XML 23 R13.htm IDEA: XBRL DOCUMENT

ALLOWANCE FOR CREDIT LOSSES FOR LOANS

9 Months Ended

Sep. 30, 2025

ALLOWANCE FOR CREDIT LOSSES FOR LOANS

NOTE 5 – ALLOWANCE FOR CREDIT LOSSES FOR LOANS

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


	Commercial		Construction		Commercial								Reserve for
	and industrial		and land		real estate		Residential		Consumer		Total		unfunded commitments
Three months ended September 30, 2025
Allowance for credit losses
Beginning balance	$	4,467	$	141	$	12,327	$	1,761	$	4	$	18,700	$	530
Charge-offs		—		—		(839)		—		—		(839)		—
Recoveries		6		—		—		—		—		6		—
Provision for (reversal of) credit losses		(35)		134		2,541		291		2		2,933		40
Ending balance	$	4,438	$	275	$	14,029	$	2,052	$	6	$	20,800	$	570

Nine months ended September 30, 2025
Allowance for credit losses:
Beginning balance	$	4,681	$	72	$	11,365	$	1,780	$	2	$	17,900	$	600
Charge-offs		(193)		—		(839)		(1)		(7)		(1,040)		—
Recoveries		21		—		69		1		1		92		—
Provision for (reversal of) credit losses		(71)		203		3,434		272		10		3,848		(30)
Ending balance	$	4,438	$	275	$	14,029	$	2,052	$	6	$	20,800	$	570

September 30, 2025
Allowance for credit losses:
Loans individually evaluated	$	—	$	—	$	868	$	—	$	—	$	868
Loans collectively evaluated		4,438		275		12,940		2,051		6		19,710
PCD loans		—		—		221		1		—		222

Loans receivable:
Individually evaluated	$	—	$	—	$	18,044	$	711	$	—	$	18,755
Collectively evaluated		177,250		5,124		1,708,222		114,470		749		2,005,815
PCD loans		—		—		17,002		111		—		17,113
Total loans	$	177,250	$	5,124	$	1,743,268	$	115,292	$	749	$	2,041,683


	Commercial		Construction		Commercial								Reserve for
	and industrial		and land		real estate		Residential		Consumer		Total		unfunded commitments
Three months ended September 30, 2024
Allowance for credit losses
Beginning balance	$	3,987	$	105	$	13,695	$	1,205	$	8	$	19,000	$	200
Charge-offs		(1,031)		—		(566)		—		(1)		(1,598)		—
Recoveries		53		—		—		—		—		53		—
Provision for (reversal of) credit losses		1,991		13		(1,670)		523		(2)		855		390
Ending balance	$	5,000	$	118	$	11,459	$	1,728	$	5	$	18,310	$	590

Nine months ended September 30, 2024
Allowance for loan losses
Beginning balance	$	4,216	$	298	$	16,498	$	979	$	9	$	22,000	$	225
Charge-offs		(1,387)		—		(3,772)		—		(2)		(5,161)		—
Recoveries		68		—		—		99		1		168		—
Provision for (reversal of) credit losses		2,103		(180)		(1,267)		650		(3)		1,303		365
Ending balance	$	5,000	$	118	$	11,459	$	1,728	$	5	$	18,310	$	590

September 30, 2024
Allowance for credit losses:
Loans individually evaluated	$	44	$	—	$	194	$	205	$	—	$	443
Loans collectively evaluated		4,929		118		10,942		1,519		5		17,513
PCD loans		27		—		323		4		—		354

Loans receivable:
Individually evaluated	$	1,191	$	—	$	15,582	$	1,279	$	—	$	18,052
Collectively evaluated		173,116		2,620		1,592,348		101,507		397		1,869,988
PCD loans		123		11		23,443		304		—		23,881
Total loans	$	174,430	$	2,631	$	1,631,373	$	103,090	$	397	$	1,911,921

For the three months ended September 30, 2025, the provision for credit losses primarily reflected an increase in the reserve for pooled loans and the replenishment of the allowance due to charge-offs. Net charge-offs were $833,000 for the third quarter of 2025, compared to $1.5 million for the same period in 2024.

For the nine months ended September 30, 2025, the provision for credit losses and the related change in the allowance for credit losses on loans were mainly driven by loan growth, an increase in the reserve for pooled loans, replenishment of the allowance during the period and, to a lesser extent, an increase in specific reserves on individually evaluated loans. The increase in the allowance for credit losses on pooled loans primarily reflected higher quantitative reserves resulting from the Company’s annual update to its CECL model methodology. This update incorporated more recent economic data and revised segment-specific peer group comparisons, which together contributed to a higher modeled reserve level. To a lesser extent, the increase also reflected a higher forecasted national unemployment rate, a weaker outlook for national gross domestic product, loan growth during the quarter, and changes in the risk level of one qualitative factor. Net charge-offs totaled $948,000 for the nine months ended September 30, 2025, compared to $5.0 million for the nine months ended September 30, 2024, of which $3.2 million had been specifically reserved for at December 31, 2023.

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


	Retail and				Convalescent								A/R and
	Office		Multifamily		facility		Hotel		Other		SFR 1-4		Equipment		Total		ACL
September 30, 2025
Commercial and industrial	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Construction and land		—		—		—		—		—		—		—		—		—
Commercial real estate		3,707		—		—		12,747		1,590		—		—		18,044		868
Residential		—		—		—		—		—		711		—		711		—
Consumer		—		—		—		—		—		—		—		—		—
Total	$	3,707	$	—	$	—	$	12,747	$	1,590	$	711	$	—	$	18,755	$	868

December 31, 2024
Commercial and industrial	$	—	$	—	$	—	$	—	$	—	$	—	$	954	$	954	$	367
Construction and land		—		—		—		—		—		—		—		—		—
Commercial real estate		466		77		1,200		7,987		5,695		—		—		15,425		25
Residential		—		—		—		—		—		984		—		984		—
Consumer		—		—		—		—		—		—		—		—		—
Total	$	466	$	77	$	1,200	$	7,987	$	5,695	$	984	$	954	$	17,363	$	392

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


	As of September 30, 2025						As of December 31, 2024
	Nonaccrual		Nonaccrual				Nonaccrual		Nonaccrual
	with no allowance		with allowance		Total		with no allowance		with allowance		Total
	for credit losses		for credit losses		nonaccrual		for credit losses		for credit losses		nonaccrual
Commercial and industrial	$	—	$	863	$	863	$	—	$	293	$	293
Construction and land		—		—		—		—		—		—
Commercial real estate		6,406		5,455		11,861		6,055		1,792		7,847
Residential		711		42		753		984		119		1,103
Consumer		—		—		—		—		4		4
Total	$	7,117	$	6,360	$	13,477	$	7,039	$	2,208	$	9,247

As part of its acquisition of Pacific Enterprise Bancorp (“PEB”) in 2022, the Company acquired certain small business loans to borrowers qualified under The California Capital Access Program for Small Business, a state guaranteed loan program sponsored by the California Pollution Control Financing Authority (“CalCAP”). PEB ceased originating loans under this loan program in 2017. Under this loan program, the borrower, CalCAP and the participating lender contributed funds to a loss reserve account held in a demand deposit account at the participating lender. The borrower’s contributions to the loss reserve account are attributed to the participating lender. Losses on qualified loans are charged to this account after approval by CalCAP. Under the program, if a loan defaults, the participating lender has immediate coverage of 100% of the loss. The participating lender must return recoveries from the borrower, less expenses, to the credit loss reserve account. The funds in the loss reserve account are the property of CalCAP; however, in the event that the participating lender leaves the program any excess funds, after all loans have been repaid or unenrolled from the program by the participating lender and provided there are no pending claims for reimbursement, the remaining excess funds are distributed to CalCAP and the participating lender based on their respective contributions to the loss reserve account. Funds contributed by the participating lender to the loss reserve account are treated as a receivable from CalCAP and evaluated for impairment quarterly. As of September 30, 2025 and December 31, 2024, the Company had $10.5 million and $17.7 million, respectively, of loans enrolled in this loan program. The Company had a loss reserve account of $7.0 million and $10.4 million as of September 30, 2025 and December 31, 2024, respectively.

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

the total associated loan balance, the excess is to be remitted to CalCAP. The Company originated loans under this program of $3.3 million and $12.1 million during the three and nine months ended September 30, 2025 and $3.9 million and $8.4 million during the three and nine months ended September 30, 2024, respectively. As of September 30, 2025, the Company had $21.7 million of loans enrolled in this program and a loss reserve account of $4.7 million. As of December 31, 2024, the Company had $17.3 million of loans enrolled in this program and a loss reserve account of $3.8 million.