for loan losses $ 43,888 1.32 % 100 % $ 47,729 1.56 % 100.0 % (1) Includes non-farm and non-residential real estate loans, multi-family residential and SFR loans originated for a business purpose.
Specific reserves totaled $6.9 million, or 0.23% of total loans HFI, at December 31, 2024, compared to $816,000, or 0.03% of total loans HFI, at December 31, 2023. 59 Table of Contents The following table provides an analysis of the ACL, provision for credit losses and net charge-offs for the periods indicated: Year Ended December 31, 2024 2023 2022 2021 (1) 2020 (1) (dollars in thousands) Balance, beginning of period $ 41,903 $ 41,076 $ 32,912 $ 29,337 $ 18,816 ASU 2016-13 transition adjustment — — 2,135 — — Adjusted beginning balance $ 41,903 $ 41,076 $ 35,047 $ 29,337 $ 18,816 Charge-offs: Construction & land development (1,148 ) (140 ) — — — Commercial real estate (2,645 ) (2,537 ) — (67 ) (85 ) Single-family residential mortgages — (93 ) — — — Commercial and industrial (11 ) — (5 ) (500 ) (200 ) SBA (78 ) (62 ) (14 ) (1 ) (973 ) Other (201 ) (362 ) (237 ) (59 ) (45 ) Total charge-offs (4,083 ) (3,194 ) (256 ) (627 ) (1,303 ) Recoveries: Commercial real estate 61 80 — 61 — Commercial and industrial 2 2 2 1 — SBA 1 1 227 95 1 Other 77 60 29 86 — Total recoveries 141 143 258 243 1 Net (charge-offs)/recoveries (3,942 ) (3,051 ) 2 (384 ) (1,302 ) Provision for loan losses 9,768 3,878 6,027 3,959 11,823 Balance, end of period $ 47,729 $ 41,903 $ 41,076 $ 32,912 $ 29,337 Reserve for off-balance sheet credit commitments Balance at beginning of year $ 640 $ 1,156 $ 1,203 $ 1,383 $ 826 ASU 2016-13 transition adjustment — — 1,045 — — Adjusted beginning balance $ 640 $ 1,156 $ 2,248 $ 1,383 $ 826 Reserve for (reversal of) unfunded commitments 89 (516 ) (1,092 ) (180 ) 557 Balance at the end of period $ 729 $ 640 $ 1,156 $ 1,203 $ 1,383 Total allowance for credit losses (ACL) $ 48,458 $ 42,543 $ 42,232 $ 34,115 $ 30,720 Total LHFI at end of period $ 3,053,230 $ 3,031,861 $ 3,336,449 $ 2,931,350 $ 2,706,766 Average LHFI $ 3,039,718 $ 3,205,625 $ 3,096,786 $ 2,745,492 $ 2,544,413 Net charge-offs to average LHFI 0.13 % 0.10 % 0.00 % 0.01 % 0.05 % Allowance for loan losses to total LHFI 1.56 % 1.38 % 1.23 % 1.12 % 1.08 % Allowance for credit losses to total LHFI 1.59 % 1.40 % 1.27 % 1.16 % 1.13 % (1) Reserve was under the allowance for loan loss method in accordance with ASC 450 and ASC 310 Problem Loans.
The ALL as a percentage of nonperforming loans HFI was 98.3% at December 31, 2025, an increase from 68.3% at December 31, 2024. 59 Table of Contents The following table provides an analysis of the ACL, provision for credit losses and net charge-offs for the periods indicated: Year Ended December 31, 2025 2024 2023 2022 2021 (1) (dollars in thousands) Balance, beginning of period $ 47,729 $ 41,903 $ 41,076 $ 32,912 $ 29,337 ASU 2016-13 transition adjustment — — — 2,135 — Adjusted beginning balance $ 47,729 $ 41,903 $ 41,076 $ 35,047 $ 29,337 Charge-offs: Single-family residential mortgages (1,403 ) — (93 ) — — Commercial real estate (4,679 ) (2,645 ) (2,537 ) — (67 ) Construction & land development (8,175 ) (1,148 ) (140 ) — — Commercial and industrial (88 ) (11 ) — (5 ) (500 ) SBA (187 ) (78 ) (62 ) (14 ) (1 ) Other (180 ) (201 ) (362 ) (237 ) (59 ) Total charge-offs (14,712 ) (4,083 ) (3,194 ) (256 ) (627 ) Recoveries: Commercial real estate — 61 80 — 61 Construction & land development 137 — — — — Commercial and industrial 79 2 2 2 1 SBA 1 — 1 227 95 Other 51 78 60 29 86 Total recoveries 268 141 143 258 243 Net (charge-offs)/recoveries (14,444 ) (3,942 ) (3,051 ) 2 (384 ) Provision for loan losses 10,603 9,768 3,878 6,027 3,959 Balance, end of period $ 43,888 $ 47,729 $ 41,903 $ 41,076 $ 32,912 Reserve for off-balance sheet credit commitments Balance at beginning of year $ 729 $ 640 $ 1,156 $ 1,203 $ 1,383 ASU 2016-13 transition adjustment — — — 1,045 — Adjusted beginning balance $ 729 $ 640 $ 1,156 $ 2,248 $ 1,383 (Reversal of) reserve for unfunded commitments (245 ) 89 (516 ) (1,092 ) (180 ) Balance at the end of period $ 484 $ 729 $ 640 $ 1,156 $ 1,203 Total allowance for credit losses (ACL) $ 44,372 $ 48,458 $ 42,543 $ 42,232 $ 34,115 Total LHFI at end of period $ 3,314,301 $ 3,053,230 $ 3,031,861 $ 3,336,449 $ 2,931,350 Average LHFI $ 3,195,853 $ 3,039,718 $ 3,205,625 $ 3,096,786 $ 2,745,492 Net charge-offs to average LHFI 0.45 % 0.13 % 0.10 % 0.00 % 0.01 % Allowance for loan losses to total LHFI 1.32 % 1.56 % 1.38 % 1.23 % 1.12 % Allowance for credit losses to total LHFI 1.34 % 1.59 % 1.40 % 1.27 % 1.16 % (1) Reserve was under the allowance for loan loss method in accordance with ASC 450 and ASC 310.
Potential problem loans include loans with a risk grade of 6, which are “special mention,” loans with a risk grade of 7, which are “substandard” loans and loans with a risk grade of 8, which are “doubtful” loans.
Potential problem loans include loans with a risk grade of 6, which are “special mention,” loans with a risk grade of 7, which are “substandard” loans that are generally not considered impaired and loans with a risk grade of 8, which are “doubtful” loans generally considered to be impaired.
Based on this sensitivity analysis, a positive 25% change in loan prepayment speeds would result in a $1.4 million, or 2.8%, decrease to the ACL. Conversely, a negative 25% change in loan prepayment speeds would result in a $1.5 million, or 3.2%, increase to the ACL.
Based on this sensitivity analysis, a 25% increase in loan prepayment speeds would result in a $891,000, or 2.0%, decrease to the ACL. Conversely, a 25% decrease in loan prepayment speeds would result in a $1.1 million, or 2.5%, increase to the ACL.
Loans The loan portfolio is the largest category of our earning assets, which is almost entirely held for investment as of December 31, 2024. Loans HFI totaled $3.1 billion, a net increase of $21.4 million, or 0.7%, as compared to $3.0 billion at December 31, 2023.
Loans The loan portfolio is the largest category of our earning assets, which is almost entirely held for investment as of December 31, 2025. Loans HFI totaled $3.3 billion, an increase of $261.1 million, or 8.6%, as compared to $3.1 billion at December 31, 2024.
The following table presents information on loan servicing income for the years indicated: Year Ended December 31, 2024 vs. 2023 Increase (Decrease) 2023 vs. 2022 Increase (Decrease) 2024 2023 2022 $ % $ % Loan servicing income, net of amortization: (dollars in thousands) Single-family residential mortgage loans $ 1,699 $ 2,119 $ 1,706 $ (420 ) (19.8 )% $ 413 24.2 % SBA loans 566 457 503 109 23.9 % (46 ) (9.1 )% Total $ 2,265 $ 2,576 $ 2,209 $ (311 ) (12.1 )% $ 367 16.6 % As of December 31, 2024, we were servicing SFR mortgage loans for other financial institutions, FHLMC, FNMA and SBA loans.
The following table presents information on loan servicing income for the years indicated: Year Ended December 31, 2025 vs. 2024 Increase (Decrease) 2024 vs. 2023 Increase (Decrease) 2025 2024 2023 $ % $ % Loan servicing income, net of amortization: (dollars in thousands) Single-family residential mortgage loans $ 1,538 $ 1,699 $ 2,119 $ (161 ) (9.5 )% $ (420 ) (19.8 )% SBA loans 711 566 457 145 25.6 % 109 23.9 % Total $ 2,249 $ 2,265 $ 2,576 $ (16 ) (0.7 )% $ (311 ) (12.1 )% As of December 31, 2025, we were servicing SFR mortgage loans for other financial institutions, FHLMC, and FNMA, and SBA loans where we have sold the guaranteed portion in the secondary market.
Interest income on loans includes the effects of discount accretion and amortization of net deferred loan origination fees and costs accounted for as yield adjustments. 46 Table of Contents Provision for Credit Losses The provision for credit losses was $9.9 million for the year ended December 31, 2024, an increase of $6.5 million from $3.4 million in 2023.
Interest income on loans includes the effects of discount accretion and amortization of net deferred loan origination fees and costs accounted for as yield adjustments. 46 Table of Contents Provision for Credit Losses The provision for credit losses totaled $10.4 million for the year ended December 31, 2025, compared to a $9.9 million provision for credit losses for the year ended December 31, 2024.
These non-GAAP financial measures include “tangible common equity to tangible assets,” “tangible book value per share” and “return on average tangible common equity.” Our management uses these non-GAAP financial measures in its analysis of our performance. Tangible Common Equity to Tangible Assets Ratio and Tangible Book Value per Share.
Non-GAAP Financial Measures Some of the financial measures included in this Annual Report are not measures of financial performance recognized by GAAP. These non-GAAP financial measures include the “tangible common equity to tangible assets ratio,” “tangible book value per share,” and “return on average tangible common equity.” Our management uses these non-GAAP financial measures in our analysis of our performance.
The overall cost of funds increased to 3.49% in the year ended December 31, 2024 from 2.94% in the year ended December 31, 2023 due to a higher average cost of interest-bearing deposits in response to higher average market interest rates.
The overall cost of funds decreased to 3.11% for the year ended December 31, 2025, from 3.49% for the year ended December 31, 2024, due to a lower average cost of interest-bearing deposits in response to lower average market interest rates.
The increase was primarily due to an 18 basis point increase in the tax equivalent yield due to increases in market interest rates, partially offset by the impact of a $7.0 million, or 2.1%, decrease in the average balance of securities. Interest income on our cash and cash equivalents increased $4.7 million, or 40.2%, to $16.4 million in 2024.
The increase was primarily due to the impact of a $79.7 million, or 24.2%, increase in the average balance of securities, partially offset by an 18 basis point decrease in the tax equivalent yield due to decreases in market interest rates. Interest income on our cash and cash equivalents decreased $7.6 million, or 46.0%, to $8.9 million in 2025.
For further discussion of financial results for the years ended December 31, 2023 and 2022 please refer to Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on March 12, 2024.
Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 17, 2025.
Time deposits held through the CDARS program were $130.6 million at December 31, 2024 and $135.7 million at December 31, 2023 and ICS funds totaled $146.1 million at December 31, 2024 and $109.2 million at December 31, 2023.
Time deposits held through the CDARS program were $128.3 million at December 31, 2025, and $130.6 million at December 31, 2024, and ICS funds totaled $156.3 million at December 31, 2025, and $146.1 million at December 31, 2024.
The net increase in loans HFI was primarily due to net increases in CRE loans of $33.6 million and SFR mortgage loans of $6.2 million, partially offset by decreases in C&D loans of $8.2 million, SBA loans of $4.8 million, and other loans of $4.9 million.
The increase in loans HFI was primarily due to increases in SFR mortgage loans of $161.4 million, CRE loans of $101.6 million, C&I loans of $10.5 million, and SBA loans of $8.7 million, partially offset by decreases in C&D loans of $17.8 million and other loans of $3.3 million.
Results of Operations—Comparison of Results of Operations for the Years Ended December 31, 2024 to December 31, 2023 Net Interest Income/Average Balance Sheet In 2024, we generated fully-taxable equivalent net interest income of $99.5 million, a decrease of $19.9 million, or 16.7%, from $119.4 million in 2023.
Results of Operations—Comparison of Results of Operations for the Years Ended December 31, 2025 to December 31, 2024 Net Interest Income/Average Balance Sheet In 2025, we generated fully-taxable equivalent net interest income of $112.4 million, an increase of $12.9 million, or 13.0%, from $99.5 million in 2024.
As of December 31, 2024, Bancorp’s Tier 1 leverage capital ratio was 11.92%, common equity Tier 1 ratio was 17.94%, Tier 1 risk-based capital ratio totaled 18.52%, and total risk-based capital ratio was 24.49%.
As of December 31, 2025, Bancorp’s Tier 1 leverage capital ratio was 11.60%, common equity Tier 1 ratio was 17.49%, Tier 1 risk-based capital ratio totaled 18.06%, and total risk-based capital ratio was 23.83%.
We evaluate each client’s credit worthiness on a case-by-case basis and determine the level of collateral required as necessary to meet our underwriting standards. In addition, we invest in various affordable housing partnerships and Small Business Investment Company ("SBIC") funds. Pursuant to these investments, we commit to an investment amount to be fulfilled in future periods.
We evaluate each client’s credit worthiness on a case-by-case basis and determine the level of collateral required as necessary to meet our underwriting standards. In addition, we invest in various affordable housing partnerships, CRA investments including Small Business Investment Company ("SBIC") funds, and other limited partnerships with less than 3% ownership.
Long-term debt consists of subordinated notes. As of December 31, 2024, the amount of subordinated notes outstanding, net of issuance costs, was $119.5 million as compared to $119.1 million at December 31, 2023. In November 2018, we issued $55.0 million in fixed-to-floating rate subordinated notes due December 1, 2028 (“the 2028 Subordinated Notes”).
Long-term debt consists of subordinated notes. As of December 31, 2025, the amount of subordinated notes outstanding, net of issuance costs, was $119.9 million as compared to $119.5 million at December 31, 2024. In March 2021, we issued $120.0 million of 4.00% fixed to floating rate subordinated notes due April 1, 2031 (the “2031 Subordinated Notes”).
The largest sub-set of CRE loans was the multi-family residential loan portfolio, which totaled $605.5 million as of December 31, 2024 and $573.4 million as of December 31, 2023. The SFR loan portfolio originated for a business purpose totaled $54.1 million as of December 31, 2024 and $48.7 million as of December 31, 2023.
The largest sub-set of CRE loans was the multi-family residential loan portfolio, which totaled $745.3 million as of December 31, 2025, and $605.5 million as of December 31, 2024. Also included in CRE loans are SFR loans originated for a business purpose, which totaled $40.6 million at December 31, 2025, and $54.1 million at December 31, 2024.
The subordinated debentures have a variable rate of interest equal to three - month CME Term SOFR plus applicable tenor spread adjustment of 0.26% plus 1.65%, which was 6.27% as of December 31, 2024, and 7.30% as of December 31, 2023. In October 2018, we, through the acquisition of FAIC, acquired the FAIC Trust I.
The TFC Trust subordinated debentures have a variable rate of interest equal to three - month CME Term SOFR plus applicable tenor spread adjustment of 0.26% plus 1.65%, which was 5.63% as of December 31, 2025, and 6.27% at December 31, 2024.
The following table presents the maturity distribution of time deposits in excess of the FDIC insurance limit of more than $250,000 as of the date indicated: December 31, 2024 (dollars in thousands) 3 months or less $ 234,728 Over 3 months through 6 months 187,720 Over 6 months through 12 months 217,251 Over 12 months 424 Total $ 640,123 Time deposits equal to and less than $250,000 include certain wholesale and brokered deposits and we do not consider these core deposits.
The following table presents the maturity distribution of time deposits in excess of the FDIC insurance limit of more than $250,000 as of the date indicated: December 31, 2025 (dollars in thousands) 3 months or less $ 250,988 Over 3 months through 6 months 186,988 Over 6 months through 12 months 184,914 Over 12 months 389 Total $ 623,279 Time deposits include certain wholesale and brokered deposits and we do not consider these stable deposits.
As of December 31, 2023, Bancorp’s Tier 1 leverage capital ratio was 11.99%, common equity Tier 1 ratio was 19.07%, Tier 1 risk-based capital ratio totaled 19.69%, and total risk-based capital ratio was 25.92%. 42 Table of Contents ANALYSIS OF THE RESULTS OF OPERATIONS Financial Performance Year Ended December 31, 2024 2023 2022 (dollars in thousands, except per share data) Interest income $ 216,661 $ 221,148 $ 180,970 Interest expense 117,297 101,862 31,416 Net interest income 99,364 119,286 149,554 Provision for credit losses 9,857 3,362 4,935 Net interest income after provision for credit losses 89,507 115,924 144,619 Noninterest income 15,335 15,018 11,252 Noninterest expense 69,163 70,696 64,526 Income before income taxes 35,679 60,246 91,345 Income tax expense 9,014 17,781 27,018 Net income $ 26,665 $ 42,465 $ 64,327 Share Data Earnings per common share (1) : Basic $ 1.47 $ 2.24 $ 3.37 Diluted 1.47 2.24 3.33 Performance Ratios Return on average assets 0.68 % 1.06 % 1.62 % Return on average shareholders’ equity 5.21 % 8.48 % 13.66 % Efficiency ratio (2) 60.30 % 52.64 % 40.13 % Tangible common equity to tangible assets (3) 11.08 % 11.06 % 10.65 % Return on average tangible common equity (3) 6.09 % 9.97 % 16.26 % Tangible book value per share (3) $ 24.51 $ 23.48 $ 21.58 (1) Earnings per share are calculated utilizing the two-class method.
As of December 31, 2024, Bancorp’s Tier 1 leverage capital ratio was 11.92%, common equity Tier 1 ratio was 17.94%, Tier 1 risk-based capital ratio totaled 18.52%, and total risk-based capital ratio was 24.49%. 42 Table of Contents ANALYSIS OF THE RESULTS OF OPERATIONS Financial Performance Year Ended December 31, 2025 2024 2023 (dollars in thousands, except per share data) Interest income $ 221,126 $ 216,661 $ 221,148 Interest expense 108,844 117,297 101,862 Net interest income 112,282 99,364 119,286 Provision for credit losses 10,358 9,857 3,362 Net interest income after provision for credit losses 101,924 89,507 115,924 Noninterest income 16,873 15,335 15,018 Noninterest expense 76,663 69,163 70,696 Income before income taxes 42,134 35,679 60,246 Income tax expense 10,186 9,014 17,781 Net income $ 31,948 $ 26,665 $ 42,465 Pre-tax pre-provision income (1) $ 52,492 $ 45,536 $ 63,608 Share Data Earnings per common share (2) Basic $ 1.83 $ 1.47 $ 2.24 Diluted 1.83 1.47 2.24 Performance Ratios Return on average assets 0.78 % 0.68 % 1.06 % Return on average shareholders’ equity 6.21 % 5.21 % 8.48 % Return on average tangible common equity (1) 7.24 % 6.09 % 9.97 % Efficiency ratio (3) 59.36 % 60.30 % 52.64 % Tangible common equity to tangible assets (1) 10.90 % 11.08 % 11.06 % Tangible book value per share (1) $ 26.42 $ 24.51 $ 23.48 (1) Non-GAAP financial measure.
Year Ended December 31, 2024 2023 2022 Average Interest Yield / Average Interest Yield / Average Interest Yield / Balance & Fees Rate Balance & Fees Rate Balance & Fees Rate Interest-earning assets: (dollars in thousands) Cash and cash equivalents (1) $ 297,331 $ 16,449 5.53 % $ 216,851 $ 11,731 5.41 % $ 273,364 $ 2,849 1.04 % FHLB Stock 15,000 1,314 8.76 % 15,000 1,125 7.50 % 15,000 938 6.25 % Securities: Available for sale (2) 324,644 14,242 4.39 % 331,357 13,928 4.20 % 338,437 5,973 1.76 % Held to maturity (2) 5,200 188 3.62 % 5,509 198 3.59 % 5,865 208 3.55 % Total loans (3) 3,041,337 184,567 6.07 % 3,205,625 194,264 6.06 % 3,098,049 171,099 5.52 % Total interest-earning assets 3,683,512 $ 216,760 5.88 % 3,774,342 $ 221,246 5.86 % 3,730,715 $ 181,067 4.85 % Total noninterest-earning assets 243,258 246,980 233,453 Total average assets $ 3,926,770 $ 4,021,322 $ 3,964,168 Interest-bearing liabilities: NOW $ 56,158 $ 1,105 1.97 % $ 58,191 $ 725 1.25 % $ 73,335 $ 262 0.36 % Money market 436,925 15,231 3.49 % 429,102 10,565 2.46 % 631,094 5,114 0.81 % Savings deposits 162,243 2,959 1.82 % 126,062 915 0.73 % 144,409 185 0.13 % Time deposits, $250,000 and under 1,074,291 50,059 4.66 % 1,146,513 47,150 4.11 % 609,464 6,583 1.08 % Time deposits, greater than $250,000 803,187 39,027 4.86 % 742,839 29,687 4.00 % 565,059 6,755 1.20 % Total interest-bearing deposits 2,532,804 108,381 4.28 % 2,502,707 89,042 3.56 % 2,023,361 18,899 0.93 % FHLB advances 162,705 2,217 1.36 % 172,219 2,869 1.67 % 192,438 2,872 1.49 % Long-term debt 119,324 5,182 4.34 % 169,182 8,477 5.01 % 173,275 8,777 5.07 % Subordinated debentures 15,039 1,517 10.09 % 14,821 1,474 9.95 % 14,603 868 5.94 % Total interest-bearing liabilities 2,829,872 117,297 4.14 % 2,858,929 101,862 3.56 % 2,403,677 31,416 1.31 % Noninterest-bearing liabilities Noninterest-bearing deposits 531,458 602,291 1,050,063 Other noninterest-bearing liabilities 53,970 59,562 39,647 Total noninterest-bearing liabilities 585,428 661,853 1,089,710 Shareholders' equity 511,470 500,540 470,781 Total liabilities and shareholders' equity $ 3,926,770 $ 4,021,322 $ 3,964,168 Net interest income / interest rate spreads $ 99,463 1.74 % $ 119,384 2.30 % $ 149,651 3.54 % Net interest margin 2.70 % 3.16 % 4.01 % Total cost of deposits $ 3,064,262 $ 108,381 3.54 % $ 3,104,998 $ 89,042 2.87 % $ 3,073,424 $ 18,899 0.61 % Total cost of funds $ 3,361,330 $ 117,297 3.49 % $ 3,461,220 $ 101,862 2.94 % $ 3,453,740 $ 31,416 0.91 % (1) Includes income and average balances for interest-earning time deposits.
Year Ended December 31, 2025 2024 2023 Average Interest Yield / Average Interest Yield / Average Interest Yield / Balance & Fees Rate Balance & Fees Rate Balance & Fees Rate Interest-earning assets: (dollars in thousands) Cash and cash equivalents (1) $ 192,642 $ 8,885 4.61 % $ 297,331 $ 16,449 5.53 % $ 216,851 $ 11,731 5.41 % FHLB Stock 15,000 1,312 8.75 % 15,000 1,314 8.76 % 15,000 1,125 7.50 % Securities: Available for sale (2) 404,929 17,006 4.20 % 324,644 14,242 4.39 % 331,357 13,928 4.20 % Held to maturity (2) 4,643 172 3.70 % 5,200 188 3.62 % 5,509 198 3.59 % Total loans (3) 3,198,619 193,849 6.06 % 3,041,337 184,567 6.07 % 3,205,625 194,264 6.06 % Total interest-earning assets 3,815,833 $ 221,224 5.80 % 3,683,512 $ 216,760 5.88 % 3,774,342 $ 221,246 5.86 % Total noninterest-earning assets 258,550 243,258 246,980 Total average assets $ 4,074,383 $ 3,926,770 $ 4,021,322 Interest-bearing liabilities: NOW $ 69,003 $ 1,551 2.25 % $ 56,158 $ 1,105 1.97 % $ 58,191 $ 725 1.25 % Money market 491,048 15,247 3.10 % 436,925 15,231 3.49 % 429,102 10,565 2.46 % Savings deposits 156,728 2,227 1.42 % 162,243 2,959 1.82 % 126,062 915 0.73 % Time deposits, $250,000 and under 1,020,451 40,053 3.93 % 1,074,291 50,059 4.66 % 1,146,513 47,150 4.11 % Time deposits, greater than $250,000 930,325 38,021 4.09 % 803,187 39,027 4.86 % 742,839 29,687 4.00 % Total interest-bearing deposits 2,667,555 97,099 3.64 % 2,532,804 108,381 4.28 % 2,502,707 89,042 3.56 % FHLB advances 162,767 5,221 3.21 % 162,705 2,217 1.36 % 172,219 2,869 1.67 % Long-term debt 119,706 5,182 4.33 % 119,324 5,182 4.34 % 169,182 8,477 5.01 % Subordinated debentures 15,257 1,342 8.80 % 15,039 1,517 10.09 % 14,821 1,474 9.95 % Total borrowings 297,730 11,745 3.94 % 297,068 8,916 3.00 % 356,222 12,820 3.60 % Total interest-bearing liabilities 2,965,285 108,844 3.67 % 2,829,872 117,297 4.14 % 2,858,929 101,862 3.56 % Noninterest-bearing liabilities: Noninterest-bearing deposits 529,651 531,458 602,291 Other noninterest-bearing liabilities 64,927 53,970 59,562 Total noninterest-bearing liabilities 594,578 585,428 661,853 Shareholders' equity 514,520 511,470 500,540 Total liabilities and shareholders' equity $ 4,074,383 $ 3,926,770 $ 4,021,322 Net interest income / interest rate spreads $ 112,380 2.13 % $ 99,463 1.74 % $ 119,384 2.30 % Net interest margin 2.95 % 2.70 % 3.16 % Total cost of deposits $ 3,197,206 $ 97,099 3.04 % $ 3,064,262 $ 108,381 3.54 % $ 3,104,998 $ 89,042 2.87 % Total cost of funds $ 3,494,936 $ 108,844 3.11 % $ 3,361,330 $ 117,297 3.49 % $ 3,461,220 $ 101,862 2.94 % (1) Includes income and average balances for interest-earning time deposits.
The weighted average Federal Funds Rate was 5.15% for the year ended December 31, 2024 compared to 5.03% for the year ended December 31, 2023. 43 Table of Contents Our net interest margin ("NIM") was 2.70% for the year ended December 31, 2024, a decrease of 46 basis points from 3.16% for the year ended December 31, 2023.
The average overnight Federal Funds Rate was 4.21% for the year ended December 31, 2025, compared to 5.15% for the year ended December 31, 2024. 43 Table of Contents Our net interest margin ("NIM") was 2.95% for the year ended December 31, 2025, an increase of 25 basis points from 2.70% for the year ended December 31, 2024.
Total liabilities decreased $30.2 million, or 0.9%, to $3.5 billion, at December 31, 2024 from $3.5 billion at December 31, 2023, primarily due to a $91.0 million decrease in deposits, partially offset by a $50.0 million increase in FHLB advances.
Total liabilities increased $200.3 million, or 5.7%, to $3.7 billion, at December 31, 2025, from $3.5 billion at December 31, 2024, primarily due to a $266.6 million increase in deposits, partially offset by a $70.0 million decrease in FHLB advances. Deposits.
The following table reconciles ROATCE to its most comparable GAAP measure: For the year 2024 2023 2022 (dollars in thousands) Net income available to common shareholders $ 26,665 $ 42,465 $ 64,327 Average shareholders' equity 511,470 500,540 470,781 Adjustments: Average goodwill (71,498 ) (71,498 ) (70,948 ) Average core deposit intangible (2,425 ) (3,282 ) (4,131 ) Adjusted average tangible common equity $ 437,547 $ 425,760 $ 395,702 Return on average tangible common equity 6.09 % 9.97 % 16.26 % 68 Table of Contents
The following table reconciles ROATCE to its most comparable GAAP measure: For the Year Ended 2025 2024 2023 Return on average tangible common equity: (dollars in thousands) Net income available to common shareholders $ 31,948 $ 26,665 $ 42,465 Average shareholders' equity 514,520 511,470 500,540 Adjustments: Average goodwill (71,498 ) (71,498 ) (71,498 ) Average core deposit intangible (1,693 ) (2,425 ) (3,282 ) Adjusted average tangible common equity $ 441,329 $ 437,547 $ 425,760 Return on average common equity 6.21 % 5.21 % 8.48 % Return on average tangible common equity 7.24 % 6.09 % 9.97 % Pre-tax Pre-Provision Income.
December 31, 2024 December 31, 2023 December 31, 2022 Amount % of Total Amount % of Total Amount % of Total Securities, available for sale, at fair value (dollars in thousands) Government agency securities $ 21,042 4.9 % $ 8,161 2.5 % $ 4,495 1.7 % SBA agency securities 26,764 6.3 % 13,217 4.1 % 2,411 0.9 % Mortgage-backed securities: residential 55,677 13.1 % 34,652 10.7 % 38,057 14.4 % Mortgage-backed securities: commercial — 0.0 % — 0.0 % 4,871 1.9 % Collateralized mortgage obligations: residential 105,476 24.8 % 82,327 25.3 % 69,903 26.6 % Collateralized mortgage obligations: commercial 91,656 21.5 % 67,299 20.8 % 41,690 15.9 % Commercial paper 78,685 18.5 % 73,105 22.6 % 49,537 18.9 % Corporate debt securities (1) 31,815 7.5 % 30,691 9.5 % 37,012 14.1 % Municipal tax-exempt securities 9,075 2.2 % 9,509 2.8 % 8,854 3.4 % Total securities, available for sale, at fair value $ 420,190 98.8 % $ 318,961 98.3 % $ 256,830 97.8 % Securities, held to maturity, at amortized cost Taxable municipal securities $ 500 0.1 % $ 501 0.2 % $ 1,003 0.4 % Tax-exempt municipal securities 4,691 1.1 % 4,708 1.5 % 4,726 1.8 % Total securities, held to maturity, at amortized cost 5,191 1.2 % 5,209 1.7 % 5,729 2.2 % Total securities $ 425,381 100.0 % $ 324,170 100.0 % $ 262,559 100.0 % (1) Comprised of corporate debt securities and individual financial institution subordinated debentures 51 Table of Contents The tables below set forth investment debt securities AFS and HTM as of the dates indicated: Amortized Unrealized Unrealized Fair December 31, 2024 Cost Gains Losses Value Available for sale (dollars in thousands) Government agency securities $ 21,592 $ — $ (550 ) $ 21,042 SBA agency securities 27,231 — (467 ) 26,764 Mortgage-backed securities: residential 62,351 — (6,674 ) 55,677 Collateralized mortgage obligations: residential 117,936 178 (12,638 ) 105,476 Collateralized mortgage obligations: commercial 94,284 175 (2,803 ) 91,656 Commercial paper 78,687 1 (3 ) 78,685 Corporate debt securities 34,733 43 (2,961 ) 31,815 Municipal tax-exempt securities 12,602 — (3,527 ) 9,075 $ 449,416 $ 397 $ (29,623 ) $ 420,190 Held to maturity Municipal taxable securities $ 500 $ 1 $ — $ 501 Municipal tax-exempt securities 4,691 — (244 ) 4,447 $ 5,191 $ 1 $ (244 ) $ 4,948 December 31, 2023 Available for sale (dollars in thousands) Government agency securities $ 8,705 $ — $ (544 ) $ 8,161 SBA securities 13,289 144 (216 ) 13,217 Mortgage-backed securities: residential 40,507 — (5,855 ) 34,652 Collateralized mortgage obligations: residential 94,071 454 (12,198 ) 82,327 Collateralized mortgage obligations: commercial 69,941 22 (2,664 ) 67,299 Commercial paper 73,121 — (16 ) 73,105 Corporate debt securities 34,800 — (4,109 ) 30,691 Municipal securities 12,636 — (3,127 ) 9,509 $ 347,070 $ 620 $ (28,729 ) $ 318,961 Held to maturity Municipal taxable securities $ 501 $ 3 $ — $ 504 Municipal securities 4,708 — (115 ) 4,593 $ 5,209 $ 3 $ (115 ) $ 5,097 The weighted-average life on the total investment portfolio at December 31, 2024 was 5.0 years compared to a weighted-average life of 5.1 years at December 31, 2023.
December 31, 2025 December 31, 2024 December 31, 2023 Amount % of Total Amount % of Total Amount % of Total Securities, available for sale, at fair value (dollars in thousands) Government agency securities $ 22,705 5.5 % $ 21,042 4.9 % $ 8,161 2.5 % SBA agency securities 21,180 5.1 % 26,764 6.3 % 13,217 4.1 % Mortgage-backed securities: residential 87,178 21.2 % 55,677 13.1 % 34,652 10.7 % Mortgage-backed securities: commercial 4,977 1.2 % — 0.0 % — 0.0 % Collateralized mortgage obligations: residential 112,495 27.3 % 105,476 24.8 % 82,327 25.3 % Collateralized mortgage obligations: commercial 100,777 24.6 % 91,656 21.5 % 67,299 20.8 % Commercial paper 19,948 4.9 % 78,685 18.5 % 73,105 22.6 % Corporate debt securities (1) 28,429 6.9 % 31,815 7.5 % 30,691 9.5 % Municipal tax-exempt securities 9,515 2.3 % 9,075 2.2 % 9,509 2.8 % Total securities, available for sale, at fair value $ 407,204 99.0 % $ 420,190 98.8 % $ 318,961 98.3 % Securities, held to maturity, at amortized cost Municipal taxable securities $ — 0.0 % $ 500 0.1 % $ 501 0.2 % Municipal tax-exempt securities 4,184 1.0 % 4,691 1.1 % 4,708 1.5 % Total securities, held to maturity, at amortized cost 4,184 1.0 % 5,191 1.2 % 5,209 1.7 % Total securities $ 411,388 100.0 % $ 425,381 100.0 % $ 324,170 100.0 % (1) Comprised of corporate debt securities and individual financial institution subordinated debentures. 51 Table of Contents The tables below set forth investment debt securities AFS and HTM as of the dates indicated: Amortized Unrealized Unrealized Fair December 31, 2025 Cost Gains Losses Value Available for sale (dollars in thousands) Government agency securities $ 22,850 $ 34 $ (179 ) $ 22,705 SBA agency securities 21,326 90 (236 ) 21,180 Mortgage-backed securities: residential 91,049 634 (4,505 ) 87,178 Mortgage-backed securities: commercial 5,010 — (33 ) 4,977 Collateralized mortgage obligations: residential 120,475 760 (8,740 ) 112,495 Collateralized mortgage obligations: commercial 102,755 183 (2,161 ) 100,777 Commercial paper 19,948 — — 19,948 Corporate debt securities 30,165 75 (1,811 ) 28,429 Municipal tax-exempt securities 12,567 — (3,052 ) 9,515 $ 426,145 $ 1,776 $ (20,717 ) $ 407,204 Held to maturity Municipal tax-exempt securities $ 4,184 $ — $ (81 ) $ 4,103 $ 4,184 $ — $ (81 ) $ 4,103 December 31, 2024 Available for sale (dollars in thousands) Government agency securities $ 21,592 $ — $ (550 ) $ 21,042 SBA securities 27,231 — (467 ) 26,764 Mortgage-backed securities: residential 62,351 — (6,674 ) 55,677 Collateralized mortgage obligations: residential 117,936 178 (12,638 ) 105,476 Collateralized mortgage obligations: commercial 94,284 175 (2,803 ) 91,656 Commercial paper 78,687 1 (3 ) 78,685 Corporate debt securities 34,733 43 (2,961 ) 31,815 Municipal tax-exempt securities 12,602 — (3,527 ) 9,075 $ 449,416 $ 397 $ (29,623 ) $ 420,190 Held to maturity Municipal taxable securities $ 500 $ 1 $ — $ 501 Municipal tax-exempt securities 4,691 — (244 ) 4,447 $ 5,191 $ 1 $ (244 ) $ 4,948 The weighted-average life on the total investment portfolio at December 31, 2025, was 4.9 years compared to a weighted-average life of 5.0 years at December 31, 2024.

… 196 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

13 edited+0 added−2 removed8 unchanged
Biggest changeThe NII at Risk results are within board policy limits. 70 Table of Contents Economic Value of Equity Sensitivity (Shock) Immediate Change in Rates -300 -200 -100 +100 +200 +300 December 31, 2024 (dollars in thousands) Dollar change (25,835 ) 3,288 11,486 (19,175 ) (46,186 ) (80,285 ) Percent change (3.84 )% 0.49 % 1.71 % (2.85 )% (6.86 )% (11.93 )% December 31, 2023 Dollar change (26,488 ) (7,430 ) 4,856 (28,251 ) (69,646 ) (111,281 ) Percent change (4.79 )% (1.34 )% 0.88 % (5.11 )% (12.60 )% (20.14 )% At December 31, 2024, the EVE position is projected to decrease in the up rate scenarios.
Biggest changeThe NII at Risk results are within board policy limits. 69 Table of Contents Economic Value of Equity Sensitivity (Shock) Immediate Change in Rates -300 -200 -100 +100 +200 +300 December 31, 2025 (dollars in thousands) Dollar change (48,495 ) 7,557 8,430 (18,774 ) (39,714 ) (64,688 ) Percent change (7.41 %) 1.16 % 1.29 % (2.87 %) (6.07 %) (9.89 %) December 31, 2024 Dollar change (25,835 ) 3,288 11,486 (19,175 ) (46,186 ) (80,285 ) Percent change (3.84 )% 0.49 % 1.71 % (2.85 )% (6.86 )% (11.93 )% At December 31, 2025, the EVE position is projected to increase in the down 100 and 200 rate scenarios and decrease in the up rate scenarios and down 300 rate scenario.
Interest rate risk arises from timing differences in the repricings and maturities of interest-earning assets and interest-bearing liabilities (repricing risk), changes in the expected maturities of assets and liabilities arising from embedded options, such as borrowers’ ability to prepay residential mortgage loans at any time and depositors’ ability to redeem certificates of deposit before maturity (option risk), changes in the shape of the yield curve where interest rates increase or decrease in a nonparallel fashion (yield curve risk), and changes in spread relationships between different yield curves, such as U.S.
Interest rate risk arises from timing differences in the repricing and maturities of interest-earning assets and interest-bearing liabilities (repricing risk), changes in the expected maturities of assets and liabilities arising from embedded options, such as borrowers’ ability to prepay residential mortgage loans at any time and depositors’ ability to redeem certificates of deposit before maturity (option risk), changes in the shape of the yield curve where interest rates increase or decrease in a nonparallel fashion (yield curve risk), and changes in spread relationships between different yield curves, such as U.S.
Under NII at Risk, net interest income is modeled utilizing various assumptions for assets, liabilities, and derivatives over a 12 month horizon assuming a flat balance sheet and an instantaneous and parallel shift in market interest rates in 100 basis point increments.
Under NII at Risk, net interest income is modeled utilizing various assumptions for assets, liabilities, and derivatives over a 12 month time horizon assuming a flat balance sheet and an instantaneous and parallel shift in market interest rates in 100 basis point increments.
Actual results could vary materially from those calculated by our model, due to a variety of factors or assumptions such as the uncertainty of the magnitude, timing and direction of future interest rate movement or the shape of the yield curve. The EVE results are within board policy limits. 71 Table of Contents
Actual results could vary materially from those calculated by our model, due to a variety of factors or assumptions such as the uncertainty of the magnitude, timing and direction of future interest rate movement or the shape of the yield curve. The EVE results are within board policy limits. 70 Table of Contents
We report NII at Risk to isolate the change in income related solely to interest-earning assets and interest-bearing liabilities. The model results do not take into consideration any steps management might take to respond to the changes in interest rates.
We report NII at Risk to isolate the change in income related solely to interest-earning assets and interest-bearing liabilities. The model results do not take into consideration any steps management might take to respond to the changes in interest rates or changes in competitor or customer behavior.
Basis risk represents the risk of loss arising from asset and liability pricing movements not changing in the same direction. We have basis risk in the SFR mortgage loan portfolio, the multifamily loan portfolio and our securities portfolio. 69 Table of Contents Our ALCO establishes broad policy limits with respect to interest rate risk.
Basis risk represents the risk of loss arising from asset and liability pricing movements not changing in the same direction. We have basis risk primarily in the SFR mortgage loan portfolio, the multi-family loan portfolio, and our securities portfolio. 68 Table of Contents Our ALCO establishes broad policy limits with respect to interest rate risk.
The ALCO meets at least quarterly to monitor the level of interest rate risk sensitivity to ensure compliance with the board of directors’ approved risk limits and to oversee management's balance sheet risk management strategies. Interest rate risk management is an active process that encompasses monitoring loan and deposit flows complemented by investment and funding activities.
The ALCO monitors the level of interest rate risk sensitivity to ensure compliance with the board of directors’ approved risk limits and to oversee management's balance sheet risk management strategies. Interest rate risk management is an active process that encompasses monitoring loan and deposit flows complemented by investment and funding activities.
Conversely, a liability sensitive position refers to a balance sheet position in which an increase in short-term interest rates is expected to generate lower net interest income, as rates paid on interest-bearing liabilities would reprice upward more quickly than rates earned on interest-earning assets, thus compressing the net interest margin. Income Simulation and Economic Value Analysis.
Conversely, a liability sensitive position refers to a balance sheet position in which a short-term decrease in interest rates is expected to generate higher net interest income, as rates paid on interest-bearing liabilities would reprice downward more quickly than rates earned on interest-earning assets, thus expanding the net interest margin. Income Simulation and Economic Value Analysis.
An asset sensitive position refers to a balance sheet position in which an increase in short-term interest rates is expected to generate higher net interest income, as rates earned on interest-earning assets would reprice upward more quickly than rates paid on interest-bearing liabilities, thus expanding the net interest margin.
An asset sensitive position refers to a balance sheet position in which a short-term decrease in interest rates is expected to generate lower net interest income, as rates earned on interest-earning assets would reprice downward more quickly than rates paid on interest-bearing liabilities, thus compressing the net interest margin.
When interest rates rise, fixed rate assets generally lose economic value as these instruments are discounted at a higher rate demonstrating the relative longer asset duration as compared to the overall liability duration.
When interest rates rise, fixed rate assets generally lose economic value as these instruments are discounted at a higher rate demonstrating the relative longer asset duration as compared to the overall liability duration. When interest rates decrease, the value of noninterest-bearing deposits also decreases.
Actual results could vary materially from those calculated by our model, due to a variety of factors or assumptions such as the uncertainty of the magnitude, timing and direction of future interest rate movement or the shape of the yield curve.
This is directionally consistent with our profile at December 31, 2024. Actual results could vary materially from those calculated by our model, due to a variety of factors or assumptions such as the uncertainty of the magnitude, timing and direction of future interest rate movement or the shape of the yield curve.
Net Interest Income Sensitivity Immediate Change in Rates -300 -200 -100 +100 +200 +300 December 31, 2024 (dollars in thousands) Dollar change $ 12,278 $ 6,776 $ 2,810 $ (960 ) $ (2,321 ) $ (3,612 ) Percent change 10.73 % 5.92 % 2.46 % (0.84 %) (2.03 %) (3.16 %) December 31, 2023 Dollar change $ 11,086 $ 6,553 $ 2,545 $ 470 $ 50 $ (455 ) Percent change 10.48 % 6.20 % 2.41 % 0.44 % 0.05 % (0.43 )% At December 31, 2024, our NII at Risk profile is liability sensitive in the down and up rate scenarios.
Net Interest Income Sensitivity Immediate Change in Rates -300 -200 -100 +100 +200 +300 December 31, 2025 (dollars in thousands) Dollar change $ 11,201 $ 5,268 $ 3,325 $ (2,860 ) $ (5,527 ) $ (8,440 ) Percent change 9.38 % 4.41 % 2.78 % (2.39 %) (4.63 %) (7.07 %) December 31, 2024 Dollar change $ 12,278 $ 6,776 $ 2,810 $ (960 ) $ (2,321 ) $ (3,612 ) Percent change 10.73 % 5.92 % 2.46 % (0.84 %) (2.03 %) (3.16 %) At December 31, 2025, our NII at Risk profile is liability sensitive.
However, as the down rate shocks become more severe, the pace of the increase in the value of loans slows a loan prepayments increase and discount rates reach their floors, resulting in a lower EVE position in the down 300 scenario.
In addition, as the down rate shocks become more severe, the pace of the increase in the value of loans also slows due to an increase in loan prepayments and the impact of discount rates reaching their floors; this results in a change of EVE volatility from positive to negative between the down 200 and 300 rate scenarios.
Removed
This is directionally consistent with our profile at December 31, 2023 for the down rate and a change from neutral in the up rate scenario. For the up rate scenarios, we are more liability sensitive due to fixed rate debt approaching its maturity date in the first quarter of 2025.
Removed
In the down rate scenario, the EVE position is projected to initially increase as assets gain in value at a faster rate than the decrease in the value of noninterest-bearing deposits.

Other RBB 10-K year-over-year comparisons