# Hanmi Financial Corp: Form 10-Q for the period ended Jun 30, 2025

- Company: [Hanmi Financial Corp](/companies/hafc.md) (CIK 1109242)
- Form: 10-Q
- Filed: 2025-08-08
- Accepted by EDGAR: Aug 8, 2025, 13:54 ET
- Period: 2025-06-30
- Accession: 0000950170-25-105658
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1109242/000095017025105658/hafc-20250630.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1109242/000095017025105658/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2025-06-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2025-04-01 to 2025-06-30 | $65.2m | us-gaap:Revenues |
| Revenue | 6 months, 2025-01-01 to 2025-06-30 | $128.0m | us-gaap:Revenues |
| Operating income | 3 months, 2025-04-01 to 2025-06-30 | $15.1m | us-gaap:OperatingIncomeLoss |
| Operating income | 6 months, 2025-01-01 to 2025-06-30 | $32.8m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2025-04-01 to 2025-06-30 | $6.1m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 6 months, 2025-01-01 to 2025-06-30 | $13.6m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2025-04-01 to 2025-06-30 | $15.1m | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2025-01-01 to 2025-06-30 | $32.8m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2025-04-01 to 2025-06-30 | $0.50 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 6 months, 2025-01-01 to 2025-06-30 | $1.08 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2025-04-01 to 2025-06-30 | $0.50 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 6 months, 2025-01-01 to 2025-06-30 | $1.09 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2025-04-01 to 2025-06-30 | 30,054,456 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 6 months, 2025-01-01 to 2025-06-30 | 30,048,704 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 6 months, 2025-01-01 to 2025-06-30 | $6.9m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 6 months, 2025-01-01 to 2025-06-30 | $832.0k | us-gaap:PaymentsToAcquireProductiveAssets |
| Dividends paid | 6 months, 2025-01-01 to 2025-06-30 | $16.4m | us-gaap:PaymentsOfDividends |
| Share repurchases | 6 months, 2025-01-01 to 2025-06-30 | $2.8m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Total assets | at 2025-06-30 | $7.86bn | us-gaap:Assets |
| Total liabilities | at 2025-06-30 | $7.10bn | us-gaap:Liabilities |
| Shareholders' equity | at 2025-06-30 | $762.8m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 77,218 characters.

The following is management’s discussion and analysis of our results of operations and financial condition as of and for the three and six months ended June 30, 2025. This analysis should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2024 (the “2024 Annual Report on Form 10-K”) and with the unaudited consolidated financial statements and notes thereto set forth in this Quarterly Report on Form 10-Q for the period ended June 30, 2025 (this “Report”).

### Forward-Looking Statements

Some of the statements contained in this Report are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements in this Report other than statements of historical fact are “forward–looking statements” for purposes of federal and state securities laws, including, but not limited to, statements about anticipated future operating and financial performance, financial condition and liquidity, business strategies, regulatory and competitive outlook, investment and expenditure plans, capital and financing needs and availability, plans and objectives of management for future operations, developments regarding our capital and strategic plans and other similar forecasts and statements of expectation and statements of assumptions underlying any of the foregoing. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “could,” “expects,” “plans,” “intends,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” or “continue,” or the negative of such terms and other comparable terminology. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.

Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, financial condition, levels of activity, performance or achievements to differ from those expressed or implied by the forward-looking statements. These factors include:

- a failure to maintain adequate levels of capital and liquidity to support our operations;
- general economic and business conditions internationally, nationally and in those areas in which we operate, including potential recessionary conditions;
- volatility and deterioration in the credit and equity markets;
- changes in investor sentiment or consumer spending, borrowing and savings habits;
- availability of capital from private and government sources;
- demographic changes;
- competition for loans and deposits and failure to attract or retain loans and deposits;
- inflation and fluctuations in interest rates that reduce our margins and yields, the fair value of financial instruments, the level of loan originations or prepayments on loans we have made and make, the level of loan sales and the cost we pay to retain and attract deposits and secure other types of funding;
- our ability to enter new markets successfully and capitalize on growth opportunities;
- the current or anticipated impact of military conflict, terrorism or other geopolitical events;
- the effect of potential future supervisory action against us or Hanmi Bank and our ability to address any issues raised in our regulatory exams;
- risks of natural disasters;
- legal proceedings and litigation brought against us;
- a failure in or breach of our operational or security systems or infrastructure, including cyberattacks;
- the failure to maintain current technologies;
- risks associated with Small Business Administration loans;
- failure to attract or retain key employees;
- our ability to access cost-effective funding;
- the imposition of tariffs or other domestic or international governmental policies and retaliatory responses;
- changes in liquidity, including the size and composition of our deposit portfolio and the percentage of uninsured deposits in the portfolio;
- fluctuations in real estate values;
- changes in accounting policies and practices;
- changes in governmental regulation, including, but not limited to, any increase in FDIC insurance premiums and changes in the monetary policies of the U.S. Treasury and the Board of Governors of the Federal Reserve System;
- the ability of Hanmi Bank to make distributions to Hanmi Financial Corporation, which is restricted by certain factors, including Hanmi Bank’s retained earnings, net income, prior distributions made, and certain other financial considerations;
- strategic transactions we may enter into;
- the adequacy of and changes in the economic assumptions and methodology for computing our allowance for credit losses;
- our credit quality and the effect of credit quality on our credit losses expense and allowance for credit losses;
- changes in the financial performance and/or condition of our borrowers and the ability of our borrowers to perform under the terms of their loans and other terms of credit agreements;
- our ability to control expenses; and
- cyber security and fraud risks against our information technology and those of our third-party providers and vendors.

For additional information concerning risks we face, see “Part II, Item 1A. Risk Factors” in this Report and “Item 1A. Risk Factors” in Part I of the 2024 Annual Report on Form 10-K. We undertake no obligation to update these forward-looking statements to reflect events or circumstances that occur after the date on which such statements were made, except as required by law.

### Critical Accounting Policies

We have established various accounting policies that govern the application of GAAP in the preparation of our financial statements. Our significant accounting policies are described in the Notes to the consolidated financial statements in our 2024 Annual Report on Form 10-K. We had no significant changes in what constituted our accounting policies since the filing of our 2024 Annual Report on Form 10-K.

Certain accounting policies require us to make significant estimates and assumptions that have a material impact on the carrying value of certain assets and liabilities, and we consider these to be critical accounting policies. For a description of these critical accounting policies, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies” in our 2024 Annual Report on Form 10-K. Actual results could differ significantly from these estimates and assumptions, which could have a material impact on the carrying value of assets and liabilities at the balance sheet dates and our results of operations for the reporting periods. Management has discussed the development and selection of these critical accounting policies with the Audit Committee of the Company’s Board of Directors.

### Executive Overview

Net income was $15.1 million, or $0.50 per diluted share, for the three months ended June 30, 2025 compared with $14.5 million, or $0.48 per diluted share, for the same period a year ago. The increase in net income was driven by a $8.5 million increase in net interest income, offset by a $6.6 million increase in credit loss expense, a $1.1 million increase in noninterest expense, and a $0.1 million higher income tax expense. Credit loss expense for the second quarter of 2025 was $7.6 million compared with a $1.0 million expense for the second quarter of 2024.

Net income was $32.8 million, or $1.08 per diluted share, for the six months ended June 30, 2025 compared with $29.6 million, or $0.97 per diluted share, for the same period a year ago. The $3.2 million increase in net income was driven by a $13.0 million increase in net interest income and a $0.4 million decrease in noninterest expense, offset by increases in credit loss expense of $9.2 million and income tax expense of $1.0 million. Credit loss expense for the six months ended June 30, 2025 was $10.4 million compared with credit loss expense of $1.2 million for the six months ended June 30, 2024.

Additional significant financial highlights include:

- Loans receivable increased by $58.0 million, or 0.94%, to $6.24 billion as of June 30, 2025, compared with $6.18 billion as of December 31, 2024. The net increase was due to loan production of $0.7 billion, offset by payoffs, loan sales, and prepayments of $0.6 billion.
- Deposits were $6.73 billion at June 30, 2025 compared with $6.44 billion at December 31, 2024 as money market and savings accounts increased by $159.3 million, time deposits increased by $115.5 million, and demand deposits increased by $18.9 million.
- Return on average assets and return on average stockholders’ equity for the six months ended June 30, 2025 were 0.86% and 8.19%, respectively, as compared with 0.79% and 7.70%, respectively for the six months ended June 30, 2024.

### Results of Operations

### Net Interest Income

Our primary source of revenue is net interest income, which is the difference between interest derived from earning assets, and interest paid on liabilities obtained to fund those assets. Our net interest income is affected by changes in the level and mix of interest-earning assets and interest-bearing liabilities, referred to as volume changes. Net interest income is also affected by changes in the yields earned on assets and rates paid on liabilities, referred to as rate changes. Interest rates charged on loans are affected principally by changes to market interest rates, the demand for loans receivable, the supply of money available for lending purposes, and other competitive factors. Those factors are, in turn, affected by general economic conditions and other factors beyond our control, such as federal economic policies, the general supply of money in the economy, legislative tax policies, governmental budgetary matters, and the actions of the Federal Reserve.

The following table shows the average balance of assets, liabilities and stockholders’ equity, the amount of interest income, and interest expense, the average yield or rate for each category of interest-earning assets and interest-bearing liabilities, and the net interest spread and the net interest margin on a taxable-equivalent basis for the periods indicated. All average balances are daily average balances.

*(dollars in thousands)*

| Assets Interest-earning assets: | Three Months Ended June 30, 2025 Average Balance | Interest Income / Expense | Average Yield / Rate | June 30, 2024 Average Balance | Interest Income / Expense | Average Yield / Rate |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Loans receivable (1) | $6,257,741 | $92,589 | 5.93% | $6,089,440 | $90,752 | 5.99% |
| Securities (2) | 993,975 | 6,261 | 2.55% | 979,671 | 5,238 | 2.17% |
| FHLB stock | 16,385 | 354 | 8.65% | 16,385 | 357 | 8.77% |
| Interest-bearing deposits in other banks | 200,266 | 2,129 | 4.26% | 180,177 | 2,313 | 5.16% |
| Total interest-earning assets | 7,468,367 | 101,333 | 5.44% | 7,265,673 | 98,660 | 5.46% |
| Noninterest-earning assets: |  |  |  |  |  |  |
| Cash and due from banks | 53,977 |  |  | 55,442 |  |  |
| Allowance for credit losses | (70,222) |  |  | (67,908) |  |  |
| Other assets | 250,241 |  |  | 252,410 |  |  |
| **Total assets** | **$7,702,363** |  |  | **$7,505,617** |  |  |
| **Liabilities and Stockholders’ Equity** |  |  |  |  |  |  |
| Interest-bearing liabilities: |  |  |  |  |  |  |
| Deposits: |  |  |  |  |  |  |
| Demand: interest-bearing | $81,308 | $29 | 0.15% | $85,443 | $32 | 0.15% |
| Money market and savings | 2,109,221 | 17,342 | 3.30% | 1,845,870 | 17,324 | 3.77% |
| Time deposits | 2,434,659 | 24,553 | 4.05% | 2,453,154 | 29,139 | 4.78% |
| Total interest-bearing deposits | 4,625,188 | 41,924 | 3.64% | 4,384,467 | 46,495 | 4.27% |
| Borrowings | 60,134 | 684 | 4.58% | 169,525 | 1,896 | 4.50% |
| Subordinated debentures | 130,880 | 1,586 | 4.84% | 130,239 | 1,649 | 5.07% |
| Total interest-bearing liabilities | 4,816,202 | 44,194 | 3.68% | 4,684,231 | 50,040 | 4.30% |
| Noninterest-bearing liabilities and equity: |  |  |  |  |  |  |
| Demand deposits: noninterest-bearing | 1,934,985 |  |  | 1,883,765 |  |  |
| Other liabilities | 140,053 |  |  | 162,543 |  |  |
| Stockholders’ equity | 811,123 |  |  | 775,078 |  |  |
| **Total liabilities and stockholders’ equity** | **$7,702,363** |  |  | **$7,505,617** |  |  |
| **Net interest income** |  | **$57,139** |  |  | **$48,620** |  |
| **Cost of deposits (3)** |  |  | **2.56%** |  |  | **2.98%** |
| Net interest spread (taxable equivalent basis) (4) |  |  | **1.76%** |  |  | **1.16%** |
| Net interest margin (taxable equivalent basis) (5) |  |  | **3.07%** |  |  | **2.69%** |

*(1) Loans receivable include loans held for sale and exclude the allowance for credit losses. Nonaccrual loans receivable are included in the average loans receivable balance.*

*(2) Securities average yield is calculated on a fully taxable equivalent basis using the current statutory federal tax rate of 21%.*

*(3) Represents interest expense on deposits as a percentage of all interest-bearing and noninterest-bearing deposits.*

*(4) Represents the average yield earned on interest-earning assets less the average rate paid on interest-bearing liabilities.*

*(5) Represents net interest income as a percentage of average interest-earning assets.*

The table below shows changes in interest income and interest expense and the amounts attributable to variations in interest rates and volumes for the periods indicated. The variances attributable to simultaneous volume and rate changes have been allocated to the change due to volume and the change due to rate categories in proportion to the relationship of the absolute dollar amount attributable solely to the change in volume and to the change in rate.

*(in thousands)*

| Interest and dividend income: | Three Months Ended June 30, 2025 vs June 30, 2024 Increases (Decreases) Due to Change In Volume | Rate | Total |
| --- | ---: | ---: | ---: |
| Loans receivable (1) | $2,762 | $(925) | $1,837 |
| Securities (2) | 76 | 947 | 1,023 |
| FHLB stock | 2 | (5) | (3) |
| Interest-bearing deposits in other banks | 264 | (448) | (184) |
| **Total interest and dividend income** | **3,104** | **(431)** | **2,673** |
| Interest expense: |  |  |  |
| Demand: interest-bearing | $(1) | $(2) | $(3) |
| Money market and savings | 2,526 | (2,508) | 18 |
| Time deposits | (140) | (4,446) | (4,586) |
| Borrowings | (1,219) | 7 | (1,212) |
| Subordinated debentures | 8 | (71) | (63) |
| **Total interest expense** | **1,174** | **(7,020)** | **(5,846)** |
| **Change in net interest income** | **$1,930** | **$6,589** | **$8,519** |

*(1) Loans receivable include loans held for sale and exclude the allowance for credit losses. Nonaccrual loans receivable are included in the average loans receivable balance.*

*(2) Securities average yield is calculated on a fully taxable equivalent basis using the current statutory federal tax rate of 21%.*

For the three months ended June 30, 2025 and 2024, net interest income was $57.1 million and $48.6 million, respectively. The increase of $8.5 million was due to a decrease in interest expense and an increase in interest and dividend income. The net interest spread and net interest margin, on a taxable equivalent basis, for the quarter ended June 30, 2025, were 1.76% and 3.07%, respectively, compared with 1.16% and 2.69%, respectively, for the same period in 2024. Interest and dividend income increased $2.7 million, or 2.7%, to $101.3 million for the three months ended June 30, 2025 from $98.7 million for the same period in 2024 primarily due to an increase in the average balance of loans. Interest expense decreased $5.8 million, or 11.7%, to $44.2 million for the three months ended June 30, 2025 from $50.0 million for the same period in 2024 primarily due to decreases in deposit rates.

The average balance of interest earning assets increased $202.7 million, or 2.8%, to $7.47 billion for the three months ended June 30, 2025, from $7.27 billion for the three months ended June 30, 2024. The average balance of loans increased $168.3 million, or 2.8%, to $6.26 billion for the three months ended June 30, 2025, from $6.09 billion for the three months ended June 30, 2024. The average balance of securities was $1.0 billion for the three months ended June 30, 2025 and 2024. The average balance of interest-bearing deposits at other banks increased $20.1 million, or 11.1%, to $200.3 million for the three months ended June 30, 2025, from $180.2 million for the three months ended June 30, 2024.

The average yield on interest-earning assets, on a taxable equivalent basis, decreased two basis points to 5.44% for the three months ended June 30, 2025, from 5.46% for the three months ended June 30, 2024. The average yield on loans decreased to 5.93% for the three months ended June 30, 2025, from 5.99% for the three months ended June 30, 2024. The average yield on securities, on a taxable equivalent basis, increased to 2.55% for the three months ended June 30, 2025, from 2.17% for the three months ended June 30, 2024. The increase in the average yield on securities was primarily due to the Company using the proceeds from lower-coupon maturing securities to reinvest into higher-coupon securities.

The average balance of interest-bearing liabilities increased $132.0 million, or 2.8%, to $4.82 billion for the three months ended June 30, 2025 compared with $4.68 billion for the three months ended June 30, 2024. The average balances of money market and savings accounts and increased $263.4 million, offset partially by decreases in borrowings of $109.4 million and in interest-bearing demand deposits and time deposits of $4.1 million and $18.5 million, respectively. The increase in average balances of money market and savings accounts was due to an increase in new commercial accounts. The decrease in the average balance of time deposits was due to the shift to money market and savings accounts as market rates decreased. The decrease in the average balance of borrowings during the three months ended June 30, 2025 was due to the increase in the average balance on interest-bearing deposits.

The average cost of interest-bearing liabilities was 3.68% and 4.30% for the three months ended June 30, 2025 and 2024, respectively. The average cost of interest-bearing deposits decreased 63 basis points to 3.64% for the three months ended June 30, 2025, compared with 4.27% for the three months ended June 30, 2024. The average cost of time deposits decreased 73 basis points to 4.05% for the three months ended June 30, 2025 compared with 4.78% for the three months ended June 30, 2024. The average cost of money market and savings accounts decreased 47 basis points to 3.30% for the three months ended June 30, 2024 compared with 3.77% for the three months ended June 30, 2024. The decrease in the cost of deposits was due to a decrease in deposit market rates. The average cost of borrowings increased to 4.58% for the three months ended June 30, 2025 compared with 4.50% for the three months ended June 30, 2024, as the lower-rate borrowings matured or were paid off.

The following table shows the average balance of assets, liabilities and stockholders’ equity; the amount of interest income, and interest expense; the average yield or rate for each category of interest-earning assets and interest-bearing liabilities; and the net interest spread and the net interest margin on a taxable-equivalent basis for the periods indicated. All average balances are daily average balances.

*(dollars in thousands)*

| Assets Interest-earning assets: | Six Months Ended June 30, 2025 Average Balance | Interest Income / Expense | Average Yield / Rate | June 30, 2024 Average Balance | Interest Income / Expense | Average Yield / Rate |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Loans receivable (1) | $6,223,825 | $183,476 | 5.94% | $6,113,664 | $182,427 | 6.00% |
| Securities (2) | 997,716 | 12,430 | 2.52% | 974,596 | 10,193 | 2.12% |
| FHLB stock | 16,385 | 715 | 8.79% | 16,385 | 719 | 8.82% |
| Interest-bearing deposits in other banks | 188,214 | 3,968 | 4.25% | 190,950 | 4,914 | 5.18% |
| Total interest-earning assets | 7,426,140 | 200,589 | 5.44% | 7,295,595 | 198,253 | 5.46% |
| Noninterest-earning assets: |  |  |  |  |  |  |
| Cash and due from banks | 53,824 |  |  | 56,912 |  |  |
| Allowance for credit losses | (69,936) |  |  | (68,507) |  |  |
| Other assets | 249,697 |  |  | 248,555 |  |  |
| **Total assets** | **$7,659,725** |  |  | **$7,532,555** |  |  |
| **Liabilities and Stockholders’ Equity** |  |  |  |  |  |  |
| Interest-bearing liabilities: |  |  |  |  |  |  |
| Deposits: |  |  |  |  |  |  |
| Demand: interest-bearing | $80,344 | $56 | 0.14% | $85,922 | $61 | 0.14% |
| Money market and savings | 2,073,421 | 33,779 | 3.29% | 1,830,478 | 33,877 | 3.72% |
| Time deposits | 2,390,249 | 48,648 | 4.10% | 2,480,492 | 58,195 | 4.72% |
| Total interest-bearing deposits | 4,544,014 | 82,483 | 3.66% | 4,396,892 | 92,133 | 4.21% |
| Borrowings | 119,460 | 2,708 | 4.57% | 165,972 | 3,551 | 4.30% |
| Subordinated debentures | 130,799 | 3,167 | 4.84% | 130,163 | 3,295 | 5.06% |
| Total interest-bearing liabilities | 4,794,273 | 88,358 | 3.72% | 4,693,027 | 98,979 | 4.24% |
| Noninterest-bearing liabilities and equity: |  |  |  |  |  |  |
| Demand deposits: noninterest-bearing | 1,915,577 |  |  | 1,902,477 |  |  |
| Other liabilities | 142,341 |  |  | 163,533 |  |  |
| Stockholders’ equity | 807,534 |  |  | 773,518 |  |  |
| **Total liabilities and stockholders’ equity** | **$7,659,725** |  |  | **$7,532,555** |  |  |
| **Net interest income** |  | **$112,231** |  |  | **$99,274** |  |
| **Cost of deposits (3)** |  |  | **2.58%** |  |  | 2.94% |
| Net interest spread (taxable equivalent basis) (4) |  |  | **1.73%** |  |  | 1.22% |
| Net interest margin (taxable equivalent basis) (5) |  |  | **3.05%** |  |  | 2.74% |

50

*(1) Loans receivable include loans held for sale and exclude the allowance for credit losses. Nonaccrual loans receivable are included in the average loans receivable balance.*

*(2) Securities average yield is calculated on a fully taxable equivalent basis using the current statutory federal tax rate of 21%.*

*(3) Represents interest expense on deposits as a percentage of all interest-bearing and noninterest-bearing deposits.*

*(4) Represents the average yield earned on interest-earning assets less the average rate paid on interest-bearing liabilities.*

*(5) Represents net interest income as a percentage of average interest-earning assets.*

The table below shows changes in interest income and interest expense and the amounts attributable to variations in interest rates and volumes for the periods indicated. The variances attributable to simultaneous volume and rate changes have been allocated to the change due to volume and the change due to rate categories in proportion to the relationship of the absolute dollar amount attributable solely to the change in volume and to the change in rate.

*(in thousands)*

| Interest and dividend income: | Six Months Ended June 30, 2025 vs June 30, 2024 Increases (Decreases) Due to Change In Volume | Rate | Total |
| --- | ---: | ---: | ---: |
| Loans receivable (1) | $2,770 | $(1,721) | $1,049 |
| Securities (2) | 242 | 1,995 | 2,237 |
| FHLB stock | (2) | (2) | (4) |
| Interest-bearing deposits in other banks | (84) | (862) | (946) |
| **Total interest and dividend income** | **2,926** | **(590)** | **2,336** |
| Interest expense: |  |  |  |
| Demand: interest-bearing | $(4) | $(1) | $(5) |
| Money market and savings | 4,390 | (4,488) | (98) |
| Time deposits | (2,273) | (7,274) | (9,547) |
| Borrowings | (1,000) | 157 | (843) |
| Subordinated debentures | 16 | (144) | (128) |
| **Total interest expense** | **1,129** | **(11,750)** | **(10,621)** |
| **Change in net interest income** | **$1,797** | **$11,160** | **$12,957** |

*(1) Loans receivable include loans held for sale and exclude the allowance for credit losses. Nonaccrual loans receivable are included in the average loans receivable balance.*

*(2) Securities average yield is calculated on a fully taxable equivalent basis using the current statutory federal tax rate of 21%.*

For the six months ended June 30, 2025 and 2024, net interest income was $112.2 million and $99.3 million, respectively. The increase of $12.9 million was primarily due to a decrease in interest expense due to decreases in deposit rates. The net interest spread and net interest margin, on a taxable equivalent basis, for the six months ended June 30, 2025, were 1.73% and 3.05%, respectively, compared with 1.22% and 2.74%, respectively, for the same period in 2024. Interest and dividend income increased $2.3 million, or 1.2%, to $200.6 million for the six months ended June 30, 2025 from $198.3 million for the same period in 2024. Interest expense decreased $10.6 million, or 10.7%, to $88.4 million for the six months ended June 30, 2025 from $99.0 million for the same period in 2024 primarily due to decreases in deposit rates.

The average balance of interest earning assets increased $130.5 million, or 1.8%, to $7.43 billion for the six months ended June 30, 2025, from $7.30 billion for the six months ended June 30, 2024. The average balance of loans increased $110.2 million, or 1.8%, to $6.22 billion for the six months ended June 30, 2025, from $6.11 billion for the six months ended June 30, 2024. The average balance of securities was $1.00 billion for the six months ended June 30, 2025 and 2024. The average balance of interest-bearing deposits at other banks decreased $2.7 million, or 1.4%, to $188.2 million for the six months ended June 30, 2025, from $191.0 million for the six months ended June 30, 2024.

The average yield on interest-earning assets, on a taxable equivalent basis, decreased two basis points to 5.44% for the six months ended June 30, 2025, from 5.46% for the six months ended June 30, 2024. The average yield on loans decreased to 5.94% for the six months ended June 30, 2025, from 6.00% for the six months ended June 30, 2024. The average yield on securities, on a taxable equivalent basis, increased to 2.52% for the six months ended June 30, 2025, from 2.12% for the six months ended June 30, 2024. The increase in the average yield on securities was primarily due to the Company using the proceeds from lower-coupon maturing securities to reinvest into higher-coupon securities.

The average balance of interest-bearing liabilities increased $101.2 million, or 2.2%, to $4.8 billion for the six months ended June 30, 2025 compared with $4.6 billion for the six months ended June 30, 2024 due to a $147.1 million increase in the average balance of interest-bearing deposits offset by a $46.5 million decrease in the average balance of borrowings. The average balances of money market and savings accounts increased by $242.9 million while the average balance of time deposits decreased $90.2 million. The increase in average balances of money market and savings accounts was due to an increase in new commercial accounts. The decrease in the average balance of time deposits was due to the shift to money market and savings accounts as market rates decreased. The decrease in the average balance of borrowings was due to an increase in the average balance of interest-bearing deposits.

**The average cost of interest-bearing liabilities was 3.72% and 4.24% for the six months ended June 30, 2025 and 2024, respectively. The average cost of interest-bearing deposits decreased 55 basis points to 3.66% for the six months ended June 30, 2025, compared with 4.21% for the six months ended June 30, 2024. The average cost of time deposits decreased 62 basis points to 4.10% for the six months ended June 30, 2025 compared with 4.72% for the six months ended June 30, 2024. The average cost of money market and savings accounts decreased 43 basis points to 3.29% for the six months ended June 30, 2024 compared with 3.72% for the six months ended June 30, 2024. The decrease in the cost of deposits was due to a decrease in deposit market rates. The average cost of borrowings increased to 4.57% for the six months ended June 30, 2025 compared with 4.30% for the six months ended June 30, 2024, as the lower-rate borrowings matured or were paid off.**

### Credit Loss Expense

For the second quarter of 2025, the Company recorded $7.6 million of credit loss expense, comprised of a $7.5 million provision for loan losses and a $0.1 million provision recorded for off-balance sheet items. For the same period in 2024, the Company recorded $1.0 million of credit loss expense, comprised of a $1.2 million provision for loan losses, partially offset by a $0.2 million recovery for off-balance sheet items. The $6.6 million increase in credit loss expense reflected an increase in net charge-offs as well as an increase in quantitative and qualitative estimated loss rates. Net charge-offs included an $8.6 million loan charge-off on a syndicated commercial real estate office loan designated as nonaccrual, which had an associated specific allowance of $6.2 million assigned in the first quarter of 2025.

For the six months ended June 30, 2025, the Company recorded $10.4 million of credit loss expense, comprised of a $9.9 million provision for loan losses and a $0.5 million provision recorded for off-balance sheet items. For the same period in 2024, the Company recorded $1.2 million of credit loss expense, comprised of a $1.7 million provision for loan losses, partially offset by a $0.5 million recovery for off-balance sheet items. The $8.2 million increase in provision for loan losses was the result of a $9.9 million increase in net charge-offs, partially offset by a $2.7 million decrease in specific allowances.

See also “Allowance for Credit Losses and Allowance for Credit Losses Related to Off-Balance Sheet Items” for further details.

### Noninterest Income

The following table sets forth the various components of noninterest income for the periods indicated:

*(in thousands)*

|  | Three Months Ended June 30, 2025 | 2024 | Increase (Decrease) Amount | Increase (Decrease) Percent |
| --- | ---: | ---: | ---: | ---: |
| Service charges on deposit accounts | $2,169 | $2,429 | $(260) | (10.70)% |
| Trade finance and other service charges and fees | 1,461 | 1,277 | 184 | 14.41 |
| Servicing income | 754 | 796 | (42) | (5.28) |
| Bank-owned life insurance income | 708 | 638 | 70 | 10.97 |
| All other operating income | 819 | 908 | (89) | (9.80) |
| **Service charges, fees & other** | **5,911** | **6,048** | **(137)** | **(2.27)** |
| Gain on sale of SBA loans | 2,160 | 1,644 | 516 | 31.39 |
| Gain on sale of residential mortgage loans | — | 365 | (365) | (100.00) |
| **Total noninterest income** | **$8,071** | **$8,057** | **$14** | **0.17%** |

For the three months ended June 30, 2025 and 2024, noninterest income was $8.1 million. A $0.5 million increase in gain on sale of SBA loans and a $0.2 million increase in trade finance and other service charges was offset by a $0.4 million decrease in gain on sale of residential mortgage loans and $0.3 million decrease in service charges on deposit accounts due to reductions in the number of transactions eligible for service charges.

During the second quarter of 2025, the Company sold $35.4 million of SBA loans, recognizing a net gain of $2.2 million. There were no residential mortgage loans sold during the second quarter of 2025. During the second quarter of 2024, the Company sold $19.5 million of residential loans, recognizing a net gain of $0.4 million, and sold $23.5 million of SBA loans, recognizing a net gain of $1.6 million. Trade premiums on SBA loan sales were 7.61% and 8.54% for the three months ended June 30, 2025 and 2024, respectively.

The following table sets forth the various components of noninterest income for the periods indicated:

*(in thousands)*

|  | Six Months Ended June 30, 2025 | 2024 | Increase (Decrease) Amount | Increase (Decrease) Percent |
| --- | ---: | ---: | ---: | ---: |
| Service charges on deposit accounts | $4,387 | $4,878 | $(491) | (10.07)% |
| Trade finance and other service charges and fees | 2,858 | 2,691 | 167 | 6.21 |
| Servicing income | 1,486 | 1,508 | (22) | (1.46) |
| Bank-owned life insurance income | 1,017 | 942 | 75 | 7.96 |
| All other operating income | 1,712 | 1,837 | (125) | (6.80) |
| **Service charges, fees & other** | **11,460** | **11,856** | **(396)** | **(3.34)** |
| Gain on sale of SBA loans | 4,161 | 3,126 | 1,035 | 33.11 |
| Gain on sale of residential mortgage loans | 175 | 808 | (633) | (78.34) |
| **Total noninterest income** | **$15,796** | **$15,790** | **$6** | **0.04%** |

For the six months ended June 30, 2025 and 2024, noninterest income was $15.8 million. The $1.0 million increase in gain on sale of SBA loans and $0.2 million increase in trade finance and other service charges was offset by a $0.6 million decrease in gain on sale of residential mortgage loans and $0.5 million decrease in service charges on deposit accounts due to reductions in the number of transactions eligible for service charges.

During the six months ended June 30, 2025, the Company sold $10.0 million of residential mortgage loans, recognizing a gain of $0.2 million, and sold $67.6 million of SBA loans, recognizing a net gain of $4.2 million. During the six months ended June 30, 2024, the Company sold $49.2 million of residential loans, recognizing a net gain of $0.8 million, and sold $49.1 million of SBA loans, recognizing a net gain of $3.1 million. Trade premiums on SBA loans sales were 7.71% and 7.85% for the six months ended June 30, 2025 and 2024, respectively.

### Noninterest Expense

The following table sets forth the components of noninterest expense for the periods indicated:

*(in thousands)*

|  | Three Months Ended June 30, 2025 | 2024 | Increase (Decrease) Amount | Increase (Decrease) Percent |
| --- | ---: | ---: | ---: | ---: |
| Salaries and employee benefits | $22,069 | $20,434 | $1,635 | 8.00% |
| Occupancy and equipment | 4,344 | 4,607 | (263) | (5.71) |
| Data processing | 3,727 | 3,686 | 41 | 1.11 |
| Professional fees | 1,725 | 1,749 | (24) | (1.37) |
| Supplies and communications | 515 | 570 | (55) | (9.65) |
| Advertising and promotion | 798 | 669 | 129 | 19.28 |
| All other operating expenses | 3,567 | 2,992 | 575 | 19.22 |
| **Subtotal** | **36,745** | **34,707** | **2,038** | **5.87** |
| Branch consolidation expense | — | 301 | (301) | — |
| Other real estate owned (income) expense | (461) | 6 | (467) | N/M |
| Repossessed personal property expense | 63 | 262 | (199) | (75.95) |
| **Total noninterest expense** | **$36,347** | **$35,276** | **$1,071** | **3.04%** |

53

For the three months ended June 30, 2025, noninterest expense was $36.3 million, an increase of $1.1 million, or 3.0%, compared with $35.3 million for the same period in 2024. The increase was mainly attributed to a $1.6 million increase in salaries and employee benefits, a $0.6 million increase in all other operating expenses, and a $0.1 million increase in advertising and promotion, partially offset by a $0.3 million decrease in occupancy and equipment due to branch consolidations and a $0.5 million increase in other real estate owned income due to the gain on sale of other real estate owned. The increase in salaries and employee benefits was mainly attributed to annual merit increases and a decrease in capitalized salaries related to loan originations for the three months ended June 30, 2025 compared with the same period in 2024. Advertising and promotion increased $0.1 million due to new branch promotional expenses. The increase in other operating expenses was due to loan and deposit operations.

The following table sets forth the components of noninterest expense for the periods indicated:

*(in thousands)*

|  | Six Months Ended June 30, 2025 | 2024 | Increase (Decrease) Amount | Increase (Decrease) Percent |
| --- | ---: | ---: | ---: | ---: |
| Salaries and employee benefits | $43,041 | $42,019 | $1,022 | 2.43% |
| Occupancy and equipment | 8,794 | 8,843 | (49) | (0.55) |
| Data processing | 7,514 | 7,237 | 277 | 3.83 |
| Professional fees | 3,194 | 3,642 | (448) | (12.30) |
| Supplies and communications | 1,031 | 1,172 | (141) | (12.03) |
| Advertising and promotion | 1,382 | 1,576 | (194) | (12.31) |
| All other operating expenses | 6,742 | 6,451 | 291 | 4.51 |
| **Subtotal** | **71,698** | **70,940** | **758** | **1.07** |
| Branch consolidation expense | — | 301 | (301) | N/M |
| Other real estate owned (income) expense | (420) | 28 | (448) | N/M |
| Repossessed personal property expense | 52 | 451 | (399) | (88.47) |
| **Total noninterest expense** | **$71,330** | **$71,720** | **$(390)** | **(0.54)%** |

For the six months ended June 30, 2025, noninterest expense was $71.3 million, a decrease of $0.4 million, or 0.5%, compared with $71.7 million for the same period in 2024. The decrease was mainly attributed to a $0.4 million decrease in professional fees, a $0.2 million decrease in advertising and promotion, a $0.3 million branch consolidation expense during the six months ended June 30, 2024, a $0.4 million increase in other real estate owned income due to the sale of other real estate owned and $0.4 million decrease in repossessed personal property expense, offset by a $1.0 million increase in salaries and benefits. The increase in salaries and employee benefits was primarily due to an increase in annual merit raises and promotions. Professional fees decreased $0.4 million for the six months ended June 30, 2025 due to the completion of a loan system implementation in 2024. Advertising and promotion decreased $0.2 million due to a decrease in deposit marketing campaign expenses.

### Income Tax Expense

Income tax expense was $6.1 million and $6.0 million, representing an effective income tax rate of 28.8% and 29.3% for the three months ended June 30, 2025 and 2024, respectively. Income tax expense was $13.6 million and $12.5 million, representing an effective income tax rate of 29.3% and 29.7% for the six months ended June 30, 2025 and 2024, respectively.

### Financial Condition

### Securities

As of June 30, 2025, our securities portfolio consisted of U.S. government agency and sponsored agency mortgage-backed securities, collateralized mortgage obligations and debt securities, tax-exempt municipal bonds and U.S. Treasury securities. Most of these securities carry fixed interest rates. Other than holdings of U.S. government agency and sponsored agency obligations, there were no securities of any one issuer exceeding 10% of stockholders’ equity as of June 30, 2025 or December 31, 2024.

Securities increased $12.3 million to $918.1 million at June 30, 2025 from $905.8 million at December 31, 2024, mainly attributed to $101.0 million in securities purchases and a decrease in unrealized losses on securities, net of tax, of $15.9 million during the six months ended June 30, 2025, partially offset by $109.6 million in payments and maturities.

The following table summarizes the contractual maturity schedule for securities, at amortized cost, and their cost weighted average yield, which is calculated using amortized cost as the weight, as of June 30, 2025:

*(dollars in thousands)*

| Securities available for sale: | Within One Year Amount | Yield | After One Year But Within Five Years Amount | Yield | After Five Years But Within Ten Years Amount | Yield | After Ten Years Amount | Yield | Total Amount | Yield |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| U.S. Treasury securities | $80,844 | 4.46% | $39,064 | 3.51% | $— | 0.00% | $— | 0.00% | $119,908 | 4.15% |
| U.S. government agency and sponsored agency obligations: |  |  |  |  |  |  |  |  |  |  |
| Mortgage-backed securities - residential | — | — | — | — | 67,608 | 1.98 | 366,980 | 1.91 | 434,588 | 1.92 |
| Mortgage-backed securities - commercial | 1,480 | 0.76 | 3,203 | 3.46 | — | — | 68,612 | 2.48 | 73,295 | 2.49 |
| Collateralized mortgage obligations | — | — | 81 | 1.31 | 1,399 | 1.03 | 202,489 | 4.31 | 203,969 | 4.29 |
| Debt securities | 39,496 | 1.52 | 47,791 | 2.25 | — | — | — | — | 87,287 | 1.92 |
| Total U.S. government agency and sponsored agency obligations | 40,976 | 1.49 | 51,075 | 2.32 | 69,007 | 1.96 | 638,081 | 2.73 | 799,139 | 2.58 |
| Municipal bonds-tax exempt | — | — | — | — | 53,062 | 1.33 | 22,502 | 1.34 | 75,564 | 1.34 |
| **Total securities available for sale** | **$121,820** | **3.47%** | **$90,139** | **2.84%** | **$122,069** | **1.69%** | **$660,583** | **2.69%** | **$994,611** | **2.67%** |

### Loans Receivable

As of June 30, 2025 and December 31, 2024, loans receivable (excluding loans held for sale), net of deferred loan fees and costs, discounts and allowance for credit losses, were $6.24 billion and $6.18 billion, respectively. For the six months ended June 30, 2025, there was $675.5 million in new loan production, offset partially by $321.8 million in loan sales and payoffs, and amortization and other reductions of $258.1 million. Loan production consisted of commercial real estate loans of $258.6 million, residential mortgages of $138.8 million, commercial and industrial loans of $95.8 million, equipment financing agreements of $80.3 million and SBA loans of $102.1 million.

The table below shows the maturity distribution of outstanding loans, before the allowance for credit losses as of June 30, 2025. In addition, the table shows the distribution of such loans between those with floating or variable interest rates and those with fixed or predetermined interest rates.

*(in thousands)*

| Real estate loans: Commercial property | Within One Year | After One Year but Within Three Years | After Three Years but Within Five Years | After Five Years but Within Fifteen Years | After Fifteen Years | Total |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Retail | $169,350 | $306,509 | $425,818 | $136,850 | $78,013 | $1,116,540 |
| Hospitality | 145,223 | 267,240 | 348,296 | 44,739 | 16,523 | 822,021 |
| Office | 241,831 | 248,758 | 46,353 | 9,957 | 9,554 | 556,453 |
| Other | 338,734 | 464,636 | 424,740 | 107,913 | 37,813 | 1,373,836 |
| Total commercial property loans | 895,138 | 1,287,143 | 1,245,207 | 299,459 | 141,903 | 3,868,850 |
| Construction | 76,076 | 3,996 | — | — | — | 80,072 |
| Residential | 7,103 | — | 230 | 4,250 | 982,286 | 993,869 |
| Total real estate loans | 978,317 | 1,291,139 | 1,245,437 | 303,709 | 1,124,189 | 4,942,791 |
| Commercial and industrial loans | 416,708 | 152,778 | 152,214 | 196,295 | — | 917,995 |
| Equipment financing agreements | 32,819 | 222,640 | 175,740 | 13,972 | — | 445,171 |
| **Loans receivable** | **$1,427,844** | **$1,666,557** | **$1,573,391** | **$513,976** | **$1,124,189** | **$6,305,957** |
| Loans with predetermined interest rates | 782,718 | 1,091,615 | 640,878 | 32,641 | 259,709 | 2,807,561 |
| Loans with variable interest rates | 645,126 | 574,942 | 932,513 | 481,335 | 864,480 | 3,498,396 |

55

The table below shows the maturity distribution of outstanding loans, before the allowance for credit losses, with fixed or predetermined interest rates, as of June 30, 2025.

*(in thousands)*

| Real estate loans: Commercial property | Within One Year | After One Year but Within Three Years | After Three Years but Within Five Years | After Five Years but Within Fifteen Years | After Fifteen Years | Total |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Retail | $137,363 | $242,039 | $199,583 | $104 | $472 | $579,561 |
| Hospitality | 75,370 | 132,053 | 94,285 | — | 215 | 301,923 |
| Office | 122,030 | 198,116 | 17,446 | — | — | 337,592 |
| Other | 276,476 | 291,673 | 142,975 | 10,985 | 3,237 | 725,346 |
| Total commercial property loans | 611,239 | 863,881 | 454,289 | 11,089 | 3,924 | 1,944,422 |
| Construction | — | — | — | — | — | — |
| Residential | 1,467 | — | 21 | 2,201 | 255,785 | 259,474 |
| Total real estate loans | 612,706 | 863,881 | 454,310 | 13,290 | 259,709 | 2,203,896 |
| Commercial and industrial loans | 137,193 | 5,094 | 10,828 | 5,379 | — | 158,494 |
| Equipment financing agreements | 32,819 | 222,640 | 175,740 | 13,972 | — | 445,171 |
| **Loans receivable** | **$782,718** | **$1,091,615** | **$640,878** | **$32,641** | **$259,709** | **$2,807,561** |

The table below shows the maturity distribution of outstanding loans, before the allowance for credit losses, with floating or variable interest rates (including floating, adjustable and hybrids), as of June 30, 2025.

*(in thousands)*

| Real estate loans: Commercial property | Within One Year | After One Year but Within Three Years | After Three Years but Within Five Years | After Five Years but Within Fifteen Years | After Fifteen Years | Total |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Retail | $31,987 | $64,470 | $226,235 | $136,746 | $77,542 | $536,980 |
| Hospitality | 69,853 | 135,187 | 254,011 | 44,739 | 16,307 | 520,097 |
| Office | 119,801 | 50,642 | 28,907 | 9,957 | 9,554 | 218,861 |
| Other | 62,258 | 172,964 | 281,765 | 96,929 | 34,574 | 648,490 |
| Total commercial property loans | 283,899 | 423,263 | 790,918 | 288,371 | 137,977 | 1,924,428 |
| Construction | 76,076 | 3,995 | — | — | — | 80,071 |
| Residential | 5,637 | — | 209 | 2,049 | 726,503 | 734,398 |
| Total real estate loans | 365,612 | 427,258 | 791,127 | 290,420 | 864,480 | 2,738,897 |
| Commercial and industrial loans | 279,514 | 147,684 | 141,386 | 190,915 | — | 759,499 |
| **Loans receivable** | **$645,126** | **$574,942** | **$932,513** | **$481,335** | **$864,480** | **$3,498,396** |

### Industry

As of June 30, 2025, the loan portfolio included the following concentrations of loan types to borrowers in industries that represented greater than 10.0% of loans receivable outstanding:

*(in thousands)*

|  | Balance as of June 30, 2025 | Percentage of Loans Receivable Outstanding |
| --- | ---: | ---: |
| Lessor of nonresidential buildings | $1,635,211 | 25.9% |
| Hospitality | 820,660 | 13.0% |

### Loan Quality Indicators

Loans 30 to 89 days past due and still accruing were $11.0 million at June 30, 2025, compared with $18.5 million at December 31, 2024.

Activity in criticized loans was as follows for the periods indicated:

*(in thousands)*

| Three months ended June 30, 2025 | Special Mention | Classified |
| --- | ---: | ---: |
| Balance at beginning of period | $118,380 | $46,519 |
| Additions | 300 | 4,769 |
| Reductions | (105,980) | (17,431) |
| **Ending balance** | **$12,700** | **$33,857** |
| **Three months ended June 30, 2024** |  |  |
| Balance at beginning of period | $62,316 | $23,669 |
| Additions | 1,969 | 13,993 |
| Reductions | (27,363) | (3,716) |
| **Ending balance** | **$36,922** | **$33,946** |

*(in thousands)*

| Six months ended June 30, 2025 | Special Mention | Classified |
| --- | ---: | ---: |
| Balance at beginning of period | $139,613 | $25,683 |
| Additions | 448 | 20,045 |
| Reductions | (127,361) | (11,871) |
| **Ending balance** | **$12,700** | **$33,857** |
| **Six months ended June 30, 2024** |  |  |
| Balance at beginning of period | $65,315 | $31,367 |
| Additions | 2,522 | 16,571 |
| Reductions | (30,915) | (13,992) |
| **Ending balance** | **$36,922** | **$33,946** |

Special mention loans were $12.7 million and $139.6 million at June 30, 2025 and December 31, 2024, respectively. The $126.9 million decrease in the first six months of 2025 reflected loan upgrades of $105.8 million on a commercial and industrial loan during the first quarter and two commercial real estate loans during the second quarter, paydowns of $20.0 million and amortization of $1.5 million, offset by downgrades of $0.4 million. The $28.4 million decrease in special mention loans during the six months ended June 30, 2024 reflected upgrades to pass loans of $19.4 million, downgrades to classified loans of $8.0 million, and paydowns and payoffs of $3.7 million, offset by downgrades from pass loans of $2.7 million. The upgrades to pass loans were primarily attributable to upgrades of two commercial and industrial loans totaling $13.6 million and one commercial real estate loan of $4.3 million during the second quarter of 2024.

Classified loans were $33.9 million and $25.7 million at June 30, 2025 and December 31, 2024, respectively. The $8.2 million increase in classified loans for the six months ended June 30, 2025 resulted from $25.2 million of loan downgrades and $5.8 million of additions to classified loans. The increase in loan downgrades was primarily the result of a $20.0 million commercial real estate office loan designated as nonaccrual during the first quarter of 2025. Additions were offset by $14.6 million of charge-offs, including an $8.6 million charge-off during the second quarter of 2025 on the previously mentioned office loan and $5.6 million of equipment financing charge-offs, $4.3 million of upgrades, $2.6 million of amortization and paydowns and $1.3 million of payoffs. The $2.5 million increase in classified loans during the six months ended June 30, 2024 was primarily driven by new downgrades to classified of $17.6 million, offset by payoffs of $8.3 million, charge-offs of $3.7 million, and paydowns and amortization of $3.1 million.

### Nonperforming Assets

Nonperforming loans consist of nonaccrual loans and loans 90 days or more past due and still accruing interest. Nonperforming assets consist of nonperforming loans and OREO. Loans are placed on nonaccrual status when, in the opinion of management, the full timely collection of principal or interest is in doubt. Generally, the accrual of interest is discontinued when principal or interest payments become more than 90 days past due, unless we believe the loan is adequately collateralized and in the process of collection. However, in certain instances, we may place a particular loan on nonaccrual status earlier, depending upon the individual circumstances surrounding the loan’s delinquency. When a loan is placed on nonaccrual status, previously accrued but unpaid interest is reversed against current income. Subsequent collections of cash are applied as principal reductions when received, except when the ultimate collectability of principal is probable, in which case interest payments are credited to income. Nonaccrual loans may be restored to accrual status when principal and interest become current and full repayment is expected, which generally occurs after sustained payment of six months. Interest income is recognized on the accrual basis for loans not meeting the criteria for nonaccrual. OREO consists of properties acquired by foreclosure or similar means.

Except for nonaccrual loans, management is not aware of any other loans as of June 30, 2025 for which known credit problems of the borrower would cause serious doubts as to the ability of such borrowers to comply with their present loan repayment terms, or any known events that would result in a loan being designated as nonperforming at some future date.

Nonaccrual loans were $26.0 million and $14.3 million as of June 30, 2025 and December 31, 2024, respectively, representing an increase of $11.7 million, or 82.6%. The increase was due to the previously mentioned commercial real estate office loan designated as nonaccrual during the first quarter of 2025. As of June 30, 2025 and December 31, 2024, 1.57% and 1.81% of equipment financing agreements were on nonaccrual status, respectively. At June 30, 2025, there were no loans 90 days or more past due and still accruing interest. At December 31, 2024, all loans 90 days or more past due were classified as nonaccrual.

The $26.0 million of nonperforming loans as of June 30, 2025 had individually evaluated allowances of $4.1 million, compared with $14.3 million of nonperforming loans with individually evaluated allowances of $6.2 million as of December 31, 2024.

Nonperforming assets were $26.0 million at June 30, 2025, or 0.33% of total assets, compared with $14.4 million, or 0.19%, at December 31, 2024. Additionally, not included in nonperforming assets were repossessed personal property assets associated with equipment finance agreements of $0.6 million and $0.6 million at June 30, 2025 and December 31, 2024, respectively.

### Individually Evaluated Loans

The Company reviews loans on an individual basis when the loan does not share similar risk characteristics with loan pools. Individually evaluated loans are measured for expected credit losses based on the present value of expected cash flows discounted at the effective interest rate, the observable market price, or the fair value of collateral.

Individually evaluated loans were $23.0 million and $14.3 million as of June 30, 2025 and December 31, 2024, respectively, representing a increase of $8.7 million, or 60.8%. Specific allowances associated with individually evaluated loans decreased $2.1 million to $4.1 million as of June 30, 2025 compared with $6.2 million as of December 31, 2024. due to increased charge-offs, offset by new specific allowances on individually evaluated loans.

A borrower is experiencing financial difficulties when there is a probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification. The Company may modify loans to borrowers experiencing financial difficulties by providing principal forgiveness, a term extension, an other-than-insignificant payment delay, or an interest rate reduction.

The following table presents loan modifications made to borrowers experiencing financial difficulty by type of modification, with related amortized cost balances, respective percentage shares of the total class of loans, and the related financial effect, as of the periods indicated:

*(in thousands)*

| Six months ended June 30, 2025 | Principal and Interest Deferment Amortized Cost Basis | % of Total Class of Loans | Financial Effect |
| --- | ---: | ---: | --- |
| Commercial property loans: Retail | $13,533 | 1.2% | Two loans with three-month principal and interest deferment |

The modified loans above were current at June 30, 2025.

No loans were modified during the three months ended June 30, 2025. The table above includes two retail commercial loans with an amortized cost of $13.5 million that were modified during the six months ended June 30, 2025.

*(in thousands)*

| Six months ended June 30, 2025 | Term Extension Amortized Cost Basis | % of Total Class of Loans | Financial Effect |
| --- | ---: | ---: | --- |
| Commercial and industrial loans | $20,620 | 2.6% | One loan with term extension of six years |

During the three and six months ended June 30, 2025 and 2024, there were no payment defaults on loans modified within the preceding 12 months.

### Allowance for Credit Losses and Allowance for Credit Losses Related to Off-Balance Sheet Items

As previously mentioned, effective January 1, 2025, the Company changed its methodology for estimating expected credit losses on its loan portfolio. The Company’s estimate of the allowance for credit losses at June 30, 2025 and December 31, 2024 reflected losses expected over the remaining contractual life of assets based on historical, current, and forward-looking information. The contractual term does not consider extensions, renewals or modifications.

Our allowance for credit losses methodology incorporates a variety of risk considerations, both quantitative and qualitative, that management believes is appropriate to absorb lifetime credit losses at each reporting date. Quantitative factors include the general economic forecast in our markets, risk ratings, delinquency trends, collateral values, changes in nonperforming loans, and other factors.

We use qualitative factors to adjust the allowance calculation for risks not considered by the quantitative calculations. Qualitative factors considered in our methodologies include concentrations of credit, changes in lending management and staff, and quality of the loan review system.

The Company reviews baseline and alternative economic scenarios from Moody’s (previously known as Moody’s Analytics, a subsidiary of Moody’s Corporation) for consideration in the quantitative portion of our analysis of the allowance for credit losses. Moody’s publishes a baseline forecast that represents the estimate of the most likely path for the United States economy through the current business cycle (50% probability that economic conditions will be worse and 50% probability that economic conditions will be better) as well as alternative scenarios to examine how different types of shocks will affect the future performance of the United States economy.

The Company utilizes a midpoint approach of multiple forward-looking scenarios to incorporate losses from a baseline, upside (stronger near-term growth) and downside (slower near-term growth) economy. As a result, the upside and downside scenarios each receive a weight of 30%, and the baseline receives a weight of 40%.

Certain quantitative and qualitative factors used to estimate credit losses and establish an allowance for credit losses are subject to uncertainty. The adequacy of our allowance for credit losses is sensitive to changes in current and forecasted economic conditions that may affect the ability of borrowers to make contractual payments as well as the value of the collateral securing such payments.

Although management believes it uses the best information available to establish the allowance for credit losses, future adjustments to the allowance for credit losses may be necessary and the Company’s results of operations could be adversely affected if circumstances differ substantially from the assumptions used in making the determinations.

In addition, because future events affecting borrowers and collateral cannot be predicted without uncertainty, the existing allowance for credit losses may not be adequate or increases may be necessary should the quality of any loans deteriorate as a result of the factors discussed. Any material increase in the allowance for credit losses would adversely impact the Company's financial condition and results of operations.

The following table reflects our allocation of the allowance for credit losses by loan category as well as the amount of loans in each loan category, including related percentages:

*(dollars in thousands)*

| Real estate loans: Commercial property | June 30, 2025 Allowance Amount | Percentage of Total Allowance | Total Loans | Percentage of Total Loans | December 31, 2024 Allowance Amount | Percentage of Total Allowance | Total Loans | Percentage of Total Loans |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Retail | $9,886 | 14.8% | $1,116,540 | 17.7% | $10,171 | 14.5% | $1,068,978 | 17.1% |
| Hospitality | 7,579 | 11.3 | 822,021 | 13.1 | 15,302 | 21.8 | 848,134 | 13.6 |
| Office | 5,603 | 8.4 | 556,453 | 8.8 | 3,935 | 5.6 | 568,861 | 9.1 |
| Other | 13,268 | 19.9 | 1,373,836 | 21.8 | 8,243 | 11.8 | 1,385,051 | 22.2 |
| Total commercial property loans | 36,336 | 54.4 | 3,868,850 | 61.4 | 37,651 | 53.7 | 3,871,024 | 62.0 |
| Construction | 1,107 | 1.7 | 80,072 | 1.3 | 1,664 | 2.4 | 78,598 | 1.3 |
| Residential | 10,578 | 15.8 | 993,869 | 15.8 | 5,784 | 8.2 | 951,302 | 15.2 |
| Total real estate loans | 48,021 | 71.9 | 4,942,791 | 78.5 | 45,099 | 64.3 | 4,900,924 | 78.5 |
| Commercial and industrial loans | 6,935 | 10.4 | 917,995 | 14.5 | 10,006 | 14.3 | 863,431 | 13.8 |
| Equipment financing agreements | 11,800 | 17.7 | 445,171 | 7.0 | 15,042 | 21.4 | 487,022 | 7.7 |
| **Total** | **$66,756** | **100.0%** | **$6,305,957** | **100.0%** | **$70,147** | **100.0%** | **$6,251,377** | **100.0%** |

The following table sets forth certain ratios related to our allowance for credit losses at the dates presented:

*(dollars in thousands)*

| Ratios: | As of June 30, 2025 | December 31, 2024 |
| --- | ---: | ---: |
| Allowance for credit losses to loans receivable | 1.06% | 1.12% |
| Nonaccrual loans to loans | 0.41% | 0.23% |
| Allowance for credit losses to nonaccrual loans | 257.08% | 491.50% |
| **Balance:** |  |  |
| Nonaccrual loans at end of period | $25,967 | $14,272 |
| Nonperforming loans at end of period | $25,967 | $14,272 |

The allowance for credit losses was $66.8 million and $70.1 million at June 30, 2025 and December 31, 2024, respectively. The allowance attributed to individually evaluated loans was $4.1 million and $6.2 million as of June 30, 2025 and December 31, 2024, respectively. The decrease in the allowance on individually evaluated loans during the six months ended June 30, 2025 was due to increased charge-offs, offset by new specific allowances on individually evaluated loans. The allowance attributed to collectively evaluated loans was $62.7 million and $64.0 million as of June 30, 2025 and December 31, 2024, respectively. The decrease in the allowance attributed to collectively evaluated loans was primarily due to the change in ACL methodology.

As of June 30, 2025 and December 31, 2024, the allowance for credit losses related to off-balance sheet items, primarily unfunded loan commitments, was $2.5 million and $2.1 million, respectively. The Bank closely monitors the borrower’s repayment capabilities, while funding existing commitments to ensure losses are minimized. Based on management’s evaluation and analysis of portfolio credit quality, prevailing economic conditions and economic forecasts, we believe these allowances were adequate for current expected lifetime losses in the loan portfolio and off-balance sheet exposure as of June 30, 2025.

The following table presents a summary of gross charge-offs and recoveries for the loan portfolio:

*(in thousands)*

*(in thousands)*

|  | Three Months Ended June 30, 2025 | 2024 | Six Months Ended June 30, 2025 | 2024 |
| --- | ---: | ---: | ---: | ---: |
| Gross charge-offs | $(12,377) | $(2,338) | $(15,567) | $(4,461) |
| Gross recoveries | 1,013 | 548 | 2,256 | 1,076 |
| **Net (charge-offs) recoveries** | **$(11,364)** | **$(1,790)** | **$(13,311)** | **$(3,385)** |

For the three months ended June 30, 2025, gross charge-offs increased $10.0 million from the same period in 2024. Gross recoveries for the three months ended June 30, 2025 increased $0.5 million from the same period in 2024. Gross charge-offs for the three months ended June 30, 2025 primarily consisted of an $8.6 million charge-off on the previously mentioned commercial real estate loan designated as nonaccrual in the first quarter of 2025 and $2.9 million of equipment financing agreements charge-offs.

Gross charge-offs for the three months ended June 30, 2024 primarily consisted of $2.2 million of equipment financing charge-offs. Gross recoveries for the three months ended June 30, 2025 primarily consisted of $0.6 million of recoveries on equipment financing agreements.

For the six months ended June 30, 2025, gross charge-offs increased $11.1 million from the same period in 2024. Gross recoveries for the six months ended June 30, 2025 increased $1.2 million from the same period in 2024. Gross charge-offs for the six months ended June 30, 2025 primarily consisted of an $8.6 million charge-off on the previously mentioned commercial real estate loan designated as nonaccrual in the first quarter of 2025 and $5.7 million of equipment financing agreements charge-offs. Gross charge-offs for the six months ended June 30, 2024 primarily consisted of $4.1 million of equipment financing agreements charge-offs. Gross recoveries for the six months ended June 30, 2025 primarily consisted of $1.4 million of recoveries on equipment financing agreements.

The following table presents a summary of net (charge-offs) recoveries for the loan portfolio:

*(dollars in thousands)*

*(dollars in thousands)*

| June 30, 2025 | Three Months Ended Average Loans | Net (Charge-Offs) Recoveries | Net (Charge-Offs) Recoveries to Average Loans (1) | Six Months Ended Average Loans | Net (Charge-Offs) Recoveries | Net (Charge-Offs) Recoveries to Average Loans (1) |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Commercial real estate loans | $3,978,350 | $(8,422) | (0.85)% | $3,958,335 | $(8,169) | (0.41)% |
| Residential loans | 997,921 | 1 | 0.00 | 982,922 | 2 | 0.00 |
| Commercial and industrial loans | 818,498 | (613) | (0.30) | 808,069 | (799) | (0.20) |
| Equipment financing agreements | 462,972 | (2,330) | (2.01) | 474,499 | (4,345) | (1.83) |
| **Total** | **$6,257,741** | **$(11,364)** | **(0.73)%** | **$6,223,825** | **$(13,311)** | **(0.43)%** |
| **June 30, 2024** |  |  |  |  |  |  |
| Commercial real estate loans | $3,853,792 | $— | —% | $3,864,615 | $— | —% |
| Residential loans | 959,072 | (29) | (0.01) | 965,708 | 18 | 0.00 |
| Commercial and industrial loans | 730,929 | 73 | 0.04 | 723,967 | (24) | (0.01) |
| Equipment financing agreements | 545,647 | (1,834) | (1.34) | 559,374 | (3,379) | (1.21) |
| **Total** | **$6,089,440** | **$(1,790)** | **(0.12)%** | **$6,113,664** | **$(3,385)** | **(0.11)%** |

#### (1) Annualized

### Deposits

The following table shows the composition of deposits by type as of the dates indicated:

*(dollars in thousands)*

|  | June 30, 2025 Balance | Percent | December 31, 2024 Balance | Percent |
| --- | ---: | ---: | ---: | ---: |
| Demand – noninterest-bearing | $2,105,369 | 31.3% | $2,096,634 | 32.6% |
| Interest-bearing: |  |  |  |  |
| Demand | 90,172 | 1.3 | 80,323 | 1.2 |
| Money market and savings | 2,092,847 | 31.2 | 1,933,535 | 30.0 |
| Uninsured amount of time deposits more than $250,000: |  |  |  |  |
| Three months or less | 264,868 | 3.9 | 225,015 | 3.5 |
| Over three months through six months | 218,328 | 3.2 | 219,304 | 3.4 |
| Over six months through twelve months | 262,060 | 3.9 | 202,966 | 3.2 |
| Over twelve months | 494 | 0.0 | 14 | — |
| All other insured time deposits | 1,694,984 | 25.2 | 1,677,985 | 26.1 |
| **Total deposits** | **$6,729,122** | **100.0%** | **$6,435,776** | **100.0%** |

61

Total deposits were $6.73 billion and $6.44 billion as of June 30, 2025 and December 31, 2024, respectively, representing an increase of $293.3 million, or 4.6%. The increase in deposits was primarily driven by a $159.3 million increase in money market and savings deposits and a $115.5 million increase in time deposits as a result of new commercial accounts and branch openings during the first six months of 2025. At June 30, 2025, the loan-to-deposit ratio was 93.7% compared with 97.1% at December 31, 2024.

As of June 30, 2025, the aggregate amount of uninsured deposit accounts (deposits in amounts greater than $250,000, which is the maximum amount for federal deposit insurance) was $2.94 billion. For time deposits, the aggregate amount exceeding the insurance limit was $745.8 million. For demand money market and savings accounts, the aggregate amount exceeding the insurance limit was $2.19 billion. At June 30, 2025, $1.31 billion of total uninsured deposits were in accounts with balances of $5.0 million or more. As of December 31, 2024, the aggregate amount of uninsured deposits was $2.72 billion. The aggregate amount of uninsured time deposits was $647.3 million. For demand, money market and savings accounts, the aggregate amount of uninsured deposits was $2.07 billion. At December 31, 2024, $1.21 billion of total uninsured deposits were in accounts with balances of $5.0 million or more.

### Borrowings and Subordinated Debentures

The Bank’s wholesale funds have historically consisted of FHLB advances, brokered deposits as well as State of California time deposits. As of June 30, 2025 and December 31, 2024, the Bank had $127.5 million and $262.5 million of FHLB advances, and $85.5 million and $60.7 million of brokered deposits, respectively. The Bank had $150.0 million and $120.0 million of State of California time deposits, as of June 30, 2025 and December 31, 2024, respectively.

Borrowings mostly take the form of FHLB advances. At June 30, 2025 and December 31, 2024, FHLB advances were $127.5 million and $262.5 million, respectively. FHLB open advances were $90.0 million and $225.0 million at June 30, 2025 and December 31, 2024, respectively. For the same periods, term advances were $37.5 million and $37.5 million, respectively. Funds from deposit growth not used to fund loan production were used to pay off borrowings.

The weighted-average interest rate of all FHLB advances at June 30, 2025 and December 31, 2024 was 4.62% and 4.75%, respectively.

The FHLB maximum amount outstanding at any month end during each of the year-to-date periods ended June 30, 2025 and December 31, 2024 was $152.5 million and $350.0 million, respectively.

The following is a summary of contractual maturities of FHLB advances greater than twelve months:

*(dollars in thousands)*

| FHLB of San Francisco | June 30, 2025 Outstanding Balance | Weighted Average Rate | December 31, 2024 Outstanding Balance | Weighted Average Rate |
| --- | ---: | ---: | ---: | ---: |
| Advances due over 12 months through 24 months | $12,500 | 4.85% | $37,500 | 4.58% |
| **Outstanding advances over 12 months** | **$12,500** | **4.85%** | **$37,500** | **4.58%** |

62

Subordinated debentures were $131.0 million and $130.6 million as of June 30, 2025 and December 31, 2024, respectively. Subordinated debentures are comprised of fixed-to-floating subordinated notes of $108.6 million and $108.5 million as of June 30, 2025 and December 31, 2024, respectively, and junior subordinated deferrable interest debentures of $22.3 million and $22.1 million as of June 30, 2025 and December 31, 2024, respectively. See “Note 8 – Borrowings and Subordinated Debentures” to the consolidated financial statements for more details.

### Stockholders' Equity

Stockholders’ equity was $762.8 million and $732.2 million as of June 30, 2025 and December 31, 2024, respectively. Net income, net of $16.4 million of dividends paid, added $16.4 million to stockholders' equity for the period, as did $0.9 million of share-based compensation, a $15.9 million decrease in unrealized after-tax losses on securities available for sale and a $0.3 million decrease in unrealized after-tax losses on cash flow hedges due to changes in interest rates. In addition, the Company repurchased 120,000 shares of common stock during the period at an average share price of $22.94 for a total cost of $2.8 million. At June 30, 2025, 1,110,500 shares remain under the Company's share repurchase program.

### Interest Rate Risk Management

The spread between interest income on interest-earning assets and interest expense on interest-bearing liabilities is the principal component of net interest income, and interest rate changes substantially affect our financial performance. We emphasize capital protection through stable earnings. In order to achieve stable earnings, we prudently manage our assets and liabilities and closely monitor the percentage changes in net interest income and equity value in relation to limits established within our guidelines.

The Company performs simulation modeling to estimate the potential effects of interest rate changes. The following table summarizes one of the stress simulations performed to forecast the impact of changing interest rates on net interest income and the value of interest-earning assets and interest-bearing liabilities reflected on our balance sheet (i.e., an instantaneous parallel shift in the yield curve of the magnitude indicated below) as of June 30, 2025. The Company compares this stress simulation to policy limits, which specify the maximum tolerance level for net interest income exposure over a 1- to 12-month and a 13- to 24- month horizon, given the basis point adjustment in interest rates reflected below.

*(dollars in thousands)*

| Change in Interest Rates (Basis Points) | Net Interest Income Simulation 1- to 12-Month Horizon Dollar Change | Percentage Change | 13- to 24-Month Horizon Dollar Change | Percentage Change |
| ---: | ---: | ---: | ---: | ---: |
| 300 | $22,761 | 8.48% | $46,198 | 15.44% |
| 200 | $15,500 | 5.77% | $31,253 | 10.45% |
| 100 | $9,455 | 3.52% | $18,340 | 6.13% |
| (100) | $(9,298) | (3.46%) | $(19,331) | (6.46%) |
| (200) | $(18,377) | (6.84%) | $(40,210) | (13.44%) |
| (300) | $(24,592) | (9.16%) | $(59,708) | (19.96%) |

*(dollars in thousands)*

| Change in Interest Rates (Basis Points) | Economic Value of Equity (EVE) Dollar Change | Percentage Change |
| ---: | ---: | ---: |
| 300 | $70,160 | 8.31% |
| 200 | $55,651 | 6.59% |
| 100 | $41,513 | 4.91% |
| (100) | $(53,182) | (6.30%) |
| (200) | $(124,160) | (14.70%) |
| (300) | $(205,910) | (24.38%) |

The estimated sensitivity does not necessarily represent our forecast, and the results may not be indicative of actual changes to our net interest income. These estimates are based upon a number of assumptions, including the timing and magnitude of interest rate changes, prepayments on loans receivable and securities, pricing strategies on loans receivable and deposits, and replacement of asset and liability cash flows.

The key assumptions, based upon loans receivable, securities and deposits, are as follows:

| Conditional prepayment rates\*: |  |
| --- | ---: |
| Loans receivable | 10% |
| Securities | 6% |
| Deposit rate betas\*: |  |
| NOW, savings, money market demand | 48% |
| Time deposits, retail and wholesale | 76% |
| \* Balance-weighted average |  |

While the assumptions used are based on current economic and local market conditions, there is no assurance as to the predictive nature of these conditions, including how customer preferences or competitor influences might change.

### Capital Resources and Liquidity

### Capital Resources

Historically, our primary source of capital has been the retention of operating earnings. In order to ensure adequate capital levels, the Board regularly assesses projected sources and uses of capital, expected loan growth, anticipated capital management tools (such as stock repurchases and dividends), and projected capital thresholds under adverse and severely adverse economic conditions. In addition, the Board considers the Company’s access to capital from financial markets through the issuance of additional debt and securities, including common stock or notes, to meet its capital needs.

The Company’s ability to pay dividends to stockholders depends in part upon dividends it receives from the Bank. California law restricts the amount available for cash dividends to the lesser of a bank’s retained earnings or net income for its last three fiscal years (less any distributions to stockholders made during such period). Where the above test is not met, cash dividends may still be paid, with the prior approval of the California Department of Financial Protection and Innovation (“DFPI”), in an amount not exceeding the greater of: (1) retained earnings of the Bank; (2) net income of the Bank for its last fiscal year; or (3) the net income of the Bank for its current fiscal year. The Company paid dividends of $16.4 million ($0.54 per share) for the six months ended June 30, 2025 and $30.4 million ($1.00 per share) for the year 2024. As of July 1, 2025, the Bank has the ability to pay dividends of approximately $83.1 million, after giving effect to the $0.27 dividend declared on July 24, 2025, for the third quarter of 2025, without the prior approval of the Commissioner of the DFPI.

At June 30, 2025, the Bank’s total risk-based capital ratio of 14.39%, Tier 1 risk-based capital ratio of 13.32%, common equity Tier 1 capital ratio of 13.32% and Tier 1 leverage capital ratio of 11.43% placed the Bank in the “well capitalized” category pursuant to capital rules, which is defined as institutions with total risk-based capital ratio equal to or greater than 10.00%, Tier 1 risk-based capital ratio equal to or greater than 8.00%, common equity Tier 1 capital ratios equal to or greater than 6.50%, and Tier 1 leverage capital ratio equal to or greater than 5.00%.

At June 30, 2025, the Company's total risk-based capital ratio was 15.20%, Tier 1 risk-based capital ratio was 12.46%, common equity Tier 1 capital ratio was 12.12% and Tier 1 leverage capital ratio was 10.63%.

For a discussion of the applicable capital adequacy framework, see "Regulation and Supervision - Capital Adequacy Requirements" in our 2024 Annual Report on Form 10-K.

### Liquidity

**For a discussion of liquidity for the Company, see Note 14 - Liquidity included in the notes to unaudited consolidated financial statements in this Report and Note 22 – Liquidity in our 2024 Annual Report on Form 10-K.**

### Off-Balance Sheet Arrangements

For a discussion of off-balance sheet arrangements, see Note 12 - Off-Balance Sheet Commitments included in the notes to unaudited consolidated financial statements in this Report and “Item 1. Business - Off-Balance Sheet Commitments” in our 2024 Annual Report on Form 10-K.

## Market risk

As filed, 216 characters.

For quantitative and qualitative disclosures regarding market risks, see “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Interest Rate Risk Management” in this Report.

## Controls and procedures

As filed, 1,881 characters.

### Evaluation of Disclosure Controls and Procedures

### Evaluation of Disclosure Controls and Procedures

Management is responsible for the disclosure controls and procedures of the Corporation. Disclosure controls and procedures are controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods required by the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. As of the end of the period covered by this report, an evaluation was performed under the supervision and with the participation of the Corporation’s management, including the Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer), of the effectiveness of the design and operation of the Corporation’s disclosure controls and procedures. Based on that evaluation, the Corporation’s Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective as of June 30, 2025.

### Changes in Internal Control over Financial Reporting

There were no changes in the Corporation's internal control over financial reporting (as defined in Rule 13a-15(f)) during the quarter ended June 30, 2025 that materially affected, or are reasonably likely to materially affect, the Corporation’s internal control over financial reporting.

## Risk factors

As filed, 1,528 characters.

There have been no material changes in risk factors applicable to the Corporation from those described in “Risk Factors” in Part I, Item 1A of the Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

In addition to the other information contained in this Quarterly Report on Form 10-Q, the following risk factor represents a material update and addition to the risk factors previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

***Tariffs imposed on South Korea could have an impact on our business.*** On July 31, 2025, President Trump announced that an agreement has been reached with South Korea whereby a 15% tariff will be imposed on goods imported by South Korea into the U.S. and South Korea will make investments in certain U.S. industries. The final details of this trade agreement, including the timing of its implementation, remain unclear and may be subject to further negotiation. Any tariffs or required investments in U.S. industries imposed on South Korea may have an impact on South Korean businesses and the South Korean economy, which may negatively impact our customers with ties to South Korea, including U.S. subsidiaries of South Korean companies. While the impact of any final trade agreement with South Korea is uncertain, it may have an impact on the demand and performance of loans related to our customers with South Korean ties which, in turn, could have an effect on our financial condition and results of operations.

Filed Aug 8, 2025.
Source: SEC EDGAR, the filing index for accession 0000950170-25-105658. Last ingested by Listed: Nov 6, 2026, 14:12 ET. No prices; not investment advice.