10-Q

Table of Contents **** ​

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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FORM 10-Q

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☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
​	​
​	For the quarterly period ended June 30, 2024
​	​
​	or
​	​
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
​	​
​	For the transition period from            to

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Commission File Number: 001-38483

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BAYCOM CORP

(Exact name of registrant as specified in its charter)

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California	37-1849111
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
500 Ygnacio Valley Road , Suite 200 , Walnut Creek , California	94596
(Address of principal executive offices)	(Zip Code)

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Registrant’s telephone number, including area code:  (925) 476-1800

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None

(Former name, former address and former fiscal year, if changed since last report)

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

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, no par value per share	BCML	The NASDAQ Stock Market LLC

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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ☒  No ☐

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Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes ☒   No ☐

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

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Large accelerated filer ☐	Accelerated filer ☒
Non-accelerated filer ☐	Smaller reporting company ☒
	Emerging growth company ☐

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

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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐    No ☒

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Indicate the number of shares outstanding of each of the registrant’s classes of common stock as of the latest practicable date.

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As of August 7, 2024, there were 11,156,267 shares of the registrant’s common stock outstanding.

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Table of Contents

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BAYCOM CORP

QUARTERLY REPORT ON FORM 10-Q

TABLE OF CONTENTS

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PART I — FINANCIAL INFORMATION	2
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ITEM 1. FINANCIAL STATEMENTS	2
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	34
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	57
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ITEM 4. CONTROLS AND PROCEDURES	57
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PART II — OTHER INFORMATION	58
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ITEM 1. LEGAL PROCEEDINGS	58
​	​
ITEM 1A. RISK FACTORS	58
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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	58
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ITEM 3. DEFAULTS UPON SENIOR SECURITIES	58
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ITEM 4. MINE SAFETY DISCLOSURES	58
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ITEM 5. OTHER INFORMATION	59
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ITEM 6. EXHIBITS	59
​	​
SIGNATURES	60

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As used throughout this report, the terms “we,” “our,” “us,” “BayCom,” or the “Company” refer to BayCom Corp and its consolidated subsidiary, United Business Bank, which we sometimes refer to as the “Bank,” unless the context otherwise requires.

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Table of Contents

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BAYCOM CORP

QUARTERLY REPORT ON FORM 10-Q

TABLE OF CONTENTS

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

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Condensed Consolidated Balance Sheets (unaudited)	3
Condensed Consolidated Statements of Income (unaudited)	4
Condensed Consolidated Statements of Comprehensive Income (unaudited)	5
Condensed Consolidated Statements of Changes in Shareholders’ Equity (unaudited)	6
Condensed Consolidated Statements of Cash Flows (unaudited)	7
Notes to Condensed Consolidated Financial Statements (unaudited)	9

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BAYCOM CORP AND SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except for share data)

(unaudited)

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​	​	​	​	​	​	​
​	​	June 30,		​	December 31,
​	****	2024		****	2023
ASSETS		​			​
Cash due from banks	​	$	23,278	​	$	17,901
Federal funds sold and interest-bearing balances in banks	​		367,930	​		289,638
Cash and cash equivalents	​	​	391,208	​		307,539
Time deposits in banks	​	​	747	​		1,245
Investment securities available-for-sale ("AFS"), at fair value, net of allowance for credit losses of $0 at both June 30, 2024 and December 31, 2023	​	​	183,633	​		163,152
Equity securities	​	​	12,837	​	​	12,585
Federal Home Loan Bank ("FHLB") stock, at par	​	​	11,313	​		11,313
Federal Reserve Bank ("FRB") stock, at par	​	​	9,635	​		9,626
Loans, net of allowance for credit losses of $19,000 at June 30, 2024 and $22,000 at December 31, 2023	​	​	1,845,172	​		1,905,829
Premises and equipment, net	​	​	14,052	​		13,734
Core deposit intangible, net	​	​	3,304	​		3,915
Cash surrender value of bank owned life insurance ("BOLI") policies, net	​	​	23,225	​		22,867
Right-of-use assets ("ROU"), net	​	​	12,874	​	​	13,939
Goodwill	​	​	38,838	​		38,838
Interest receivable and other assets	​	​	47,095	​		47,378
Total assets	​	$	2,593,933	​	$	2,551,960
LIABILITIES AND SHAREHOLDERS’ EQUITY	​		​	​	​	​
Noninterest and interest bearing deposits	​	$	2,175,010	​	$	2,132,750
Junior subordinated deferrable interest debentures, net	​		8,605	​		8,565
Subordinated debt, net	​	​	63,651	​	​	63,881
Salary continuation plan	​		4,733	​		4,552
Lease liabilities	​		13,779	​		14,752
Interest payable and other liabilities	​		12,890	​		14,591
Total liabilities	​		2,278,668	​		2,239,091
Commitments and contingencies (Note 17)	​			​
Shareholders' equity	​			​
Preferred stock, no par value; 10,000,000 shares authorized; no shares issued and outstanding at both June 30, 2024 and December 31, 2023	​		—	​		—
Common stock, no par value; 100,000,000 shares authorized; 11,172,323 and 11,551,271 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively	​		173,108	​		180,913
Additional paid in capital	​		287	​		287
Accumulated other comprehensive loss, net of tax	​		(13,602)	​		(14,592)
Retained earnings	​		155,472	​		146,261
Total shareholders’ equity	​		315,265	​		312,869
Total liabilities and shareholders’ equity	​	$	2,593,933	​	$	2,551,960

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See Notes to Condensed Consolidated Financial Statements.

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BAYCOM CORP AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except for share and per share data)

(unaudited)

​

​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Three months ended					​	Six months ended
​	​	June 30,					​	June 30,
​	****	2024			2023		****	2024			2023
​	​	​	​	​	​		​	​	​	​	​
Interest income:		​			​			​			​
Loans, including fees	​	$	25,014	​	$	26,667	​	$	50,271	​	$	52,922
Investment securities	​		2,181	​		1,693	​		4,137	​		3,333
Fed funds sold and interest-bearing balances in banks	​	​	4,819	​	​	2,560	​	​	8,934	​	​	4,389
FHLB dividends	​		247	​		196	​		519	​		384
FRB dividends	​		145	​		144	​		289	​		288
Total interest and dividend income	​		32,406	​		31,260	​		64,150	​		61,316
Interest expense:	​			​			​			​
Deposits	​		9,002	​		5,881	​		17,229	​		9,581
Subordinated debt	​	​	891	​	​	895	​	​	1,784	​	​	1,791
Junior subordinated deferrable interest debentures	​		218	​		203	​		435	​		406
Total interest expense	​		10,111	​		6,979	​		19,448	​		11,778
Net interest income	​		22,295	​		24,281	​		44,702	​		49,538
Provision for (reversal of) credit losses	​		171	​		(1,260)	​		423	​		(985)
Net interest income after provision for (reversal of) credit losses	​		22,124	​		25,541	​		44,279	​		50,523
Noninterest income:	​			​			​			​
Gain on sale of loans	​		287	​		68	​		287	​		480
(Loss) gain on equity securities	​	​	(321)	​	​	(917)	​	​	252	​	​	(1,813)
Service charges and other fees	​		734	​		882	​		1,573	​		1,767
Loan servicing and other loan fees	​		441	​		593	​		833	​		1,003
Income on investment in Small Business Investment Company (“SBIC”) fund	​		71	​		225	​		41	​		714
Other income and fees	​		271	​		235	​		559	​		496
Total noninterest income	​		1,483	​		1,086	​		3,545	​		2,647
Noninterest expense:	​			​			​			​
Salaries and employee benefits	​		9,642	​		10,745	​		19,678	​		21,781
Occupancy and equipment	​		2,133	​		1,974	​		4,287	​		4,001
Data processing	​		1,650	​		1,616	​		3,403	​		3,081
Other expense	​		2,587	​		2,222	​		4,715	​		4,223
Total noninterest expense	​		16,012	​		16,557	​		32,083	​		33,086
Income before provision for income taxes	​		7,595	​		10,070	​		15,741	​		20,084
Provision for income taxes	​		1,995	​		2,864	​		4,264	​		5,687
Net income	​	$	5,600	​	$	7,206	​	$	11,477	​	$	14,397
Earnings per common share:	​			​			​			​
Basic earnings per common share	​	$	0.50	​	$	0.59	​	$	1.01	​	$	1.16
Weighted average common shares outstanding	​		11,254,233	​		12,228,206	​		11,389,992	​		12,462,539
​	​	​	​	​	​	​	​	​	​	​	​	​
Diluted earnings per common share	​	$	0.50	​	$	0.59	​	$	1.01	​	$	1.16
Weighted average common shares outstanding	​		11,254,233	​		12,228,206	​		11,389,992	​		12,462,539

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See Notes to Condensed Consolidated Financial Statements.

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BAYCOM CORP AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(unaudited)

​

​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	Three months ended				​	Six months ended
​	​	June 30,					​	June 30,
​	****	2024			2023			2024			2023
​	​	​	​	​	​		​	​	​	​	​
Net income	​	$	5,600	​	$	7,206	​	$	11,477	​	$	14,397
Other comprehensive income (loss):	​			​			​		​	​
Change in unrealized gain (loss) on AFS securities	​		710	​		(4,999)	​		1,406	​		(6,823)
Deferred tax (expense) benefit	​		(204)	​		1,437	​		(416)	​		1,964
Other comprehensive income (loss), net of tax	​		506	​		(3,562)	​		990	​		(4,859)
Total comprehensive income	​	$	6,106	​	$	3,644	​	$	12,467	​	$	9,538

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See Notes to Condensed Consolidated Financial Statements.

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BAYCOM CORP AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(In thousands, except for share and per share data)

(unaudited)

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	****	​		​			​			Accumulated			​	​		​	​
​	​	​	​	Common		​	Additional		​	Other		​	​	​	​	Total
​	​	Number of	​	Stock		​	Paid in		​	Comprehensive		​	Retained		​	Shareholders’
​	​	Shares	​	Amount		​	Capital		​	Income/(Loss)		​	Earnings		​	Equity
Three months ended June 30, 2024	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Balance, April 1, 2024	​	11,377,117	​	$	177,075	​	$	287	​	$	(14,108)	​	$	150,981	​	$	314,235
Net income	​	​	​	​	​	​	​	​	​	​	​	​	​	5,600	​	​	5,600
Other comprehensive income, net	​	​	​	​	​	​	​	​	​	​	506	​	​	​	​	​	506
Cash dividends of $0.10 per share	​	​	​	​	​	​	​	​	​	​	​	​	​	(1,109)	​	​	(1,109)
Stock based compensation	​	​	​	​	164	​	​	​	​	​	​	​	​	​	​	​	164
Repurchase of shares	​	(204,794)	​	​	(4,131)	​	​	​	​	​	​	​	​	​	​	​	(4,131)
Balance, June 30, 2024	​	11,172,323	​	$	173,108	​	$	287	​	$	(13,602)	​	$	155,472	​	$	315,265
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Three months ended June 30, 2023	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Balance, April 1, 2023 (As Restated)	​	12,443,977	​	$	196,485	​	$	287	​	$	(12,858)	​	$	129,558	​	$	313,472
Net income	​	​	​	​	​	​	​	​	​	​	​	​	​	7,206	​	​	7,206
Other comprehensive loss, net	​	​	​	​	​	​	​	​	​	​	(3,562)	​	​	​	​	​	(3,562)
Cash dividends of $0.10 per share	​	​	​	​	​	​	​	​	​	​	​	​	​	(1,196)	​	​	(1,196)
Stock based compensation	​	​	​	​	182	​	​	​	​	​	​	​	​	​	​	​	182
Repurchase of shares	​	(543,955)	​	​	(9,088)	​	​	​	​	​	​	​	​	​	​	​	(9,088)
Balance, June 30, 2023	​	11,900,022	​	$	187,579	​	$	287	​	$	(16,420)	​	$	135,568	​	$	307,014
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​

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​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	****	​		​			​			Accumulated			​	​		​	​
​	​	​	​	Common		​	Additional		​	Other		​	​	​	​	Total
​	​	Number of	​	Stock		​	Paid in		​	Comprehensive		​	Retained		​	Shareholders’
​	​	Shares	​	Amount		​	Capital		​	Income/(Loss)		​	Earnings		​	Equity
Six months ended June 30, 2024	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Balance, January 1, 2024	​	11,551,271	​	$	180,913	​	$	287	​	$	(14,592)	​	$	146,261	​	$	312,869
Net income	​	​	​	​	​	​	​	​	​	​	​	​	​	11,477	​	​	11,477
Other comprehensive income, net	​	​	​	​	​	​	​	​	​	​	990	​	​	​	​	​	990
Restricted stock granted	​	24,471	​	​	​	​	​	​	​	​	​	​	​	​	​	​	—
Forfeiture of restricted stock granted	​	(505)	​	​	​	​	​	​	​	​	​	​	​	​	​	​	—
Cash dividends of $0.20 per share	​	​	​	​	​	​	​	​	​	​	​	​	​	(2,266)	​	​	(2,266)
Stock based compensation	​	​	​	​	324	​	​	​	​	​	​	​	​	​	​	​	324
Repurchase of shares	​	(402,914)	​	​	(8,129)	​	​	​	​	​	​	​	​	​	​	​	(8,129)
Balance, June 30, 2024	​	11,172,323	​	$	173,108	​	$	287	​	$	(13,602)	​	$	155,472	​	$	315,265
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Six months ended June 30, 2023	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Balance, January 1, 2023 (As Restated)	​	12,838,462	​	$	204,301	​	$	287	​	$	(11,561)	​	$	124,122	​	$	317,149
Net income	​	​	​	​	​	​	​	​	​	​	​	​	​	14,397	​	​	14,397
Other comprehensive loss, net	​	​	​	​	​	​	​	​	​	​	(4,859)	​	​	​	​	​	(4,859)
Cumulative change from adoption of ASU 2016-13, net of tax	​	​	​	​	​	​	​	​	​	​	​	​	​	(491)	​	​	(491)
Restricted stock granted	​	28,392	​	​	​	​	​	​	​	​	​	​	​	​	​	​	—
Cash dividends of $0.20 per share	​	​	​	​	​	​	​	​	​	​	​	​	​	(2,460)	​	​	(2,460)
Stock based compensation	​	​	​	​	432	​	​	​	​	​	​	​	​	​	​	​	432
Repurchase of shares	​	(966,832)	​	​	(17,154)	​	​	​	​	​	​	​	​	​	​	​	(17,154)
Balance, June 30, 2023	​	11,900,022	​	$	187,579	​	$	287	​	$	(16,420)	​	$	135,568	​	$	307,014

​

See Notes to Condensed Consolidated Financial Statements.

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BAYCOM CORP AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(unaudited)

​

​	​	​	​	​	​	​	​	​
​	​	Six months ended					​	​
​	​	June 30,					​	​
​	****	2024			2023		​	****
​	​	​	​	​	​		​	​
Cash flows from operating activities:		​			​			​
Net income	​	$	11,477	​	$	14,397	​	​
Adjustments to reconcile net income to net cash provided by operating activities:	​			​			​	​
Provision for (reversal of) credit losses	​		423	​		(985)	​	​
Deferred tax expense (benefit)	​		2,021	​		(1,285)	​	​
Accretion on acquired loans	​		(186)	​		(853)	​	​
Gain on sale of loans	​		(287)	​		(480)	​	​
Proceeds from sale of loans	​		4,749	​		9,176	​	​
Loans originated for sale	​		(3,562)	​		(6,882)	​	​
Loss on sale of OREO	​		—	​		21	​	​
Accretion on junior subordinated debentures	​		40	​		40	​	​
Gain on repayment of subordinated debt, net	​	​	(34)	​	​	—	​	​
Increase in cash surrender value of life insurance policies	​		(358)	​		(335)	​	​
Amortization/accretion of premiums/discounts on investment securities, net	​		64	​		227	​	​
(Gain) loss on equity securities	​	​	(252)	​	​	1,813	​	​
Depreciation and amortization	​		1,009	​		883	​	​
Core deposit intangible amortization	​		611	​		674	​	​
Stock based compensation expense	​		324	​		432	​	​
Increase (decrease) in deferred loan origination fees, net	​		66	​		(92)	​	​
Net change in interest receivable and other assets	​		(1,120)	​		1,956	​	​
Increase in salary continuation plan, net	​		181	​		115	​	​
Net change in interest payable and other liabilities	​		(2,415)	​		967	​	​
Net cash provided by operating activities	​		12,751	​		19,789	​	​
Cash flows from investing activities:	​			​			​	​
Proceeds from maturities of interest bearing deposits in banks	​		498	​		249	​	​
Purchase of investment securities AFS	​		(26,570)	​		(2,460)	​	​
Proceeds from maturities, repayments and calls of investment securities AFS	​		7,430	​		2,943	​	​
Purchase of FHLB stock	​		—	​		(634)	​	​
Purchase of FRB stock	​		(9)	​		(14)	​	​
Decrease in loans, net	​		59,454	​		10,513	​	​
Purchase of equipment and leasehold improvements, net	​		(1,388)	​		(171)	​	​
Net cash provided by investing activities	​		39,415	​		10,426	​	​

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BAYCOM CORP AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS – (continued)

(In thousands)

(unaudited)

​

​	​	​	​	​	​	​	​
​	​	Six months ended
​	​	June 30,
​	****	2024			2023		****
​	​	​	​	​	​		​
Cash flows from financing activities:		​			​
Decrease in noninterest and interest bearing deposits in banks, net		​	(8,601)		​	(104,187)
Increase in time deposits, net		​	50,861		​	165,774
Repayment of subordinated debt, net	​	​	(315)	​	​	—	​
Repurchase of common stock		​	(8,129)		​	(17,154)
Dividends paid on common stock	​	​	(2,313)	​	​	(1,264)	​
Net cash provided by financing activities		​	31,503		​	43,169
Increase in cash and cash equivalents		​	83,669		​	73,384
Cash and cash equivalents at beginning of period		​	307,539		​	176,815
Cash and cash equivalents at end of period	​	$	391,208	​	$	250,199	​
​	​	​	​	​	​	​	​
Supplemental disclosure of cash flow information:	​			​			​
Cash paid during the year for:	​			​			​
Interest expense	​	$	18,920	​	$	10,576	​
Income taxes paid, net	​	​	3,893	​		7	​
Recognition of ROU assets	​	​	575	​	​	—	​
Recognition of lease liability	​	​	570	​	​	—	​
​	​	​	​	​	​	​	​
Non-cash investing and financing activities:	​			​			​
Change in unrealized gain (loss) on AFS securities, net of tax	​	$	990	​	$	(4,859)	​
Transfer of loans to held-for-sale	​	​	1,684	​	​	—	​
Cash dividends declared on common stock not yet paid	​	​	(1,109)	​	​	(1,196)	​
​	​	​	​	​	​	​	​

​

See Notes to Condensed Consolidated Financial Statements.

​

​

​

​ 8

Table of Contents

​

NOTE 1 – BASIS OF PRESENTATION

BayCom Corp (the “Company”) is a bank holding company headquartered in Walnut Creek, California. United Business Bank (the “Bank”), the Company’s wholly owned banking subsidiary, is a California state-chartered bank which provides a broad range of financial services primarily to local small and mid-sized businesses, service professionals and individuals. In its 20 years of operation, the Bank has grown to 35 full-service banking branches, with 16 locations in California, one in Nevada, two in Washington, five in New Mexico and 11 in Colorado. The condensed consolidated financial statements include the accounts of the Company and the Bank.

All intercompany transactions and balances have been eliminated in consolidation. The condensed consolidated financial statements include all adjustments of a normal and recurring nature, which are, in the opinion of management, necessary for a fair presentation of the financial position and results of operations for the periods presented. Dollar amounts presented in the consolidated financial statements and footnote tables are rounded and presented to the nearest thousands of dollars except per share amounts. If the amounts are above $1.0 million, they are rounded one decimal point, and if they are above $1.0 billion, they are rounded two decimal points.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and, therefore, do not include all information and footnotes normally included in annual financial statements prepared in conformity with accounting principles generally accepted in the United States of America. Accordingly, these condensed consolidated financial statements should be read in conjunction with the consolidated audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. Results of operations for interim periods are not necessarily indicative of results for the full year. Certain prior year information has been reclassified to conform to the current year presentation. None of the reclassifications impacted consolidated net income, earnings per share or shareholders’ equity.

Restatement of Previously Issued Consolidated Financial Statements

​

On July 18, 2023, the audit committee of the Company’s board of directors concluded that the Company’s previously issued unaudited interim consolidated financial statements for the period ended March 31, 2023 and the consolidated financial statements for the year ended December 31, 2022, as well as for the unaudited interim periods included in that fiscal year (collectively, “Restated Periods”), should no longer be relied upon because of errors related to the accounting for unrealized losses on preferred equity securities that resulted in material misstatements of noninterest income and accumulated other comprehensive income.

​

At the time of its purchase of the preferred equity securities for investment purposes, the Company inappropriately accounted for them as AFS debt securities under Accounting Standards Codification (“ASC”) Topic 320 – Investments-Debt Securities. As such, the changes in the fair value of these securities were not recorded as part of net income but rather as a component of shareholders’ equity (in accumulated other comprehensive income, net of tax). However, as a result of subsequent research and third-party consultation, the Company determined that the securities should instead have been accounted for under ASC Topic 321 – Investments-Equity Securities. The result of this change in classification of the preferred equity securities is that the change in the fair value of the securities each quarter should have been recorded in noninterest income on the consolidated statements of income.

​

On July 25, 2023, the Company filed amendments to its Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2023, September 30, 2022, June 30, 2022, and March 31, 2022, and its Form 10-K for the year ended December 31, 2022, (the “Original Reports”) with the Securities and Exchange Commission (“SEC”), to reflect the restatement of the Company’s consolidated financial statements for the Restated Periods (the “Amended Form 10-Qs” and the “Amended Form 10-K,” collectively, the “Amended Reports”).

​

As disclosed in the Original Reports, the Company recorded the change, net of taxes, in the fair value of preferred equity securities as part of other comprehensive loss, net of taxes, under ASC Topic 320 – Investments-Debt Securities rather than as part of non-interest income under ASC Topic 321 – Investments-Equity Securities. In addition, various footnotes in the Amended Reports reflect the effects of these restatements.

​ 9

Table of Contents For additional information on the effects of the restatement, see Note 2 Restatement of Consolidated Financial Statements in the Notes to Consolidated Financial Statements contained in the Amended Form 10-K and Note 3. Restatement of the Consolidated Financial Statements in the Notes to Condensed Consolidated Financial Statements contained in each of the Amended Form 10-Qs.

NOTE 2 - ACCOUNTING GUIDANCE NOT YET EFFECTIVE AND ADOPTED ACCOUNTING GUIDANCE

Accounting Guidance Adopted in 2024

On January 1, 2024, the Company adopted Accounting Standards Update (“ASU”) 2023-02, Investments - Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method, a consensus of the Emerging Issues Task Force. ASU 2023-02 allows an entity the option to apply the proportional amortization method of accounting to other equity investments that are made for the primary purpose of receiving tax credits or other income tax benefits if certain conditions are met. Prior to this ASU, the application of the proportional amortization method of accounting was limited to investments in low-income housing tax credit structures. The proportional amortization method of accounting results in the amortization of applicable investments, as well as the related income tax credits or other income tax benefits received, being presented on a single line in the statements of income, income tax expense. Under this ASU, an entity has the option to apply the proportional amortization method of accounting to applicable investments on a tax-credit-program-by-tax-credit program basis. In addition, the amendments in this ASU require that all tax equity investments accounted for using the proportional amortization method use the delayed equity contribution guidance in paragraph 323-740-25-3, requiring a liability to be recognized for delayed equity contributions that are unconditional and legally binding or for equity contributions that are contingent upon a future event when that contingent event becomes probable. Under this ASU, low-income housing tax credit investments for which the proportional amortization method is not applied can no longer be accounted for using the delayed equity contribution guidance. Further, this ASU specifies that impairment of low-income housing tax credit investments not accounted for using the equity method must apply the impairment guidance in Subtopic 323-10: Investments - Equity Method and Joint Ventures - Overall. This ASU also clarifies that for low-income housing tax credit investments not accounted for under the proportional amortization method or the equity method, an entity shall account for them under Topic 321: Investments - Equity Securities. The amendments in the ASU also require additional disclosures in interim and annual periods concerning investments for which the proportional amortization method is applied, including (i) the nature of tax equity investments, and (ii) the effect of tax equity investments and related income tax credits and other income tax benefits on the financial position and results of operations. ASU 2023-02 is effective for the Company for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. The adoption of ASU 2023-02 did not have a material impact on the Company's consolidated financial statements and related disclosures.

​

Fair Value Measurement (Topic 820) - In June 2022, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2022-03, Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions. The guidance in the ASU clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account on the equity security and, therefore, is not considered in measuring fair value. The ASU also requires additional disclosures about the restriction. The amendments in this update are effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. The adoption of ASU 2022-03 did not have a material impact on the Company's consolidated financial statements and related disclosures.

Recent Accounting Guidance Not Yet Effective

Business Combinations (Topic 805) - In August 2023, the FASB issued ASU 2023-05, Business Combinations—Joint Venture (JV) Formations: Recognition and Initial Measurement. The guidance requires newly-formed JVs to apply a new basis of accounting to all of its contributed net assets, which results in the JV initially measuring its contributed net assets under ASC 805-20, Business Combinations. The new guidance would be applied prospectively and is effective for all newly-formed joint venture entities with a formation date on or after January 1, 2025, with early adoption permitted. The Company is evaluating the accounting and disclosure requirements of this update and does not expect them to have a material effect on the Company’s consolidated financial statements.

​

Segment Reporting – Improvements to Reportable Segment Disclosures (Topic 280) – In November 2023, the FASB issued ASU 2023-07 to enhance disclosures about significant segment expenses for public entities reporting 10

Table of Contents segment information under Topic 280. It requires that a public entity disclose, on an annual and interim basis, significant expense categories for each reportable segment. Significant expense categories are derived from expenses that are 1) regularly reported to an entity’s chief operating decision-maker ("CODM"), and 2) included in a segment’s reported measure of profit or loss. The disclosures should include an amount for "other segment items," reflecting the difference between 1) segment revenue less significant segment expenses, and 2) the reportable segment’s profit or loss measures. It requires that a public entity disclose the title and position of the CODM and how the CODM uses the reported measure of profit or loss to assess segment performance and to allocate resources. Further it clarifies that entities with a single reportable segment must comply with both new and existing segment reporting requirements. The amendments are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Entities must adopt the guidance on a retrospective basis. The Company is evaluating the accounting and disclosure requirements of this update and does not expect them to have a material effect on the Company’s consolidated financial statements.

​

*Income Taxes – Improvements to Income Tax Disclosures (Topic 740) –*In December 2023, the FASB issued ASU 2023-09 to provide additional transparency into an entity’s income tax disclosures primarily related to the rate reconciliation and income taxes paid information. The standard requires that public business entities disclose, on an annual basis, specific categories in the rate reconciliation and additional information for reconciling items meeting a certain quantitative threshold. The amendments also require that entities disclose on an annual basis: 1) income taxes paid (net of refunds received) disaggregated by federal (national), state, and foreign taxes and 2) the income taxes paid (net of refunds received) disaggregated by individual jurisdictions exceeding 5% of total income taxes paid (net of refunds received). The amendments are effective for public business entities for annual periods beginning after December 15, 2024. The Company is evaluating the accounting and disclosure requirements of this update and does not expect them to have a material effect on the Company’s consolidated financial statements.

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NOTE 3 – INVESTMENT SECURITIES

The amortized cost, gross unrealized gains and losses, and estimated fair values of securities AFS at the dates indicated are summarized as follows:

​

​	​	​	​	​	​	​	​	​	​	​	​	​
​	****	​	​		Gross			Gross		​	​	​
​	​	Amortized		​	unrealized		​	unrealized		​	Estimated
​	​	cost		​	gains		​	losses		​	fair value
June 30, 2024	​	​			​			​		​	​
Municipal securities	​	$	23,817	​	$	77	​	$	(1,477)	​	$	22,417
Mortgage-backed securities	​		47,464	​		98	​		(3,779)	​		43,783
Collateralized mortgage obligations	​		45,536	​		131	​		(2,277)	​		43,390
SBA securities	​		4,674	​		43	​		(77)	​		4,640
Corporate bonds	​		81,224	​		—	​		(11,821)	​		69,403
Total	​	$	202,715	​	$	349	​	$	(19,431)	​	$	183,633

​ 11

Table of Contents

​	​	​	​	​	​	​	​	​	​	​	​	​
​	****	​	​		Gross			Gross		​	​	​
​	​	Amortized		​	unrealized		​	unrealized		​	Estimated
​	​	cost		​	gains		​	losses		​	fair value
December 31, 2023	​	​			​			​		​	​
Municipal securities	​	$	21,910	​	$	75	​	$	(1,158)	​	$	20,827
Mortgage-backed securities	​		41,048	​		194	​		(3,641)	​		37,601
Collateralized mortgage obligations	​		35,019	​		256	​		(2,299)	​		32,976
SBA securities	​		5,280	​		49	​		(77)	​		5,252
Corporate bonds	​		80,383	​		7	​		(13,894)	​		66,496
Total	​	$	183,640	​	$	581	​	$	(21,069)	​	$	163,152

​

Amortized cost and fair values exclude accrued interest receivable of $1.5 million and $1.2 million at June 30, 2024 and December 31, 2023, respectively, which is included in interest receivable and other assets in the condensed consolidated balance sheets.

​

During both the three and six months ended June 30, 2024 and 2023, the Company sold no securities AFS.

​

The amortized cost and estimated fair value of securities AFS at the dates indicated by contractual maturity are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

​

​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	June 30, 2024					​	December 31, 2023
​	****	Amortized			Estimated			Amortized			Estimated
​	​	cost		​	fair value		​	cost		​	fair value
​	​	​	​	​	​	​	​	​		​	​
Securities AFS		​			​			​			​
Due in one year or less	​	$	34,697	​	$	34,051	​	$	6,397	​	$	6,338
Due after one through five years	​		84,573	​		72,430	​		15,909	​		14,206
Due after five years through ten years	​		26,967	​		24,092	​		102,430	​		87,867
Due after ten years	​		56,478	​		53,060	​		58,904	​		54,741
Total	​	$	202,715	​	$	183,633	​	$	183,640	​	$	163,152

​

At both June 30, 2024 and December 31, 2023, there were no securities pledged.

​ 12

Table of Contents The estimated fair value and gross unrealized losses for securities AFS aggregated by the length of time that individual securities have been in a continuous unrealized loss position at the dates indicated are as follows:

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Less than 12 months					​	12 months or more					​	Total
​	****	Estimated			Unrealized			Estimated			Unrealized			Estimated			Unrealized
​	​	fair value		​	loss		​	fair value		​	loss		​	fair value		​	loss
June 30, 2024	​	​			​			​			​			​			​
Municipal securities	​	$	1,649	​	$	(12)	​	$	16,962	​	$	(1,465)	​	$	18,611	​	$	(1,477)
Mortgage-backed securities	​	​	2,804	​	​	(33)	​	​	30,898	​	​	(3,746)	​	​	33,702	​	​	(3,779)
Collateralized mortgage obligations	​		4	​	​	—	​	​	26,524	​	​	(2,277)	​		26,528	​		(2,277)
SBA securities	​		—	​	​	—	​	​	1,403	​	​	(77)	​		1,403	​		(77)
Corporate bonds	​		—	​	​	—	​	​	69,403	​	​	(11,821)	​		69,403	​		(11,821)
Total	​	$	4,457	​	$	(45)	​	$	145,190	​	$	(19,386)	​	$	149,647	​	$	(19,431)

​

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Less than 12 months					​	12 months or more					​	Total
​	****	Estimated			Unrealized			Estimated			Unrealized			Estimated			Unrealized
​	​	fair value		​	loss		​	fair value		​	loss		​	fair value		​	loss
December 31, 2023	​	​			​			​			​			​			​
Municipal securities	​	$	2,483	​	$	(28)	​	$	13,975	​	$	(1,130)	​	$	16,458	​	$	(1,158)
Mortgage-backed securities	​		1,369	​		(30)	​		26,435	​		(3,611)	​		27,804	​		(3,641)
Collateralized mortgage obligations	​		1,496	​		(8)	​		20,713	​		(2,291)	​		22,209	​		(2,299)
SBA securities	​		—	​		—	​		1,610	​		(77)	​		1,610	​		(77)
Corporate bonds	​		—	​		—	​		65,505	​		(13,894)	​		65,505	​		(13,894)
Total	​	$	5,348	​	$	(66)	​	$	128,238	​	$	(21,003)	​	$	133,586	​	$	(21,069)

​

At June 30, 2024, the Company held 338 securities AFS, of which 315 were in an unrealized loss position for more than twelve months and 18 were in an unrealized loss position for less than twelve months. At December 31, 2023, the Company held 334 investment securities, of which 297 were in an unrealized loss position for more than twelve months and 22 were in an unrealized loss position for less than twelve months. The Company anticipates full recovery of amortized cost with respect to these securities at maturity or sooner in the event of a more favorable market interest rate environment.

Allowance for credit losses on investment debt securities available-for-sale

​

Securities that were in an unrealized loss position as of June 30, 2024 were evaluated to determine whether the decline in fair value below the amortized cost basis resulted from a credit loss or changes in required yields by investors in these types of securities, among other factors. This assessment first includes a determination of whether the Company intends to sell the security, or it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis less any current-period credit losses. In making this assessment, management considers the nature of the security and any related government guarantees, any changes to the rating of the security by a rating agency, creditworthiness of the issuers/guarantors, the underlying collateral, the financial conditions and prospects of the issuer, and any adverse conditions specifically related to the security, among other factors.

As of June 30, 2024, the Company expects to recover the amortized cost basis of its securities, has no present intent to sell any investment securities with unrealized losses and it is not more likely than not that we will not be required to sell securities with unrealized losses before recovery of their amortized cost and the decline in fair value is largely attributed to changes in interest rates and other market conditions. The issuers of these securities continue to make timely principal and interest payments. No allowances for credit losses have been recognized on investment debt securities AFS in an unrealized loss position, as management does not believe any of the securities are impaired due to reasons of credit quality at June 30, 2024.

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​ 13

Table of Contents

Equity Securities

​

The Company recognized a net loss on equity securities of $321,000 and a net gain on equity securities of $252,000 for the three and six months ended June 30, 2024, and recognized a net loss on equity securities of $917,000 and $1.8 million for the three and six months ended June 30, 2023, respectively. Equity securities were $12.8 million and $12.6 million as of June 30, 2024 and December 31, 2023, respectively.

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NOTE 4 – LOANS

The Company’s loan portfolio at the dates indicated is summarized below:

​

​	​	​	​	​	​	​
​	****	June 30,			December 31,
​	​	2024		​	2023
Commercial and industrial (1)	​	$	155,146	​	$	162,889
Construction and land	​		3,469	​		9,559
Commercial real estate	​		1,599,743	​		1,668,585
Residential	​		105,222	​		86,002
Consumer	​		602	​		738
Total loans	​		1,864,182	​		1,927,773
Net deferred loan (fees) costs	​		(10)	​		56
Allowance for credit losses	​		(19,000)	​		(22,000)
Net loans	​	$	1,845,172	​	$	1,905,829

​

(1)	Includes $2.3 million and $3.8 million of U.S. Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”) loans as of June 30, 2024 and December 31, 2023, respectively.

​

Net loans exclude accrued interest receivable of $5.8 million and $6.7 million at June 30, 2024 and December 31, 2023, respectively, which is included in interest receivable and other assets in the condensed consolidated balance sheets.

​

The Company’s total individually evaluated loans, including collateral dependent loans, nonaccrual loans, modified loans to borrowers experiencing financial difficulty, and accreting purchase credit deteriorated (“PCD”) loans that have experienced post-acquisition declines in cash flows expected to be collected are summarized as follows:

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	****	Commercial			Construction			Commercial			​			​			​
​	​	and industrial		​	and land		​	real estate		​	Residential		​	Consumer		​	Total
June 30, 2024	​	​			​			​			​			​			​
Recorded investment in loans individually evaluated:		​			​			​			​			​			​
With no specific allowance recorded	​	$	95	​	$	366	​	$	12,715	​	$	1,291	​	$	—	​	$	14,467
With a specific allowance recorded	​		1,341	​		—	​		6,067	​		—	​		—	​		7,408
Total recorded investment in loans individually evaluated	​	$	1,436	​	$	366	​	$	18,782	​	$	1,291	​	$	—	​	$	21,875
Specific allowance on loans individually evaluated	​	$	1,140	​	$	—	​	$	350	​	$	—	​	$	—	​	$	1,490
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
December 31, 2023	​			​			​			​			​			​
Recorded investment in loans individually evaluated:	​			​			​			​			​			​
With no specific allowance recorded	​	$	273	​	$	366	​	$	1,298	​	$	1,349	​	$	—	​	$	3,286
With a specific allowance recorded	​		1,799	​		—	​		7,745	​		147	​		—	​		9,691
Total recorded investment in loans individually evaluated	​	$	2,072	​	$	366	​	$	9,043	​	$	1,496	​	$	—	​	$	12,977
Specific allowance on loans individually evaluated	​	$	1,423	​	$	—	​	$	3,008	​	$	2	​	$	—	​	$	4,433

​ 14

Table of Contents From time to time, the Company may extend, restructure, or otherwise modify the terms of existing loans, on a case-by-case basis, to remain competitive and retain certain customers, as well as assist other customers who may be experiencing financial difficulties. At the time of restructuring, these loans are generally placed on nonaccrual. These loans may be returned to accrual status after the borrower demonstrates performance with the modified terms for a sustained period of time (generally six months) and the capacity to continue to perform in accordance with the modified terms of the restructured debt. The ACL on a modified loan to a borrower experiencing financial difficulty is measured using the same method as individually evaluated loans.

During the three and six months ended June 30, 2024 and 2023, there were no modifications of loans to borrowers experiencing financial difficulty.

A summary of previously modified loans to borrowers experiencing financial difficulty by type of concession and type of loan, as of the dates indicated, is set forth below:

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	****	Number of		Rate			Term			Rate & term			​	​	​	% of Total
​	​	loans	​	modification		​	modification		​	modification		​	Total		​	loans outstanding
June 30, 2024	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Commercial and industrial		2	​	$	—	​	$	110	​	$	—	​	$	110	​	​	0.07	%
Construction and land		—	​		—	​		—	​		—	​		—	​		—	%
Commercial real estate		4	​		—	​		2,079	​		—	​		2,079	​		0.13	%
Residential		1	​		—	​	​	747	​		—	​		747	​		0.71	%
Consumer		—	​		—	​		—	​		—	​		—	​		—	%
Total		7	​	$	—	​	$	2,936	​	$	—	​	$	2,936	​	​	0.16	%

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	****	Number of		Rate			Term			Rate & term			​	​	​	% of Total
​	​	loans	​	modification		​	modification		​	modification		​	Total		​	loans outstanding
December 31, 2023	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Commercial and industrial		2	​	$	—	​	$	125	​	$	—	​	$	125	​	​	0.08	%
Construction and land		—	​		—	​		—	​		—	​		—	​		—	%
Commercial real estate		4	​		—	​		3,400	​		—	​		3,400	​		0.20	%
Residential		1	​		—	​		778	​		—	​		778	​		0.90	%
Consumer		—	​		—	​		—	​		—	​		—	​		—	%
Total		7	​	$	—	​	$	4,303	​	$	—	​	$	4,303	​	​	0.22	%

​

For the three and six months ended June 30, 2024, the Company recorded no charge-offs and $1.3 million of charge-offs for modified loans to borrowers experiencing financial difficulty, respectively. During the three and six months ended June 30, 2023, the Company recorded no charge-offs for modified loans to borrowers experiencing financial difficulty.

​

As of June 30, 2024 and December 31, 2023, individually evaluated modified loans to borrowers experiencing financial difficulty had a related allowance of $27,000 and $1.3 million, respectively. As of June 30, 2024 and December 31, 2023, none of the modified loans to borrowers experiencing financial difficulty were performing in accordance with their modified terms. Accruing modified loans to borrowers experiencing financial difficulty are included in the loans individually evaluated as part of the calculation of the allowance for credit losses for loans.

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Risk Rating System

The Company evaluates and assigns a risk grade to each loan based on certain criteria to assess the credit quality of the loan. The assignment of a risk rating is done for each individual loan. Loans are graded from inception and on a continuing basis until the debt is repaid. Any adverse or beneficial trends will trigger a review of the loan risk rating. Each loan is assigned a risk grade based on its characteristics. Loans with low to average credit risk are assigned a lower risk grade than those with higher credit risk as determined by the individual loan characteristics.

The Company’s Pass loans include loans with acceptable business or individual credit risk where the borrower’s operations, cash flow or financial condition provides evidence of low to average levels of risk. 15

Table of Contents Loans that are assigned higher risk grades are loans that exhibit the following characteristics:

Special Mention loans have potential weaknesses that deserve close attention. If left uncorrected, these potential weaknesses may result in a deterioration of the repayment prospects for the loan or in the Company’s credit position at some future date. Special Mention loans are not adversely classified and do not expose the Company to sufficient risk to warrant adverse classification. A Special Mention rating is a temporary rating, pending the occurrence of an event that would cause the risk rating either to improve or to be downgraded.

Loans in this category would be characterized by any of the following situations:

●	Credit that is currently protected but is potentially a weak asset;
●	Credit that is difficult to manage because of an inadequate loan agreement, the condition of and/or control over collateral, failure to obtain proper documentation, or any other deviation from product lending practices; and
---	---
●	Adverse financial trends.
---	---

Substandard loans are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged. Loans classified substandard must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. Substandard loans are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. The potential loss does not have to be recognizable in an individual credit for that credit to be risk rated Substandard. A loan can be fully and adequately secured and still be considered Substandard.

Some characteristics of Substandard loans are:

●	Inability to service debt from ordinary and recurring cash flow;
●	Chronic delinquency;
---	---
●	Reliance upon alternative sources of repayment;
---	---
●	Term loans that are granted on liberal terms because the borrower cannot service normal payments for that type of debt;
---	---
●	Repayment dependent upon the liquidation of collateral;
---	---
●	Inability to perform as agreed, but adequately protected by collateral;
---	---
●	Necessity to renegotiate payments to a non-standard level to ensure performance; and
---	---
●	The borrower is bankrupt, or for any other reason, future repayment is dependent on court action.
---	---

Doubtful loans have all the weaknesses inherent in loans classified as Substandard with the added characteristic that the weaknesses make collection or liquidation in full, based on currently existing facts, conditions, and value, highly questionable and improbable. Doubtful loans have a high probability of loss, yet certain important and reasonably specific pending factors may work toward the strengthening of the credit.

Losses are recognized as charges to the allowance when the loan or portion of the loan is considered uncollectible or at the time of foreclosure. Recoveries on loans previously charged off are credited to the allowance for credit losses.

Revolving loans that are converted to term loans are treated as new originations in the tables below and are presented by year of initial origination. During the six months ended June 30, 2024, and the year ended December 31, 2023, $512,000 and $7.1 million of revolving loans were converted to term loans, respectively. 16

Table of Contents The following tables present the internally assigned risk grade by class of loans at the dates indicated:

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	Revolving		​	​	​
​	****	​	Term loans - amortized cost by origination year																​	loans		​	​
​	​	2024		​	2023		​	2022		​	2021		​	2020		​	Prior		​	amortized cost		​	Total
June 30, 2024		​			​			​			​			​		​	​	​	​	​	​	​	​	​
Commercial and industrial:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Pass	​	$	15,600	​	$	22,939	​	$	22,686	​	$	15,047	​	$	18,047	​	$	37,339	​	$	15,586	​	$	147,244
Special mention	​	​	—	​	​	555	​	​	—	​	​	—	​	​	563	​	​	2,498	​	​	1,785	​	​	5,401
Substandard	​	​	—	​	​	—	​	​	—	​	​	—	​	​	854	​	​	626	​	​	1,021	​	​	2,501
Total commercial and industrial	​	$	15,600	​	$	23,494	​	$	22,686	​	$	15,047	​	$	19,464	​	$	40,463	​	$	18,392	​	$	155,146
YTD gross charge-offs	​	$	—	​	$	—	​	$	—	​	$	—	​	$	45	​	$	311	​	$	—	​	$	356
Construction and land:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Pass	​	$	—	​	$	1,370	​	$	—	​	$	134	​	$	1,136	​	$	463	​	$	—	​	$	3,103
Special mention	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—
Substandard	​	​	—	​	​	—	​	​	—	​	​	—	​	​	366	​	​	—	​	​	—	​	​	366
Total construction and land	​	$	—	​	$	1,370	​	$	—	​	$	134	​	$	1,502	​	$	463	​	$	—	​	$	3,469
YTD gross charge-offs	​	$	—	​	$	—	​	$	—	​	$	—	​	$	—	​	$	—	​	$	—	​	$	—
Commercial real estate:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Pass	​	$	24,908	​	$	80,443	​	$	372,000	​	$	483,577	​	$	102,200	​	$	418,761	​	$	8,454	​	$	1,490,343
Special mention	​	​	—	​	​	637	​	​	7,066	​	​	3,198	​	​	19,040	​	​	44,993	​	​	—	​	​	74,934
Substandard	​	​	—	​	​	—	​	​	2,288	​	​	16,588	​	​	—	​	​	15,590	​	​	—	​	​	34,466
Total commercial real estate	​	$	24,908	​	$	81,080	​	$	381,354	​	$	503,363	​	$	121,240	​	$	479,344	​	$	8,454	​	$	1,599,743
YTD gross charge-offs	​	$	—	​	$	—	​	$	—	​	$	1,934	​	$	—	​	$	1,272	​	$	—	​	$	3,206
Residential:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Pass	​	$	23,135	​	$	—	​	$	—	​	$	41,237	​	$	1,589	​	$	5,208	​	$	32,185	​	$	103,354
Special mention	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	424	​	​	—	​	​	424
Substandard	​	​	—	​	​	—	​	​	—	​	​	316	​	​	—	​	​	1,128	​	​	—	​	​	1,444
Total residential	​	$	23,135	​	$	—	​	$	—	​	$	41,553	​	$	1,589	​	$	6,760	​	$	32,185	​	$	105,222
YTD gross charge-offs	​	$	—	​	$	—	​	$	—	​	$	—	​	$	—	​	$	—	​	$	—	​	$	—
Consumer:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Pass	​	$	88	​	$	39	​	$	44	​	$	—	​	$	—	​	$	39	​	$	373	​	$	583
Special mention	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—
Substandard	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	19	​	​	—	​	​	19
Total consumer	​	$	88	​	$	39	​	$	44	​	$	—	​	$	—	​	$	58	​	$	373	​	$	602
YTD gross charge-offs	​	$	—	​	$	—	​	$	—	​	$	—	​	$	—	​	$	—	​	$	1	​	$	1
Total loans outstanding	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Risk ratings	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Pass	​	$	63,731	​	$	104,791	​	$	394,730	​	$	539,995	​	$	122,972	​	$	461,810	​	$	56,598	​	$	1,744,627
Special mention	​	​	—	​	​	1,192	​	​	7,066	​	​	3,198	​	​	19,603	​	​	47,915	​	​	1,785	​	​	80,759
Substandard	​	​	—	​	​	—	​	​	2,288	​	​	16,904	​	​	1,220	​	​	17,363	​	​	1,021	​	​	38,796
Doubtful	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—
Total loans outstanding	​	$	63,731	​	$	105,983	​	$	404,084	​	$	560,097	​	$	143,795	​	$	527,088	​	$	59,404	​	$	1,864,182
YTD gross charge-offs	​	$	—	​	$	—	​	$	—	​	$	1,934	​	$	45	​	$	1,583	​	$	1	​	$	3,563

​

​ 17

Table of Contents

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	Revolving		​	​	​
​	****	​	Term loans - amortized cost by origination year																​	loans		​	​
​	​	2023		​	2022		​	2021		​	2020		​	2019		​	Prior		​	amortized cost		​	Total
December 31, 2023		​			​			​			​			​		​	​	​	​	​	​	​	​	​
Commercial and industrial:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Pass	​	$	26,055	​	$	25,039	​	$	19,294	​	$	22,831	​	$	26,008	​	$	17,357	​	$	17,754	​	$	154,338
Special mention	​	​	—	​	​	—	​	​	—	​	​	1,323	​	​	932	​	​	1,926	​	​	1,831	​	​	6,012
Substandard	​	​	—	​	​	—	​	​	—	​	​	156	​	​	320	​	​	1,039	​	​	1,024	​	​	2,539
Total commercial and industrial	​	$	26,055	​	$	25,039	​	$	19,294	​	$	24,310	​	$	27,260	​	$	20,322	​	$	20,609	​	$	162,889
YTD gross charge-offs	​	$	—	​	$	—	​	$	—	​	$	—	​	$	27	​	$	436	​	$	—	​	$	463
Construction and land:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Pass	​	$	1,217	​	$	6,040	​	$	—	​	$	1,177	​	$	109	​	$	650	​	$	—	​	$	9,193
Special mention	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—
Substandard	​	​	—	​	​	—	​	​	—	​	​	366	​	​	—	​	​	—	​	​	—	​	​	366
Total construction and land	​	$	1,217	​	$	6,040	​	$	—	​	$	1,543	​	$	109	​	$	650	​	$	—	​	$	9,559
YTD gross charge-offs	​	$	—	​	$	—	​	$	—	​	$	—	​	$	—	​	$	—	​	$	—	​	$	—
Commercial real estate:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Pass	​	$	80,576	​	$	397,319	​	$	377,165	​	$	140,265	​	$	180,859	​	$	370,887	​	$	9,405	​	$	1,556,476
Special mention	​	​	—	​	​	10,348	​	​	1,894	​	​	17,001	​	​	15,101	​	​	41,482	​	​	—	​	​	85,826
Substandard	​	​	—	​	​	158	​	​	946	​	​	—	​	​	11,579	​	​	13,600	​	​	—	​	​	26,283
Total commercial real estate	​	$	80,576	​	$	407,825	​	$	380,005	​	$	157,266	​	$	207,539	​	$	425,969	​	$	9,405	​	$	1,668,585
YTD gross charge-offs	​	$	—	​	$	—	​	$	—	​	$	—	​	$	—	​	$	—	​	$	—	​	$	—
Residential:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Pass	​	$	—	​	$	—	​	$	2,432	​	$	4,319	​	$	7,986	​	$	36,814	​	$	32,420	​	$	83,971
Special mention	​	​	—	​	​	—	​	​	—	​	​	—	​	​	437	​	​	—	​	​	—	​	​	437
Substandard	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	1,594	​	​	—	​	​	1,594
Total residential	​	$	—	​	$	—	​	$	2,432	​	$	4,319	​	$	8,423	​	$	38,408	​	$	32,420	​	$	86,002
YTD gross charge-offs	​	$	—	​	$	—	​	$	—	​	$	—	​	$	—	​	$	172	​	$	3	​	$	175
Consumer:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Pass	​	$	65	​	$	67	​	$	—	​	$	6	​	$	18	​	$	69	​	$	494	​	$	719
Special mention	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—
Substandard	​	​	—	​	​	—	​	​	—	​	​	—	​	​	19	​	​	—	​	​	—	​	​	19
Total consumer	​	$	65	​	$	67	​	$	—	​	$	6	​	$	37	​	$	69	​	$	494	​	$	738
YTD gross charge-offs	​	$	—	​	$	—	​	$	—	​	$	—	​	$	—	​	$	—	​	$	5	​	$	5
Total loans outstanding	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Risk ratings	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Pass	​	$	107,913	​	$	428,465	​	$	398,891	​	$	168,598	​	$	214,980	​	$	425,777	​	$	60,073	​	$	1,804,697
Special mention	​	​	—	​	​	10,348	​	​	1,894	​	​	18,324	​	​	16,470	​	​	43,408	​	​	1,831	​	​	92,275
Substandard	​	​	—	​	​	158	​	​	946	​	​	522	​	​	11,918	​	​	16,233	​	​	1,024	​	​	30,801
Doubtful	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—
Total loans outstanding	​	$	107,913	​	$	438,971	​	$	401,731	​	$	187,444	​	$	243,368	​	$	485,418	​	$	62,928	​	$	1,927,773
YTD gross charge-offs	​	$	—	​	$	—	​	$	—	​	$	—	​	$	27	​	$	608	​	$	8	​	$	643

​ 18

Table of Contents The following tables provide an aging of the Company’s loans receivable as of the dates indicated:

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		Recorded
​		​	​		​	​		90 Days			​	​		​	​		​	​		​	​		investment >
​	​	30–59 Days		​	60–89 Days		​	or more		​	Total		​	​	​	​	​	​	​	Total loans		​	90 days and
​	​	past due		​	past due		​	past due		​	past due		​	Current		​	PCD loans		​	receivable		​	accruing
June 30, 2024		​			​			​			​			​			​			​			​
Commercial and industrial	​	$	556	​	$	218	​	$	1,253	​	$	2,027	​	$	152,954	​	$	165	​	$	155,146	​	$	—
Construction and land	​		—	​		—	​		366	​		366	​		3,087	​		16	​		3,469	​		—
Commercial real estate	​		2,375	​		675	​		4,696	​		7,746	​		1,567,083	​		24,914	​		1,599,743	​		—
Residential	​		69	​		747	​	​	283	​		1,099	​		103,773	​		350	​		105,222	​		—
Consumer	​		—	​		—	​		—	​		—	​		602	​		—	​		602	​		—
Total	​	$	3,000	​	$	1,640	​	$	6,598	​	$	11,238	​	$	1,827,499	​	$	25,445	​	$	1,864,182	​	$	—

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	****	​	​		​	​		​			​	​		​	​		​	​		​	​		Recorded
​	****	​	​		​	​		90 Days			​	​		​	​		​	​		​	​		investment >
​	​	30–59 Days		​	60–89 Days		​	or more		​	Total		​	​	​	​	​	​	​	Total loans		​	90 days and
​	​	past due		​	past due		​	past due		​	past due		​	Current		​	PCD loans		​	receivable		​	accruing
December 31, 2023		​			​			​			​			​			​			​			​
Commercial and industrial	​	$	803	​	$	146	​	$	1,782	​	$	2,731	​	$	159,960	​	$	198	​	$	162,889	​	$	—
Construction and land	​		97	​		—	​		366	​		463	​		9,071	​		25	​		9,559	​		—
Commercial real estate	​		2,908	​		1,702	​		7,793	​		12,403	​		1,631,129	​		25,053	​		1,668,585	​		—
Residential	​		55	​		—	​		—	​		55	​		85,500	​		447	​		86,002	​		—
Consumer	​		—	​		—	​		—	​		—	​		738	​		—	​		738	​		—
Total	​	$	3,863	​	$	1,848	​	$	9,941	​	$	15,652	​	$	1,886,398	​	$	25,723	​	$	1,927,773	​	$	—

​

Nonaccrual loans totaled $16.1 million and $13.0 million at June 30, 2024 and December 31, 2023, respectively. Nonaccrual loans guaranteed by a government agency, which reduces the Company’s credit exposure, were $2.1 million at June 30, 2024 compared to $740,000 at December 31, 2023. At June 30, 2024, nonaccrual loans included $3.2 million of loans 30-89 days past due and $6.3 million of loans less than 30 days past due. At December 31, 2023, nonaccrual loans included $927,000 of loans 30-89 days past due and $2.1 million of loans less than 30 days past due. At June 30, 2024, the $3.2 million of nonaccrual loans 30-89 days past due was comprised of three loans and the $6.3 million of loans less than 30 days past due was comprised of 19 loans. All these loans were placed on nonaccrual due to concerns over the financial condition of the borrowers. There were no loans that were 90 days or more past due and still accruing at June 30, 2024 or December 31, 2023.

​

Interest foregone on nonaccrual loans was approximately $226,000 and $709,000 for the three and six months ended June 30, 2024, compared to $185,000 and $420,000 for the three and six months ended June 30, 2023. Interest income recognized on nonaccrual loans was approximately $79,000 and $86,000 for the three and six months ended June 30, 2024, compared to $16,000 and $81,000 for the three and six months ended June 30, 2023, respectively.

​

Pledged Loans

Our FHLB line of credit is secured under terms of a blanket collateral agreement by a pledge of certain qualifying loans with unpaid principal balances of $977.9 million and $1.14 billion at June 30, 2024 and December 31, 2023, respectively. Our discount window advance line with the FRB of San Francisco is secured by a pledge of certain qualifying loans with unpaid principal balances of $84.2 million at June 30, 2024. No loans were pledged to the FRB of San Francisco at December 31, 2023. For additional information, see Note 11, Other Borrowings.

​

​

​ 19

Table of Contents NOTE 5 – ALLOWANCE FOR CREDIT LOSSES FOR LOANS

The following tables summarize the Company’s allowance for credit losses for loans, reserve for unfunded commitments, and loan balances individually and collectively evaluated by type of loan, as of the dates and for the periods indicated:

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Commercial		​	Construction		​	Commercial		​	​	​	​	​	​	​	​	​	​	Reserve for
​		and industrial			and land			real estate			Residential			Consumer			Total			unfunded commitments
Three months ended June 30, 2024	​		​	​		​	​		​	​		​	​		​	​		​	​		​
Allowance for credit losses		​			​			​			​			​			​			​
Beginning balance	​	$	4,191	​	$	312	​	$	13,432	​	$	947	​	$	8	​	$	18,890	​	$	215
Charge-offs	​		(178)	​		—	​	​	—	​		—	​	​	—	​		(178)	​		—
Recoveries	​		2	​		—	​		—	​		99	​		1	​		102	​		—
(Reversal of) provision for credit losses	​		(28)	​		(207)	​		263	​		159	​		(1)	​		186	​		(15)
Ending balance	​	$	3,987	​	$	105	​	$	13,695	​	$	1,205	​	$	8	​	$	19,000	​	$	200
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Six months ended June 30, 2024	​		​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Allowance for credit losses:		​			​			​			​			​			​			​
Beginning balance	​	$	4,216	​	$	298	​	$	16,498	​	$	979	​	$	9	​	$	22,000	​	$	225
Charge-offs	​		(356)	​		—	​		(3,206)	​		—	​		(1)	​		(3,563)	​		—
Recoveries	​		15	​		—	​		—	​	​	99	​		1	​		115	​		—
Provision for (reversal of) credit losses	​		112	​	​	(193)	​	​	403	​	​	127	​	​	(1)	​		448	​	​	(25)
Ending balance	​	$	3,987	​	$	105	​	$	13,695	​	$	1,205	​	$	8	​	$	19,000	​	$	200
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
June 30, 2024	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Allowance for credit losses:	​			​			​			​			​			​			​	​	​
Loans individually evaluated	​	$	1,140	​	$	—	​	$	350	​	$	—	​	$	—	​	$	1,490	​	​	​
Loans collectively evaluated	​		2,847	​		105	​		12,935	​		1,200	​		8	​		17,095	​	​	​
PCD loans	​		—	​		—	​		410	​		5	​		—	​		415	​	​	​
​	​			​			​			​			​			​		​	​	​	​
Loans receivable:	​			​			​			​			​			​		​	​	​	​
Individually evaluated	​	$	1,436	​	$	366	​	$	18,782	​	$	1,291	​	$	—	​	$	21,875	​	​	​
Collectively evaluated	​		153,545	​		3,087	​		1,556,047	​		103,581	​		602	​		1,816,862	​	​	​
PCD loans	​		165	​		16	​		24,914	​		350	​		—	​		25,445	​	​	​
Total loans	​	$	155,146	​	$	3,469	​	$	1,599,743	​	$	105,222	​	$	602	​	$	1,864,182	​	​	​

​

​ 20

Table of Contents

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Commercial		​	Construction		​	Commercial		​	​	​	​	​	​	​	​	​	​	Reserve for
​		and industrial			and land			real estate			Residential			Consumer		​	Total			unfunded commitments
Three months ended June 30, 2023	​		​	​		​	​		​	​		​	​		​	​		​	​		​
Allowance for credit losses		​			​			​			​			​		​	​			​
Beginning balance	​	$	4,470	​	$	314	​	$	14,530	​	$	1,066	​	$	20	​	$	20,400	​	$	320
Charge-offs	​		(125)	​		—	​		—	​		—	​		(2)	​		(127)	​		—
Recoveries	​		64	​		—	​		2	​		—	​		1	​		67	​		—
(Reversal of) provision for credit losses	​		(762)	​		3	​		(365)	​		(107)	​		(9)	​		(1,240)	​		(20)
Ending balance	​	$	3,647	​	$	317	​	$	14,167	​	$	959	​	$	10	​	$	19,100	​	$	300
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Six months ended June 30, 2023	​		​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Allowance for loan losses		​			​			​			​			​		​	​			​
Beginning balance	​	$	2,885	​	$	68	​	$	14,185	​	$	1,742	​	$	20	​	$	18,900	​	$	315
Impact of CECL adoption	​	​	1,366	​	​	402	​	​	2	​	​	(302)	​	​	32	​	​	1,500	​	​	45
Charge-offs	​		(283)	​		—	​		—	​		(175)	​		(3)	​		(461)	​		—
Recoveries	​		80	​		—	​		2	​		—	​		4	​		86	​		—
Reversal of credit losses	​		(401)	​	​	(153)	​	​	(22)	​	​	(306)	​	​	(43)	​		(925)	​	​	(60)
Ending balance	​	$	3,647	​	$	317	​	$	14,167	​	$	959	​	$	10	​	$	19,100	​	$	300
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
June 30, 2023	​		​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Allowance for credit losses by methodology:	​			​			​			​			​			​			​
Loans individually evaluated	​	$	433	​	$	—	​	$	259	​	$	2	​	$	—	​	$	694	​	​	​
Loans collectively evaluated	​		3,212	​		317	​		13,293	​		948	​		10	​		17,780	​	​	​
PCD loans	​		2	​		—	​		615	​		9	​		—	​		626	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Loans receivable by methodology:	​			​			​			​			​			​			​	​	​
Individually evaluated	​	$	656	​	$	—	​	$	11,251	​	$	1,698	​	$	—	​	$	13,605	​	​	​
Collectively evaluated	​		179,977	​		9,999	​		1,693,072	​		87,767	​		916	​		1,971,731	​	​	​
PCD loans	​		219	​		—	​		27,192	​		550	​		—	​		27,961	​	​	​
Total loans	​	$	180,852	​	$	9,999	​	$	1,731,515	​	$	90,015	​	$	916	​	$	2,013,297	​	​	​

​

​

​

For the three months ended June 30, 2024, the provision for credit losses and related change in the allowance for credit losses on loans was mainly driven by a replenishment of the allowance, partially offset by decreases in outstanding loan balances, leading to lower quantitative reserves. Net charges-offs totaled $76,000 during the second quarter of 2024, which included a $160,000 charge-off for one loan, which was fully specifically reserved for at March 31, 2024. The quantitative reserve was also impacted by improvement in forecasted economic conditions for national gross domestic product, offset by increasing forecasted national unemployment, both of which are key indicators utilized to estimate credit losses.

​

For the six months ended June 30, 2024, the provision for credit losses and related change in the allowance for credit losses on loans was mainly driven by decreased reserve for individually evaluated loans and a replenishment of the allowance during the period, partially offset by decreases in outstanding loan balances, leading to lower quantitative reserves. Net charges-offs totaled $3.5 million for the six months ended June 30, 2024, of which $3.2 million was specifically reserved for at December 31, 2023. No changes were made to the qualitative risk factor conclusions during the six months ended June 30, 2024. The quantitative reserve was impacted by improvement in forecasted economic conditions, specifically, national unemployment levels and national gross domestic product, both of which are key indicators utilized to estimate credit losses. The reserve for individually evaluated loans decreased during the six months ended June 30, 2024 primarily due to a charge-off of $3.2 million, as the collateral shortfalls were deemed uncollectable.

​

The following table summarizes the amortized cost basis of individually evaluated collateral-dependent loans, including nonaccrual loans, modified loans to borrowers experiencing financial difficulty, and accreting purchase credit deteriorated (“PCD”) loans that have experienced post-acquisition declines in cash flows expected to be collected, by loan and collateral type as of the dates indicated.

​

​ 21

Table of Contents

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Retail and		​	​		​	Convalescent		​	​		​	​		​	​		​	A/R and		​	​		​	​
​		Office			Multifamily			facility			Hotel			Other		​	SFR 1-4			Equipment			Total			ACL
June 30, 2024	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​
Commercial and industrial		$	—	​	$	—	​	$	—	​	$	—	​	$	1,020	​	$	—	​	$	416	​	$	1,436	​	$	1,140
Construction and land	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	366	​	​	—	​	​	366	​	​	—
Commercial real estate	​	​	1,258	​		7,743	​		1,200	​		4,672	​		3,909	​		—	​		—	​		18,782	​		350
Residential	​		—	​		—	​	​	—	​	​	—	​	​	—	​	​	1,291	​		—	​	​	1,291	​		—
Consumer	​		—	​		—	​		—	​		—	​		—	​		—	​		—	​		—	​		—
Total	​	$	1,258	​	$	7,743	​	$	1,200	​	$	4,672	​	$	4,929	​	$	1,657	​	$	416	​	$	21,875	​	$	1,490
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
December 31, 2023	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​
Commercial and industrial		$	—	​	$	—	​	$	—	​	$	—	​	$	1,021	​	$	—	​	$	1,052	​	$	2,073	​	$	1,423
Construction and land	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	366	​	​	—	​	​	366	​	​	—
Commercial real estate	​	​	224	​		5,305	​		2,213	​		135	​		1,165	​		—	​		—	​		9,042	​		3,008
Residential	​		—	​		—	​	​	—	​	​	—	​	​	—	​	​	1,496	​		—	​	​	1,496	​		2
Consumer	​		—	​		—	​		—	​		—	​		—	​		—	​		—	​		—	​		—
Total	​	$	224	​	$	5,305	​	$	2,213	​	$	135	​	$	2,186	​	$	1,862	​	$	1,052	​	$	12,977	​	$	4,433

​

The following table shows the amortized cost and allowance for credit losses for loans on nonaccrual status as of the dates indicated:

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	As of June 30, 2024								​	As of December 31, 2023
​	​	Nonaccrual		​	Nonaccrual		​	​		​	Nonaccrual		​	Nonaccrual		​	​
​	​	with no allowance		​	with allowance		​	Total		​	with no allowance		​	with allowance		​	Total
​		for credit losses			for credit losses			nonaccrual			for loan losses			for loan losses			nonaccrual
Commercial and industrial		$	95	​	$	1,384	​	$	1,479	​	$	272	​	$	1,800	​	$	2,072
Construction and land	​	​	366	​	​	—	​	​	366	​	​	366	​	​	—	​	​	366
Commercial real estate	​	​	7,700	​		5,161	​	​	12,861	​		1,295	​		7,748	​		9,043
Residential	​		1,291	​		131	​	​	1,422	​	​	1,349	​	​	147	​		1,496
Consumer	​		—	​		—	​	​	—	​		—	​		—	​		—
Total	​	$	9,452	​	$	6,676	​	$	16,128	​	$	3,282	​	$	9,695	​	$	12,977

​

​

As part of its acquisition of Pacific Enterprise Bancorp (“PEB”) in 2022, the Company acquired certain small business loans to borrowers qualified under The California Capital Access Program for Small Business, a state guaranteed loan program sponsored by the California Pollution Control Financing Authority (“CalCAP”). PEB ceased originating loans under this loan program in 2017. Under this loan program, the borrower, CalCAP and the participating lender contributed funds to a loss reserve account that is held in a demand deposit account at the participating lender. The borrower’s contributions to the loss reserve account are attributed to the participating lender. Losses on qualified loans are charged to this account after approval by CalCAP. Under the program, if a loan defaults, the participating lender has immediate coverage of 100% of the loss. The participating lender must return recoveries from the borrower, less expenses, to the credit loss reserve account. The funds in the loss reserve account are the property of CalCAP; however, in the event that the participating lender leaves the program any excess funds, after all loans have been repaid or unenrolled from the program by the participating lender and provided there are no pending claims for reimbursement, the remaining excess funds are distributed to CalCAP and the participating lender based on their respective contributions to the loss reserve account. Funds contributed by the participating lender to the loss reserve account are treated as a receivable from CalCAP and evaluated for impairment quarterly. As of June 30, 2024 and December 31, 2023, the Company had $18.8 million and $19.4 million, respectively, of loans enrolled in this loan program. The Company had a loss reserve account of $13.6 million and $13.7 million as of June 30, 2024 and December 31, 2023, respectively.

​

In addition, as successor to PEB, the Company was approved by CalCAP, in partnership with the California Air Resources Board, to originate loans to California truckers in the On-Road Heavy-Duty Vehicle Air Quality Loan Program. Under this loan program, CalCAP solely contributes funds to a loss reserve account that is held in a demand deposit account at the participating lender. Losses are handled in the same manner as described above. The funds are the property of CalCAP and are payable upon termination of the program. When the loss reserve account balance exceeds the total associated loan balance, the excess is to be remitted to CalCAP. The Company originated loans under this 22

Table of Contents program of $1.1 million and $4.5 million during the three and six months ended June 30, 2024, and $461,000 and $2.5 million during the three and six months ended June 30, 2023, respectively. As of June 30, 2024, the Company had $16.2 million of loans enrolled in this program and a loss reserve account of $5.2 million. As of December 31, 2023, the Company had $17.7 million of loans enrolled in this program and a loss reserve account of $6.2 million.

​

​

​

​

​

​

​

​

NOTE 6 – PREMISES AND EQUIPMENT

Premises and equipment consisted of the following at the dates indicated:

​

​	​	​	​	​	​	​
​	****	June 30,		****	December 31,
​	​	2024		​	2023
Premises owned	​	$	11,345	​	$	11,233
Leasehold improvements	​		3,082	​		3,082
Furniture, fixtures and equipment	​		9,097	​		7,948
Less accumulated depreciation and amortization	​		(9,472)	​		(8,529)
Total premises and equipment, net	​	$	14,052	​	$	13,734

​

Depreciation and amortization included in occupancy and equipment expense totaled $518,000 and $1.0 million for the three and six months ended June 30, 2024 and $430,000 and $883,000 for the three and six months ended June 30, 2023, respectively.

​

NOTE 7 – LEASES

The Company leased 20 branches under noncancelable operating leases as of June 30, 2024. These leases expire on various dates through 2030. The Company’s leases often have an option to renew one or more times, at the Company’s discretion, following the expiration of the initial term. If at lease inception, the Company considers the exercising of a renewal option to be reasonably certain, the Company will include the extended term in the calculation of the ROU asset and lease liability.

​

The Company uses the discount rate implicit in the lease whenever this rate is readily determinable. As this rate is rarely determinable, the Company utilizes its incremental borrowing rate at lease inception, on a collateralized basis, over a similar term.

​

The below maturity schedule represents the undiscounted lease payments for the five-year period and thereafter as of June 30, 2024:

​

​	​	​	​
For remainder of 2024	​	$	1,956
2025	​	​	3,503
2026	​		2,820
2027	​		2,393
2028	​	​	2,238
Thereafter	​		2,111
Total undiscounted cash flows	​	​	15,021
Less: interest	​	​	(1,242)
Present value of lease payments	​	$	13,779

​

The following table presents the weighted average lease term and discount rate at the dates indicated:

​

​	​	​	​	​	​	​
​		June 30, 2024		​	December 31, 2023
Weighted-average remaining lease term		4.6	years	​	4.8	years
Weighted-average discount rate		3.7	%	​	3.4	%

​

Rental expense included in occupancy and equipment expense totaled $1.0 million and $2.0 million for both the three and six months ended June 30, 2024 and the three and six months ended June 30, 2023, respectively. 23

Table of Contents The following table presents certain information related to the operating lease costs included in occupancy and equipment expense on the consolidated statements of income for the periods indicated:

​

​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Three months ended					​	Six months ended
​	****	June 30,					****	June 30,
​	​	2024		​	2023		​	2024		​	2023
Operating lease cost	​	$	5,035	​	$	4,997	​	$	6,989	​	$	6,948
Short-term lease cost	​		—	​		21	​		15	​		64
Less: Sublease income	​		(22)	​		(19)	​		(34)	​		(41)
Total operating lease cost, net	​	$	5,013	​	$	4,999	​	$	6,970	​	$	6,971

​

​

​

NOTE 8 – GOODWILL AND INTANGIBLE ASSETS

Goodwill is determined as the excess of the fair value of the consideration transferred, plus the fair value of any noncontrolling interests in the acquiree, over the fair value of the net assets acquired and the liabilities assumed as of the acquisition date. Goodwill and other intangible assets are assessed for impairment annually or whenever events or changes in circumstances indicate the carrying amount may not be recoverable. Intangible assets with definite useful lives are amortized over their estimated useful lives to their estimated residual values. Core deposit intangible represents the estimated future benefit of deposits related to an acquisition and is booked separately from the related deposits and amortized over an estimated useful life of seven to ten years.

Goodwill

The Company’s policy is to assess goodwill for impairment at the reporting unit level on an annual basis or between annual assessments if a triggering event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount.  Impairment exists when a reporting unit’s fair value is less than its carrying amount, including goodwill.

Changes in the Company's goodwill during the periods indicated were as follows:

​

​	​	​	​	​	​	​
​	​	Six months ended		​	Year ended
​	​	June 30, 2024		​	December 31, 2023
Balance at beginning of period	​	$	38,838	​	$	38,838
Acquired goodwill	​		—	​		—
Impairment	​		—	​		—
Balance at end of period	​	$	38,838	​	$	38,838

​

​

​

​

​

​

​

​

​

​

​ 24

Table of Contents Core Deposit Intangible

Changes in the Company’s core deposit intangible during the periods indicated were as follows:

​

​	​	​	​	​	​	​
​	​	Six months ended		​	Year ended
​	​	June 30, 2024		​	December 31, 2023
Balance at beginning of period	​	$	3,915	​	$	5,201
Additions	​		—	​		—
Less amortization	​		(611)	​		(1,286)
Balance at end of period	​	$	3,304	​	$	3,915

​

Estimated annual amortization expense at June 30, 2024 was as follows:

​

​	​	​	​
For remainder of 2024	​	$	611
2025	​	​	948
2026	​		455
2027	​		455
2028	​	​	455
Thereafter	​		380
Total	​	$	3,304

​

​

​

NOTE 9 – INTEREST RECEIVABLE AND OTHER ASSETS

The Company’s interest receivable and other assets at the dates indicated consisted of the following:

​

​	​	​	​	​	​	​
​	****	June 30,		****	December 31,
​	​	2024		​	2023
Tax assets, net	​	$	18,267	​	$	19,480
Accrued interest receivable	​		7,794	​		8,423
Investment in SBIC fund	​		3,782	​		3,969
Investment in Community Reinvestment Act fund	​	​	2,000	​	​	2,000
Prepaid assets	​		1,958	​		2,023
Servicing assets	​		995	​		1,269
Investment in Low Income Housing Tax Credit ("LIHTC") partnerships, net	​		3,602	​		3,480
Investment in statutory trusts	​		522	​		511
CalCAP reserve receivable	​	​	4,023	​	​	4,023
Other assets	​		4,152	​		2,200
Total	​	$	47,095	​	$	47,378

​

​

​

​

NOTE 10 – DEPOSITS

The Company’s deposits at the dates indicated consisted of the following:

​

​	​	​	​	​	​	​
​	****	June 30,		****	December 31,
​	​	2024		​	2023
Demand deposits	​	$	618,616	​	$	646,278
NOW accounts	​		273,292	​		283,089
Savings	​	​	93,726	​	​	102,073
Money market	​		661,271	​		624,066
Time deposits	​		528,105	​		477,244
Total	​	$	2,175,010	​	$	2,132,750

​ 25

Table of Contents Included in time deposits above are brokered deposits of $35.5 million and $43.6 million as of June 30, 2024 and December 31, 2023, respectively. At June 30, 2024, uninsured deposits totaled $980.0 million, or 45.1% of total deposits, compared to $969.2 million, or 45.5% of total deposits at December 31, 2023. The uninsured amounts are estimates based on the methodologies and assumptions used for United Business Bank’s regulatory reporting requirements.

​

​

NOTE 11 – BORROWINGS

Other borrowings – The Bank has an approved secured borrowing facility with the Federal Home Loan Bank of San Francisco (the “FHLB”) for up to 25% of total assets for a term not to exceed five years under a blanket lien of certain types of loans. At June 30, 2024 and December 31, 2023, we had the ability to borrow up to $514.1 million and $576.9 million, respectively, from the FHLB of San Francisco.  At both June 30, 2024 and December 31, 2023, we had no FHLB advances outstanding.

​

During the first quarter of 2024, the Bank was approved for discount window advances with the FRB of San Francisco secured by certain types of loans. At June 30, 2024, we had the ability to borrow up to $43.8 million from the FRB of San Francisco, with no FRB of San Francisco advances outstanding at that date.

​

The Bank has Federal Funds lines with four corresponding banks. Cumulative available commitments totaled $65.0 million at both June 30, 2024 and December 31, 2023. There were no amounts outstanding under these facilities at both June 30, 2024 and December 31, 2023.

Junior subordinated deferrable interest debentures – In connection with its previous acquisitions, the Company assumed junior subordinated deferrable interest debentures, totaling $8.6 million, net of fair value adjustments, with a weighted average interest rate of 8.18% at June 30, 2024, compared to $8.6 million, net of fair value adjustments, with a weighted average rate of 8.23% at December 31, 2023*.*The junior subordinated deferrable interest debentures mature in 2034, subject to earlier redemption by the Company at its option.

Subordinated debt – On August 10, 2020, the Company issued and sold $65.0 million aggregate principal amount of 5.25% Fixed-to-Floating Rate Subordinated Notes due 2030 (the “Notes”) at a public offering price equal to 100% of the aggregate principal amount of the Notes. The Notes initially bear a fixed interest rate of 5.25% per year. Commencing on September 15, 2025, the interest rate on the Notes resets quarterly to the three-month Secured Overnight Financing rate plus a spread of 521 basis points (5.21%), payable quarterly in arrears. Interest on the Notes is payable semi-annually on March 15 and September 15 of each year through September 15, 2025 and quarterly thereafter on March 15, June 15, September 15 and December 15 of each year through the maturity date or earlier redemption date. The Company, at its option, may redeem the Notes, in whole or in part, on any interest payment date on or after September 15, 2025, without a premium. At June 30, 2024 and December 31, 2023, the Company had outstanding Notes, net of cost to issue, totaling $63.7 million and $63.9 million, respectively.

​

NOTE 12 – INTEREST PAYABLE AND OTHER LIABILITIES

The Company’s interest payable and other liabilities at the dates indicated consisted of the following:

​

​	​	​	​	​	​	​
​		June 30,			December 31,
​	​	2024		​	2023
Accrued expenses	​	$	5,893	​	$	7,419
Accounts payable	​		796	​		716
Reserve for unfunded commitments	​		200	​		225
Accrued interest payable	​		3,651	​		3,054
Other liabilities	​		2,350	​		3,177
Total	​	$	12,890	​	$	14,591

​

​ 26

Table of Contents ​

NOTE 13 – OTHER EXPENSES

​

The Company’s other expenses for the periods indicated consisted of the following:

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Three months ended					​	Six months ended					​
​	****	June 30,					****	June 30,					****
​	​	2024		​	2023		​	2024		​	2023		​
Professional fees	​	$	673	​	$	445	​	$	1,260	​	$	892	​
Core deposit premium amortization	​		305	​		305	​		611	​		674	​
Marketing and promotions	​		246	​		253	​		369	​		400	​
Stationery and supplies	​		82	​		85	​		158	​		172	​
Insurance (including FDIC premiums)	​		349	​		433	​		708	​		634	​
Communication and postage	​		255	​		221	​		515	​		450	​
Loan default related expense	​		148	​		86	​		158	​		152	​
Director fees and expenses	​		82	​		84	​		170	​		165	​
Bank service charges	​		16	​		16	​		31	​		32	​
Courier expense	​		186	​		189	​		379	​		371	​
Other	​		245	​		105	​		356	​		281	​
Total	​	$	2,587	​	$	2,222	​	$	4,715	​	$	4,223	​

​

The Company expenses marketing and promotion costs as they are incurred. Advertising expense included in marketing and promotions totaled $17,000 and $28,000 for the three and six months ended June 30, 2024 and $15,000 and $21,000 for the three and six months ended June 30, 2023, respectively.

​

​

NOTE 14 – EQUITY INCENTIVE PLANS

Equity Incentive Plans

2024 Omnibus Equity Incentive Plan

The Company’s shareholders approved the Company’s 2024 Omnibus Equity Incentive Plan (“2024 Plan”) in June 2024. The 2024 Plan provides for the grant of equity incentive awards to employees and directors (including emeritus and advisory directors) of the Company and its subsidiaries. The 2024 Plan permits the granting of incentive stock options, within the meaning of Section 422 of the Internal Revenue Code, non-statutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance shares and performance units.  Factors generally considered by the Board in awarding equity incentives to officers and employees include the performance of the Company, the employee’s or officer’s job performance, the importance of his or her position, and his or her contribution to the organization’s goals for the award period.

Generally, awards under the 2024 Plan are subject to a minimum vesting period of one year (at least three years for full vesting for the chief executive officer), provided that awards for up to 5% of the maximum shares available under the 2024 Plan (for any participant other than the chief executive officer) may provide for a shorter vesting period. Subject to adjustment as provided in the 2024 Plan, the maximum number of shares of common stock available for issuance under the 2024 Plan is 500,000, and awards granted under the 2024 Plan to any one participant in any one calendar year are subject to the following limitations: (i) aggregate grants of stock options or stock appreciation rights to any one participant are subject to an annual limit of the lesser of 100,000 shares or $2.0 million in fair market value as of the date of grant; (ii) aggregate grants of restricted stock or restricted stock units to any one participant are subject to an annual limit of the lesser of 50,000 shares or $2.0 million in fair market value as of the date of grant; and (iii) aggregate grants of performance shares or performance units to any one participant are subject to an annual limit of the lesser of 50,000 shares or $2.0 million in fair market value as of the date of grant. In addition, subject to adjustment as provided in the 2024 Plan, the maximum aggregate number of shares that may be covered by awards granted under the 2024 Plan to any non-employee director in any one calendar year is 25,000 shares. As of June 30, 2024, a total of 500,000 shares were available for future issuance under the 2024 Plan.

​ 27

Table of Contents 2017 Omnibus Equity Incentive Plan

The Company’s shareholders approved the Company’s 2017 Omnibus Equity Incentive Plan (“2017 Plan”) in November 2017. The 2017 Plan provides for the awarding by the Company’s Board of Directors of equity incentive awards to employees and non-employee directors. An equity incentive award under the 2017 Plan may be an option, stock appreciation right, restricted stock units, stock award, other stock-based award or performance award. Factors considered by the Board in awarding equity incentives to officers and employees include the performance of the Company, the employee’s or officer’s job performance, the importance of his or her position, and his or her contribution to the organization’s goals for the award period. Generally, awards have a vesting period of no longer than ten years. Subject to adjustment as provided in the 2017 Plan, the maximum number of shares of common stock that may be delivered pursuant to awards granted under the 2017 Plan is 450,000. The 2017 Plan provides for annual restricted stock grant limits to officers, employees and directors. The annual stock grant limit per person for officers and employees is the lesser of 50,000 shares or a value of $2.0 million, and per person for directors, the maximum is 25,000 shares. All unvested restricted shares outstanding vest in the event of a change in control of the Company. Awarded shares of restricted stock vest over (i) a one-year period following the date of grant, in the case of the non-employee directors, and (ii) a three-year or five-year period following the date of grant, with the initial vesting occurring on the one-year anniversary of the date of grant, in the case of the executive officers. As of June 30, 2024, no shares were available for future issuance under the 2017 Plan because the 2024 Plan provides that no further awards may be made under the 2017 Plan upon the approval by the Company’s shareholders of the 2024 Plan.

The following table provides the restricted stock grant activity for the periods indicated:

​

​	​	​	​	​	​	​	​	​	​	​	​
​	​	At and for the three and six months ended June 30,									​
​	​	2024				​	2023				​
​	****	​		Weighted-average			​		Weighted-average		****
​	​	​	​	grant date		​	​	​	grant date		****
​	​	Shares	​	fair value		​	Shares	​	fair value		****
Non-vested at January 1,		81,365	​	$	18.27	​	97,877	​	$	16.80	​
Granted		24,471	​		23.30	​	28,392	​		18.98	​
Vested		(19,927)	​		18.99	​	(16,979)	​		19.06	​
Forfeited	​	(505)	​	​	16.67	​	—	​	​	—	​
Non-vested, at March 31,		85,404	​	​	19.55	​	109,290	​	​	17.01	​
Granted	​	—	​	​	—	​	—	​	​	—	​
Vested		—	​	​	—	​	(30,764)	​	​	12.18	​
Forfeited	​	—	​	​	—	​	—	​	​	—	​
Non-Vested, at June 30,		85,404	​	$	19.55	​	78,526	​	$	18.91	​

​

**** ​

NOTE 15 – FAIR VALUE MEASUREMENT

ASC Topic 820, “Fair Value Measurement,” defines fair value, establishes a framework for measuring fair value including a three-level valuation hierarchy, and expands disclosures about fair value measurements. Fair value is defined as the exchange price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date reflecting assumptions that a market participant would use when pricing an asset or liability. The hierarchy uses three levels of inputs to measure the fair value of assets and liabilities, as follows:

Level 1 – Quoted prices (unadjusted) for identical assets or liabilities in active markets that the reporting entity has the ability to access at the measurement date.

Level 2 – Observable prices in active markets for similar assets and liabilities; prices for identical or similar assets or liabilities in markets that are not active; directly observable market inputs for substantially the full term of the asset and liability; market inputs that are not directly observable but are derived from or corroborated by observable market data.

Level 3 – Unobservable inputs for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability. 28

Table of Contents We use fair value to measure certain assets and liabilities on a recurring basis, primarily securities AFS. For assets measured at the lower of cost or fair value, the fair value measurement criteria may or may not be met during a reporting period and such measurements are therefore considered “nonrecurring” for purposes of disclosing our fair value measurements. Fair value is used on a nonrecurring basis to adjust carrying values for individually evaluated loans and other real estate owned and to record impairment on certain assets, such as goodwill, core deposit intangible, and other long-lived assets.

In certain cases, the inputs used to measure fair value may fall into different levels of the hierarchy. In such cases, the lowest level of inputs that is significant to the measurement is used to determine the hierarchy for the entire asset or liability. Transfers between levels of the fair value hierarchy are recognized on the actual date of the event or circumstances that caused the transfer, which generally coincides with our quarterly valuation process. There were no transfers between levels during the three and six months ended June 30, 2024 and 2023.

At both June 30, 2024 and December 31, 2024, there were no liabilities measured at fair value on a recurring or non-recurring basis.

The following assets are measured at fair value on a recurring basis as of the dates indicated:

​

​	​	​	​	​	​	​	​	​	​	​	​	​
​	****	Total Estimated		****	Fair Value Measurements
​	​	Fair Value		​	Level 1		​	Level 2		​	Level 3
June 30, 2024	​	​	​	​	​	​	​	​	​	​	​	​
Municipal securities	​	$	22,417	​	$	—	​	$	22,417	​	$	—
Mortgage-backed securities	​		43,783	​		—	​		43,783	​		—
Collateralized mortgage obligations	​		43,390	​		—	​		43,390	​		—
SBA securities	​		4,640	​		—	​		4,640	​		—
Corporate bonds	​		69,403	​		—	​		69,403	​		—
Equity securities	​	​	12,837	​	​	12,837	​	​	—	​	​	—
Total	​	$	196,470	​	$	12,837	​	$	183,633	​	$	—

​

​	​	​	​	​	​	​	​	​	​	​	​	​
​	****	Total Estimated		****	Fair Value Measurements
​	​	Fair Value		​	Level 1		​	Level 2		​	Level 3
December 31, 2023		​			​			​			​
Municipal securities	​	$	20,827	​	$	—	​	$	20,827	​	$	—
Mortgage-backed securities	​		37,601	​		—	​		37,601	​		—
Collateralized mortgage obligations	​		32,976	​		—	​		32,976	​		—
SBA securities	​		5,252	​		—	​		5,252	​		—
Corporate bonds	​		66,496	​		—	​		66,496	​		—
Equity securities	​	​	12,585	​	​	12,585	​	​	—	​	​	—
Total	​	$	175,737	​	$	12,585	​	$	163,152	​	$	—

​

The following assets are measured at fair value on a nonrecurring basis as of the dates indicated:

​ 29

Table of Contents

​	​	​	​	​	​	​	​	​	​	​	​	​
​	****	Total Estimated		****	Fair Value Measurements
​	​	Fair Value		​	Level 1		​	Level 2		​	Level 3
June 30, 2024		​			​			​			​
Individually evaluated loans	​	$	21,875	​	$	—	​	$	—	​	$	21,875
Total	​	$	21,875	​	$	—	​	$	—	​	$	21,875
​	​	​	​	​	​	​	​	​	​	​	​	​
​	****	Total Estimated		****	Fair Value Measurements
​	​	Fair Value		​	Level 1		​	Level 2		​	Level 3
December 31, 2023	​			​			​			​
Individually evaluated loans (1)	​	$	12,977	​	$	—	​	$	—	​	$	12,977
Total	​	$	12,977	​	$	—	​	$	—	​	$	12,977

​

(1)	For each quarter the loan was outstanding in 2023, with the adoption of CECL, one performing modified loan to a borrower experiencing financial difficulty was individually evaluated in determining the estimated allowance for credit losses.

The Company does not record loans at fair value on a recurring basis. However, from time to time, certain loans have individual risk characteristics not consistent with a pool of loans and are individually evaluated for credit reserves. Loans for which it is probable that payment of interest and principal will not be made in accordance with the original contractual terms of the loan agreement are typically individually evaluated. The fair value of individually evaluated loans is estimated using one of several methods, including collateral value, market value of similar debt, enterprise and liquidation value and discounted cash flows. Those individually evaluated loans not requiring an allowance represent loans for which the fair value of the expected repayments or collateral exceed the recorded investments in such loans. When the fair value of the collateral is based on an observable market price or a current appraised value which uses substantially observable data, the Company records the individually evaluated loan as nonrecurring Level 2. When an appraised value is not available or management determines the fair value of the collateral is less than the appraised value or the appraised value contains a significant assumption and there is no observable market price, the Company records the individually evaluated loan as nonrecurring Level 3.

The Company records foreclosed assets, or other real estate owned (“OREO”), at fair value on a nonrecurring basis based on the collateral value of the property. When the fair value of the collateral is based on an observable market price or a current appraised value which uses substantially observable data, the Company records the OREO as nonrecurring Level 2. When an appraised value is not available or management determines the fair value of the collateral is less than the appraised value or the appraised value contains a significant assumption, and there is no observable market price, the Company records the OREO as nonrecurring Level 3. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available. Management also incorporates assumptions regarding market trends or other relevant factors and selling and commission costs ranging from 5% to 10%. Such adjustments and assumptions are typically significant and result in a Level 3 classification of the inputs for determining fair value. The Company had no OREO at both June 30, 2024 and December 31, 2023.

​

NOTE 16 – FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts and fair values of the Company’s financial instruments at the dates indicated are presented below:

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Carrying		​	Fair		​	Fair value measurements
​	****	amount			value			Level 1			Level 2			Level 3
June 30, 2024		​			​			​			​			​
Financial assets:		​			​			​			​			​
Cash and cash equivalents	​	$	391,208	​	$	391,208	​	$	391,208	​	$	—	​	$	—
Time deposits in banks	​		747	​		747	​		747	​		—	​		—
Investment securities AFS	​		183,633	​		183,633	​		—	​		183,633	​		—
Equity securities	​	​	12,837	​	​	12,837	​	​	12,837	​	​	—	​	​	—
Investment in FHLB and FRB Stock	​		20,948	​		20,948	​		—	​		20,948	​		—
Loans held for sale	​		—	​		—	​		—	​		—	​		—
Loans, net	​		1,845,172	​		1,759,753	​		—	​		—	​		1,759,753

30

Table of Contents

Accrued interest receivable	​		7,794	​		7,794	​		—	​		7,794	​		—
Financial liabilities:	​			​			​			​			​
Deposits	​		2,175,010	​		2,177,879	​		—	​		2,177,879	​		—
Junior subordinated deferrable interest debentures, net	​	​	8,605	​	​	8,713	​	​	—	​	​	—	​	​	8,713
Subordinated debt, net	​	​	63,651	​		63,651	​		—	​	​	63,651	​	​	—
Accrued interest payable	​		3,651	​		3,651	​		—	​		3,651	​		—
Off-balance sheet liabilities:	​		​	​			​			​			​
Undisbursed loan commitments, lines of credit, standby letters of credit	​		68,506	​		68,306	​		—	​		—	​		68,306

​

​

​ 31

Table of Contents ​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Carrying		​	Fair		​	Fair value measurements
​	****	amount			value			Level 1			Level 2			Level 3
December 31, 2023		​			​			​			​			​
Financial assets:		​			​			​			​			​
Cash and cash equivalents	​	$	307,539	​	$	307,539	​	$	307,539	​	$	—	​	$	—
Time deposits in banks	​		1,245	​		1,245	​		1,245	​		—	​		—
Investment securities AFS	​		163,152	​		163,152	​		—	​		163,152	​		—
Equity securities	​	​	12,585	​	​	12,585	​	​	12,585	​	​	—	​	​	—
Investment in FHLB and FRB Stock	​		20,939	​		20,939	​		—	​		20,939	​		—
Loans held for sale	​		—	​		—	​		—	​		—	​		—
Loans, net	​		1,905,829	​		1,810,426	​		—	​		—	​		1,810,426
Accrued interest receivable	​		8,423	​		8,423	​		—	​		8,423	​		—
Financial liabilities:	​			​			​			​			​
Deposits	​		2,132,750	​		2,135,923	​		—	​		2,135,923	​		—
Junior subordinated deferrable interest debentures, net	​		8,565	​		8,631	​		—	​		—	​		8,631
Subordinated debt, net	​		63,881	​		63,881	​		—	​		63,881	​		—
Accrued interest payable	​		3,054	​		3,054	​		—	​		3,054	​		—
Off-balance sheet liabilities:	​		​	​		​	​		​	​		​	​	​	​
Undisbursed loan commitments, lines of credit, standby letters of credit	​		77,377	​		77,152	​		—	​		—	​		77,152

​

​

​

NOTE 17 – COMMITMENTS AND CONTINGENCIES

Lending and Letter of Credit Commitments

We operate in a highly regulated environment. From time to time, we are a party to various claims and litigation matters incidental to the conduct of our business. We are not presently party to any legal proceedings where we believe the resolution would have a material adverse effect on our business, financial condition, or results of operations.

Nevertheless, given the nature, scope and complexity of the extensive legal and regulatory landscape applicable to our business (including laws and regulations governing consumer protection, fair lending, fair labor, privacy, information security and anti-money laundering and anti-terrorism laws), we, like all banking organizations, are subject to heightened legal and regulatory compliance and litigation risk.

In the normal course of business, the Company enters into various commitments to extend credit which are not reflected in the financial statements. These commitments consist of the undisbursed balance on home equity and unsecured personal lines of credit, commercial lines of credit, including commercial real estate secured lines of credit, and of undisbursed funds on construction and development loans. The Company also issues standby letter of credit commitments, primarily for the third-party performance obligations of clients.

The following table presents a summary of commitments described above as of the dates indicated:

​

​	​	​	​	​	​	​
​	****	June 30,		****	December 31,
​	​	2024		​	2023
Commitments to extend credit	​	$	67,754	​	$	76,531
Standby letters of credit	​		752	​		846
Total commitments	​	$	68,506	​	$	77,377

​

Commitments generally have fixed expiration dates or other termination clauses. The actual liquidity needs or the credit risk that the Company will experience will likely be lower than the contractual amount of commitments to extend credit because a significant portion of these commitments are expected to expire without being drawn upon. The commitments are generally variable rate and include unfunded home equity lines of credit, commercial real estate construction loans where disbursement is made over the course of construction, commercial revolving lines of credit, and 32

Table of Contents unsecured personal lines of credit. The Company’s outstanding loan commitments are made using the same underwriting standards as comparable outstanding loans. The reserve associated with these commitments included in interest payable and other liabilities on the consolidated balance sheets was $200,000 at June 30, 2024 and $225,000 at December 31, 2023.

Commercial Real Estate Concentrations

At June 30, 2024 and December 31, 2023, in management’s judgment, a concentration of loans existed in commercial real estate related loans. The Company’s commercial real estate loans are secured by owner-occupied and non-owner occupied commercial real estate and multifamily properties. Although management believes that loans within these concentrations have no more than the normal risk of collectability, a decline in the performance of the economy in general, or a decline in real estate values in the Company’s primary market areas in particular, could have an adverse impact on collectability.

Other Assets

The Company has commitments to fund investments in LIHTC partnerships and an SBIC fund. At June 30, 2024, the remaining commitments to the LIHTC partnerships and the SBIC fund were approximately $5.4 million and $122,000, respectively. At December 31, 2023, the remaining commitments to the LIHTC partnerships and the SBIC fund were approximately $5.7 million and $122,000, respectively.

Deposits

At June 30, 2024, approximately $245.5 million, or 11.3%, of the Company's deposits were derived from its top ten depositors. At December 31, 2023, approximately $246.0 million, or 11.5%, of the Company's deposits were derived from its top ten depositors. As of June 30, 2024 and December 31, 2023, approximately $980.0 million, or 45.1% and $969.2 million, or 45.4%, of our total deposits were uninsured, respectively. The uninsured amounts are estimates based on the methodologies and assumptions used for United Business Bank’s regulatory reporting requirements.

Local Agency Deposits and Other Advances

In the normal course of business, the Company accepts deposits from local agencies. The Company is required to provide collateral for certain local agency deposits in the states of California, Colorado, New Mexico and Washington. At both June 30, 2024 and December 31, 2023, the FHLB issued letters of credit on behalf of the Company totaling $40.6 million, as collateral for local agency deposits.

​

NOTE 18 – SUBSEQUENT EVENTS

The Company has evaluated subsequent events through the filing of this Quarterly Report on Form 10-Q and determined that there have been no events that have occurred that would require adjustments to our disclosures in the condensed consolidated financial statements.

​

​ 33

Table of Contents Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain matters discussed in this Form 10-Q may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements relate to our financial condition, results of operations, plans, objectives, future performance or business. Forward-looking statements are not statements of historical fact, are based on certain assumptions and are generally identified by use of the words “believes,” “expects,” “anticipates,” “estimates,” “forecasts,” “intends,” “plans,” “targets,” “potentially,” “probably,” “projects,” “outlook” or similar expressions or future or conditional verbs such as “may,” “will,” “should,” “would” and “could.” Forward-looking statements include statements with respect to our beliefs, plans, objectives, goals, expectations, assumptions and statements about, among other things, expectations of the business environment in which we operate, projections of future performance or financial items, perceived opportunities in the market, potential future credit experience, and statements regarding our mission and vision. These forward-looking statements are based upon current management expectations and may, therefore, involve risks and uncertainties. Our actual results, performance, or achievements may differ materially from those suggested, expressed, or implied by forward- looking statements as a result of a wide variety or range of factors including, but not limited to:

​

●	adverse impacts to economic conditions in general and in California, Nevada, Colorado, New Mexico and Washington specifically, as well as other markets where the Company has lending relationships;
●	effects of employment levels, labor shortages, inflation, a recession, or slowed economic growth;
---	---
●	changes in the interest rate environment, including past increases in the Board of Governors of the Federal Reserve System (“Federal Reserve”) benchmark rate and the duration of such increased levels, which could adversely affect our revenues and expenses, the values of our assets and obligations, and the availability and cost of capital and liquidity;
---	---
●	the impact of inflation and the Federal Reserve’s monetary policy decisions;
---	---
●	the effects of any federal government shutdown;
---	---
●	the credit risks of lending and securities activities, including delinquencies, write-offs, and changes in our allowance for credit losses and provision for credit losses;
---	---
●	changes in the levels of general interest rates and the relative differences between short and long-term interest rates and loan and deposit interest rates;
---	---
●	unexpected outflows of uninsured deposits, which may require us to sell investment securities at a loss;
---	---
●	our net interest margin and funding sources;
---	---
●	fluctuations in the demand for loans, unsold homes, land and other properties;
---	---
●	fluctuations in real estate values in our market areas;
---	---
●	secondary market conditions for loans and our ability to sell loans in the secondary market;
---	---
●	results of examinations of us by regulatory authorities and the possibility that any such regulatory authority may, among other things, limit our business activities, require us to change our business mix, increase our allowance for credit losses, write-down asset values or increase our capital levels, affect our ability to borrow funds or maintain or increase deposits;
---	---
●	risks related to our acquisition strategy, including our ability to identify future suitable acquisition candidates, exposure to potential asset and credit quality risks and unknown or contingent liabilities, the need for capital to finance such transactions, our ability to obtain required regulatory approvals and possible failures in realizing the anticipated benefits from acquisitions;
---	---
●	challenges arising from attempts to expand into new geographic markets, products, or services;
---	---
●	goodwill impairment;
---	---
●	bank failures or adverse developments at other banks and related negative press about the banking industry in general on investor and depositor sentiment;
---	---
●	risks and uncertainties related to the recent restatement of certain of our historical consolidated financial statements;
---	---
●	legislative or regulatory changes, including changes in banking, securities and tax laws, in regulatory policies and principles, or the interpretation of regulatory capital or other rules, and other governmental initiatives affecting the financial services industry;
---	---
●	our ability to attract and retain deposits;
---	---
●	our ability to control operating costs and expenses;
---	---

34

Table of Contents

●	use of estimates in determining the fair value of certain of our assets and liabilities, which may prove incorrect;
●	difficulties in reducing risk associated with the loans and securities on our balance sheet;
---	---
●	staffing fluctuations in response to product demand or corporate implementation strategies;
---	---
●	the effectiveness of our risk management framework;
---	---
●	disruptions, security breaches, or other adverse events, failures or interruptions in, or attacks on, our information technology systems or on those of our third-party vendors;
---	---
●	an inability to keep pace with the rate of technological advances;
---	---
●	risks associated with dependence on our Chief Executive Officer and other members of our senior management team and our ability to attract, motivate and retain qualified personnel;
---	---
●	costs and effects of litigation, including settlements and judgments;
---	---
●	our ability to implement our business strategies, including expectations regarding key growth initiatives and strategic priorities;
---	---
●	liquidity issues, including our ability to borrow funds or raise additional capital, if necessary or desired;
---	---
●	the loss of our large loan and deposit relationships;
---	---
●	increased competitive pressures among financial services companies;
---	---
●	changes in consumer spending, borrowing and savings habits;
---	---
●	the availability of resources to address changes in laws, rules, or regulations or to respond to regulatory actions;
---	---
●	our ability to pay dividends on our common stock;
---	---
●	the quality and composition of our securities portfolio and the impact of any adverse changes in the securities markets;
---	---
●	the inability of key third-party providers to perform their obligations;
---	---
●	changes in accounting principles, policies or guidelines and practices, as may be adopted by the financial institution regulatory agencies, the Public Company Accounting Oversight Board or the Financial Accounting Standards Board;
---	---
●	environmental, social and governance goals;
---	---
●	effects of climate change, severe weather events, natural disasters, pandemics, epidemics and other public health crises, acts of war or terrorism, civil unrest and other external events;
---	---
●	other economic, competitive, governmental, regulatory, and technological factors affecting our operations, pricing, products and services; and
---	---
●	risks described in other reports filed with or furnished to the Securities and Exchange Commission (“SEC”), including our Annual Report on Form 10-K for the year ended December 31, 2023 (“2023 Annual Report”) and this Form 10-Q.
---	---

​

In light of these risks, uncertainties and assumptions, the forward-looking statements discussed in this report might not occur, and you should not put undue reliance on any forward-looking statements. Moreover, you should treat these statements as speaking only as of the date they are made and based only on information then actually known to us. We do not undertake and specifically disclaim any obligation to revise any forward-looking statements included in this report or the reasons why actual results could differ from those contained in such statements, whether as a result of new information or to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements. These risks could cause our actual results for the remainder of 2024 and beyond to differ materially from those expressed in any forward-looking statements by, or on behalf of us and could negatively affect our consolidated financial condition and results of operations as well as our stock price performance.

​

Executive Overview

General. BayCom is a bank holding company headquartered in Walnut Creek, California. BayCom’s wholly owned banking subsidiary, United Business Bank, provides a broad range of financial services to businesses and business owners as well as individuals through its network of 35 full-service branches, with 16 locations in California, one in Nevada, two in Washington, five in New Mexico and 11 in Colorado. The Company’s business activities generally are

35

Table of Contents limited to passive investment activities and oversight of its investment in the Bank. Accordingly, the information set forth in this report, including the consolidated financial statements and related data, relates primarily to the Bank.

Our principal objective is to continue to increase shareholder value and generate consistent earnings growth by expanding our commercial banking franchise through both strategic acquisitions and organic growth. Since 2010, we have expanded our geographic footprint through 10 strategic acquisitions. We believe our strategy of selectively acquiring and integrating community banks has provided us with economies of scale and improved our overall franchise efficiency. Looking forward, we expect to continue to pursue strategic acquisitions and believe our targeted market areas present us with many and varied acquisition opportunities. We are also focused on continuing to grow organically and believe the metropolitan and community markets in which we operate currently provide meaningful opportunities to expand our commercial client base and increase both interest-earning assets and market share. We believe our geographic footprint, which now includes the San Francisco Bay area, the metropolitan markets of Los Angeles, California, Las Vegas, Nevada, Seattle, Washington, and Denver, Colorado, and community markets including Albuquerque, New Mexico, and Custer, Delta, and Grand counties, Colorado, provides us with access to low cost, stable core deposits that we can use to fund commercial loan growth. We strive to provide an enhanced banking experience for our clients by providing them with a comprehensive suite of sophisticated banking products and services tailored to meet their needs, while delivering the high-quality, relationship-based client service of a community bank. At June 30, 2024, on a consolidated basis, the Company had approximately $2.6 billion in total assets, $1.9 billion in total loans, $2.2 billion in total deposits and $315.3 million in shareholders’ equity.

We continue to focus on growing our commercial loan portfolios through acquisitions as well as organic growth. At June 30, 2024, our $1.9 billion total loan portfolio included $343.5 million, or 18.4%, of acquired loans (all of which were recorded to their estimated fair values at the time of acquisition), and the remaining $1.5 billion, or 81.6%, consisted of loans we originated.

The profitability of our operations depends primarily on our net interest income after provision for credit losses, which is the difference between interest earned on interest earning assets and interest paid on interest bearing liabilities less provision for credit losses. Our net income is also affected by other factors, including the provision for credit losses on loans, noninterest income and noninterest expense.

Set forth below is a discussion of the primary factors affecting our results of operations:

Net interest income. Net interest income represents interest income less interest expense. We generate interest income from interest and fees received on interest earning assets, including loans and investment securities and dividends on Federal Home Loan Bank of San Francisco (“FHLB”) and Federal Reserve Bank of San Francisco (“FRB”) stock we own. We incur interest expense from interest paid on interest bearing liabilities, including interest bearing deposits and borrowings. To evaluate net interest income, we measure and monitor: (i) yields on our loans and other interest earning assets; (ii) the costs of our deposits and other funding sources; (iii) our net interest margin; and (iv) the regulatory risk weighting associated with our assets. Net interest margin is calculated as the annualized net interest income divided by average interest earning assets. Because noninterest bearing sources of funds, such as noninterest bearing deposits and shareholders’ equity, also fund interest earning assets, net interest margin reflects the benefit of these noninterest bearing sources.

Changes in market interest rates, the slope of the yield curve, and interest we earn on interest earning assets or pay on interest bearing liabilities, as well as the volume and types of interest earning assets, interest bearing and noninterest bearing liabilities and shareholders’ equity, usually have the largest impact on changes in our net interest spread, net interest margin and net interest income during a reporting period. Since March 2022, through July 2023, in response to inflation, the Federal Open Market Committee ("FOMC") of the Federal Reserve has increased the target range for the federal funds rate by 525 basis points to a range of 5.25% to 5.50%, where it remained as of June 30, 2024. The increase in the average yield on interest-earning assets during the six months ended June 30, 2024 reflects the lagging benefit of variable rate interest-earning assets beginning to reprice higher.

Noninterest income. Noninterest income consists of, among other things: (i) service charges on loans and deposits; (ii) gain on sale of loans; and (iii) gain (loss) on equity securities; and (iv) other noninterest income. Gain on sale

36

Table of Contents of loans includes income (or losses) from the sale of the guaranteed portion of Small Business Administration (“SBA”) loans, capitalized loan servicing rights and other related income.

Provision for credit losses. We established an allowance for credit losses by charging amounts to provision for credit losses at a level required to reflect estimated credit losses in the loan and available-for sale investment securities portfolios. For loans, management considers many factors including historical experience, types and amounts of the portfolio and adverse situations that may affect borrowers’ ability to repay, among other factors. See “Critical Accounting Policies and Estimates - Allowance for Credit Losses” for a description of the manner in which the provision for credit losses is established.

For investments, the Company evaluates investment available-for-sale debt securities in an unrealized loss position to determine whether the decline in the fair value below the amortized cost basis is due to credit-related factors or noncredit-related factors. Such situations may result from either a decline in the financial condition of the issuing entity or in the case of fixed interest rate investments, from rising interest rates. In making this assessment, management considers the length of time and the extent to which fair value is less than amortized cost, the nature of the security, the underlying collateral, and the financial condition and prospects of the issuer, among other factors. This assessment also includes a determination of whether the Company intends to sell the security, or if it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis less any current-period credit losses. If this assessment indicates a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of the cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses for available-for-sale securities is recorded for the credit loss, limited by the amount that the fair value is less than the amortized costs basis. Any impairment that has not been recorded through an allowance for credit losses for available-for-sale securities is recognized in other comprehensive income. Changes in the allowance for credit losses for available-for-sale securities are recorded as provision for (or reversal of) credit loss. Losses are charged against the allowance for credit losses for available-for-sale securities, with a corresponding adjustment to the security's amortized cost basis, when management believes the uncollectibility of an available-for-sale security is confirmed or when either criteria regarding intent or requirement to sell is met.

​

Noninterest expense. Noninterest expense includes, among other things: (i) salaries and related benefits; (ii) occupancy and equipment expense; (iii) data processing; (iv) Federal Deposit Insurance Corporation (“FDIC”) and state assessments; (v) outside and professional services; and (vi) other general and administrative expenses, including amortization of intangible assets. Salaries and related benefits include compensation, employee benefits and employment tax expenses for our personnel. Occupancy and equipment expense includes depreciation expense on our owned properties and equipment, lease expense on our leased properties and other occupancy-related expenses. Data processing expense includes fees paid to our third-party data processing system provider and other data service providers. FDIC and state assessments expense represents the assessments that we pay to the FDIC for deposit insurance and other regulatory costs to various states. Outside and professional fees include legal, accounting, consulting and other outsourcing arrangements. Amortization of intangibles represents the amortization of our core deposit intangible from various acquisitions. Other general and administrative expenses include expenses associated with travel, meals, training, supplies and postage. Noninterest expenses generally increase as we grow our business. Noninterest expenses have increased significantly over the past few years as we have grown through acquisitions and organically, and as we have built out our operational infrastructure.

Critical Accounting Policies and Estimates

Our accounting and reporting policies conform to accounting principles generally accepted in the United States of America (“GAAP”) and to general practices within the banking industry. To prepare financial statements and interim financial statements in conformity with GAAP, management makes estimates, assumptions and judgments based on available information. These estimates, assumptions and judgments affect the amounts reported in the financial statements and accompanying notes; and are based on information available as of the date of the financial statements. As this information changes, actual results could differ from the estimates, assumptions and judgments reflected in the financial statements. In particular, management has identified several accounting policies that, due to the estimates, assumptions and judgments inherent in those policies, are critical in understanding our financial statements. 37

Table of Contents These critical accounting policies and estimates include determining the allowance for credit losses and related provision.

There have been no material changes in the Company’s critical accounting policies and estimates as previously disclosed in the Company’s 2023 Form 10-K. For a detailed discussion, refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies” in the 2023 Form 10-K filed with the SEC on March 15, 2024.

​

Comparison of Financial Condition at June 30, 2024 and December 31, 2023

Total assets. Total assets increased $42.0 million, or 1.6%, to $2.6 billion at June 30, 2024, from December 31, 2023.  The increase primarily was due to cash and cash equivalents increasing $83.7 million or 27.2% and investment securities available-for-sale increasing $20.5 million or 12.6%, partially offset by decreases in loans receivable, net of $63.7 million or 3.3%.

Cash and cash equivalents.  Cash and cash equivalents increased $83.7 million, or 27.2%, to $391.2 million, at June 30, 2024, from $307.5 million at December 31, 2023. The increase primarily was due to a $78.3 million increase in federal funds sold and interest bearing balances in banks due to repayment on loans coupled with a decline in loan demand.

Investment securities available-for-sale.  Investment securities available-for-sale increased $20.5 million, or 12.6%, to $183.6 million at June 30, 2024 from $163.2 million at December 31, 2024. The increase primarily was due to the purchase of $26.6 million of investment securities and unrealized gains on investment securities available-for-sale of $1.4 million as a result of fair value adjustments, partially offset by the routine amortization and repayment of investment principal balances and securities called and matured of $7.4 million during the six months ended June 30, 2024.

The following table sets forth certain information regarding contractual maturities and the weighted average yields of our available for sale investment securities as of June 30, 2024. Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties. The weighted average yields were calculated by multiplying each carrying value by its yield and dividing the sum of these results by the total carrying values. Yields on tax-exempt investments are not calculated on a fully tax equivalent basis.

​

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Amount Due or Repricing Within:																								​
​	​	One Year				​	Over One				​	Over Five				​	Over				​	​	​	​	​	​
​	​	or Less				​	to Five Years				​	to Ten Years				​	Ten Years				​	Total				​
​	​	​	​	​	Weighted	​	​	​	​	Weighted	​	​	​	​	Weighted	​	​	​	​	Weighted	​	​	​	​	Weighted	​
​	​	Amortized		​	Average	​	Amortized		​	Average	​	Amortized		​	Average	​	Amortized		​	Average	​	Amortized		​	Average	​
​		Cost			Yield	****	Cost			Yield		Cost			Yield		Cost			Yield		Cost			Yield	​
​	​	(Dollars in thousands)
Municipal securities	​	$	1,661	​	2.30	%	$	7,799	​	1.46	%	$	11,184	​	3.01	%	$	3,173	​	3.97	%	$	23,817	​	2.58	%
Mortgage-backed securities	​	​	7,245	​	3.89	​	​	1,802	​	3.20	​	​	10,150	​	2.43	​	​	28,267	​	4.37	​	​	47,464	​	3.84	​
Collateralized mortgage obligations	​	​	11,920	​	4.90	​	​	4,398	​	1.31	​	​	4,435	​	1.94	​	​	24,783	​	4.87	​	​	45,536	​	4.25	​
SBA securities	​	​	3,971	​	6.53	​	​	—	​	—	​	​	448	​	2.14	​	​	255	​	2.26	​	​	4,674	​	5.88	​
Corporate bonds	​	​	9,900	​	5.87	​	​	70,574	​	4.41	​	​	750	​	3.38	​	​	—	​	—	​	​	81,224	​	4.58	​
Total	​	$	34,697	​	5.03	%	$	84,573	​	3.95	%	$	26,967	​	2.61	%	$	56,478	​	4.56	%	$	202,715	​	4.12	%

​

Equity securities.  Equity securities increased $252,000, or 2.0%, to $12.8 million at June 30, 2024 from $12.6 million at December 31, 2023, primarily due to a mark-to-market upward adjustment recorded during the six months ended June 30, 2024.

Loans receivable, net.  We originate a wide variety of loans with a focus on commercial real estate (“CRE”) loans and commercial and industrial loans. Total loans decreased  $63.6 million, or 3.3% to $1.8 billion at June 30, 2024 from $1.9 billion at December 31, 2023. The decrease was due to $136.8 million of loan repayments and $4.7 million in loans sold, partially offset by $50.0 million of new loan originations and $27.6 million of loan purchases. 38

Table of Contents The following table provides information about our loan portfolio by type of loan, with purchase credit deteriorated (“PCD”) loans presented as a separate balance, at the dates presented.

​	​	​	​	​	​	​	​	​	​
​	​	June 30,		​	December 31,		​	​
​	​	2024		​	2023		​	% Change
​	​	(Dollars in thousands)					​	​
Commercial and industrial (1)		$	154,981		$	162,691		(4.7)	%
Real estate:	​			​			​	​	​
Residential	​		104,872	​		85,555		22.6	​
Multifamily residential	​		243,508	​		246,840		(1.3)	​
Owner occupied CRE	​		464,834	​		497,360		(6.5)	​
Non-owner occupied CRE	​		866,487	​		899,332		(3.7)	​
Construction and land	​		3,453	​		9,534		(63.8)	​
Total real estate	​		1,683,154	​		1,738,621	​	(3.2)	​
Consumer	​		602	​		738	​	(18.4)	​
PCD loans	​		25,445	​		25,723	​	(1.1)	​
Total Loans	​		1,864,182	​		1,927,773	​	(3.3)	​
Net deferred loan fees	​		(10)	​		56	​	(118.6)	​
Allowance for credit losses	​		(19,000)	​		(22,000)	​	(13.6)	​
Loans, net	​	$	1,845,172	​	$	1,905,829	​	(3.2)	%

​

(1)	Includes $2.3 million and $3.8 million of Paycheck Protection Program (“PPP”) loans as of June 30, 2024 and December 31, 2023, respectively.

​

The following table shows as of June 30, 2024, the geographic distribution of our loan portfolio by type of loan in dollar amounts and percentages:

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	San Francisco Bay					​	​	​	​	​	​	​	Total in State of				​	​	​	​	​	​	​	​	​	​
​	​	Area (1)					​	Other California (2)					​	California				​	​	All Other States (3)			​	Total
​	​	​	​	​	% of		​	​	​	​	% of		​	​	​	​	% of	​	​	​	​	% of	​	​	​	​	% of
​	​	​	​	​	Total in		​	​	​	​	Total in		​	​	​	​	Total in	​	​	​	​	Total in	​	​	​	​	Total in
​	​	Amount		​	Category		​	Amount		​	Category		​	Amount		​	Category	​	Amount		​	Category	​	Amount		​	Category
​		(Dollars in thousands)																										​
June 30, 2024		​			​			​			​			​					​					​				​
Commercial and industrial	​	$	33,639		​	8.3	%	$	67,212		​	8.6	%	$	100,851		8.5	%	$	54,295		8.0	%	$	155,146		8.3	%
Real estate:	​		​		​		​		​		​		​					​		​			​					​
Residential	​		12,746		​	3.1	​		42,983		​	5.5	​		55,729		4.7	​		49,493		7.3	​		105,222		5.6	​
Multifamily residential	​		43,254		​	10.6	​		103,975		​	13.3	​		147,229		12.4	​		98,895		14.6	​		246,124		13.2	​
Owner occupied CRE	​		162,192		​	39.8	​		271,978		​	34.8	​		434,170		36.5	​		41,896		6.2	​		476,066		25.5	​
Non-owner occupied CRE	​		155,386		​	38.2	​		294,310		​	37.7	​		449,696		37.8	​		427,857		63.4	​		877,553		47.1	​
Construction and land	​		—		​	—	​		1,136		​	0.1	​		1,136		0.1	​		2,333		0.3	​		3,469		0.2	​
Total real estate	​		373,578		​	​	​		714,382		​	​	​		1,087,960		​	​		620,474		​	​		1,708,434		​	​
Consumer	​		2		​	—	%		1		​	—	%		3		—	%		599		0.1	%		602		—	%
Total loans	​	$	407,219	​	​	​	​	$	781,595	​	​	​	​	$	1,188,814			​	$	675,368			​	$	1,864,182			​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
December 31, 2023	​			​			​			​			​					​					​					​
Commercial and industrial	​	$	35,954	​	​	8.5	%	$	75,549	​	​	9.0	%	$	111,503	​	8.8	%	$	51,386	​	7.7	%	$	162,889	​	8.4	%
Real estate:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Residential	​	​	13,876	​	​	3.3	​	​	43,157	​	​	5.1	​	$	57,033	​	4.5	​	​	28,969	​	4.3	​	​	86,002	​	4.5	​
Multifamily residential	​	​	46,129	​	​	10.9	​	​	109,214	​	​	13.0	​	​	155,343	​	12.3	​	​	94,180	​	14.1	​	​	249,523	​	12.9	​
Owner occupied CRE	​	​	168,977	​	​	40.1	​	​	292,880	​	​	34.9	​	​	461,857	​	36.6	​	​	47,296	​	7.1	​	​	509,153	​	26.4	​
Non-owner occupied CRE	​	​	156,411	​	​	37.1	​	​	312,362	​	​	37.2	​	​	468,773	​	37.2	​	​	441,136	​	66.2	​	​	909,909	​	47.2	​
Construction and land	​	​	—	​	​	—	​	​	7,217	​	​	0.9	​	​	7,217	​	0.6	​	​	2,342	​	0.4	​	​	9,559	​	0.5	​
Total real estate	​	​	385,393	​	​	​	​	​	764,830	​	​	​	​	​	1,150,223	​	​	​	​	613,923	​	​	​	​	1,764,146	​	​	​
Consumer	​	​	4	​	​	—	%	​	1	​	​	—	%		5	​	—	%	​	733	​	0.1	%	​	738	​	—	%
Total loans	​	$	421,351	​	​	​	​	$	840,380	​	​	​	​	$	1,261,731			​	$	666,042			​	$	1,927,773			​

​

(1)	Includes Alameda, Contra Costa, Solano, Sonoma, Marin, San Francisco, San Mateo and Santa Clara counties.
(2)	Includes loans located in Sacramento and Northern California counties totaling $94.0 million and loans located in Los Angeles and Orange counties totaling $467.3 million at June 30, 2024. At December 31, 2023, loans in Sacramento and Northern California counties and loans in Los Angeles and Orange counties totaled $95.6 million and $506.6 million, respectively.
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Table of Contents

(3)	Includes loans located primarily in the states of Colorado, New Mexico and Washington. At June 30, 2024, loans in Colorado, New Mexico and Washington totaled $110.4 million, $47.3 million and $92.3 million, respectively. At December 31, 2023, loans in Colorado, New Mexico and Washington totaled $87.1 million, $43.9 million and $103.8 million, respectively.

Acquired loans. As of June 30, 2024, acquired non-PCD loans totaled $159.5 million with a remaining net premium of $2.2 million, compared to $187.7 million with a remaining net premium of $2.1 million as of December 31, 2023. The net premium for acquired non-PCD loans includes a credit discount based on estimated losses in the acquired loans, partially offset by any premium based on market interest rates on the date of acquisition.

As of June 30, 2024 acquired PCD loans totaled $27.1 million with a remaining net non-credit discount of $1.7 million, compared to $27.5 million with a remaining net non-credit discount of $1.8 million as of December 31, 2023.

Nonperforming assets and loans.  Nonperforming assets generally consists of nonperforming loans and other real estate owned (“OREO”). Nonperforming loans generally consist of nonaccrual loans and accruing loans 90 days or more past due. There were no accruing loans 90 days or more past due or other real estate owned (“OREO”) at both June 30, 2024 and December 31, 2023.

Nonperforming loans, consisting solely of nonaccrual loans, totaled $16.1 million, or 0.87% of total loans, at June 30, 2024, compared to $13.0 million, or 0.67% of total loans, at December 31, 2023. The increase in nonperforming loans was primarily due to the placement of six new loans on nonaccrual totaling $7.3 million, partially offset by partial charge-offs of two nonaccrual loans totaling $2.9 million, charge-offs of five nonaccrual loans totaling $435,000 and, to a lesser extent, pay-offs of five nonaccrual loans totaling $305,000, all of which occurred during the first quarter of 2024. At June 30, 2024, nonperforming loans totaling $2.1 million were guaranteed by governmental agencies, compared to $740,000 at December 31, 2023. At June 30, 2024 and December 31, 2023, there were no performing (accruing) modified loans to borrowers experiencing financial difficulty.

At June 30, 2024 and December 31, 2023, nonaccrual loans included $3.2 million and $927,000 of loans 30-89 days past due, and $6.3 million and $2.1 million of loans less than 30 days past due, respectively. At June 30, 2024, the $6.3 million of nonaccrual loans less than 30 days past due was comprised of 19 loans, all of which were placed on nonaccrual due to concerns over the financial condition of the borrowers.

In general, loans are placed on nonaccrual status after being contractually delinquent for more than 90 days, or earlier, if management believes full collection of future principal and interest on a timely basis is unlikely. When a loan is placed on nonaccrual status, all interest accrued but not received is charged against interest income. When the ability to fully collect nonaccrual loan principal is in doubt, cash payments received are applied against the principal balance of the loan until such time as full collection of the remaining recorded balance is expected. Interest received on such loans is recognized as interest income when received. A nonaccrual loan is restored to an accrual basis when principal and interest payments are brought current, and full payment of principal and interest is probable. Loans that are well secured and in the process of collection will remain on accrual status.

Loans may be acquired at a premium or discount to par value, in which case the premium is amortized (subtracted from) or accreted (added to) interest income over the remaining life of the loan. Generally, as time goes on, the effects of loan discount accretion and loan premium amortization decrease as the purchased loans mature or pay off early. Upon the early pay-off of a loan, any remaining (unaccreted) discount or (unamortized) premium is immediately taken into interest income; as loan payoffs may vary significantly from quarter to quarter, so may the impact of discount accretion and premium amortization on interest income.

Modified loans to borrowers experiencing financial difficulty. **** Occasionally, the Company offers modifications of loans to borrowers experiencing financial difficulty by providing principal forgiveness, interest rate reductions, other-than-insignificant payment delays, term extensions or any combination of these. When principal forgiveness is provided, the amount of the forgiveness is charged-off against the allowance for credit losses for loans. Upon the Company’s subsequent determination that a modified loan (or a portion thereof) is uncollectible, the loan (or portion thereof) is charged off. The amortized cost basis of the loan is reduced by the uncollectible amount and the allowance for credit losses for loans is adjusted by the same amount. 40

Table of Contents ​

Loan modifications to borrowers experiencing financial difficulty as of June 30, 2024 totaled $2.9 million, of which none were accruing and performing according to their modified terms, compared to $4.3 million, of which none were accruing and performing according to their modified terms, at December 31, 2023. Modified loans that are accruing and performing according to their modified terms are not considered nonperforming loans as they continue to accrue interest despite their modified status. The related allowance for credit losses on individually evaluated modified loans totaled $27,000 and $1.3 million at June 30, 2024 and December 31, 2023, respectively. This change in the ACL was due to one full charge-off and one partial charge-off totaling $1.3 million during the first quarter of 2024, all of which was specifically reserved for at December 31, 2023.

​

The following table provides information regarding nonperforming loans, nonperforming assets and modified loans as of the dates indicated:

​

​	​	​	​	​	​	​	​
​	​	June 30,		​	December 31,		​
​		2024			2023
​	​	(Dollars in thousands)					​
Loans accounted for on a nonaccrual basis:	​	​	​	​	​	​	​
Commercial and industrial	​	$	1,479	​	$	2,072	​
Real estate:	​	​	​	​	​	​	​
Residential	​	​	1,422	​	​	1,496	​
Multifamily residential	​	​	7,431	​	​	5,305	​
Owner occupied CRE	​	​	5,304	​	​	3,573	​
Non-owner occupied CRE	​	​	126	​	​	165	​
Construction and land	​	​	366	​	​	366	​
Total real estate	​	​	14,649	​	​	10,905	​
Consumer	​	​	—	​	​	—	​
Total nonaccrual loans	​	​	16,128	​	​	12,977	​
Accruing loans 90 days or more past due	​	​	—	​	​	—	​
Total nonperforming loans	​	​	16,128	​	​	12,977	​
Real estate owned	​	​	—	​	​	—	​
Total nonperforming assets (1)	​	$	16,128	​	$	12,977	​
Modified loans to borrowers experiencing financial difficulty – performing	​	$	—	​	$	—	​
PCD loans	​	$	15,337	​	$	25,723	​
Nonperforming assets to total assets (1)	​	​	0.62	%	​	0.51	%
Nonperforming loans to total loans (1)	​	​	0.87	%	​	0.67	%

​

(1)	Performing modified loans to borrowers experiencing financial difficulty are neither included in nonperforming loans above nor are they included in the numerators used to calculate these ratios.

​

Interest foregone on nonaccrual loans was approximately $226,000 and $709,000 for the three and six months ended June 30, 2024 compared to $185,000 and $631,000 for the three and six months ended June 30, 2023. Interest income recognized on nonaccrual loans was approximately $79,000 and $86,000 for the three and six months ended June 30, 2024 and $16,000 and $81,000 for the three and six months ended June 30, 2023, respectively.

​

Allowance for credit losses for loans.  The allowance for credit losses is determined by us on a quarterly basis, although we are engaged in monitoring the appropriate level of the allowance on a more frequent basis. We assess the allowance for credit losses based on three categories: (i) originated loans, (ii) acquired non-PCD loans, and (iii) acquired PCD loans. The allowance for credit losses reflects management’s estimate of current expected credit losses inherent in the loan portfolios. The computation includes elements of judgment and high levels of subjectivity.

At June 30, 2024, the Company’s allowance for credit losses for loans was $19.0 million, or 1.02% of total loans, compared to $22.0 million, or 1.14% of total loans, at December 31, 2023. Management currently believes that the $19.0 41

Table of Contents million allowance for credit losses at June 30, 2024 is adequate to absorb expected credit losses inherent in the Company’s loan portfolio. No assurance can be given, however, that adverse economic conditions or other circumstances will not result in increased losses in the portfolio.

We recorded net charge-offs of $76,000 and $3.5 million for the three and six months ended June 30, 2024, compared to net charge-offs of $60,000 and $375,000 for the three and six months ended June 30, 2023, respectively. Net charge-offs during the first six months of 2024 consisted primarily of charge-offs of six nonaccrual loans totaling $595,000 and partial charge-offs of two nonaccrual loans totaling $2.9 million, of which $3.2 million of were specifically reserved for, partially offset by the recovery of $97,000 on one nonaccrual loan. These charge-offs were due to collateral shortfall amounts being deemed uncollectable.

The following table presents certain credit ratios at the dates and for the periods indicated and each component of the ratio’s calculations:

​	​	​	​	​	​	​	​	​
​	​	At and for the six months ended June 30,					​	​
​	****	2024		****	2023		​	​
​	​	(Dollars in thousands)						​
Allowance for credit losses on loans as a percentage of total loans outstanding at period end	​	​	1.02	%	​	0.95	%	​
Allowance for credit losses on loans	​	$	19,000	​	$	19,100	​	​
Total loans outstanding	​	​	1,864,172	​	​	2,013,307	​	​
​	​	​	​	​	​	​	​	​
Nonaccrual loans as a percentage of total loans outstanding at period end	​	​	0.87	%	​	0.64	%	​
Total nonaccrual loans	​	$	16,128	​	$	12,831	​	​
Total loans outstanding	​	​	1,864,172	​	​	2,013,307	​	​
​	​	​	​	​	​	​	​	​
Allowance for credit losses on loans as a percentage of nonaccrual loans at period end	​	​	117.81	%	​	148.86	%	​
Allowance for credit losses on loans	​	$	19,000	​	$	19,100	​	​
Total nonaccrual loans	​	​	16,128	​	​	12,831	​	​
​	​	​	​	​	​	​	​	​
Net charge-offs/(recoveries) during period to average loans outstanding:	​	​	​	​	​	​	​	​
Commercial and industrial:	​	​	0.21	%	​	0.10	%	​
Net charge-offs	​	$	341	​	$	203	​	​
Average loans outstanding	​	​	161,412	​	​	195,743	​	​
Construction and land:	​	​	—	%	​	—	%	​
Net charge-offs	​	$	—	​	$	—	​	​
Average loans outstanding	​	​	10,059	​	​	13,609	​	​
Commercial estate:	​	​	—	%	​	—	%	​
Net charge-offs/(recoveries)	​	$	3,206	​	$	(2)	​	​
Average loans outstanding	​	​	1,628,282	​	​	1,723,505	​	​
Residential:	​	​	(0.12)	%	​	0.18	%	​
Net (recoveries)/charge-offs	​	$	(100)	​	$	175	​	​
Average loans outstanding	​	​	84,660	​	​	95,383	​	​
Consumer:	​	​	0.14	%	​	(0.05)	%	​
Net charge-offs/(recoveries)	​	$	1	​	$	(1)	​	​
Average loans outstanding	​	​	733	​	​	2,185	​	​
Total loans:	​	​	0.18	%	​	0.02	%	​
Total net charge-offs	​	$	3,448	​	$	375	​	​
Total average loans outstanding	​	​	1,885,146	​	​	2,030,425	​	​

​ 42

Table of Contents As of June 30, 2024, the Company individually evaluated $21.9 million in loans, inclusive of the $16.1 million of nonperforming loans as of that date. Of these individually evaluated loans, $7.4 million had a specific allowance of $1.5 million as of June 30, 2024. As of December 31, 2023, the Company individually evaluated $13.0 million in loans, all of which were on nonaccrual status. Of these individually evaluated loans, $9.7 million had a specific allowance of $4.4 million as of December 31, 2023.

Management considers the allowance for credit losses for loans at June 30, 2024 to be adequate to cover losses inherent in the loan portfolio based on the assessment of the above-mentioned factors affecting the loan portfolio. While management believes the estimates and assumptions used in its determination of the adequacy of the allowance are reasonable, there can be no assurance that such estimates and assumptions will not be proven incorrect in the future, or that the actual amount of future losses will not exceed the amount of the established allowance for credit losses for loans or that any increased allowance for credit losses for loans that may be required will not adversely impact our financial condition and results of operations. A further decline in national and local economic conditions due to employment levels, labor shortages, the effects of inflation, a potential recession, slowed economic growth or otherwise, could result in a material increase in the allowance for credit losses for loans and may adversely affect the Company’s financial condition and results of operations. In addition, the determination of the amount of our allowance for credit losses for loans is subject to review by bank regulators, as part of their routine examination process, which may result in additions to our provision for credit losses based upon their judgment of information available to them at the time of their examination.

Deposits.  Deposits are our primary source of funding and generally consist of core deposits from the communities served by our branch and office locations. We offer a variety of deposit accounts with a competitive range of interest rates and terms to both consumers and businesses. Deposits include interest bearing and noninterest bearing demand accounts, savings, money market, certificates of deposit and individual retirement accounts. These accounts earn interest at rates established by management based on competitive market factors, management’s desire to increase certain product types or maturities, and in keeping with our asset/liability, liquidity and profitability objectives. Competitive products, competitive pricing and high touch client service are important to attracting and retaining these deposits.

Total deposits increased $42.3 million, or 2.0%, to $2.2 billion at June 30, 2024 from $2.1 billion at December 31, 2023. At June 30, 2024, noninterest bearing demand deposits totaled $618.6 million, or 28.4% of total deposits, compared to $646.3 million, or 30.3% of total deposits, at December 31, 2023. At June 30, 2024, uninsured deposits totaled $979.9 million, or 45.1% of total deposits, compared to $969.2 million, or 45.5% of total deposits at December 31, 2023. Estimated uninsured deposits, excluding collateralized public deposits and affiliate deposits, were approximately 43.9% and 42.1% of total deposits at June 30, 2024 and December 31, 2023, respectively. The uninsured amounts are estimates based on the methodologies and assumptions used for United Business Bank’s regulatory reporting requirements.

We consider our deposit base to be seasoned, stable and well-diversified, and we do not have any significant industry concentrations among our non-insured deposits. We also offer an insured cash sweep product (ICS) that allows customers to insure deposits above FDIC insurance limits. At June 30, 2024, our average deposit account size (excluding public funds), calculated by dividing period-end deposits by the population of accounts with balances, was approximately $59,000. See Note 17 of the Notes to Condensed Consolidated Financial Statements in this Form 10-Q for information regarding our top ten depositors.

The following table sets forth the dollar amount of deposits in the various types of deposit programs offered at the dates indicated.

​

​	​	​	​	​	​	​	​	​	​
​	​	June 30,		​	December 31,		​	​
​	​	2024		​	2023		​	% Change
​	​	(Dollars in thousands)					​	​
Noninterest bearing demand deposits		$	618,616		$	646,278		(4.3)	%
NOW accounts	​		273,292	​		283,089		(3.5)	​
Saving	​	​	93,726	​	​	102,073	​	(8.2)	​
Money market	​		661,271	​		624,066		6.0	​
Time deposits	​		528,105	​		477,244		10.7	​
Total	​	$	2,175,010	​	$	2,132,750		2.0	%

​ 43

Table of Contents Borrowings.  Although deposits are our primary source of funds, we may from time to time utilize borrowings as a cost-effective source of funds when they can be invested at a positive interest rate spread, for additional capacity to fund loan demand, or to meet our asset/liability management goals. We are a member of and may obtain advances from the FHLB of San Francisco, which is part of the Federal Home Loan Bank System. The eleven regional Federal Home Loan Banks provide a central credit facility for their member institutions. These advances are provided upon the security of certain of our mortgage loans and mortgage-backed securities. These advances may be made pursuant to several different credit programs, each of which has its own interest rate, range of maturities and call features.

At June 30, 2024 and December 31, 2023, we had the ability to borrow up to $514.1 million and $576.9 million, respectively, from the FHLB of San Francisco. At both June 30, 2024 and December 31, 2023, there were no FHLB advances outstanding.

​

During the first quarter of 2024, the Bank was approved for discount window advances with the FRB of San Francisco secured by certain types of loans. At June 30, 2024, we had the ability to borrow up to $43.8 million from the FRB of San Francisco, with no FRB of San Francisco advances outstanding at that date.

​

We may also utilize Fed Funds purchased from correspondent banks as a source of short-term funding. At both June 30, 2024 and December 31, 2023, we had a total of $65.0 million in federal funds lines available from third-party financial institutions and no balances outstanding at these dates.

​

At both June 30, 2024 and December 31, 2023, the Company had outstanding junior subordinated deferrable interest debentures, net of fair value adjustments, assumed in connection with its previous acquisitions totaling $8.6 million.

​

At June 30, 2024, the Company had outstanding subordinated debt, net of costs to issue, totaling $63.7 million compared to $63.9 million at December 31, 2023.

​

We are required to provide collateral for certain local agency deposits. At both June 30, 2024 and December 31, 2023, the FHLB of San Francisco had issued letters of credit on behalf of the Bank totaling $40.6 million, as collateral for local agency deposits.

​

Shareholders’ equity. Shareholders’ equity increased $2.4 million, to $315.3 million at June 30, 2024 from $312.9 million at December 31, 2023. The increase in shareholders’ equity primarily was due to $11.5 million of net income earned and a $990,000 decrease in accumulated other comprehensive loss, net of taxes, partially offset by the repurchase of $8.1 million of Company common stock and cash dividends paid or accrued payable totaling $2.3 million, during the first six months of 2024. During the six months ended June 30, 2024, the Company repurchased a total of 402,914 shares of its common stock at a total cost of $8.1 million, or $20.19 per share, leaving 516,838 shares available for future purchases under the current stock repurchase plan. For additional information see Part II, Item 2, “Unregistered Sales of Equity Securities and Use of Proceeds.”

​ 44

Table of Contents Comparison of Results of Operations for the Three and Six Months Ended June 30, 2024 and 2023

​

Earnings summary.  Net income was $5.6 million for the three months ended June 30, 2024, compared to $7.2 million for the three months ended June 30, 2023, a decrease of $1.6 million or 22.3%. The decrease was the result of a $2.0 million decrease in net interest income and a $1.4 million increase in the provision for credit losses, resulting from a $171,000 provision for credit losses for the current quarter compared to a $1.3 million reversal of credit losses in the same quarter a year ago, partially offset by a $397,000 increase in noninterest income, a $545,000 decrease in noninterest expenses, and a $869,000 decrease in provision for income taxes. Basic and diluted earnings per share were $0.50 for the three months ended June 30, 2024, compared to $0.59 for the three months ended June 30, 2023.

Net income was $11.5 million for the six months ended June 30, 2024, compared to $14.4 million for the six months ended June 30, 2023, a decrease of $2.9 million or 20.3%. The decrease was the result of a $4.8 million decrease in net interest income and a $1.4 million increase in the provision for credit losses, resulting from a $423,000 provision for credit losses for the six months ended June 30, 2024 compared to a $985,000 reversal of credit losses in the same period a year ago, partially offset by a $898,000 increase in noninterest income, a $1.0 million decrease in noninterest expense and a $1.4 million decrease in provision for income taxes. Basic and diluted earnings per share were $1.01 for the six months ended June 30, 2024, compared to $1.16 for the six months ended June 30, 2023.

Our efficiency ratio, which is calculated by dividing noninterest expense by the sum of net interest income before provision for credit losses and noninterest income, was 67.34% and 66.49% for the three and six months ended June 30, 2024, compared to 65.27% and 63.40% for the three and six months ended June 30, 2023, respectively. The deterioration in the efficiency ratio during the three months and six months June 30, 2024 as compared to the same periods in 2023 was primarily due to lower overall revenues, partially offset by lower noninterest expenses.

Interest income.  Interest income for the three months ended June 30, 2024 was $32.4 million, compared to $31.3 million for the three months ended June 30, 2023, an increase of $1.1 million or 3.7%. The increase in interest income between periods reflects increases in interest income in all interest-earning asset categories, except loans. Increased yields earned on interest-earning assets, along with an increase in the average balances of investment securities and fed funds sold and interest bearing balances in banks, were the primary drivers for the increase in interest income, partially offset by a decrease in the average balance of loans.

Interest income on loans, including fees, decreased $1.7 million, or 6.2%, to $25.0 million for the three months ended June 30, 2024 from $26.7 million for three months ended June 30, 2023, primarily due to a $168.5 million decrease in the average balance of loans, partially offset by a 13 basis point increase in the average loan yield. The average balance of loans was $1.9 billion for the second quarter of 2024, compared to $2.0 billion for the second quarter of 2023. The average yield on loans was 5.41% for the three months ended June 30, 2024, compared to 5.28% for the three months ended June 30, 2023. The increase in the average yield on loans from the second quarter of 2023 was due to the impact of increased rates on variable rate loans as well as new loans being originated at higher market interest rates.

Interest income on loans for the three months ended June 30, 2024 and 2023 included $124,000 and $5,000 in accretion of the net discount on acquired loans and revenue from PCD loans in excess of discounts. The balance of the remaining net discounts on these acquired loans totaled $540,000 and $331,000 at June 30, 2024 and 2023, respectively. Interest income on loans for the three months ended June 30, 2024 and 2023, included $70,000 and $48,000, respectively, in fees related to prepayment penalties.

Interest income on investment securities increased $488,000, or 28.8%, to $2.2 million for the three months ended June 30, 2024, compared to $1.7 million for the three months ended June 30, 2023, as a result of increases in the average yield and average balance. The average yield on investment securities increased 51 basis points to 4.50% for the three months ended June 30, 2024, compared to 3.99% for the three months ended June 30, 2023. The increase in average yield was due to higher market interest rates on newly purchased securities.  The average balance of investment securities totaled $195.1 million for the three months ended June 30, 2024, compared to $170.1 million for the three months ended June 30, 2023. In addition, during the second quarter of 2024, we received $392,000 in cash dividends on our FRB and FHLB stock up 16.2% from $340,000 received in the second quarter of 2023. 45

Table of Contents Interest income on federal funds sold and interest-bearing balances in banks increased $2.3 million, or 88.2%, to $4.8 million for the three months ended June 30, 2024, compared to $2.6 million for the three months ended June 30, 2023, as a result of increases in the average yield and average balance. The average yield increased 33 basis points to 5.47% for the three months ended June 30, 2024, compared to 5.14% for the three months ended June 30, 2023, reflecting higher market rates. The average balance totaled $354.3 million for the three months ended June 30, 2024, compared to $199.9 million for the three months ended June 30, 2023. The increase in average balance during the current quarter compared to the same quarter one year ago was due to higher retained cash balances resulting from lower new loan production.

Interest income for the six months ended June 30, 2024 was $64.2 million, compared to $61.3 million for the six months ended June 30, 2023, an increase of $2.8 million or 4.6%. The increase in interest income between periods reflects increases in interest income in all interest-earning asset categories, except loans. Increased yields earned on interest-earning assets, along with an increase in the average balances of investment securities and fed funds sold and interest bearing balances in banks, were the primary drivers for the increase in interest income, partially offset by a decrease in the average balance of loans.

Interest income on loans, including fees, decreased $2.7 million, or 5.0%, to $50.3 million for the six months ended June 30, 2024 from $52.9 million for six months ended June 30, 2023, primarily due to a $144.9 million decrease in the average balance of loans, partially offset by a 10 basis point increase in the average loan yield. The average balance of loans was $1.9 billion for the six months ended June 30 2024, compared to $2.0 billion for the six months ended June 30, 2023. The average yield on loans was 5.36% for the six months ended June 30, 2024, compared to 5.26% for the six months ended June 30, 2023. The increase in the average yield on loans from the same period 2023 was due to the impact of increased rates on variable rate loans as well as new loans being originated at higher market interest rates.

Interest income on loans for the six months ended June 30, 2024 and 2023 included $222,000 and $102,000 in accretion of the net discount on acquired loans and revenue from PCD loans in excess of discounts. Interest income on loans for the six months ended June 30, 2024 and 2023, included $246,000 and $317,000, respectively, in fees related to prepayment penalties.

Interest income on investment securities increased $804,000, or 24.1%, to $4.1 million for the six months ended June 30, 2024, compared to $3.3 million for the six months ended June 30, 2023. The average yield on investment securities increased 43 basis points to 4.37% for the six months ended June 30, 2024, compared to 3.94% for the six months ended June 30, 2023. The increase in average yield was due to higher market interest rates on newly purchased securities.  The average balance of investment securities totaled $190.4 million for the six months ended June 30, 2024, compared to $170.4 million for the six months ended June 30, 2023. In addition, during the six months ended June 30, 2024, we received $808,000 in cash dividends on our FRB and FHLB stock, up 20.2% from $672,000 received during the six months ended June 30, 2023.

Interest income on federal funds sold and interest-bearing balances in banks increased $4.5 million, or 103.5%, to $8.9 million for the six months ended June 30, 2024, compared to $4.4 million for the six months ended June 30, 2023, as a result of changes in the average yield and average balance. The average yield increased 59 basis points to 5.47% for the six months ended June 30, 2024, compared to 4.88% for the six months ended June 30, 2023, reflecting higher market rates. The average balance totaled $328.2 million for the six months ended June 30, 2024, compared to $181.5 million for the six months ended June 30, 2023. The increase in average balance during the current year compared to the same period one year ago was due to higher retained cash balances resulting from lower new loan production.

Interest expense.  Interest expense increased $3.1 million, or 44.9%, to $10.1 million for the three months ended June 30, 2024, compared to $7.0 million for the three months ended June 30, 2023, reflecting higher funding costs primarily related to increased market rates of interest payable on money market and time deposits. The average rate paid on interest-bearing liabilities for three months ended June 30, 2024 was 2.54%, compared to 1.82% for three months ended June 30, 2023.  Total average interest-bearing liabilities increased $63.9 million, or 0.72%, to $1.6 billion for the three months ended June 30, 2024, compared to $1.5 billion for the three months ended June 30, 2023.

Interest expense on deposits increased $3.1 million, or 53.1%, to $9.0 million for the three months ended June 30, 2024 compared to $5.9 million for the three months ended June 30, 2023. The increase was driven by higher rates paid on money market accounts and time deposits and, to a lesser extent, an increase in the average balance of time deposits. 46

Table of Contents Specifically, rates on money market accounts and time deposits increased by 79 basis points and 89 basis points, respectively, during the three months ended June 30, 2024, compared to the same period in 2023. The average balance of time deposits also increased, rising by $82.6 million, or 52.6%, to $518.1 million during the three months ended June 30 , 2024, compared to $435.4 million during the same period in 2023.

The overall average cost of deposits for the three months ended June 30, 2024 and 2023 was 1.69% and 1.10%, respectively. The average rate paid on all interest-bearing deposits increased by 76 basis points to 2.37% for the three months ended June 30, 2024, compared to 1.61% for the three months ended June 30, 2023. The average balance of interest-bearing deposits totaled $1.5 billion for both the three months ended June 30, 2024 and 2023. Meanwhile, the average balance of noninterest-bearing deposits decreased $57.1 million, or 8.4%, to $620.5 million for the three months ended June 30, 2024 compared to $677.5 million for the three months ended June 30, 3023 as customers sought to place excess funds in higher yielding deposit accounts.

Interest expense on borrowings remained relatively flat, increasing $11,000, or 1.00%, to $1.1 million for the three months ended June 30, 2024, compared to the three months ended June 30, 2023, due to a nine basis point increase in the average rate paid on junior subordinated debentures. The average cost of total borrowings increased to 6.18% for the three months ended June 30, 2024, compared to 6.09% for the three months ended June 30, 2023. The average balance of borrowings decreased $20,000 to $72.3 million during the three months ended June 30, 2024, compared to the three months ended June 30, 2023.

Interest expense increased $7.7 million, or 65.1%, to $19.4 million for the six months ended June 30, 2024, compared to $11.8 million for the six months ended June 30, 2023, reflecting higher funding costs primarily related to increased market rates of interest payable on money market and time deposits, as well as an increase in the average balance of time deposits. The average rate paid on interest-bearing liabilities for six months ended June 30, 2024 was 2.47%, compared to 1.60% for six months ended June 30, 2023.  Total average interest-bearing liabilities increased $94.8 million, or 6.4%, to $1.6 billion for the six months ended June 30, 2024, compared to $1.5 billion for the six months ended June 30, 2023.

Interest expense on deposits increased $7.7 million, or 79.8%, to $17.2 million for the six months ended June 30, 2024, compared to $9.6 million for the six months ended June 30, 2023. The increase was driven by higher rates paid on money market accounts and time deposits and, to a lesser extent, an increase in the average balance of time deposits. Specifically, rates on money market accounts and time deposits increased by 91 basis points and 118 basis points, respectively, during the six months ended June 30, 2024, compared to the same period in 2023. The average balance of time deposits also increased, rising by $122.7 million, or 32.2%, to $503.4 million during the six months ended June 30 , 2024, compared to $380.7 million during the same period in 2023.

The overall average cost of deposits for the six months ended June 30, 2024 and 2023 was 1.62% and 0.91%, respectively. The average rate paid on all interest-bearing deposits increased by 92 basis points to 2.30% for the six months ended June 30, 2024, compared to 1.37% for the six months ended June 30, 2023. The average balance of interest-bearing deposits totaled $1.5 billion for the six months ended June 30, 2024, compared to $1.4 billion during the same period in 2023. Meanwhile, the average balance of noninterest-bearing deposits decreased $79.5 million, or 11.2%, to $630.0 million for the six months ended June 30, 2024 compared to $709.6 million for the six months ended June 30, 3023.

Interest expense on borrowings increased $23,000, or 1.00%, to $2.2 million for the six months ended June 30, 2024, compared to the six months ended June 30, 2023, due to a five basis point increase in the average rate paid on junior subordinated debentures. The average cost of total borrowings increased to 6.18% for the six months ended June 30, 2024, compared to 6.11% for the six months ended June 30, 2023. The average balance of borrowings decreased $335,000 to $72.3 million during the six months ended June 30, 2024, compared to $72.6 million during the three months ended June 30, 2023.

Net interest income and net interest margin.  Net interest income decreased $2.0 million, or 8.1%, to $22.3 million for the three months ended June 30, 2024, compared to $24.3 million for the three months ended June 30, 2023. The decrease in net interest income primarily was due to an increase in interest expense on deposits and a decrease in interest income on loans, partially offset by increases in interest income on federal funds sold and interest-bearing balances in banks, interest income on investment securities and dividends on FHLB stock.

47

Table of Contents The average yield (annualized) on interest earning assets for the three months ended June 30, 2024 was 5.37%, a 19 basis point increase from 5.18% for the three months ended June 30, 2023, while the average cost of interest bearing liabilities increased 72 basis points to 2.54% for the three months ended June 30, 2024, compared to 1.82% for the three months ended June 30, 2023. The increases in average yields on interest-earning assets and average rates paid on interest-bearing liabilities during the three months ended June 30, 2024, compared to the same periods in 2023, were due to higher market interest rates generally.

​

The annualized net interest margin was 3.69% and 4.02%, for the three months ended June 30, 2024 and 2023, respectively. Net interest margin in the second quarter 2024 as compared to the second quarter 2023 was negatively impacted by increasing funding costs, due to shifts towards higher yielding deposits, which outpaced, on a percentage basis, increasing yields on interest-earning assets.

​

Net interest income decreased $4.8 million, or 9.8%, to $44.7 million for the six months ended June 30, 2024, compared to $49.5 million for the six months ended June 30, 2023. The decrease in net interest income primarily was due to an increase in interest expense on deposits and a decrease in interest income on loans, partially offset by increases in interest income on federal funds sold and interest-bearing balances in banks, interest income on investment securities and dividends on FHLB stock.

​

The average yield (annualized) on interest earning assets for the six months ended June 30, 2024 was 5.32%, a 17 basis point increase from 5.15% for the six months ended June 30, 2023, while the average cost of interest bearing liabilities increased 87 basis points to 2.47% for the six months ended June 30, 2024, compared to 1.60% for the six months ended June 30, 2023. The increases in average yields on interest-earning assets and average rates paid on interest-bearing liabilities during the six months ended June 30, 2024, compared to the same period in 2023, were due to higher market interest rates generally.

​

The annualized net interest margin was 3.71% and 4.16%, for the six months ended June 30, 2024 and 2023, respectively. Net interest margin for the six months ended June 30, 2024 as compared to the same period in 2023 was negatively impacted by increasing funding costs, due to shifts towards higher yielding deposits, which outpaced, on a percentage basis, increasing yields on interest-earning assets.

​

​ 48

Table of Contents Average Balances, Interest and Average Yields/Cost. The following tables present, for the periods indicated, information about (i) average balances, the total dollar amount of interest income from interest earning assets and the resultant average yields; (ii) average balances, the total dollar amount of interest expense on interest bearing liabilities and the resultant average costs; (iii) net interest income; (iv) the interest rate spread; and (v) the net interest margin. Nonaccrual loans have been included in the table as loans carrying a zero yield. Yields have been calculated on a pre-tax basis. Loan yields include the effect of amortization or accretion of deferred loan fees/costs and purchase accounting premiums/discounts to interest and fees on loans.

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Three months ended June 30,															​
​	​	2024							​	2023							​
​	​	​	​	​	​	​	​	Annualized	​	​	​	​	​	​	​	Annualized	​
​	​	Average		​	​	​	​	Average	​	Average		​	​	​	​	Average	​
​		Balance(1)			Interest			Yield/Cost		Balance(1)			Interest			Yield/Cost	​
​	​	(Dollars in thousands)															​
Interest earning assets	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Fed Funds sold and interest bearing balances in banks	​	$	354,259	​	$	4,819		5.47	%	$	199,905	​	$	2,560		5.14	%
Investments securities	​	​	195,135	​		2,181		4.50	%		170,141	​		1,693		3.99	%
FHLB Stock	​	​	11,313	​		247		8.77	%		13,189	​		196		5.96	%
FRB Stock	​	​	9,638	​		145		6.05	%		9,641	​		144		5.99	%
Total loans	​	​	1,858,996	​		25,014		5.41	%		2,027,505	​		26,667		5.28	%
Total interest earning assets	​	​	2,429,341	​		32,406		5.37	%		2,420,381	​		31,260		5.18	%
Noninterest earning assets	​	​	133,624	​		​		​	​		140,770	​		​		​	​
Total average assets	​	$	2,562,965	​		​		​	​	$	2,561,151	​		​		​	​
Interest bearing liabilities	​	​	​	​		​		​	​		​	​		​		​	​
Savings	​	$	96,028	​	​	31	​	0.13	%	$	112,378	​	​	37		0.13	%
NOW accounts	​	​	271,886	​		62		0.09	%		298,339	​		68		0.09	%
Money market	​	​	640,520	​		3,725		2.34	%		616,426	​		2,380		1.55	%
Time deposits	​	​	518,052	​		5,184		4.02	%		435,405	​		3,396		3.13	%
Total interest bearing deposit accounts	​	​	1,526,486	​		9,002		2.37	%		1,462,548	​		5,881		1.61	%
Subordinated debt, net	​	​	63,625	​	​	891	​	5.64	%	​	63,770	​	​	895	​	5.63	%
Junior subordinated debentures, net	​	​	8,593	​	​	218	​	10.21	%	​	8,512	​	​	203	​	9.57	%
Other borrowings	​	​	44	​		—		—	​		—	​	​	—		—	​
Total interest bearing liabilities	​	​	1,598,748	​		10,111		2.54	%		1,534,830	​		6,979		1.82	%
Noninterest bearing deposits	​	​	620,453	​	​	​	​	​	​	​	677,500	​	​	​	​	​	​
Other noninterest bearing liabilities	​	​	28,902	​	​	​	​	​	​	​	36,003	​	​	​	​	​	​
Noninterest bearing liabilities	​	​	649,355	​		​		​	​		713,503	​		​		​	​
Total average liabilities	​	​	2,248,103	​		​		​	​		2,248,333	​		​		​	​
Average equity	​	​	314,862	​		​		​	​		312,818	​		​		​	​
Total average liabilities and equity	​	$	2,562,965	​		​		​	​	$	2,561,151	​		​		​	​
Net interest income	​		​	​	$	22,295		​	​		​	​	$	24,281		​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Interest rate spread (2)	​		​	​		​		2.83	%		​	​		​		3.36	%
Net interest margin (3)	​		​	​		​		3.69	%		​	​		​		4.02	%
Ratio of average interest earning assets to average interest bearing liabilities	​		​	​		​		151.95	%		​	​		​		157.70	%

​

(1)	Average balances are computed using average daily balances.
(2)	Interest rate spread is calculated as the average rate earned on interest earning assets minus the average rate paid on interest bearing liabilities.
---	---
(3)	Net interest margin is calculated as net interest income divided by total average interest earning assets.
---	---

​ 49

Table of Contents

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Six months ended June 30,
​	​	2024							​	2023							​
​	​	(Dollars in thousands)
​	​	​	​	​	​	​	​	Annualized	​	​	​	​	​	​	​	Annualized	​
​	​	Average		​	​	​	​	Average	​	Average		​	​	​	​	Average	​
​		Balance (1)			Interest			Yield/Cost		Balance(1)			Interest			Yield/Cost	​
​	​	(Dollars in thousands)															​
Interest earning assets	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Fed Funds sold and interest-bearing balances in banks	​	$	328,189	​	$	8,934		5.47	%	$	181,455	​	$	4,389		4.88	%
Investments securities	​	​	190,420	​		4,137		4.37	%		170,409	​		3,333		3.94	%
FHLB Stock	​	​	11,313	​		519		9.23	%		10,931	​		384		7.09	%
FRB Stock	​	​	9,631	​		289		6.03	%		9,609	​		288		6.04	%
Total loans	​	​	1,884,983	​		50,271		5.36	%		2,029,959	​		52,922		5.26	%
Total interest earning assets	​	​	2,424,536	​		64,150		5.32	%		2,402,363	​		61,316		5.15	%
Noninterest earning assets	​	​	132,464	​		​		​	​		144,767	​		​		​	​
Total average assets	​	$	2,557,000	​		​		​	​	$	2,547,130	​		​		​	​
Interest bearing liabilities	​	​	​	​		​		​	​		​	​		​		​	​
Savings	​	$	96,773	​	​	62	​	0.13	%	$	115,968	​	​	77		0.13	%
NOW accounts	​	​	277,945	​		126		0.09	%		307,273	​		142		0.09	%
Money market	​	​	631,014	​		7,122		2.27	%		610,140	​		4,117		1.36	%
Time deposits	​	​	503,398	​		9,919		3.96	%		380,650	​		5,245		2.78	%
Total interest bearing deposit accounts	​	​	1,509,130	​		17,229		2.30	%		1,414,031	​		9,581		1.37	%
Subordinated debt, net	​	​	63,670	​	​	1,784	​	5.64	%	​	63,749	​	​	1,791	​	5.67	%
Junior subordinated debentures, net	​	​	8,582	​	​	435	​	10.20	%	​	8,502	​	​	406	​	9.63	%
Other borrowings	​	​	22	​		—		—	%		359	​	​	—		—	%
Total interest bearing liabilities	​	​	1,581,404	​		19,448		2.47	%		1,486,641	​		11,778		1.60	%
Noninterest bearing deposits	​	​	630,095	​	​	​	​	​	​	​	709,590	​	​	​	​	​	​
Other noninterest bearing liabilities	​	​	30,065	​	​	​	​	​	​	​	35,071	​	​	​	​	​	​
Noninterest bearing liabilities	​	​	660,160	​		​		​	​		744,661	​		​		​	​
Total average liabilities	​	​	2,241,564	​		​		​	​		2,231,302	​		​		​	​
Average equity	​	​	315,436	​		​		​	​		315,827	​		​		​	​
Total average liabilities and equity	​	$	2,557,000	​		​		​	​	$	2,547,129	​		​		​	​
Net interest income	​		​	​	$	44,702		​	​		​	​	$	49,538		​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Interest rate spread (2)	​		​	​		​		2.85	%		​	​		​		3.55	%
Net interest margin (3)	​		​	​		​		3.71	%		​	​		​		4.16	%
Ratio of average interest earning assets to average interest bearing liabilities	​		​	​		​		153.32	%		​	​		​		161.60	%

​

(1)	Average balances are computed using average daily balances.
(2)	Interest rate spread is calculated as the average rate earned on interest earning assets minus the average rate paid on interest bearing liabilities.
---	---
(3)	Net interest margin is calculated as net interest income divided by total average interest earning assets.
---	---

50

Table of Contents Rate/Volume Analysis.  Increases and decreases in interest income and interest expense result from changes in average balances (volume) of interest earning assets and interest bearing liabilities, as well as changes in weighted average interest rates. The following table sets forth the effects of changing rates and volumes on our net interest income during the periods shown. Information is provided with respect to (i) effects on interest income attributable to changes in volume (changes in volume multiplied by prior rate) and (ii) effects on interest income attributable to changes in rate (changes in rate multiplied by prior volume). Changes applicable to both volume and rate have been allocated to volume.

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Three months ended June 30,									​	Six months ended June 30,
​	​	2024 compared to 2023									​	2024 compared to 2023
​	​	Increase/(Decrease)									​	Increase/(Decrease)
​	​	Attributable to									​	Attributable to
​		Rate			Volume			Total			​	Rate			Volume			Total
​	​	(Dollars in thousands)									​	(Dollars in thousands)
Interest earning assets	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Fed funds sold and interest bearing balances in banks	​	$	287	​	$	1,972	​	$	2,259	​	​	$	986	​	$	3,559	​	$	4,545
Investments securities	​		240	​		248	​		488	​	​		412	​		392	​		804
FHLB stock and FRB stock	​		80	​		(28)	​		52	​	​		123	​		13	​		136
Total loans	​		558	​		(2,211)	​		(1,653)	​	​		1,139	​		(3,790)	​		(2,651)
Total interest income	​		1,165	​		(19)	​		1,146	​	​		2,660	​		174	​		2,834
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Interest bearing liabilities	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Savings	​		(1)	​		(5)	​		(6)	​	​		(2)	​		(13)	​		(15)
NOW accounts	​		—	​		(6)	​		(6)	​	​		(2)	​		(14)	​		(16)
Money market accounts	​		1,252	​		93	​		1,345	​	​		2,864	​		141	​		3,005
Time deposits	​		1,145	​		643	​		1,788	​	​		2,978	​		1,696	​		4,674
Total deposit accounts	​		2,396	​		725	​		3,121	​	​		5,838	​		1,810	​		7,648
Subordinated debt, net	​		—	​		(4)	​		(4)	​	​		—	​		(7)	​		(7)
Junior subordinated debentures, net	​		13	​		2	​		15	​	​		25	​		4	​		29
Other borrowings	​		—	​		—	​		—	​	​		—	​		—	​		—
Total interest expense	​		2,409	​		723	​		3,132	​	​		5,863	​		1,807	​		7,670
Net interest income	​	$	(1,244)	​	$	(742)	​	$	(1,986)	​	​	$	(3,203)	​	$	(1,633)	​	$	(4,836)

​

Provision for credit losses. We recorded provisions for credit losses for loans of $171,000 and $423,000 for the three and six months ended June 30, 2024, compared to reversals of the allowance for credit losses for loans of $1.3 million and $985,000 for the three and six months ended June 30, 2023. The provisions for credit losses during the three and six months ended June 30, 2024 were primarily driven by replenishments of the allowance during the periods, partially offset by decreases in outstanding loan balances, leading to lower quantitative reserves. Net charge-offs totaled $3.5 million for the six months ended June 30, 2024, of which $3.2 million was specifically reserved for at December 31, 2023. No changes were made to the qualitative risk factor conclusions during the six months ended June 30, 2024. The quantitative reserve was impacted by improvement in forecasted economic conditions, specifically, national unemployment and national gross domestic product, both of which are key indicators utilized to estimate credit losses.

The reversals of the allowance for credit losses during the three and six months ended June 30, 2023 were primarily due to improvements in forecasted economic conditions, specifically, national gross domestic product and national unemployment, indicators utilized to estimate credit losses and, to a lesser extent, decreases in outstanding loan balances and $60,000 and $375,000 in net charge-offs during the three and six months ended June 30, 2023, respectively.

Noninterest income. Noninterest income increased $397,000, or 36.6%, to $1.5 million for three months ended June 30, 2024 compared to $1.1 million for the three months ended June 30, 2023. The increase in noninterest income was primarily due to a $596,000 increase in gain on equity securities and a $219,000 increase in gain on sale of loans, partially offset by a $154,000 decrease in income on an investment in SBIC fund, a $152,000 decrease in loan servicing fees and other fees due to lower loan origination volume and a $148,000 decrease in service charges and other fees primarily due to fewer customer deposits placed in Certificate of Deposit Account Registry Service (“CDARS”) and Insured Cash Sweep (“ICS”) money market product services via the IntraFi Network.

​ 51

Table of Contents Noninterest income increased $898,000, or 33.9%, to $3.5 million for six months ended June 30, 2024, compared to $2.6 million for the six months ended June 30, 2023. The increase in noninterest income was primarily due to a  $252,000 gain on equity securities in the current year period compared to a $1.8 million loss on equity securities in the prior year period, partially offset by a $673,000 decrease in income on an investment in an SBIC fund,  a $193,000 decrease in gain on sale of loans, a $170,000 decrease in loan servicing fees and other fees due to lower loan origination volume and a $194,000 decrease in service charges and other fees primarily due to fewer customer deposits placed in CDARS and ICS money market product services via the IntraFi Network.

​

The following table presents the key components of noninterest income for the periods indicated:

​

​	​	​	​	​	​	​	​	​	​	​	​
​	​	Three months ended June 30,					​	​	​	​
​		2024			2023			Change		% Change
​	​	(Dollars in thousands)							​	​
Gain on sale of loans	​	$	287	​	$	68	​		​	322.1	%
Loss on equity securities	​	​	(321)	​	​	(917)	​	​	​	(65.0)	%
Service charges and other fees	​		734	​		882	​			(16.8)	%
Loan servicing and other loan fees	​		441	​		593	​			(25.6)	%
Income on investment in SBIC fund	​		71	​		225	​			68.4	%
Other income and fees	​		271	​		235	​			15.3	%
Total noninterest income	​	$	1,483	​	$	1,086	​			36.6	%

All values are in US Dollars.

​

​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Six months ended June 30,					​	​	​	​		​
​		2024			2023			Change		% Change		​
​	​	(Dollars in thousands)							​	​		​
Gain on sale of loans	​	$	287	​	$	480	​		​	(40.2)	%	​
Gain (loss) on equity securities	​	​	252	​	​	(1,813)	​	​	​	(113.9)	%	​
Service charges and other fees	​		1,573	​		1,767	​			(11.0)	%	​
Loan servicing and other loan fees	​		833	​		1,003	​			(16.9)	%	​
Income on investment in SBIC fund	​		41	​		714	​			(94.3)	%	​
Other income and fees	​		559	​		496	​			12.7	%	​
Total noninterest income	​	$	3,545	​	$	2,647	​			33.9	%	​

All values are in US Dollars.

​

Noninterest expense. Noninterest expense decreased $545,000, or 3.3%, to $16.0 million for the three months ended June 30, 2024 compared to $16.6 million for the three months ended June 30, 2023. The decrease in noninterest expense was primarily due to a $1.1 million decrease in salaries and employee benefits as a result of a $485,000 decrease in bonus accrual and decrease in full-time equivalent employees, partially offset by a $365,000 increase in other expense due to increased legal costs, professional fees, FDIC insurance costs, and fraudulent check losses, and a $159,000 increase in occupancy and equipment expense.

​

Noninterest expense decreased $1.0 million, or 3.0%, to $32.1 million for the six months June 30, 2024 compared to $33.1 million for the six months ended June 30, 2023. The decrease in noninterest expense was primarily due to a $2.1 million decrease in salaries and employee benefits as a result of a $1.3 million decrease in bonus accrual and decrease in full-time equivalent employees, partially offset by a $492,000 increase in other expense due to increased legal costs, professional fees, FDIC insurance costs, and fraudulent check losses, and a $286,000 increase in occupancy and equipment expense.

​ 52

Table of Contents The following table details the components of noninterest expense for the periods indicated:

​	​	​	​	​	​	​	​	​	​	​	​
​	​	Three months ended June 30,					​	​	​	​
​		2024			2023			Change		% Change
​	​	(Dollars in thousands)							​	​
Salaries and related benefits	​	$	9,642	​	$	10,745	​		​	(10.3)	%
Occupancy and equipment	​		2,133	​		1,974	​			8.1	%
Data processing	​		1,650	​		1,616	​			2.1	%
Other	​		2,587	​		2,222	​			16.4	%
Total noninterest expense	​	$	16,012	​	$	16,557	​			(3.3)	%

All values are in US Dollars.

​

​

​

​

​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Six months ended June 30,					​	​	​	​		​
​		2024			2023			Change		% Change		​
​	​	(Dollars in thousands)							​	​		​
Salaries and employee benefits	​	$	19,678	​	$	21,781	​		​	(9.7)	%	​
Occupancy and equipment	​		4,287	​		4,001	​			7.1	%	​
Data processing	​		3,403	​		3,081	​			10.5	%	​
Other	​		4,715	​		4,223	​			11.7	%	​
Total noninterest expense	​	$	32,083	​	$	33,086	​			(3.0)	%	​

All values are in US Dollars.

​

Income taxes.  The provision for income taxes decreased $869,000, or 30.3%, to $2.0 million for the three months ended June 30, 2024 compared to $2.9 million for the three months ended June 30, 2023 due to lower taxable income. The provision for income taxes decreased $1.4 million, or 25.0%, to $4.3 million for the six months ended June 30, 2024 compared to $5.7 million for the six months ended June 30, 2023 due to lower taxable income.

The Company’s effective tax rate was 26.3% and 27.09% for three and six months ended June 30, 2024 and 28.4% and 28.3% for the six months ended June 30, 2023, respectively. The effective tax rate was lower for the three months and six months ended June 30, 2024, compared to the same periods in 2023, due to higher low income housing tax credits.

Liquidity and Capital Resources

Planning for our normal business liquidity needs, both expected and unexpected, is done on a daily and short-term basis through the cash management function. On a longer-term basis, it is accomplished through the budget and strategic planning functions, with support from internal asset/liability management software model projections.

Management maintains a liquidity position that it believes will adequately provide funding for loan demand and deposit run off that may occur in the normal course of business. We rely on multiple sources to meet our potential liquidity demands. Our primary sources of funds are deposits, escrow and custodial deposits, principal and interest payments on loans and proceeds from sale of loans. During the six months ended June 30, 2024, the Bank sold $3.1 million in loan participation interests and received $136.8 million in principal loan repayments. While maturities and scheduled amortization of loans are generally predictable sources of funds, deposit flows and loan prepayments are greatly influenced by market interest rates, economic conditions, and competition.

Deposits increased $42.3 million to $2.2 billion and liquid assets, in the form of cash and cash equivalents, time deposit in banks and investment securities, increased $103.7 million to $575.6 million at June 30, 2024 from December 31, 2023. Management believes that our securities portfolio is of high quality and the securities would therefore be marketable. Securities purchased during the six months ended June 30, 2024 totaled $26.6 million and securities repayments, maturities and sales during the six months ended June 30, 2024 were $7.4 million. Certificates of deposit scheduled to mature in one year or less at June 30, 2024, totaled $302.2 million.  It is management’s policy to maintain deposit rates that are competitive with other local financial institutions. Based on this management strategy, we believe that most of our maturing certificates of deposit will remain with us.

In addition to these primary sources of funds, management has several secondary sources available to meet potential funding requirements. As of June 30, 2024, the Bank had an available borrowing capacity of $514.1 million with 53

Table of Contents the FHLB of San Francisco, with no borrowings outstanding at that date or at December 31, 2023. During the first quarter of 2024, the Bank was approved for discount window advances with the FRB of San Francisco secured by certain types of loans. At June 30, 2024, we had the ability to borrow up to $43.8 million from the FRB of San Francisco, with no borrowings outstanding at that date. The Bank also had, as of that date, federal funds lines with available commitments totaling $65.0 million with four correspondent banks. There were no amounts outstanding under these facilities at June 30, 2024 and December 31, 2023. Subject to market conditions, we expect to utilize these borrowing facilities from time to time in the future to fund loan originations and deposit withdrawals, to satisfy other financial commitments, repay maturing debt and to take advantage of investment opportunities to the extent feasible.

Liquidity management is both a daily and long-term function of the Company’s management. Excess liquidity is generally invested in short-term investments, such as overnight deposits and federal funds. On a longer-term basis, a strategy is maintained of investing in various lending products and investment securities, including U.S. Government obligations and U.S. agency securities. We use our sources of funds primarily to meet our ongoing commitments, to pay maturing deposits and fund withdrawals, and to fund loan commitments. Loan commitments and letters of credit were $68.5 million, including $163,000 of undisbursed construction and development loan commitments, at June 30, 2024. For information regarding our commitments, see “Note 17 – Commitments and Contingencies” of the Notes to Condensed Consolidated Financial Statements included in “Item 1. Financial Information” of Part I of this report.

Our cash flows are comprised of three primary classifications: cash flows from operating activities, investing activities, and financing activities. Net cash provided by operating activities for the six months ended June 30, 2024 was $12.8 million, compared to $19.8 million for the six months ended June 30, 2023. During the six months ended June 30, 2024, net cash provided by investing activities was $39.4 million, which consisted primarily of net decrease in loans receivable, compared to $10.4 million for the six months ended June 30, 2023. Net cash provided by financing activities for the six months ended June 30, 2024 was $31.5 million, which was comprised primarily of net increase in deposits, compared to $43.4 million during the six months ended June 30, 2023. Management believes our capital sources are adequate to meet all reasonably foreseeable short-term and long-term cash requirements. There has not been a material change in our liquidity and capital resources since the information disclosed in our 2023 Annual Report other than set forth above. We are not aware of any reasonably likely material changes in the mix and relative cost of such resources.

BayCom Corp is a separate legal entity from the Bank and must provide for its own liquidity. At June 30, 2024, BayCom Corp had liquid assets of $13.1 million. In addition to its operating expenses, BayCom Corp is responsible for paying to its shareholders any dividends that have been declared, funding stock repurchases, and making payments on its junior subordinated debentures and subordinated notes. BayCom Corp can receive dividends and other capital distributions from the Bank, although there are regulatory restrictions on the ability of the Bank to pay dividends and make other capital distributions.

On May 24, 2024, the Company announced that its Board of Directors declared a quarterly cash dividend of $0.10 per share on the Company’s outstanding common stock, which was paid on July 11, 2024 to shareholders of record as of the close of business on June 13, 2024. The Company expects to continue to pay quarterly cash dividends on its common stock, subject to the Board of Directors’ discretion to modify or terminate this practice at any time and for any reason without prior notice. Assuming continued payment of the cash dividend at this rate of $0.10 per share, our average total dividend paid each quarter would be approximately $1.1 million based on the number of our outstanding shares at June 30, 2024. The dividends we pay if any, may be limited as more fully discussed under “Business – Supervision and Regulation – BayCom Corp – Dividends” and “– Regulatory Capital Requirements” contained in “Part I. Item 1. Business” of the 2023 Annual Report.

From time to time, our Board of Directors has authorized stock repurchase programs. In general, stock repurchases allow us to proactively manage our capital position and return excess capital to shareholders. Stock repurchases also provide us with shares of common stock necessary to satisfy obligations related to stock compensation awards. In May 2024, our Board of Directors announced a new stock repurchase program, to commence following completion of the existing stock repurchase program (which was completed during the quarter ended June 30, 2024), for the repurchase of up to 560,000 shares, or approximately 5.0% of the Company’s outstanding common stock, over a one- year period. Purchases under the Company’s stock repurchase programs may be made through open market purchases, privately negotiated transactions, or otherwise in compliance with Rule 10b-18 under the Securities Exchange Act of 1934. The repurchase programs may be suspended, terminated, or modified at any time for any reason, including market 54

Table of Contents conditions, the cost of repurchasing shares, the availability of alternative investment opportunities, liquidity, and other factors deemed appropriate. The Company’s stock repurchase programs do not obligate the Company to purchase any particular number of shares. As of June 30, 2024, there remained 516,838 shares available for repurchase under the Company’s existing stock repurchase program. For additional information on the Company’s stock repurchases, see “Item 2. Unregistered Sales of Equity Securities and Use of Proceeds” contained in Part II of this report.

Regulatory Capital

The Bank, as a state-chartered, federally insured commercial bank and member of the Board of Governors of the Federal Reserve System, is subject to capital requirements established by the Federal Reserve. The Federal Reserve requires the Bank to maintain levels of capital adequacy that generally parallel the FDIC requirements. The capital adequacy requirements are quantitative measures established by regulation that require the Bank to maintain minimum amounts and ratios of capital. The FDIC requires the Bank to maintain minimum ratios of Total Capital, Tier 1 Capital, and Common Equity Tier 1 Capital to risk-weighted assets as well as Tier 1 Leverage Capital to average assets. Consistent with our goal to operate a sound and profitable organization, our policy is for the Bank to maintain “Well Capitalized” status under the Federal Reserve regulations. Based on capital levels at June 30, 2024 and December 31, 2023, the Bank was considered Well Capitalized at both of those dates.

​

​ 55

Table of Contents The table below shows the capital ratios under the Basel III capital framework as of the dates indicated:

​	​	​	​	​	​	​	​	​	​	​	​
​	​	At June 30, 2024				​	At December 31, 2023
​	​	Amount		​	Ratio	​	Amount		​	Ratio
​	​	(Dollars in thousands)
Leverage Ratio		​					​				​
BayCom Corp	​	$	285,291		11.63	%	$	282,402		11.56	%
Minimum requirement for “Well Capitalized”	​		122,616		5.00	%		122,135		5.00	%
Minimum regulatory requirement	​		98,093		4.00	%		97,708		4.00	%
​	​		​	​	​	​		​	​	​	​
United Business Bank	​		342,858		13.62	%		328,303		13.08	%
Minimum requirement for “Well Capitalized”	​		125,836		5.00	%		125,479		5.00	%
Minimum regulatory requirement	​		100,669		4.00	%		100,383		4.00	%
​	​		​	​	​	​		​	​	​	​
Common Equity Tier 1 Ratio	​					​					​
BayCom Corp	​		285,291		14.29	%		282,402		14.41	%
Minimum requirement for “Well Capitalized”	​		129,735		6.50	%		127,400		6.50	%
Minimum regulatory requirement	​		89,816		4.50	%		8,820		4.50	%
​	​		​	​	​	​		​	​	​	​
United Business Bank	​		342,858	​	17.47	%		328,303	​	16.94	%
Minimum requirement for “Well Capitalized”	​		127,581		6.50	%		125,987		6.50	%
Minimum regulatory requirement	​		88,325		4.50	%		87,222		4.50	%
​	​		​	​	​	​		​	​	​	​
Tier 1 Risk-Based Capital Ratio	​					​					​
BayCom Corp	​		294,776		14.77	%		291,887		14.89	%
Minimum requirement for “Well Capitalized”	​		159,674		8.00	%		156,800		8.00	%
Minimum regulatory requirement	​		119,755		6.00	%		117,600		6.00	%
​	​		​	​	​	​		​	​	​	​
United Business Bank	​		342,858		17.47	%		328,303		16.94	%
Minimum requirement for “Well Capitalized”	​		157,023		8.00	%		155,062		8.00	%
Minimum regulatory requirement	​		117,767		6.00	%		116,296		6.00	%
​	​		​	​	​	​		​	​	​	​
Total Risk-Based Capital Ratio	​					​					​
BayCom Corp	​		378,661		18.97	%		379,112		19.34	%
Minimum requirement for “Well Capitalized”	​		199,592		10.00	%		196,000		10.00	%
Minimum regulatory requirement	​		159,674		8.00	%		156,800		8.00	%
​	​		​	​	​	​		​	​	​	​
United Business Bank	​		362,058		18.45	%		350,528		18.08	%
Minimum requirement for “Well Capitalized”	​		196,278		10.00	%		193,827		10.00	%
Minimum regulatory requirement	​		157,023		8.00	%		155,062		8.00	%

​

In addition to the minimum capital ratios, the Bank must maintain a capital conservation buffer consisting of additional Common Equity Tier 1 capital greater than 2.5% above the required minimum levels in order to avoid limitations on paying dividends, engaging in share repurchases, and paying discretionary bonuses based on percentages of eligible retained income that could be utilized for such actions. At June 30, 2024, the Bank’s Common Equity Tier 1 capital exceeded the required capital conservation buffer.

For a bank holding company with less than $3.0 billion in assets, the capital guidelines apply on a bank only basis and the Federal Reserve expects the holding company’s subsidiary bank(s) to be Well Capitalized under the prompt corrective action regulations. If the Company were subject to regulatory guidelines for bank holding companies with $3.0 billion or more in assets, at June 30, 2024, the Company would have exceeded all regulatory capital requirements.

For additional information, see “Item 1. Business — Supervision and Regulation — United Business Bank — Capital Requirements” and Note 19, “Regulatory Matters” in the Notes to the Consolidated Financial Statements, included in “Item 8. Financial Statements and Supplementary Data” in the 2023 Annual Report. 56

Table of Contents ​

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We are exposed to interest rate risk through our lending and deposit gathering activities. Our results of operations are highly dependent upon our ability to manage interest rate risk. We consider interest rate risk to be a significant market risk that could have a material effect on our financial condition and results of operations. Interest rate risk is measured and assessed on a quarterly basis. For information regarding the Company’s market risk, see “Management Discussion and Analysis of Financial Condition and Results of Operations — Quantitative and Qualitative Disclosures About Market and Interest Rate Risk,” in the Company’s 2023 Annual Report. In our opinion, there has not been a material change in our interest rate risk exposure since the information disclosed in our 2023 Annual Report.

Item 4. Controls and Procedures

(a)       Evaluation of Disclosure Controls and Procedures

An evaluation of the disclosure controls and procedures as defined in Rule 13a 15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) was carried out as of June 30, 2024 under the supervision and with the participation of the Company’s principal executive officer, principal financial officer and several other members of the Company’s senior management. In designing and evaluating the Company’s disclosure controls and procedures, management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

The Company’s principal executive officer and principal financial officer concluded that as of June 30, 2024, based on their evaluation, the Company’s disclosure controls and procedures were effective in ensuring that information we are required to disclose in the reports we file or submit under the Exchange Act is (1) recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and (2) accumulated and communicated to BayCom Corp’s management, including its CEO and CFO, as appropriate to allow timely decisions regarding required disclosure, specified in the SEC’s rules and forms.

​

(b)       Changes in Internal Controls

There were no changes in the Company’s internal control over financial reporting that occurred during the three months ended June 30, 2024, that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

The Company does not expect that its disclosure controls and procedures and internal control over financial reporting will prevent all error and all fraud. A control procedure, no matter how well conceived and operated, can provide only reasonable, not absolute assurance that the objectives of the control procedure are met. Because of the inherent limitations in all control procedures, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls may be circumvented by the individual acts of some persons, by collusion of two or more people, or by override of the control. The design of any control procedure is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control procedure, misstatements due to error or fraud may occur and not be detected.

​

​ 57

Table of Contents PART II — OTHER INFORMATION

Item 1. Legal Proceedings

Periodically, there have been various claims and lawsuits involving the Company, such as claims to enforce liens, condemnation proceedings on properties in which the Company holds security interests, claims involving the making and servicing of real property loans and other issues incident to the Company’s business. The Company is not a party to any pending legal proceedings that it believes would have a material adverse effect on the financial condition or operations of the Company.

Item 1A. Risk Factors

There have been no material changes in the Risk Factors previously disclosed in Item 1A of the 2023 Annual Report.

​

Item 2. Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities

(a)	Not applicable.
(b)	Not applicable.
---	---

(c)Stock Repurchases. The following table sets forth information with respect to our repurchases of our outstanding common shares during the three months ended June 30, 2024:

​

​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	Total number of	​
​	​	Total	​	​	Average	​	shares purchased	​	Maximum number of
​	​	number of	​	​	price	​	as part of	​	shares that may yet be
​	​	shares	​	​	paid	​	publicly announced	​	purchased under the
​	​	purchased	​	​	per share	​	plans or programs	​	plans or programs (1)
April 1, 2024 - April 30, 2024		98,546		$	20.25	​	98,546		63,086
May 1, 2024 - May 31, 2024		60,118	​	​	20.39	​	60,118		562,968
June 1, 2024 - June 30, 2024		46,130	​	​	19.71	​	46,130		516,838
​		204,794	​	$	20.17	​	204,794		​

​

​

​

​

(1)

In May 2024, the Company’s Board of Directors approved the Company’s ninth stock repurchase program, which commenced following completion of the eighth stock repurchase program in June 2024, authorizing the purchase of up to 560,000 shares, or approximately 5.0%, of the Company’s outstanding common stock over a one-year period. Purchases under the Company’s stock repurchase programs may be made through open market purchases, privately negotiated transactions, or otherwise in compliance with Rule 10b-18 under the Securities Exchange Act of 1934. The repurchase programs may be suspended, terminated, or modified at any time for any reason, including market conditions, the cost of repurchasing shares, the availability of alternative investment opportunities, liquidity, and other factors deemed appropriate. The Company’s stock repurchase programs do not obligate the Company to purchase any specific number of shares.

​

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​

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​

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable. 58

Table of Contents Item 5. Other Information

(a)	Not applicable.
(b)	Not applicable.
---	---

(c)  Trading Plans. During the three months ended June 30, 2024, no director or officer (as defined in Rule 16a-1(f) under the Exchange Act) of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

Item 6. Exhibits

​

3.1	Articles of Incorporation of BayCom Corp^(1)^
3.2	Amended and Restated Bylaws of BayCom Corp^(2)^
10.1	BayCom Corp 2024 Omnibus Incentive Plan^(3)^
10.2	Form of Incentive Stock Option Agreement under the BayCom Corp 2024 Omnibus Incentive Plan^(4)^
10.3	Form of Non-Qualified Stock Option Agreement under the BayCom Corp 2024 Omnibus Incentive Plan^(4)^
10.4	Form of Restricted Stock Agreement under the BayCom Corp 2024 Omnibus Incentive Plan^(4)^
10.5	Form of Restricted Stock Unit Agreement under the BayCom Corp 2024 Omnibus Incentive Plan^(4)^
31.1<br><br>31.2	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002<br><br>Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32	Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101	The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2024 formatted in Extensible Business Reporting Language (XBRL): (1) Condensed Consolidated Balance Sheets; (2) Condensed Consolidated Statements of Income; (3) Condensed Consolidated Statements of Comprehensive Income; (4) Condensed Consolidated Statements of Changes in Stockholders’ Equity; (5) Condensed Consolidated Statements of Cash Flows; and (6) Notes to Condensed Consolidated Financial Statements.
104	Cover Page Interactive Data File (embedded within the Inline XBRL document).

​

(1)	Filed as an exhibit to the Registrant’s Registration Statement on Form S-1 filed with the SEC on April 11, 2018 (File No. 333-224236) and incorporated herein by reference.
(2)	Filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the SEC on June 17, 2020 (File No. 001-38483) and incorporated herein by reference.
---	---
(3)	Included as Appendix A to the Registrant’s Definitive Proxy Statement on Schedule 14A filed with the SEC on April 26, 2024 (File No. 001-38483) and incorporated herein by reference.
---	---
(4)	Filed as an exhibit to the Registrant’s Registration Statement on Form S-8 filed with the SEC on June 24, 2024 (File No. 333-280442) and incorporated herein by reference.
---	---

​ 59

Table of Contents SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

​

		BAYCOM CORP
		Registrant
Date: August 9, 2024	By:	/s/ George J. Guarini
		George J. Guarini
​	​	President and Chief Executive Officer
​	​	(Principal Executive Officer)
​	​	​
Date: August 9, 2024	By:	/s/ Keary L. Colwell
		Keary L. Colwell
​	​	Senior Executive Vice President, Chief Financial Officer and Secretary<br><br>(Principal Financial and Accounting Officer)

​

​

​ 60

Exhibit 31.1

​

Rule 13a-14(a) Certification

​

I, George Guarini, certify that:

​

1.         I have reviewed this quarterly report on Form 10-Q of BayCom Corp.

​

2.         Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

​

3.         Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

​

4.         The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

​

a)         Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

​

b)         Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

​

c)         Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

​

d)         Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

​

5.         The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors:

​

a)         All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

​

b)        Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

​

ug
Date: August 9, 2024	/s/ George Guarini
	George Guarini
	Chief Executive Officer

​

Exhibit 31.2

​

Rule 13a-14(a)Certification

​

I, Keary Colwell, certify that:

​

1         I have reviewed this quarterly report on Form 10-Q of BayCom Corp.

​

2.        Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

​

3.        Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

​

4.        The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

​

a)        Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

​

b)        Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial instruments for external purposes in accordance with generally accepted accounting principles;

​

c)        Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

​

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

​

5.        The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors:

​

a)        All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

​

b)       Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

​

Ugust 10
Date: August 9, 2024	/s/ Keary Colwell
	Keary Colwell
	Senior Executive Vice President,
	Chief Financial Officer and Secretary

​

Exhibit 32

​

Section 1350 Certification

​

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 each of the undersigned hereby certifies in his or her capacity as an officer of BayCom Corp (“the Company”) that the Quarterly Report of the Company on Form 10-Q for the period ended June 30, 2024, fully complies with the requirements of Section 13(a) of the Securities and Exchange Act of 1934, as amended, and that the information contained in such report fairly represents, in all material respects, the financial statements included in such report.

​

Ugust
Date: August 9, 2024	/s/ George Guarini
	George Guarini
	Chief Executive Officer
Date: August 9, 2024	/s/ Keary Colwell
	Keary Colwell Senior Executive Vice President,
	Chief Financial Officer and Secretary

​