Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

All references to "we," "us," "our," or the "Company" means Private Bancorp of America, Inc. and its wholly-owned subsidiary CalPrivate Bank. All references to the "Bank" refer to CalPrivate Bank.

This Quarterly Report on Form 10-Q contains information and statements that are considered "forward looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). These forward-looking statements represent plans, estimates, objectives, goals, guidelines, expectations, intentions, projections, and statements of our beliefs concerning future events, business plans, objectives, expected operating results, and the assumptions upon which those statements are based. Forward-looking statements include without limitation, any statement that may predict, forecast, indicate, or imply future results, performance, or achievements and are typically identified with words such as "may," "could," "should," "will," "would," "believe," "anticipate," "estimate," "expect," "intend," "plan," or words or phrases of similar meaning.

We caution that the forward-looking statements are based largely on our expectations and are subject to a number of known and unknown risks and uncertainties that are subject to change based on factors, which are, in many instances, beyond our control. Actual results, performance or achievements could differ materially from those contemplated, expressed, or implied by the forward-looking statements.

The following factors, among others, could cause our financial performance to differ materially from that expressed in such forward-looking statements:

If one or more of the factors affecting our forward-looking information and statements proves incorrect, then our actual results, performance, or achievements could differ materially from those expressed in, or implied by, forward-looking information and statements contained in this Quarterly Report on Form 10-Q and other reports and registration statements filed by us with the SEC. Therefore, we caution you not to place undue reliance on our forward-looking information and statements. We will not update the forward-looking information and statements to reflect actual results or changes in the factors affecting the forward-looking information and statements. For information on the factors that could cause actual results to differ from the expectations stated in the forward-looking statements, see Item 1A. Risk Factors of our Registration Statement on Form 10 (File No. 001-43397), initially filed with the SEC on July 13, 2026, as amended by Amendment No. 1, filed with the SEC on July 17, 2026 (together, the "Form 10"), which was declared effective by the SEC on July 29, 2026, and other reports as filed with the SEC.

Forward-looking information and statements should not be viewed as predictions, and should not be the primary basis upon which investors evaluate us. Any investor in our common stock should consider all risks and uncertainties disclosed in our filings with the SEC, all of which are accessible on the SEC's website at http://www.sec.gov.

General

Management's discussion and analysis of financial condition and results of operations is intended to provide a better understanding of the significant changes in trends relating to the Company's financial condition, results of operations, liquidity, and capital resources. This discussion should be read in conjunction with our Form 10, plus the unaudited condensed consolidated financial statements and the notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q. The results for the three and nine months ended September 30, 2026 are not necessarily indicative of the results expected for the year ending December 31, 2026.

Overview

The Company was incorporated in California in 2015 and is a registered bank holding company headquartered in La Jolla, California. Our wholly owned subsidiary, CalPrivate Bank, was founded in 2006 and is a California state-chartered commercial bank with deposits insured by the FDIC.

We are a relationship-based bank that specializes in serving the unique needs of our private banking clients, the businesses they own and operate, and the advisors that serve them. We organize our business development activities and operations around three categories - private banking, business banking, and SBA lending. We leverage our deep understanding of our clients' banking needs, coupled with innovative technology, to deliver customized banking products and services for our private and business banking clients, which include high-net-worth individuals, real estate entrepreneurs, professionals, closely-held businesses, and for-profit and nonprofit businesses. At September 30, 2026, we served our clients from our seven branches located throughout coastal Southern California, specifically Beverly Hills, Coronado, La Jolla, Montecito, Newport Beach, San Diego and El Segundo, California. At September 30, 2026, we had total assets of $2.75 billion, total deposits of $2.41 billion, and total equity of $291.3 million, and the Bank was considered "well capitalized" for regulatory capital purposes at that date.

Critical Accounting Policies and Estimates

Management has established various accounting policies that govern the application of accounting principles generally accepted in the United States ("GAAP") in the preparation of our financial statements. Certain accounting policies require management to make estimates and assumptions that involve a significant level of estimation uncertainty and are reasonably likely to have a material impact on the carrying value of certain assets and liabilities as well as the Company's results of operations, which management considers to be critical accounting policies. The estimates and assumptions management uses are based on historical experience and other factors, which management believes to be reasonable under the circumstances. Actual results could differ significantly from these estimates and assumptions, which could have a material impact on the carrying value of the Company's assets and liabilities as well as the Company's results of operations in future reporting periods. The Company's critical accounting policies consist of the allowance for credit losses and deferred tax assets and income taxes. Please see Item 2. Financial Information in the Company's Form 10 for additional discussion concerning these critical accounting policies. Also, our significant accounting policies are described in Note 1. Summary of Significant Accounting Policies of the audited consolidated financial statements in our Form 10.

Pursuant to the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"), as an emerging growth company, we can elect to opt out of the extended transition period for adopting any new or revised accounting standards. We have elected to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we will adopt the standard on the application date for public companies.

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

The following is a discussion of these critical accounting policies and significant estimates that require us to make complex and subjective judgments.

Allowance for Credit Losses

We account for credit losses on loans held for investment under the current expected credit loss ("CECL") methodology. The allowance for credit losses represents management's estimate of expected lifetime credit losses in the loan portfolio and expected losses on unfunded lending commitments as of the balance sheet date. The estimate is based on relevant available information, including historical credit loss experience, current portfolio conditions, reasonable and supportable economic forecasts, loan risk characteristics, collateral values, borrower-specific information, and qualitative factors.

For loans that share similar risk characteristics, management estimates expected credit losses on a collective basis. Effective July 1, 2026, we implemented a new third-party CECL estimation model for loans held for investment and unfunded lending commitments. The new model uses more granular segmentation based on shared risk characteristics and incorporates exposure at default, probability of default, loss given default, prepayment assumptions and expected utilization of unfunded commitments. For modeled economic forecasts, we use a 24-month reasonable and supportable forecast period followed by a six-month straight-line reversion to historical experience. Management reviews economic scenario weights and other model assumptions each reporting period and applies qualitative adjustments when the quantitative model does not fully capture expected losses.

Effective July 1, 2026, we implemented the new CECL model prospectively as a change in accounting estimate. The model change resulted in approximately $0.8 million of provision for credit losses, primarily reflecting an increase in the reserve for unfunded commitments under the facility-level utilization methodology. The provision for the three months ended September 30, 2026 also includes subsequent activity under the new model, as discussed under Provision for Credit Losses below. The estimated after-tax effect of the model change was a $0.5 million decrease in net income, or $0.09 per basic share and $0.09 per diluted share, for both the three and nine months ended September 30, 2026. See Note 3 for additional information.

Management also applies qualitative adjustments when the model output does not fully capture expected credit losses. These adjustments may reflect management's assessment of current and expected economic conditions, credit concentrations, collateral-specific risks, regulatory and external factors, model limitations, underwriting changes, portfolio segmentation, and other factors that may affect expected credit losses. After the July 1 model change, management refined the qualitative scoring for appraisal age in relation to combined loan-to-value and for underwriting policy exceptions in relation to recent origination volume. These refinements reduced qualitative adjustments in subsequent quarterly estimates, partly offset by higher adjustments for construction policy exceptions and C&I past-due loans. Because these judgments are inherently subjective, changes in the underlying assumptions or in management's assessment of credit risk could materially affect the allowance for credit losses and provision for credit losses. At September 30, 2026, scenario weights were 20% Base, 40% Downside and 40% Severe Downside, unchanged from the July 1 model change. As an illustration, weighting the Base, Downside and Severe Downside scenarios at 40%, 30% and 30%, respectively, would reduce the quarter-end quantitative allowance for pooled loans by approximately $1.5 million, with other model assumptions unchanged. This illustration excludes qualitative adjustments, individually evaluated loans and unfunded reserves.

Loans that do not share risk characteristics with other loans are evaluated individually. These loans generally include nonaccrual loans and collateral-dependent loans. For collateral-dependent loans, expected credit losses are measured based on the fair value of the collateral, less estimated costs to sell when applicable. This estimate is sensitive to changes in collateral values, appraisal assumptions, market conditions, expected liquidation timing and estimated selling costs.

The provision for credit losses is directly affected by changes in the allowance for credit losses. The allowance for credit losses is sensitive to changes in portfolio composition, borrower risk ratings, nonaccrual and past due loans, collateral values, charge-off experience, economic forecasts, probability weighting of economic scenarios, qualitative factors and model calibration.

Deferred Tax Assets and Income Taxes

Deferred tax assets and liabilities are recognized for temporary differences between the financial statement carrying amounts of assets and liabilities and their tax bases. Management evaluates deferred tax assets for realizability and records a valuation allowance when, based on available evidence, it is more likely than not that some portion or all of the deferred tax asset will not be realized. This assessment requires judgment regarding future taxable income, the timing of reversals of temporary differences, tax planning strategies, tax credit utilization, and changes in applicable tax laws and rates.

The estimate is subject to uncertainty because future taxable income, tax law changes, state apportionment, utilization of tax credits and discrete tax items may differ from management's assumptions. Changes in those assumptions could affect the amount of deferred tax assets recognized and the provision for income taxes.

Non-GAAP Financial Measures

The Company uses certain non-GAAP financial measures to provide meaningful supplemental information regarding the Company's operational performance and to enhance investors' overall understanding of such financial performance. Generally, a non-GAAP financial measure is a numerical measure of a company's financial performance, financial position, or cash flows that exclude (or include) amounts that are included in (or excluded from) the most directly comparable measure calculated and presented in accordance with GAAP. However, these non-GAAP financial measures are supplemental and are not a substitute for an analysis based on GAAP measures and may not be comparable to non-GAAP financial measures that may be presented by other companies. Management believes that these non-GAAP financial measures provide useful information to gain an understanding of the operating results of our core business.

Efficiency Ratio

For the periods presented below, efficiency ratio is a non-GAAP financial measure derived from GAAP-based amounts. This figure is calculated by dividing noninterest expense by total net interest income and noninterest income. Management believes this measure provides investors with useful supplemental information regarding our operating efficiency by showing the portion of revenue used to support noninterest expense.

Pre-tax Pre-Provision Net Revenue

For the periods presented below, pre-tax pre-provision net revenue is a non-GAAP financial measure derived from GAAP-based amounts. This figure is calculated as net interest income plus noninterest income, less noninterest expense, before provision for credit losses and income tax expense. Management believes this measure provides investors with useful supplemental information regarding our ability to generate earnings from operations before the effects of credit loss provisioning and income taxes. The following table reconciles net income to pre-tax pre-provision net revenue:

Return on Average Tangible Common Equity

For the periods presented below, return on average tangible common equity is a non-GAAP financial measure derived from GAAP-based amounts. This figure is calculated by dividing net income, annualized for interim periods, by average tangible common equity, which is average shareholders' equity less average intangible assets. Management believes this measure provides investors with useful supplemental information regarding returns generated on tangible common equity.

Tangible Book Value Per Share

For the periods presented below, tangible book value per share is a non-GAAP financial measure derived from GAAP-based amounts. This figure is calculated by dividing total tangible equity, which is total equity less total intangible assets, by shares

outstanding. Management believes this measure provides investors with useful supplemental information regarding the Company's tangible net asset value on a per share basis.

Results of Operations

The following is a discussion and analysis of our results of operations for the three and nine months ended September 30, 2026 and 2025. The results of operations for the three and nine months ended September 30, 2026 are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2026.

Net income and Profitability

Net income was $11.4 million for the three months ended September 30, 2026, compared to $9.7 million for the three months ended September 30, 2025. The increase was primarily due to a $4.8 million increase in net interest income and a $531 thousand favorable change in provision for credit losses, partially offset by a $737 thousand decrease in noninterest income, a $2.5 million increase in noninterest expense and a $407 thousand increase in provision for income taxes. Diluted earnings per common share were $1.97 for the three months ended September 30, 2026, compared to $1.65 for the same period in 2025. Return on average assets was 1.65% for the three months ended September 30, 2026, compared to 1.51% for the same period in 2025, and return on average equity was 15.53%, compared to 15.16%. Return on average tangible common equity, a non-GAAP financial measure, was 15.62% for the three months ended September 30, 2026, compared to 15.28% for the same period in 2025. The increases in return on average equity and return on average tangible common equity were primarily due to higher net income, partially offset by growth in average shareholders' equity and average tangible common equity. See the section entitled "Non-GAAP Financial Measures" for a reconciliation of return on average tangible common equity to the most directly comparable GAAP measure.

Pre-tax pre-provision net revenue, a non-GAAP financial measure, was $17.2 million for the three months ended September 30, 2026, compared to $15.6 million for the three months ended September 30, 2025. The increase was primarily due to higher net interest income, driven by higher interest income from loans and investment securities and lower interest expense on deposits. The increase in net interest income was partially offset by lower noninterest income, primarily due to lower gain on sale of SBA loans, and higher noninterest expense, primarily due to higher administrative and other expense, compensation and employee benefits, and professional services. See the section entitled "Non-GAAP Financial Measures" for a reconciliation of pre-tax pre-provision net revenue to the most directly comparable GAAP measure.

Net income was $36.6 million for the nine months ended September 30, 2026, compared to $30.7 million for the nine months ended September 30, 2025. The increase was primarily due to a $13.1 million increase in net interest income and a $308 thousand favorable change in provision for credit losses, partially offset by a $1.1 million decrease in noninterest income, a $5.3 million increase in noninterest expense and a $1.2 million increase in provision for income taxes. Diluted earnings per common share were $6.31 for the nine months ended September 30, 2026, compared to $5.22 for the same period in 2025. Return on average assets was 1.84% for the nine months ended September 30, 2026, compared to 1.64% for the same period in 2025, and return on average equity was 17.38%, compared to 16.94%. Return on average tangible common equity, a non-GAAP financial measure, was 17.49% for the nine months ended September 30, 2026, compared to 17.09% for the same period in 2025. See the section entitled "Non-GAAP Financial Measures" for a reconciliation of return on average tangible common equity to the most directly comparable GAAP measure.

Pre-tax pre-provision net revenue, a non-GAAP financial measure, was $53.7 million for the nine months ended September 30, 2026, compared to $47.0 million for the nine months ended September 30, 2025. The increase was primarily due to higher net interest income, driven by higher interest income from loans and investment securities and lower interest expense on deposits and borrowings. The increase in net interest income was partially offset by lower noninterest income and higher noninterest expense, primarily due to higher compensation and employee benefits, administrative and other expense, and professional services. See the section entitled "Non-GAAP Financial Measures" for a reconciliation of pre-tax pre-provision net revenue to the most directly comparable GAAP measure.

Net Interest Income

Our primary source of revenue is net interest income, which is the difference between the interest and fees earned on loans and investments ("interest-earning assets") and the interest paid on deposits and borrowed funds ("interest-bearing liabilities"). Net interest margin is annualized net interest income as a percentage of average interest-earning assets for the period. Net interest income is affected by changes in volume, mix, and rates of interest-earning assets and interest-bearing liabilities, as well as days in a period.

Three months ended September 30, 2026 compared to three months ended September 30, 2025

Average Balance Sheet, Interest and Yield/Rate Analysis

The following table presents average balance sheet information, interest income, interest expense and the corresponding average yield earned and rates paid for the periods indicated. The average balances are daily averages and include both performing and nonperforming loans.

Net interest income increased $4.8 million, or 16.3%, to $34.1 million for the three months ended September 30, 2026, compared to $29.3 million for the three months ended September 30, 2025. Net interest margin increased 40 basis points to 5.05% for the three months ended September 30, 2026, compared to 4.65% for the same period in 2025. The increase in net interest income was driven by a $3.3 million increase in total interest income and a $1.4 million decrease in total interest expense, primarily due to higher average

balances of loans and investment securities, together with lower funding costs, including lower rates paid on deposits and a lower average balance of brokered deposits. The improvement in net interest margin reflected lower funding costs and a 7 basis point increase in the average yield on interest-earning assets.

Analysis of Changes in Interest Income and Expenses

Changes in our net interest income are a function of changes in volume and rates of interest-earning assets and interest-bearing liabilities. Changes in net interest income that are not a function of changes in volume and rates of interest-earning assets and interest-bearing liabilities are allocated proportionately to the change due to volume and the change due to rate. The following table presents the impact the volume and rate changes have had on our net interest income for the period indicated. For each category of interest-earning assets and interest-bearing liabilities, we have provided information on changes to our net interest income with respect to:

Total interest income increased $3.3 million, or 8.1%, to $44.6 million for the three months ended September 30, 2026, compared to $41.3 million for the same period in 2025. Interest income on loans was $39.1 million, interest income on investment securities was $2.9 million, and interest income on deposits in other financial institutions was $2.6 million. The increase in interest income was primarily due to higher interest income from loans and investment securities. Interest income on loans increased $2.3 million, reflecting a $58.5 million increase in average loan balances and a 23 basis point increase in loan yield. The increase in loan yield was primarily attributable to lower nonaccrual interest reversals. Nonaccrual interest reversals totaled $1.3 million for the three months ended September 30, 2025, reducing loan yield by approximately 25 basis points, and were nominal for the three months ended September 30, 2026. Interest income on investment securities increased $869 thousand, reflecting a $63.5 million increase in average investment securities balances and a 34 basis point increase in yield. Interest income on deposits in other financial institutions increased $198 thousand, reflecting a $54.5 million increase in average balances, partially offset by a 65 basis point decrease in yield.

Total interest expense decreased $1.4 million, or 12.1%, to $10.5 million for the three months ended September 30, 2026, compared to $11.9 million for the same period in 2025. The decrease was primarily driven by lower deposit costs, including a $403 thousand decrease in brokered deposit interest expense to $518 thousand, as average brokered deposits declined $35.5 million to $49.3 million. The total cost of deposits decreased 36 basis points to 1.66% for the three months ended September 30, 2026, compared to 2.02% for the same period in 2025. The decrease in total cost of deposits was primarily due to lower rates paid on interest-bearing deposit products and a reduction in average brokered deposits.

Nine months ended September 30, 2026 compared to nine months ended September 30, 2025

Average Balance Sheet, Interest and Yield/Rate Analysis

The following table presents average balance sheet information, interest income, interest expense and the corresponding average yield earned and rates paid for the periods indicated. The average balances are daily averages and include both performing and nonperforming loans.

Net interest income increased $13.1 million, or 15.0%, to $100.3 million for the nine months ended September 30, 2026, compared to $87.2 million for the nine months ended September 30, 2025. Net interest margin increased 41 basis points to 5.14% for the nine months ended September 30, 2026, compared to 4.73% for the same period in 2025. The increase in net interest income was driven by a $6.9 million increase in total interest income and a $6.2 million decrease in total interest expense. Total interest income increased primarily due to higher average balances of loans and investment securities and higher yields on investment securities. Total interest

expense decreased primarily due to lower rates paid on interest-bearing deposits and a lower average balance of brokered deposits. The improvement in net interest margin reflected lower funding costs, which more than offset a modest decrease in the average yield on interest-earning assets.

Analysis of Changes in Interest Income and Expenses

Changes in our net interest income are a function of changes in volume and rates of interest-earning assets and interest-bearing liabilities. Changes in net interest income that are not a function of changes in volume and rates of interest-earning assets and interest-bearing liabilities are allocated proportionately to the change due to volume and the change due to rate. The following table presents the impact the volume and rate changes have had on our net interest income for the period indicated. For each category of interest-earning assets and interest-bearing liabilities, we have provided information on changes to our net interest income with respect to:

Total interest income increased $6.9 million, or 5.6%, to $130.4 million for the nine months ended September 30, 2026, compared to $123.5 million for the same period in 2025. The increase was primarily due to higher interest income from loans and investment securities. Interest income on loans increased $4.7 million, reflecting a $61.6 million increase in average loan balances and a 9 basis point increase in loan yield. Interest income on investment securities increased $2.6 million, reflecting a $64.7 million increase in average investment securities balances and a 38 basis point increase in yield. These increases were partially offset by a $446 thousand decrease in interest income on deposits in other financial institutions, primarily reflecting a 62 basis point decrease in yield.

Total interest expense decreased $6.2 million, or 17.1%, to $30.1 million for the nine months ended September 30, 2026, compared to $36.3 million for the same period in 2025. The decrease was primarily driven by lower deposit costs, including a $2.7 million decrease in interest expense on brokered deposits as average brokered deposits decreased $75.7 million. The total cost of deposits decreased 45 basis points to 1.65% for the nine months ended September 30, 2026, compared to 2.10% for the same period in 2025. The decrease in total cost of deposits was primarily due to lower rates paid on interest-bearing deposit products and a reduction in average brokered deposits.

Provision for Credit Losses

The allowance for credit losses represents management's estimate of expected credit losses in the loan portfolio and unfunded lending commitments as of the balance sheet date. Factors impacting the allowance for credit losses include the risk characteristics of the loan portfolio, the level of nonperforming loans, net charge-offs, current and historical credit experience, local economic and credit conditions, collateral values, reasonable and supportable economic forecasts, and expected funding of lending commitments. The provision for credit losses is charged or reversed against earnings to maintain the allowance for credit losses at a level management believes is appropriate.

Three months ended September 30, 2026 compared to three months ended September 30, 2025

For the three months ended September 30, 2026, we recorded a provision for credit losses of $1.3 million, compared to $1.8 million for the three months ended September 30, 2025. The provision included $0.4 million for loans held for investment and $0.9 million for unfunded commitments. The provision for the three months ended September 30, 2026 included approximately $0.8 million associated with the July 1, 2026 CECL model change, primarily reflecting an increase in the reserve for unfunded commitments. The remaining $492 thousand of provision was recorded after the July 1 change and related primarily to loans held for investment. Apart from the model change impact, changes in the allowance for loans held for investment primarily reflected net loan growth, with originations and balance increases carrying higher reserve rates than loans paid off or paid down, as well as risk-rating downgrades and higher qualitative reserves for policy exceptions on newly originated construction loans. These effects were partially offset by lower estimated loss rates and qualitative reserves in other loan portfolios. Net recoveries totaled $899 thousand, including an $862 thousand recovery associated with additional OREO collateral on a previously charged-off loan balance.

Nine months ended September 30, 2026 compared to nine months ended September 30, 2025

For the nine months ended September 30, 2026, we recorded a provision for credit losses of $3.1 million, compared to $3.4 million for the nine months ended September 30, 2025. The decrease reflected a lower provision for loans held for investment of $2.3 million, compared to $3.9 million for the same period in 2025, partially offset by a provision for unfunded commitments of $762 thousand, compared to a reversal of $485 thousand for the same period in 2025. Net recoveries were $85 thousand, compared to net charge-offs of $2.3 million for the same period in 2025. Recoveries totaled $1.7 million for the nine months ended September 30, 2026, compared to no recoveries for the nine months ended September 30, 2025. The 2026 recoveries included $862 thousand on a previously charged-off loan upon acquisition of the collateral as OREO. Gross charge-offs declined from $2.3 million to $1.6 million over the same period. The current period included the July 1, 2026 CECL model change described above. Reserve changes during the first six months of 2026 reflected higher levels of past due loans, loan growth, increased weighting toward the downside economic scenario and annual updates to certain CECL model calibration assumptions and qualitative factors, particularly for multifamily and commercial and industrial loans, partially offset by loan payoffs, improvements in delinquency status and lower reserves for certain individually evaluated loans.

Noninterest Income

Noninterest income consists primarily of service charges on deposit accounts, net gains on sales of the guaranteed portions of SBA 7(a) loans, servicing income related to loans sold, and other fee income. The level and composition of noninterest income may fluctuate from period to period based on the volume and pricing of SBA loan sales and other fee-generating activities.

Three months ended September 30, 2026 compared to three months ended September 30, 2025

Noninterest income decreased $737 thousand, or 33.9%, to $1.4 million for the three months ended September 30, 2026, compared to $2.2 million for the three months ended September 30, 2025. The decrease was primarily due to lower gain on sale of SBA loans.

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

Service charges on deposit accounts. Service charges on deposit accounts decreased $17 thousand, or 3.2%, to $520 thousand for the three months ended September 30, 2026, compared to $537 thousand for the same period in 2025.

Gain on sale of SBA loans. Gain on sale of SBA loans decreased $671 thousand, or 66.6%, to $337 thousand for the three months ended September 30, 2026, compared to $1.0 million for the same period in 2025. The decline was primarily due to a lower volume of SBA loan sales, partially offset by higher premiums on the loans sold. The aggregate principal balance of SBA 7(a) guaranteed portions sold was approximately $6.1 million for the three months ended September 30, 2026, compared to $17.3 million for the same period in 2025. The weighted average premium received was 10.72% for the three months ended September 30, 2026, compared to 9.46% for the same period in 2025.

Servicing income, net. Servicing income, net increased $47 thousand, or 27.8%, to $216 thousand for the three months ended September 30, 2026, compared to $169 thousand for the same period in 2025, primarily due to lower servicing asset amortization and higher servicing fees on commercial and industrial loans, partially offset by lower servicing fees on non-real estate secured loans.

Other fees and miscellaneous income. Other fees and miscellaneous income decreased $96 thousand, or 21.0%, to $362 thousand for the three months ended September 30, 2026, compared to $458 thousand for the same period in 2025, primarily due to lower other non-customer income.

Nine months ended September 30, 2026 compared to nine months ended September 30, 2025

Noninterest income decreased $1.1 million, or 20.7%, to $4.4 million for the nine months ended September 30, 2026, compared to $5.5 million for the nine months ended September 30, 2025. The decrease reflected lower gains on sales of SBA loans and decreases in other fees and miscellaneous income and service charges, partially offset by higher servicing income.

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

Service charges on deposit accounts. Service charges on deposit accounts decreased $88 thousand, or 5.2%, to $1.6 million for the nine months ended September 30, 2026, compared to $1.7 million for the same period in 2025.

Gain on sale of SBA loans. Gain on sale of SBA loans decreased $752 thousand, or 37.6%, to $1.2 million for the nine months ended September 30, 2026, compared to $2.0 million for the same period in 2025. The decrease primarily reflected lower sales volume, partly offset by higher premiums on loans sold. The aggregate principal balance of SBA 7(a) guaranteed portions sold was approximately $25.6 million for the nine months ended September 30, 2026, compared to approximately $35.1 million for the same period in 2025. The weighted average premium was 10.43% for the nine months ended September 30, 2026, compared to 9.94% for the same period in 2025. Gain on sale of SBA loans for the nine months ended September 30, 2026 was also reduced by a $162 thousand premium reimbursement to an investor following the early payoff of a previously sold SBA loan.

Servicing income, net. Servicing income, net increased $12 thousand, or 2.5%, to $486 thousand for the nine months ended September 30, 2026, compared to $474 thousand for the same period in 2025, primarily due to higher servicing fees on commercial and industrial loans, partially offset by higher servicing asset amortization and lower servicing fees on non-real estate secured loans.

Other fees and miscellaneous income. Other fees and miscellaneous income decreased $316 thousand, or 23.3%, to $1.0 million for the nine months ended September 30, 2026, compared to $1.4 million for the same period in 2025, primarily due to lower loan referral fees and other non-customer income.

Noninterest Expense

Noninterest expense consists primarily of compensation and employee benefits, occupancy and equipment expense, data processing expense, professional services, and other operating expenses. The level and composition of noninterest expense are influenced by the Company's staffing levels, investments in technology and infrastructure, professional services needs, and other costs associated with operating and growing the business.

Noninterest expense was $18.4 million for the three months ended September 30, 2026, compared to $15.9 million for the three months ended September 30, 2025. Noninterest expense as a percentage of average assets was 2.66% for the three months ended

September 30, 2026, compared to 2.47% for the same period in 2025. The efficiency ratio, a non-GAAP financial measure, was 51.68% for the three months ended September 30, 2026, compared to 50.49% for the same period in 2025. The increase in the efficiency ratio reflected growth in noninterest expense that outpaced growth in total revenue. The Company continues to invest in people, processes and technology to scale the business and enhance its capabilities. See the section entitled "Non-GAAP Financial Measures" for a reconciliation of this measure to the most directly comparable GAAP measure.

Noninterest expense was $50.9 million for the nine months ended September 30, 2026, compared to $45.6 million for the nine months ended September 30, 2025. Noninterest expense as a percentage of average assets was 2.56% for the nine months ended September 30, 2026, compared to 2.44% for the same period in 2025. The efficiency ratio, a non-GAAP financial measure, was 48.66% for the nine months ended September 30, 2026, compared to 49.25% for the same period in 2025. The improvement in the efficiency ratio was primarily due to growth in net interest income that outpaced the increase in noninterest expense and the decrease in noninterest income. See the section entitled "Non-GAAP Financial Measures" for a reconciliation of this measure to the most directly comparable GAAP measure.

Three months ended September 30, 2026 compared to three months ended September 30, 2025

Noninterest expense increased $2.5 million, or 15.5%, to $18.4 million for the three months ended September 30, 2026, compared to $15.9 million for the three months ended September 30, 2025. The increase included $670 thousand of higher compensation and employee benefits, $539 thousand of higher professional services expense and $0.6 million of impairment expense on other real estate owned (OREO). Total noninterest expense reflected continued investment in personnel and capabilities to support the Company's growth and scale the business, as well as costs associated with becoming an SEC reporting company and listing the Company's common stock on NASDAQ.

The following table presents the primary components of our noninterest expense for the periods indicated:

Compensation and employee benefits. Compensation and employee benefits increased $670 thousand, or 6.2%, to $11.6 million for the three months ended September 30, 2026, compared to $10.9 million for the same period in 2025. The increase was primarily due to higher salaries and employee-related costs, reflecting continued investment in personnel and capabilities to support the Company's growth and scale the business.

Occupancy and equipment. Occupancy and equipment expense increased $103 thousand, or 12.2%, to $944 thousand for the three months ended September 30, 2026, compared to $841 thousand for the same period in 2025. The increase primarily reflected higher rent expense and depreciation on leasehold improvements. The Brea lease, which commenced in August 2026, contributed to the increase in rent expense.

Data processing. Data processing expense increased $47 thousand, or 3.3%, to $1.5 million for the three months ended September 30, 2026, compared to $1.4 million for the same period in 2025.

Professional services. Professional services expense increased $539 thousand, or 72.6%, to $1.3 million for the three months ended September 30, 2026, compared to $742 thousand for the same period in 2025. Professional services for the three months ended September 30, 2026 included $0.6 million related to the NASDAQ uplisting. The increase was primarily due to higher legal, audit, consulting and other professional fees, including costs associated with the Company's initiative to become an SEC reporting company and list its common stock on NASDAQ.

Director compensation and expenses. Director compensation and expenses increased $29 thousand, or 9.2%, to $344 thousand for the three months ended September 30, 2026, compared to $315 thousand for the same period in 2025. The increase primarily reflected higher director stock-based compensation and other director expenses, partially offset by lower director cash compensation. In 2025, compensation for services provided by the Chair as a non-employee director was paid separately under the Director Services

Agreement and recognized in professional services. Following the expiration of that agreement, compensation for those services is included in director fees in 2026. The increase also reflected higher expenses related to director travel and attendance at Board and Bank Board meetings.

Regulatory assessments. Regulatory assessments decreased $12 thousand, or 3.2%, to $362 thousand for the three months ended September 30, 2026, compared to $374 thousand for the same period in 2025. Regulatory assessments principally consist of FDIC deposit insurance and state regulatory assessments.

Administrative and other expense. Administrative and other expense increased $1.1 million, or 82.9%, to $2.4 million for the three months ended September 30, 2026, compared to $1.3 million for the same period in 2025. The increase was primarily due to the $0.6 million OREO impairment expense and $0.3 million NASDAQ initial listing fee.

Nine months ended September 30, 2026 compared to nine months ended September 30, 2025

Noninterest expense increased $5.3 million, or 11.5%, to $50.9 million for the nine months ended September 30, 2026, compared to $45.6 million for the nine months ended September 30, 2025. The increase primarily reflected higher compensation and employee benefits, administrative and other expense, and professional services. NASDAQ uplisting costs totaled approximately $1.4 million for the nine months ended September 30, 2026.

The following table presents the primary components of our noninterest expense for the periods indicated:

Compensation and employee benefits. Compensation and employee benefits increased $2.6 million, or 8.3%, to $33.5 million for the nine months ended September 30, 2026, compared to $30.9 million for the same period in 2025. The increase was primarily due to higher salaries and employee-related costs, reflecting continued investment in personnel and capabilities to support the Company's growth and scale the business.

Occupancy and equipment. Occupancy and equipment expense increased $153 thousand, or 6.1%, to $2.7 million for the nine months ended September 30, 2026, compared to $2.5 million for the same period in 2025.

Data processing. Data processing expense increased $185 thousand, or 4.5%, to $4.3 million for the nine months ended September 30, 2026, compared to $4.2 million for the same period in 2025.

Professional services. Professional services expense increased $763 thousand, or 34.9%, to $3.0 million for the nine months ended September 30, 2026, compared to $2.2 million for the same period in 2025. The increase was primarily due to higher legal and audit fees, including costs associated with the Company's initiative to become an SEC reporting company and list its common stock on NASDAQ, partially offset by lower consulting and other professional fees.

Director compensation and expenses. Director compensation and expenses increased $148 thousand, or 17.9%, to $974 thousand for the nine months ended September 30, 2026, compared to $826 thousand for the same period in 2025. The increase reflected higher director fees, director stock-based compensation and other director expenses. In 2025, compensation for services provided by the Chair as a non-employee director was paid separately under the Director Services Agreement and recognized in professional services. Following the expiration of that agreement, compensation for those services is included in director fees in 2026. The increase also reflected higher expenses related to director travel and attendance at Board and Bank Board meetings.

Regulatory assessments. Regulatory assessments increased $24 thousand, or 2.2%, to $1.1 million for the nine months ended September 30, 2026, compared to $1.1 million for the same period in 2025. Regulatory assessments principally consist of FDIC deposit insurance and state regulatory assessments.

Administrative and other expense. Administrative and other expense increased $1.4 million, or 36.7%, to $5.4 million for the nine months ended September 30, 2026, compared to $3.9 million for the same period in 2025. The increase primarily reflected the $0.6 million OREO impairment and the $0.3 million NASDAQ initial listing fee. OREO operating expense and subscription expense each increased by approximately $0.2 million.

Provision for Income Tax Expense

The Company is subject to federal income taxes and state and local income taxes, primarily California franchise taxes. The Company's effective tax rate generally differs from the federal statutory income tax rate primarily due to California state income taxes, tax credits, and other permanent and discrete tax items.

Three months ended September 30, 2026 compared to three months ended September 30, 2025

Provision for income tax expense increased $407 thousand, or 9.9%, to $4.5 million for the three months ended September 30, 2026, compared to $4.1 million for the three months ended September 30, 2025. The effective tax rate was 28.3% for the three months ended September 30, 2026, compared to 29.7% for the same period in 2025. The effective tax rate reflects refinements to the Company's quarterly income tax provision estimates as part of its transition to public company reporting.

Nine months ended September 30, 2026 compared to nine months ended September 30, 2025

Provision for income tax expense increased $1.2 million, or 8.9%, to $14.1 million for the nine months ended September 30, 2026, compared to $12.9 million for the nine months ended September 30, 2025. The effective tax rate was 27.8% for the nine months ended September 30, 2026, compared to 29.7% for the same period in 2025. The effective tax rate reflects refinements to the Company's quarterly income tax provision estimates as part of its transition to public company reporting.

Financial Condition

The following table summarizes selected components of our balance sheet as of the periods indicated:

Total Assets

Total assets were $2.75 billion at September 30, 2026, compared to $2.54 billion at December 31, 2025, an increase of $213.2 million, or 8.4%. The increase was primarily due to a $96.2 million increase in cash and cash equivalents, a $49.9 million increase in investment securities available for sale, a $58.1 million increase in loans held for investment, net of the allowance, and a $6.0 million increase in other real estate owned. The increase in cash and cash equivalents was primarily driven by deposit growth during the period. Investment securities available for sale increased $49.9 million, or 22.9%, to $267.7 million at September 30, 2026, compared to $217.8 million at December 31, 2025, primarily reflecting securities purchases partially offset by principal paydowns.

Loan Portfolio

Our loan portfolio is our largest category of earning assets and typically provides higher yields than other types of earning assets. These higher yields are accompanied by inherent credit risk, which we seek to manage through disciplined underwriting, ongoing portfolio monitoring and active credit administration.

Total loans, consisting of loans held for investment and loans held for sale, were $2.19 billion at September 30, 2026, compared to $2.13 billion at December 31, 2025. Loans held for investment were $2.19 billion at September 30, 2026, an increase of $60.5 million, or 2.8%, from December 31, 2025. Loans held for sale were zero at September 30, 2026, compared to $2.3 million at December 31,

2025. The increase was primarily due to growth in CRE loans, particularly multifamily and single-family-secured loans, partially offset by a decrease in commercial business loans, primarily commercial and industrial ("C&I") loans.

We continue to emphasize disciplined pricing, credit quality and loan retention while balancing loan growth against appropriate risk-adjusted returns.

The following table presents the balance and percentage of each major loan category within our portfolio as of the dates indicated:

Our loan portfolio is concentrated in CRE and commercial business lending, including SBA 7(a) and SBA 504 loans. CRE loans represented 80.3% and 76.1% of total loans at September 30, 2026 and December 31, 2025, respectively. Commercial business loans represented 19.5% and 23.7% of total loans at those same dates. Consumer loans represented less than 1.0% of loans held for investment for each period presented. We generally sell the guaranteed portion of SBA 7(a) loans in the secondary market when market conditions are favorable.

The following table presents the CRE loan balance and associated percentage of CRE concentrations by collateral type, as of the dates indicated:

The following table presents the total number of loans, total loan balances and average loan size of investor-owned CRE concentrations by collateral type along with the percentage of the total CRE portfolio as of the dates indicated.

The following table presents the balance, associated percentage of real estate loan concentrations and total count of CRE loans collateralized by properties outside of California as of the dates indicated: