BCML Baycom Corp - 10-K

Item 1A. Risk Factors

An investment in our common stock is subject to risks inherent in our business. Before making an investment decision, you should carefully consider the risks and uncertainties described below together with all the other information included in this Form 10-K. The risks described below are not the only ones we face. Additional risks and uncertainties not currently known to us or that we may currently deem to be immaterial may also materially and adversely affect our business, financial condition, capital levels, cash flows, liquidity, results of operations and prospects. The market price of our common stock could decline significantly due to any of these identified or other risks, and you could lose some or all of your investment. The risks discussed below include forward-looking statements, and our actual results may differ substantially from those discussed in these forward-looking statements. This Form 10-K is qualified in its entirety by these risk factors.

Risks Related to Macroeconomic Conditions

Our business may be adversely affected by downturns in the national economy and the regional economies in which we operate.

We provide banking and financial services primarily to businesses and individuals in the states of California, Colorado, Nevada, New Mexico, and Washington. All our branches and most of our deposit clients are located in these five states. Adverse economic conditions in our market areas could impact our growth rate, reduce our customers’ ability to repay loans, and adversely impact our business, financial condition, and results of operations.

Broader economic factors such as inflation, unemployment, money supply fluctuations, changes in monetary policy, and volatility in interest rate markets also may adversely affect our profitability. Uncertainty regarding the timing, magnitude or pace of potential interest rate changes by the Federal Reserve, particularly following a prolonged period of elevated rates or increased interest rate volatility, may negatively affect borrowing demand, asset yields, deposit pricing, credit performance, and overall economic activity in our market areas. Furthermore, trade disputes, tariffs, or shifts in trade policies between the United States and other nations could disrupt supply chains, increase costs for businesses, and reduce export opportunities for our customers. These developments may, in turn, negatively impact our customers’ operations and, consequently, our financial performance.

A downturn in economic conditions in the market areas we serve, in particular the San Francisco Bay Area, Southern California, Denver, Colorado, Seattle, Washington, Central New Mexico and the agricultural region of the California Central Valley, whether due to inflation, recessionary trends, geopolitical instability or conflicts, or environmental and climate-related events such as wildfires, floods, or other factors, could have a material adverse effect on our business, financial condition, liquidity, and results of operations, including but not limited to:

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Reduced demand for our products and services , potentially leading to a decline in our overall loans or assets.

Elevated levels of loan delinquencies, problem assets , and foreclosures .

An increase in our allowance for credit losses on loan s.

Depreciation in collateral values linked to our loans, thereby diminishing borrowing capacities and asset values tied to existing loans .

Reduced net worth and liquidity of loan guarantors , possibly impairing their ability to meet their commitments to us .

Reduction in our low-cost or noninterest -bearing deposits.

A decline in local or regional economic conditions may have a greater effect on our earnings and capital compared to larger financial institutions with more geographically diverse real estate loan portfolios. Because a significant portion of our loan portfolio is secured by real estate, deterioration in real estate markets, including stress in certain commercial real estate sectors, could impair borrowers’ ability to repay loans and reduce the value of the underlying collateral. Real estate values are influenced by a range of factors, including economic conditions, interest rates, government policies, natural disasters, construction and material availability, and other market or policy factors. Liquidating significant collateral during a period of depressed real estate values could negatively impact our financial condition and profitability.

Monetary policy, inflation, deflation, and other external economic factors could adversely impact our financial performance and operations.

Our financial condition and results of operations are influenced by monetary, fiscal, and trade policies, including those of the Federal Reserve, the U.S. Treasury, and other governmental authorities. Actions by these authorities may lead to inflation, deflation, changes in interest rates, or other economic conditions that could materially adversely affect our results of operations. Tariffs, supply-chain disruptions, or rising costs could reduce the ability of our clients, particularly small- and medium-sized businesses, to repay loans, negatively affecting credit quality and our financial performance. Prolonged inflation may increase operational costs, including wages and benefits, while fluctuations in interest rates and the yield curve can significantly impact our net interest income. Interest rates may not move in alignment with inflation or deflation, adding uncertainty to the economic environment.

Risks Related to Our Lending Activities

Nonperforming assets take significant time to resolve and adversely affect our results of operations and financial condition and could result in further losses in the future.

Nonperforming assets adversely affect our earnings and liquidity in various ways. We do not record interest income on nonaccrual loans or foreclosed assets, and nonaccrual loans and foreclosed assets increase our loan administration costs. Upon foreclosure or similar proceedings, we record the repossessed asset at its estimated fair value, less costs to sell, which may result in a write-down or loss. A significant increase in the level of nonperforming assets from current levels would also increase our risk profile and may impact the capital levels and supervisory expectations our regulators believe are appropriate in light of the increased risk profile. While we attempt to reduce problem assets through collection efforts, asset sales and workouts and restructurings, decreases in the value of the underlying collateral, including as a result of valuation uncertainty, reduced market liquidity, or refinancing challenges, or in the borrower’s performance or financial condition, could adversely affect our business, results of operations and financial condition. In addition, the resolution of nonperforming assets can require significant commitments of time from management, diverting their attention from other aspects of our operations, and may be prolonged due to market conditions, interest rate levels, or reduced liquidity for certain asset classes.

Many of our loans are to commercial borrowers, which have a higher degree of risk than other types of loans .

At December 31, 2025, we had $2.0 billion of commercial loans, consisting of $1.8 billion of commercial real estate and construction and land loans, representing 86.8% of total loans, and $175.4 million of commercial and industrial loans, representing 8.6% of total loans, where real estate is not the primary source of collateral. The $1.8 billion of

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commercial real estate loans includes $310.3 million of multifamily loans and $9.0 million of commercial construction and land loans.

Commercial loans typically involve larger principal amounts than other types of loans, and some of our commercial borrowers have more than one loan outstanding with us. Consequently, an adverse development related to a single loan or credit relationship poses a significantly greater risk of loss compared to one-to-four family residential mortgage loans. Repayment of commercial loans often depends on the cash flow generated by the business or property involved, making them more sensitive to adverse conditions in the real estate market, business climate, or economy. For loans secured by non-owner-occupied properties, repayments rely heavily on tenant rent payments, and downturns in the real estate market or economic conditions heighten repayment risks. In addition, many of our commercial real estate loans are not fully amortizing and require large balloon payments upon maturity. These balloon payments may require the borrower to either sell or refinance the property, and refinancing may be difficult or unavailable due to elevated interest rates, tighter underwriting standards, declining property values, or reduced lender appetite, heightening the risk of default or non-payment. If we foreclose on a commercial or multifamily real estate loan, the holding period for the collateral is typically longer than for one- to four-family residential loans as a result of the smaller pool of potential buyers.

C ommercial business loans are typically made based on the cash flow of the borrower and secondarily on the underlying collateral provided by the borrower.  A borrower’s cash flow can be unpredictable, and collateral securing these loans may fluctuate in value. For loans secured by accounts receivable, repayment is often dependent on the borrower’s ability to collect from clients, while other forms of collateral may be difficult to appraise, illiquid, or affected by business success. Increases in reserves and charge-offs related to our commercial and industrial loan portfolio could materially impact our business, financial condition, operations, and future prospects.

In recent years, the commercial real estate market has experienced substantial growth, with increased competition contributing to historically low capitalization rates and rising property values. More recently, the commercial real estate market has been affected by higher interest rates, tighter credit conditions, and changing economic and workplace dynamics. The adoption of remote and hybrid work models has led many companies to re-evaluate their long-term real estate needs. Although certain employers have increased in-office requirements, others are downsizing or shifting to hybrid models, and demand for office space in certain markets has remained structurally lower than pre-pandemic levels, creating uncertainty in demand for office space and other commercial properties. This trend could result in prolonged vacancies, declining rental income, refinancing challenges, and reduced property values, particularly for certain property types or markets, adversely affecting the performance of our commercial real estate loan portfolio. Federal banking regulators have increased their focus on commercial real estate exposures, particularly with respect to refinancing risk, collateral valuation, and borrower equity levels, which may subject us to heightened examination scrutiny, additional risk management expectations, or more conservative supervisory expectations. Failures in our risk management policies and controls could lead to higher delinquencies and losses, adversely affecting our business, financial condition, and results of operations.

Construction loans are based upon estimates of costs and values associated with the completed project. These estimates may be inaccurate, and we may be exposed to significant losses on loans for these projects.

Construction and land development loans totaled $9.0 million, or 0.4% of total loans as of December 31, 2025, nearly all of which were commercial real estate construction loans.

These types of loans involve additional risks because funds are advanced based on the project’s uncertain value prior to its completion, and costs may exceed realizable values in declining real estate markets. Because of the uncertainties inherent in estimating construction costs and the realizable market value of the completed project and the effects of governmental regulation of real property, it is relatively difficult to accurately evaluate the total funds required to complete a project and the related loan-to-value ratio. Higher than anticipated construction costs may cause actual results to vary significantly from those estimated. Further, this type of lending often involves larger loan principal amounts and might be concentrated among a limited number of builders. A downturn in the commercial real estate market could increase delinquencies, defaults and foreclosures and significantly impair the value of our collateral, hindering our ability to sell the collateral upon foreclosure. Builders with multiple loans heighten these risks, as adverse developments in one credit relationship can increase overall exposure. During the terms of some of our construction loans, borrowers do not make payments, as accumulated interest is added to the principal balance through an interest reserve. Consequently, repayment

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often depends on the project's success and the borrower's ability to sell or lease the property rather than solely on repayment capacity. Overstating project value, declining market conditions, or falling rental rates could result in insufficient collateral to secure loan repayment post-construction. Additionally, monitoring the building process requires on-site inspections and cost comparisons, adding to administrative costs.

Some construction loans include interest reserves, where accumulated interest is added to the loan principal rather than requiring borrower payments during the loan term. Rising market interest rates can rapidly deplete these reserves before project completion and increase borrowing costs for end-purchasers, potentially reducing their ability to finance the home or diminishing demand for the project. Properties under construction are also generally difficult to sell and often must be completed before a successful sale can occur, complicating the management of problem loans. If we foreclose on a defaulted construction loan during or before project completion, we might not recover the unpaid balance, accrued interest, or foreclosure costs. Further, completing unfinished projects may require additional funding, and we may need to hold properties for extended periods before disposing of them.

Our construction loans include speculative construction loans—projects without identified end-purchasers—which pose heightened risks due to market uncertainties. We also provide loans for land under development or held for future construction. These loans carry additional risks, including longer development timelines, exposure to real estate value declines, economic fluctuations, political changes affecting land use, and the collateral's illiquid nature. During these extended periods, the collateral typically generates no cash flow.

Our business may be adversely affected by credit risk associated with residential property.

At December 31, 2025, $113.2 million, or 5.5% of total loans, was secured by first liens on one-to-four family residential real estate . In addition, at December 31, 2025, our home equity loans and lines of credit totaled $4.8 million. A portion of our one-to-four family residential loan portfolio consists of jumbo loans, which exceed the maximum balance allowed for sale to Fannie Mae or Freddie Mac and therefore cannot be sold to these government-sponsored enterprises. These jumbo loans carry increased risk due to their larger balances and limited liquidity. In addition, one-to-four family residential loans are generally sensitive to regional and local economic conditions that affect borrowers’ ability to meet their loan payment obligations, making loss levels difficult to predict. A downturn in the housing market in our areas may reduce the value of the real estate collateral securing these loans, increasing the risk of loss in the event of borrower defaults. Recessionary conditions, decreased real estate sales volumes or prices, and elevated unemployment rates could lead to higher delinquencies, problem assets, and reduced demand for our products and services. These adverse conditions could result in losses and negatively impact our business, financial condition, and results of operations.

Agricultural lending and volatility in government regulations may adversely affect our financial condition and results of operations.

At December 31, 2025, agricultural loans, including agricultural real estate and operating loans, were $10.3 million, or 0.51% of total loans. Agricultural lending involves a greater degree of risk and typically involves higher principal amounts than other types of loans. Repayment is dependent upon the successful operation of the business, which is greatly dependent on many things outside the control of either us or the borrowers. These factors include adverse weather conditions that prevent the planting of crops or limit crop yields (such as hail, drought and floods), increasing climate variability and extreme weather events, loss of livestock due to disease or other factors, declines in market prices for agricultural products (both domestically and internationally), supply chain disruptions, and the impact of government regulations (including changes in price supports, subsidies, tariffs and environmental regulations, water usage restrictions, labor regulations, and environmental compliance requirements). Rising input costs, including fuel, fertilizer, labor, insurance, and equipment, may also adversely affect farm profitability and cash flows. In addition, many farms are dependent on a limited number of key individuals whose injury or death may significantly affect the successful operation of the farm. If the cash flow from a farming operation is diminished, the borrower’s ability to repay the loan may be impaired and the Bank may be unable to collect all principal and interest contractually due. Consequently, agricultural loans may involve a greater degree of risk than other types of loans, particularly in the case of loans that are unsecured or secured by rapidly depreciating assets such as farm equipment (some of which is highly specialized with a limited or no market for resale), or assets such as livestock or crops. In such cases, any repossessed collateral for a defaulted agricultural operating loan may not provide an adequate source of repayment of the outstanding loan balance as a result of the greater

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likelihood of damage, loss or depreciation, or because the assessed value of the collateral exceeds the eventual realization value.

The success of our SBA lending program is dependent upon the continued availability of SBA loan programs, our status as a preferred lender under the SBA loan programs and our ability to comply with applicable SBA lending requirements.

As an SBA Preferred Lender, we streamline the SBA loan process for clients by bypassing the lengthy approval procedures required for non-Preferred Lenders. The SBA periodically reviews participating lenders to evaluate risk management practices and compliance with evolving program requirements. If deficiencies are identified, the SBA may request corrective actions, impose restrictions, or revoke a lender’s Preferred Lender status. Losing this status could impair our ability to compete with other Preferred Lenders and materially affect our financial results.

Additionally, changes to the SBA program, such as adjustments to federal guaranty levels, program eligibility requirements, or funding allocations, including as a result of legislative, budgetary, or policy changes, could adversely impact our business, results of operations, and financial condition.

Historically, we have sold the guaranteed portion of our SBA 7(a) loans in the secondary market. These sales have resulted in gains or premiums on the sale of the loans and have created a stream of future servicing income. For the year ended December 31, 2025, we sold a total of $2.2 million in SBA loans (guaranteed portion) for a net gain of $152,000. There can be no assurance that we will be able to continue originating these loans, that a secondary market will continue to exist, that investor demand or market liquidity will remain at current levels, or that we will continue to realize premiums on future sales. Selling the guaranteed portion of SBA loans also exposes us to credit risk on the retained, non-guaranteed portion, as well as interest rate and valuation risk on loans held for sale prior to disposition.

To qualify for an SBA loan, a borrower must demonstrate an inability to secure conventional financing without the SBA guaranty. Accordingly, SBA loans in our portfolio often have weaker credit characteristics compared to other loans, increasing the risk of default during economic downturns, periods of elevated interest rates, or borrower financial distress. If a borrower defaults and the SBA determines there were deficiencies in how the loan was originated, funded, or serviced, the SBA may deny or reduce its guaranty, require us to repurchase the sold portion, delay payment on the guaranty, or seek recovery of losses. We have established a recourse reserve to cover estimated losses on the outstanding guaranteed portion of SBA loans. Significant increases to this reserve could reduce our net income and adversely affect our business, results of operations, and financial condition.

To meet our growth objectives, we may originate or purchase loans outside our market areas, which could affect the level of our net interest margin and nonperforming loans.

To achieve our desired loan portfolio growth, we have sought and may continue seeking opportunities to originate or purchase loans outside of our market area, whether individually, through participations, or in bulk or “pools.”  Prior to purchase, we perform certain due diligence procedures and may re-underwrite these loans to our underwriting standards. Although we anticipate acquiring loans with customary limited indemnities, this approach exposes us to heightened risks, particularly when acquiring loans in unfamiliar geographic areas or of a type where our management lacks substantial prior experience. Monitoring such loans also may pose greater challenges for us. Further, when determining the purchase price for these loans, management will make certain assumptions about, among other things, whether and when borrowers will prepay their loans, real estate market conditions, and our ability to successfully manage loan collections and, if necessary, dispose of acquired real estate through foreclosure.

To the extent that our underlying assumptions prove inaccurate or undergo unexpected changes, such as an unanticipated decline in the real estate market, the purchase price paid for  these loans could exceed the actual value, resulting in a lower yield or a loss of some or all of the loan principal. For instance, purchasing loan "pools" at a premium and experiencing earlier-than-expected loan prepayments would yield lower interest income than initially projected. Our success in growing our loan portfolio through loan purchases depends on our ability to price the loans properly and relies on the economic conditions in the geographic areas where the underlying properties or collateral for the acquired loans are

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located. Inaccurate estimates or declines in economic conditions or real estate values in the markets where we purchase loans could significantly adversely affect the level of our nonperforming loans and our results of operations.

Our allowance for credit losses may prove to be insufficient to absorb losses in our loan portfolio.

As with most financial institutions, we maintain an allowance for credit losses on loans to reserve for estimated potential losses on loans from defaults, which represents management's best estimate of expected credit losses inherent in the loan portfolio. Determining the appropriate level of the allowance for credit losses on loans involves estimating future losses at the time a loan is originated or acquired, incorporating a broad range of information and potential future economic scenarios. The determination of the appropriate level of the allowance for credit losses on loans inherently involves a high degree of subjectivity and requires us to make various assumptions and judgments about the collectability of our loan portfolio, including the creditworthiness of borrowers and the value of the real estate and other assets serving as collateral for the repayment of many of our loans. In determining the amount of the allowance for credit losses on loans, we review loans and our historical loss and delinquency experience and evaluate economic conditions. Management also recognizes that significant new growth in loan portfolios, new loan products, and the refinancing of existing loans can result in portfolios comprised of unseasoned loans that may not perform consistently with a historical or projected manner and will increase the risk that our allowance for credit losses on loans may be insufficient to absorb credit losses without signific ant additional provisions. If our assumptions are incorrect, our allowance for credit losses on loans may not be sufficient to cover actual losses, requiring additional provisions for credit losses on loans to replenish the allowance for credit losses on loans. Deterioration in economic conditions, new information regarding existing loans, identification of additional problem loans or relationships, and other factors, both within and outside of our control, may increase our loan charge-offs and/or otherwise require an increase in our provision for credit losses on loans.

Environmental and climate-related events, such as wildfires, flooding, mudslides, hurricanes, or other natural disasters, including recent events in our market regions, may adversely affect borrowers’ ability to repay loans, reduce collateral values, and increase uncertainty in estimating credit losses. Wildfires, in particular, pose significant risks to our loan portfolio and allowance for credit losses. While recent wildfires in Southern California that began in January 2025 do not appear to have materially affected our borrowers, future wildfires could cause borrower financial distress, impair repayment capacity, and increase loan defaults. Damage to or destruction of collateral, inadequate or unavailable insurance coverage, denied claims, rising insurance costs, and related economic disruptions, including business closures and job losses, could further increase credit risk. Our concentration of loans in wildfire-prone areas and the increasing frequency and severity of wildfires may heighten long-term credit risk and require increases to our allowance for credit losses, which could materially adversely affect our business, financial condition, and results of operations.

In addition, bank regulatory agencies periodically review our allowance for credit losses on loans.  Based on their assessment, they may require increased provisions or loan charge-offs.  Any increase in the provision for credit losses on loans negatively affects net income and could materially impact our financial condition, results of operations, and capital.

Risks Related to Market and Interest Rate Changes

Our profitability is vulnerable to interest rate fluctuations.

Our earnings and cash flows are largely dependent upon our net interest income, which is significantly affected by interest rates. Interest rates are highly sensitive to factors beyond our control, such as general economic conditions and policies set by governmental and regulatory bodies, particularly the Federal Reserve.  Increases in interest rates could reduce our net interest income, weaken the housing market by curbing refinancing activity and home purchases, and negatively affect the broader U.S. economy, potentially leading to slower economic growth or recessionary conditions.

We principally manage interest rate risk by managing our volume and mix of earning assets and funding liabilities. If we are unable to manage this risk effectively, our business, financial condition and results of operations could be materially affected.

Our net interest margin, the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities, can be adversely affected by interest rate changes. While yields on assets and costs of liabilities tend

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to move in the same direction, they may do so at different speeds, causing the margin to expand or contract. Because our interest-bearing liabilities often have shorter durations than our interest-earning assets, rising rates may increase funding costs faster than asset yields, compressing our net interest margin. Periods of volatile, elevated, or declining rates may affect net interest income in multiple ways. For example, floating-rate assets generally reprice more quickly than deposits, potentially reducing net interest income in falling rate environments. Changes in borrower refinancing behavior, including increased loan prepayments and mortgage-backed security redemptions, introduce reinvestment risk, as prepaid amounts may need to be reinvested at lower rates. Additionally, changes in the shape of the yield curve, such as flattening or inversion, can compress margins, particularly for institutions with significant fixed-rate assets.

Rising rates can also increase the cost of deposits and other funding sources. If deposit and borrowing rates rise faster than loan and investment yields, our net interest income and overall earnings could decline.

A substantial amount of our loans have adjustable interest rates, which may result in a higher incidence of default in a rising interest rate environment. Additionally, a significant portion of our adjustable-rate loans include interest rate floors that prevent the loan’s contractual interest rate from falling below a specified level. While interest rate floors may increase or stabilize interest income during periods of declining interest rates, they may also limit growth in interest income during periods of rising rates and increase the likelihood that borrowers will refinance when market rates decline. At December 31, 2025, approximately $1.4 billion, or 67.1% of our loan portfolio consisted of adjustable or floating-rate loans, and approximately $1.0 billion, or 51.1%, of those adjustable or floating-rate loans contained interest rate floors. Furthermore, when loans are at their floor interest rates, our interest income may not rise as quickly as our cost of funds during periods of increasing interest rates, which could compress net interest margin and materially and adversely affect our results of operations.

While we employ asset and liability management strategies to mitigate interest rate risk, unexpected, substantial, or prolonged rate changes could materially affect our financial condition and results of operations. Additionally, our interest rate risk models and assumptions may not fully capture the impact of actual rate changes on our balance sheet or projected operating results. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Interest Rate Sensitivity and Market Risk,” of this Form 10-K for a discussion of interest rate risk modeling and the inherent risks in modeling assumptions.

We may incur losses on our securities portfolio as a result of increases in interest rates.

Our securities portfolio may be impacted by fluctuations in market value, potentially reducing accumulated other comprehensive income and/or earnings.  These fluctuations may result from changes in market interest rates, rating agency actions, issuer defaults, issues with underlying securities, changes in market prices, or changes in investor demand. Our available-for-sale debt securities in an unrealized loss position are evaluated to determine whether the decline in fair value has resulted from credit losses or other factors. If a credit loss is identified, an allowance for credit losses is recorded, resulting in a charge against earnings.  Because available-for-sale securities are reported at estimated fair value, changes in interest rates can adversely affect our financial condition. The fair value of fixed-rate securities generally moves inversely with interest rate changes. Unrealized gains and losses on these securities are reported as a separate component of AOCI, net of tax.

Decreases in the fair value of securities available-for-sale resulting from increases in interest rates could have an adverse effect on shareholders’ equity.  Additionally, there is no assurance that the declines in market value will not result in credit losses, which would lead to additional provisions for credit losses that could have a material adverse effect on our net income and capital levels.

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Risks Related to our Merger and Acquisition Strategy

Our strategy of pursuing acquisitions exposes us to financial, execution, compliance and operational risks that could have a material adverse effect on our business, financial condition, results of operations and growth prospects.

A substantial part of our historical growth has been a result of acquisitions of other financial institutions, a strategy we plan to continue by evaluating and selectively acquiring entities that align with our client base and desired markets. However, the acquisition market is fiercely competitive, and we may encounter challenges in identifying suitable candidates that meet our acquisition standards and strategy. Our ability to compete relies on our financial resources, including cash reserves, liquidity, and the market price of our common stock.  Increased competition may also drive up acquisition costs, which fluctuate with market conditions. There have been instances in the past where we were unable to secure acquisitions at acceptable prices, and we anticipate similar challenges in the future. Furthermore, identifying attractive acquisition opportunities often involves meeting various conditions, such as obtaining regulatory approvals, a process that can be burdensome, time-consuming and unpredictable. Sustaining our historical growth rate may be difficult if we are unable to identify and acquire suitable acquisition targets. We have completed ten full bank acquisitions since 2010, which has enhanced our growth rate over the years.

Our pursuit of acquisitions may disrupt our business, and any equity that we issue as merger consideration may have the effect of diluting the value of your investment in the Company. Our acquisition activities strategy involves a number of significant risks, including:

Diverting management attention and resources toward identifying, evaluating, and negotiating potential acquisitions, potentially detracting from our existing business operations.

Reliance on estimates and judgments, which could be inaccurate, in evaluating credit, operational, management, and market risks of the target company or the assets and liabilities we aim to acquire.

Exposure to potential asset quality and credit risks.

Higher than expected deposit attrition;

Potential exposure to unknown or contingent liabilities from acquired banks and businesses, including regulatory and compliance issues.

The risk of not realizing expected revenue increases, cost savings, geographic or product expansions, or other projected acquisition benefits.

Costs and time required to integrate operations and personnel from the combined businesses.

Inconsistencies in standards, procedures, and policies that may adversely affect client and employee relationships;

Potential increase in operating expenses relative to operating income from the new operations.

Short-term adverse effects on our financial results, such as increases in general and administrative expenses initially, which potentially adversely affects our efficiency ratio.

Challenges related to the conversion and integration of financial and client data.

Borrowing funds or alternative financing methods, such as issuing common or convertible preferred stock, which may increase leverage, diminish liquidity, and result in dilution for existing shareholders.

Risks of impairment to goodwill, which would require a charge to earnings.

Any of the foregoing could have a material adverse effect on our business, financial condition, and results of operations.

Any expansion into new markets or new lines of business might not be successful.

As part of our strategic plan, we may consider expansion into new geographic markets. Such expansion might take the form of de novo branches or the acquisition of existing banks or branches. There are substantial risks associated with such efforts, including risks that (i) revenues from such activities might not be sufficient to offset the development, compliance, and other implementation costs, (ii) competing products and services and shifting market preferences might affect the profitability of such activities, and (iii) our internal controls might be inadequate to manage the risks associated with new activities. Furthermore, our unfamiliarity with new markets or lines of business might adversely affect the success of such actions. External factors, such as compliance with regulations, competitive alternatives and shifting market preferences, may also affect the ultimate implementation of a new line of business or offerings of new products, product

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enhancements or services. If any such expansions into new geographic or product markets are not successful, there could be an adverse effect on our financial condition and results of operations.

Risks Related to Accounting Matters

We may experience future goodwill impairment, which could reduce our earnings.

We performed our test for goodwill impairment at December 31, 2025 and the test concluded that recorded goodwill was not impaired. Our test of goodwill for potential impairment is based on a qualitative assessment by management that takes into consideration macroeconomic conditions, industry and market conditions, cost or margin factors, financial performance and share price. Our evaluation of the fair value of goodwill involves a substantial amount of judgment. If our judgment were incorrect, or if events or circumstances change, and an impairment of goodwill was deemed to exist, we would be required to write down our goodwill, resulting in a charge against earnings, which may materially adversely affect our results of operations.

Our reported financial results depend on management’s selection of accounting methods and certain assumptions and estimates, which, if incorrect, could cause unexpected losses in the future.

Our accounting policies and methods are fundamental to how we record and report our financial condition and results of operations. Management must exercise judgment in selecting and applying many of these accounting policies and methods so that they comply with generally accepted accounting principles and reflect management’s judgment regarding the most appropriate manner to report our financial condition and results of operations. In some cases, management must select the accounting policy or method to apply from two or more alternatives, any of which might be reasonable under the circumstances, yet might result in our reporting materially different results than would have been reported under a different alternative.

Certain accounting policies, most notably the allowance for credit losses, are critical to presenting our financial condition and results of operations. They require management to make difficult, subjective or complex judgments about matters that are uncertain. Materially different amounts could be reported under different conditions or using different assumptions or estimates. For more information, refer to “Critical Accounting Estimates” included in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations of this Form 10-K.

We are subject to an extensive body of accounting rules and best practices. Periodic changes to such rules may change the treatment and recognition of critical financial line items and affect our profitability.

Our business operations are significantly influenced by the extensive body of accounting regulations in the United States. Regulatory bodies regularly issue new guidance, altering accounting rules and reporting requirements, which can substantially affect the preparation and presentation of our financial statements. These changes may require enhanced judgments, additional data collection, new internal controls, or retrospective application, potentially leading to restatements of prior period financial statements or increased compliance costs .

Under the Current Expected Credit Loss (“CECL”) model, which we currently apply, financial assets carried at amortized cost, such as loans and held-to-maturity debt securities, are presented at the net amount expected to be collected. This forward-looking approach estimates expected credit losses by considering historical experience, current conditions, and reasonable and supportable forecasts affecting collectability. CECL contrasts with the prior “incurred loss” methodology under GAAP, which recognized losses only when they were probable. While CECL improves the timeliness of recognizing credit losses, its reliance on macroeconomic assumptions and forecasts may continue to introduce earnings volatility, particularly during periods of economic uncertainty, interest rate volatility, or changing credit conditions. In addition, CECL creates an accounting asymmetry: loan-related income is recognized periodically using the effective interest method, while expected credit losses are recognized up front. This asymmetry may give the impression of reduced profitability during periods of loan growth, particularly in higher-risk or rapidly changing economic environments, and relatively higher profitability during periods of stable or declining loan volumes, as income continues to accrue on loans with previously recognized losses.

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Risks Related to Cybersecurity, Third Parties and Technology

We are subject to certain risks in connection with our use of technology.

Our security measures may not be sufficient to mitigate the risk of a cyber-attack. Communications and information systems are essential to the conduct of our business, as we use such systems to manage our client relationships, our general ledger, and virtually all other aspects of our business. Our operations rely on the secure processing, storage, and transmission of confidential and other information in our computer systems and networks. The security of our computer systems, software, and networks may be vulnerable to breaches, fraudulent or unauthorized access, denial or degradation of service, attacks, misuse, computer viruses, malware, or other malicious code and cyber-attacks that could result in the loss, misappropriation, or exposure of sensitive information and disruption of operations. If one or more of these events occur, our or our clients’ confidential information may be compromised, and our operations and those of our clients and counterparties may be disrupted. We may be required to expend significant additional resources to modify our protective measures or to investigate and remediate vulnerabilities or other exposures, and we may be subject to litigation and financial losses that are either not insured against or not fully covered through any insurance maintained by us.

Security breaches in our internet banking activities may expose us to liability, loss of business, and damage to our reputation. Increases in criminal activity levels and sophistication, advances in computer capabilities, new discoveries, vulnerabilities in third party technologies (including browsers and operating systems), or other developments could result in a compromise or breach of the technology, processes and controls that we use to prevent fraudulent transactions, and to protect data about us, our clients, and underlying transactions. Any compromise of our security may result in loss of clients and business, disruption of operations, financial loss, or damage to our reputation. These events could have a material adverse effect on our business, financial condition and results of operations.

Our security measures may not protect us from system failures or interruptions. We have established policies and procedures to prevent or limit the impact of system breaches, failures and interruptions. In addition, we outsource certain aspects of our data processing and other operational functions to certain third-party providers. If our third-party providers encounter difficulties, including breakdowns or disruptions in communication services, failure to handle transaction volumes, cyber-attacks or security breaches, or if we otherwise have difficulty in communicating with them, our ability to adequately process and account for transactions will be affected, and our ability to deliver products and services and conduct operations will be disrupted. Replacing these third-party vendors may cause significant delays and expenses. Threats to information security also exist in the processing of client information through other vendors and their personnel. If such breaches, failures, or interruptions occur, we may be unable to prevent or mitigate their impact.

Further, insurance may not cover all losses resulting from breaches, system failures, or other disruptions. The occurrence of any system failure or interruption may damage our reputation, result in loss of clients and business, subject us to regulatory scrutiny, and expose us to legal liability. Any of these occurrences could have a material adverse effect on our financial condition and results of operations.

Our current and future uses of Artificial Intelligence (AI) and other emerging technologies may create additional risks.

The increasing adoption of AI in financial services presents a range of risks that could impact our operations, regulatory compliance, and customer trust. AI introduces model risk, where flawed algorithms or biased data could result in inaccurate credit decisions, compliance violations, or discriminatory outcomes in lending or customer service. Cybersecurity threats, such as data breaches, adversarial attacks, and data poisoning, pose significant challenges, particularly as these systems handle large volumes of sensitive customer information. Additionally, the opaque nature of some AI models, often referred to as "black-box" systems, raises regulatory compliance concerns, as regulators increasingly require transparency and explainability in AI-driven decision-making.

Operational risks also arise from potential system failures, over-reliance on AI, and integration challenges with existing infrastructure. Disruptions in AI systems could impact critical functions such as fraud detection, transaction monitoring, and customer support. Ethical and reputational risks, including unintended consequences or perceived unfairness in AI-driven decisions, may erode customer trust and expose us to regulatory scrutiny.

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Mitigating these risks requires a robust governance framework, regularly testing and auditing of AI models, and strong human oversight. Investments in cybersecurity, data privacy protections, and employee training are critical to managing these risks.

We are subject to certain risks in connection with our data management or aggregation.

We are reliant on our ability to manage data and our ability to aggregate data in an accurate and timely manner to ensure effective risk reporting and decision-making. Deficiencies in how data is acquired, validated, stored, protected, or processed, as well as the manual nature of many of our data management and aggregation processes, could lead to human error or system failures. Inaccurate, incomplete, or delayed data could limit our ability to identify, measure, and manage current and emerging risks, impair management decision-making, and hinder our ability to respond to changing business conditions. These shortcomings could also adversely affect our financial reporting, regulatory compliance, operational efficiency, and strategic initiatives. Any of these outcomes could materially and adversely affect our business, financial condition, results of operations, and growth prospects.

Our business may be adversely affected by an increasing prevalence of fraud and other financial crimes.

As a bank, we are susceptible to fraudulent activity, information security breaches and cybersecurity related incidents that may be committed against us or our clients, which may result in financial losses or increased costs to us or our clients, disclosure or misuse of our information or our client information, misappropriation of assets, privacy breaches against our clients, litigation or damage to our reputation. Such fraudulent activity may take many forms, including check fraud, electronic fraud, wire fraud, phishing, social engineering and other dishonest acts. Nationally, reported incidents of fraud and other financial crimes have increased. We are not aware that we have experienced any material misappropriation, loss or other unauthorized disclosure of confidential or personally identifiable information as a result of a cyber-security breach or other act; however, some of our clients may have been affected by these breaches, which could increase their risks of identity theft, credit card fraud and other fraudulent activity that could involve their accounts with us. While we have policies and procedures designed to prevent such losses, there can be no assurance that such losses will not occur.

The financial services market is undergoing rapid technological changes, and if we are unable to stay current with those changes, we will not be able to effectively compete.

The financial services market, including banking services, is undergoing rapid changes with frequent introductions of new technology-driven products and services. Our future success will depend, in part, on our ability to keep pace with technological changes and to use technology to satisfy and increase customer demand for our products and services and to create additional efficiencies in our operations. We expect that we will need to make substantial investments in our technology and information systems to compete effectively and to stay current with technological changes. Some of our competitors have substantially greater resources to invest in technological improvements and will be able to invest more heavily in developing and adopting new technologies, which may put us at a competitive disadvantage. We may not be able to effectively implement new technology-driven products and services or be successful in marketing these products and services to our customers. As a result, our ability to effectively compete to retain or acquire new business may be impaired, and our business, financial condition or results of operations may be adversely affected .

Risks Related to Regulatory and Compliance Matters

The level of our commercial real estate loan portfolio may subject us to additional regulatory scrutiny.

The FDIC, the Federal Reserve and the Office of the Comptroller of the Currency have promulgated joint guidance on sound risk management practices for financial institutions with concentrations in commercial real estate lending. Under this guidance, a financial institution that, like us, is actively involved in commercial real estate lending, should perform a risk assessment to identify concentrations. A financial institution may have a concentration in commercial real estate lending if, among other factors, (i) total reported loans for construction, land development and other land represent 100.0% or more of total capital, or (ii) total reported commercial real estate loans (as defined in the guidance) represent 300.0% or more of total capital. The particular focus of the guidance is on exposure to commercial real estate loans that are dependent on the cash flow from the real estate held as collateral and that are likely to be at greater risk to

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conditions in the commercial real estate market (as opposed to real estate collateral held as a secondary source of repayment or as an abundance of caution). The purpose of the guidance is to assist banks in developing risk management practices and capital levels commensurate with the level and nature of their real estate concentrations. The guidance states that management should employ heightened risk management practices, including board and management oversight and strategic planning, development of underwriting standards, risk assessment and monitoring through market analysis and stress testing. As of December 31, 2025, the Bank’s aggregate recorded loan balances for construction, land development and land loans were 2.0% of total regulatory capital, while the Bank’s commercial real estate loans as calculated in accordance with regulatory guidance were 320.2% of total regulatory capital. As a result, we have concluded that we have a concentration in commercial real estate lending under the foregoing standards. While we believe we have implemented policies and procedures with respect to our commercial real estate loan portfolio consistent with this guidance, bank regulators could require us to implement additional policies and procedures consistent with their interpretation of the guidance that may result in additional costs to us.

We operate in a highly regulated environment and may be adversely affected by changes in federal and state laws and regulations that could increase our costs of operations.

The banking industry is extensively regulated. Federal banking regulations are designed primarily to protect the deposit insurance funds and customers, not to benefit a company’s shareholders. These regulations may sometimes impose significant limitations on our operations. The significant federal and state banking regulations that affect us are described in this Form 10-K under the heading “Item 1. Business — Supervision and Regulation.” These regulations, along with the currently existing tax, accounting, securities, insurance, privacy and monetary laws, regulations, rules, standards, and policies and interpretations, control the methods by which financial institutions conduct business, implement strategic initiatives and tax compliance, and govern financial reporting and disclosures. These laws, regulations, rules, standards, policies, and interpretations are constantly evolving and may change significantly over time. Any new regulation or legislation, or change in existing regulation or oversight, whether a change in regulatory policy or a change in a regulator’s interpretation of a law or regulation, could have a material impact on our operations, increase our costs of regulatory compliance and of doing business and adversely affect our profitability. For example, changes in consumer privacy laws, such as the recently enacted CCPA and CPRA in California, other state privacy statutes, or any future federal privacy legislation, or any non-compliance with such laws, could adversely affect our business, financial condition and results of operations. See “Item 1. Business—Supervision and Regulation—Privacy Standards” for additional information on the CCPA and the CPRA. Compliance with the CCPA, the CPRA, and other state or federal statutes or regulations designed to protect consumer personal data could require us to implement substantive technology infrastructure and process changes. Non-compliance with these privacy laws or regulations could lead to substantial regulatory fines and penalties, damages from private causes of action or reputational harm. Developments in regulatory interpretations or supervisory guidance may also require operational changes, additional expenditures, or restrictions on certain activities.

Non-compliance with the USA PATRIOT Act, Bank Secrecy Act, or other laws and regulations could result in fines or sanctions and limit our ability to get regulatory approval of acquisitions.

The USA PATRIOT and Bank Secrecy Acts require financial institutions to develop programs to prevent themselves from being used for money laundering and terrorist activities. If such activities are detected, financial institutions are obligated to file suspicious activity reports with the U.S. Treasury’s Office of Financial Crimes Enforcement Network. These rules require financial institutions to establish procedures for identifying and verifying the identity of clients seeking to open new financial accounts. Failure to comply with these regulations could result in fines or sanctions and limit our ability to get regulatory approval of acquisitions. If our policies, procedures and systems are deemed deficient, we would be subject to liability, including fines and regulatory actions, which may include the denial of regulatory approvals to proceed with certain aspects of our business plan, including our acquisition plans. Additionally, any perceived or actual failure to prevent money laundering or terrorist financing activities could significantly damage our reputation. These outcomes could have a material adverse effect on our business, financial condition, results of operations, and growth prospects.

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If our enterprise risk management framework is not effective at mitigating risk and loss to us, we could suffer unexpected losses.

Our business is exposed to a broad range of risks, including liquidity, credit, market, interest rate, operational, legal and compliance, reputational, cybersecurity, climate-related, and other risks. These risks may arise from internal factors, the actions of third parties, changes in economic, market, or regulatory conditions, or other unforeseen events. There may be risks that we have not anticipated or identified, and existing or emerging risks could result in substantial and unexpected losses. If our risk management framework or processes prove ineffective, we may incur losses that could materially and adversely affect our business, financial condition, results of operations, and growth prospects.

Climate change and related legislative and regulatory initiatives may materially affect the Company’s business and results of operations.

The effects of climate change continue to raise significant concerns about the state of the environment. Federal and state policy approaches to climate change continue to evolve, and changes in legislative or regulatory priorities could alter the requirements and expectations placed on businesses, including banks, to address climate-related risks.

The lack of empirical data regarding the financial and credit risks posed by climate change still makes it difficult to predict its specific impact on our financial condition and results of operations. However, the physical effects of climate change, such as more frequent and severe weather disasters, could directly affect us. For instance, such events may damage real property securing loans in our portfolio or reduce the value of that collateral. If our borrowers' insurance is insufficient to cover these losses or if insurance becomes unavailable, the value of the collateral securing our loans could be negatively affected, potentially impacting our financial condition and results of operations. Moreover, climate change may adversely affect regional and local economic activity, harming our customers and the communities in which we operate. Regardless of changes in federal policy, the effects of climate change and their unknown long-term impacts could have a material adverse effect on our financial condition and results of operations.

Risks Related to Our Business and Industry Generally

We rely on other companies to provide key components of our business infrastructure.

We rely on numerous external vendors for our day-to-day operations. Accordingly, our operations are exposed to risks associated with vendor performance under service-level agreements. If a vendor fails to meet its contractual obligations due to changes in its organizational structure, financial condition, support for existing products and services, strategic focus, or any other reason, our operations could be disrupted, potentially causing a material adverse impact on our financial condition and results of operations.

Furthermore, we could be adversely affected if a vendor agreement is not renewed or is renewed on terms less favorable to us. Regulatory agencies also require financial institutions to remain accountable for all aspects of vendor performance, including activities delegated to third parties. Additionally, disruptions or failures in the physical infrastructure or operating systems supporting our business and customers, or cyber-attacks or security breaches involving networks, systems, or devices used by our customers to access our services, could lead to client attrition, regulatory fines or penalties, reputational damage, reimbursement or compensation costs, and increased compliance expenses. Any of these outcomes could materially and adversely affect our financial condition and results of operations.

Ineffective liquidity management could adversely affect our financial results and condition.

Maintaining sufficient liquidity is essential for the operation of our business. We require liquidity to meet customer loan requests, customer deposit maturities/withdrawals, payments on our debt obligations as they come due, and other cash commitments under both normal operating conditions and other unpredictable circumstances causing industry or general financial market stress. Our access to funding sources in amounts adequate to finance our activities on terms that are acceptable to us could be impaired by factors that affect us specifically, or the financial services industry or economy generally. Factors that could detrimentally impact our access to liquidity sources include a downturn in the geographic markets in which our loans and operations are concentrated or difficult credit markets. Our access to deposits

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may also be affected by the liquidity needs of our depositors. In particular, a majority of our liabilities are checking accounts and other liquid deposits, which are payable on demand or upon several days’ notice, while by comparison, a substantial majority of our assets are loans, which cannot be called or sold in the same time frame. While in prior periods we have successfully replaced maturing deposits and borrowings, deposit balances across the banking industry have become more rate-sensitive and responsive to market perceptions, and future replacements may be challenged by shifts in our financial condition, FHLB of San Francisco’s status, or market conditions. A failure to maintain adequate liquidity could materially and adversely affect our business, financial condition and results of operations. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity” of this Form 10-K.

Several of our large depositors have relationships with each other, which creates a higher risk that one client’s withdrawal of its deposit could lead to a loss of deposits from other clients within the relationship, which, in turn, could force us to fund our business through more expensive and less stable sources.

As of December 31, 2025, our ten largest depositors, none of which include brokered deposits, accounted for $235.8 million in deposits, or approximately 11.7% of total deposits. Several of our large depositors are local unions of labor unions or have business, family, or other relationships with each other, which creates a risk that any one client’s withdrawal of its deposits could lead to a loss of other deposits from clients within the relationship. At December 31, 2025, $590.9 million, or 26.7%, of our total deposits were comprised of deposits from labor unions, representing 785 different local unions with an average deposit balance per local union of approximately $753,000. At December 31, 2025, 20 labor unions had aggregate deposits with us of $10.0 million or more, totaling $385.3 million, or 17.4% of our total deposits.

Given our use of these high average balance deposits as a source of funds, the inability to retain them could have an adverse effect on our liquidity. In addition, these deposits are primarily demand deposit accounts or short-term deposits and therefore may be more sensitive to changes in interest rates. If we are forced to pay higher rates on these deposits to retain them, or if we are unable to retain them and are forced to turn to borrowings and other funding sources for our lending and investment activities, the interest expense associated with such borrowings or other funding sources may exceed the cost of these deposits, which could adversely affect our net interest margin and net income. We may also be forced, as a result of any material withdrawal of deposits, to rely more heavily on other, potentially more expensive and less stable funding sources. Any of these occurrences could have a material adverse effect on our business, financial condition, and results of operations.

Our growth or future losses may require us to raise additional capital in the future, but that capital may not be available when it is needed, or the cost of that capital may be exceedingly high.

We are required by regulatory authorities to maintain adequate levels of capital to support our operations. We anticipate that our capital resources will enable us to satisfy our capital requirements for the foreseeable future. Nonetheless, we may at some point need to raise additional capital to support continued growth or be required by our regulators to increase our capital resources. Our ability to raise additional capital, if needed, will depend on conditions in the capital markets at that time, which are outside our control, and on our financial condition and performance.

Accordingly, we may not be able to raise additional capital, if needed, on terms that are acceptable to us. If we cannot raise additional capital when needed, our operations could be materially impaired, and our financial condition and liquidity could be materially and adversely affected. In addition, if we are unable to raise additional capital when required by our banking regulators, we may be subject to additional adverse regulatory action.

Our liquidity is dependent on dividends from the Bank.

BayCom is a legal entity separate and distinct from the Bank. A substantial portion of BayCom’s cash flow, including cash flow to pay principal and interest on any debt it may incur, comes from dividends BayCom receives from the Bank. Various federal and state laws and regulations limit the amount of dividends that the Bank may pay to BayCom. Because our ability to receive dividends or loans from the Bank is restricted, our ability to pay dividends to our shareholders and repurchase our stock may also effectively be restricted. Also, BayCom’s right to participate in the distribution of assets upon a subsidiary’s liquidation or reorganization is subject to the prior claims of the subsidiary’s creditors. In the event the Bank is unable to pay dividends to BayCom, BayCom may not be able to service any debt it

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may incur, which could have a material adverse effect on our business, financial condition, results of operations and growth prospects.

We rely heavily on our management team and could be adversely affected by the unexpected loss of key officers and relationship managers.

Our management team brings substantial experience in the markets we serve and the financial products we offer. Our operating strategy emphasizes providing products and services through long-term relationship managers. Consequently, our success relies heavily on the performance of key personnel and our ability to attract, motivate, and retain highly qualified senior and middle management.

Competition for skilled employees in the banking industry is intense, and identifying individuals with the necessary combination of expertise and attributes to execute our business plan can be a lengthy process. The unexpected loss of one or more key personnel could have a material adverse effect on our business due to their skills, market knowledge, industry experience, and long-term client relationships. If key personnel become unavailable for any reason, we may face challenges in promptly identifying and hiring suitable replacements on acceptable terms, which could adversely affect our business, financial condition, and results of operations.

S crutiny and evolving expectations from customers, regulators, investors, and other stakeholders with respect to our environmental, social and governance practices may impose additional costs on us or expose us to new or additional risks.

In recent years, companies have faced scrutiny from customers, regulators, investors, and other stakeholders related to their environmental, social, and governance (“ESG”) practices and disclosure. Investor advocacy groups, investment funds, and influential investors are also focused on these practices, especially as they relate to the environment, health and safety, diversity, labor conditions, and human rights. ESG-related compliance costs could result in increases to our overall operational costs. Failure to adapt to or comply with regulatory requirements, or investor or stakeholder expectations and standards, could negatively impact our reputation, ability to do business with certain partners, and our stock price.

Recent changes in the regulatory landscape and shifting federal priorities have moved toward a reduction in emphasis on certain ESG priorities, particularly around climate change and diversity, equity, and inclusion (“DEI”). This shift has led to a rollback of regulations that mandate specific disclosures and operational practices in these areas. However, some stakeholder groups continue to demand greater transparency and action, resulting in a complex and potentially conflicting environment for companies. If regulatory enforcement of ESG-related policies becomes less stringent, companies may face reputational risks if their practices are seen as insufficient or inconsistent with broader societal expectations, especially related to DEI and environmental stewardship. As a result, navigating this evolving regulatory and public opinion landscape may require us to balance compliance with regulatory requirements against maintaining investor, customer, and stakeholder trust.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This discussion and analysis reviews our consolidated financial statements and other relevant statistical data and is intended to enhance your understanding of our financial condition and results of operations. The information in this section has been derived from the Consolidated Financial Statements and footnotes thereto that appear in “Item 8. Financial Statements and Supplementary Data” of this Form 10-K. The information contained in this section should be read in conjunction with these Consolidated Financial Statements and footnotes and the business and financial information provided in this Form 10-K. Unless otherwise indicated, the financial information presented in this section reflects the consolidated financial condition and results of operations of BayCom Corp and its subsidiary, United Business Bank. Because we conduct all of our material business operations through the Bank, the entire discussion relates to activities primarily conducted by the Bank.

History and Overview

BayCom is a bank holding company headquartered in Walnut Creek, California. The Company’s wholly owned banking subsidiary, United Business Bank, provides a broad range of financial services primarily to businesses and business owners, as well as individual consumers, through its branch network. At December 31, 2025, the Bank had 34 full-service branches, with 16 locations in California, one in Nevada, one in Washington, five in New Mexico and 11 in Colorado.

Our principal objective is to enhance 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 ten strategic acquisitions, which includes our most recent acquisition of PEB, which closed in February 2022. We believe our strategy of selectively acquiring and integrating community banks has yielded economies of scale and improved our overall franchise efficiency. Looking forward, we expect to continue pursuing strategic acquisitions, believing our targeted market areas present us with many and varied acquisition opportunities. We are also committed to organic growth, leveraging the potential within metropolitan and community markets where we

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currently operate. These markets offer significant opportunities to expand our commercial client base, increase interest-earning assets, and enhance market share. We believe our geographic footprint, which now includes the San Francisco Bay area, the metropolitan markets of Los Angeles, California; Seattle, Washington; Denver, Colorado; and Las Vegas, Nevada, and community markets including Albuquerque, New Mexico and Custer, Delta and Grand counties, Colorado, provides us access to low cost, stable core deposits that we can use to fund commercial loan growth. We strive to enhance our clients’ banking experience by providing them with a comprehensive suite of sophisticated products and services tailored to meet their needs, while delivering the high-quality, relationship-based service of a community bank. At December 31, 2025, the Company, on a consolidated basis, had total assets of $2.6 billion, loans receivable, net of $2.0 billion, deposits of $2.2 billion and shareholders’ equity of $338.6 million.

We continue to focus on growing our commercial loan portfolios through both acquisitions and organic growth. At December 31, 2025, our $2.0 billion total loan portfolio included $224.9 million, or 10.9%, of acquired loans (all of which were recorded to their estimated fair values at the time of acquisition), and the remaining $1.8 billion, or 89.1%, 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 the provision for credit losses. 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.

Changes in market interest rates, the slope of the yield curve, and the rates we earn on interest earning assets or pay on interest bearing liabilities have a significant impact on our net interest spread, net interest margin and net interest income. During 2025, the Federal Open Market Committee of the Federal Reserve (“FOMC”) lowered the target range for the federal funds rate in response to continued moderation in inflation and evolving economic conditions. The FOMC reduced the target range by 75 basis points, from 4.25%–4.50% at December 31, 2024, to 3.50%–4.25% by year-end 2025. All reductions occurred between September and December 2025. Correspondingly, the prime rate, which generally moves in relation to the federal funds rate, was approximately 6.75% at year-end 2025. These rate levels influenced both asset yields and funding costs during the year.

Net interest margin increased to 3.82% for the year ended December 31, 2025, compared to 3.74% for the previous year and was driven by lower average costs of interest-bearing liabilities, particularly on money market and time deposits, and the redemption of subordinated debt. Based on the current composition of our balance sheet, we believe net interest margin could improve if interest rates remain at or near current levels; however, a decline in interest rates would likely negatively impact our net interest income.

The provision for credit losses is dependent on changes in our loan portfolio and management’s assessment of the collectability of our loan portfolio, as well as prevailing economic and market conditions. We recorded a $4.1 million provision for credit losses for the year ended December 31, 2025, primarily driven by loan growth and increases in specific reserves. Net charge-offs totaled $948,000 for the year ended December 31, 2025. The lower net charge-offs primarily reflect fewer nonaccrual loan charge-offs, as well as payoffs and collections on previously nonaccrual loans.

Our net income is also affected by noninterest income and noninterest expenses. 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. Our noninterest income decreased $291,000 during the year ended December 31, 2025, as compared to 2024. Noninterest expense consists of, among other things: (i) salaries and related benefits; (ii) occupancy and equipment expense; (iii) data processing; (iv) FDIC and state assessments; (v) outside and professional services; (vi) amortization of intangibles; and (vii) other general and administrative expenses. Our noninterest expenses decreased $278,000 during the year ended December 31, 2025, as compared to 2024. Noninterest income and noninterest expenses are influenced by growth of our banking operations and loan and deposit volumes.

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Business Strategy

Our strategy is to continue to make strategic acquisitions of financial institutions within the Western United States, grow organically and preserve our strong asset quality through disciplined lending practices. We seek to achieve these results by focusing on the following:

Strategic Consolidation of Community Banks.   We believe our strategy of selectively acquiring and integrating community banks has provided us with economies of scale and improved our overall franchise efficiency. We expect to continue to pursue strategic acquisitions of financial institutions and believe our target market areas present us with numerous acquisition opportunities as many of these financial institutions will continue to be burdened and challenged by new and more complex banking regulations, resource constraints, competitive limitations, rising technological and other business costs, management succession issues and liquidity concerns. In addition, we believe that the breadth of our operating experience and successful track record of integrating prior acquisitions increases the potential acquisition opportunities available to us. We will continue to employ a disciplined approach to our acquisition strategy and only seek to identify and partner with financial institutions that possess attractive market share, low-cost deposit funding and compelling noninterest income generating businesses. Our disciplined approach to acquisitions, consolidations and integrations, includes the following: (i) selectively acquiring community banking franchises only at appropriate valuations, after taking into account risks that we perceive with respect to the targeted bank; (ii) completing comprehensive due diligence and developing an appropriate plan to address any non-acquired credit problems of the targeted institution; (iii) identifying an achievable cost savings estimate; (iv) executing definitive acquisition agreements that we believe provide adequate protections to us; (v) installing our credit procedures, audit and risk management policies and procedures, and compliance standards upon consummation of the acquisition; (vi) collaborating with the target’s management team to execute on synergies and cost saving opportunities related to the acquisition; and (vii) involving a broader management team across multiple departments in order to help ensure the successful integration of all business functions. We believe this approach allows us to realize the benefits of our acquisition and consolidation strategy. We also expect to continue to manage our branch network in order to ensure effective coverage for clients while minimizing any geographic overlap and driving corporate efficiency.

Enhance the Performance of the Banks We Acquire.   We strive to successfully integrate the banks we acquire into our existing operational platform and enhance shareholder value through the creation of efficiencies within the combined operations. We seek to realize operating efficiencies from our recently completed acquisitions by utilizing technology to streamline our operations. We continue to centralize the back-office functions of our acquired banks as well as realize cost savings using third-party vendors and technology to take advantage of economies of scale as we continue to grow. We intend to focus on initiatives that we believe will provide opportunities to enhance earnings, including the continued rationalization of our retail banking footprint through the evaluation of possible branch consolidations or opportunities to sell branches.

Focus on Lending Growth in Our Metropolitan Markets While Increasing Deposits in Our Community Markets.   Our banking footprint has given us experience operating in small communities and large cities. We believe that our presence in smaller communities gives us a relatively stable source of low-cost core deposits, while our more metropolitan markets represent strong long term growth opportunities to expand our commercial client base and increase our current market share through organic growth. In acquiring United Business Bank, FSB in 2017, we acquired a large deposit base from the local and regional unionized labor community. As of December 31, 2025, our top ten depositors, which included 10 labor unions, accounted for roughly 11.7% of our total deposits. At that date, nearly 26.1% of our deposit base was comprised of noninterest bearing demand deposit accounts, significantly lowering our aggregate cost of funds.

Our Team of Seasoned Bankers Represents an Important Driver of our Organic Growth by Expanding Banking Relationships with Current and Potential Clients.   We expect to continue to make opportunistic hires of talented and entrepreneurial bankers, to further augment our growth. Our bankers are incentivized to

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increase the size of their loan and deposit portfolios and generate fee income while maintaining strong credit quality. We also seek to cross sell our various banking products, including our deposit products, to our commercial loan clients, which provides a basis for expanding our banking relationships as well as a stable, low-cost deposit base. We believe we have built a scalable platform that will support our recent growth as well as efficiently and effectively manage our anticipated growth in the future, both organically and through acquisitions.

Preserve Our Asset Quality Through Disciplined Lending Practices. Our approach to credit management uses well defined policies and procedures, disciplined underwriting criteria and ongoing risk management. We believe we are a competitive and effective commercial lender, supplementing ongoing and active loan servicing with early-stage credit review provided by our bankers. This approach has allowed us to maintain loan growth with a diversified portfolio of assets. We believe our credit culture supports accountability amongst our bankers, who maintain an ability to expand our client base as well as make sound decisions for our Company. At December 31, 2025, our ratio of nonperforming assets to total assets was 0.52% and our ratio of nonperforming loans to total loans was 0.65%. Over the 21 years since our inception, which timeframe includes a U.S. recession and a global pandemic, we have cumulative net charge-offs of $11.8 million. We believe our success in managing asset quality is illustrated by our aggregate net charge-off history.

Critical Accounting Estimates

Our consolidated financial statements are prepared in accordance with GAAP. In doing so, we have to make estimates and assumptions. Our critical accounting estimates are those estimates that involve a significant level of uncertainty at the time the estimate was made, and changes in the estimate that are reasonably likely to occur from period to period, or use of different estimates that we reasonably could have used in the current period, would have a material impact on our financial condition or results of operations. Accordingly, actual results could differ materially from our estimates. We base our estimates on past experience and other assumptions that we believe are reasonable under the circumstances, and we evaluate these estimates on an ongoing basis. We have reviewed our critical accounting estimates with the audit committee of our Board of Directors.

See Note 1 of the Notes to Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K for a summary of significant accounting policies and the effect on our financial statements.

Allowance for credit losses for loans. The allowance for credit losses represents management’s estimate of current expected credit losses over the life of a financial asset carried at amortized cost at an appropriate level based upon management’s evaluation of the adequacy of collectively and individually evaluated loss reserves. The Company’s method for assessing the appropriateness of the allowance for credit losses includes specific allowances for individually analyzed loans, pooled loans component which includes both quantitative and qualitative factors, and a reserve for unfunded loan commitments.

Under the CECL methodology, expected credit losses reflect expected losses over the remaining contractual life of an asset, considering the effect of prepayments and available information about the collectability of cash flows, including information about relevant historical experience, current conditions, and reasonable and supportable forecasts of future events and circumstances. Thus, the CECL methodology incorporates a broad range of information in developing credit loss estimates. The CECL methodology could result in significant changes to both the timing and amounts of provision for credit losses and the allowance as compared to historical periods. Loans that are deemed to be uncollectable are charged off and deducted from the allowance. The provision for credit losses and recoveries on loans previously charged off are added to the allowance. Regardless of the determination that a charge-off is appropriate for financial accounting purposes, the Company manages its loan portfolio by continually monitoring, where possible, a borrower's ability to pay through the collection of financial information, delinquency status, borrower discussion and the encouragement to repay in accordance with the original contract or modified terms, if appropriate.

All loans with an outstanding balance of $250,000 or more are individually evaluated for expected credit loss when it is probable that we will be unable to collect all amounts due according to the original contractual terms of the

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loan agreement. We select loans for individual assessment on an ongoing basis using criteria such as payment performance, borrower reported and forecasted financial results, and other external factors when appropriate. Loans that do not share the same risk characteristics as pooled loans are evaluated individually for credit loss and generally include all nonaccrual loans, collateral dependent loans, and certain modified loans to borrowers experiencing financial difficulties. We measure the current expected credit loss of an individually evaluated loan based upon the fair value of the underlying collateral, adjusted for costs to sell when applicable, or if the loan is not collateral-dependent we utilize the present value of expected future cash flows, discounted at the effective interest rate. A loan for which the terms have been modified resulting in a concession, and where the borrower is experiencing financial difficulties, is considered a modified loan to a borrower experiencing financial difficulty. The allowance for credit losses on modified loans to borrowers experiencing financial difficulty is measured using the same method as individually evaluated loans. When the value of a concession is measured using the discounted cash flow method, the allowance for credit losses is determined by discounting the expected future cash flows at the original interest rate of the loan. To the extent a loan balance exceeds the estimated collectable value, a reserve or charge-off is recorded depending upon either the certainty of the estimate of loss or the fair value of the loan’s collateral if the loan is collateral-dependent. By definition, any loan that management has placed on non-accrual is required to be individually evaluated; however, not all individually evaluated loans need to be placed on non-accrual.

Our CECL methodology for the pooled loans component includes both quantitative and qualitative loss factors which are applied to our population of loans and assessed at a pool level. The quantitative CECL model estimates credit losses by applying pool-specific probability of default ("PD") and loss given default ("LGD") rates to the expected exposure at default ("EAD") over the contractual life of loans. The qualitative component considers internal and external risk factors that may not be adequately assessed in the quantitative model. Expected credit losses are estimated over the contractual term of the loans, adjusted for expected prepayments and curtailments, when appropriate. The pooled loans' contractual loan terms exclude extensions, renewals, and modifications. To estimate future prepayments by loan pool, we use our actual historical loan prepayment experience over a trailing time period, adjusted for forecasted economic conditions, to estimate future prepayments by loan pool. To estimate curtailment by loan pool we use our actual historical loan curtailment experience over a trailing time period, adjusted for forecasted economic conditions. Where observations in either case may be insufficient, the global rate, which is simply the aggregate performance of all loan segments of the Bank, is used.

The CECL model utilizes a discounted cash flow ("DCF") method to measure the expected credit losses on loans collectively evaluated that are sub-segmented by loan pools with similar credit risk characteristics, which generally correspond to federal regulatory reporting codes (i.e., Call Report codes), with PCD assets pooled separately by similar loan pools to evaluate and measure the allowance for credit losses:

Loans secured by real estate:

1-4 family residential construction loans and other construction loans and all land development and other land loans

Secured by farmland and finance agricultural production and other loans to farmers

Revolving, open-end loans secured by 1-4 family residential properties extended under lines of credit and closed-end loans secured by 1-4 family residential properties, secured by junior liens

Closed-end loans secured by 1-4 family residential properties, secured by first liens

Commercial real estate loans secured by owner-occupied non-farm nonresidential properties

Commercial real estate loans secured by other non-farm nonresidential properties and

Secured by multifamily (5 or more units) residential properties

Commercial and industrial loans

Loans to individuals for household, family and other personal expenditures (i.e., consumer loans)

In determining the PD for each pooled segment, the Bank utilized regression analyses to identify certain economic drivers that were considered highly correlated to historical Bank or peer loan default experience. The regression models developed by the Company correlate macroeconomic variables to historical credit performance based on Call Report data over 78 quarters, consisting of the period from the first quarter of 2004 through the fourth quarter of 2019 and the fourth quarter of 2021 through the first quarter of 2025. We elected to exclude historical data from 2020 first quarter to 2021 third quarter for purposes of estimating expected credit losses because we believe that period is an outlier and did

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not represent normal economic behavior considering the COVID-19 pandemic lockdown with changes in macroeconomic variables and the significant levels of government relief programs in place during that period. For all segments, the Company's actual loss history was not statistically relevant, thus the loss history of peers, defined as commercial financial institutions with asset size of $1.0 billion to $5.0 billion, domiciled in California, with similar concentrations of lending were utilized to determine loss rates. The peers utilized in the allowance for credit losses are segment specific. Additionally, management chose the national unemployment rate and U.S. gross domestic product as the primary economic forecast drivers for all segments. A third party provides LGD estimates for each segment based on a banking industry Frye-Jacobs Risk Index approach.

In its loss forecasting framework, the Company incorporates forward-looking information using macroeconomic scenarios applied over the forecasted life of the assets. The quantitative CECL model applies the projected rates based on the economic forecasts for the four quarter (one-year) reasonable and supportable forecast horizon to EAD to estimate defaulted loans. The economic data is updated quarterly, which is based on Federal Reserve Economic Data (“FRED”) forecasts. Historical LGD rates are applied to estimated defaulted loans to determine estimated credit losses. For periods beyond the forecast horizon, the economic factors revert to historical averages on a straight-line basis over an eight-quarter (two-year) period. Subsequent to the reversion period for the remaining contractual life of loans and leases, the PD, LGD, and prepayment rates are based on historical experience during a full economic cycle.

Management considers whether adjustments to the quantitative portion of the allowance for credit losses are needed for differences in segment-specific risk characteristics or to reflect the extent to which it expects current conditions and reasonable and supportable forecasts of economic conditions to differ from the conditions that existed during the historical period included in the development of PD and LGD. During 2025, management applied qualitative adjustments primarily related to macroeconomic forecasts and changes in loan composition within the commercial real estate portfolio. Qualitative internal and external risk factors include, but are not limited to, the following:

Changes in the nature and volume of the loan portfolio.

Changes in the volume and severity of past due loans, the volume of nonaccrual loans, and the volume and severity of adversely classified or graded loans.

Changes in lending policies and procedures, including changes in underwriting standards and collection.

Changes in economic and business conditions, and developments that affect the collectability of the portfolio.

Changes in the experience, ability, and depth of credit management and lending staff.

Changes in the quality of our systematic loan review processes.

Changes in the value of underlying collateral, where applicable.

Changes in concentration of credit.

● The effect of other external factors such as legal and regulatory requirements on the level of estimated credit losses in the portfolio.

The estimated credit losses associated with unfunded loan commitments are calculated using the same models and methodologies noted above and incorporate utilization assumptions at the estimated time of default. While the provision for credit losses associated with unfunded loan commitments is included in "provision for credit losses" on the consolidated statement of income, the allowance for credit losses for unfunded loan commitments is maintained on the consolidated balance sheet in "Interest payable and other liabilities" .

Comparison of Financial Condition at December 31, 2025 and 2024

Total assets.   Total assets decreased $70.8 million, or 2.7%, to $2.6 billion at December 31, 2025 from $2.7 billion at December 31, 2024. The decrease was primarily due to decreases in cash and cash equivalents of $157.5 million or 43.3%, and investment securities available-for-sale of $13.6 million or 7.0%, partially offset by an increase in loans receivable, net of $110.1 million or 5.7%.

Cash and cash equivalents.   Cash and cash equivalents decreased $157.5 million, or 43.3%, to $206.5 million at December 31, 2025 from $364.0 million at December 31, 2024. The decrease primarily was due to a $161.2 million decrease in federal funds sold and interest-bearing balances in banks, reflecting the use of excess cash to fund the

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Company’s early redemption of the remaining $63.7 million of its outstanding Notes due 2030, as well as to support loan growth and deposit withdrawals.

Investment securities.   Investment securities decreased $13.6 million, or 7.0%, to $179.7 million at December 31, 2025 from $193.3 million at December 31, 2024. The decrease primarily was due to $38.1 million in routine amortization, principal repayments and maturities and calls of securities, partially offset by $15.6 million of investment securities purchased during the year ended December 31, 2025. A $1.8 million fair value adjustment related to unrealized gains on investment securities available-for-sale also contributed to the increase.

The following table sets forth certain information regarding contractual maturities and the weighted average yields of our available for sale investment securities as of December 31, 2025. 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

Mortgage-backed securities

Collateralized mortgage obligations

SBA securities

ABS securities

Corporate bonds

Total

See “Note 2 – Investment Securities” in the Notes to Consolidated Financial Statements contained in “Item 8. Financial Statements and Supplementary Data” of this Form 10-K for additional information on our investment securities.

Equity securities. Equity securities decreased $566,000, or 4.3% to $12.6 million at December 31, 2025 from $13.1 million at December 31, 2024, primarily due to mark-to-market adjustments recorded during the year ended December 31, 2025.

Loans, net.   We originate a wide variety of loans with a focus on commercial real estate (“CRE”) loans and commercial and industrial loans. Loans receivable, net of allowance for credit losses, increased $110.1 million, or 5.7%, to $2.0 billion at December 31, 2025, from $1.9 billion at December 31, 2024. The increase was due to $440.4 million of new loan originations and $31.0 million of loan purchases, partially offset by $354.1 million of loan repayments and $5.1 million of loans sold.

Loan originations in 2025 were concentrated in California markets, primarily Los Angeles, Irvine/Southern California, San Francisco Bay Area and Sacramento/Northern California, with commercial and multifamily real estate secured loans accounting for the majority of the originations. Loan purchases were concentrated in New Mexico and Colorado.

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The following table provides information about our loan portfolio by type of loan, with PCD loans presented as a separate balance, at the dates presented.

As of December 31,

Percent

Percent

Amount

Total

Amount

Total

(Dollars in thousands)

Commercial and industrial

Real estate:

Residential

Multifamily residential

Owner occupied CRE

Non-owner occupied CRE

Construction and land

Total real estate

Consumer

PCD loans

Total Loans

Net deferred loan fees

Allowance for credit losses

Loans, net

The following table presents at December 31, 2025, the geographic distribution of our loan portfolio in dollar amounts and percentages.

San Francisco Bay

Total in State of

Area (1)

Other California (2)

California

All Other States (3)

Total

Total in

Total in

Total in

Total in

Total in

Amount

Category

Amount

Category

Amount

Category

Amount

Category

Amount

Category

(Dollars in thousands)

Commercial and industrial

Real estate:

Residential

Multifamily residential

Owner occupied CRE

Non-owner occupied CRE

Construction and land

Total real estate

Consumer

Total loans

(1)   Includes Alameda, Contra Costa, Solano, Sonoma, Marin, San Francisco, San Joaquin, San Mateo and Santa Clara Counties.

(2) Includes loans located in Sacramento and Northern California counties totaling $92.3 million and loans located in Los Angeles and Orange counties totaling $601.5 million.

(3)   Includes loans located in the states of Colorado, Nevada, New Mexico, Washington and other states. At December  31, 2025, loans in Colorado, New Mexico, Washington and other states totaled $132.2 million, $44.5 million, $69.6 million, $89.9 million, and $425.3 million, respectively.

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The following table provides information about our loan portfolio segregated by legacy and acquired loans with a remaining discount, net of their discounts at the dates presented.

As of December 31,

Non-

Non-

Acquired

Acquired

Total

Acquired

Acquired

Total

(Dollars in thousands)

Commercial and industrial

Real estate:

Residential

Multifamily residential

Owner-occupied CRE

Non-owner occupied CRE

Construction and land

Total real estate

Consumer

PCD loans

Total Loans

Deferred loan fees and costs, net

Allowance for credit losses

Loans, net

The following table sets forth contractual maturity and repricing information for our loan portfolio at December 31, 2025. Loans which have adjustable or renegotiable interest rates are shown as maturing in the period during which the contract is due. PCD loans are reported at their contractual interest rate. The schedule does not reflect the effects of possible prepayments or enforcement of due on sale clauses.

Maturing

Maturing

Maturing

After One

After Five

Maturing

Within

to Five

to Fifteen

After Fifteen

One Year

Years

Years

Years

Total

(Dollars in thousands)

Commercial and industrial

Real estate:

Residential

Multifamily residential

Owner-occupied CRE

Non-owner occupied CRE

Construction and land

Total real estate

Consumer and other

PCD loans

Total loans

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The following table sets forth the amounts of loans due after December 31, 2026, with fixed or adjustable rates:

Floating or

Fixed

Adjustable

Rate

Rate

Total

(Dollars in thousands)

Commercial and industrial

Real estate:

Residential

Commercial Real Estate

Construction and land

Total real estate

Consumer and other

PCD loans

Total loans

The following table sets forth the originations, purchases, sales and repayments of loans as of the dates indicated.

Years ended December 31,

(Dollars in thousands)

Loans originated

Commercial and industrial

Real estate:

Residential

Multifamily residential

Owner occupied CRE

Non-owner occupied CRE

Construction and land

Total real estate

Consumer

Total loans originated

Loans purchased or acquired through acquisitions

Other loans purchased

Loans sold

Commercial and Industrial

Owner occupied CRE

Non-owner occupied CRE

Other

Principal repayments

Transfer to real estate owned

Increase in allowance for credit losses and other items, net

Net increase in loans receivable and loans held for sale

Acquired loans. Acquired PCD loans are loans acquired through a business combination with evidence of more than insignificant credit deterioration and are accounted for under Accounting Standards Codification (“ASC”) Topic 326. Acquired non-PCD loans represent loans acquired through a business combination without more than insignificant evidence of credit deterioration and are accounted for under ASC Topic 310-20.

As of December 31, 2025, acquired non-PCD loans totaled $121.1 million with a remaining net premium of $397,000 compared to $140.6 million with a remaining net premium of $1.8 million as of December 31, 2024. The net premium for acquired non-PCD loans includes both 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.

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As of December 31, 2025, the unpaid principal balance of acquired PCD loans totaled $16.1 million with a remaining net non-credit discount of $1.2 million, compared to $24.0 million with a remaining net non-credit discount of $1.5 million as of December 31, 2024.

Nonperforming assets and nonaccrual loans.   Nonperforming assets generally consist of nonaccrual loans, accruing loans 90 days or more past due, and other real estate owned (“OREO”). Nonperforming assets increased $3.8 million to $13.4 million, or 0.65% of total loans, at December 31, 2025 compared to $9.7 million, or 0.50% of total loans, at December 31, 2024. There was no OREO at both December 31, 2025 and 2024.

The increase in nonperforming loans was primarily due to 13 new commercial real estate loans (secured by various types of real estate) totaling $13.0 million being placed on nonaccrual status during the year ended December 31, 2025, which were in the process of collection. These increases were partially offset by payoffs of 12 nonaccrual loans totaling $10.1 million, one $3.2 million non-accrual loan returned to accrual status as the loan is current and in the process of collection, and one fully charged off nonaccrual loan of $105,000. The rise in nonperforming loans reflects elevated credit risk primarily within the commercial real estate portfolio, more specifically, in the hotel and retail segments of the portfolio. When these loans were placed on non-accrual, updated appraisals were obtained and indicated collateral shortfalls, resulting in a $1.4 million specific reserve at December 31, 2025, of which $1.3 million related to loans placed on nonaccrual during the current year.

Accruing loans past due 30 to 89 days totaled $1.1 million at December 31, 2025, compared to $6.7 million at December 31, 2024. At December 31, 2025 and 2024, nonaccrual loans included $562,000 and $643,000 of loans 30-89 days past due, and $9.4 million and $4.4 million of loans less than 30 days past due, respectively. At December 31, 2025, the $9.4 million of loans less than 30 days past due was comprised of 15 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 paid 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 determination that a modified loan (or portion of a loan) has subsequently been deemed uncollectible, the loan (or a portion of the loan) is charged off. Therefore, 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.

Loan modifications to borrowers experiencing financial difficulty as of December 31, 2025 totaled $1.4 million compared to $2.7 million at December 31, 2024.  All modified loans were classified as nonaccrual at both dates. Modified loans that are accruing and performing according to their modified terms are not considered nonperforming. The related allowance for credit losses on individually evaluated modified loans totaled $1,500 and $24,000 at December 31, 2025 and December 31, 2024, respectively.

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The following table sets forth the nonperforming loans, nonperforming assets and performing modified loans to borrowers experiencing financial difficulty as of the dates indicated:

December 31,

December 31,

(Dollars in thousands)

Loans accounted for on a nonaccrual basis:

Commercial and industrial

Real estate:

Residential

Multifamily residential

Owner occupied CRE

Non-owner occupied CRE

Construction and land

Total real estate

Consumer

Total nonaccrual loans

Accruing loans 90 days or more past due

Total nonperforming loans

Real estate owned

Total nonperforming assets (1)

Performing modified loans to borrowers experiencing financial difficulty – performing

PCD loans

Nonperforming assets to total assets (1)

Nonperforming loans to total loans (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. PCD loans are considered performing and are not included in nonperforming assets in the table above.

At December 31, 2025 and 2024, we had no PCD loans that were 90 days or more past due and still accruing.

Allowance for credit losses.   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-credit-deteriorated loans, and (iii) acquired or purchased credit deteriorated 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 December 31, 2025, the Company’s allowance for credit losses for loans was $21.2 million, or 1.03% of total loans, compared to $17.9 million, or 0.92% of total loans, at December 31, 2024. A $4.1 million provision for credit losses was recorded for the year ended December 31, 2025.

Based on the current composition of the Company’s loan portfolio, management believes that the $21.2 million allowance for credit losses at December 31, 2025 is adequate to absorb probable losses inherent in the portfolio. No assurance can be given, however, that adverse economic conditions or other circumstances will not result in increased losses in the portfolio.

For the year ended December 31, 2025, the $4.1 million provision for credit losses was primarily driven by loan growth, charge-offs during the current year, and increased reserves on both pooled loans and individually evaluated loans. The decrease in the provision for credit loss for unfunded commitments of $190,000 for the year ended December 31, 2025 was primarily due to a reduction in construction commitments being funded, partially offset by increased loss rates.

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The increase in the allowance for credit losses on pooled loans primarily reflected higher quantitative reserves resulting from the Company’s annual update to its CECL model methodology. The update incorporated more recent economic data and revised segment-specific peer group comparisons, which together contributed to a higher modeled reserve level. To a lesser extent, the increase also reflected updated economic forecasts, including a higher projected national unemployment rate and a weaker outlook for national gross domestic product compared to the assumptions used as of December 31, 2024. In addition, loan growth during the year and changes in the risk level associated with certain qualitative factors contributed to the increase. The allowance for credit losses on individually evaluated loans increased during the year primarily due to three commercial real estate loans placed on nonaccrual status for which updated appraisals indicated collateral shortfalls.

Net charge-offs totaled $948,000 for the year ended December 31, 2025 compared to $5.0 million for the year ended December 31, 2024. Charge-offs in 2024 included a $3.2 million charge-off related to a loan for which a specific reserve was established as of December 31, 2023.

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

Year ended December 31,

(Dollars in thousands)

Allowance for credit losses on loans as a percentage of total loans outstanding at period end

Allowance for credit losses on loans

Total loans outstanding

Nonaccrual loans as a percentage of total loans outstanding at period end

Total nonaccrual loans

Total loans outstanding

Allowance for credit losses on loans as a percentage of nonaccrual loans at period end

Allowance for credit losses on loans

Total nonaccrual loans

Net charge-offs during period to average loans outstanding:

Commercial and industrial:

Net charge-offs

Average loans outstanding

Construction and land:

Net charge-offs

Average loans outstanding

Commercial real estate:

Net charge-offs

Average loans outstanding

Residential:

Net charge-offs

Average loans outstanding

Consumer:

Net charge-offs

Average loans outstanding

Total loans:

Total net charge-offs

Total average loans outstanding

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The following table shows the allocation of the allowance for credit losses at the indicated dates.

As of December 31,

Percent of

Percent of

Loans in

Loans in

Allowance

Category

Allowance

Category

Loan

by Loan

to Total

Loan

by Loan

to Total

Balance

Category

Loans

Balance

Category

Loans

(Dollars in thousands)

Commercial and industrial

Real estate:

Residential

Multifamily residential

Owner-occupied CRE

Non-owner occupied CRE

Construction and land

Total real estate

Consumer

PCD loans

Total Loans

As of December 31, 2024, the Company individually evaluated $14.9 million of loans, inclusive of the $13.4 million of nonaccrual loans as of that date. Of these individually evaluated loans, $4.5 million had a specific allowance of $1.4 million as of December 31, 2025. As of December 31, 2024, the Company individually evaluated $17.4 million in loans, all of which were on nonaccrual status. Of these individually evaluated loans, $9.2 million had a specific allowance of $392,000 as of December 31, 2024.

Management considers the allowance for credit losses for loans at December 31, 2025 to be adequate to cover future expected 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 as a result of unemployment levels, labor shortages and the effects of inflation, a potential recession, or slowed economic growth caused by increasing political instability from acts of war, as well as supply chain disruptions, among other factors, 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 the routine examination process, which may result in additions to our allowance for credit losses based upon their judgment of information available to them at the time of their examination.

Right-of-use assets and lease liabilities.   The Company recognizes operating leases on the Consolidated Balance Sheet as ROU assets and lease liabilities based on the value of the discounted future lease payments. ROU assets decreased $718,000, or 5.4%, to $12.7 million at December 31, 2025 from $13.4 million at December 31, 2024. Lease liabilities decreased $724,000, or 5.0%, to $13.7 million at December 31, 2025 from $14.4 million at December 31, 2024. The decrease in right-of-use assets and lease liabilities was due to normal depreciation and amortization, respectively, partially offset by changes in the ROU asset and liabilities resulting from lease extensions.

Premises and Equipment.   Premises and equipment decreased $166,000, or 1.2%, to $13.2 million at December 31, 2025 from $13.4 million at December 31, 2024, driven by normal depreciation expenses associated with these assets.

Deposits.   Deposits are our primary source of funding and mainly consist of core deposits from the communities served by our branch network. 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,

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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 decreased $20.4 million, or 0.9%, to $2.2 billion at December 31, 2025 compared to December 31, 2024. Noninterest bearing deposits totaled $578.1 million, or 26.1% of total deposits, at December 31, 2025, compared to $689.0 million, or 30.8% of total deposits, at December 31, 2024. During the year ended December 31, 2025, some interest rate sensitive clients shifted a portion of their non-operating deposit balances from lower-cost deposits, including noninterest-bearing deposits, into higher-cost money market and time deposits.

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

December 31,

Percent

Percent

of Total

of Total

Amount

Deposits

Amount

Deposits

(Dollars in thousands)

Demand deposits (1)

NOW accounts

Savings

Money market

Time deposits

Total

Noninterest bearing.

The following table shows a summary of our average deposit amounts and average rates paid during the years indicated:

December 31,

Weighted

Weighted

Average

Average

Average

Average

Balance

Rate

Balance

Rate

(Dollars in thousands)

NOW accounts

Savings

Money market

Time deposits

Total interest bearing deposits

Demand deposits (1)

Total deposits

(1) Noninterest bearing.

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The following table shows time deposits by maturity and rate as of December 31, 2025.

Time deposits

(Dollars in thousands)

Maturities:

Due in three months or less

Due in over three months through six months

Due in over six months through 12 months

Total due within 12 months

Due in over 12 months through 24 months

Due in over 24 months

Total due over 12 months

Total

As of December 31, 2025 and 2024, approximately $1.0 billion, or 46.6% of total deposits, and $1.0 billion, or 46.8% of total deposits, respectively, were uninsured. The uninsured amounts are estimates based on the methodologies and assumptions used for United Business Bank’s regulatory reporting requirements.

The following table sets forth the portion of our time deposits that are in excess of the FDIC insurance limit, by remaining time until maturity, as of December 31, 2025.

(Dollars in thousands)

Less than 3 months

Over 3 through 6 months

Over 6 through 12 months

Over 12 months

Total

For additional information regarding our deposits, see “Note 10 – Deposits” of the Notes to Consolidated Financial Statements contained in “Item 8. Financial Statements and Supplementary Data” of this Form 10-K.

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 December 31, 2025 and 2024, we had the ability to borrow from the FHLB up to $580.7 million and $540.2 million, respectively. At both December 31, 2025 and 2024, there were no FHLB advances outstanding.

The Bank has been approved for discount window advances from the FRB of San Francisco secured by certain types of loans. At December 31, 2025, we had the ability to borrow up to $49.3 million from the FRB of San Francisco, with no FRB of San Francisco advances outstanding at that date.

The Bank also has uncommitted Federal Funds lines with four corresponding banks. Cumulative available commitments totaled $65.0 million at both December 31, 2025 and December 31, 2024. There were no amounts outstanding under these facilities at both December 31, 2025 and 2024.

At December 31, 2025 and 2024, the Company had outstanding junior subordinated debt, net of marked-to-market, related to junior subordinated deferrable interest debentures assumed in connection with its previous acquisitions totaling $8.7 million. For additional information, see “Note 12 — Junior Subordinated Deferrable Interest Debentures”

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in the Notes to the Consolidated Financial Statements contained in “Item 8. Financial Statements and Supplementary Data” of this Form 10-K.

During the third quarter of 2025, the Company redeemed all of the Company’s outstanding subordinated debt. At December 31, 2025, the Company had no subordinated debt remaining, compared to $63.7 million, net of issuance costs, at December 31, 2024. For additional information, see “Item 1–Business – Sources of Funds ”, contained in this Form 10-K. See also, “Note 13 — Subordinated Debt” in the Notes to the Consolidated Financial Statements contained in “Item 8. Financial Statements and Supplementary Data” of this Form 10-K.

We are required to provide collateral for certain local agency deposits. At December 31, 2025 and 2024, the FHLB of San Francisco had issued letter of credits on behalf of the Bank totaling $41.6 million and $41.1 million, respectively, as collateral for local agency deposits.

Shareholders’ equit y.  Shareholders’ equity increased $14.2 million, or 4.4%, to $338.6 million at December 31, 2025 from $324.4 million at December 31, 2024. The increase was due to $23.9 million of net income, a $6.4 million decrease in accumulated other comprehensive loss, net of taxes, reflecting the increase in market interest rates during the year, and $653,000 in stock-based compensation related to the grant of equity awards.  These changes were partially offset by the repurchase of $6.9 million of the Company’s common stock and the $9.9 million in cash dividends paid or accrued during 2025.

During the year ended December 31, 2025, the Company repurchased a total of 261,654 shares of its common stock at an average cost of $26.40 per share. At December 31, 2025, 202,444 shares remained available for future purchases under the current stock repurchase plan. For additional information related to our stock repurchases, see “Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities – Stock Repurchases” contained in this Form 10-K.

Comparison of Operating Results for the Years Ended December 31, 2025 and 2024

Earnings summary.   We reported net income of $23.9 million for the year ended December 31, 2025, compared to $23.6 million for the year ended December 31, 2024, an increase of $317,000 or 1.3%. Net income for the year ended December 31, 2025 reflects a $3.3 million increase in net interest income and a $278,000 decrease in noninterest expense, partially offset by a $2.8 million increase in the provision for credit losses, a $291,000 decrease in noninterest income and a $180,000 increase in the provision for income taxes. Diluted earnings per share were $2.18 for the year ended December 31, 2025, up $0.08 from diluted earnings per share of $2.10 for the year ended December 31, 2024.

Our efficiency ratio, calculated as noninterest expense divided by the sum of net interest income before provision for credit losses and noninterest income, was 63.51% for the year ended December 31, 2025, compared to 65.77% for the year ended December 31, 2024. The improvement in the efficiency ratio was primarily due to higher revenues and, to a lesser extent, a modest decrease in total noninterest expenses.

Interest income.   Interest income for the year ended December 31, 2025 was $135.4 million, compared to $131.7 million for the year ended December 31, 2024, an increase of $3.7 million or 2.8%. Increased average yields and balances on interest-earning assets, specifically, loans and investment securities, drove the increase in interest income.

Interest income on loans, including fees, increased $10.1 million , or 9.7%, to $114.1 million for the year ended December 31, 2025, compared to $104.1 million for the year ended December 31, 2024. The increase was primarily due to a $114.3 million increase in the average balance of loans and a 19 basis point increase in the average loan yield. The average yield earned on loans, including the accretion of the net discount and deferred loan fees recognized, was 5.68% for the year ended December 31, 2025, compared to 5.49% for the year ended December 31, 2024. Interest income on loans for the year ended December 31, 2025 and 2024, included $501,000 and $523,000 respectively, in fees related to prepayment penalties. Interest income on loans for the years ended December 31, 2025 and 2024, also included $638,000 and $158,000, respectively, in accretion and amortization of the net discount on acquired loans, as well as revenue from PCD loans in excess of discounts. The remaining net discount on these acquired loans was $87,000 and $326,000 at December 31, 2025 and 2024, respectively.

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Interest income on investment securities, excluding FRB and FHLB stock, increased $438,000, or 4.9%, to $9.4 million for the year ended December 31, 2025 from $9.0 million for the year ended December 31, 2024. The increase was due to a 14 basis point increase in the average yield on investment securities to 4.65% for the year ended December 31, 2025 from 4.51% for the year ended December 31, 2024, and a $3.1 million increase in the average balance of investment securities. Dividends on FHLB and FRB stock totaled $1.6 million and $1.4 million for the years ended December 31, 2025 and 2024, respectively.

Interest income on fed funds sold and interest-bearing balances in banks decreased $6.8 million, or 39.9% to $10.3 million for the year ended December 31, 2025 from $17.1 million for the year ended December 31, 2024. The decrease was primarily due to a $86.5 million decrease in the average balance of federal funds sold and interest-bearing balances in banks, reflecting the use of excess cash to fund the early redemption of $63.7 million of the Company’s outstanding subordinated notes, as well as loan growth and deposit outflows. A 95 basis point decrease in the average yield on fed funds sold and interest-bearing balance in banks to 4.35% for the year ended December 31, 2025 from 4.35% for the year ended December 31, 2024 also contributed to the decrease.

Interest expense. Interest expense increased $366,000, or 0.9%, to $40.9 million for the year ended December 31, 2025 from $40.6 million for the year ended December 31, 2024, reflecting higher funding costs primarily related to increased rates of interest payable on our money market and time deposits . The average rate paid on interest bearing liabilities for the year ended December 31, 2025 was 2.51% compared to 2.54% for year ended December 31, 2024. The total average balance of interest-bearing liabilities increased $30.4 million, or 1.90%, to $1.6 billion for the year ended December 31, 2025, from the year ended December 31, 2024, primarily due to an increase in interest-bearing time deposits.

Interest expense on deposits increased $680,000, or 1.9%, to $36.8 million for the year ended December 31, 2025 from $36.1 million for the year ended December 31, 2024, primarily due to increases in the average balances of money market accounts and time deposits, partially offset by decreases in the average rates paid on those accounts. The average balance of time deposits increased $39.7 million, or 7.73%, to $553.2 million during 2025, compared to $513.5 million during 2024. Similarly, the average balance of money market accounts increased $31.5 million, or 4.9%, to $680.7 million during 2025, up from $649.2 million during 2024. The average rate paid on interest bearing deposits decreased to 2.34% for the year ended December 31, 2025, from 2.37% for the year ended December 31, 2024, with the average rate paid on time deposits decreasing 26 basis points to 3.73% during 2025 compared to 3.99% during 2024, and the average rate paid on money market deposits decreasing three basis points to 2.33% during 2025 compared to 2.36% during 2024.

The overall average cost of deposits, which includes noninterest-bearing deposits, was 1.68% for both the year ended December 31, 2025 and the year ended December 31, 2024. The average balance of noninterest bearing deposits decreased $15.8 million, or 2.54%, to $608.0 million for the year ended December 31, 2025 compared to $623.8 million for the year ended December 31, 2024.

Interest expense on borrowings, which in 2024 consisted primarily of subordinated debt and junior subordinated debentures, decreased in 2025, as the Company redeemed all of its subordinated debt in September 2025. Accordingly, borrowings outstanding at December 31, 2025 consisted primarily of junior subordinated debentures. The average balance of borrowings decreased $18.7 million, or 25.8%, to $53.6 million for the year ended December 31, 2025, compared to the year ended December 31, 2024. At the same time, the average cost of borrowings increased 156 basis points to 7.68% in 2025, up from 6.13% in 2024.

Net interest income and net interest margin.   Net interest income increased $3.3 million, or 3.6%, to $94.5 million for the year ended December 31, 2025, compared to $91.1 million for the year ended December 31, 2024. The increase primarily resulted from higher interest income on loans and investment securities and a decrease in interest expense on borrowings, partially offset by lower interest income on federal funds sold and interest-bearing balances in banks, as well as an increase in interest expense on deposits.

Net interest margin for the year ended December 31, 2025 was 3.82%, an eight basis point increase from 3.74% for the year ended December 31, 2024. The increase in net interest margin primarily reflects higher yields on interest-earning assets, particularly loans and investment securities, driven by both rate and volume increases. The average yield

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on interest-earning assets increased to 5.48% for 2025 from 5.40% in 2024, while the average cost of interest-bearing liabilities slightly decreased to 2.51% in 2025 from 2.54% in 2024.

Overall, net interest income growth and margin expansion were largely attributable to the combination of higher asset balances and rising yields, partially offset by modestly higher interest costs on deposits.

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Average Balances, Interest and Average Yields/Cost.   The following table presents, 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 yields; (iii) net interest income; (iv) the interest rate spread; and (v) the net interest margin. 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. Non-accrual loans are included in the average balance.

Year ended December 31,

(Dollars in thousands)

Annualized

Annualized

Annualized

Average

Average

Average

Average

Average

Average

Balance (4)

Interest

Yield/Cost

Balance (4)

Interest

Yield/Cost

Balance (4)

Interest

Yield

(Dollars in thousands)

Interest earning assets

Fed Funds sold and interest-bearing balances in banks

Investments securities

FHLB Stock

FRB Stock

Total loans (1)

Total interest earning assets

Noninterest earning assets

Total average assets

Interest bearing liabilities

Savings

NOW accounts

Money market

Time deposits

Total interest bearing deposit accounts

Subordinated debt, net

Junior subordinated debentures, net

Other borrowings

Total interest bearing liabilities

Noninterest bearing deposits

Other noninterest bearing liabilities

Noninterest bearing liabilities

Total average liabilities

Average equity

Total average liabilities and equity

Net interest income

Interest rate spread (2)

Net interest margin (3)

Ratio of average interest earning assets to average interest bearing liabilities

Loan average balances are net of deferred origination fees and costs. Non-accrual loans are included in the average balances. Interest income on non-accruing loans is reflected in the period that it is collected, to the extent it is not applied to principal.

Interest rate spread is calculated as the average rate earned on interest earning assets minus the average rate paid on interest bearing liabilities.

Net interest margin is calculated as net interest income divided by total average earning assets.

Average balances are average daily balances.

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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. Yields have been calculated on a pre-tax basis.

Year ended December 31,

Year ended December 31,

2025 compared to 2024

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

Investments securities

FHLB stock and FRB stock

Total loans

Total interest income

Interest bearing liabilities

Savings

NOW accounts

Money market accounts

Time deposits

Total deposit accounts

Subordinated debt, net

Junior subordinated debentures, net

Total interest expense

Net interest income

Provision for credit losses. We recorded a $4.1 million provision for credit losses for the year ended December 31, 2025, compared to a $1.3 million provision for credit losses for the year ended December 31, 2024.  The provision for credit losses for the year ended December 31, 2025 was primarily driven by loan growth, charge-offs during the current year, and increased reserves on both pooled loans and individually evaluated loans. Net charge-offs totaled $948,000 for the year ended December 31, 2025 compared to net charge-offs of $5.0 million in 2024. The lower level of net charge-offs for 2025 primarily reflect fewer nonaccrual loan charge-offs, as well as payoffs and collections on previously nonaccrual loans. Approximately $9.4 million of nonaccrual loans were less than 30 days past due as of December 31, 2025, and were placed on nonaccrual primarily due to borrower-specific financial concerns or elevated risk in the underlying collateral rather than payment delinquency. The Company continues to monitor these loans closely, and certain loans may return to accrual status if the borrowers’ financial positions stabilize and full collection of principal and interest becomes probable.

Noninterest income.   Total noninterest income decreased $291,000, or 4.6%, to $6.1 million for the year ended December 31, 2025 compared to $6.4 million for the year ended December 31, 2024. The decrease was primarily due to a $693,000 decrease in gain on equity securities as a result of negative fair value adjustments on these securities due to changes in market conditions and a $160,000 decrease in other income and fees, offset by a $222,000 decrease in loss on investment in SBIC fund, a $184,000 increase in service charges and other fees, and a $175,000 increase in loan servicing and other loan fees.

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The following table presents the key components of noninterest income for the years ended December 31, 2025 and 2024.

December 31,

$ Change

% Change

(Dollars in thousands)

Gain on sale of loans

(Loss) gain on equity securities

Service charges and other fees

Loan servicing and other loan fees

Loss on investment in SBIC fund

Other income and fees

Total noninterest income

N/M - Not meaningful

Noninterest expense.   Total noninterest expense decreased $278,000, or 0.4%, to $63.9 million for the year ended December 31, 2025 compared to $64.1 million for the year ended December 31, 2024. The decrease was primarily due to a $2.1 million decline in other expense, which included the return of $1.2 million of excess funds to the Bank in 2025 from a loss reserve account previously established under the CalCAP. The excess funds were returned due to strong loan performance. No unused CalCAP funds were returned in 2024. The decrease in other expense also reflected lower legal and professional service costs, reduced FDIC insurance expense and a lower level of fraudulent check losses. These decreases were partially offset by a $1.3 million increase in salaries and wages resulting from higher incentive compensation and increased base wages, and a $593,000 increase in data processing expense due to newly implemented services in 2025.

The following table presents the key components of noninterest expense for the years ended December 31, 2025 and 2024:

Year ended December 31,

$ Change

% Change

(Dollars in thousands)

Salaries and employee benefits

Occupancy and equipment

Data processing

Other

Total noninterest expense

Income taxes.   Income tax expense increased $180,000, or 2.1%, to $8.7 million for the year ended December 31, 2025 from $8.5 million for the year ended December 31, 2024, reflecting an increase in pre-tax income for the year ended December 31, 2025. The Company’s effective tax rate was 26.6% for the year ended December 31, 2025 compared to 26.5% for 2024.

Comparison of Operating Results for the Years Ended December 31, 2024 and 2023

For a discussion of the Company’s 2024 results compared to 2023, refer to Part I, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2024, which was filed with the SEC on March 14, 2025.

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.

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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 several different sources to meet our potential liquidity demands. Our primary sources of funds are deposits, principal and interest payments on loans and proceeds from sales of loans. During the years ended December 31, 2025, 2024 and 2023, the Bank sold $5.1 million, $14.0 million and $9.6 million in loans and loan participation interests, and received $354.1 million, $299.9 million and $196.7 million in principal repayments, respectively.

While maturities and scheduled amortization of loans are predictable sources of funds, deposit flows and mortgage prepayments are greatly influenced by market interest rates, economic conditions, and competition.

During the years ended December 31, 2025 and 2024, deposits decreased by $20.4 million and increased by $101.3 million, respectively. Liquid assets in the form of cash and cash equivalents, time deposit in banks and investment securities available-for-sale decreased to $386.2 million at December 31, 2025 from $557.6 million at December 31, 2024. Further, management believes that our security portfolio is of high quality, helping to ensure marketability. Securities purchased during the years ended December 31, 2025 and 2024, excluding FHLB and FRB stock, totaled $15.6 million and $49.9 million, while securities repayments, maturities and sales in those years were $38.2 million, and $21.9 million, respectively. Certificates of deposit scheduled to mature in one year or less at December 31, 2025, totaled $471.2 million. It is management’s strategy to offer deposit rates that are competitive with other local financial institutions. As a result of this strategy, we believe that a significant portion of our maturing certificates of deposit will be retained.

In addition to these primary sources of funds, management has several secondary sources available to meet potential funding requirements. As of December 31, 2025, the Bank had an available borrowing capacity of $580.7 million with the FHLB of San Francisco, with no borrowings outstanding at that date. The Bank also had Federal Funds lines with available commitments totaling $65.0 million with four correspondent banks. There were no amounts outstanding under these facilities at both December 31, 2025 and 2024. The Bank has been approved for discount window advances from the FRB of San Francisco secured by certain types of loans. At December 31, 2025 and December 31, 2024, we had the ability to borrow up to $49.3 million and $41.9 million, respectively, from the FRB of San Francisco. At both December 31, 2025 and December 31, 2024, we had  no FRB of San Francisco advances outstanding. 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, pay maturing deposits and fund withdrawals, and to fund loan commitments. Loan commitments and letters of credit were $67.5 million and $73.4 million, including $1.5 million and $9.6 million of undisbursed construction and development loan commitments, at December 31, 2025 and 2024, respectively. For information regarding our commitments, see “Note 15 - Commitments and Contingencies” of the Notes to Consolidated Financial Statements included in “Item 8. Financial Statements and Supplementary Data” of this Form 10 K.

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 was $31.8 million and $30.4 million for the years ended December 31, 2025 and 2024, respectively. Net cash used in investing activities, which consisted primarily of net change in loans receivable and purchases, sales and maturities of investment securities, was $90.8 million and $62.2 million for the years ended December 31, 2025 and 2024, respectively. During the year ended December 31, 2025, financing activities, comprised primarily of net change in deposits, used net cash of $98.6 million, compared to $88.3 million of net cash provided by financing activities for the year ended December 31, 2024.

We incur capital expenditures on an ongoing basis to expand and improve our product offerings, enhance and modernize our technology infrastructure, and introduce new technology-based products to compete effectively in our markets. We evaluate capital expenditure projects based on a variety of factors, including expected strategic impacts (such as forecasted impact on revenue growth, productivity, expenses, service levels and customer retention) and our expected

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return on investment. The amount of capital investment is influenced by, among other things, current and projected demand for our services and products, cash flow generated by operating activities, cash required for other purposes and regulatory considerations. The Bank utilizes funds to acquire, upgrade, and maintain its equipment, IT infrastructure and operating locations, with the investment intended to provide longer-term utility to the Company’s business. Based on current capital allocation objectives, there are no projects scheduled for capital investments in premises, IT infrastructure and equipment as of December 31, 2025 that would materially impact liquidity. We also have purchase obligations, generally with remaining terms of less than three years and contracts with various vendors to provide services, including information processing, for periods generally ranging from one to five years, for which our financial obligations are dependent upon satisfactory performance by the vendor.

As of December 31, 2025, we had total other future obligations and accrued expenses of $27.9 million, which includes $13.7 million of projected operating lease payments and $622,000 of scheduled interest payments on junior subordinated debentures, excluding any borrowings made after December 31, 2025. For information regarding our operating leases, see “Note 6, Leases” of the Notes to Consolidated Financial Statements included in “Item 8. Financial Statements and Supplementary Data” of this Form 10-K. We believe that our liquid assets combined with the available lines of credit provide adequate liquidity to meet our current financial obligations for at least the next 12 months.

BayCom Corp is a separate legal entity from the Bank and must provide for its own liquidity. At December 31, 2025, the Company, on an unconsolidated basis, had liquid assets of $7.5 million. In addition to its operating expenses, the Company is responsible for paying any dividends declared to its shareholders, funds paid out for Company stock repurchases, and payments on trust-preferred securities issued at the holding company level. The Company can receive dividends or other capital distributions from the Bank, although there are regulatory restrictions on the ability of the Bank to make such payments.

During 2025, the Company declared $9.9 million of cash dividends on its common stock, of which $3.3 million was paid subsequent to year-end. The Company expects to continue paying quarterly cash dividends on its common stock, subject to the Board of Director’s discretion to modify or terminate this practice at any time and for any reason without prior notice. On February 19, 2026, the Company declared a quarterly cash dividend of $0.30 per share on the Company’s outstanding common stock, payable on April 9, 2026 to shareholders of record as of the close of business on March 12, 2026. Assuming continued payment during 2026 at this rate of $0.30 per share, our average total dividend paid each quarter would be approximately $3.3 million based on the number of our outstanding shares at December 31, 2025. The dividends, if any, we may pay 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 this Form 10-K.

From time to time, our Board of Directors has authorized stock repurchase plans. In general, stock repurchase plans allow us to proactively manage our capital position and return excess capital to shareholders. Shares purchased under such plans may also provide us with shares of common stock necessary to satisfy obligations related to stock compensation awards. In May 2024, the Company announced that its Board of Directors approved a stock repurchase program authorizing the Company to repurchase up to five percent of BayCom’s common stock, or approximately 560,000 shares. The repurchase program does not have a set expiration date. The repurchase program 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 repurchase program does not obligate the Company to purchase any particular number of shares. See "Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities” of this Form 10-K for additional information relating to stock repurchases.

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Regulatory capital. The Bank, as a state-chartered, federally insured commercial bank, and member of the Federal Reserve is subject to the capital requirements established by the Federal Reserve. The Federal Reserve requires the Bank to maintain capital adequacy that generally parallels 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 December 31, 2025 and 2024, the Bank was considered to be Well Capitalized.

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

Minimum

Minimum

Regulatory

Regulatory

Requirement for

Actual

Requirement

“Well Capitalized”

Amount

Ratio

Amount

Ratio

Amount

Ratio

(Dollars in thousands)

BayCom Corp

As of December 31, 2025

Tier 1 leverage ratio

Common equity tier 1 capital

Tier 1 capital to risk-weighted assets

Total capital to risk-weighted assets

United Business Bank

As of December 31, 2025

Tier 1 leverage ratio

Common equity tier 1 capital

Tier 1 capital to risk-weighted assets

Total capital to risk-weighted assets

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 to avoid limitations on paying dividends, engaging in share repurchases, and paying discretionary bonuses. At December 31, 2025, 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 banks 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 December 31, 2025, 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 18, “Regulatory Matters” in the Notes to the Consolidated Financial Statements, included in “Item 8. Financial Statements and Supplementary Data”, within this Form 10-K.