ThZeal - The Zeal

ppbi-20250630

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2025

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to _______

Commission File Number 0-22193

(Exact name of registrant as specified in its charter)


Delaware			33-0743196
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

17901 Von Karman Avenue, Suite 1200, Irvine, California 92614

(Address of principal executive offices and zip code)

(949) 864-8000

(Registrant’s telephone number, including area code)

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

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

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

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

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

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

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

Title of Each Class

Trading Symbol

Name of Each Exchange on Which Registered

Common Stock, par value $0.01 per share

PPBI

The Nasdaq Stock Market LLC

The number of shares outstanding of the registrant’s common stock as of July 25, 2025 was 96,991,440.

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES

FORM 10-Q

INDEX

FOR THE QUARTER ENDED JUNE 30, 2025


PART I - FINANCIAL INFORMATION

Item 1 - Financial Statements

Consolidated Statements of Financial Condition (Unaudited)			3

Consolidated Statements of Income (Unaudited)			4

Consolidated Statements of Comprehensive Income (Unaudited)			5

Consolidated Statements of Stockholders’ Equity (Unaudited)			6

Consolidated Statements of Cash Flows (Unaudited)			8

Notes to Consolidated Financial Statements (Unaudited)			9

Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations			51

Item 3 - Quantitative and Qualitative Disclosures About Market Risk			98

Item 4 - Controls and Procedures			100

PART II - OTHER INFORMATION			101

Item 1 - Legal Proceedings			101

Item 1A - Risk Factors			101

Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds			101

Item 3 - Defaults Upon Senior Securities			101

Item 4 - Mine Safety Disclosures			101

Item 5 - Other Information			102

Item 6 - Exhibits			102

SIGNATURE			103

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(Unaudited)


(Dollars in thousands, except par value and share data)	June 30, 2025		December 31, 2024
ASSETS
Cash and due from banks	$	166,647	$	117,955
Interest-bearing deposits with financial institutions	624,490		491,375
Cash and cash equivalents	791,137		609,330
Interest-bearing time deposits with financial institutions	1,253		1,246
Investments securities held-to-maturity, at amortized cost, net of allowance for credit losses of $103 and $110 (fair value of $1,377,903 and $1,428,077) at June 30, 2025 and December 31, 2024, respectively	1,687,871		1,711,804
Investment securities available-for-sale, at fair value	1,581,731		1,683,215
FHLB, FRB, and other stock	97,717		97,539
Loans held for sale, at lower of cost or fair value	751		2,315
Loans held for investment	11,902,079		12,039,741
Allowance for credit losses	(170,663)		(178,186)
Loans held for investment, net	11,731,416		11,861,555
Accrued interest receivable	69,455		67,953

Premises and equipment, net	45,666		48,580
Deferred income taxes, net	93,450		100,295
Bank owned life insurance	490,770		484,952
Intangible assets	27,127		32,194
Goodwill	901,312		901,312
Other assets	263,516		301,295
Total assets	$	17,783,172	$	17,903,585

LIABILITIES
Deposit accounts:
Noninterest-bearing checking	$	4,687,795	$	4,617,013
Interest-bearing:
Checking	2,814,687		2,898,810
Money market/savings	5,035,658		4,837,929
Retail certificates of deposit	1,758,846		1,809,818
Wholesale/brokered certificates of deposit	200,387		300,132
Total interest-bearing	9,809,578		9,846,689
Total deposits	14,497,373		14,463,702

Subordinated debentures	124,023		272,449

Accrued expenses and other liabilities	186,358		211,691
Total liabilities	14,807,754		14,947,842
STOCKHOLDERS’ EQUITY
Preferred stock, $0.01 par value; 1,000,000 authorized; no shares issued and outstanding	—		—
Common stock, $0.01 par value; 150,000,000 shares authorized at June 30, 2025 and December 31, 2024; 97,019,910 shares and 96,441,667 shares issued and outstanding, respectively	946		942
Additional paid-in capital	2,400,552		2,395,339
Retained earnings	639,189		635,268
Accumulated other comprehensive loss	(65,269)		(75,806)
Total stockholders’ equity	2,975,418		2,955,743
Total liabilities and stockholders’ equity	$	17,783,172	$	17,903,585

Accompanying notes are an integral part of these consolidated financial statements.

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)


	Three Months Ended		Six Months Ended
	June 30,		June 30,		June 30,		June 30,
(Dollars in thousands, except share data)	2025		2024		2025		2024
INTEREST INCOME
Loans	$	150,419	$	167,547	$	298,949	$	340,522
Investment securities and other interest-earning assets	38,762		40,507		77,567		80,963
Total interest income	189,181		208,054		376,516		421,485
INTEREST EXPENSE
Deposits	58,376		64,229		117,949		123,735
FHLB advances and other borrowings	2		2,330		4		6,567
Subordinated debentures	4,048		5,101		8,441		9,662
Total interest expense	62,426		71,660		126,394		139,964
Net interest income before provision for credit losses	126,755		136,394		250,122		281,521
Provision for credit losses	(2,078)		1,265		(5,796)		5,117
Net interest income after provision for credit losses	128,833		135,129		255,918		276,404
NONINTEREST INCOME
Loan servicing income	472		510		919		1,039
Service charges on deposit accounts	2,578		2,710		5,207		5,398
Other service fee income	283		309		572		645
Debit card interchange fee income	935		925		1,769		1,690
Earnings on bank owned life insurance	4,341		4,218		10,113		8,377
Net gain from sales of loans	23		65		113		65




Trust custodial account fees	8,815		8,950		19,122		19,592
Escrow and exchange fees	774		702		1,446		1,398
Other (loss) income	(656)		(167)		(231)		5,792
Total noninterest income	17,565		18,222		39,030		43,996
NONINTEREST EXPENSE
Compensation and benefits	53,268		53,140		106,080		107,270
Premises and occupancy	8,471		10,480		18,187		21,287
Data processing	7,806		7,754		15,782		15,265
Other real estate owned operations, net	—		—		—		46
FDIC insurance premiums	1,947		1,873		3,943		4,502
Legal and professional services	2,223		1,078		7,084		5,221
Marketing expense	905		1,724		1,841		3,282
Office expense	1,006		1,077		2,105		2,170
Loan expense	829		840		1,610		1,610
Deposit expense	13,644		12,289		26,540		24,954
Merger-related expense	6,712		—		6,712		—
Amortization of intangible assets	2,501		2,763		5,067		5,599
Other expense	5,064		4,549		9,717		8,994
Total noninterest expense	104,376		97,567		204,668		200,200
Net income before income taxes	42,022		55,784		90,280		120,200
Income tax expense	9,961		13,879		22,198		31,270
Net income	$	32,061	$	41,905	$	68,082	$	88,930
EARNINGS PER SHARE
Basic	$	0.33	$	0.43	$	0.70	$	0.92
Diluted	0.33		0.43		0.70		0.92
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic	95,096,632		94,628,201		94,931,672		94,489,230
Diluted	95,132,789		94,716,205		94,968,160		94,597,559

Accompanying notes are an integral part of these consolidated financial statements.

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


	Three Months Ended		Six Months Ended
	June 30,		June 30,		June 30,		June 30,
(Dollars in thousands)	2025		2024		2025		2024
Net income	$	32,061	$	41,905	$	68,082	$	88,930
Other comprehensive income, net of tax:
Unrealized gain on securities available-for-sale, net of income taxes (1)	97		2,983		5,414		4,373


Amortization of unrealized loss on securities transferred from available-for-sale to held-to-maturity, net of income taxes (2)	2,646		2,600		5,123		5,119
Other comprehensive income, net of tax	2,743		5,583		10,537		9,492
Comprehensive income, net of tax	$	34,804	$	47,488	$	78,619	$	98,422

______________________________

(1) Income tax expense of the unrealized gain on securities was $38,000 and $1.2 million for the three months ended June 30, 2025 and 2024, respectively, and $2.1 million and $1.7 million for the six months ended June 30, 2025 and 2024, respectively.

(2) Income tax expense on the amortization of unrealized loss on securities transferred from available-for-sale to held-to-maturity included in net income was $1.0 million and $1.0 million for the three months ended June 30, 2025 and 2024, respectively, and $2.0 million and $2.0 million for the six months ended June 30, 2025 and 2024, respectively.

Accompanying notes are an integral part of these consolidated financial statements.

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE SIX AND THREE MONTHS ENDED JUNE 30, 2025

(Unaudited)


(Dollars in thousands, except share data)	Common Stock Shares	Common Stock		Additional Paid-in Capital		Accumulated Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity
Balance at December 31, 2024	96,441,667	$	942	$	2,395,339	$	635,268	$	(75,806)	$	2,955,743
Net income	—	—		—		68,082		—		68,082
Other comprehensive income	—	—		—		—		10,537		10,537
Cash dividends declared ($0.66 per common share)	—	—		—		(63,850)		—		(63,850)
Dividend equivalents declared ($0.66 per restricted stock unit)	—	—		311		(311)		—		—
Share-based compensation expense	—	—		9,906		—		—		9,906
Issuance of restricted stock, net	855,050	4		(4)		—		—		—
Restricted stock surrendered and canceled	(279,807)	—		(5,046)		—		—		(5,046)
Exercise of stock options	3,000	—		46		—		—		46
Balance at June 30, 2025	97,019,910	$	946	$	2,400,552	$	639,189	$	(65,269)	$	2,975,418


Balance at March 31, 2025	97,069,001	$	946	$	2,394,834	$	639,321	$	(68,012)	$	2,967,089
Net income	—	—		—		32,061		—		32,061
Other comprehensive income	—	—		—		—		2,743		2,743
Cash dividends declared ($0.33 per common share)	—	—		—		(32,029)		—		(32,029)
Dividend equivalents declared ($0.33 per restricted stock unit)	—	—		164		(164)		—		—
Share-based compensation expense	—	—		5,690		—		—		5,690
Issuance of restricted stock, net	1,000	—		—		—		—		—
Restricted stock surrendered and canceled	(50,091)	—		(136)		—		—		(136)
Exercise of stock options	—	—		—		—		—		—
Balance at June 30, 2025	97,019,910	$	946	$	2,400,552	$	639,189	$	(65,269)	$	2,975,418

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE SIX MONTHS AND THREE MONTHS ENDED JUNE 30, 2024

(Unaudited)


(Dollars in thousands, except share data)	Common Stock Shares	Common Stock		Additional Paid-in Capital		Accumulated Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity
Balance at December 31, 2023	95,860,092	$	938	$	2,377,131	$	604,137	$	(99,625)	$	2,882,581
Net income	—	—		—		88,930		—		88,930
Other comprehensive income	—	—		—		—		9,492		9,492

Cash dividends declared ($0.66 per common share)	—	—		—		(63,458)		—		(63,458)
Dividend equivalents declared ($0.66 per restricted stock unit)	—	—		268		(268)		—		—
Share-based compensation expense	—	—		10,884		—		—		10,884
Issuance of restricted stock, net	806,001	3		(3)		—		—		—

Restricted stock surrendered and canceled	(243,472)	—		(4,852)		—		—		(4,852)
Exercise of stock options	11,426	—		187		—		—		187

Balance at June 30, 2024	96,434,047	$	941	$	2,383,615	$	629,341	$	(90,133)	$	2,923,764



Balance at March 31, 2024	96,459,966	$	941	$	2,378,171	$	619,405	$	(95,716)	$	2,902,801
Net income	—	—				41,905		—		41,905
Other comprehensive income	—	—				—		5,583		5,583

Cash dividends declared ($0.33 per common share)	—	—				(31,823)		—		(31,823)
Dividend equivalents declared ($0.33 per restricted stock unit)	—	—		146		(146)		—		—
Share-based compensation expense	—	—		5,434		—		—		5,434
Issuance of restricted stock, net	19,500	—		—		—		—		—
Restricted stock surrendered and canceled	(46,585)	—		(161)		—		—		(161)
Exercise of stock options	1,166	—		25		—		—		25
Balance at June 30, 2024	96,434,047	$	941	$	2,383,615	$	629,341	$	(90,133)	$	2,923,764

Accompanying notes are an integral part of these consolidated financial statements.

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Six Months Ended
	June 30,		June 30,
(Dollars in thousands)	2025		2024
Cash flows from operating activities:
Net income	$	68,082	$	88,930
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense	5,345		6,097
Provision for credit losses	(5,796)		5,117
Share-based compensation expense	9,906		10,884
Loss on sales and disposals of premises and equipment	51		6
Loss on sale or write down of other real estate owned	—		28
Net (accretion) of discounts/premium on securities	(2,119)		(6,403)
Net (accretion) of discounts/premiums for acquired loans and deferred loan fees/costs	(3,706)		(6,411)

Loss (Gain) on debt extinguishment	1,315		(5,067)
(Gain) on sales of loans	(113)		(65)
Deferred income tax expense	2,712		1,234
Income from bank owned life insurance, net	(8,614)		(6,977)
Amortization of intangible assets	5,067		5,599
Origination of loans held for sale, net of principal payments received	(1,390)		(1,006)
Proceeds from the sales of loans held for sale	3,227		1,280
Net change in accrued expenses and other liabilities	(24,730)		(16,502)
Net change in accrued interest receivable and other assets	28,626		46,745
Net cash provided by operating activities	77,863		123,489
Cash flows from investing activities:
Net (increase) in interest-bearing time deposits with financial institutions	(7)		(1)
Proceeds from sales of other real estate owned	—		209
Loan payments and (originations), net	434,413		734,144
Proceeds from sales of loans classified as loans held for investment	773		55,625
Purchase of loans held for investment	(286,919)		—

Proceeds from prepayments and maturities of securities held-to-maturity	26,498		22,032
Purchase of securities available-for-sale	(320,289)		(564,079)
Proceeds from prepayments and maturities of securities available-for-sale	436,004		425,294

Proceeds from the sales of premises and equipment	—		2
Proceeds from surrender of bank owned life insurance	2,799		352
Purchase of premises and equipment	(2,482)		(1,566)
Net change in FHLB, FRB, and other stock	(126)		2,017
Funding of Community Reinvestment Act (“CRA”) investments, net	(1,541)		(3,146)
Net cash provided by investing activities	289,123		670,883
Cash flows from financing activities:
Net change in deposit accounts	$	33,671	$	(367,972)


Repayments of long-term borrowings	—		(394,933)

Repayments of subordinated debentures	(150,000)		—
Cash dividends paid	(63,850)		(63,458)

Proceeds from exercise of stock options	46		187
Restricted stock surrendered and canceled	(5,046)		(4,852)
Net cash (used in) financing activities	(185,179)		(831,028)
Net change in cash and cash equivalents	181,807		(36,656)
Cash and cash equivalents, beginning of period	609,330		936,473
Cash and cash equivalents, end of period	$	791,137	$	899,817

Supplemental cash flow disclosures:
Interest paid	$	129,655	$	141,280
Income taxes (refunded) paid, net	(4,183)		(3,470)
Noncash investing activities during the period:
Transfers from loans held for investment to loans held for sale	735		55,974




Recognition of operating lease right-of-use assets	(187)		(4,357)
Recognition of operating lease liabilities	175		4,131
Receivable on unsettled security maturity	—		25,000
Due on unsettled security purchases	—		(49,513)

Accompanying notes are an integral part of these consolidated financial statements.

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2025

(Unaudited)

Note 1 – Basis of Presentation

The consolidated financial statements include the accounts of Pacific Premier Bancorp, Inc. (the “Corporation”) and its wholly owned subsidiaries, including Pacific Premier Bank, National Association, (the “Bank”) (collectively, the “Company,” “we,” “our,” or “us”). All significant intercompany accounts and transactions have been eliminated in consolidation.

In the opinion of management, the unaudited consolidated financial statements reflect all normal recurring adjustments and accruals that are necessary for a fair presentation of the statement of financial position and the results of operations for the interim periods presented. The results of operations for the six months ended June 30, 2025 are not necessarily indicative of the results that may be expected for any other interim period or the full year ending December 31, 2025.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 (the “2024 Form 10-K”).

The Company consolidates voting entities in which the Company has control through voting interests or entities through which the Company has a controlling financial interest in a variable interest entity (“VIE”). The Company evaluates its interests in these entities to determine whether they meet the definition of a VIE and whether the Company is required to consolidate these entities. A VIE is consolidated by its primary beneficiary, which is the party that has both (i) the power to direct the activities that most significantly impact the economic performance of the VIE and (ii) a variable interest that could potentially be significant to the VIE. To determine whether or not a variable interest the Company holds could potentially be significant to the VIE, the Company considers both qualitative and quantitative factors regarding the nature, size, and form of the Company's involvement with the VIE. See Note 13 – Variable Interest Entities for additional information.

Note 2 – Recently Issued Accounting Pronouncements

Recent Accounting Guidance Not Yet Effective

In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40). This Update addresses requests from financial statement users for more detailed information concerning a public business entity’s expenses, such as those related to purchases of inventory, employee compensation costs, depreciation, amortization, and depletion costs. The incremental disclosures are intended to assist financial statement users by providing a better understanding of an entity’s expenses and to enable investors to better assess an entity’s current and future performance. This Update also requires entities to disclose the total amount of selling expenses and to provide the entity’s definition of what constitutes “selling expenses” in annual financial statement disclosures. Further, this Update requires a qualitative description of the amounts remaining in relevant expense captions that have not been separately disaggregated. The amendments in this Update are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. The amendments in this Update may be applied either prospectively or retrospectively. The Company is currently evaluating the impact of this Update.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) - Improvements to Income Tax Disclosures. The amendments in this Update address investor requests for more transparency and decision usefulness about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid. The amendments in this Update are effective for annual periods beginning after December 15, 2024. Early adoption is permitted. The Company has evaluated the provisions of this Update and does not believe they will have a material impact on the Company’s consolidated financial statements.

Note 3 – Significant Accounting Policies

Our accounting policies are described in Note 1 - Description of Business and Summary of Significant Accounting Policies, of our audited consolidated financial statements included in our 2024 Form 10-K. As of June 30, 2025, there were no significant changes to accounting policies from those disclosed in our audited consolidated financial statements included in our 2024 Form 10-K.

Use of Estimates. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods presented. Actual results could differ from those estimates.

Note 4 – Investment Securities

The amortized cost and estimated fair value of available-for-sale (“AFS”) investment securities were as follows:



(Dollars in thousands)	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss		Estimated Fair Value
AFS investment securities:
June 30, 2025
U.S. Treasury	$	1,093,655	$	1,763	$	(417)	$	1,095,001
Agency	928		—		(23)		905
Corporate	383,165		228		(10,578)		372,815

Collateralized mortgage obligations	113,611		—		(601)		113,010

Total AFS investment securities	$	1,591,359	$	1,991	$	(11,619)	$	1,581,731





December 31, 2024
U.S. Treasury	$	1,166,474	$	2,192	$	(2,581)	$	1,166,085
Agency	1,148		—		(40)		1,108
Corporate	408,256		421		(16,419)		392,258

Collateralized mortgage obligations	124,502		4		(742)		123,764

Total AFS investment securities	$	1,700,380	$	2,617	$	(19,782)	$	1,683,215

The carrying amount and estimated fair value of held-to-maturity (“HTM”) investment securities were as follows:



(Dollars in thousands)	Amortized Cost		Allowance for Credit Losses		Net Carrying Amount		Gross Unrecognized Gain		Gross Unrecognized Loss		Estimated Fair Value
HTM investment securities:
June 30, 2025

Municipal bonds	$	1,143,058	$	(103)	$	1,142,955	$	—	$	(273,668)	$	869,287
Collateralized mortgage obligations	295,445		—		295,445		4,060		(8,063)		291,442
Mortgage-backed securities	233,355		—		233,355		178		(32,475)		201,058
Other	16,116		—		16,116		—		—		16,116
Total HTM investment securities	$	1,687,974	$	(103)	$	1,687,871	$	4,238	$	(314,206)	$	1,377,903





December 31, 2024
Municipal bonds	$	1,144,862	$	(110)	$	1,144,752	$	—	$	(242,298)	$	902,454
Collateralized mortgage obligations	309,653		—		309,653		3,886		(8,718)		304,821
Mortgage-backed securities	241,223		—		241,223		67		(36,664)		204,626
Other	16,176		—		16,176		—		—		16,176
Total HTM investment securities	$	1,711,914	$	(110)	$	1,711,804	$	3,953	$	(287,680)	$	1,428,077

Investment securities with carrying values of $3.04 billion and $3.16 billion as of June 30, 2025 and December 31, 2024, respectively, were pledged to other borrowings, to secure public deposits, and for other purposes as required or permitted by law, of which $2.85 billion and $2.97 billion as of June 30, 2025 and December 31, 2024, respectively, were pledged to the Federal Reserve's discount window to increase the Company’s access to funding and provide liquidity.

Unrealized Gains and Losses

Unrealized gains and losses on AFS investment securities, net of tax, are recognized in stockholders’ equity as accumulated other comprehensive income or loss, net of tax. At June 30, 2025, the Company had a net unrealized loss on AFS investment securities of $9.6 million, or $6.9 million net of tax in accumulated other comprehensive loss, compared to a net unrealized loss of $17.2 million, or $12.3 million net of tax in accumulated other comprehensive loss, at December 31, 2024.

For investment securities transferred from AFS to HTM, the net after-tax unrealized gains and losses at the date of transfer continue to be reported in stockholders’ equity as accumulated other comprehensive loss and are amortized over the remaining lives of the securities with an offsetting entry to interest income as an adjustment of yield in a manner consistent with the amortization of a premium or discount. At June 30, 2025, the unrealized loss on investment securities transferred from AFS to HTM was $81.3 million, or $58.4 million net of tax. At December 31, 2024, the unrealized loss on investment securities transferred from AFS to HTM was $88.4 million, or $63.5 million net of tax.

The table below summarizes the number, fair value, and gross unrealized holding losses of the Company’s AFS investment securities in an unrealized loss position for which an allowance for credit losses (the “ACL”) has not been recorded as of the dates indicated, aggregated by investment category and length of time in a continuous loss position.


	Less than 12 Months					12 Months or Longer					Total
(Dollars in thousands)	Number	Fair Value		Gross Unrealized Losses		Number	Fair Value		Gross Unrealized Losses		Number	Fair Value		Gross Unrealized Losses
AFS investment securities:
June 30, 2025
U.S. Treasury	22	$	547,178	$	(417)	—	$	—	$	—	22	$	547,178	$	(417)
Agency	—	—		—		4	905		(23)		4	905		(23)
Corporate	7	61,542		(42)		23	203,113		(10,536)		30	264,655		(10,578)

Collateralized mortgage obligations	2	7,536		(12)		24	105,474		(589)		26	113,010		(601)

Total AFS investment securities	31	$	616,256	$	(471)	51	$	309,492	$	(11,148)	82	$	925,748	$	(11,619)

December 31, 2024
U.S. Treasury	21	$	519,211	$	(2,581)	—	$	—	$	—	21	$	519,211	$	(2,581)
Agency	—	—		—		4	1,108		(40)		4	1,108		(40)
Corporate	1	9,007		(4)		25	227,250		(16,415)		26	236,257		(16,419)

Collateralized mortgage obligations	2	11,161		(37)		23	108,783		(705)		25	119,944		(742)

Total AFS investment securities	24	$	539,379	$	(2,622)	52	$	337,141	$	(17,160)	76	$	876,520	$	(19,782)

Allowance for Credit Losses on Investment Securities

The Company reviews individual securities classified as AFS to determine whether unrealized losses are deemed credit related or due to other factors such as changes in interest rates and general market conditions. An ACL on AFS investment securities is recorded when unrealized losses have been deemed, through the Company’s qualitative assessment, to be credit related. Non-credit related unrealized losses on AFS investment securities, which may be attributed to changes in interest rates and other market-related factors, are not recorded through an ACL. Such declines are recorded as an adjustment to accumulated other comprehensive loss, net of tax. In the event the Company is required to sell or has the intent to sell an AFS security that has experienced a decline in fair value below its amortized cost, the Company writes the amortized cost of the security down to fair value in the current period.

The ACL for HTM investment securities is estimated on a collective basis, based on shared risk characteristics, and is determined at the individual security level when the Company deems a security to no longer possess shared risk characteristics. Credit losses on HTM investment securities are representative of the amount needed to reduce the amortized cost basis to reflect the net amount expected to be collected.

The Company determines credit losses on both AFS and HTM investment securities through the use of a discounted cash flow approach using the security’s effective interest rate. The ACL is measured as the amount by which an investment security’s amortized cost exceeds the net present value of expected future cash flows. However, the amount of credit losses for AFS investment securities is limited to the amount of a security’s unrealized loss. The ACL is established through a charge to provision for credit losses in current period earnings.

For additional information concerning the ACL on investment securities, refer to Note 1 - Description of Business and Summary of Significant Accounting Policies, of our audited consolidated financial statements included in our 2024 Form 10-K

The Company had no ACL for AFS investment securities at June 30, 2025 and December 31, 2024. The Company performed a qualitative assessment of these investments as of June 30, 2025 and determined that unrealized losses during the second quarter of 2025 were the result of general market conditions, including changes in interest rates, and does not believe the declines in fair value were credit related. As of June 30, 2025, the Company had not recorded credit losses on AFS securities that were in an unrealized loss position due to the high credit quality of the investments, with investment grade ratings, and many of them issued by U.S. government agencies. As of June 30, 2025, 76% of our AFS securities were U.S. Treasury, U.S. government agency, and U.S. government-sponsored enterprise securities. The fair value of corporate bank debt securities continued to improve during the six months ended June 30, 2025 as the spreads on the bank debt continued to tighten with overall signs of stability in the banking industry and interest rate movement during the period. Additionally, the Company continues to receive contractual principal and interest payments in a timely manner. It is more likely than not that the Company will not be required to sell AFS securities prior to their anticipated recoveries, and at this time the Company does not intend to sell these securities. There was no provision for credit losses recognized for AFS investment securities during the six months ended June 30, 2025 and 2024.

At June 30, 2025 and December 31, 2024, the Company had an ACL of $103,000 and $110,000, respectively, for HTM investment securities classified as municipal bonds. The following table presents a rollforward by major security type of the ACL on the Company's HTM debt securities as of and for the periods indicated:


(Dollars in thousands)	Beginning ACL Balance		Provision for Credit Losses		Ending ACL Balance









Three Months Ended June 30, 2025
HTM investment securities:
Municipal bonds	$	97	$	6	$	103


Three Months Ended June 30, 2024









HTM investment securities:
Municipal bonds	$	115	$	14	$	129


(Dollars in thousands)	Beginning ACL Balance		Provision for Credit Losses		Ending ACL Balance









Six Months Ended June 30, 2025
HTM investment securities:
Municipal bonds	$	110	$	(7)	$	103


Six Months Ended June 30, 2024









HTM investment securities:
Municipal bonds	$	126	$	3	$	129

At June 30, 2025 and December 31, 2024, there were no AFS or HTM securities on nonaccrual status. At June 30, 2025 and December 31, 2024, there were no securities purchased with deterioration in credit quality since their origination.

Contractual Maturities

The amortized cost and estimated fair value of investment securities at June 30, 2025, by contractual maturity, are shown in the table below.


	Due in One Year or Less				Due after One Year through Five Years				Due after Five Years through Ten Years				Due after Ten Years				Total
(Dollars in thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
AFS investment securities:
U.S. Treasury	$	772,231	$	772,600	$	321,424	$	322,401	$	—	$	—	$	—	$	—	$	1,093,655	$	1,095,001
Agency	—		—		585		572		—		—		343		333		928		905
Corporate	—		—		215,224		214,328		167,941		158,487		—		—		383,165		372,815

Collateralized mortgage obligations	3,844		3,835		62,795		62,559		13,846		13,750		33,126		32,866		113,611		113,010

Total AFS investment securities	776,075		776,435		600,028		599,860		181,787		172,237		33,469		33,199		1,591,359		1,581,731
HTM investment securities:

Municipal bonds	—		—		38,940		37,369		43,068		38,673		1,061,050		793,245		1,143,058		869,287
Collateralized mortgage obligations	—		—		22		22		—		—		295,423		291,420		295,445		291,442
Mortgage-backed securities	—		—		3,917		4,009		5,064		5,111		224,374		191,938		233,355		201,058
Other	—		—		—		—		—		—		16,116		16,116		16,116		16,116
Total HTM investment securities	—		—		42,879		41,400		48,132		43,784		1,596,963		1,292,719		1,687,974		1,377,903
Total investment securities	$	776,075	$	776,435	$	642,907	$	641,260	$	229,919	$	216,021	$	1,630,432	$	1,325,918	$	3,279,333	$	2,959,634

Note 5 – Loans Held for Investment

The Company’s loan portfolio is segmented according to loans that share similar attributes and risk characteristics.

Investor loans secured by real estate includes commercial real estate (“CRE”) non-owner-occupied, multifamily, construction, and land, as well as Small Business Administration (“SBA”) loans secured by investor real estate, which are loans collateralized by hotel/motel real property.

Business loans secured by real estate are loans to businesses that are collateralized by real estate where the operating cash flow of the business is the primary source of repayment. This loan portfolio includes CRE owner-occupied, franchise loans secured by real estate, and SBA loans secured by real estate, which are collateralized by real property other than hotel/motel real property.

Commercial loans are loans to businesses where the operating cash flow of the business is the primary source of repayment. This loan portfolio includes commercial and industrial (“C&I”), franchise loans non-real estate secured, and SBA loans non-real estate secured.

Retail loans include single family residential and consumer loans. Single family residential includes home equity lines of credit, as well as second trust deeds.

The following table presents the composition of the loan portfolio for the periods indicated:


	June 30,		December 31,
(Dollars in thousands)	2025		2024
Investor loans secured by real estate
CRE non-owner-occupied	$	2,084,781	$	2,131,112
Multifamily	5,255,040		5,326,009
Construction and land	302,781		379,143
SBA secured by real estate	27,405		28,777
Total investor loans secured by real estate	7,670,007		7,865,041
Business loans secured by real estate
CRE owner-occupied	1,918,031		1,995,144
Franchise real estate secured	227,080		255,694
SBA secured by real estate	39,263		43,978
Total business loans secured by real estate	2,184,374		2,294,816
Commercial loans
Commercial and industrial	1,643,977		1,486,340
Franchise non-real estate secured	180,708		213,357
SBA non-real estate secured	7,472		8,086
Total commercial loans	1,832,157		1,707,783
Retail loans
Single family residential	224,483		186,739
Consumer	1,658		1,804
Total retail loans	226,141		188,543
Loans held for investment before basis adjustment (1)	11,912,679		12,056,183
Basis adjustment associated with fair value hedge (2)	(10,600)		(16,442)
Loans held for investment	11,902,079		12,039,741
Allowance for credit losses for loans held for investment	(170,663)		(178,186)
Loans held for investment, net	$	11,731,416	$	11,861,555

Total unfunded loan commitments	$	1,723,901	$	1,532,623
Loans held for sale, at lower of cost or fair value	$	751	$	2,315

______________________________

(1) Includes unamortized net purchase premiums of $11.2 million and $9.1 million, net deferred origination (fees) costs of $(103,000) and $1.1 million, and unaccreted fair value net purchase discounts of $29.5 million and $33.2 million as of June 30, 2025 and December 31, 2024, respectively.

(2) Represents the basis adjustment associated with the application of hedge accounting on certain loans. The basis adjustment will be allocated to the amortized cost of associated loans within the closed portfolio if the hedge is discontinued. Refer to Note 11 – Derivative Instruments for additional information.

The Company generally originates SBA loans with the intent to sell the guaranteed portion of the loans prior to maturity and, therefore, designates them as held for sale. From time to time, the Company may purchase or sell other types of loans or participation interests in order to manage concentrations, maximize interest income, change risk profiles, improve returns, and generate liquidity.

Loans Serviced for Others and Loan Securitization

The Company generally retains the servicing rights of the guaranteed portion of SBA loans sold, for which the Company initially records servicing assets at fair value within its other assets category. Servicing assets are subsequently measured using the amortization method and amortized to noninterest income. At June 30, 2025 and December 31, 2024, the servicing assets totaled $824,000 and $1.0 million, respectively, and were included in other assets on the Company’s consolidated statements of financial condition. Servicing assets are evaluated for impairment based upon the fair value of the servicing rights as compared to the carrying amount. Impairment is recognized through a valuation allowance, to the extent the fair value is less than the carrying amount. At June 30, 2025 and December 31, 2024, the Company determined that no valuation allowance was necessary.

In connection with the acquisition of Opus Bank (“Opus”), the Company acquired Federal Home Loan Mortgage Corporation (“Freddie Mac”) guaranteed structured pass-through certificates, which were issued as a result of Opus’s securitization sale of $509 million in originated multifamily loans through a Freddie Mac-sponsored transaction in December 2016. The Company's continuing involvement includes sub-servicing responsibilities, general representations and warranties, and reimbursement obligations. Servicing responsibilities on loan sales generally include obligations to collect and remit payments of principal and interest, provide foreclosure services, manage payments of taxes and insurance premiums, and otherwise administer the underlying loans. In connection with the securitization transaction, Freddie Mac was designated as the master servicer and appointed the Company to perform sub-servicing responsibilities, which generally include the servicing responsibilities described above with the exception of the servicing of foreclosed or defaulted loans. The overall management, servicing, and resolution of defaulted loans and foreclosed loans are separately designated to the special servicer, a third-party institution that is independent of the master servicer and the Company. The master servicer has the right to terminate the Company in its role as sub-servicer and direct such responsibilities accordingly.

To the extent the ultimate resolution of defaulted loans results in contractual principal and interest payments that are deficient, the Company is obligated to reimburse Freddie Mac for such amounts, not to exceed 10% of the original principal amount of the loans comprising the securitization pool at the closing date of December 23, 2016. The liability recorded for the Company’s exposure to the reimbursement agreement with Freddie Mac was $274,000 as of June 30, 2025 and December 31, 2024.

Loans sold and serviced for others are not included in the accompanying consolidated statements of financial condition. The unpaid principal balances of loans and participations serviced for others were $280.2 million at June 30, 2025 and $307.3 million at December 31, 2024, respectively. Included in those totals are multifamily loans transferred through securitization with Freddie Mac of $33.8 million and $37.4 million at June 30, 2025 and December 31, 2024, respectively, and SBA participations serviced for others totaling $191.6 million and $212.5 million at June 30, 2025 and December 31, 2024, respectively.

Concentration of Credit Risk

As of June 30, 2025, the Company’s loan portfolio was primarily collateralized by various forms of real estate and business assets located principally in California. The Company’s loan portfolio contains concentrations of credit in multifamily, CRE non-owner-occupied, CRE owner-occupied, and C&I business loans. The Bank maintains policies approved by the Bank’s Board of Directors (the “Bank Board”) that address these concentrations and diversifies its loan portfolio through loan originations, purchases, and sales to meet approved concentration levels.

During the fourth quarter of 2024, the Bank converted to a national banking association, and as such all loans and extensions of credit made by the Bank are subject to the legal lending limits for national banks. Under applicable laws and regulations, the Bank may not make loans to one borrower in excess of 15% of the Bank’s capital and surplus, plus an additional 10% of the Bank’s capital and surplus, if the amount that exceeds the Bank’s 15% general limit is fully secured by readily marketable collateral. At June 30, 2025, these loans-to-one borrower limitations result in a dollar limitation of $378.8 million for the 15% general limit and a maximum dollar limitation of $631.4 million for the 25% combined limit. In order to manage concentration risk, the Bank maintains an internal lending limit well below these statutory maximums. At June 30, 2025, the Bank’s largest aggregate outstanding balance of loans to one borrower was $160.4 million comprised of multifamily loans.

Credit Quality and Credit Risk Management

The Company’s credit quality and credit risk is managed in two distinct areas. The first is the loan origination process, wherein the Bank underwrites credit and chooses which types and levels of risk it is willing to accept. The Company maintains a credit policy which addresses many related topics, sets forth maximum tolerances for key elements of loan risk, and indicates appropriate protocols for identifying and analyzing these risk elements. The policy sets forth specific guidelines for analyzing each of the loan products the Company offers from both an individual and portfolio-wide basis. The credit policy is reviewed at least annually by the Bank Board. The Bank’s underwriters ensure all key risk factors are analyzed, with most underwriting including a global cash flow analysis of the prospective borrowers.

The second area is in the ongoing oversight of the loan portfolio, where existing credit risk is measured and monitored, and where performance issues are dealt with in a timely and appropriate fashion. Credit risk is monitored and managed within the loan portfolio by the Company’s portfolio managers based on both the credit policy and a credit and portfolio review policy. This latter policy requires a program of financial data collection and analysis, thorough loan reviews, property and/or business inspections, monitoring of portfolio concentrations and trends, and consideration of current business and economic conditions. The portfolio managers also monitor asset-based lines of credit, loan covenants, and other conditions associated with the Company’s business loans as a means to help identify potential credit risk. Most individual loans, excluding the homogeneous loan portfolio, are reviewed at least annually, including the assignment or confirmation of a risk grade.

Risk grades are based on a six-grade Pass scale, along with Special Mention, Substandard, Doubtful, and Loss classifications, as such classifications are defined by the federal banking regulatory agencies. The assignment of risk grades allows the Company to, among other things, identify the risk associated with each credit in the portfolio and to provide a basis for estimating credit losses inherent in the portfolio. Risk grades are reviewed regularly with the Company’s Credit and Portfolio Review Committee, and the portfolio management and risk grading process is reviewed on an ongoing basis by both an independent loan review function and periodic internal audits, as well as by regulatory agencies during scheduled examinations.

The following provides brief definitions for risk grades assigned to loans in the portfolio:

•Pass assets carry an acceptable level of credit quality that contains no well-defined deficiencies or weaknesses.

•Special Mention assets do not currently expose the Bank to a sufficient risk to warrant classification in one of the adverse categories, but possess correctable deficiencies or potential weaknesses deserving management’s close attention.

•Substandard assets are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. These assets are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected. Other real estate owned (“OREO”) acquired through foreclosure are also classified as substandard assets.

•Doubtful credits have all the weaknesses inherent in substandard credits, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

•Loss assets are those that are considered uncollectible and of such little value that their continuance as assets is not warranted. Amounts classified as loss are promptly charged off.

The Bank’s portfolio managers also manage loan performance risks, collections, workouts, bankruptcies, and foreclosures. A special assets department, whose portfolio managers have professional expertise in these areas, typically handles or advises on these types of matters. Loan performance risks are mitigated by our portfolio managers acting promptly and assertively to address problem credits when they are identified. Collection efforts commence immediately upon non-payment, and the portfolio managers seek to promptly determine the appropriate steps to minimize the Company’s risk of loss. When foreclosure will maximize the Company’s recovery for a non-performing loan, the portfolio managers will take appropriate action to initiate the foreclosure process.

When a loan is graded as special mention, substandard, or doubtful, the Company obtains an updated valuation of the underlying collateral. Collateral generally consists of accounts receivable, inventory, fixed assets, real estate properties, and cash. The Company typically continues to obtain or confirm updated valuations of underlying collateral for special mention and classified loans on an annual or biennial basis, in accordance with our credit policy, in order to have the most current indication of fair value of the underlying collateral securing the loan. If the loan no longer possesses risk characteristics similar to other loans of a similar type in the loan portfolio, then the loan is individually evaluated to determine an appropriate ACL for the loan. If, through the Company’s credit risk management process, it is determined the ultimate repayment of a loan will come from the foreclosure upon and ultimate sale of the underlying collateral, the loan is deemed collateral dependent. If an individually evaluated loan is not considered collateral dependent, the associated ACL is determined through the use of a discounted cash flow analysis.

The following table stratifies the loans held for investment portfolio by the Company’s internal risk grading, and by year of origination, as well as the gross charge-offs on a year-to-date basis by year of origination as of June 30, 2025:


	Term Loans by Vintage
(Dollars in thousands)	2025		2024		2023		2022		2021		Prior		Revolving		Revolving Converted to Term During the Period		Total
June 30, 2025
Investor loans secured by real estate
CRE non-owner-occupied
Pass	$	128,145	$	50,398	$	29,842	$	435,813	$	479,954	$	926,971	$	—	$	—	$	2,051,123
Special mention	—		—		—		—		—		6,835		—		—		6,835
Substandard	—		13,118		—		11,170		—		2,535		—		—		26,823

Multifamily
Pass	180,023		111,730		161,954		1,105,238		1,856,604		1,826,948		—		—		5,242,497
Special mention	—		207		—		—		2,682		9,654		—		—		12,543


Construction and land
Pass	30,310		84,454		45,697		86,925		17,134		2,576		—		—		267,096
Special mention	9,439		—		—		25,850		396		—		—		—		35,685


SBA secured by real estate
Pass	—		—		—		5,289		132		13,159		—		—		18,580
Special mention	—		—		—		—		—		2,379		—		—		2,379
Substandard	—		—		—		1,037		—		5,409		—		—		6,446

Total investor loans secured by real estate	347,917		259,907		237,493		1,671,322		2,356,902		2,796,466		—		—		7,670,007
Year-to-date gross charge-offs	—		—		—		—		—		—		—		—		—
Business loans secured by real estate
CRE owner-occupied
Pass	75,715		44,979		15,692		445,853		540,023		695,594		—		—		1,817,856
Special mention	—		—		—		33,987		25,810		7,756		—		—		67,553
Substandard	—		—		—		—		819		31,803		—		—		32,622

Franchise real estate secured
Pass	3,604		2,470		8,378		36,272		80,665		81,318		—		—		212,707
Special mention	—		—		—		—		4,925		7,924		—		—		12,849
Substandard	—		—		—		—		—		1,524		—		—		1,524

SBA secured by real estate
Pass	19		704		106		9,169		6,467		19,533		—		—		35,998

Substandard	—		—		—		—		309		2,956		—		—		3,265

Total loans secured by business real estate	79,338		48,153		24,176		525,281		659,018		848,408		—		—		2,184,374
Year-to-date gross charge-offs	—		—		—		—		—		—		—		—		—
Commercial loans
Commercial and industrial
Pass	305,827		385,189		27,889		111,369		111,471		220,707		450,976		1,176		1,614,604
Special mention	—		740		2,735		—		1,076		125		8,841		182		13,699
Substandard	—		—		20		7,896		1,881		475		2,069		448		12,789
Doubtful	—		—		—		2,885		—		—		—		—		2,885
Franchise non-real estate secured
Pass	$	2,450	$	1,155	$	5,583	$	53,208	$	66,169	$	50,405	$	—	$	—	$	178,970
Special mention	—		—		—		—		178		—		—		—		178
Substandard	—		1,106		—		—		—		454		—		—		1,560


	Term Loans by Vintage
(Dollars in thousands)	2025		2024		2023		2022		2021		Prior		Revolving		Revolving Converted to Term During the Period		Total
June 30, 2025
SBA non-real estate secured
Pass	461		923		239		2,952		309		1,509		—		—		6,393

Substandard	—		—		—		943		—		136		—		—		1,079






Total commercial loans	308,738		389,113		36,466		179,253		181,084		273,811		461,886		1,806		1,832,157
Year-to-date gross charge-offs	—		274		70		165		—		22		229		—		760
Retail loans
Single family residential
Pass	40,165		110,013		9		—		—		34,381		39,788		—		224,356

Substandard	—		—		—		—		—		127		—		—		127

Consumer loans
Pass	78		91		—		—		—		342		1,147		—		1,658



Total retail loans	40,243		110,104		9		—		—		34,850		40,935		—		226,141
Year-to-date gross charge-offs	10		6		1		2		—		13		—		—		32
Loans held for investment before basis adjustment (1)	$	776,236	$	807,277	$	298,144	$	2,375,856	$	3,197,004	$	3,953,535	$	502,821	$	1,806	$	11,912,679
Total year-to-date gross charge-offs	$	10	$	280	$	71	$	167	$	—	$	35	$	229	$	—	$	792

______________________________

(1) Excludes the basis adjustment of $10.6 million to the carrying amount of certain loans included in fair value hedging relationships. Refer to Note 11 – Derivative Instruments for additional information.

The following table stratifies the loans held for investment portfolio by the Company’s internal risk grading, and by year of origination, as of December 31, 2024:


	Term Loans by Vintage
(Dollars in thousands)	2024		2023		2022		2021		2020		Prior		Revolving		Revolving Converted to Term During the Period		Total
December 31, 2024
Investor loans secured by real estate
CRE non-owner-occupied
Pass	$	61,326	$	30,284	$	448,638	$	491,594	$	160,984	$	900,867	$	—	$	—	$	2,093,693
Special mention	—		—		—		2,918		—		1,531		—		—		4,449
Substandard	13,563		—		11,167		—		5,740		2,500		—		—		32,970

Multifamily
Pass	120,793		168,040		1,136,648		1,931,238		669,154		1,272,416		—		—		5,298,289
Special mention	—		—		—		2,053		14,052		11,615		—		—		27,720


Construction and land
Pass	79,235		47,024		216,604		21,063		2,224		3,185		—		—		369,335
Special mention	—		—		9,398		410		—		—		—		—		9,808


SBA secured by real estate
Pass	$	—	$	—	$	6,366	$	—	$	493	$	17,189	$	—	$	—	$	24,048

Substandard	—		—		—		131		—		4,598		—		—		4,729

Total investor loans secured by real estate	274,917		245,348		1,828,821		2,449,407		852,647		2,213,901		—		—		7,865,041
Year-to-date gross charge-offs	$	2,304	$	—	$	28	$	29	$	11,539	$	1,651	$	—	$	—	$	15,551


	Term Loans by Vintage
(Dollars in thousands)	2024		2023		2022		2021		2020		Prior		Revolving		Revolving Converted to Term During the Period		Total
December 31, 2024
Business loans secured by real estate
CRE owner-occupied
Pass	54,983		20,800		505,611		578,642		209,526		546,759		—		—		1,916,321
Special mention	—		—		2,663		24,673		1,884		9,169		—		—		38,389
Substandard	—		—		—		832		—		39,602		—		—		40,434

Franchise real estate secured
Pass	2,501		9,622		36,991		98,416		15,397		78,083		—		—		241,010
Special mention	—		—		—		5,027		8,102		1,555		—		—		14,684


SBA secured by real estate
Pass	741		108		9,699		7,007		1,205		22,101		—		—		40,861

Substandard	—		—		—		—		—		3,117		—		—		3,117

Total loans secured by business real estate	58,225		30,530		554,964		714,597		236,114		700,386		—		—		2,294,816
Year-to-date gross charge-offs	—		93		3,345		581		1,152		1,024		—		—		6,195
Commercial loans
Commercial and industrial
Pass	436,794		34,576		122,900		130,428		32,337		210,544		484,411		3,926		1,455,916
Special mention	533		407		—		—		160		—		11,408		330		12,838
Substandard	—		842		9,192		2,439		3		540		1,685		—		14,701
Doubtful and loss	—		—		2,885		—		—		—		—		—		2,885
Franchise non-real estate secured
Pass	1,325		6,770		56,825		77,541		8,907		54,069		—		—		205,437
Special mention	—		—		—		190		—		512		—		—		702
Substandard	1,142		—		—		—		—		6,076		—		—		7,218

SBA non-real estate secured
Pass	944		248		4,176		322		—		2,201		—		—		7,891

Substandard	—		—		—		—		125		70		—		—		195

Total commercial loans	440,738		42,843		195,978		210,920		41,532		274,012		497,504		4,256		1,707,783
Year-to-date gross charge-offs	—		470		370		290		41		234		2,539		—		3,944
Retail loans
Single family residential
Pass	116,317		10		—		—		158		35,923		34,331		—		186,739



Consumer loans
Pass	104		—		—		—		1		374		1,325		—		1,804



Total retail loans	116,421		10		—		—		159		36,297		35,656		—		188,543
Year-to-date gross charge-offs	$	10	$	2	$	7	$	1	$	—	$	876	$	—	$	—	$	896
Loans held for investment before basis adjustment (1)	$	890,301	$	318,731	$	2,579,763	$	3,374,924	$	1,130,452	$	3,224,596	$	533,160	$	4,256	$	12,056,183
Total year-to-date gross charge-offs	$	2,314	$	565	$	3,750	$	901	$	12,732	$	3,785	$	2,539	$	—	$	26,586

______________________________

(1) Excludes the basis adjustment of $16.4 million to the carrying amount of certain loans included in fair value hedging relationships. Refer to Note 11 – Derivative Instruments for additional information.

The following tables stratify the loans held for investment portfolio by delinquency as of the periods indicated:


			Days Past Due(2)
(Dollars in thousands)	Current		30-59		60-89		90+		Total
June 30, 2025
Investor loans secured by real estate
CRE non-owner-occupied	$	2,084,781	$	—	$	—	$	—	$	2,084,781
Multifamily	5,255,040		—		—		—		5,255,040
Construction and land	302,781		—		—		—		302,781
SBA secured by real estate	27,405		—		—		—		27,405
Total investor loans secured by real estate	7,670,007		—		—		—		7,670,007
Business loans secured by real estate
CRE owner-occupied	1,918,031		—		—		—		1,918,031
Franchise real estate secured	227,080		—		—		—		227,080
SBA secured by real estate	39,263		—		—		—		39,263
Total business loans secured by real estate	2,184,374		—		—		—		2,184,374
Commercial loans
Commercial and industrial	1,642,337		300		99		1,241		1,643,977
Franchise non-real estate secured	180,708		—		—		—		180,708
SBA not secured by real estate	7,454		—		—		18		7,472
Total commercial loans	1,830,499		300		99		1,259		1,832,157
Retail loans
Single family residential	224,094		389		—		—		224,483
Consumer loans	1,658		—		—		—		1,658
Total retail loans	225,752		389		—		—		226,141
Loans held for investment before basis adjustment (1)	$	11,910,632	$	689	$	99	$	1,259	$	11,912,679




December 31, 2024
Investor loans secured by real estate
CRE non-owner-occupied	$	2,131,112	$	—	$	—	$	—	$	2,131,112
Multifamily	5,326,009		—		—		—		5,326,009
Construction and land	379,143		—		—		—		379,143
SBA secured by real estate	28,777		—		—		—		28,777
Total investor loans secured by real estate	7,865,041		—		—		—		7,865,041
Business loans secured by real estate
CRE owner-occupied	1,995,144		—		—		—		1,995,144
Franchise real estate secured	255,694		—		—		—		255,694
SBA secured by real estate	43,978		—		—		—		43,978
Total business loans secured by real estate	2,294,816		—		—		—		2,294,816
Commercial loans
Commercial and industrial	1,483,926		824		349		1,241		1,486,340
Franchise non-real estate secured	213,357		—		—		—		213,357
SBA not secured by real estate	8,017		49		—		20		8,086
Total commercial loans	1,705,300		873		349		1,261		1,707,783
Retail loans
Single family residential	186,603		136		—		—		186,739
Consumer loans	1,804		—		—		—		1,804
Total retail loans	188,407		136		—		—		188,543
Loans held for investment before basis adjustment (1)	$	12,053,564	$	1,009	$	349	$	1,261	$	12,056,183

______________________________

(1) Excludes the basis adjustment of $10.6 million and $16.4 million to the carrying amount of certain loans included in fair value hedging relationships as of June 30, 2025 and December 31, 2024, respectively. Refer to Note 11 – Derivative Instruments for additional information.

(2) Nonaccrual loans are included in this aging analysis based on the loan’s past due status.

Individually Evaluated Loans

The Company evaluates loans collectively for purposes of determining the ACL in accordance with ASC 326. Collective evaluation is based on aggregating loans deemed to possess similar risk characteristics. In certain instances, the Company may identify loans that it believes no longer possess risk characteristics similar to other loans in the portfolio. These loans are typically identified from a substandard or worse internal risk grade, since the specific attributes and risks associated with such loans tend to become unique as the credit deteriorates. Such loans are typically nonperforming, can be modified loans made to borrowers experiencing financial difficulty, and/or are deemed collateral dependent, where the ultimate repayment of the loan is expected to come from the operation of or eventual sale of the collateral. Loans that are deemed by management to no longer possess risk characteristics similar to other loans in the portfolio are evaluated individually for purposes of determining an appropriate lifetime ACL. The Company uses a discounted cash flow approach, using the loan’s effective interest rate, for determining the ACL on individually evaluated loans, unless the loan is deemed collateral dependent, which requires evaluation based on the estimated fair value of the underlying collateral, less estimated costs to sell. The Company may increase or decrease the ACL for collateral dependent individually evaluated loans based on changes in the estimated expected fair value of the collateral. Changes in the ACL for all other individually evaluated loans is based substantially on the Company’s evaluation of cash flows expected to be received from such loans.

As of June 30, 2025, $26.3 million of loans were individually evaluated with a $484,000 ACL attributed to such loans. At June 30, 2025, $16.6 million of individually evaluated loans were evaluated based on the underlying value of the collateral, and $9.7 million were evaluated using a discounted cash flow approach. All individually evaluated loans were on nonaccrual status at June 30, 2025.

As of December 31, 2024, $28.0 million of loans were individually evaluated with no ACL attributed to such loans. At December 31, 2024, $17.1 million of the individually evaluated loans were evaluated based on the underlying value of the collateral, and $10.9 million were evaluated using a discounted cash flow approach. All individually evaluated loans were on nonaccrual status at December 31, 2024.

Purchased Credit Deteriorated Loans

The Company analyzed acquired loans for more-than-insignificant deterioration in credit quality since their origination. Such loans are classified as purchased credit deteriorated (“PCD”) loans. Please see Note 1 - Description of Business and Summary of Significant Accounting Policies of our audited consolidated financial statements included in our 2024 Form 10-K for more information concerning the accounting for PCD loans. The Company had PCD loans of $234.9 million and $275.4 million at June 30, 2025 and December 31, 2024, respectively.

Acquired loans classified as PCD are recorded at an initial amortized cost, which is comprised of the purchase price of the loans (or initial fair value) and the initial ACL determined for the loans, which is added to the purchase price, as well as any resulting discount or premium related to factors other than credit. The Company accounts for interest income on PCD loans using the interest method, whereby any purchase discounts or premiums are accreted or amortized into interest income as an adjustment of the loan’s yield. Subsequent to acquisition, the ACL for PCD loans is measured in accordance with the Company’s ACL methodology. Please also see Note 6 – Allowance for Credit Losses for more information concerning the Company’s ACL methodology.

Nonaccrual Loans

When loans are placed on nonaccrual status, previously accrued but unpaid interest is reversed from current period earnings. Payments received on nonaccrual loans are generally applied as a reduction to the loan principal balance. If the likelihood of further loss is remote, the Company may recognize interest on a cash basis. Loans may be returned to accruing status if the Company believes that all remaining principal and interest is fully collectible and there has been at least three months of sustained repayment performance since the loan was placed on nonaccrual.

The Company typically does not accrue interest on loans 90 days or more past due or when, in the opinion of management, there is reasonable doubt as to the timely collection of principal or interest regardless of the length of past due status. However, when such loans are well-secured and in the process of collection, the Company may continue with the accrual of interest. The Company had loans on nonaccrual status of $26.3 million at June 30, 2025 and $28.0 million at December 31, 2024.

The Company did not record income from the receipt of cash payments related to nonaccruing loans during the three and six months ended June 30, 2025 and 2024. The Company had no loans 90 days or more past due and still accruing at June 30, 2025 and December 31, 2024.

The following tables provide a summary of nonaccrual loans as of the dates indicated:


	Nonaccrual Loans (1)
	Collateral Dependent Loans				Non-Collateral Dependent Loans				Total Nonaccrual Loans		Nonaccrual Loans with No ACL
(Dollars in thousands)	Balance		ACL		Balance		ACL
June 30, 2025
Investor loans secured by real estate
CRE non-owner-occupied	$	14,805	$	—	$	—	$	—	$	14,805	$	14,805


SBA secured by real estate	380		—		—		—		380		380
Total investor loans secured by real estate	15,185		—		—		—		15,185		15,185





Commercial loans
Commercial and industrial	1,241		484		9,730		—		10,971		10,071

SBA non-real estate secured	18		—		—		—		18		18
Total commercial loans	1,259		484		9,730		—		10,989		10,089
Retail loans
Single family residential	127		—		—		—		127		127

Total retail loans	127		—		—		—		127		127
Total nonaccrual loans	$	16,571	$	484	$	9,730	$	—	$	26,301	$	25,401





December 31, 2024
Investor loans secured by real estate
CRE non-owner-occupied	$	15,423	$	—	$	—	$	—	$	15,423	$	15,423


SBA secured by real estate	409		—		—		—		409		409
Total investor loans secured by real estate	15,832		—		—		—		15,832		15,832





Commercial loans
Commercial and industrial	1,241		—		10,938		—		12,179		12,179

SBA non-real estate secured	20		—		—		—		20		20
Total commercial loans	1,261		—		10,938		—		12,199		12,199




Total nonaccrual loans	$	17,093	$	—	$	10,938	$	—	$	28,031	$	28,031

______________________________

(1) The ACL for nonaccrual loans is determined based on a discounted cash flow methodology unless the loan is considered collateral dependent; otherwise, the ACL for collateral dependent nonaccrual loans is determined based on the estimated fair value of the underlying collateral.

Residential Real Estate Loans In Process of Foreclosure

The Company had no consumer mortgage loans collateralized by residential real estate property for which formal foreclosure proceedings were in process as of June 30, 2025 and December 31, 2024.

Modified Loans to Troubled Borrowers

On January 1, 2023, the Company adopted ASU 2022-02, Financial Instruments - Credit Losses (Topic 326) Troubled Debt Restructurings and Vintage Disclosures, which introduces new reporting requirements for modifications of loans to borrowers experiencing financial difficulty. The Company also refers to these loans as modified loans to troubled borrowers (“MLTB”). An MLTB arises from a modification made to a loan in order to alleviate temporary difficulties in the borrower’s financial condition and/or constraints on the borrower’s ability to repay the loan, and to minimize potential losses to the Company. GAAP requires that certain types of modifications be reported, which consist of the following: (i) principal forgiveness, (ii) interest rate reduction, (iii) other-than-insignificant payment delay, (iv) term extension, or any combination of the foregoing. The ACL for an MLTB is measured on a collective basis, as with other loans in the loan portfolio, unless management determines that such loans no longer possess risk characteristics similar to others in the loan portfolio. In those instances, the ACL for an MLTB is determined through individual evaluation.

MLTBs were $9.7 million at June 30, 2025 and $13.6 million at December 31, 2024.

There were two syndicated C&I participation loans to one borrower totaling $9.7 million modified as an MLTB during the three and six months ended June 30, 2025, compared to one MLTB loan of $16.3 million during the three and six months ended June 30, 2024.

The following table shows the amortized cost of the MLTB by class and type of modification, as well as the percentage of the loans modified to the total class of loans at and during the periods indicated:

Three and Six Months Ended

June 30, 2025

Combination of
Other-than-Insignificant Payment Delay
and
Term Extension

(Dollars in thousands)

Balance

Percent of Total Class of Loans

Commercial loans

Commercial and industrial

9,730

0.59

Total commercial loans

9,730


		Three and Six Months Ended June 30, 2024
	Combination of Other-than-Insignificant Payment Delay and Term Extension
(Dollars in thousands)		Balance		Percent of Total Class of Loans
Investor loans secured by real estate
CRE non-owner-occupied		$	16,296	0.73	%



Total investor loans secured by real estate		$	16,296

The following table describes the financial effect of the loan modification made for the borrower experiencing financial difficulty during the periods indicated:

Three and Six Months Ended
June 30, 2025

Combination of

Other-than-Insignificant Payment Delay and

Term Extension

Investor loans secured by real estate

Commercial and industrial

15 month term extension and 9 months of interest only payments

Three and Six Months Ended

June 30, 2024

Combination of

Other-than-Insignificant Payment Delay and

Term Extension

Investor loans secured by real estate

CRE non-owner-occupied

Consolidated 3 loans with varying maturities into a single loan that extended the weighted average maturity by 6 months

and

2 years of interest only payments

During the three and six months ended June 30, 2025 and 2024, there were no MLTBs that had a payment default and had been modified within the 12 months preceding the payment default (90 days or more past due).

The following table depicts the performance of the loans that were modified in the past 12 months as of the dates indicated:


			Days Past Due
(Dollars in thousands)	Current		30-59		60-89		90+		Total
June 30, 2025











Commercial loans
Commercial and industrial	$	9,730	$	—	$	—	$	—	$	9,730


Total commercial loans	$	9,730	$	—	$	—	$	—	$	9,730




June 30, 2024
Investor loans secured by real estate
CRE non-owner-occupied	$	16,296	$	—	$	—	$	—	$	16,296



Total investor loans secured by real estate	$	16,296	$	—	$	—	$	—	$	16,296





Commercial loans
Commercial and industrial	$	11,727	$	—	$	—	$	—	$	11,727


Total commercial loans	$	11,727	$	—	$	—	$	—	$	11,727




Total	$	28,023	$	—	$	—	$	—	$	28,023

Collateral Dependent Loans

Loans that have been classified as collateral dependent are loans where substantially all repayment of the loan is expected to come from the operation of or eventual liquidation of the collateral. Collateral dependent loans are evaluated individually for purposes of determining the ACL. The ACL for each loan is measured as the amount by which the fair value of the underlying collateral, less estimated costs to sell, is less than the amortized cost of the loan. Additionally, due to the likelihood of foreclosure and that repayment of the loan is expected to come from the eventual sale of the underlying collateral, management analyzes the underlying collateral at least quarterly, with changes in the estimated fair value of the collateral and/or estimated costs to sell reflected in the lifetime ACL for the loan and balances deemed uncollectible are promptly charged-off. In cases where the loan is well-secured and the estimated value of the collateral exceeds the amortized cost of the loan, no ACL is recorded.

The following tables summarize collateral dependent loans by collateral type as of the dates indicated:



(Dollars in thousands)	Office Properties		Hotel Properties		Residential Properties		Other CRE Properties		Business Assets		Total
June 30, 2025
Investor loan secured by real estate
CRE non-owner-occupied	$	13,118	$	—	$	—	$	1,687	$	—	$	14,805


SBA secured by real estate	—		380		—		—		—		380
Total investor loans secured by real estate	13,118		380		—		1,687		—		15,185





Commercial loans
Commercial and industrial	—		—		—		—		1,241		1,241
SBA non-real estate secured	—		—		—		—		18		18
Total commercial loans	—		—		—		—		1,259		1,259
Retail loans
Single family residential	—		—		127		—		—		127

Total retail loans	—		—		127		—		—		127
Total collateral dependent loans	$	13,118	$	380	$	127	$	1,687	$	1,259	$	16,571




December 31, 2024
Investor loan secured by real estate
CRE non-owner-occupied	$	13,563	$	—	$	—	$	1,860	$	—	$	15,423


SBA secured by real estate	—		409		—		—		—		409
Total investor loans secured by real estate	13,563		409		—		1,860		—		15,832





Commercial loans
Commercial and industrial	—		—		—		—		1,241		1,241

SBA non-real estate secured	—		—		—		—		20		20
Total commercial loans	—		—		—		—		1,261		1,261




Total collateral dependent loans	$	13,563	$	409	$	—	$	1,860	$	1,261	$	17,093

Note 6 – Allowance for Credit Losses

The Company maintains an ACL for loans and unfunded loan commitments in accordance with ASC 326 - Financial Instruments - Credit Losses. ASC 326 requires the Company to initially recognize estimates for lifetime credit losses on loans and unfunded loan commitments at the time of origination or acquisition. The recognition of credit losses represents the Company’s best estimate of lifetime expected credit losses, given the facts and circumstances associated with a particular loan or group of loans with similar risk characteristics. Determining the ACL involves the use of significant management judgement and estimates, which are subject to change based on management’s ongoing assessment of the credit quality of the loan portfolio and changes in economic forecasts used in the Company’s ACL model. The Company uses a discounted cash flow model when determining estimates for the ACL for commercial real estate loans and commercial loans, which comprise the majority of the loan portfolio, and uses a historical loss rate model for retail loans. The Company also utilizes proxy loan data in its ACL model where the Company’s own historical data is not sufficiently available.

The discounted cash flow model is applied on an instrument-by-instrument basis, and for loans with similar risk characteristics, to derive estimates for the lifetime ACL for each loan. The discounted cash flow methodology relies on several significant components essential to the development of estimates for future cash flows on loans and unfunded loan commitments. These components consist of: (i) the estimated probability of default (“PD”), (ii) the estimated loss given default (“LGD”), which represents the estimated severity of the loss when a loan is in default, (iii) estimates for prepayment activity on loans, and (iv) the estimated exposure to the Company at default (“EAD”). The PD and LGD are heavily influenced by changes in economic forecasts and key variables employed in the model as well as our portfolio performance and composition over a reasonable and supportable period. The Company’s ACL methodology for unfunded loan commitments also includes assumptions concerning the probability an unfunded commitment will be drawn upon by the borrower. These assumptions are based on the Company’s historical experience.

The Company’s discounted cash flow ACL model for CRE and commercial loans uses internally derived estimates for prepayments in determining the amount and timing of future contractual cash flows expected to be collected. The estimate of future cash flows also incorporates estimates for contractual amounts the Company believes may not be collected, which are based on assumptions for PD, LGD, and EAD. The EAD is determined by the contractual payment schedule and expected payment profile of the loan, incorporating estimates for expected prepayments and future draws on revolving credit facilities. The Company discounts cash flows using the effective interest rate on the loan. The effective interest rate represents the contractual rate on the loan; adjusted for any purchase premiums, or discounts, and deferred fees and costs associated with an originated loan. The Company has made an accounting policy election to adjust the effective interest rate to take into consideration the effects of estimated prepayments. The ACL for loans is determined by measuring the amount by which a loan’s amortized cost exceeds its discounted cash flows expected to be collected. The ACL for credit facilities is determined by discounting estimates for cash flows not expected to be collected.

Probability of Default

The PD for investor loans secured by real estate is based largely on a model provided by a third party, using proxy loan information. The PDs generated by this model are reflective of current and expected economic conditions in the commercial real estate market, and how they are expected to impact loan level and property level attributes, and ultimately the likelihood of a default event occurring. This model incorporates assumptions for PD at a loan’s maturity. Significant loan and property level attributes include: loan-to-value (“LTV”) ratios, debt service coverage ratio, loan size, loan vintage, and property types.

The PD for business loans secured by real estate and commercial loans is based on an internally developed PD rating scale that assigns PDs based on the Company’s internal credit risk grades for loans. This internally developed PD rating scale is based on a combination of the Company’s own historical data and observed historical data from the Company’s peers, which consist of banks that management believes align with our business profile. As credit risk grades change for these loans, the PD assigned to them also changes. As with investor loans secured by real estate, the PD for business loans secured by real estate and commercial loans is also impacted by current and expected economic conditions, including U.S. GDP growth and U.S. unemployment rate forecasts.

The Company considers loans to be in default when they are 90 days or more past due or placed on nonaccrual status.

Loss Given Default

LGDs for commercial real estate loans are derived from a third party, using proxy loan information, and are based on loan and property level characteristics for loans in the Company’s loan portfolio, such as: LTV ratio, estimated time to resolution, property size, and current and estimated future market price changes for underlying collateral. LGDs are highly dependent upon LTV ratios, and incorporate estimates for the expenses associated with managing the loans through to resolution. LGDs also incorporate an estimate for the loss severity associated with loans where the borrower fails to meet their debt obligation at maturity, such as through a balloon payment or the refinancing of the loan through another lender. External factors that have an impact on LGDs include: changes in the index for CRE pricing, GDP growth rate, unemployment rates, and the Consumer Price Index. LGDs are applied to each loan in the commercial real estate portfolio, and in conjunction with the PD, produce estimates for net cash flows not expected to be collected over the estimated term of the loan.

LGDs for commercial loans are also derived from a third party that has a considerable database of credit related information specific to the financial services industry and the type of loans within this segment, and is used to generate annual default information for commercial loans. These proxy LGDs are dependent upon data inputs such as credit quality, borrower industry, region, borrower size, and debt seniority, as well as external factors, including GDP growth rate and unemployment rates. LGDs are then applied to each loan in the commercial segment, and in conjunction with the PD, produce estimates for net cash flows not expected to be collected over the estimated term of the loan.

Historical Loss Rates for Retail Loans

The historical loss rate model for retail loans is derived from a third party that has a considerable database of credit related information for retail loans. Key loan level attributes and economic drivers in determining the loss rate for retail loans include FICO scores, vintage, as well as geography, unemployment rates, and changes in consumer real estate prices.

Economic Forecasts

In order to develop reasonable and supportable forecasts of future conditions, the Company estimates how those forecasts are expected to impact a borrower’s ability to satisfy their obligation to the Bank and the ultimate collectability of future cash flows over the life of a loan. The Company uses macroeconomic scenarios from an independent third party, which are based on past events, current conditions, and the likelihood of future events occurring. These scenarios are typically comprised of: a base-case scenario, an upside scenario, representing slightly better economic conditions than currently experienced and, a downside scenario, representing recessionary conditions. Management evaluates appropriateness of economic scenarios and may decide that a particular economic scenario or a combination of probability-weighted economic scenarios should be used in the Company’s ACL model. The economic scenarios chosen for the model, the extent to which more than one scenario is used, and the weights that are assigned to them, are based on the likelihood that the economy would perform better than each scenario, which is based in part on analysis performed by an independent third party. Economic scenarios chosen, as well as the assumptions within those scenarios, and whether to use a probability-weighted multiple scenario approach, can vary from one period to the next based on changes in current and expected economic conditions, and due to the occurrence of specific events. The Company’s ACL model at June 30, 2025 includes assumptions concerning the interest rate environment, general uncertainty concerning future economic conditions, and the potential for recessionary conditions.

The Company currently forecasts PDs and LGDs based on economic scenarios over a two-year period, which we believe is a reasonable and supportable period. Beyond this point, PDs and LGDs revert to their long-term averages. The Company has reflected this reversion over a period of three years in each of its economic scenarios used to generate the overall probability-weighted forecast. Changes in economic forecasts impact the PD, LGD, and EAD for each loan, and therefore influence the amount of future cash flows the Company does not expect to collect for each loan.

It is important to note that the Company’s ACL model relies on multiple economic and model variables, which are used in several economic scenarios. Although no one variable can fully demonstrate the sensitivity of the ACL calculation to changes in the economic variables used in the model, the Company has identified certain economic variables that have significant influence in the Company’s model for determining the ACL. These key economic variables include forecasted changes in the U.S. unemployment rate, U.S. real GDP growth, CRE prices, and interest rates.

Qualitative Adjustments

The Company recognizes that historical information used as the basis for determining future expected credit losses may not always, by itself, provide a sufficient basis for determining future expected credit losses. The Company, therefore, considers the need for qualitative adjustments to the ACL on a quarterly basis. Qualitative adjustments may be related to and include, but not be limited to, factors such as: (i) management’s assessment of economic forecasts used in the model and how those forecasts align with management’s overall evaluation of current and expected economic conditions, (ii) organization specific risks such as credit concentrations, collateral specific risks, regulatory risks, and external factors that may ultimately impact credit quality, (iii) potential model limitations such as limitations identified through back-testing, and other limitations associated with factors such as underwriting changes, acquisition of new portfolios, and changes in portfolio segmentation, and (iv) management’s overall assessment of the adequacy of the ACL, including an assessment of model data inputs used to determine the ACL.

Qualitative adjustments primarily relate to certain segments of the loan portfolio deemed by management to be of potentially higher-risk profiles or other factors where management believes the quantitative component of the Company’s ACL model may not be fully reflective of levels deemed adequate in the judgement of management. Certain qualitative adjustments also relate to heightened uncertainty as to future macroeconomic conditions and the related impact on certain loan segments. Management reviews the need for an appropriate level of qualitative adjustments on a quarterly basis, and as such, the amount and allocation of qualitative adjustments may change in future periods.

The following tables provide the allocation of the ACL for loans held for investment as well as the activity in the ACL attributed to various segments in the loan portfolio as of, and for the periods indicated:


	Three Months Ended June 30, 2025
(Dollars in thousands)	Beginning ACL Balance		Charge-offs		Recoveries		Provision for Credit Losses		Ending ACL Balance
Investor loans secured by real estate
CRE non-owner-occupied	$	26,866	$	—	$	—	$	254	$	27,120
Multifamily	51,375		—		—		2,603		53,978
Construction and land	3,777		—		—		(210)		3,567
SBA secured by real estate	1,678		—		—		(551)		1,127
Business loans secured by real estate
CRE owner-occupied	30,521		—		—		(2,600)		27,921
Franchise real estate secured	4,663		—		—		(651)		4,012
SBA secured by real estate	3,864		—		—		(415)		3,449
Commercial loans
Commercial and industrial	41,902		(280)		298		(1,821)		40,099
Franchise non-real estate secured	8,077		(22)		—		(1,451)		6,604
SBA non-real estate secured	461		—		2		(26)		437
Retail loans
Single family residential	1,680		—		9		548		2,237
Consumer loans	103		(22)		364		(333)		112
Totals	$	174,967	$	(324)	$	673	$	(4,653)	$	170,663


	Six Months Ended June 30, 2025

	Beginning ACL Balance		Charge-offs		Recoveries		Provision for Credit Losses		Ending ACL Balance
(Dollars in thousands)
Investor loans secured by real estate
CRE non-owner occupied	$	26,408	$	—	$	—	$	712	$	27,120
Multifamily	53,305		—		—		673		53,978
Construction and land	5,230		—		—		(1,663)		3,567
SBA secured by real estate	1,722		—		30		(625)		1,127
Business loans secured by real estate
CRE owner-occupied	31,794		—		—		(3,873)		27,921
Franchise real estate secured	5,836		—		—		(1,824)		4,012
SBA secured by real estate	3,831		—		—		(382)		3,449
Commercial loans
Commercial and industrial	37,603		(738)		1,073		2,161		40,099
Franchise non-real estate secured	10,794		(22)		—		(4,168)		6,604
SBA non-real estate secured	359		—		8		70		437
Retail loans
Single family residential	1,193		—		9		1,035		2,237
Consumer loans	111		(32)		364		(331)		112
Totals	$	178,186	$	(792)	$	1,484	$	(8,215)	$	170,663


	Three Months Ended June 30, 2024
(Dollars in thousands)	Beginning ACL Balance		Charge-offs		Recoveries		Provision for Credit Losses		Ending ACL Balance
Investor loans secured by real estate
CRE non-owner-occupied	$	30,781	$	(4,196)	$	1,500	$	1,653	$	29,738
Multifamily	58,411		(7,372)		—		6,259		57,298
Construction and land	8,171		—		—		2,633		10,804
SBA secured by real estate	2,184		(153)		86		25		2,142
Business loans secured by real estate
CRE owner-occupied	28,760		—		121		(350)		28,531
Franchise real estate secured	7,258		—		—		(464)		6,794
SBA secured by real estate	4,288		—		1		(155)		4,134
Commercial loans
Commercial and industrial	37,107		(968)		148		(4,030)		32,257
Franchise non-real estate secured	14,320		—		1,375		(4,565)		11,130
SBA non-real estate secured	495		(6)		3		(10)		482
Retail loans
Single family residential	442		—		3		(46)		399
Consumer loans	123		(835)		—		806		94
Totals	$	192,340	$	(13,530)	$	3,237	$	1,756	$	183,803


	Six Months Ended June 30, 2024
(Dollars in thousands)	Beginning ACL Balance		Charge-offs		Recoveries		Provision for Credit Losses		Ending ACL Balance
Investor loans secured by real estate
CRE non-owner-occupied	$	31,030	$	(5,123)	$	1,500	$	2,331	$	29,738
Multifamily	56,312		(7,372)		5		8,353		57,298
Construction and land	9,314		—		—		1,490		10,804
SBA secured by real estate	2,182		(406)		86		280		2,142
Business loans secured by real estate
CRE owner-occupied	28,787		(4,452)		184		4,012		28,531
Franchise real estate secured	7,499		(212)		—		(493)		6,794
SBA secured by real estate	4,427		—		2		(295)		4,134
Commercial loans
Commercial and industrial	36,692		(1,553)		187		(3,069)		32,257
Franchise non-real estate secured	15,131		(100)		1,375		(5,276)		11,130
SBA non-real estate secured	458		(6)		5		25		482
Retail loans
Single family residential	505		—		3		(109)		399
Consumer loans	134		(835)		—		795		94
Totals	$	192,471	$	(20,059)	$	3,347	$	8,044	$	183,803

The decrease in the ACL for loans held for investment during the three months ended June 30, 2025 of $4.3 million was reflective of a reversal of provision for credit losses of $4.7 million and net recoveries of $349,000.

During the three months ended June 30, 2025, the reversal of provision for credit losses was principally driven by provision reversals in the business loans secured by real estate and commercial loans segments, partially offset by provisions for credit losses in the investor loans secured by real estate and retail loans segments. The reversal of provision for credit losses in the business loans secured by real estate segment was principally driven by the impact of shorter duration as well as a decrease in loan balances. The reversal of provision for credit losses for loans in the commercial loans segment was largely attributed to shorter duration, economic forecast updates, as well as a decline in loan balances for SBA and franchise non-real estate secured loans. The provision for credit losses for the investor loans secured by real estate segment is largely attributed to a provision for multifamily loans, which was driven by economic forecast updates, partially offset by the impact of shorter duration. The provision for multifamily loans was partially offset by provision reversals for construction and land loans as well as SBA loans secured by real estate, which were driven by slightly lower loss rates for construction and land loans, and a change in qualitative adjustments during the period for SBA loans secured by real estate. The provision for credit losses for retail loans can be attributed in large part to the change in qualitative adjustments for single family residential loans during the period.

The decrease in the ACL for loans held for investment during the six months ended June 30, 2025 of $7.5 million was reflective of a reversal of provision for credit losses of $8.2 million and net recoveries of $692,000.

During the six months ended June 30, 2025, the reversal of provision for credit losses was principally driven by provision reversals in the business and investor loans secured by real estate and the commercial loans segments. The provision reversals in these segments were partially offset by a provision for credit losses in the retail loans segment. The reversal of provision for credit losses in the business loans secured by real estate segment is largely attributed to the impact of shorter duration as well as a decline in loan balances in that segment. The reversal of provision for credit losses in the commercial loans segment can be attributed to the impact of shorter duration, as well as a decline in loan balances for SBA and franchise non-real estate secured loans, partially offset by the provision for credit losses for commercial and industrial loans, which was primarily attributed to new originations and purchases of commercial and industrial loans. The reversal of provision for credit losses in the investor loans secured by real estate segment is largely attributed to the decline in loan balances for construction and land and SBA real estate secured loans. This was partially offset by provisions for credit losses for CRE non-owner occupied and multifamily loans, which was driven by economic forecast updates, partially offset by the impact of shorter duration. The provision for credit losses for retail loans was principally driven by a change in qualitative adjustments during the second quarter, as well as the purchase of jumbo single family residential loans with high credit quality during the first quarter. GAAP requires the Company to establish an ACL for purchased loans at the time of purchase.

The decrease in the ACL for loans held for investment during the three months ended June 30, 2024 of $8.5 million was reflective of $10.3 million in net charge-offs, partially offset by $1.8 million in provision for credit losses.

During the three months ended June 30, 2024, the provision for credit losses was principally driven by a $10.6 million provision for credit losses for investor loans secured by real estate. The provision for credit losses for loans in this segment was largely due to economic forecast updates on multifamily loans as well as the impact from the loan composition changes on construction and land loans, partially offset by improved asset quality for loans in this segment. The reversal of provision for credit losses for commercial loan totaled $8.6 million, and can be attributed largely to the declines in the balances of franchise non-real estate secured and C&I loans.

Charge-offs during the three months ended June 30, 2024 were largely due to $11.5 million in charge-offs related to the sale of a substandard multifamily loan and a substandard non-owner-occupied CRE loan during the second quarter of 2024.

The decrease in the ACL for loans held for investment during the six months ended June 30, 2024 of $8.7 million was reflective of $16.7 million in net charge-offs, partially offset by $8.0 million in provision for credit losses.

During the six months ended June 30, 2024, the provision for credit losses was largely attributed to the investor and business loans secured by real estate segments, partially offset by a reversal of provision for credit losses in the commercial loans segment. The provision for credit losses in the investor loans secured by real estate segment was attributed to economic forecast updates, with the largest impact on multifamily loans. The provision for credit losses in the business loans secured by real estate segment was attributed to the impact from changes in economic forecasts with the largest impact on CRE owner-occupied loans, partially offset by a decline in the loan balances in this segment, as well as favorable changes in asset quality. The reversal of provision for credit losses in the commercial loans segment was principally driven by a decline in the balance of those loans during the first six months of 2024.

Charge-offs during the six months ended June 30, 2024 were largely due to the charge-offs recorded during the second quarter of 2024, as well as $5.7 million in charge-offs associated with the sale of special mention and substandard CRE and franchise loans during the first quarter of 2024.

Allowance for Credit Losses for Off-Balance Sheet Commitments

The Company maintains an ACL for off-balance sheet commitments related to unfunded loans and lines of credit, which is included in other liabilities of the consolidated statements of financial condition. The following table summarizes the activities in the ACL for off-balance sheet commitments for the periods indicated:


	Three Months Ended				Six Months Ended
	June 30,		June 30,		June 30,		June 30,
(Dollars in thousands)	2025		2024		2025		2024
Beginning ACL balance	$	17,763	$	16,839	$	17,906	$	19,264
Provision for credit losses on off-balance sheet commitments	2,569		(505)		2,426		(2,930)
Ending ACL balance	$	20,332	$	16,334	$	20,332	$	16,334

The allowance for off-balance sheet commitments was $20.3 million at June 30, 2025 and $17.9 million at December 31, 2024. The provision for off-balance sheet commitments for the three and six months ended June 30, 2025 was largely attributable to an increase in the balance of unfunded loan commitments, partially offset by the impact of economic forecast updates.

The provision reversal for off-balance sheet commitments during the three months ended June 30, 2024 was largely attributable to slightly lower loss rates for C&I loans, partially offset by a slight increase in the balance of unfunded commitments during the quarter. The provision reversal for off-balance sheet commitments during the six months ended June 30, 2024 was attributed largely to overall lower levels of unfunded commitments during the period.

Note 7 – Goodwill and Other Intangible Assets

The Company had goodwill of $901.3 million at June 30, 2025 and December 31, 2024. The Company did not record any adjustments to goodwill during the three months ended June 30, 2025 and June 30, 2024.

The Company’s policy is to assess goodwill for impairment on an annual basis during the fourth quarter of each year, and more frequently if events or circumstances lead management to believe the value of goodwill may be impaired.

Other intangible assets with definite lives were $27.1 million at June 30, 2025, consisting of $25.5 million in core deposit intangibles and $1.6 million in customer relationship intangibles. At December 31, 2024, other intangibles assets were $32.2 million, consisting of $30.5 million in core deposit intangibles and $1.7 million in customer relationship intangibles. The following table summarizes the change in the balances of core deposit and customer relationship intangible assets, and the related accumulated amortization for the periods indicated below:


	Three Months Ended		Six Months Ended
	June 30,		June 30,		June 30,		June 30,
(Dollars in thousands)	2025		2024		2025		2024
Gross amount of intangible assets:
Beginning balance	$	145,212	$	145,212	$	145,212	$	145,212
Additions due to acquisitions	—		—		—		—
Ending balance	145,212		145,212		145,212		145,212
Accumulated amortization:
Beginning balance	(115,584)		(104,763)		(113,018)		(101,927)
Amortization	(2,501)		(2,763)		(5,067)		(5,599)
Ending balance	(118,085)		(107,526)		(118,085)		(107,526)
Net intangible assets	$	27,127	$	37,686	$	27,127	$	37,686

The Company amortizes core deposit intangibles and customer relationship intangibles based on the projected useful lives of the related deposits in the case of core deposit intangibles, and over the projected useful lives of the related client relationships in the case of customer relationship intangibles. The amortization periods typically range from six to eleven years. The estimated aggregate amortization expense related to our core deposit and customer relationship intangible assets for each of the next five years succeeding December 31, 2024, in order from the present, is $10.0 million, $8.9 million, $7.2 million, $4.0 million, and $1.5 million. The Company’s core deposit and customer relationship intangibles are evaluated annually for impairment or more frequently if events and circumstances lead management to believe their value may not be recoverable. The Company is unaware of any events and/or circumstances that would indicate the value of customer relationship intangible assets are impaired as of June 30, 2025.

Note 8 – Subordinated Debentures

As of June 30, 2025, the Company had one series of subordinated notes with a carrying value of $124.0 million and a weighted interest rate of 7.14%, compared to two series of subordinated notes with an aggregate carrying value of $272.4 million and a weighted interest rate of 6.30% at December 31, 2024. The decrease of $148.4 million was due to the early redemption of $150.0 million in subordinated notes due 2030 in the current quarter.

The following table summarizes our outstanding subordinated debentures as of the dates indicated:


						Carrying Value
(Dollars in thousands)	Stated Maturity	Current Interest Rate		Principal Balance		June 30, 2025		December 31, 2024
Subordinated notes
Subordinated notes due 2029, 4.875% per annum until May 15, 2024, 3-month term SOFR +2.762% thereafter	May 15, 2029	7.088	%	125,000		124,023		123,896
Subordinated notes due 2030, 5.375% per annum until June 15, 2025, 3-month term SOFR +5.17% thereafter	June 15, 2030	—	%	150,000		—		148,553
Total subordinated debentures				$	275,000	$	124,023	$	272,449

In connection with the various issuances of subordinated notes, the Corporation obtained ratings from Kroll Bond Rating Agency (“KBRA”). KBRA assigned investment grade ratings of BBB+ and BBB for the Corporation’s senior unsecured debt and subordinated debt, respectively, and a deposit and senior unsecured debt rating of A- and subordinated debt of BBB+ for the Bank. The Corporation’s and Bank’s ratings were reaffirmed in April 2025 by KBRA.

For additional information on the Company’s subordinated debentures, see “Note 13 — Subordinated Debentures” to the audited consolidated financial statements in the Company’s 2024 Form 10-K.

For regulatory capital purposes, subordinated notes qualify as Tier 2 capital, subject to limitations. Per applicable Federal Reserve rules and regulations, the amount of the subordinated notes qualifying as Tier 2 regulatory capital is phased out by 20% of the original amount of the subordinated notes in each of the five years beginning on the fifth anniversary preceding the maturity date of the subordinated notes. The regulatory total capital ratios of the Company and the Bank continued to exceed regulatory minimums, inclusive of the fully phased-in capital conservation buffer.

Note 9 – Earnings Per Share

The Company’s restricted stock awards contain non-forfeitable rights to dividends and therefore are considered participating securities. The Company calculates basic and diluted earnings per common share using the two-class method.

Under the two-class method, distributed and undistributed earnings allocable to participating securities are deducted from net income to determine net income allocable to common shareholders, which is then used in the numerator of both basic and diluted earnings per share calculations. Basic earnings per common share is computed by dividing net income allocable to common shareholders by the weighted average number of common shares outstanding for the reporting period, excluding outstanding participating securities. Diluted earnings per common share is computed by dividing net income allocable to common shareholders by the weighted average number of common shares outstanding over the reporting period, adjusted to include the effect of potentially dilutive common shares, but excludes awards considered participating securities. The computation of diluted earnings per common share excludes the impact of the assumed exercise or issuance of securities that would have an anti-dilutive effect.

The following tables set forth the Corporation’s earnings per share calculations for the periods indicated:


	Three Months Ended
(Dollars in thousands, except per share data)	June 30, 2025		June 30, 2024
Basic
Net income	$	32,061	$	41,905
Less: dividends and undistributed earnings allocated to participating securities	(650)		(786)
Net income allocated to common stockholders	$	31,411	$	41,119

Weighted average common shares outstanding	95,096,632		94,628,201
Basic earnings per common share	$	0.33	$	0.43

Diluted
Net income allocated to common stockholders	$	31,411	$	41,119

Weighted average common shares outstanding	95,096,632		94,628,201
Dilutive effect of share-based compensation	36,157		88,004

Weighted average diluted common shares	95,132,789		94,716,205
Diluted earnings per common share	$	0.33	$	0.43


	Six Months Ended
(Dollars in thousands, except per share data)	June 30, 2025		June 30, 2024
Basic
Net income	$	68,082	$	88,930

Less: dividends and undistributed earnings allocated to participating securities	(1,302)		(1,570)
Net income allocated to common stockholders	$	66,780	$	87,360

Weighted average common shares outstanding	94,931,672		94,489,230
Basic earnings per common share	$	0.70	$	0.92

Diluted
Net income allocated to common stockholders	$	66,780	$	87,360

Weighted average common shares outstanding	94,931,672		94,489,230
Dilutive effect of share-based compensation	36,488		108,329

Weighted average diluted common shares	94,968,160		94,597,559
Diluted earnings per common share	$	0.70	$	0.92

Shares or stock options are excluded from the computations of diluted earnings per share when their inclusion have an anti-dilutive effect. The dilutive impact of these securities could be included in future computations of diluted earnings per share if the market price of the common stock increases. For the three and six months ended June 30, 2025 there were 8,604 and 34,133 weighted average common shares that were anti-dilutive, respectively. For the three and six months ended June 30, 2024, there were 44,647 and 25,924 weighted average common shares that were anti-dilutive, respectively.

Note 10 – Fair Value of Financial Instruments

The fair value of an asset or liability is the exchange price that would be received to sell that asset or paid to transfer that liability (exit price) in an orderly transaction occurring in the principal market (or most advantageous market in the absence of a principal market) for such asset or liability. In estimating fair value, the Company utilizes valuation techniques that are consistent with the market approach, the income approach, and/or the cost approach. Such valuation techniques are consistently applied. Inputs to valuation techniques include the assumptions that market participants would use in pricing an asset or liability. ASC Topic 825 - Financial Instruments, requires disclosure of the fair value of financial assets and financial liabilities, including both those financial assets and financial liabilities that are not measured and reported at fair value on a recurring basis and a non-recurring basis. The methodologies for estimating the fair value of financial assets and financial liabilities that are measured at fair value are discussed below.

In accordance with ASC Topic 820 - Fair Value Measurement, the Company groups its financial assets and financial liabilities measured at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described as follows:

Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

Level 2 - Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might include quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (such as interest rates, prepayment speeds, volatilities, etc.), or model-based valuation techniques where all significant assumptions are observable, either directly or indirectly, in the market.

Level 3 - Valuation is generated from model-based techniques where one or more significant inputs are not observable, either directly or indirectly, in the market. These unobservable assumptions reflect the Company’s own estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques may include use of matrix pricing, discounted cash flow models, and similar techniques.

Because no market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on judgments regarding current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature, and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the fair values presented. Management uses its best judgment in estimating the fair value of the Company’s financial instruments; however, there are inherent limitations in any estimation technique. While management believes the Company’s valuation methodologies are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. The Company’s valuation methodologies may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values.

A financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. Management maximizes the use of observable inputs and attempts to minimize the use of unobservable inputs when determining fair value measurements. Estimated fair values are disclosed for financial instruments for which it is practicable to estimate fair value. These estimates are made at a specific point in time based on relevant market data and information about the financial instruments. These estimates do not reflect any premium or discount that could result from offering the Company’s entire holdings of a particular financial instrument for sale at one time, nor do they attempt to estimate the value of anticipated future business related to the instruments. In addition, the tax ramifications related to the realization of unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in any of these estimates.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following is a description of both the general and specific valuation methodologies used for certain instruments measured at fair value, as well as the general classification of these instruments pursuant to the fair value hierarchy.

AFS Investment Securities – Investment securities are generally valued based upon quotes obtained from independent third-party pricing services, which use evaluated pricing applications and model processes. Observable market inputs, such as, benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, and reference data are considered as part of the evaluation. The inputs are related directly to the security being evaluated, or indirectly to a similarly situated security. Market assumptions and market data are utilized in the valuation models. The Company reviews the market prices provided by the third-party pricing service for reasonableness based on the Company’s understanding of the marketplace and credit issues related to the securities. The Company has not made any adjustments to the market quotes provided by them and, accordingly, the Company categorized these securities within Level 2 of the fair value hierarchy.

Equity Securities With Readily Determinable Fair Values – The Company’s equity securities with readily determinable fair values consist of investments in public companies and qualify for CRA purposes. The fair value is based on the closing price on nationally recognized securities exchanges at the end of each period and classified as Level 1 of the fair value hierarchy.

Interest Rate Swaps – The Company originates a variable rate loan and enters into a variable-to-fixed interest rate swap with the customer. The Company also enters into an offsetting swap with a correspondent bank. These back-to-back swap agreements are intended to offset each other and allow the Company to originate a variable rate loan, while providing a contract for fixed interest payments for the customer. The Company also enters into interest rate swap contracts with institutional counterparties to hedge against certain fixed-rate loans. The net cash flow for the Company is equal to the interest income received from a variable rate loan originated with the customer. The fair value of these derivatives is based on a market standard discounted cash flow approach. The Company incorporates credit value adjustments on derivatives to properly reflect the respective counterparty’s nonperformance risk in the fair value measurements of its derivatives. The Company has determined that the observable nature of the majority of inputs used in deriving the fair value of these derivative contracts fall within Level 2 of the fair value hierarchy, and the credit valuation adjustments are not significant to the overall valuation of its derivative financial instruments. As a result, the valuation of interest rate swaps is classified as Level 2 of the fair value hierarchy.

Foreign Exchange Contracts – The Company enters into foreign exchange contracts to accommodate the business needs of its customers. The Company also enters into offsetting contracts with institutional counterparties to mitigate the Company’s foreign exchange exposure with its customers, or enters into bilateral collateral and master netting agreements with certain customer counterparties to manage its credit exposure. The Company measures the fair value of foreign exchange contracts based on quoted prices for identical instruments in active markets, a Level 1 measurement.

The following fair value hierarchy table presents information about the Company’s financial assets and liabilities measured at fair value on a recurring basis at the dates indicated:


	June 30, 2025
	Fair Value Measurement Using						Total Fair Value
(Dollars in thousands)	Level 1		Level 2		Level 3
Financial assets
AFS investment securities:
U.S. Treasury	$	—	$	1,095,001	$	—	$	1,095,001
Agency	—		905		—		905
Corporate	—		372,815		—		372,815

Collateralized mortgage obligations	—		113,010		—		113,010

Total AFS investment securities	$	—	$	1,581,731	$	—	$	1,581,731


Equity securities	$	836	$	—	$	—	$	836

Derivative assets:
Foreign exchange contracts	$	3	$	—	$	—	$	3
Interest rate swaps (1)	—		3,939		—		3,939

Total derivative assets	$	3	$	3,939	$	—	$	3,942



Financial liabilities
Derivative liabilities:
Foreign exchange	$	1	$	—	$	—	$	1
Interest rate swaps	—		8,534		—		8,534
Total derivative liabilities	$	1	$	8,534	$	—	$	8,535


	December 31, 2024
	Fair Value Measurement Using						Total Fair Value
(Dollars in thousands)	Level 1		Level 2		Level 3
Financial assets
AFS investment securities:
U.S. Treasury	$	—	$	1,166,085	$	—	$	1,166,085
Agency	—		1,108		—		1,108
Corporate	—		392,258		—		392,258

Collateralized mortgage obligations	—		123,764		—		123,764

Total AFS investment securities	$	—	$	1,683,215	$	—	$	1,683,215

Equity securities	$	784	$	—	$	—	$	784

Derivative assets:
Foreign exchange contracts	$	6	$	—	$	—	$	6
Interest rate swaps (1)	—		5,638		—		5,638

Total derivative assets	$	6	$	5,638	$	—	$	5,644

Financial liabilities
Derivative liabilities:

Interest rate swaps	$	—	$	11,152	$	—	$	11,152
Total derivative liabilities	$	—	$	11,152	$	—	$	11,152

______________________________

(1) Represents amounts after the application of variation margin payments as settlements with central counterparties, where applicable. See Note 11 – Derivative Instruments for additional information.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Individually Evaluated Loans – A loan is individually evaluated for expected credit losses when it is probable that payment of interest and principal will not be made in accordance with the contractual terms of the loan agreement and it does not share similar risk characteristics with other loans. Individually evaluated loans are measured at fair value when they are deemed collateral dependent. Fair value on such loans is measured based on the underlying collateral. Collateral generally consists of accounts receivable, inventory, fixed assets, real estate properties, and cash. The Company measures impairment on all individually evaluated loans for which it has reduced the principal balance to the value of the underlying collateral less the anticipated selling costs.

The fair value of individually evaluated collateral dependent loans were determined using Level 3 assumptions, and represents individually evaluated loans for which a specific reserve has been established or on which a write down has been taken. For real estate loans, generally, the Company obtains third party appraisals (or property valuations) and/or collateral audits in conjunction with internal analysis based on historical experience on its individually evaluated loans to determine fair value. In determining the net realizable value of the underlying collateral for individually evaluated loans, the Company then discounts the valuation to cover both market price fluctuations and selling costs, typically ranging from 7% to 10% of the collateral value, that the Company expects would be incurred in the event of foreclosure. In addition to the discounts taken, the Company’s calculation of net realizable value considered any other senior liens in place on the underlying collateral. For non-real estate loans, fair value of the loan’s collateral may be determined using an appraisal, net book value per the borrower’s financial statements, or aging reports, adjusted or discounted based on management’s historical knowledge, changes in market conditions, and management’s expertise and knowledge of the client and client’s business.

At June 30, 2025, the Company’s individually evaluated collateral dependent loans were evaluated based on the fair value of their underlying collateral based upon the most recent appraisals available to management. The Company completed partial charge-offs on certain individually evaluated loans based on recent real estate or property appraisals and recorded the related reserves where applicable during the six months ended June 30, 2025.

The following table presents our assets measured at fair value on a nonrecurring basis at the dates indicated.



(Dollars in thousands)	Fair Value Measurement Using						Total Fair Value
June 30, 2025	Level 1		Level 2		Level 3
Financial assets
Collateral dependent loans	$	—	$	—	$	757	$	757

Total assets	$	—	$	—	$	757	$	757



December 31, 2024
Financial assets
Collateral dependent loans	$	—	$	—	$	13,563	$	13,563

Total assets	$	—	$	—	$	13,563	$	13,563

The following table presents quantitative information about Level 3 fair value measurements for assets measured at fair value on a nonrecurring basis at the dates indicated.

Range

(Dollars in thousands)

Fair Value

Valuation Technique(s)

Unobservable Input(s)

Min

Max

Weighted Average

June 30, 2025

Commercial loans

Commercial and industrial

757

Fair value of collateral

Cost to sell

1.73%

Total individually evaluated loans

757

Total assets

757




December 31, 2024
Investor loans secured by real estate
CRE non-owner-occupied	$	13,563	Fair value of collateral	Cost to sell	10.00%	10.00%	10.00%


















Total individually evaluated loans	13,563

Total assets	$	13,563

Fair Values of Financial Instruments

The fair value estimates presented herein are based on pertinent information available to management as of the dates indicated, representing an exit price.


(Dollars in thousands)	Carrying Amount		Level 1		Level 2		Level 3		Estimated Fair Value
June 30, 2025
Assets
Cash and cash equivalents	$	791,137	$	791,137	$	—	$	—	$	791,137
Interest-bearing time deposits with financial institutions	1,253		1,253		—		—		1,253
HTM investment securities	1,687,871		—		1,377,903		—		1,377,903
AFS investment securities	1,581,731		—		1,581,731		—		1,581,731
Equity securities	836		836		—		—		836
Loans held for sale	751		—		778		—		778
Loans held for investment, net	11,902,079		—		—		11,518,745		11,518,745
Derivative assets (1)	3,942		3		3,939		—		3,942

Accrued interest receivable	69,455		—		69,455		—		69,455

Liabilities
Deposit accounts	$	14,497,373	$	—	$	14,504,834	$	—	$	14,504,834


Subordinated debentures	124,023		—		123,248		—		123,248
Derivative liabilities (1)	8,535		1		8,534		—		8,535
Accrued interest payable	8,332		—		8,332		—		8,332


December 31, 2024
Assets
Cash and cash equivalents	$	609,330	$	609,330	$	—	$	—	$	609,330
Interest-bearing time deposits with financial institutions	1,246		1,246		—		—		1,246
HTM investment securities	1,711,804		—		1,428,077		—		1,428,077
AFS investment securities	1,683,215		—		1,683,215		—		1,683,215
Equity securities	784		784		—		—		784
Loans held for sale	2,315		—		2,425		—		2,425
Loans held for investment, net	12,039,741		—		—		11,575,603		11,575,603
Derivative assets (1)	5,644		6		5,638		—		5,644
Accrued interest receivable	67,953		—		67,953		—		67,953

Liabilities
Deposit accounts	$	14,463,702	$	—	$	14,478,071	$	—	$	14,478,071


Subordinated debentures	272,449		—		267,258		—		267,258
Derivative liabilities (1)	11,152		—		11,152		—		11,152
Accrued interest payable	11,589		—		11,589		—		11,589

______________________________

Note 11 – Derivative Instruments

The Company uses derivative instruments to manage its exposure to market risks, including interest rate risk, and to assist customers with their risk management objectives. The Company designates certain derivatives as hedging instruments in a qualifying hedge accounting relationship, while other derivatives serve as economic hedges that do not qualify for hedge accounting.

Derivatives Designated as Hedging Instruments

Fair Value Hedges – The Company is exposed to changes in the fair value of fixed-rate assets due to changes in benchmark interest rates. The Company entered into pay-fixed and receive-floating interest rate swaps associated with certain fixed rate loans, primarily multifamily and commercial real estate loans, to manage its exposure to changes in fair value on these instruments attributable to changes in the designated SOFR benchmark interest rate. These interest rate swaps are designated as fair value hedges using the portfolio layer method. The Company receives variable-rate interest payments in exchange for making fixed-rate payments over the lives of the contracts without exchanging the notional amounts. The fair value hedges are recorded as components of other assets and other liabilities in the Company’s consolidated statements of financial condition. The gain or loss on these derivatives, as well as the offsetting loss or gain on the hedged items attributable to the hedged risk, are recognized consistent with the classification of the hedged item in interest income in the Company’s consolidated statements of income.

During 2024, as part of its interest rate risk management, the Company voluntarily discontinued portfolio layer method fair value hedges with an aggregate notional amount of $450.0 million associated with closed pools of fixed rate loans. When a portfolio layer method fair value hedge is discontinued, the hedged item is no longer adjusted for changes in the fair value of the hedged risk, also referred to as the basis adjustment. The basis adjustment, as of the date the fair value hedge is discontinued, is allocated on a proportionate basis to the remaining loans that previously comprised the closed pool. The basis adjustment is subsequently amortized or accreted into interest income using the interest method over the remaining lives of the individual loans. Cash flows on derivatives designated as hedging instruments are classified in the statement of cash flows the same as the cash flows of the assets being hedged. At June 30, 2025 and December 31, 2024, interest rate swaps with an aggregate notional amount of $300.0 million and $300.0 million, respectively, were designated as fair value hedges.

The following amounts were recorded on the consolidated statement of financial condition related to cumulative basis adjustment for fair value hedges as of the dates indicated:


Line Item in the Statement of Financial Position in Which the Hedged Item is Included	Carrying Amount of the Hedged Assets				Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Assets(2)
(Dollars in thousands)	June 30, 2025		December 31, 2024		June 30, 2025		December 31, 2024
Loans held for investment (1)	$	289,400	$	283,558	$	(10,026)	$	(15,815)
Total	$	289,400	$	283,558	$	(10,026)	$	(15,815)

______________________________

(1) These amounts were included in the amortized cost basis of closed portfolios of loans held for investment used to designate hedging relationships in which the hedged item is the stated amount of assets in the closed portfolios anticipated to be outstanding for the designated hedge period. At June 30, 2025 and December 31, 2024, the amortized cost basis of the closed portfolios used in these hedging relationships was $930.4 million and $990.6 million, respectively, the cumulative basis adjustments associated with these hedging relationships was $(10.6) million and $(16.4) million, respectively, and the amounts of the designated hedged items were $300.0 million and $300.0 million, respectively.

(2) At June 30, 2025 and December 31, 2024, the balance included $574,000 and $628,000, respectively, hedging adjustment on discontinued hedging relationships.

Derivatives Not Designated as Hedging Instruments

Interest Rate Swap Contracts – From time to time, the Company enters into interest rate swap agreements with certain borrowers to assist them in mitigating their interest rate risk exposure associated with the loans they have with the Company. At the same time, the Company enters into identical offsetting interest rate swap agreements with another financial institution to mitigate the Company’s interest rate risk exposure associated with the swap agreements it enters into with its borrowers. The Company has over-the-counter derivative instruments and centrally-cleared derivative instruments with matched terms. The fair values of these agreements are determined through a third-party valuation model used by the Company’s swap advisory firm, which uses observable market data such as interest rates, prices of Eurodollar futures contracts, and market swap rates. The fair values of these swaps are recorded as components of other assets and other liabilities in the Company’s consolidated statement of financial condition. Changes in the fair value of these swaps, which occur due to changes in interest rates, are recorded in the Company’s statement of income as a component of noninterest income.

Over-the-counter contracts are tailored to meet the needs of the counterparties involved and, therefore, generally contain a greater degree of credit risk and liquidity risk than centrally-cleared contracts, which have standardized terms. Although changes in the fair value of swap agreements between the Company and borrowers and the Company and other financial institutions offset each other, changes in the credit risk of these counterparties may result in a difference in the fair value of the swap agreements. Offsetting over-the-counter swap agreements the Company has with other financial institutions are collateralized with cash, and swap agreements with borrowers are secured by the collateral arrangements for the underlying loans these borrowers have with the Company. All interest rate swap agreements entered into by the Company are free-standing derivatives and are not designated as hedging instruments.

Foreign Exchange Contracts – The Company offers foreign exchange spot and forward contracts as accommodations to its customers to purchase and/or sell foreign currencies at a contractual price. In conjunction with these products the Company also enters into offsetting contracts with institutional counterparties to mitigate the Company’s foreign exchange exposure with its customers, or enters into bilateral collateral and master netting agreements with certain customer counterparties to manage its credit exposure. These contracts allow the Company to offer its customers foreign exchange products while minimizing its exposure to foreign exchange rate fluctuations. These foreign exchange contracts are not designated as hedging instruments and are recorded at fair value in other assets and other liabilities in the Company’s consolidated statements of financial condition. Changes in the fair value of these contracts are recorded in the Company’s consolidated statements of income as a component of noninterest income.

The net increases or decreases in derivatives not designated as hedging instruments are included in “Net change in accrued interest receivable and other assets” and “Net change in accrued expenses and other liabilities” within the statement of cash flows.

The following tables summarize the Company's derivative instruments included in “other assets” and “other liabilities” in the consolidated statements of financial condition as of the dates indicated:


	June 30, 2025
	Derivative Assets				Derivative Liabilities
(Dollars in thousands)	Notional		Fair Value		Notional		Fair Value
Derivative instruments designated as hedging instruments:
Fair value hedge - interest rate swap contracts	$	300,000	$	11,212	$	—	$	—
Total derivative designated as hedging instruments	300,000		11,212		—		—
Derivative instruments not designated as hedging instruments:
Foreign exchange contracts	85		3		210		1
Interest rate swaps contracts	90,607		8,448		90,607		8,454
Total derivative not designated as hedging instruments	90,692		8,451		90,817		8,455
Total derivatives	$	390,692	19,663		$	90,817	8,455

Netting adjustments - cleared positions (1)			15,721				(80)
Total derivatives in the Statement of Financial Condition			$	3,942			$	8,535


	December 31, 2024
	Derivative Assets				Derivative Liabilities
(Dollars in thousands)	Notional		Fair Value		Notional		Fair Value
Derivative instruments designated as hedging instruments:
Fair value hedge - interest rate swap contracts	$	300,000	$	17,108	$	—	$	—
Total derivative designated as hedging instruments	300,000		17,108		—		—
Derivative instruments not designated as hedging instruments:
Foreign exchange contracts	361		6		—		—
Interest rate swaps contracts	93,732		11,047		93,732		11,052

Total derivative not designated as hedging instruments	94,093		11,053		93,732		11,052
Total derivatives	$	394,093	$	28,161	$	93,732	$	11,052

Netting adjustments - cleared positions (1)			22,517				(100)
Total derivatives in the Statement of Financial Condition			$	5,644			$	11,152

______________________________

(1) Netting adjustments represents the variation margin payments that are considered legal settlements of derivative exposure and applied to net the fair value of the respective derivative contracts in accordance with the applicable accounting guidance on the settle-to-market rule for cleared derivatives.

The following table presents the effect of fair value hedge accounting on the consolidated statements of income:



		Three Months Ended				Six Months Ended
(Dollars in thousands)	Location of Gain (Loss) Recognized in Income on Derivative Instruments	June 30, 2025		June 30, 2024		June 30, 2025		June 30, 2024



Gain (loss) on fair value hedging relationships:
Hedged items	Interest Income	$	2,401	$	4,123	$	5,841	$	1,350
Derivatives designated as hedging instruments	Interest Income	180		3,175		(697)		13,191

The following table summarizes the effect of the derivatives not designated as hedging instruments in the consolidated statements of income.


(Dollars in thousands)		Three Months Ended				Six Months Ended
Derivatives Not Designated as Hedging Instruments:	Location of Gain Recognized in Income on Derivative Instruments	June 30, 2025		June 30, 2024		June 30, 2025		June 30, 2024
Foreign exchange contracts	Other income	$	226	$	207	$	451	$	352
Interest rate products	Other income	—		1		—		3

Total		$	226	$	208	$	451	$	355

Note 12 – Balance Sheet Offsetting

Derivative financial instruments may be eligible for offset in the consolidated statements of financial condition, such as those subject to enforceable master netting arrangements or a similar agreement. Under these agreements, the Company has the right to net settle multiple contracts with the same counterparty. The Company offers an interest rate swap product to qualified customers, which are then paired with derivative contracts the Company enters into with a counterparty bank. While derivative contracts entered into with counterparty banks may be subject to enforceable master netting agreements, derivative contracts with customers may not be subject to enforceable master netting arrangements. With regard to derivative contracts not centrally cleared through a clearinghouse, regulations require collateral to be posted by the party with a net liability position. Parties to a centrally cleared over-the-counter derivative exchange daily payments that reflect the daily change in the value of the derivative. These payments are commonly referred to as variation margin and are treated as settlements of derivative exposure rather than as collateral. The gross amounts of derivative assets and liabilities for derivative contracts cleared through certain central clearing parties are reported at the fair value of the respective derivative contracts net of the variation margin payments, where applicable.

Financial instruments that are eligible for offset in the consolidated statements of financial condition as of the periods indicated are presented below:


	Gross Amounts Recognized (1)		Gross Amounts Offset in the Consolidated Statements of Financial Condition		Net Amounts Presented in the Consolidated Statements of Financial Condition		Gross Amounts Not Offset in the Consolidated Statements of Financial Condition				Net Amount
(Dollars in thousands)							Financial Instruments (2)		Cash Collateral (3)
June 30, 2025
Derivative assets:
Interest rate swaps	$	3,939	$	—	$	3,939	$	—	$	(3,300)	$	639
Total	$	3,939	$	—	$	3,939	$	—	$	(3,300)	$	639

Derivative liabilities:
Interest rate swaps	$	8,534	$	—	$	8,534	$	—	$	—	$	8,534
Total	$	8,534	$	—	$	8,534	$	—	$	—	$	8,534





December 31, 2024
Derivative assets:
Interest rate swaps	$	5,638	$	—	$	5,638	$	—	$	(4,230)	$	1,408
Total	$	5,638	$	—	$	5,638	$	—	$	(4,230)	$	1,408

Derivative liabilities:
Interest rate swaps	$	11,152	$	—	$	11,152	$	—	$	—	$	11,152
Total	$	11,152	$	—	$	11,152	$	—	$	—	$	11,152

______________________________

(1) Represents amounts after the application of variation margin payments as settlements with central counterparties, where applicable.

(2) Represents the fair value of securities pledged with counterparty bank.

(3) Represents cash collateral received from or pledged with counterparty bank. Amounts are limited to the derivative asset or liability balance and, accordingly, do not include excess collateral, if any, received or pledged.

Note 13 – Variable Interest Entities

The Company is involved with VIEs through its loan securitization activities and affordable housing investments that qualify for the low-income housing tax credit (“LIHTC”). The Company has determined that its interests in these entities meet the definition of variable interests.

As of June 30, 2025 and December 31, 2024, the Company determined it was not the primary beneficiary of the VIEs and did not consolidate its interests in VIEs. The following table provides a summary of the carrying amount of assets and liabilities in the Company’s consolidated statements of financial condition and maximum exposure to loss as of June 30, 2025 and December 31, 2024 that relate to variable interests in non-consolidated VIEs.


	June 30, 2025						December 31, 2024
(Dollars in thousands)	Maximum Loss		Assets		Liabilities		Maximum Loss		Assets		Liabilities
Multifamily loan securitization:
Investment securities (1)	$	32,866	$	32,866	$	—	$	37,300	$	37,300	$	—
Reimbursement obligation (2)	33,814		—		274		37,354		—		274
Affordable housing partnership:
Other investments (3)	46,291		77,622		—		50,511		85,335		—
Unfunded equity commitments (2)	—		—		31,330		—		—		34,824

Total	$	112,971	$	110,488	$	31,604	$	125,165	$	122,635	$	35,098

______________________________

(1) Included in investment securities AFS on the consolidated statement of financial condition.

(2) Included in accrued expenses and other liabilities on the consolidated statement of financial condition.

(3) Included in other assets on the consolidated statement of financial condition.

Multifamily Loan Securitization

With respect to the securitization transaction with Freddie Mac discussed in Note 5 – Loans Held for Investment, the Company’s variable interests reside with the underlying Freddie Mac-issued guaranteed, structured pass-through certificates that were held as AFS investment securities at fair value as of June 30, 2025. Additionally, the Company has variable interests through a reimbursement agreement executed by Freddie Mac that obligates the Company to reimburse Freddie Mac for any defaulted contractual principal and interest payments identified after the ultimate resolution of the defaulted loans. Such reimbursement obligations are not to exceed 10% of the original principal amount of the loans comprising the securitization pool.

As part of the securitization transaction, the Company released all servicing obligations and rights to Freddie Mac who was designated as the Master Servicer. In its capacity as Master Servicer, Freddie Mac can terminate the Company’s role as sub-servicer and direct such responsibilities accordingly. In evaluating our variable interests and continuing involvement in the VIE, we determined that we do not have the power to make significant decisions or direct the activities that most significantly impact the economic performance of the VIE’s assets and liabilities. As sub-servicer of the loans, the Company does not have the authority to make significant decisions that influence the value of the VIE’s net assets and, therefore, the Company is not the primary beneficiary of the VIE. As a result, we determined that the VIE associated with the multifamily securitization should not be included in the consolidated financial statements of the Company.

We believe that our maximum exposure to loss as a result of our involvement with the VIE associated with the securitization is the carrying value of the investment securities issued by Freddie Mac and purchased by the Company. Additionally, our maximum exposure to loss under the reimbursement agreement executed with Freddie Mac is 10% of the original principal amount of the loans comprising the securitization pool, or $50.9 million. As the total outstanding principal amount of the underlying loans decreased below the aforementioned reimbursement threshold, the maximum exposure declined to the total outstanding principal amount of the underlying loans of $33.8 million at June 30, 2025 and $37.4 million at December 31, 2024. Based upon our analysis of quantitative and qualitative data over the underlying loans included in the securitization pool, as of June 30, 2025 and December 31, 2024, our reserve for estimated losses with respect to the reimbursement obligation was $274,000.

Investments in Qualified Affordable Housing Partnerships

The Company has variable interests through its affordable housing partnership investments. These investments are fundamentally designed to provide a return through the generation of income tax credits and other income tax benefits. The Company has evaluated its involvement with the low-income housing projects and determined it does not have the ability to exercise significant influence over or participate in the decision-making activities related to the management of the projects, and therefore, is not the primary beneficiary, and does not consolidate these interests.

The Company’s maximum exposure to loss, exclusive of any potential realization of tax credits, is equal to the commitments invested, adjusted for amortization. The amount of unfunded commitments was included in the investments recognized as assets with a corresponding liability. The preceding table summarizes the amount of tax credit investments held as assets, the amount of unfunded commitments recognized as liabilities, and the maximum exposure to loss as of June 30, 2025 and December 31, 2024, respectively. See Note 14 – Tax Equity Investments for additional information on equity investments that generate LIHTC and other income tax benefits for the Company.

Note 14 – Tax Equity Investments

The Company makes investments in the equity of certain limited partnerships or limited liability companies that typically qualify for credit under the Community Reinvestment Act. Certain of these equity investments are associated with affordable housing projects that generate LIHTC and other income tax benefits for the Company.

The Company typically accounts for tax equity investments using the proportional amortization method, if certain criteria are met. The election to account for tax equity investments using the proportional amortization method is done so on a tax credit program-by-tax credit program basis. Under the proportional amortization method, the Company amortizes the initial cost of the investment, which is inclusive of any commitments to make future equity contributions, in proportion to the income tax credits and other income tax benefits that are allocated to the Company over the period of the investment. The net benefits of these investments, which are comprised of income tax credits and operating loss income tax benefits, net of investment amortization, are recognized in the income statement as a component of income tax expense. At June 30, 2025 and December 31, 2024, the carrying value of these investments was $77.6 million and $85.3 million, respectively, and are included in other assets in the consolidated statements of financial position.

As of June 30, 2025, the Company’s unfunded commitments associated with tax equity investments, which are comprised of investments in affordable housing partnerships, were estimated to be paid as follows:


(Dollars in thousands)	Amount
Year Ending December 31,
2025	$	14,481
2026	12,192
2027	1,045
2028	653
2029	301
Thereafter	2,658
Total unfunded commitments	$	31,330

The following table presents income tax credits and other income tax benefits, as well as amortization expense, associated with investments in qualified affordable housing partnerships where the proportional amortization method of accounting has been applied for the periods indicated.


	Three Months Ended				Six Months Ended
	June 30,		June 30,		June 30,		June 30,
(Dollars in thousands)	2025		2024		2025		2024
Tax credit and other tax benefits recognized (1)	$	4,727	$	4,217	$	9,453	$	8,434
Amortization of investments (1)	3,856		3,475		$	7,713	$	6,950

______________________________

(1) Amounts for income tax credits and other income tax benefits, as well as amortization of investments, are included in income tax expense in the consolidated statements of income, and net change in accrued interest receivable and other assets on the consolidated statements of cash flows, for the periods presented above.

There was no non-income-tax-related activity associated with tax equity investments recorded outside of income tax expense for the three and six months ended June 30, 2025. During the three and six months ended June 30, 2024, non-income-tax-related income of $371,000 associated with a tax equity investment was included in other income in the consolidated statements of income as well as net change in accrued interest receivable and other assets on the consolidated statements of cash flows. There were no impairment losses recorded on tax equity investments during the three and six months ended June 30, 2025 and 2024.

Note 15 – Segment Reporting

The Company has identified two operating segments: Commercial and Specialty Banking and Pacific Premier Trust. Only Commercial and Specialty Banking meets the quantitative thresholds under GAAP for disclosure and Pacific Premier Trust’s activities are largely complementary to the broader suite of financial products and services the Company offers its banking clients. The Company has concluded that it is managed on a consolidated basis as one reportable segment, and the measure of profit and loss is net income.

The Company primarily conducts commercial and specialty banking activities with operations in the Western Region of the United States, with branches in Arizona, California, Nevada, Oregon, and Washington. Our commercial and specialty banking operations comprise the majority of our business activities and largely consist of making commercial and commercial real estate loans tailored to small and middle market businesses, including the owners and employees of those businesses, as well as accepting deposits in the markets we serve. Revenues generated from these activities largely consist of interest income on loans and investment securities, net of interest paid on deposits and borrowed funds, as well as fee income generated from the various banking services we offer our clients. As part of the Company’s broader suite of financial products and services, the Company offers commercial escrow and exchange services through our Commerce Escrow division, as well as custodial and maintenance services for clients with self-directed IRA accounts under our Pacific Premier Trust division. Revenues generated from these activities consist of fee income. The Company’s business activities are collectively managed and monitored by the chief operating decision maker (“CODM”) in assessing performance and making decisions about the allocation of resources.

The Company’s CODM is a role shared by two executive officers, the Chairman, Chief Executive Officer, and President of the Company, as well as the President and Chief Operating Officer of the Bank. The CODM regularly monitors the performance of the Company through the use of internally derived reporting packages, which contain financial metrics of profit/loss, including net income, which is the measure of segment profit and loss, as well as other key performance indicators. The CODM uses such information to assess performance of the Company and make decisions that impact revenues, such as the levels and types of lending and the yields earned, as well as the acceptance of various types of deposits and the rates paid. The CODM also uses such information to monitor levels of noninterest income earned from the various services provided to the Company’s clients, and to monitor the level of expenses incurred associated with the various aspects of the Company’s business that support our clients, generate revenues, and are associated with the overall administration of the Company’s operations. Further, internal financial information is also used by the CODM to monitor credit quality and credit loss expense, and to make decisions concerning risk exposures in the Company’s loan portfolio.

Please refer to the consolidated statements of income for information concerning revenues, expenses, and the measure of segment profit and loss, which is net income. The consolidated statements of income also provide the categories of significant expenses regularly provided to the CODM. In addition, segment assets are reported in the consolidated statements of financial condition.

Note 16 – Subsequent Events

Quarterly Cash Dividend

On July 23, 2025, the Corporation’s Board of Directors declared a cash dividend of $0.33 per share, payable on August 15, 2025 to stockholders of record as of August 5, 2025.

Redemption of Subordinated Notes

On July 14, 2025, the Company’s Board of Directors approved the early redemption of $125.0 million in subordinated notes due 2029 on August 15, 2025.

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

FORWARD-LOOKING STATEMENTS

All references to “we,” “us,” “our,” “Pacific Premier,” or the “Company” mean Pacific Premier Bancorp, Inc. and our consolidated subsidiaries, including Pacific Premier Bank, National Association, our primary operating subsidiary. All references to the “Bank” refer to Pacific Premier Bank, National Association. All references to the “Corporation” refer to Pacific Premier Bancorp, Inc.

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

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

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

•The strength of the United States (“U.S.”) economy in general and the strength of the local economies in which we conduct operations;

•Adverse developments in the banking industry, for example the high-profile bank failures in 2023, and the potential impact of such developments on customer confidence, liquidity, and regulatory responses to these developments;

•The effects of, and changes in, trade, monetary, and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System (the “Federal Reserve”);

•Interest rate, liquidity, economic, market, credit, operational, and inflation risks associated with our business, including the speed and predictability of changes in these risks;

•Our ability to attract and retain deposits and to access other sources of liquidity, particularly in a higher interest rate environment, and the quality and composition of our deposits;

•Business and economic conditions generally and in the financial services industry, nationally and within our current and future geographic markets, including the labor market, ineffective management of the U.S. Federal budget or debt, fluctuations in the real estate market, or turbulence or uncertainty in domestic or foreign financial markets;

•The effect of acquisitions we have made or may make, including, without limitation, the failure to achieve the expected revenue growth and/or expense savings from such acquisitions, and/or the failure to effectively integrate an acquisition target into our operations;

•The timely development of competitive new products and services and the acceptance of these products and services by new and existing customers;

•Possible impairment charges to goodwill, including any impairment that may result from increased volatility in our stock price;

•The impact of changes in financial services policies, laws, and regulations, including those concerning taxes, banking, securities, and insurance, and the application thereof by regulatory bodies;

•Compliance risks, including any increased costs of monitoring, testing, and maintaining compliance with complex laws and regulations;

•The effectiveness of our risk management framework and quantitative models;

•The effect of changes in accounting policies and practices or accounting standards, as may be adopted from time to time by bank regulatory agencies, the Securities and Exchange Commission (“SEC”), the Public Company Accounting Oversight Board (“PCAOB”), the Financial Accounting Standards Board (“FASB”), or other accounting standards setters;

•Possible credit-related impairments of securities held by us;

•Changes in the level of our nonperforming assets and charge-offs;

•The impact of governmental efforts to restructure or modify the U.S. financial regulatory system;

•The impact of changes in Federal Deposit Insurance Corporation (the “FDIC”) insurance assessment rate or the rules and regulations related to the calculation of the FDIC insurance assessment amount, including any special assessments;

•Changes in consumer spending, borrowing, and savings habits;

•The effects of concentrations in our loan portfolio, including commercial real estate, and the risks of geographic and industry concentrations;

•The possibility that we may reduce or discontinue the payments of dividends on our common stock;

•The possibility that we may discontinue, reduce, or otherwise limit the level of repurchases of our common stock we may make from time to time pursuant to our stock repurchase program;

•Changes in the financial performance and/or condition of our borrowers;

•Changes in the competitive environment among financial and bank holding companies and other financial service providers;

•Geopolitical conditions, including acts or threats of terrorism, actions taken by the U.S. or other governments in response to acts or threats of terrorism and/or military conflicts, including the war between Russia and Ukraine and conflicts in the Middle East, all of which could impact business and economic conditions in the U.S. and abroad;

•Tariffs, trade policies, and related tensions, which could impact our clients, specific industry sectors and/or broader economic conditions and financial market;

•Public health crises and pandemics and their effects on the economic and business environments in which we operate, including on our credit quality and business operations, as well as the impact on general economic and financial market conditions;

•Cybersecurity threats and the cost of defending against them;

•Uncertainty around, and disruption from, new and emerging technologies, including the adoption and utilization of artificial intelligence (“AI”) and generative AI;

•Climate change, including the enhanced regulatory, compliance, credit, and reputational risks and costs;

•Natural disasters, earthquakes, fires, and severe weather;

•Unanticipated regulatory, legal, or judicial proceedings;

•The possibility that the Company’s pending merger with Columbia Banking System, Inc., a Washington corporation (“Columbia”) does not close when expected or at all because required regulatory or other approvals and other conditions to closing are not received or satisfied on a timely basis or at all;

•The possibility that the anticipated benefits and cost savings from the merger with Columbia may not be fully realized or may take longer to realize than expected;

•Disruptions to the Company’s business as a result of the announcement and pendency of the merger with Columbia;

•The possibility that the merger with Columbia may be more expensive to complete than anticipated, including as a result of unexpected factors or events; and

•Our ability to manage the risks involved in the foregoing.

If one or more of the factors affecting our forward-looking information and statements proves incorrect, then our actual results, performance, or achievements could differ materially from those expressed in, or implied by, forward-looking information and statements contained in this Quarterly Report on Form 10-Q and other reports and registration statements filed by us with the SEC. Therefore, we caution you not to place undue reliance on our forward-looking information and statements. We will not update the forward-looking information and statements to reflect actual results or changes in the factors affecting the forward-looking information and statements. For information on the factors that could cause actual results to differ from the expectations stated in the forward-looking statements, see “Risk Factors” under Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2024 (the “2024 Form 10-K”) and quarterly report on Form 10-Q for the quarter ended March 31, 2025, and other reports as filed with the SEC.

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

GENERAL

Management’s discussion and analysis of financial condition and results of operations is intended to provide a better understanding of the significant changes in trends relating to the Company’s financial condition, results of operations, liquidity, and capital resources. This discussion should be read in conjunction with our 2024 Form 10-K, plus the unaudited consolidated financial statements and the notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q. The results for the three and six months ended June 30, 2025 are not necessarily indicative of the results expected for the year ending December 31, 2025.

The Corporation, a California-based bank holding company, was incorporated in 1997 in the state of Delaware and is registered as a bank holding company under the Bank Holding Company Act of 1956, as amended (“BHCA”). Our wholly owned subsidiary, Pacific Premier Bank, is a national banking association chartered under the laws of the United States, and is thereby subject to the supervision, periodic examination, and regulation by the Office of the Comptroller of the Currency (the “OCC”). The OCC holds primary supervisory and regulatory authority over the operations of the Bank. The Bank’s deposits are insured by the FDIC through the Deposit Insurance Fund. The FDIC also has certain supervisory authority and powers over the Bank as well as all other FDIC insured institutions. Additionally, the Bank is a member of the Federal Home Loan Bank of San Francisco (“FHLB”), which is a member of the Federal Home Loan Bank System. As a bank holding company, the Corporation is subject to regulation and supervision by the Federal Reserve and the Federal Reserve Bank of San Francisco (“FRB”). The Federal Reserve may conduct examinations of bank holding companies, including the Corporation, and its subsidiaries.

Our corporate headquarters is located in Irvine, California. At June 30, 2025, we primarily conducted business throughout the Western Region of the United States from our 58 full-service depository branches located in Arizona, California, Nevada, Oregon, and Washington.

Our business strategy is centered on leveraging our high-touch relationship banking model, our broad range of banking products and service offerings, and our investment in technology to drive profitable, risk-adjusted growth, and generate operational efficiencies. Throughout our history, we have accomplished our growth objectives through a two-pronged approach of organic growth and strategic acquisitions.

In support of our organic and strategic growth strategy, we focus on attracting deposits from small- and middle-market businesses, corporations, including the owners and employees of those businesses, professionals, real estate investors/operators, non-profit organizations, and consumers. We invest those deposits, together with funds generated from operations and borrowings, primarily in commercial loans and various types of commercial real estate loans. The Company expects to fund substantially all of the loans that it originates or purchases through deposits, FHLB advances and other borrowings, and internally generated funds. Through our branches and our website, www.ppbi.com, we offer a variety of banking products and services within our targeted markets in the Western United States such as: various types of deposit accounts, digital banking, treasury management services, online bill payment, and a wide array of loan products, including commercial business loans, lines of credit, Small Business Administration (“SBA”) loans, commercial real estate (“CRE”) loans, agribusiness loans, quick-service restaurant franchise lending, home equity lines of credit, and construction loans throughout the Western U.S. in major metropolitan markets within Arizona, California, Nevada, Oregon, and Washington. We also have developed nationwide specialty banking products and service offerings for homeowners’ associations (“HOA”) and HOA management companies, as well as experienced owner-operator franchisees in the QSR industry. Our specialty products and services offerings include commercial escrow and exchange services through our Commerce Escrow division, which provides a variety of real-property and non-real property escrow services, including the facilitation of Section 1031 of the Internal Revenue Code. In addition, our Pacific Premier Trust division provides individual retirement account (“IRA”) custodial and maintenance services and serves as a custodian for self-directed IRAs holding various asset classes.

The Company generates the majority of its revenues from interest income on loans that it originates and purchases, and income from investments in securities. The Company also provides its clients with financial products and services, which generate noninterest income such as service charges on customer accounts, trust custodial account fees, and escrow and exchange fees. The Company’s revenues are partially offset by interest expense paid on deposits and borrowings, the provision for credit losses, and noninterest expenses, such as operating expenses. The Company’s operating expenses primarily consist of employee compensation and benefit expenses, premises and occupancy expenses, data processing expenses, deposit expenses, and other general expenses. The Company’s results of operations are also affected by prevailing economic conditions, competition, acquisitions, government policies, and other actions of regulatory agencies.

PENDING MERGER WITH COLUMBIA

On April 23, 2025, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Columbia, and Balboa Merger Sub, Inc., a Delaware corporation and a direct, wholly owned subsidiary of Columbia (“Merger Sub”). The Merger Agreement provides that, upon the terms and subject to the conditions set forth therein, Merger Sub will merge with and into the Company (the “Merger”), with the Company surviving the Merger (the “Surviving Corporation”), and immediately following the Merger, the Surviving Corporation will merge with and into Columbia (the “Second Step Merger”, and together with the Merger, the “Mergers”), with Columbia continuing as the surviving entity in the Second Step Merger. Promptly following the Second Step Merger, the Bank will merge with and into Columbia’s wholly owned bank subsidiary, Umpqua Bank (the “Bank Merger”), with Umpqua Bank as the surviving bank in the Bank Merger. The Merger Agreement was unanimously approved and adopted by the board of directors of each of Columbia, Pacific Premier, and Merger Sub.

Subject to the terms and conditions of the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each share of the Company’s common stock outstanding immediately prior to the Effective Time, other than certain shares held by Columbia, the Company or Merger Sub, will be converted into the right to receive 0.9150 of a share of common stock, no par value per share, of Columbia. Holders of the Company’s common stock will receive cash in lieu of fractional shares.

The Company and Columbia received all required stockholder and shareholder approvals, as applicable, related to the Merger, which is anticipated to close during the second half of 2025, subject to customary closing conditions, including the receipt of regulatory approval.

CRITICAL ACCOUNTING POLICIES

Management has established various accounting policies that govern the application of GAAP in the preparation of our financial statements. Certain accounting policies require management to make estimates and assumptions that involve a significant level of estimation uncertainty and are reasonably likely to have a material impact on the carrying value of certain assets and liabilities as well as the Company’s results of operations, which management considers to be critical accounting policies. The estimates and assumptions management uses are based on historical experience and other factors, which management believes to be reasonable under the circumstances. Actual results could differ significantly from these estimates and assumptions, which could have a material impact on the carrying value of the Company’s assets and liabilities as well as the Company’s results of operations in future reporting periods. The Company’s critical accounting policies consist of the allowance for credit losses on loans and off-balance sheet commitments, as well as goodwill. Please see Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in the Company’s 2024 Form 10-K for additional discussion concerning these critical accounting policies. Also, our significant accounting policies are described in Note 1. Description of Business and Summary of Significant Accounting Policies to the audited consolidated financial statements in our 2024 Form 10-K.

NON-GAAP MEASURES

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

For periods presented below, adjusted return on average assets (“ROAA”) is a non-GAAP financial measure derived from GAAP based amounts. We calculate this figure by excluding merger-related expense, the FDIC special assessment, and the related tax impact from net income. Management believes that the exclusion of such nonrecurring items from this financial measure provides useful information to gain an understanding of the operating results of our core business and a better comparison of financial performance.


	Three Months Ended									Six Months Ended
	June 30,			March 31,			June 30,			June 30,			June 30,
(Dollars in thousands)	2025			2025			2024			2025			2024
Net income	$	32,061		$	36,021		$	41,905		$	68,082		$	88,930

Add: FDIC special assessment	(25)			25			(161)			—			362
Add: merger-related expense	6,712			—			—			6,712			—
Less: tax adjustment (1)	1,884			7			(45)			1,891			103
Adjusted net income for average assets	$	36,864		$	36,039		$	41,789		$	72,903		$	89,189

Average assets	$	18,018,457		$	18,086,988		$	18,595,683		$	18,052,533		$	18,815,040

ROAA (annualized)	0.71		%	0.80		%	0.90		%	0.75		%	0.95		%
Adjusted ROAA (annualized)	0.82		%	0.80		%	0.90		%	0.81		%	0.95		%

______________________________

(1) Adjusted by statutory tax rate.

For periods presented below, return on average tangible common equity (“ROATCE”) is a non-GAAP financial measure derived from GAAP-based amounts. We calculate this figure by excluding amortization of intangible assets expense from net income and excluding the average intangible assets and average goodwill from the average stockholders' equity during the periods indicated. Management believes that the exclusion of such items from this financial measure provides useful information to gain an understanding of the operating results of our core business. The adjusted net income, adjusted return on average equity (“ROAE”), and adjusted ROATCE further exclude the nonrecurring items to provide a better comparison to the financial results of prior periods.


	Three Months Ended									Six Months Ended
	June 30,			March 31,			June 30,			June 30,			June 30,
(Dollars in thousands)	2025			2025			2024			2025			2024
Net income	$	32,061		$	36,021		$	41,905		$	68,082		$	88,930
Add: amortization of intangible assets expense	2,501			2,566			2,763			5,067			5,599
Less: tax adjustment (1)	705			723			781			1,428			1,582
Net income for average tangible common equity	33,857			37,864			43,887			71,721			92,947

Add: FDIC special assessment	(25)			25			(161)			—			362
Add: merger-related expense	6,712			—			—			6,712			—
Less: tax adjustment (1)	1,884			7			(45)			1,891			103
Adjusted net income for average tangible common equity	$	38,660		$	37,882		$	43,771		$	76,542		$	93,206

Average stockholders’ equity	$	2,964,049		$	2,956,846		$	2,908,015		$	2,960,468		$	2,901,982
Less: average intangible assets	28,613			31,168			39,338			29,884			40,736
Less: average goodwill	901,312			901,312			901,312			901,312			901,312
Average tangible common equity	$	2,034,124		$	2,024,366		$	1,967,365		$	2,029,272		$	1,959,934



ROAE (annualized)	4.33		%	4.87		%	5.76		%	4.60		%	6.13		%
Adjusted ROAE (annualized)	4.97		%	4.88		%	5.75		%	4.93		%	6.15		%
ROATCE (annualized)	6.66		%	7.48		%	8.92		%	7.07		%	9.48		%
Adjusted ROATCE (annualized)	7.60		%	7.49		%	8.90		%	7.54		%	9.51		%

______________________________

(1) Amortization of intangible assets expense adjusted by statutory tax rate.

Tangible book value per share and tangible common equity to tangible assets (the “tangible common equity ratio”) are non-GAAP financial measures derived from GAAP-based amounts. We calculate tangible book value per share by dividing tangible common stockholders’ equity by shares outstanding. We calculate the tangible common equity ratio by excluding the balance of intangible assets from common stockholders’ equity and dividing by period end tangible assets, which also excludes intangible assets. We believe that this information is important to shareholders as tangible equity is a measure that is consistent with the calculation of capital for bank regulatory purposes, which excludes intangible assets from the calculation of risk-based ratios.


	June 30,			December 31,
(Dollars in thousands)	2025			2024
Total stockholders’ equity	$	2,975,418		$	2,955,743
Less: intangible assets	928,439			933,506
Tangible common equity	$	2,046,979		$	2,022,237

Total assets	$	17,783,172		$	17,903,585
Less: intangible assets	928,439			933,506
Tangible assets	$	16,854,733		$	16,970,079

Tangible common equity ratio	12.14		%	11.92		%

Common shares issued and outstanding	97,019,910			96,441,667

Book value per share	$	30.67		$	30.65
Less: intangible book value per share	9.57			9.68
Tangible book value per share	$	21.10		$	20.97

Efficiency ratio is a non-GAAP financial measure derived from GAAP-based amounts. This figure represents the ratio of noninterest expense, less amortization of intangible assets, merger-related expense, and other real estate owned operations, where applicable, to the sum of net interest income before provision for credit losses and total noninterest income less net loss from other real estate owned and net (loss) gain from debt extinguishment. The adjusted efficiency ratio further excludes the FDIC special assessment to provide a better comparison to the financial results of prior periods. Management believes that the exclusion of such items from this financial measure provides useful information to gain an understanding of the operating results of our core business.


	Three Months Ended									Six Months Ended
	June 30,			March 31,			June 30,			June 30,			June 30,
(Dollars in thousands)	2025			2025			2024			2025			2024
Total noninterest expense	$	104,376		$	100,292		$	97,567		$	204,668		$	200,200
Less: amortization of intangible assets	2,501			2,566			2,763			5,067			5,599
Less: merger-related expense	6,712			—			—			6,712			—
Less: other real estate owned operations, net	—			—			—			—			46
Adjusted noninterest expense	95,163			97,726			94,804			192,889			194,555
Less: FDIC special assessment	(25)			25			(161)			—			362
Adjusted noninterest expense excluding FDIC special assessment	$	95,188		$	97,701		$	94,965		$	192,889		$	194,193

Net interest income before provision for credit losses	$	126,755		$	123,367		$	136,394		$	250,122		$	281,521
Add: total noninterest income	17,565			21,465			18,222			39,030			43,996


Less: net loss from other real estate owned	—			—			(28)			—			(28)
Less: net (loss) gain from debt extinguishment	(1,315)			—			—			(1,315)			5,067

Adjusted revenue	$	145,635		$	144,832		$	154,644		$	290,467		$	320,478

Efficiency ratio	65.3		%	67.5		%	61.3		%	66.4		%	60.7		%
Adjusted efficiency ratio excluding FDIC special assessment	65.4		%	67.5		%	61.4		%	66.4		%	60.6		%

Pre-provision net revenue is a non-GAAP financial measure derived from GAAP-based amounts. We calculate the pre-provision net revenue by excluding income tax, provision for credit losses, and merger-related expense from net income. The adjusted pre-provision net income further excludes the FDIC special assessment to provide a better comparison of financial performance. Management believes that the exclusion of such items from this financial measure provides useful information to gain an understanding of the operating results of our core business and a better comparison to the financial results of prior periods.


	Three Months Ended						Six Months Ended
	June 30,		March 31,		June 30,		June 30,		June 30,
(Dollars in thousands)	2025		2025		2024		2025		2024
Interest income	$	189,181	$	187,335	$	208,054	$	376,516	$	421,485
Interest expense	62,426		63,968		71,660		126,394		139,964
Net interest income	126,755		123,367		136,394		250,122		281,521
Noninterest income	17,565		21,465		18,222		39,030		43,996
Revenue	144,320		144,832		154,616		289,152		325,517
Noninterest expense	104,376		100,292		97,567		204,668		200,200
Add: merger-related expense	6,712		—		—		6,712		—
Pre-provision net revenue	46,656		44,540		57,049		91,196		125,317

Add: FDIC special assessment	(25)		25		(161)		—		362
Adjusted pre-provision net revenue	$	46,631	$	44,565	$	56,888	$	91,196	$	125,679

Pre-provision net revenue (annualized)	$	186,624	$	178,160	$	228,196	$	182,392	$	250,634
Adjusted pre-provision net revenue (annualized)	$	186,524	$	178,260	$	227,552	$	182,392	$	251,358

Cost of non-maturity deposits is a non-GAAP financial measure derived from GAAP-based amounts. Cost of non-maturity deposits is calculated as the ratio of non-maturity deposit interest expense to average non-maturity deposits. We calculate non-maturity deposit interest expense by excluding interest expense for all certificates of deposit from total deposit expense, and we calculate average non-maturity deposits by excluding all certificates of deposit from total deposits. Management believes the cost of non-maturity deposits is a useful measure to assess the Company's deposit base, including its potential volatility.


	Three Months Ended									Six Months Ended
	June 30,			March 31,			June 30,			June 30,			June 30,
(Dollars in thousands)	2025			2025			2024			2025			2024
Total deposits interest expense	$	58,376		$	59,573		$	64,229		$	117,949		$	123,735
Less: certificates of deposit interest expense	16,950			18,512			21,115			35,462			40,190
Less: brokered certificates of deposit interest expense	3,620			3,789			6,506			7,409			13,175
Non-maturity deposit expense	$	37,806		$	37,272		$	36,608		$	75,078		$	70,370

Total average deposits	$	14,610,202		$	14,635,422		$	14,941,573		$	14,622,742		$	14,998,661
Less: average certificates of deposit	1,747,641			1,780,043			1,830,516			1,763,752			1,779,122
Less: average brokered certificates of deposit	283,812			300,424			542,699			292,072			555,786
Average non-maturity deposits	$	12,578,749		$	12,554,955		$	12,568,358		$	12,566,918		$	12,663,753

Cost of non-maturity deposits	1.21		%	1.20		%	1.17		%	1.20		%	1.12		%

RESULTS OF OPERATIONS

The following table presents the components of results of operations, share data, and performance ratios for the periods indicated:


	Three Months Ended									Six Months Ended
	June 30,			March 31,			June 30,			June 30,			June 30,
(Dollar in thousands, except per share data)	2025			2025			2024			2025			2024
Operating data
Interest income	$	189,181		$	187,335		$	208,054		$	376,516		$	421,485
Interest expense	62,426			63,968			71,660			126,394			139,964
Net interest income	126,755			123,367			136,394			250,122			281,521
Provision for credit losses	(2,078)			(3,718)			1,265			(5,796)			5,117
Net interest income after provision for credit losses	128,833			127,085			135,129			255,918			276,404
Net gain from sales of loans	23			90			65			113			65
Other noninterest income	17,542			21,375			18,157			38,917			43,931
Noninterest expense	104,376			100,292			97,567			204,668			200,200
Net income before income taxes	42,022			48,258			55,784			90,280			120,200
Income tax expense	9,961			12,237			13,879			22,198			31,270
Net income	$	32,061		$	36,021		$	41,905		$	68,082		$	88,930
Pre-provision net revenue (1)	$	46,656		$	44,540		$	57,049		$	91,196		$	125,317
Share data
Earnings per share:
Basic	$	0.33		$	0.37		$	0.43		$	0.70		$	0.92

Diluted	0.33			0.37			0.43			0.70			0.92

Common equity dividends declared per share	0.33			0.33			0.33			0.66			0.66
Dividend payout ratio (2)	99.91		%	88.41		%	75.94		%	93.82		%	71.39		%
Book value per share (basic)	$	30.67		$	30.57		$	30.32		$	30.67		$	30.32
Tangible book value per share (1)	21.10			20.98			20.58			21.10			20.58
Performance ratios
ROAA (3)	0.71		%	0.80		%	0.90		%	0.75		%	0.95		%
Adjusted ROAA (1)(3)	0.82			0.80			0.90			0.81			0.95
ROAE (3)	4.33			4.87			5.76			4.60			6.13
Adjusted ROAE (1)(3)	4.97			4.88			5.75			4.93			6.15
ROATCE (1)(3)	6.66			7.48			8.92			7.07			9.48
Adjusted ROATCE (1)(3)	7.60			7.49			8.90			7.54			9.51



Net interest margin	3.12			3.06			3.26			3.09			3.32
Cost of deposits	1.60			1.65			1.73			1.63			1.66
Average equity to average assets	16.45			16.35			15.64			16.40			15.42
Efficiency ratio (1)	65.3			67.5			61.3			66.4			60.7
Adjusted efficiency ratio (1)	65.4			67.5			61.4			66.4			60.6

______________________________

(1) Reconciliations of the non-GAAP measures are set forth in the Non-GAAP measures section of Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations in this Quarterly Report on Form 10-Q.

(2) Dividend payout ratio is defined as common equity dividends declared per share divided by basic earnings per share.

(3) Ratio is annualized.

Net income for the second quarter of 2025 was $32.1 million, or $0.33 per diluted share, compared to $36.0 million, or $0.37 per diluted share, for the first quarter of 2025. The decrease was primarily due to a $4.1 million increase in noninterest expense, driven by merger-related expense of $6.7 million for the second quarter of 2025 relating to the pending merger with Columbia, a $3.9 million decrease in noninterest income, and a $1.6 million decrease in reversal of provision for credit losses, partially offset by a $3.4 million increase in net interest income and a $2.3 million decrease in income tax expense.

Net income for the second quarter of 2025 was $32.1 million, or $0.33 per diluted share, compared to $41.9 million, or $0.43 per diluted share, for the second quarter of 2024. The decrease was primarily due to a $9.6 million decrease in net interest income, a $6.8 million increase in noninterest expense, driven by merger-related expense of $6.7 million, and a $657,000 decrease in noninterest income, partially offset by a $3.9 million decrease in income tax expense and a $3.3 million decrease in the provision for credit losses.

For the second quarter of 2025, the Company’s ROAA was 0.71%, ROAE was 4.33%, and ROATCE was 6.66%, compared to 0.80%, 4.87%, and 7.48%, respectively, for the first quarter of 2025, and 0.90%, 5.76%, and 8.92%, respectively, for the second quarter of 2024. For additional details, see “Non-GAAP measures” presented under Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations.

For the six months ended June 30, 2025, the Company recorded net income of $68.1 million, or $0.70 per diluted share. This compares with net income of $88.9 million, or $0.92 per diluted share, for the six months ended June 30, 2024. The decrease in net income of $20.8 million was mostly due to the $31.4 million decrease in net interest income, a $5.0 million decrease in noninterest income, and a $4.5 million increase in noninterest expense, driven by merger-related expense of $6.7 million, partially offset by a $10.9 million decrease in provision for credit losses, and a $9.1 million decrease in income tax expense.

For the six months ended June 30, 2025, the Company’s ROAA was 0.75%, ROAE was 4.60%, and ROATCE was 7.07%, compared to 0.95%, 6.13%, and 9.48%, respectively, for the six months ended June 30, 2024. For additional details, see “Non-GAAP measures” presented under Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Net Interest Income

Our primary source of revenue is net interest income, which is the difference between the interest earned on loans, investment securities, and interest-earning balances with financial institutions (“interest-earning assets”) and the interest paid on deposits and borrowings (“interest-bearing liabilities”). Net interest margin is net interest income expressed as a percentage of average interest-earning assets. Net interest income is affected by changes in both interest rates and the volume of interest-earning assets and interest-bearing liabilities.

Net interest income totaled $126.8 million in the second quarter of 2025, an increase of $3.4 million, or 2.7%, from the first quarter of 2025. The increase in net interest income was primarily attributable to a lower cost of funds, lower average interest-bearing liabilities balances, and higher average loan yields, partially offset by lower average interest-earning assets balances.

The net interest margin for the second quarter of 2025 increased 6 basis points to 3.12%, from 3.06% in the prior quarter. The increase was primarily due to a lower cost of funds as well as increased average loan yields.

Net interest income for the second quarter of 2025 decreased $9.6 million, or 7.1%, compared to the second quarter of 2024. The decrease was attributable to lower average interest-earning asset balances and yields, partially offset by lower average interest-bearing liabilities balances and a lower cost of funds.

For the first six months ended 2025, net interest income decreased $31.4 million, or 11.2%, compared to the first six months ended 2024. The decrease was driven by lower average interest-earning asset balances and yields, partially offset by lower average interest-bearing liabilities.

The following table presents the net interest margin, average balances calculated based on daily average, interest income and yields earned on average interest-earning assets and interest expense and rates paid on average interest-bearing liabilities, and the average yield/rate by asset and liability component for the periods indicated:


	Average Balance Sheet
	Three Months Ended
	June 30, 2025						March 31, 2025						June 30, 2024
(Dollars in thousands)	Average Balance		Interest		Average Yield/Cost		Average Balance		Interest		Average Yield/Cost		Average Balance		Interest		Average Yield/Cost
Assets
Interest-earning assets:
Cash and cash equivalents	$	815,636	$	7,649	3.76	%	$	882,266	$	8,279	3.81	%	$	1,134,736	$	13,666	4.84	%
Investment securities	3,552,016		31,113		3.50	%	3,483,680		30,526		3.51	%	2,964,909		26,841		3.62	%
Loans receivable, net (1)(2)	11,923,558		150,419		5.06	%	11,981,726		148,530		5.03	%	12,724,545		167,547		5.30	%
Total interest-earning assets	16,291,210		189,181		4.66	%	16,347,672		187,335		4.65	%	16,824,190		208,054		4.97	%
Noninterest-earning assets	1,727,247						1,739,316						1,771,493
Total assets	$	18,018,457					$	18,086,988					$	18,595,683
Liabilities and equity
Interest-bearing deposits:
Interest checking	$	2,864,330	$	10,611	1.49	%	$	2,880,017	$	10,669	1.50	%	$	2,747,972	$	10,177	1.49	%
Money market	4,728,738		26,983		2.29	%	4,705,209		26,358		2.27	%	4,724,572		26,207		2.23	%
Savings	251,700		212		0.34	%	258,789		245		0.38	%	271,812		224		0.33	%
Retail certificates of deposit	1,747,641		16,950		3.89	%	1,780,043		18,512		4.22	%	1,830,516		21,115		4.64	%
Wholesale/brokered certificates of deposit	283,812		3,620		5.12	%	300,424		3,789		5.11	%	542,699		6,506		4.82	%
Total interest-bearing deposits	9,876,221		58,376		2.37	%	9,924,482		59,573		2.43	%	10,117,571		64,229		2.55	%
FHLB advances and other borrowings	154		2		5.21	%	211		2		3.84	%	200,154		2,330		4.68	%
Subordinated debentures	248,151		4,048		6.48	%	272,528		4,393		6.45	%	332,097		5,101		6.14	%
Total borrowings	248,305		4,050		6.48	%	272,739		4,395		6.44	%	532,251		7,431		5.59	%
Total interest-bearing liabilities	10,124,526		62,426		2.47	%	10,197,221		63,968		2.54	%	10,649,822		71,660		2.71	%
Noninterest-bearing deposits	4,733,981						4,710,940						4,824,002
Other liabilities	195,901						221,981						213,844
Total liabilities	15,054,408						15,130,142						15,687,668
Stockholders’ equity	2,964,049						2,956,846						2,908,015
Total liabilities and equity	$	18,018,457					$	18,086,988					$	18,595,683
Net interest income			$	126,755					$	123,367					$	136,394

Net interest margin (3)					3.12	%					3.06	%					3.26	%
Cost of deposits (4)					1.60	%					1.65	%					1.73	%
Cost of funds (5)					1.69	%					1.74	%					1.86	%
Cost of non-maturity deposits (6)					1.21	%					1.20	%					1.17	%
Ratio of interest-earning assets to interest-bearing liabilities					160.91	%					160.31	%					157.98	%

______________________________

(1) Average balance includes loans held for sale and nonperforming loans and is net of deferred loan origination fees/costs and discounts/premiums, and the basis adjustment of certain loans included in fair value hedging relationships, where applicable.

(2) Interest income includes fair value net discount accretion of $1.8 million, $1.9 million, and $2.3 million for the three months ended June 30, 2025, March 31, 2025, and June 30, 2024, respectively.

(3) Represents annualized net interest income divided by average interest-earning assets.

(4) Represents annualized interest expense on deposits divided by the sum of average interest-bearing deposits and noninterest-bearing deposits.

(5) Represents annualized total interest expense divided by the sum of average total interest-bearing liabilities and noninterest-bearing deposits.

(6) Reconciliation of the “Non-GAAP measures” presented under Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations.



	Average Balance Sheet
	Six Months Ended
	June 30, 2025						June 30, 2024
(Dollars in thousands)	Average Balance		Interest		Average Yield/Cost		Average Balance		Interest		Average Yield/Cost
Assets
Interest-earning assets:
Cash and cash equivalents	$	848,767	$	15,928	3.78	%	$	1,137,822	$	27,304	4.83	%
Investment securities	3,518,037		61,639		3.50	%	2,956,540		53,659		3.63	%
Loans receivable, net (1)(2)	11,952,481		298,949		5.04	%	12,936,791		340,522		5.29	%
Total interest-earning assets	16,319,285		376,516		4.65	%	17,031,153		421,485		4.98	%
Noninterest-earning assets	1,733,248						1,783,887
Total assets	$	18,052,533					$	18,815,040
Liabilities and equity
Interest-bearing deposits:
Interest checking	$	2,872,130	$	21,280	1.49	%	$	2,793,152	$	20,080	1.45	%
Money market	4,717,039		53,341		2.28	%	4,680,357		49,839		2.14	%
Savings	255,225		457		0.36	%	279,774		451		0.32	%
Retail certificates of deposit	1,763,752		35,462		4.05	%	1,779,122		40,190		4.54	%
Wholesale/brokered certificates of deposit	292,072		7,409		5.12	%	555,786		13,175		4.77	%
Total interest-bearing deposits	9,900,218		117,949		2.40	%	10,088,191		123,735		2.47	%
FHLB advances and other borrowings	182		4		4.43	%	359,516		6,567		3.67	%
Subordinated debentures	260,272		8,441		6.47	%	332,015		9,662		5.82	%
Total borrowings	260,454		8,445		6.47	%	691,531		16,229		4.70	%
Total interest-bearing liabilities	10,160,672		126,394		2.51	%	10,779,722		139,964		2.61	%
Noninterest-bearing deposits	4,722,524						4,910,470
Other liabilities	208,869						222,866
Total liabilities	15,092,065						15,913,058
Stockholders’ equity	2,960,468						2,901,982
Total liabilities and equity	$	18,052,533					$	18,815,040
Net interest income			$	250,122					$	281,521

Net interest margin (3)					3.09	%					3.32	%
Cost of deposits (4)					1.63	%					1.66	%
Cost of funds (5)					1.71	%					1.79	%
Cost of non-maturity deposits (6)					1.20	%					1.12	%
Ratio of interest-earning assets to interest-bearing liabilities					160.61	%					157.99	%

_____________________________

(2) Interest income includes fair value net discount accretion of $3.7 million and $4.4 million for the six months ended June 30, 2025 and June 30, 2024, respectively.

(3) Represents net interest income divided by average interest-earning assets.

(4) Represents annualized interest expense on deposits divided by the sum of average interest-bearing deposits and noninterest-bearing deposits.

(5) Represents annualized total interest expense divided by the sum of average total interest-bearing liabilities and noninterest-bearing deposits.

(6) Reconciliation of the “Non-GAAP measures” presented under Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations.

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

•Changes in volume (changes in volume multiplied by prior rate);

•Changes in interest rates (changes in interest rates multiplied by prior volume and includes the recognition of discounts/premiums and deferred fees/costs); and

•The net change or the combined impact of volume and rate changes allocated proportionately to changes in volume and changes in interest rates.


	Three Months Ended June 30, 2025
	Compared to
	Three Months Ended March 31, 2025
	Increase (Decrease) Due to
(Dollars in thousands)	Volume		Rate		Net
Interest-earning assets
Cash and cash equivalents	$	(544)	$	(86)	$	(630)
Investment securities	598		(11)		587
Loans receivable, net	(5,628)		7,517		1,889
Total interest-earning assets	(5,574)		7,420		1,846
Interest-bearing liabilities
Interest checking	(20)		(38)		(58)
Money market	251		374		625
Savings	(6)		(27)		(33)
Retail certificates of deposit	(297)		(1,265)		(1,562)
Wholesale/brokered certificates of deposit	(170)		1		(169)
FHLB advances and other borrowings	(2)		2		—
Subordinated debentures	(369)		24		(345)
Total interest-bearing liabilities	(613)		(929)		(1,542)
(Decrease) increase in net interest income	$	(4,961)	$	8,349	$	3,388


	Three Months Ended June 30, 2025
	Compared to
	Three Months Ended June 30, 2024
	Increase (Decrease) Due to
(Dollars in thousands)	Volume		Rate		Net
Interest-earning assets
Cash and cash equivalents	$	(3,348)	$	(2,669)	$	(6,017)
Investment securities	5,109		(837)		4,272
Loans receivable, net	(10,028)		(7,100)		(17,128)
Total interest-earning assets	(8,267)		(10,606)		(18,873)
Interest-bearing liabilities
Interest checking	461		(27)		434
Money market	25		751		776
Savings	(16)		4		(12)
Retail certificates of deposit	(912)		(3,253)		(4,165)
Wholesale/brokered certificates of deposit	(3,310)		424		(2,886)
FHLB advances and other borrowings	(2,624)		296		(2,328)
Subordinated debentures	(1,349)		296		(1,053)
Total interest-bearing liabilities	(7,725)		(1,509)		(9,234)
Decrease in net interest income	$	(542)	$	(9,097)	$	(9,639)



	Six Months Ended June 30, 2025
	Compared to
	Six Months Ended June 30, 2024
	Increase (Decrease) Due to
(Dollars in thousands)	Volume		Rate		Net
Interest-earning assets
Cash and cash equivalents	$	(6,152)	$	(5,224)	$	(11,376)
Investment securities	9,760		(1,780)		7,980
Loans receivable, net	(25,666)		(15,907)		(41,573)
Total interest-earning assets	(22,058)		(22,911)		(44,969)
Interest-bearing liabilities
Interest checking	549		651		1,200
Money market	377		3,125		3,502
Savings	(19)		25		6
Retail certificates of deposit	(351)		(4,377)		(4,728)
Wholesale/brokered certificates of deposit	(6,815)		1,049		(5,766)
FHLB advances and other borrowings	(8,272)		1,709		(6,563)
Subordinated debentures	(2,191)		970		(1,221)
Total interest-bearing liabilities	(16,722)		3,152		(13,570)
Increase (decrease) in net interest income	$	(5,336)	$	(26,063)	$	(31,399)

Provision for Credit Losses

For the second quarter of 2025, the Company recorded a total reversal of provision for credit losses of $2.1 million, consisting of a $4.7 million reversal of provision expense for loans held for investment, a $2.6 million provision expense for unfunded commitments, and a $6,000 provision expense for HTM securities. During the first quarter of 2025, the Company recorded a $3.7 million reversal of provision expense for credit losses, consisting of a $3.6 million reversal of provision expense for loans held for investment, a $143,000 reversal of provision expense for unfunded commitments, and a $13,000 reversal of provision expense for HTM securities. For the second quarter of 2024, the Company recorded a total provision for credit losses of $1.3 million, consisting of a $1.8 million provision for credit losses for loans held for investment, a $505,000 reversal of provision expense for unfunded commitments, and a $14,000 provision expense for credit losses for HTM securities.

The reversal of provision for credit losses for loans held for investment in the second quarter of 2025 was principally driven by provision reversals in the business loans secured by real estate and commercial loans segments, partially offset by provisions for credit losses in the investor loans secured by real estate and retail loans segments. The reversal of provision for credit losses in the business loans secured by real estate segment was principally driven by the impact of shorter duration as well as a decrease in loan balances. The reversal of provision for credit losses for loans in the commercial loans segment was largely attributed to shorter duration, economic forecast updates, as well as a decline in loan balances for SBA and franchise non-real estate secured loans. The provision for credit losses for the investor loans secured by real estate segment is largely attributed to a provision for multifamily loans, which was driven by economic forecast updates, partially offset by the impact of shorter duration. The provision for multifamily loans was partially offset by provision reversals for construction and land loans as well as SBA loans secured by real estate, which were driven by slightly lower loss rates for construction and land loans, and a change in qualitative adjustments during the period for SBA loans secured by real estate. The provision for credit losses for retail loans can be attributed in large part to the change in qualitative adjustments for single family residential loans during the period.

The provision for off-balance sheet commitments during the second quarter of 2025 was largely attributable to an increase in the balance of unfunded loan commitments, partially offset by the impact of economic forecast updates. The provision for HTM investment securities during the period was due to changes in economic forecasts and their impact on HTM securities classified as municipal bonds.

The reversal of provision expense for loans held for investment during the first quarter of 2025 was principally driven by provision reversals in the investor and business loans secured by real estate segments, partially offset by provisions for credit losses in the commercial and retail loans segments. The reversal of provision for credit losses in the investor loans secured by real estate segment was primarily attributed to a decline in loan balances for multifamily and construction and land loans. The reversal of provision for credit losses in the business loan secured by real estate segment can largely be attributed to a decrease in loan balances for CRE owner-occupied loans and franchise real estate secured loans. The provision for credit losses in the commercial loans segment is largely attributed to new originations and purchases of commercial and industrial loans. The provision for commercial and industrial loans was partially offset by a provision reversal associated with franchise non-real estate secured loans, which was attributed to a decrease in loan balances coupled with slightly favorable changes in economic forecasts for those loans. The Company also recorded a provision for credit losses for retail loans during the first quarter, which was attributed to the purchase of jumbo single family residential loans with high credit quality. GAAP requires the Company to establish an ACL for purchased loans at the time of purchase.

The reversal of provision for credit losses for off-balance sheet commitments during the first quarter of 2025 was largely attributable to the impact of changes in economic forecasts, partially offset by changes in the mix of unfunded commitments between various loan segments. The reversal of provision for credit losses for HTM securities classified as municipal bonds during the first quarter of 2025 was due to economic forecast updates.

During the second quarter of 2024 the provision for credit losses for loans held for investment was principally driven by a $10.6 million provision for credit losses for investor loans secured by real estate. The provision for credit losses for loans in this segment was largely due to economic forecast updates and the impact on multifamily loans as well as the impact from the loan composition changes on construction and land loans, partially offset by improved asset quality for loans in this segment. The reversal of provision for credit losses for commercial loan totaled $8.6 million, and can be attributed largely to the declines in the balances of franchise non-real estate secured and C&I loans.

The reversal of provision for credit losses for off-balance sheet commitments during the second quarter of 2024 was attributable, in large part, to slightly lower loss rates for C&I loans, partially offset by a slight increase in unfunded commitments. The provision expense for HTM investment securities classified as municipal bonds was due to economic forecast updates.


	Three Months Ended						Variance From
	June 30,		March 31,		June 30,		March 31, 2025				June 30, 2024
(Dollars in thousands)	2025		2025		2024		$		%		$		%
Provision for credit losses
Provision for loan losses	$	(4,653)	$	(3,562)	$	1,756	$	(1,091)	30.6	%	$	(6,409)	(365.0)	%
Provision for unfunded commitments	2,569		(143)		(505)		2,712		(1,896.5)	%	3,074		(608.7)	%

Provision for HTM securities	6		(13)		14		19		(146.2)	%	(8)		(57.1)	%
Total provision for credit losses	$	(2,078)	$	(3,718)	$	1,265	$	1,640	(44.1)	%	$	(3,343)	(264.3)	%

For the first six months of 2025, the Company recorded a $5.8 million provision reversal for credit losses, compared to a $5.1 million provision expense recorded for the first six months of 2024. The provision reversal for the first six months of 2025 was attributed to a provision reversal for loans held for investment, partially offset by a provision for credit losses for off-balance sheet commitments and HTM investment securities. The provision for credit losses for the first six months of 2024 was driven principally by provisions for loans held for investment and HTM investment securities, partially offset by a provision reversal for off-balance sheet commitments during the period.

During the first six months of 2025, the reversal of provision for credit losses for loans held for investment was principally driven by provision reversals in the business and investor loans secured by real estate and the commercial loans segments. The provision reversals in these segments were partially offset by a provision for credit losses in the retail loans segment. The reversal of provision for credit losses in the business loans secured by real estate segment is largely attributed to the impact of shorter duration as well as a decline in loan balances in that segment. The reversal of provision for credit losses in the commercial loans segment can be attributed to the impact of shorter duration, as well as a decline in loan balances for SBA and franchise non-real estate secured loans, partially offset by the provision for credit losses for commercial and industrial loans, which was primarily attributed to new originations and purchases of commercial and industrial loans. The reversal of provision for credit losses in the investor loans secured by real estate segment is largely attributed to the decline in loan balances for construction and land and SBA real estate secured loans. This was partially offset by provisions for credit losses for CRE non-owner occupied and multifamily loans, which was driven by changes in economic forecasts and the impact on those loans, partially offset by the impact of shorter duration. The provision for credit losses for retail loans was principally driven by a change in qualitative adjustments during the second quarter, as well as the purchase of jumbo single family residential loans with high credit quality during the first quarter. GAAP requires the Company to establish an ACL for purchased loans at the time of purchase.

The provision for off-balance sheet commitments during the first six months of 2025 was largely attributable to an increase in the balance of unfunded loan commitments, partially offset by the impact of economic forecast updates. The reversal of provision for credit losses on HTM investment securities classified as municipal bonds was due to economic forecast updates.

During the first six months of 2024, the provision for credit losses for loans held for investment was largely attributable to the investor and business loans secured by real estate segments, partially offset by a reversal of provision for credit losses in the commercial loans segment. The provision for credit losses in the investor loans secured by real estate segment was attributed to changes in economic forecasts and the associated impact on loans in this segment, with the largest impact on multifamily loans. The provision for credit losses for loans in this segment was partially offset by improved asset quality and the impact of duration for construction loans. The provision for credit losses in the business loans secured by real estate segment was attributed to the impact from changes in economic forecasts, partially offset by a decline in the balances for those loans, as well as favorable changes in asset quality. The reversal of provision for credit losses in the commercial loans segment was principally driven by a decline in the balance of those loans during the first six months of 2024.

The provision reversal for off-balance sheet commitments during the first six months of 2024 was attributable largely to overall lower levels of unfunded commitments during the period. The provision for HTM investment securities classified as municipal bonds was attributed to economic forecast updates.



	Six Months Ended				Variance From
	June 30,		June 30,		June 30, 2024
(Dollars in thousands)	2025		2024		$		%
Provision for credit losses
Provision for loans losses	$	(8,215)	$	8,044	$	(16,259)	(202.1)	%
Provision for unfunded commitments	2,426		(2,930)		5,356		(182.8)	%

Provision for held-to-maturity securities	(7)		$	3	$	(10)	(333.3)	%
Total provision for credit losses	$	(5,796)	$	5,117	$	(10,913)	(213.3)	%

Noninterest Income

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


	Three Months Ended						Variance From
	June 30,		March 31,		June 30,		March 31, 2025				June 30, 2024
(Dollars in thousands)	2025		2025		2024		$		%		$		%
Noninterest income
Loan servicing income	$	472	$	447	$	510	$	25	5.6	%	$	(38)	(7.5)	%
Service charges on deposit accounts	2,578		2,629		2,710		(51)		(1.9)	%	(132)		(4.9)	%
Other service fee income	283		289		309		(6)		(2.1)	%	(26)		(8.4)	%
Debit card interchange fee income	935		834		925		101		12.1	%	10		1.1	%
Earnings on bank owned life insurance	4,341		5,772		4,218		(1,431)		(24.8)	%	123		2.9	%
Net gain from sales of loans	23		90		65		(67)		(74.4)	%	(42)		(64.6)	%




Trust custodial account fees	8,815		10,307		8,950		(1,492)		(14.5)	%	(135)		(1.5)	%
Escrow and exchange fees	774		672		702		102		15.2	%	72		10.3	%
Other (loss) income	(656)		425		(167)		(1,081)		(254.4)	%	(489)		292.8	%
Total noninterest income	$	17,565	$	21,465	$	18,222	$	(3,900)	(18.2)	%	$	(657)	(3.6)	%


	Six Months Ended				Variance From
	June 30,		June 30,		June 30, 2024
(Dollars in thousands)	2025		2024		$		%
Noninterest income
Loan servicing income	$	919	$	1,039	$	(120)	(11.5)	%
Service charges on deposit accounts	5,207		5,398		(191)		(3.5)	%
Other service fee income	572		645		(73)		(11.3)	%
Debit card interchange fee income	1,769		1,690		79		4.7	%
Earnings on bank owned life insurance	10,113		8,377		1,736		20.7	%
Net gain from sales of loans	113		65		48		73.8	%




Trust custodial account fees	19,122		19,592		(470)		(2.4)	%
Escrow and exchange fees	1,446		1,398		48		3.4	%
Other (loss) income	(231)		5,792		(6,023)		(104.0)	%
Total noninterest income	$	39,030	$	43,996	$	(4,966)	(11.3)	%

Noninterest income for the second quarter of 2025 was $17.6 million, a decrease of $3.9 million from the first quarter of 2025. The decrease was primarily due to a $1.5 million decrease in trust custodial account fees related to annual tax fees recognized in the prior quarter, a $1.4 million decrease in earnings on bank owned life insurance (“BOLI”) due to non-recurring benefits recorded in the prior quarter, and a $1.3 million loss on debt extinguishment, resulting from the early redemption of $150.0 million in subordinated notes due 2030.

Noninterest income for the second quarter of 2025 decreased $657,000 compared to the second quarter of 2024. The decrease was primarily due to a $1.3 million loss on debt extinguishment recorded in the second quarter of 2025, partially offset by an $826,000 increase in other income, primarily in Community Reinvestment Act investment income.

For the first six months of 2025, noninterest income totaled $39.0 million, a decrease from $44.0 million for the first six months of 2024. The decrease was primarily due to a $6.0 million decrease in other income, driven by the $1.3 million loss on debt extinguishment recorded in the first six months of 2025, compared to the $5.3 million gain on debt extinguishment resulting from the early redemption of two $200.0 million FHLB term advances during the first six months of 2024, and a $470,000 decrease in trust custodial account fees. This was offset by a $1.7 million increase in earnings on BOLI due to non-recurring benefits.

Noninterest Expense

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


	Three Months Ended						Variance From
	June 30,		March 31,		June 30,		March 31, 2025				June 30, 2024
(Dollars in thousands)	2025		2025		2024		$		%		$		%
Noninterest expense
Compensation and benefits	$	53,268	$	52,812	$	53,140	$	456	0.9	%	$	128	0.2	%
Premises and occupancy	8,471		9,716		10,480		(1,245)		(12.8)	%	(2,009)		(19.2)	%
Data processing	7,806		7,976		7,754		(170)		(2.1)	%	52		0.7	%

FDIC insurance premiums	1,947		1,996		1,873		(49)		(2.5)	%	74		4.0	%
Legal and professional services	2,223		4,861		1,078		(2,638)		(54.3)	%	1,145		106.2	%
Marketing expense	905		936		1,724		(31)		(3.3)	%	(819)		(47.5)	%
Office expense	1,006		1,099		1,077		(93)		(8.5)	%	(71)		(6.6)	%
Loan expense	829		781		840		48		6.1	%	(11)		(1.3)	%
Deposit expense	13,644		12,896		12,289		748		5.8	%	1,355		11.0	%
Merger-related expense	6,712		—		—		6,712		—	%	6,712		—	%
Amortization of intangible assets	2,501		2,566		2,763		(65)		(2.5)	%	(262)		(9.5)	%
Other expense	5,064		4,653		4,549		411		8.8	%	515		11.3	%
Total noninterest expense	$	104,376	$	100,292	$	97,567	$	4,084	4.1	%	$	6,809	7.0	%



	Six Months Ended				Variance From
	June 30,		June 30,		June 30, 2024
(Dollars in thousands)	2025		2024		$		%
Noninterest expense
Compensation and benefits	$	106,080	$	107,270	$	(1,190)	(1.1)	%
Premises and occupancy	18,187		21,287		(3,100)		(14.6)	%
Data processing	15,782		15,265		517		3.4	%
Other real estate owned operations, net	—		46		(46)		(100.0)	%
FDIC insurance premiums	3,943		4,502		(559)		(12.4)	%
Legal and professional services	7,084		5,221		1,863		35.7	%
Marketing expense	1,841		3,282		(1,441)		(43.9)	%
Office expense	2,105		2,170		(65)		(3.0)	%
Loan expense	1,610		1,610		—		—	%
Deposit expense	26,540		24,954		1,586		6.4	%
Merger-related expense	6,712		—		6,712		—	%
Amortization of intangible assets	5,067		5,599		(532)		(9.5)	%
Other expense	9,717		8,994		723		8.0	%
Total noninterest expense	$	204,668	$	200,200	$	4,468	2.2	%

Noninterest expense totaled $104.4 million for the second quarter of 2025, an increase of $4.1 million from the first quarter of 2025. The increase was primarily due to merger-related expense of $6.7 million for the second quarter of 2025 relating to the pending merger with Columbia. Excluding merger-related expense, noninterest expense totaled $97.7 million, a decrease of $2.6 million compared to the first quarter of 2025 primarily attributable to a $2.6 million decrease in legal and professional services, driven by a $1.1 million reclassification of merger-related legal and professional fees recorded in the prior quarter to merger-related expense, and a $1.2 million decrease in premises and occupancy.

Noninterest expense for the second quarter of 2025 increased by $6.8 million from the second quarter of 2024. The increase was primarily due to merger-related expense of $6.7 million for the second quarter of 2025, a $1.4 million increase in deposit expense, a $1.1 million increase in legal and professional services, partially offset by a $2.0 million decrease in premises and occupancy.

Noninterest expense totaled $204.7 million for the first six months of 2025, an increase of $4.5 million from the first six months of 2024. The increase was driven primarily by the merger-related expense of $6.7 million relating to the pending merger with Columbia. Excluding merger-related expense, noninterest expense totaled $198.0 million, a decrease of $2.2 million from the first six months of 2024, driven primarily by a $3.1 million decrease in premises and occupancy, a $1.4 million decrease in marketing expense, a $1.2 million decrease in compensation and benefits, and a $532,000 decrease in amortization of intangible assets, partially offset by a $1.9 million increase in legal and professional services, and a $1.6 million increase in deposit expense, driven by higher deposit administration service fees due to higher cap rates and the seasonal growth in HOA deposits.

The Bank pays third-party management companies, which function as vendors for the Bank, to provide certain property administrative services related to the servicing of the HOA deposit accounts. These administrative service fees are reported as deposit costs within noninterest expense and are based primarily upon the number of HOA accounts managed by these companies, with cap rates based on the size and composition of the deposit relationships.

The Company’s efficiency ratio was 65.3% for the second quarter of 2025, compared to 67.5% for the first quarter of 2025, and 61.3% for the second quarter of 2024. The Company’s efficiency ratio was 66.4% for the first six months of 2025, compared to 60.7% for the first six months of 2024. For additional details, see “Non-GAAP measures” presented under Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Income Taxes

For the three months ended June 30, 2025, March 31, 2025, and June 30, 2024, income tax expense was $10.0 million, $12.2 million, and $13.9 million, respectively, and the effective income tax rate was 23.7%, 25.4%, and 24.9%, respectively. For the six months ended June 30, 2025 and 2024, income tax expense was $22.2 million and $31.3 million, respectively, and the effective income tax rate was 24.6% and 26.0%, respectively. Our effective tax rate for the three and six months ended June 30, 2025 differs from the 21% federal statutory rate due to the impact of state taxes as well as various permanent tax differences, including tax-exempt income from municipal securities and loans, BOLI income, tax benefits associated with low-income housing tax credit investments, Section 162(m) limitation on the deduction of executive compensation, non-deductible transaction costs, and the exercise of stock options and vesting of other stock-based compensation.

The total amount of unrecognized tax benefits was $380,000 at June 30, 2025 and December 31, 2024, and was comprised of unrecognized tax benefits related to the Opus acquisition in 2020. The total amount of tax benefits that, if recognized, would favorably impact the effective tax rate was $149,000 at June 30, 2025 and December 31, 2024. It is reasonably possible that $380,000 of the Company's unrecognized tax benefits may be recognized within the next 12 months due to a lapse of the statute of limitations.

The Company recognizes interest and penalties related to unrecognized tax benefits in income tax expense. The Company has accrued $123,000 and $99,000 for such interest at June 30, 2025 and December 31, 2024, respectively. No amounts for penalties were accrued.

The Company and its subsidiaries are subject to U.S. Federal income tax, as well as income and franchise tax in multiple state jurisdictions. The statute of limitations related to the consolidated Federal income tax returns is closed for all tax years up to and including 2020. The expirations of the statutes of limitations related to the various state income and franchise tax returns vary by state.

The Company accounts for income taxes by recognizing deferred tax assets and liabilities based upon temporary differences between the amounts for financial reporting purposes and the tax basis of its assets and liabilities. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion, or all, of the deferred tax assets will not be realized. In assessing the realization of deferred tax assets, management evaluates both positive and negative evidence, including the existence of any cumulative losses in the current year and the prior two years, the forecasts of future income, applicable tax planning strategies, and assessments of current and future economic and business conditions. This analysis is updated quarterly and adjusted as necessary. Based on the analysis, the Company has determined that a valuation allowance for deferred tax assets was not required as of June 30, 2025 and December 31, 2024.

FINANCIAL CONDITION

At June 30, 2025, assets totaled $17.78 billion, a decrease of $120.4 million, or 0.7%, from $17.90 billion at December 31, 2024. The decrease was primarily due to a $139.2 million decrease in total loans and a $125.4 million decrease in investment securities, partially offset by a $181.8 million increase in cash and cash equivalents.

Total liabilities were $14.81 billion at June 30, 2025, compared to $14.95 billion at December 31, 2024. The decrease of $140.1 million, or 0.9%, from December 31, 2024 was primarily due to a $148.4 million decrease in subordinated debentures, partially offset by a $33.7 million increase in deposits.

Total stockholders’ equity was $2.98 billion as of June 30, 2025, an increase of $19.7 million from $2.96 billion at December 31, 2024. The increase was primarily due to $68.1 million of net income and $10.5 million of other comprehensive income, partially offset by $63.9 million in cash dividends.

Since the fourth quarter of 2024, we took steps to increase loan originations and supplemented our new loan production with select loan purchases and participations as well as reinvested excess liquidity into shorter-term U.S. Treasury securities. Improved loan originations also led to expanded depository relationships and a favorable deposit mix, with brokered certificates of deposit decreasing by $99.7 million during the second half of 2025. Prudent credit risk management continues to remain our priority. The continuation of positive asset quality trends from the second half of 2024 into the second quarter of 2025, coupled with the strength of our capital position, provides us with optionality and flexibility in terms of balance sheet management and position us well to navigate and address potential challenges that may arise from economic uncertainties.

Our book value per share increased to $30.67 at June 30, 2025 from $30.65 at December 31, 2024. At June 30, 2025, the Company’s tangible common equity to tangible assets ratio increased to 12.14% from 11.92% at December 31, 2024. Our tangible book value per share increased to $21.10 from $20.97 at December 31, 2024. The increase in tangible common equity ratio and tangible book value per share from prior year-end were primarily driven by net income and other comprehensive income, partially offset by dividends paid. The decrease in tangible assets also contributed to the increase in tangible common equity ratio. For additional details, see “Non-GAAP measures” presented under Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Investment Securities

Our investment policy, as established by our Asset Liability Committee, serves to provide and maintain liquidity, capital preservation, complement our lending activities, support our interest rate risk management and tax planning strategies, and generate a favorable return on investments without incurring undue interest rate and credit risks. Specifically, our investment policy generally limits our investments to U.S. government securities, federal agency-backed securities, U.S. government-sponsored enterprise (“GSE”) guaranteed mortgage-backed securities (“MBS”), which are guaranteed by Fannie Mae (“FNMA”), Freddie Mac (“FHLMC”), Federal Farm Credit Banks (“FFCB”), or Ginnie Mae (“GNMA”), U.S. Treasury securities, municipal bonds, and corporate bonds, specifically bank debt notes. The Bank has designated all investment securities as AFS or HTM. AFS securities are carried at estimated fair value, and debt securities classified as HTM are carried at amortized cost, net of ACL.

We primarily use our investment portfolio for liquidity purposes, capital preservation, and to support our interest rate risk management strategies. Our investment securities portfolio amounted to $3.27 billion at June 30, 2025, a decrease of $125.4 million, or 3.7%, from $3.40 billion at December 31, 2024. The decrease was the result of $453.2 million in principal payments, amortization and accretion, and redemptions, partially offset by $320.3 million in purchases of AFS U.S. Treasury securities, and an improvement of $7.5 million in AFS investment securities mark-to-market unrealized loss. The Company did not sell any investment securities during the six months ended June 30, 2025.

In general, the purchase of investment securities is primarily related to investing excess liquidity from our banking operations. During the six months ended June 30, 2025, we have maintained a meaningful portion of the AFS securities portfolio in highly-liquid, shorter term securities. This strategy enhances our interest rate sensitivity profile to the current rate environment and provides us with the flexibility to quickly redeploy these funds into higher-yielding assets as opportunities arise. The effective duration of the AFS securities portfolio was 0.7 years and 0.9 years at June 30, 2025 and December 31, 2024, respectively. The effective duration of the total AFS and HTM securities portfolio was 4.7 years and 4.7 years at June 30, 2025 and December 31, 2024, respectively.

At June 30, 2025, AFS and HTM investment securities were $1.58 billion and $1.69 billion, respectively, compared to $1.68 billion and $1.71 billion, respectively, at December 31, 2024.

The ACL on investment securities is determined for both the AFS and HTM classifications of the investment portfolio in accordance with ASC 326 and evaluated on a quarterly basis. As of June 30, 2025 and December 31, 2024, the Company had an ACL of $103,000 and $110,000, respectively, for municipal bonds classified as HTM investment securities. The Company had no ACL for AFS investment securities at June 30, 2025 and December 31, 2024. For additional information, refer to Note 4 – Investment Securities to the Notes to the consolidated financial statements in this Quarterly Report on Form 10-Q.

The following table sets forth the fair value of AFS and the amortized cost of HTM investment securities as well as the weighted average yields on our investment securities portfolio by contractual maturity as of the date indicated. Weighted average yields are an arithmetic computation of income within each maturity range based on the amortized costs of securities, not on a tax-equivalent basis.


	June 30, 2025
	One Year or Less				More than One to Five Years				More than Five Years to Ten Years				More than Ten Years				Total
(Dollars in thousands)	Amount		Weighted Average Yield		Amount		Weighted Average Yield		Amount		Weighted Average Yield		Amount		Weighted Average Yield		Amount		Weighted Average Yield
AFS investment securities:
U.S. Treasury	$	772,600	4.43	%	$	322,401	3.95	%	$	—	—	%	$	—	—	%	$	1,095,001	4.29	%
Agency	—		—	%	572		6.46	%	—		—	%	333		2.27	%	905		4.92	%
Corporate	—		—	%	214,328		5.23	%	158,487		3.54	%	—		—	%	372,815		4.49	%

Collateralized mortgage obligations	3,835		4.85	%	62,559		4.78	%	13,750		4.69	%	32,866		6.16	%	113,010		5.18	%

Total AFS investment securities	776,435		4.43	%	599,860		4.50	%	172,237		3.64	%	33,199		6.12	%	1,581,731		4.40	%
HTM investment securities:

Municipal bonds	$	—	—	%	$	38,940	1.44	%	$	43,068	1.81	%	$	1,061,050	2.05	%	$	1,143,058	2.02	%
Collateralized mortgage obligations	—		—	%	22		4.66	%	—		—	%	295,423		4.00	%	295,445		4.00	%
Mortgage-backed securities	—		—	%	3,917		5.10	%	5,064		4.81	%	224,374		2.21	%	233,355		2.32	%
Other	—		—	%	—		—	%	—		—	%	16,116		2.86	%	16,116		2.86	%
Total HTM investment securities	$	—	—	%	$	42,879	1.78	%	$	48,132	2.13	%	$	1,596,963	2.44	%	$	1,687,974	2.42	%
Total securities	$	776,435	4.43	%	$	642,739	4.32	%	$	220,369	3.31	%	$	1,630,162	2.52	%	$	3,269,705	3.38	%

The following table presents the fair value of AFS and the amortized cost of HTM investment securities portfolios by Moody’s credit ratings at June 30, 2025.


(Dollars in thousands)	U.S. Treasury		Agency		Corporate Debt		Municipal Bonds		Collateralized Mortgage Obligations		Mortgage-backed Securities		Other		Total		%
Aaa - Aa3	$	1,095,001	$	905	$	—	$	1,143,058	$	408,455	$	233,355	$	—	$	2,880,774	88.1	%
A1 - A3	—		—		169,357		—		—		—		—		169,357		5.2	%
Baa1 - Baa3	—		—		203,458		—		—		—		16,116		219,574		6.7	%
Total	$	1,095,001	$	905	$	372,815	$	1,143,058	$	408,455	$	233,355	$	16,116	$	3,269,705	100.0	%

All of the municipal bond securities in our portfolio have an underlying rating of investment grade, with the majority insured by the largest bond insurance companies to bring each of these securities to a Moody’s A rating or better. The Company has predominantly purchased general obligation bonds that are risk-weighted at 20% for regulatory capital purposes. The Company reduces its exposure to any single adverse event by holding securities from geographically diversified municipalities. We continue to monitor the quality of our municipal bond portfolio in accordance with current financial conditions.

Loans

Loans held for investment totaled $11.90 billion at June 30, 2025, a decrease of $137.7 million, or 1.1%, from $12.04 billion at December 31, 2024. The decrease was primarily a result of loan maturities and prepayments, partially offset by loan originations and purchases during the first six months of 2025. Since December 31, 2024, investor loans secured by real estate decreased $195.0 million, business loans secured by real estate decreased $110.4 million, commercial loans increased $124.4 million, and retail loans increased $37.6 million. The commercial line average utilization rate decreased moderately from an average rate of 32.3% for the fourth quarter of 2024 to 31.5% for the second quarter of 2025. Since the fourth quarter of 2024 and continuing into the second quarter of 2025, we have taken strategic steps, including pricing adjustments as well as building and deepening relationships with new and existing customers, to positively impact new loan originations and loan retention, particularly in multifamily, C&I, CRE, and construction loans. In addition to organic loan growth, we have purchased $244.5 million in commercial and industrial loans and $43.0 million in single family residential loans during the first six months of 2025.

The total end-of-period weighted average interest rate on loans, excluding fees and discounts, at June 30, 2025 was 4.83%, compared to 4.78% at December 31, 2024. The increase was primarily attributable to higher-yielding new loan fundings and loan purchases, which exceeded the rates of loan prepayments and payoffs.

Loans held for sale primarily represents the guaranteed portion of SBA loans, which the Bank originates for sale. At June 30, 2025, the Bank had $751,000 of loans held for sale, compared to none at December 31, 2024.

The following table sets forth the composition of our loan portfolio in dollar amounts and as a percentage of the portfolio, and gives the weighted average interest rate by loan category at the dates indicated:


	June 30, 2025						December 31, 2024
(Dollars in thousands)	Amount		Percent of Total		Weighted Average Interest Rate		Amount		Percent of Total		Weighted Average Interest Rate
Investor loans secured by real estate
CRE non-owner-occupied	$	2,084,781	17.5	%	4.84	%	$	2,131,112	17.7	%	4.80	%
Multifamily	5,255,040		44.2	%	4.14	%	5,326,009		44.2	%	4.05	%
Construction and land	302,781		2.5	%	8.05	%	379,143		3.1	%	8.17	%
SBA secured by real estate	27,405		0.2	%	8.34	%	28,777		0.2	%	8.73	%
Total investor loans secured by real estate	7,670,007		64.4	%	4.50	%	7,865,041		65.2	%	4.47	%
Business loans secured by real estate
CRE owner-occupied	1,918,031		16.1	%	4.47	%	1,995,144		16.6	%	4.42	%
Franchise real estate secured	227,080		1.9	%	5.15	%	255,694		2.1	%	4.85	%
SBA secured by real estate	39,263		0.4	%	8.06	%	43,978		0.4	%	8.51	%
Total business loans secured by real estate	2,184,374		18.4	%	4.61	%	2,294,816		19.1	%	4.54	%
Commercial loans
Commercial and industrial	1,643,977		13.8	%	6.34	%	1,486,340		12.3	%	6.44	%
Franchise non-real estate secured	180,708		1.5	%	5.23	%	213,357		1.8	%	5.17	%
SBA non-real estate secured	7,472		0.1	%	9.08	%	8,086		0.1	%	9.50	%
Total commercial loans	1,832,157		15.4	%	6.25	%	1,707,783		14.2	%	6.30	%
Retail loans
Single family residential	224,483		1.9	%	6.86	%	186,739		1.6	%	6.87	%
Consumer	1,658		—	%	10.75	%	1,804		—	%	9.44	%
Total retail loans	226,141		1.9	%	6.89	%	188,543		1.6	%	6.90	%
Loans held for investment before basis adjustment (1)	11,912,679		100.1	%	4.83	%	12,056,183		100.1	%	4.78	%
Basis adjustment associated with fair value hedge (2)	(10,600)		(0.1)	%			(16,442)		(0.1)	%
Loans held for investment	11,902,079		100.0	%			12,039,741		100.0	%
Allowance for credit losses for loans held for investment	(170,663)						(178,186)
Loans held for investment, net	$	11,731,416					$	11,861,555

Total unfunded loan commitments	$	1,723,901					$	1,532,623
Loans held for sale, at lower of cost or fair value	$	751					$	2,315

______________________________

We also have a granular and geographically diverse set of lending relationships. In the tables below, we show the segmentation and geographic dispersion of certain loan portfolios as of June 30, 2025 and December 31, 2024.

CRE Non-Owner-Occupied. CRE non-owner-occupied loans totaled $2.08 billion at June 30, 2025 and $2.13 billion at December 31, 2024. We originate loans that are secured by investor owned CRE, such as retail centers, small office locations, light industrial buildings, and mixed-use commercial properties located in our primary market areas. We believe this loan portfolio is a well-balanced portfolio by geography and by property type as presented below:


	June 30, 2025				December 31, 2024
(Dollars in thousands)	Amount		%		Amount		%
By Property Type
Hotel and Motel	$	281,127	14	%	$	273,897	13	%
Industrial	256,295		12	%	265,437		12	%
Office	543,831		26	%	556,351		26	%
Retail	639,569		31	%	658,238		31	%
Other	363,959		17	%	377,189		18	%
Total CRE non-owner-occupied	$	2,084,781	100	%	$	2,131,112	100	%




By Geography(1)
California:
Los Angeles	$	546,519	26	%	$	550,187	26	%
Orange	299,000		14	%	306,388		14	%
Riverside	119,020		6	%	117,482		6	%
San Bernardino	45,012		2	%	48,301		2	%
San Diego	141,484		7	%	146,102		7	%
San Luis Obispo	162,567		8	%	166,996		8	%
Santa Barbara	59,159		3	%	62,915		3	%
Ventura	16,244		1	%	21,224		1	%
Other CA	187,035		9	%	186,529		9	%
Arizona	154,158		7	%	156,464		7	%
Nevada	114,272		6	%	120,493		6	%
Washington	68,587		3	%	70,571		3	%
Other States	171,724		8	%	177,460		8	%
Total CRE non-owner-occupied	$	2,084,781	100	%	$	2,131,112	100	%

______________________________

(1) Based on location of primary real property collateral. All California information is by respective county.

Multifamily. Multifamily loans totaled $5.26 billion at June 30, 2025 and $5.33 billion at December 31, 2024. We originate loans secured by multifamily residential properties (five units and greater) located in our primary market areas. These lending relationships consist of seasoned owners of multifamily properties with extensive operating experience. The loans are stratified by number of units and physical location below:


	June 30, 2025				December 31, 2024
(Dollars in thousands)	Amount		%		Amount		%
By Number of Units
10 or fewer units	$	981,174	19	%	$	1,018,112	19	%
11-25 units	1,530,107		29	%	1,562,806		29	%
26-50 units	1,037,534		20	%	1,033,483		20	%
51-100 units	1,000,344		19	%	1,031,461		19	%
101+ units	705,881		13	%	680,147		13	%
Total Multifamily	$	5,255,040	100	%	$	5,326,009	100	%




By Geography(1)
California:
Los Angeles	$	2,030,633	39	%	$	2,070,683	39	%
Orange	190,314		4	%	191,818		3	%
Riverside	108,561		2	%	104,877		2	%
San Bernardino	140,079		3	%	135,016		2	%
San Diego	338,330		6	%	343,632		6	%
San Luis Obispo	22,727		—	%	23,112		1	%
Santa Barbara	37,717		1	%	38,055		1	%
Ventura	39,501		1	%	39,967		1	%
Other CA	642,406		12	%	657,237		12	%
Arizona	411,806		8	%	419,761		8	%
Nevada	170,958		3	%	149,943		3	%
Washington	619,711		12	%	635,171		12	%
Other States	502,297		9	%	516,737		10	%
Total Multifamily	$	5,255,040	100	%	$	5,326,009	100	%

______________________________

(1) Based on location of primary real property collateral. All California information is by respective county.

CRE Owner-Occupied. CRE owner-occupied loans totaled $1.92 billion at June 30, 2025 and $2.00 billion at December 31, 2024. We originate business loans secured by owner-occupied CRE, such as light industrial buildings, mixed-use commercial properties, and small office locations for professional services located in our primary market areas. These loans are underwritten and analyzed based on each business’s cash flows. We believe this portfolio is well-diversified by industry, with a geography covering California and the Western U.S.:


	June 30, 2025				December 31, 2024
(Dollars in thousands)	Amount		%		Amount		%
By Industry(1)
Accommodation and Food Services	$	96,946	5	%	$	108,194	5	%
Administrative and Support	64,823		3	%	61,419		3	%
Agriculture	88,726		5	%	91,119		4	%
Construction	128,852		7	%	134,580		7	%
Educational Services	152,129		8	%	156,161		8	%
Entertainment	63,676		3	%	68,939		3	%
Financial Services	35,812		2	%	36,936		2	%
Health Care	285,211		15	%	293,535		15	%
Manufacturing	218,345		11	%	216,204		11	%
Other Services	202,897		11	%	222,140		11	%
Professional Services	81,167		4	%	93,082		5	%
Real Estate	91,230		5	%	92,678		5	%
Retail Trade	166,163		9	%	180,564		9	%
Transport and Warehouse	38,210		2	%	39,118		2	%
Wholesale Trade	175,390		9	%	171,372		9	%
Other	28,454		1	%	29,103		1	%
Total CRE owner-occupied	$	1,918,031	100	%	$	1,995,144	100	%




By Geography(2)
California:
Los Angeles	$	605,154	32	%	$	628,759	32	%
Orange	197,436		10	%	190,254		10	%
Riverside	313,197		16	%	325,295		16	%
San Bernardino	170,185		9	%	180,647		9	%
San Diego	117,342		6	%	122,555		6	%
San Luis Obispo	79,862		4	%	82,597		4	%
Santa Barbara	103,394		6	%	107,251		5	%
Ventura	40,418		2	%	42,617		2	%
Other CA	119,055		6	%	127,515		7	%
Arizona	62,220		3	%	57,865		3	%
Nevada	36,949		2	%	46,000		2	%
Washington	17,442		1	%	18,527		1	%
Other States	55,377		3	%	65,262		3	%
Total CRE owner-occupied	$	1,918,031	100	%	$	1,995,144	100	%

______________________________

(1) Distribution by North American Industry Classification System (NAICS).

(2) Based on location of primary real property collateral. All California information is by respective county.

Commercial & Industrial. C&I loans totaled $1.64 billion at June 30, 2025 and $1.49 billion at December 31, 2024. We originate C&I loans secured by various business assets, including inventory, receivables, machinery, and equipment. Loan types include revolving lines of credit, term loans, seasonal loans, and loans secured by liquid collateral such as cash deposits or marketable securities. These loans are underwritten and analyzed based on each business’s cash flows. During the first half of 2025, we also complemented our organic loan origination with strategic loan purchases and participations of $244.5 million in C&I loans. This portfolio includes loans to small and middle market businesses by industry and by geography as shown below:


	June 30, 2025				December 31, 2024
(Dollars in thousands)	Amount		%		Amount		%
By Industry(1)
Accommodation and Food Services	$	106,874	6	%	$	56,791	4	%
Administrative	63,739		4	%	58,184		4	%
Agriculture	26,779		2	%	26,893		2	%
Construction	140,837		9	%	141,109		9	%
Educational Services	26,079		2	%	29,145		2	%
Entertainment	69,486		4	%	62,637		4	%
Financial Services	56,489		3	%	82,553		6	%
Health Care	55,119		3	%	55,665		4	%
Information	11,608		1	%	21,312		1	%
Manufacturing	415,441		25	%	315,118		21	%
Other Services	102,581		6	%	115,523		8	%
Professional Services	81,993		5	%	80,248		5	%
Public Administration	148,606		9	%	156,010		11	%
Real Estate	108,136		7	%	109,742		7	%
Retail Trade	51,541		3	%	37,529		3	%
Transport and Warehouse	74,817		5	%	70,244		5	%
Wholesale Trade	102,493		6	%	62,019		4	%
Other	1,359		—	%	5,618		—	%
Total Commercial and industrial	$	1,643,977	100	%	$	1,486,340	100	%




By Geography(2)
California:
Los Angeles	$	273,589	17	%	$	252,632	17	%
Orange	179,651		11	%	226,331		15	%
Riverside	68,372		4	%	72,770		5	%
San Bernardino	50,672		3	%	51,960		4	%
San Diego	90,203		6	%	95,473		6	%
San Luis Obispo	36,202		2	%	37,517		3	%
Santa Barbara	18,484		1	%	19,671		1	%
Ventura	19,856		1	%	21,005		1	%
Other CA	128,733		8	%	135,608		9	%
Arizona	12,967		1	%	10,630		1	%
Nevada	21,937		1	%	21,989		2	%
Washington	50,161		3	%	48,771		3	%
Other States	693,150		42	%	491,983		33	%
Total Commercial and industrial	$	1,643,977	100	%	$	1,486,340	100	%

______________________________

(1) Distribution by North American Industry Classification System (NAICS)

(2) Based on location of primary real property collateral if available, otherwise borrower address is used. All California information is by respective county.

(3) Other states is primarily comprised of loans purchased and participated outside our primary geographic footprint. As of June 30, 2025, Illinois and Pennsylvania represented $111.2 million, or 7% and $90.3 million, or 5%, of total C&I loans, respectively, and no other state exceeded 4% of total C&I loans. As of December 31, 2024, Pennsylvania represented $79.5 million of total C&I loans and no other state exceeded 4% of total C&I loans.

Delinquent Loans

When a borrower fails to make required payments on a loan and does not cure the delinquency within 30 days, we normally will develop a plan with the borrower to remediate the problem or initiate proceedings to pursue our remedies under the loan documents. For loans secured by real estate, we provide the required notices to the borrower and make any required filings, and commence foreclosure proceedings if necessary. If the loan is not reinstated within the time permitted by law, we may sell the property at a foreclosure sale. At these foreclosure sales, we generally acquire title to the property. At June 30, 2025, loans delinquent 30 or more days as a percentage of total loans held for investment was 0.02%, unchanged from 0.02% at December 31, 2024.

The following table sets forth delinquencies in the Company’s loan portfolio as of the dates indicated:


	30 - 59 Days				60 - 89 Days				90 Days or More				Total
(Dollars in thousands)	# of Loans	Loan Balance			# of Loans	Loan Balance			# of Loans	Loan Balance			# of Loans	Loan Balance
At June 30, 2025











Commercial loans
Commercial and industrial	7	$	300		4	$	99		2	$	1,241		13	$	1,640

SBA non-real estate secured	—	—			—	—			1	18			1	18
Total commercial loans	7	300			4	99			3	1,259			14	1,658
Retail loans
Single family residential	2	389			—	—			—	—			2	389

Total retail loans	2	389			—	—			—	—			2	389
Total	9	$	689		4	$	99		3	$	1,259		16	$	2,047
Delinquent loans to loans held for investment		0.01		%		—		%		0.01		%		0.02		%




At December 31, 2024











Commercial loans
Commercial and industrial	5	$	824		3	$	349		2	$	1,241		10	$	2,414

SBA non-real estate secured	2	49			—	—			1	20			3	69
Total commercial loans	7	873			3	349			3	1,261			13	2,483
Retail loans
Single family residential	1	136			—	—			—	—			1	136

Total retail loans	1	136			—	—			—	—			1	136
Total	8	$	1,009		3	$	349		3	$	1,261		14	$	2,619
Delinquent loans to loans held for investment		0.01		%		—		%		0.01		%		0.02		%

Modified Loans to Troubled Borrowers

A modified loan to troubled borrowers (“MLTB”) arises from a modification made to a loan in response to a borrower’s financial difficulty in order to alleviate temporary impairments in the borrower’s financial condition and/or constraints on the borrower’s ability to repay the loan, and to minimize potential losses to the Company. GAAP requires that certain types of modifications be reported, which consist of the following:

•Principal forgiveness

•Interest rate reduction

•Other-than-insignificant payment delay

•Term extension

•Any combination of the above

See Note 1 - Description of Business and Summary of Significant Accounting Policies of our audited consolidated financial statements included in our 2024 Form 10-K for additional discussion on MLTBs.

As of June 30, 2025, the Company had two MLTB of $9.7 million, the modification of which involved a combination of other-than-insignificant payment delay and a term extension. During the three and six months ended June 30, 2025, there were no MLTBs that had a payment default and had been modified within the 12 months preceding the payment default.

As of June 30, 2024, the Company had three MLTBs totaling $28.0 million. This consisted of two syndicated C&I participation loan modifications to one borrower totaling $11.7 million, the modification of which involved other-than-insignificant payment delays, and a loan to another borrower for $16.3 million, the modification of which involved a combination of other-than-insignificant payment delays and a term extension. During the three and six months ended June 30, 2024, there were no MLTBs that had a payment default and had been modified within the 12 months preceding the payment default.

Credit Quality

We separate our loans by type, and we segregate the loans into various risk grade categories of “Pass,” “Special Mention,” “Substandard,” “Doubtful,” or “Loss.” Classified loans consists of those with a credit risk rating of substandard, doubtful, or loss. For additional information on the Company’s credit quality and credit risk grades, see Note 5 – Loans Held for Investment of the notes to the consolidated financial statements in this Quarterly Report on Form 10-Q.

Classified loans totaled $89.1 million, or 0.75% of loans held for investment, at June 30, 2025, compared to $106.2 million, or 0.88% of loans held for investment, at December 31, 2024. The decrease was primarily driven by the decline in classified CRE and franchise non-real estate loans during the first six months of 2025.

The following tables stratify the loan portfolio by the Company’s internal risk grading as of the dates indicated:


	Credit Risk Grades
(Dollars in thousands)	Pass		Special Mention		Substandard		Doubtful		Total Gross Loans
June 30, 2025
Investor loans secured by real estate
CRE non-owner-occupied	$	2,051,123	$	6,835	$	26,823	$	—	$	2,084,781
Multifamily	5,242,497		12,543		—		—		5,255,040
Construction and land	267,096		35,685		—		—		302,781
SBA secured by real estate	18,580		2,379		6,446		—		27,405
Total investor loans secured by real estate	7,579,296		57,442		33,269		—		7,670,007
Business loans secured by real estate
CRE owner-occupied	1,817,856		67,553		32,622		—		1,918,031
Franchise real estate secured	212,707		12,849		1,524		—		227,080
SBA secured by real estate	35,998		—		3,265		—		39,263
Total business loans secured by real estate	2,066,561		80,402		37,411		—		2,184,374
Commercial loans
Commercial and industrial	1,614,604		13,699		12,789		2,885		1,643,977
Franchise non-real estate secured	178,970		178		1,560		—		180,708
SBA non-real estate secured	6,393		—		1,079		—		7,472
Total commercial loans	1,799,967		13,877		15,428		2,885		1,832,157
Retail loans
Single family residential	224,356		—		127		—		224,483
Consumer loans	1,658		—		—		—		1,658
Total retail loans	226,014		—		127		—		226,141
Loans held for investment before basis adjustment (1)	$	11,671,838	$	151,721	$	86,235	$	2,885	$	11,912,679




December 31, 2024
Investor loans secured by real estate
CRE non-owner-occupied	$	2,093,693	$	4,449	$	32,970	$	—	$	2,131,112
Multifamily	5,298,289		27,720		—		—		5,326,009
Construction and land	369,335		9,808		—		—		379,143
SBA secured by real estate	24,048		—		4,729		—		28,777
Total investor loans secured by real estate	7,785,365		41,977		37,699		—		7,865,041
Business loans secured by real estate
CRE owner-occupied	1,916,321		38,389		40,434		—		1,995,144
Franchise real estate secured	241,010		14,684		—		—		255,694
SBA secured by real estate	40,861		—		3,117		—		43,978
Total business loans secured by real estate	2,198,192		53,073		43,551		—		2,294,816
Commercial loans
Commercial and industrial	1,455,916		12,838		14,701		2,885		1,486,340
Franchise non-real estate secured	205,437		702		7,218		—		213,357
SBA non-real estate secured	7,891		—		195		—		8,086
Total commercial loans	1,669,244		13,540		22,114		2,885		1,707,783
Retail loans
Single family residential	186,739		—		—		—		186,739
Consumer loans	1,804		—		—		—		1,804
Total retail loans	188,543		—		—		—		188,543
Loans held for investment before basis adjustment (1)	$	11,841,344	$	108,590	$	103,364	$	2,885	$	12,056,183

______________________________

(1) Excludes the basis adjustment of $10.6 million and $16.4 million to the carrying amount of certain loans included in fair value hedging relationships at June 30, 2025 and December 31, 2024. Refer to Note 11 – Derivative Instruments to the Notes to the consolidated financial statements in this Quarterly Report on Form 10-Q for additional information.

Nonperforming Assets

Nonperforming assets consist of loans whereby we have ceased accruing interest (i.e., nonaccrual loans), other real estate owned (“OREO”), and other repossessed assets owned. Nonaccrual loans generally consist of loans that are 90 days or more past due and loans where, in the opinion of management, there is reasonable doubt as to the full collection of principal and interest regardless of the length of past due status.

Nonperforming assets decreased by $2.6 million to $26.3 million, or 0.15% of total assets, at June 30, 2025, compared to $28.9 million, or 0.16% of total assets, at December 31, 2024. The decrease in nonperforming assets from the prior year-end was primarily attributed to $1.2 million repayments on a C&I lending relationship and $619,000 repayments on a CRE lending relationship, and the sale of a single nonperforming loan held for sale of $825,000 included in nonperforming assets at December 31, 2024.

At June 30, 2025, nonperforming loans totaled $26.3 million, or 0.22% of loans held for investment, a decrease from $28.0 million, or 0.23% of loans held for investment, at December 31, 2024.

The Company reported no OREO at June 30, 2025 and December 31, 2024.

The Company had no loans 90 days or more past due and still accruing at June 30, 2025 and December 31, 2024.

The following table sets forth the composition of nonperforming assets at the dates indicated:


(Dollars in thousands)	June 30, 2025			December 31, 2024
Nonperforming assets
Investor loans secured by real estate
CRE non-owner-occupied	$	14,805		$	15,423


SBA secured by real estate	380			409
Total investor loans secured by real estate	15,185			15,832





Commercial loans
Commercial and industrial	10,971			12,179

SBA non-real estate secured	18			20
Total commercial loans	10,989			12,199
Retail loans
Single family residential	127			—

Total retail loans	127			—
Total nonperforming loans held for investment	26,301			28,031
Nonperforming loans held for sale	—			825
Other real estate owned	—			—

Total nonperforming assets	$	26,301		$	28,856

Allowance for credit losses	$	170,663		$	178,186
Allowance for credit losses as a percent of total nonperforming loans	649		%	636		%
Nonperforming loans as a percent of loans held for investment	0.22		%	0.23		%
Nonperforming assets as a percent of total assets	0.15		%	0.16		%
MLTBs included in nonperforming loans	$	9,730		$	13,563

Allowance for Credit Losses

The Company maintains an ACL for loans and unfunded loan commitments in accordance with ASC 326, which requires the Company to record an initial estimate of expected lifetime credit losses for loans and unfunded loan commitments at the time of origination or acquisition. The ACL is maintained at a level deemed appropriate by management to provide for expected credit losses in the portfolio as of the date of the consolidated statements of financial condition. Estimating expected credit losses requires management to use relevant forward-looking information, including the use of reasonable and supportable forecasts. The measurement of the ACL is performed by collectively evaluating loans with similar risk characteristics. Loans that have been deemed by management to no longer possess similar risk characteristics are evaluated individually under a discounted cash flow approach, except those that have been deemed collateral dependent are evaluated individually based on the expected estimated fair value of the underlying collateral.

The Company measures the ACL on commercial real estate and commercial loans using a discounted cash flow approach, using the loan’s effective interest rate, while the ACL for retail loans is based on a historical loss rate model. The discounted cash flow methodology relies on several significant components essential to the development of estimates for future cash flows on loans and unfunded commitments. These components consist of: (i) the estimated probability of default (“PD”), (ii) the estimated loss given default (“LGD”), which represents the estimated severity of the loss when a loan is in default, (iii) estimates for prepayment activity on loans, and (iv) the estimated exposure to the Company at default (“EAD”). In the case of unfunded loan commitments, the Company incorporates estimates for utilization, based on historical loan data. PD and LGD for investor loans secured by real estate loans are derived from a third party, using proxy loan information, and loan and property level attributes. PD for both investor and business real estate loans, as well as commercial loans, is heavily impacted by current and expected economic conditions. Forecasts for PDs and LGDs are made over a two-year period, which we believe is reasonable and supportable, and are based on economic scenarios. Beyond this point, PDs and LGDs revert to their historical long-term averages. The Company has reflected this reversion over a period of three years in the ACL model.

The Company’s ACL includes assumptions concerning current and future economic conditions using reasonable and supportable forecasts from an independent third party. These economic forecast scenarios are based on past events, current conditions, and the likelihood of future events occurring. Management periodically evaluates economic scenarios used in the Company’s ACL model, and thus the scenarios as well as the assumptions within those scenarios, and whether to use a weighted multiple scenario approach, can vary from one period to the next based on changes in current and expected economic conditions, and due to the occurrence of specific events. As of June 30, 2025, the Company’s ACL model used three weighted scenarios representing a base-case scenario, an upside scenario, and a downside scenario. The use of three weighted scenarios at June 30, 2025 is consistent with the approach used in the Company’s ACL model at March 31, 2025. The Company’s ACL model at June 30, 2025 includes assumptions concerning the interest rate environment, general uncertainty concerning future economic conditions, and the potential for future recessionary conditions. The Company has identified certain economic variables that have significant influence in the Company’s model for determining the ACL. These key economic variables include forecasted changes in the U.S. unemployment rate, U.S. real GDP growth, CRE prices, and interest rates.

The Company considers the need for qualitative adjustments to the ACL on a quarterly basis. Qualitative adjustments may be related to and include, but not be limited to, factors such as (i) management’s assessment of economic forecasts used in the model and how those forecasts align with management’s overall evaluation of current and expected economic conditions, (ii) organization-specific risks such as credit concentrations, collateral specific risks, regulatory risks, and external factors that may ultimately impact credit quality, (iii) potential model limitations such as limitations identified through back-testing, and other limitations associated with factors such as underwriting changes, acquisition of new portfolios and changes in portfolio segmentation, and (iv) management’s overall assessment of the adequacy of the ACL, including an assessment of model data inputs used to determine the ACL. Qualitative adjustments at June 30, 2025 served to increase or decrease the level of allocated ACL to these segments of the loan portfolio: investor loans secured by real estate and retail loans.

The following charts quantify the factors attributing to the changes in the ACL on loans held for investment for the three and six months ended June 30, 2025 and June 30, 2024:

ACL change attributions ($ in millions)

For additional information on the provision for credit losses and ACL on loans and ACL for off-balance sheet commitments related to unfunded loans and lines of credit, refer to “Provision for Credit Losses” presented under Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations and Note 6 – Allowance for Credit Losses to the Notes to the consolidated financial statements in this Quarterly Report on Form 10-Q.

At June 30, 2025 and 2024, the Company believes the ACL was adequate to cover current expected credit losses in the loan portfolio. However, no assurance can be given that we will not, in any particular period, sustain credit losses that exceed the amount reserved, or that subsequent evaluation of our loan portfolio, in light of prevailing factors, including economic conditions that may adversely affect our market area or other circumstances, will not require significant increases in the ACL. In addition, regulatory agencies, as an integral part of their examination process, periodically review our ACL and may require us to recognize changes to the ACL based on judgments different from those of management. Should any of the factors considered by management in evaluating the appropriate level of the ACL change, including the size and composition of the loan portfolio, the credit quality of the loan portfolio, as well as forecasts of future economic conditions, the Company’s estimate of current expected credit losses could also significantly change and affect the level of future provisions for credit losses.

The following table sets forth the Company’s ACL, its corresponding percentage of the loan category balance, and the percent of loan balance to total loans held for investment in each of the loan categories listed as of the dates indicated:


	June 30, 2025						December 31, 2024
(Dollars in thousands)	Amount		Allowance as a % of Segment		% of Total Loans		Amount		Allowance as a % of Segment		% of Total Loans
Investor loans secured by real estate
CRE non-owner-occupied	$	27,120	1.30	%	17.5	%	$	26,408	1.24	%	17.7	%
Multifamily	53,978		1.03	%	44.2	%	53,305		1.00	%	44.2	%
Construction and land	3,567		1.18	%	2.5	%	5,230		1.38	%	3.1	%
SBA secured by real estate	1,127		4.11	%	0.2	%	1,722		5.98	%	0.2	%
Total investor loans secured by real estate	85,792		1.12	%	64.4	%	86,665		1.10	%	65.2	%
Business loans secured by real estate
CRE owner-occupied	27,921		1.46	%	16.1	%	31,794		1.59	%	16.6	%
Franchise real estate secured	4,012		1.77	%	1.9	%	5,836		2.28	%	2.1	%
SBA secured by real estate	3,449		8.78	%	0.4	%	3,831		8.71	%	0.4	%
Total business loans secured by real estate	35,382		1.62	%	18.4	%	41,461		1.81	%	19.1	%
Commercial loans
Commercial and industrial	40,099		2.44	%	13.8	%	37,603		2.53	%	12.3	%
Franchise non-real estate secured	6,604		3.65	%	1.5	%	10,794		5.06	%	1.8	%
SBA non-real estate secured	437		5.85	%	0.1	%	359		4.44	%	0.1	%
Total commercial loans	47,140		2.57	%	15.4	%	48,756		2.85	%	14.2	%
Retail loans
Single family residential	2,237		1.00	%	1.9	%	1,193		0.64	%	1.6	%
Consumer loans	112		6.76	%	—	%	111		6.15	%	—	%
Total retail loans	2,349		1.04	%	1.9	%	1,304		0.69	%	1.6	%
Total (1)	$	170,663	1.43	%	100.0	%	$	178,186	1.48	%	100.0	%

______________________________

(1) Total loans utilized in the calculation of the ratio of ACL to total loans held for investment includes $10.6 million and $16.4 million of the basis adjustment of certain loans used in fair value hedging relationships as of June 30, 2025 and December 31, 2024, respectively. Refer to Note 11 – Derivative Instruments to the Notes to the consolidated financial statements in this Quarterly Report on Form 10-Q for additional information.

At June 30, 2025, the ratio of ACL to loans held for investment was 1.43%, a decrease from 1.48% at December 31, 2024. Our unamortized fair value discount on the loans acquired totaled $29.5 million, or 0.25% of total loans held for investment, at June 30, 2025, compared to $33.2 million, or 0.28% of total loans held for investment, at December 31, 2024.

The following table sets forth the Company’s net charge-offs as a percentage to the average loans held for investment balances in each of the loan categories, as well as other credit related percentages at and for the periods indicated:


	At and for Three Months Ended
	June 30, 2025					March 31, 2025					June 30, 2024
(Dollars in thousands)	Net Charge-offs (Recoveries)		Average Loan Balance		Percentage	Net Charge-offs (Recoveries)		Average Loan Balance		Percentage	Net Charge-offs (Recoveries)		Average Loan Balance		Percentage
Investor loans secured by real estate
CRE non-owner-occupied	$	—	$	2,101,391	—%	$	—	$	2,108,856	—%	$	2,696	$	2,280,616	0.12%
Multifamily	—		5,261,357		—%	—		5,296,062		—%	7,372		5,515,912		0.13%
Construction and land	—		298,628		—%	—		379,080		—%	—		461,060		—%
SBA secured by real estate	—		27,462		—%	(30)		29,061		(0.10)%	67		34,110		0.20%
Total investor loans secured by real estate	—		7,688,838		—%	(30)		7,813,059		—%	10,135		8,291,698		0.12%
Business loans secured by real estate
CRE owner-occupied	—		1,922,225		—%	—		1,975,525		—%	(121)		2,117,338		(0.01)%
Franchise real estate secured	—		233,954		—%	—		247,323		—%	—		282,684		—%
SBA secured by real estate	—		40,565		—%	—		44,420		—%	(1)		47,365		—%
Total business loans secured by real estate	—		2,196,744		—%	—		2,267,268		—%	(122)		2,447,387		—%
Commercial loans
Commercial and industrial	(18)		1,626,755		—%	(317)		1,513,333		(0.02)%	820		1,655,962		0.05%
Franchise non-real estate secured	22		184,509		0.01%	—		205,390		—%	(1,375)		278,143		(0.49)%
SBA non-real estate secured	(2)		7,674		(0.03)%	(6)		7,770		(0.08)%	3		11,218		0.03%
Total commercial loans	2		1,818,938		—%	(323)		1,726,493		(0.02)%	(552)		1,945,323		(0.03)%
Retail loans
Single family residential	(9)		229,309		—%	—		188,344		—%	(3)		70,633		—%
Consumer	(342)		1,632		(20.96)%	10		1,848		0.54%	835		2,270		36.78%
Total retail loans	(351)		230,941		(0.15)%	10		190,192		0.01%	832		72,903		1.14%
Total (1)	$	(349)	$	11,923,520	—%	$	(343)	$	11,981,674	—%	$	10,293	$	12,724,401	0.08%

Allowance for credit losses to loans held for investment					1.43%					1.46%					1.47%
Nonperforming loans to loans held for investment					0.22%					0.23%					0.42%
Allowance for credit losses to nonperforming loans					649%					632%					353%

______________________________

(1) Average loan balance includes $11.9 million, $15.3 million, and $32.9 million of average basis adjustment of certain loans included in fair value hedging relationships for the three months ended June 30, 2025, March 31, 2025, and June 30, 2024, respectively. Refer to Note 11 – Derivative Instruments to the Notes to the consolidated financial statements in this Quarterly Report on Form 10-Q for additional information.




	For the Six Months Ended
	June 30, 2025					June 30, 2024
(Dollars in thousands)	Net Charge-offs (Recoveries)		Average Loan Balance		Percentage	Net Charge-offs (Recoveries)		Average Loan Balance		Percentage
Investor loans secured by real estate
CRE non-owner-occupied	$	—	$	2,105,103	—%	$	3,623	$	2,319,085	0.16%
Multifamily	—		5,278,614		—%	7,367		5,562,856		0.13%
Construction and land	—		338,632		—%	—		470,436		—%
SBA secured by real estate	(30)		28,257		(0.11)%	320		35,011		0.91%
Total investor loans secured by real estate	(30)		7,750,606		—%	11,310		8,387,388		0.13%
Business loans secured by real estate
CRE owner-occupied	—		1,948,728		—%	4,268		2,149,899		0.20%
Franchise real estate secured	—		240,602		—%	212		291,756		0.07%
SBA secured by real estate	—		42,481		—%	(2)		48,586		—%
Total business loans secured by real estate	—		2,231,811		—%	4,478		2,490,241		0.18%
Commercial loans
Commercial and industrial	(335)		1,570,357		(0.02)%	1,366		1,712,921		0.08%
Franchise non-real estate secured	22		194,892		0.01%	(1,275)		293,488		(0.43)%
SBA non-real estate secured	(8)		7,722		(0.10)%	1		11,042		0.01%

Total commercial loans	(321)		1,772,971		(0.02)%	92		2,017,451		—%
Retail loans
Single family residential	(9)		208,940		—%	(3)		71,359		—%
Consumer	(332)		1,739		(19.09)%	835		2,189		38.15%
Total retail loans	(341)		210,679		(0.16)%	832		73,548		1.13%
Total (1)	$	(692)	$	11,952,437	(0.01)%	$	16,712	$	12,936,723	0.13%

Allowance for credit losses to loans held for investment					1.43%					1.47%
Nonperforming loans to loans held for investment					0.22%					0.42%
Allowance for credit losses to nonperforming loans					649%					353%

______________________________

(1) Average loan balance includes $13.6 million and $31.9 million of average basis adjustment of certain loans included in fair value hedging relationships for the six months ended June 30, 2025 and June 30, 2024, respectively. Refer to Note 11 – Derivative Instruments to the Notes to the consolidated financial statements in this Quarterly Report on Form 10-Q for additional information.

Deposits

At June 30, 2025, total deposits were $14.50 billion, an increase of $33.7 million, or 0.2%, from $14.46 billion at December 31, 2024. The increase was primarily driven by increases of 197.7 million in money market and savings and $70.8 million in noninterest-bearing checking, partially offset by decreases of $99.7 million in brokered certificates of deposit, $84.1 million in interest-bearing checking, and $51.0 million in retail certificates of deposit.

At June 30, 2025, non-maturity deposits totaled $12.54 billion, or 86.5% of total deposits, an increase of $184.4 million, or 1.5%, from December 31, 2024. The increase was primarily in seasonal deposit growth within our HOA business as well as municipal deposits. Our non-maturity deposits reflect our well-diversified and relationship-focused business model that has resulted in noninterest-bearing checking deposits representing 32.3% of total deposits as of June 30, 2025.

At June 30, 2025, maturity deposits totaled $1.96 billion, a decrease of $150.7 million, or 7.1%, from December 31, 2024. The decrease was primarily driven by decreases of $99.7 million in brokered certificates of deposit and $51.0 million in retail certificates of deposit.

The total end-of-period weighted average rate of deposits at June 30, 2025 was 1.60%, a decrease from 1.72% at December 31, 2024, principally driven by decreases in higher-cost maturity deposits as well as pricing actions across deposit categories. At June 30, 2025, the end-of-period weighted average rate of non-maturity deposits was 1.24%, compared to 1.24% at December 31, 2024.

As of June 30, 2025, the Bank counted one client, a property management holding company, with deposits of $750.3 million, or 5.2% of total deposits, and 10,842 total deposit accounts. No other individual depositor represented more than 1.4% of our total deposits, and our top 50 depositors represented 13.4% of our total deposits.

Our ratio of loans held for investment to deposits was 82.1% and 83.3% at June 30, 2025 and December 31, 2024, respectively.

The following table sets forth the distribution of the Company’s deposit accounts at the dates indicated and the weighted average interest rates as of the last day of each period for each category of deposits presented:


	June 30, 2025						December 31, 2024
(Dollars in thousands)	Balance		% of Total Deposits		Weighted Average Rate		Balance		% of Total Deposits		Weighted Average Rate
Noninterest-bearing checking	$	4,687,795	32.3	%	—	%	$	4,617,013	31.9	%	—	%
Interest-bearing deposits:
Interest-bearing checking	2,814,687		19.4	%	1.46	%	2,898,810		20.0	%	1.58	%
Money market	4,788,067		33.0	%	2.37	%	4,577,646		31.7	%	2.34	%
Savings	247,591		1.7	%	0.33	%	260,283		1.8	%	0.37	%
Total non-maturity deposits	12,538,140		86.4	%	1.24	%	12,353,752		85.4	%	1.24	%
Time deposit accounts:
Less than 1.00%	36,222		0.2	%	0.39	%	29,299		0.2	%	0.39	%
1.00 - 1.99	25,758		0.2	%	1.54	%	17,609		0.1	%	1.86	%
2.00 - 2.99	21,815		0.2	%	2.63	%	14,814		0.1	%	2.67	%
3.00 - 3.99	1,357,418		9.4	%	3.82	%	311,972		2.2	%	3.81	%
4.00 - 4.99	417,636		2.9	%	4.44	%	1,386,196		9.7	%	4.65	%
5.00 and greater	100,384		0.7	%	5.00	%	350,060		2.4	%	5.07	%
Total time deposit accounts	1,959,233		13.6	%	3.91	%	2,109,950		14.7	%	4.50	%

Total deposits	$	14,497,373	100.0	%	1.60	%	$	14,463,702	100.0	%	1.72	%

The following table sets forth the estimated deposits exceeding the FDIC insurance limit:


(Dollars in thousands)	June 30, 2025		December 31, 2024
Uninsured deposits	$	5,991,359	$	5,781,072

The Bank is a member of the IntraFi Network (“IntraFi”), which offers deposit placement services, including both the Certificate of Deposit Account Registry Service (“CDARS”) and Insured Cash Service (“ICS”) programs, that qualify large deposits for FDIC insurance. These reciprocal deposit structures offer protection to depositors by fully insuring deposits with other network banks.

At June 30, 2025, the Company’s FDIC-insured deposits as a percentage of total deposits was 59%. Insured and collateralized deposits comprised 65% of total deposits at June 30, 2025, which includes federally-insured deposits, $863.4 million of collateralized municipal and tribal deposits, and $35.0 million of privately insured deposits. At December 31, 2024, the Company’s FDIC-insured deposits as a percentage of total deposits was 60%. Insured and collateralized deposits comprised 66% of total deposits at December 31, 2024, which includes federally-insured deposits, $765.6 million of collateralized municipal and tribal deposits, and $45.0 million of privately insured deposits.

The estimated aggregate amount of time deposits in excess of the FDIC insurance limit is $431.5 million at June 30, 2025 and $439.8 million at December 31, 2024. The following table sets forth the maturity distribution of the estimated uninsured time deposits:


(Dollars in thousands)	June 30, 2025		December 31, 2024
3 months or less	$	256,475	$	283,029
Over 3 months through 6 months	113,275		92,215
Over 6 months through 12 months	50,101		60,205
Over 12 months	11,634		4,380
Total	$	431,485	$	439,829

Borrowings

At June 30, 2025, total borrowings amounted to $124.0 million, a decrease of $148.4 million from $272.4 million at December 31, 2024. Total borrowings at June 30, 2025 were solely comprised of $124.0 million of subordinated debentures. The decrease in borrowings at June 30, 2025 as compared to December 31, 2024 was due to the early redemption of $150.0 million in subordinated notes due 2030. At June 30, 2025, total borrowings represented 0.7% of total assets and had an end-of-period weighted average rate of 7.14%, compared with 1.5% of total assets and an end-of-period weighted average rate of 6.30% at December 31, 2024.

At June 30, 2025, our subordinated notes were comprised of a principal balance of $125.0 million at 7.088% fixed-to-floating rate due May 15, 2029 (the “Notes II”) with a carrying value of $124.0 million, net of unamortized debt issuance cost of $1.0 million. Interest is payable semiannually at a floating rate equal to three-month term SOFR, plus a spread of 2.762% per annum, payable quarterly in arrears.

For additional information about the subordinated debentures, see Note 8 – Subordinated Debentures to the Notes to the consolidated financial statements in this Quarterly Report on Form 10-Q.

The following table sets forth certain information regarding the Company’s borrowed funds as of and during the periods indicated:


	June 30, 2025					December 31, 2024
(Dollars in thousands)	Balance			Weighted Average Rate		Balance			Weighted Average Rate


Subordinated debentures	$	124,023		7.14	%	$	272,449		6.30	%
Total borrowings	$	124,023		7.14	%	$	272,449		6.30	%

Weighted average cost of borrowings during the quarter	6.48		%			6.62		%
Borrowings as a percent of total assets	0.7		%			1.5		%

As of June 30, 2025, our unused borrowing capacity was $9.15 billion, which consisted of available lines of credit with FHLB and other correspondent banks as well as access through the Federal Reserve Bank's discount window. During the six months ended June 30, 2025, we did not utilize the Federal Reserve Bank's discount window.

The Company maintains additional sources of liquidity at the Corporation level. Our Corporation maintains a $25.0 million line of credit with U.S. Bank and had no outstanding balance against it at June 30, 2025 and December 31, 2024.

CAPITAL RESOURCES AND LIQUIDITY

Liquidity Management

Our primary sources of funds are deposits, advances from the FHLB and other borrowings, principal and interest payments on loans, and income from investments, to meet our financial obligations, which arise primarily from the withdrawal of deposits, extension of credit, and payment of operating expenses. While maturities and scheduled amortization of loans are a predictable source of funds, deposit inflows and outflows as well as loan prepayments are greatly influenced by market interest rates, economic conditions, and competition.

In addition to the interest payments on loans and investments as well as fees collected on the services we provide, our primary sources of funds generated during the first six months of 2025 were from:

•Principal payments on loans held for investment of $625.8 million;

•Proceeds of $462.5 million from the sales, payments, or maturities of securities; and

•Deposit growth of $33.7 million.

We used these funds to:

•Originate loans held for investment of $401.7 million;

•Purchase investment securities of $320.3 million;

•Purchase loans held for investment of $286.9 million;

•Redeem subordinated notes of $150.0 million; and

•Return capital to shareholders through $63.9 million in dividends.

Our most liquid assets are comprised of unrestricted cash, short-term investments, and unpledged AFS investment securities. The levels of these assets are dependent on our operating, lending, and investing activities during any given period. We endeavor to take a prudent, proactive approach to liquidity management, as evidenced by our balance-sheet-oriented initiatives from 2023 to the second quarter of 2025. At June 30, 2025, cash and cash equivalents totaled $791.1 million. If additional liquidity is needed or otherwise desired as part of our liquidity management strategy, we have additional sources of liquidity that can be accessed, including FHLB advances, federal funds lines, the Federal Reserve Board’s lending programs, brokered deposits, as well as loan and investment securities sales. As of June 30, 2025, the Bank had secured borrowing capacity with the FHLB allowing us to borrow up to 35% of the Bank’s total assets equating to a credit line of $6.33 billion, of which $4.81 billion remained available for borrowing based on collateral pledged of $7.09 billion at market value in qualifying loans, and no FHLB borrowings outstanding. We also had a $3.95 billion line with the FRB discount window secured by investment securities and unsecured lines of credit aggregating to $390.0 million with other correspondent banks from which to purchase federal funds. Our unused borrowing capacity was $9.15 billion, and the combined readily available liquidity with cash and cash equivalents of $791.1 million, interest-bearing time deposits with financial institutions of $1.3 million, as well as short-term, unpledged, AFS U.S. Treasury securities of $49.7 million, totaled approximately $9.99 billion, with a coverage ratio of 196.2% to uninsured and uncollateralized deposits.

We believe our level of liquid assets is sufficient to meet current anticipated funding needs. As part of our daily monitoring, we calculate a liquidity ratio by dividing the sum of cash balances plus unpledged AFS securities by total deposits, excluding time deposits maturing one year or more, plus FHLB advances maturing within one year. As of June 30, 2025, our liquidity ratio was 16.3%, which is above the Company’s minimum policy requirement of 10.0%. The Company regularly monitors liquidity, models liquidity stress scenarios to ensure that adequate liquidity is available, and has contingency funding plans in place, which are reviewed and tested on a regular, recurring basis.

A substantial portion of our loans are funded by our deposits. At June 30, 2025, the Company’s loan-to-deposit ratio was 82.1% compared to 83.3% at December 31, 2024. The Bank’s participation in IntraFi’s CDARS and ICS programs provides our depositors with full deposit insurance coverage of excess balances, while the Bank receives reciprocal deposits from other FDIC-insured banks, and helps enhance the Bank’s funding stability by retaining the full amount of the deposits on our balance sheet. To the extent that our deposit growth is not sufficient to satisfy our ongoing commitments to fund maturing and withdrawable deposits, repay maturing borrowings, fund existing and future loans, or make investments, we may access funds through our FHLB borrowing arrangement, FRB discount window, unsecured lines of credit, or other sources.

The Bank maintains liquidity guidelines in the Company’s Liquidity Policy that permits the purchase of brokered deposit funds, in an amount not to exceed 15% of total deposits or 12% of total assets, as a secondary source for funding. At June 30, 2025, we had $200.4 million in brokered deposits, which constituted 1.38% of total deposits and 1.13% of total assets at that date.

The Corporation is a corporate entity separate and apart from the Bank that must provide for its own liquidity. The Corporation’s primary sources of liquidity are dividends from the Bank. There are statutory and regulatory provisions that limit the ability of the Bank to pay dividends to the Corporation. Management believes that such restrictions will not have a material impact on the ability of the Corporation to meet its ongoing cash obligations. During the six months ended June 30, 2025, the Bank paid $190.0 million in dividends to the Corporation.

The Corporation maintains a line of credit of $25.0 million with U.S. Bank that will expire on September 24, 2025. The Corporation anticipates renewing the line of credit upon expiration. This line of credit provides an additional source of liquidity at the Corporation level. At June 30, 2025, the Corporation had no outstanding balances against this line.

During the first quarter of 2025, the Corporation declared a quarterly dividend payment of $0.33 per share. On July 23, 2025, the Company's Board of Directors declared a $0.33 per share dividend, payable on August 15, 2025 to stockholders of record as of August 5, 2025. The Corporation’s Board of Directors periodically reviews whether to declare or pay cash dividends, taking into account, among other things, general business conditions, the Company’s financial results, future prospects, capital requirements, legal and regulatory restrictions, and such other factors as the Corporation’s Board of Directors may deem relevant. Due to the pending Merger, the Company is restricted from paying quarterly cash dividends in excess of the current level.

On January 11, 2021, the Company’s Board of Directors approved a stock repurchase program, which authorized the repurchase of up to 4,725,000 shares of its common stock, representing approximately 5% of the Company’s issued and outstanding shares of common stock and approximately $150 million of common stock as of December 31, 2020 based on the closing price of the Company’s common stock on December 31, 2020. During the six months ended June 30, 2025, the Company did not repurchase any shares of common stock. See Part II, Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds for additional information. The stock repurchase program is currently suspended due to the announced Merger.

Material Cash Requirement

Our material cash requirements may include funding existing loan commitments, funding equity investments and affordable housing partnerships for low-income housing tax credit, withdrawal/maturity of existing deposits, repayment of borrowings, operating lease payments, and expenditures necessary to maintain current operations.

The Company enters into contractual obligations in the normal course of business as a source of funds for its asset growth and to meet required capital needs. The following schedule summarizes maturities and principal payments due on our contractual obligations, excluding accrued interest:


	June 30, 2025
(Dollars in thousands)	Less than 1 year		More than 1 year		Total


Subordinated debentures	$	—	$	124,023	$	124,023
Certificates of deposit	1,928,802		30,431		1,959,233
Operating leases	14,685		41,319		56,004
Affordable housing partnerships commitment	22,196		9,134		31,330
Total contractual cash obligations	$	1,965,683	$	204,907	$	2,170,590

On July 14, 2025, the Company’s Board of Directors approved the early redemption of $125.0 million in subordinated notes due 2029 on August 15, 2025.

We believe that the Company’s liquidity sources will be sufficient to fulfill all the contractual obligations as they become due, including the planned cash deployment of $125.0 million for the aforementioned subordinated notes redemption in August 2025 through the maintenance of adequate liquidity levels.

In the ordinary course of business, we enter into various transactions to meet the financing needs of our customers which, in accordance with GAAP, are not included in our consolidated balance sheets. These transactions include off-balance sheet commitments, including commitments to extend credit and standby letters of credit, and commitments to fund investments that qualify for CRA credit.

The following table presents a summary of the Company’s commitments to extend credit by expiration period:


	June 30, 2025
(Dollars in thousands)	Less than 1 year		More than 1 year		Total
Loan commitments to extend credit	$	894,843	$	781,104	$	1,675,947
Standby letters of credit	47,954		—		47,954
Total	$	942,797	$	781,104	$	1,723,901

Since many commitments to extend credit are expected to expire, the total commitment amounts do not necessarily represent future cash requirements. For further information, see Note 15 - Off-Balance Sheet Arrangements, Commitments, and Contingencies to the Notes to the audited consolidated financial statements in the Company’s 2024 Form 10-K.

Regulatory Capital Compliance

The Corporation and the Bank are subject to various regulatory capital requirements administered by federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Corporation’s and the Bank’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Corporation and the Bank must meet specific capital guidelines that involve quantitative measures of the Corporation’s and the Bank’s assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The Corporation’s and the Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain capital in order to meet certain capital ratios to be considered adequately capitalized or well capitalized under the regulatory framework for prompt corrective action. As of the most recent formal notification from the Federal Reserve, the Bank was categorized as “well capitalized.” There are no conditions or events since that notification that management believes have changed the Bank’s categorization.

Final comprehensive regulatory capital rules for U.S. banking organizations pursuant to the capital framework of the Basel Committee on Banking Supervision, generally referred to as “Basel III,” implemented a requirement for all banking organizations to maintain a capital conservation buffer of 2.5% above the minimum risk-based capital requirements, which fully phased in by January 1, 2019. The capital conservation buffer is exclusively comprised of common equity Tier 1 capital, and it applies to each of the three risk-based capital ratios but not to the leverage ratio. At June 30, 2025, the Company and Bank are in compliance with the capital conservation buffer requirement and exceeded the minimum common equity Tier 1, Tier 1, and total capital ratio, inclusive of the fully phased-in capital conservation buffer, of 7.00%, 8.50%, and 10.50%, respectively, and the Bank qualified as “well capitalized” for purposes of the federal bank regulatory prompt corrective action regulations.

The Company implemented the current expected credit losses (“CECL”) model commencing January 1, 2020 and elected to phase in the full effect of CECL on regulatory capital over the five-year transition period. Effective January 1, 2025, this cumulative difference of CECL at the end of the second year of the transition period was fully phased into regulatory capital.

For regulatory capital purposes, the Corporation’s subordinated debt is included in Tier 2 capital, the eligible amount of which is phased out by 20% of the original amount at the beginning of each of the last five years before maturity. See Note 8 – Subordinated Debentures to the Notes to the consolidated financial statements in this Quarterly Report on Form 10-Q for additional information.

As defined in applicable regulations and set forth in the table below, the Corporation and the Bank continue to exceed the regulatory capital minimum requirements, and the Bank continues to exceed the “well capitalized” standards and the required conservation buffer at the dates indicated:


	Actual	Minimum Required for Capital Adequacy Purposes Inclusive of Capital Conservation Buffer	Minimum Required For Well Capitalized Requirement
June 30, 2025
Pacific Premier Bancorp, Inc. Consolidated
Tier 1 leverage ratio	12.40%	4.00%	N/A
Common equity tier 1 capital ratio	17.00%	7.00%	N/A
Tier 1 capital ratio	17.00%	8.50%	N/A
Total capital ratio	18.85%	10.50%	N/A

Pacific Premier Bank
Tier 1 leverage ratio	12.84%	4.00%	5.00%
Common equity tier 1 capital ratio	17.60%	7.00%	6.50%
Tier 1 capital ratio	17.60%	8.50%	8.00%
Total capital ratio	18.85%	10.50%	10.00%


December 31, 2024
Pacific Premier Bancorp, Inc. Consolidated
Tier 1 leverage ratio	12.31%	4.00%	N/A
Common equity tier 1 capital ratio	17.05%	7.00%	N/A
Tier 1 capital ratio	17.05%	8.50%	N/A
Total capital ratio	20.28%	10.50%	N/A

Pacific Premier Bank
Tier 1 leverage ratio	13.41%	4.00%	5.00%
Common equity tier 1 capital ratio	18.57%	7.00%	6.50%
Tier 1 capital ratio	18.57%	8.50%	8.00%
Total capital ratio	19.82%	10.50%	10.00%

Item 3. Quantitative and Qualitative Disclosure about Market Risk

Asset/Liability Management and Market Risk

Market risk is the risk of loss in value or reduced earnings from adverse changes in market prices and interest rates. The Bank’s market risk arises primarily from interest rate risk in our lending, investments, and deposit taking activities. Interest rate risk primarily occurs to the degree that the Bank’s interest-bearing liabilities reprice or mature on a different basis and frequency than its interest-earning assets. The Bank actively monitors and manages its portfolios to limit the adverse effects on net interest income and economic value due to changes in interest rates. The Asset Liability Committee is responsible for implementing the Bank’s interest rate risk management policy established by the Board of Directors that sets forth limits of acceptable changes in net interest income (“NII”) and economic value of equity (“EVE”) due to specified changes in interest rates. Management monitors asset and liability maturities and repricing characteristics on a regular basis and evaluates its interest rate risk as it relates to operational strategies.

Interest Rate Risk Management

The principal objective of the Company’s interest rate risk management function is to maintain an interest rate risk profile close to the desired risk profile in light of the interest rate outlook. The Bank measures the interest rate risk included in the major balance sheet portfolios and compares the current risk profile to the desired risk profile and to policy limits set by the Board of Directors. Management then implements strategies consistent with the desired risk profile. Asset duration is compared to liability, with the desired mix of fixed and floating rate determined based upon the Company’s risk profile and outlook. Likewise, the Bank seeks to raise non-maturity deposits. Management often implements these strategies through pricing actions. Finally, management structures its security portfolio and borrowings to offset some of the interest rate sensitivity created by the repricing characteristics of customer loans and deposits.

Management monitors asset and liability maturities and repricing characteristics on a regular basis and evaluates its interest rate risk as it relates to operational strategies. Management analyzes potential strategies for their impact on the interest rate risk profile. Each quarter the Board of Directors reviews the Bank’s asset/liability position, including simulations showing the impact on the Bank’s EVE in various interest rate scenarios. Interest rate moves, up or down, may subject the Bank to interest rate spread compression, which adversely impacts its net interest income. This is primarily due to the lag in repricing of the indices, to which adjustable rate loans and mortgage-backed securities are tied, as well as their repricing frequencies. Furthermore, large rate moves show the impact of interest rate caps and floors on adjustable rate transactions. This is partly offset by lags in repricing for deposit products. The extent of the interest rate spread compression depends on the direction and severity of interest rate moves and features in the Bank’s product portfolios.

The Company’s interest rate sensitivity is monitored by management through the use of both a simulation model that quantifies the estimated impact to earnings (“Earnings at Risk”) for a twelve- and twenty-four-month period, and a model that estimates the change in the Company’s EVE under alternative interest rate scenarios, primarily instantaneous parallel interest rate shifts in 100 basis point increments. The simulation model estimates the impact on NII from changing interest rates on interest-earning assets and interest expense paid on interest- bearing liabilities. The EVE model computes the net present value of equity by discounting all expected cash flows on assets and liabilities under each rate scenario. For each scenario, the EVE is the present value of all assets less the present value of all liabilities. The EVE ratio is defined as the EVE divided by the market value of assets within the same scenario.

The following table shows the projected NII and net interest margin of the Company at June 30, 2025 and December 31, 2024, assuming instantaneous parallel interest rate shifts in the first month of the following quarter:




(Dollars in thousands)	Earnings at Risk			Projected Net Interest Margin
Change in Rates (Basis Points)	$ Amount	$ Change	% Change	Rate %
June 30, 2025
+300	550,264	9,341	1.7	3.42
+200	550,203	9,280	1.7	3.42
+100	546,337	5,414	1.0	3.40
Static	540,923	—	—	3.37
-100	534,182	(6,741)	(1.2)	3.32
-200	523,641	(17,282)	(3.2)	3.26
-300	513,017	(27,905)	(5.2)	3.19






December 31, 2024
+300	551,991	9,065	1.7	3.42
+200	552,383	9,457	1.7	3.42
+100	548,931	6,005	1.1	3.40
Static	542,926	—	—	3.36
-100	535,000	(7,926)	(1.5)	3.31
-200	524,599	(18,327)	(3.4)	3.25
-300	514,981	(27,945)	(5.1)	3.19

The following table shows the EVE and projected change in the EVE of the Company at June 30, 2025 and December 31, 2024, assuming instantaneous parallel interest rate shifts in the first month of the following quarter:


(Dollars in thousands)	Economic Value of Equity			EVE as % of market value of portfolio assets
Change in Rates (Basis Points)	$ Amount	$ Change	% Change	EVE Ratio
June 30, 2025
+300	2,640,593	(347,140)	(11.6)	17.89
+200	2,827,916	(159,818)	(5.3)	18.67
+100	2,993,816	6,083	0.2	19.25
Static	2,987,734	—	—	18.72
-100	2,910,241	(77,492)	(2.6)	17.78
-200	2,767,296	(220,438)	(7.4)	16.48
-300	2,559,658	(428,075)	(14.3)	14.87


December 31, 2024
+300	2,737,167	(431,287)	(13.6)	18.52
+200	2,948,727	(219,727)	(6.9)	19.43
+100	3,141,508	(26,946)	(0.9)	20.16
Static	3,168,454	—	—	19.80
-100	3,116,700	(51,754)	(1.6)	18.99
-200	2,987,732	(180,722)	(5.7)	17.76
-300	2,782,136	(386,318)	(12.2)	16.16

Based on the modeling of the impact on earnings and EVE from changes in interest rates, the Company’s sensitivity to changes in interest rates is low for rising rates. With a slightly asset sensitive profile, the Earnings at Risk is expected to increase as rates rise. It is important to note the above tables are forecasts based on several assumptions and that actual results may vary. The forecasts are based on estimates of historical behavior and assumptions by management that may change over time and may turn out to be different. Factors affecting these estimates and assumptions include, but are not limited to (1) competitor behavior, (2) economic conditions both locally and nationally, (3) actions taken by the Federal Reserve Board, (4) customer behavior, and (5) management’s responses to the foregoing. Changes that vary significantly from the assumptions and estimates may have significant effects on the Company’s earnings and EVE.

The Company has minimal direct market risk from foreign exchange and no exposure from commodities.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this Quarterly Report on Form 10-Q, an evaluation was carried out by our management, with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective as of the end of the period covered by this report.

Changes in Internal Controls over Financial Reporting

There have been no changes in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) under the Exchange Act) during the quarter ended June 30, 2025 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings

The Company is involved in legal proceedings occurring in the ordinary course of business. Management believes that none of the legal proceedings occurring in the ordinary course of business, individually or in the aggregate, will have a material adverse impact on the results of operations or financial condition of the Company.

Item 1A. Risk Factors

The section titled Risk Factors in Part I, Item 1A of our 2024 Form 10-K included a discussion of the many risks and uncertainties we face, any one or more of which could have a material adverse effect on our business, results of operations, financial condition (including capital and liquidity), prospects, or the value of or return on an investment in the Company. There are no material changes to our risk factors as previously described under Item 1A of our 2024 Form 10-K and those added to our quarterly report on Form 10-Q for the quarter ended March 31, 2025.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

On January 11, 2021, the Company’s Board of Directors approved a stock repurchase program, which authorized the repurchase of up to 4,725,000 shares of its common stock. The stock repurchase program may be limited or terminated at any time without notice. During the second quarter of 2025, the Company did not repurchase any shares of common stock. The stock repurchase program is currently suspended due to the announced Merger.

The following table provides information with respect to purchases made by or on behalf of us or any “affiliated purchaser” (as defined in Rule 10b-18(a)(3) under the Exchange Act) of our common stock during the second quarter of 2025.


Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
April 1, 2025 to April 30, 2025	—	$	—	—	4,245,056
May 1, 2025 to May 31, 2025	—	—		—	4,245,056
June 1, 2025 to June 30, 2025	—	—		—	4,245,056
Total	—			—

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

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Item 5. Other Information

Rule 10b5-1 Trading Plans

On May 5, 2025, Edward E. Wilcox, President and Chief Operating Officer of the Bank, terminated a trading plan for the sale of securities of the Company’s common stock intended to satisfy the affirmative defense conditions of the Securities Exchange Act Rule 10b5-1(c). Mr. Wilcox’s plan was originally adopted on December 23, 2025 for the sale of up to 29,000 shares of the Company’s common stock in amounts and prices set forth in the plan until the earlier of the date all shares under the plan are sold and December 31, 2025. As of the date of the plan termination, 14,500 shares of the Company’s common stock had been sold under the plan.

During the quarter ended June 30, 2025, other than disclosed above, no officer or director of the Company adopted or terminated any contract, instruction, or written plan for the purchase or sale of securities of the Company’s common stock that is intended to satisfy the affirmative defense conditions of Securities Exchange Act Rule 10b5-1(c) or any non-Rule 10b5-1 trading arrangement as defined in 17 CFR § 229.408(c).

Item 6. Exhibits


Exhibit 2.1						Agreement and Plan of Merger, dated as of April 23, 2025, by and among Columbia Banking System, Inc., Pacific Premier Bancorp, Inc., and Balboa Merger Sub, Inc.(1)
Exhibit 3.1						Second Amended and Restated Certificate of Incorporation of Pacific Premier Bancorp, Inc. (2)
Exhibit 3.2						Amended and Restated Bylaws of Pacific Premier Bancorp, Inc. (2)
Exhibit 4.1						Specimen Stock Certificate of Pacific Premier Bancorp, Inc. (3)
Exhibit 4.2						Long-term borrowing instruments are omitted pursuant to Item 601(b)(4)(iii) of Regulation S-K. The Company undertakes to furnish copies of such instruments to the SEC upon request.
Exhibit 10.1						Pacific Premier Bancorp, Inc. Amended and Restated 2022 Long-Term Incentive Plan (4)
Exhibit 10.2						Change In Control Bonus Agreement, dated as of April 23, 2025, by and between Steven R. Gardner, Pacific Premier Bancorp, Inc. and Pacific Premier Bank (5)
Exhibit 31.1						Certification of Chief Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934, as amended
Exhibit 31.2						Certification of Chief Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934, as amended
Exhibit 32						Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002
Exhibit 101.INS						XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
Exhibit 101.SCH						Inline XBRL Taxonomy Extension Schema Document
Exhibit 101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document
Exhibit 101.DEF						Inline XBRL Taxonomy Extension Definitions Linkbase Document
Exhibit 101.LAB						Inline XBRL Taxonomy Extension Label Linkbase Document
Exhibit 101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase Document
Exhibit 104						The cover page of Pacific Premier Bancorp, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2025, formatted in Inline XBRL (contained in Exhibit 101)

(1) Incorporated by reference from the Registrant’s Form 8-K filed with the SEC on April 25, 2025.
(2) Incorporated by reference from the Registrant’s Form 8-K filed with the SEC on May 15, 2018.
(3) Incorporated by reference from the Registrant’s Form 10-K filed with the SEC on February 28, 2025.
(4) Incorporated by reference from the Registrant’s Form 8-K filed with the SEC on May 20, 2025.
(5) Incorporated by reference from the Registrant’s Form 10-Q filed with the SEC on May 2, 2025.

102

SIGNATURES

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


		PACIFIC PREMIER BANCORP, INC.,

Date:	August 1, 2025	By:	/s/ Steven R. Gardner
			Steven R. Gardner
			Chairman, Chief Executive Officer, and President
			(Principal Executive Officer)

Date:	August 1, 2025	By:	/s/ Ronald J. Nicolas, Jr.
			Ronald J. Nicolas, Jr.
			Senior Executive Vice President and Chief Financial Officer
			(Principal Financial Officer)

103