BCAL

MKT CAP $708.6MP/E 11.9DIV YIELD —FCF YIELD 8.37%REV TTM —NET INCOME $60.2M +92.6%NET CASH $230.3M52W 17.21 – 22.09SEC XBRL · TTM TO Invalid Date

How BCAL rewrote its risk factors

10-K ITEM 1A · FY2024 → FY2025

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Item 1A - Risk Factors.” Employees As of December 31, 2025, we had 288 full-time equivalent employees.
Prior to the Merger during the third quarter of 2024, the Company qualified for treatment under the Small Bank Holding Company Policy Statement and, therefore, was not subject to consolidated capital rules at the bank holding company level.
The following table presents the capital ratios applicable to the Company and the Bank: Minimum Capital Required To be With Capital To be Well- Adequately Conservation Capitalized under Capitalized Buffer PCA Provisions (1) As of December 31, 2025: Total Capital (to Risk-Weighted Assets) 8.0 % 10.5 % 10.0 % Tier 1 Capital (to Risk-Weighted Assets) 6.0 % 8.5 % 8.0 % CET1 Capital (to Risk-Weighted Assets) 4.5 % 7.0 % 6.5 % Tier 1 Capital (to Average Assets) 4.0 % 4.0 % 5.0 % (1) For Bank only.
The holding company declared its first quarterly cash dividend of $0.10 per share on its common stock in December 2025 and repurchased 211,928 shares at a weighted average market price of $15.89 and a total cost of $3.4 million under its share repurchase plan during the year ended December 31, 2025.
During the years ended December 31, 2025 and 2024 there were $60.0 million and zero, respectively, in dividends paid by the Bank to the Company.
For this purpose, federal banking regulations define five capital categories: “well-capitalized,” “adequately capitalized,” “undercapitalized,” “significantly undercapitalized” and “critically undercapitalized.” As of December 31, 2025, the Bank’s capital levels exceeded the minimum levels required to be considered “well-capitalized,” which means it had a common equity Tier 1 capital ratio of 6.5% or higher; a Tier I risk-based capital ratio of 8.0% or higher; a total risk-based capital ratio of 10.0% or higher; and a leverage ratio of 5.0% or higher.
During 2025 and 2024, the Bank paid dividends to the holding company of $60.0 million, and zero, respectively.
As of December 31, 2025, the Bank’s total assets were $4.03 billion and was not subject to this special assessment.
Subsequently, in light of ongoing legal challenges to the 2023 CRA rule, the agencies on July 16, 2025, proposed rescinding the rule and reinstating the prior CRA regulatory framework, which would be substantially equivalent to the regulations in effect before the 2023 rule, subject to certain technical updates.
While the rescission proposal remains subject to notice-and-comment rulemaking, the prior regulatory framework continues to govern CRA evaluations.
These reforms may include amendments to the Dodd-Frank Act, other federal banking laws, and structural changes to the CFPB.
Economic, Market and Investment Risks • We may be adversely affected by the lack of soundness of other financial institutions. • We face risks related to severe weather, natural disasters, acts of terrorism and global conflicts. • We are particularly vulnerable to an economic downturn in California. • We have a significant number of loans secured by real estate, and a downturn in the local real estate market could negatively impact our profitability. • Changes in interest rates may affect net interest income and otherwise negatively impact our consolidated financial condition and consolidated results of operations.
Our allowance for credit losses may not be adequate to cover actual losses. • Regulatory policies regarding commercial real estate loans could limit our ability to leverage our capital and limit our growth. • The appraisals value of the real estate that secures a significant portion of our loan portfolio may not be realizable if we foreclose on such loans. • The small- to medium-sized businesses that we lend to may have fewer resources to weather adverse business developments, which may impair our borrowers’ ability to repay loans. • Our loan portfolio may be subject to increased concentration and volatility risks due to variability, driven by large relationship-based lending commitments. • Our construction and land development loans involve additional risks that could results in higher losses.
Strategic and Competitive Risks • We face risks related to our growth, expansion and any acquisitions we may pursue. • We may experience goodwill impairment. • Our reputation is critical to the success of our business and our failure to maintain our reputation may materially adversely affect our performance. • New lines of business, products, product enhancements or services may subject us to additional risk. • Competition may limit our growth and profitability. • We rely heavily on our executive management team and other key personnel.
Our failure to comply could adversely affect us and our future growth. • We are subject to laws regarding the privacy, information security and protection of personal information and any violation of these laws could damage our reputation or otherwise adversely affect our business. • Our failure to comply with stringent capital requirements could result in regulatory criticism, requirements and restrictions. • We face a risk of noncompliance and enforcement action with the Bank Secrecy Act and other anti-money laundering statutes and regulations.
Technology Risks • Our failure to keep up with the rapid technological changes in the financial services industry could have an adverse effect on our competitive position and profitability. • We face risks related to network failures, cyberattacks and data security breaches, which could subject us to increased operating costs as well as litigation and other liabilities. • The development and use of artificial intelligence may result in reputational harm or liability, or could adversely affect our business.
Risks Related to an Investment in our Common Stock • We may reduce or discontinue the payment of dividends on our common stock. • As an emerging growth company, we may take advantage of reduced regulatory and reporting requirements under the federal securities laws, which may make our common stock less attractive to investors. • We may issue additional equity securities which may adversely affect existing holders of our common stock. • Our common stock is not insured or guaranteed by the FDIC.
Risk Factors ECONOMIC, MARKET AND INVESTMENT RISKS We may be adversely affected by the lack of soundness of other financial institutions The failures of some depository institutions have raised concerns among depositors that their deposits may be at risk.
We face risks related to severe weather, natural disasters, acts of terrorism and global conflicts.
Severe weather, natural disasters, acts of terrorism, global conflicts, or other similar events have in the past, and may in the future have, a negative impact on our business and operations.
Additionally, our business and our customers may be affected by shifts in federal trade policy and judicial interpretations of trade authorities.
Supreme Court ruled that the President does not have authority under the International Emergency Economic Powers Act to impose broad tariffs without explicit congressional authorization, striking down major tariffs previously in place.
This decision may reduce certain costs for import-dependent businesses and ease inflationary pressures in affected sectors, but it also introduces uncertainty regarding future trade policy, potential tariff refund claims and shifting trade relationships.
The ruling, and any subsequent legislative or executive actions in response, could influence costs for manufacturers and resellers, alter demand for U.S. exports, and affect broader economic conditions.
Prolonged uncertainty or volatility in trade policy and economic conditions - whether arising from the Supreme Court’s decision, legislative responses, or other shifts in federal trade authority - could negatively affect consumer spending, business investment and economic growth, which in turn could adversely impact credit quality, loan growth, and demand for banking products and services.
Any such effects could materially and adversely affect our consolidated financial condition and consolidated results of operations.
As of December 31, 2025, our CRE loans for purposes of this guidance represented 469.3% of our total risk-based capital.
As of December 31, 2025, total loans secured by CRE under construction and land development represented 28.0% of our total risk-based capital.
As a result, the OCC could view the Bank as having a high concentration of CRE loans under this guidance.
Our loan portfolio may be subject to increased concentration and volatility risks due to variability, driven by large relationship-based lending commitments.
Our loan portfolio includes a limited number of large, real estate secured relationships and lending commitments that are significant in relation to our overall balance sheet.
These large, well secured relationships may cause the loan portfolio to experience limited period‑to‑period variability, as the origination, repayment capacity, or modification of such loans may result in meaningful fluctuations in loan balances, asset quality metrics, earnings, and capital ratios.
Due to our portfolio characteristics compared to other larger institutions, adverse developments affecting a single large relationship, such as changes in cash flows, liquidity, collateral values, or local economic condition - could have a disproportionate impact on our financial condition and results of operations.
In addition, repayments or paydowns of large commercial lending commitments may result in limited opportunities in redeploying capital efficiently, which could constrain growth and negatively affect profitability if suitable lending opportunities are not available on comparable terms.
Our construction and land development loans involve additional risks that could result in higher losses.
At December 31, 2025, our construction and land development loans totaled $134.3 million, or 4.4% of our loans held for investment portfolio, excluding SBA loans.
Typical for the construction loan segment, these loans involve additional risks because funds are advanced upon the progress of the project, which often exhibits volatile completion value, as among other things, costs may exceed realizable values in declining real estate markets.
During the term of construction loans, often no payment from the borrower is required since the accumulated interest is included in the loan commitment through an interest reserve.
As a result, construction loans often involve the disbursement of substantial funds with repayment dependent, in part, on the success of the ultimate project and the ability of the borrower to sell, operate, or lease the property, rather than the ability of the borrower or guarantor to repay principal and interest.
Properties under construction are often difficult to sell, either by the borrower of the bank upon foreclosure, and typically must be completed in order to be successfully sold, which may increase our loss exposure.

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Item 1A - Risk Factors.” Employees As of December 31, 2024, we had 289 full-time equivalent employees.
We have implemented a Diversity, Equity, and Inclusion (“DEI”) Policy.
A company’s commitment to diversity and inclusion is demonstrated by its leadership, its diversity policies and practices.
We foster a corporate culture that embraces DEI by (i) including DEI considerations in our recruiting, hiring, retention, and promotion practices; (ii) providing periodic progress reports to the Board; (iii) conducting regular training and education opportunities on equal employment opportunity and DEI; and (iv) taking proactive steps to promote a diverse pool of candidates.
Prior to the merger with CALB during the third quarter of 2024, the Company qualified for treatment under the Small Bank Holding Company Policy Statement and, therefore, was not subject to consolidated capital rules at the bank holding company level.
The following table presents the capital ratios applicable to the Company and the Bank: Minimum Capital Required To be With Capital To be Well- Adequately Conservation Capitalized under Capitalized Buffer PCA Provisions (1) As of December 31, 2024: Total Capital (to Risk-Weighted Assets) 8.0 % 10.5 % 10.0 % Tier 1 Capital (to Risk-Weighted Assets) 6.0 % 8.5 % 8.0 % CET1 Capital (to Risk-Weighted Assets) 4.5 % 7.0 % 6.5 % Tier 1 Capital (to Average Assets) 4.0 % 4.0 % 5.0 % 1.
During the year ended December 31, 2024, there were no dividends paid by the Bank to the Company.
The Bank paid dividends to the Company of $2.0 million during the year ended December 31, 2023.
For this purpose, federal banking regulations define five capital categories: “well-capitalized,” “adequately capitalized,” “undercapitalized,” “significantly undercapitalized” and “critically undercapitalized.” As of December 31, 2024, the Bank’s capital levels exceeded the minimum levels required to be considered “well-capitalized,” which means it had a common equity Tier 1 capital ratio of 6.5% or higher; a Tier I risk-based capital ratio of 8.0% or higher; a total risk-based capital ratio of 10.0% or higher; and a leverage ratio of 5.0% or higher.
We will continue to monitor the litigation until resolved.
We have also begun efforts to evaluate the impact of the new rule and to develop a strategy to ensure compliance.
Effect of Environmental Laws and Regulation Compliance with federal, state and local provisions regulating the discharge of materials into the environment, or otherwise relating to the protection of the environment, has not had a material effect upon our capital expenditures, earnings or competitive position.
In the opinion of management, we do not have exposure to material costs associated with compliance with environmental laws and regulations or material expenditures related to environmental hazardous waste mitigation or cleanup.
We believe our primary exposure to environmental risk is through the lending activities of the Bank.
In cases where management believes environmental risk potentially exists at a property that the Bank intends to finance, the Bank mitigates its environmental risk exposure by requiring environmental site assessments at the time of loan origination.
The environmental site assessment provides a detailed review of present and past uses of the subject property and adjacent sites to confirm any potential collateral contamination of commercial real estate parcels and identifies higher than normal potential for environmental impact to the specific real property collateral.
If warranted, the site assessment will recommend a more detailed investigation.
Environmental assessments are also typically required prior to any foreclosure activity involving nonresidential real estate collateral.
These reforms may include amendments to the Dodd-Frank Act, other federal banking laws, and structural changes to the Consumer Financial Protection Bureau (CFPB).
Economic, Market and Investment Risks • We may be adversely affected by the lack of soundness of other financial institutions • We face risk related to severe weather, natural disasters, acts of terrorism and global conflicts. • We are particularly vulnerable to an economic downturn in California. • We have a significant number of loans secured by real estate, and a downturn in the local real estate market could negatively impact our profitability. • Changes in interest rates may affect net interest income and otherwise negatively impact our consolidated financial condition and consolidated results of operations.
Our allowance for credit losses may not be adequate to cover actual losses. • Regulatory policies regarding commercial real estate loans could limit our ability to leverage our capital and limit our growth. • We may suffer losses in our loan portfolio despite our underwriting practices. • The small- to medium-sized businesses that we lend to may have fewer resources to weather adverse business developments, which may impair our borrowers’ ability to repay loans. • In addition to general lending risks, we face particular risks related to our SBA, real estate, commercial real estate, construction, commercial and consumer lending. • We have a significant number of loans secured by real estate, so we face risks related to a downturn in the real estate market and the impact of changes in interest rates on our real estate loans. • We rely upon independent appraisals to determine the value of the real estate that secures a significant portion of our loans, and the values indicated by such appraisals may not be realizable if we are forced to foreclose upon such loans.
Strategic and Competitive Risks • We face risks related to our growth, expansion and any acquisitions we may pursue. • The anticipated benefits and cost savings of the Merger may not be realized. • We may experience goodwill impairment. • Our reputation is critical to the success of our business and our failure to maintain our reputation may materially adversely affect our performance. • New lines of business, products, product enhancements or services may subject us to additional risk. • Competition may limit our growth and profitability.
Our failure to so comply could adversely affect us and our future growth. • We are subject to laws regarding the privacy, information security and protection of personal information and any violation of these laws could damage our reputation or otherwise adversely affect our business. • Our failure to comply with stringent capital requirements could result in regulatory criticism, requirements and restrictions. • We face a risk of noncompliance and enforcement action with the Bank Secrecy Act and other anti-money laundering statutes and regulations.
Technology Risks • Our failure to keep up with the rapid technological changes in the financial services industry could have an adverse effect on our competitive position and profitability. • We face risks related to network failures, cyberattacks and data security breaches, which could subject us to increased operating costs as well as litigation and other liabilities. • Our use of artificial intelligence may result in reputational harm or liability, or could adversely affect our business.
Risks Related to an Investment in our Common Stock • Our common stock currently has a limited trading market and is thinly traded, and a more liquid market for our common stock may not develop. • As an emerging growth company and a smaller reporting company, we may take advantage of reduced regulatory and reporting requirements under the federal securities laws, which may make our common stock less attractive to investors. • We may issue additional equity securities which may adversely affect existing holders of our common stock. • Our common stock is not insured or guaranteed by the FDIC.
Risk Factors ECONOMIC, MARKET AND INVESTMENT RISKS We may be adversely affected by the lack of soundness of other financial institutions The recent failures of some depository institutions have raised concerns among depositors that their deposits may be at risk.
We face risks related to severe weather, natural disasters, global climate change, acts of terrorism and global conflicts.
Pandemics, natural disasters, global climate change, acts of terrorism, global conflicts including the Russia-Ukraine War, the Israel-Hamas War, or other similar events have in the past, and may in the future have, a negative impact on our business and operations.
The trade policies and potential tariff initiatives being pursued by the U.S. government under the administration of President Trump may present risks to our borrowers and the markets within which we operate, particularly with respect to the threatened imposition of additional tariffs on certain products imported from countries such as Mexico, Canada, China, which are significant international trading partners for the California economy.
The imposition of tariffs on imports, the potential for retaliatory tariffs by foreign governments, or other similar restrictions on international trade could increase costs for manufacturers and resellers, reduce demand for U.S. exports and disrupt supply chains.
Prolonged trade tensions or the implementation of tariffs could negatively impact the broader economic environment, potentially leading to reduced consumer spending, lower economic growth, and decreased demand for other banking products and services.
As a result, our financial performance, including credit quality and loan growth, could be adversely affected by these policy changes.
The primary component of our business involves making loans to our clients.
Effective January 1, 2023, we adopted the Financial Accounting Standards Board, or FASB, Accounting Standards Update 2016-13, “Financial Instruments-Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments,” commonly referred to as the “Current Expected Credit Losses” standard, or “CECL.” CECL changes the ACL methodology from an incurred loss concept to an expected loss concept, which is more dependent on future economic forecasts, assumptions and models than previous accounting standards and could result in increases in, and add volatility to, our ACL and future provisions for credit losses.
These forecasts, assumptions, and models are inherently uncertain and are based upon management’s reasonable judgment in light of information currently available.
Our ACL may not be adequate to absorb actual credit losses, and future provisions for credit losses could materially and adversely affect our operating results.
We adopted the provisions of ASC 326 through the application of the modified retrospective transition approach, and recorded a net decrease of approximately $3.9 million to the beginning balance of retained earnings as of January 1, 2023 for the cumulative effect adjustment, reflecting an initial adjustment to the allowance for credit losses (“ACL”) of $5.5 million, net of related deferred tax assets arising from temporary differences of $1.6 million, commonly referred to as the “Day 1” adjustment.
The Day 1 adjustment to the ACL is reflective of expected lifetime credit losses associated with the composition of financial assets within the scope of ASC 326 as of January 1, 2023, which is comprised of loans held for investment and off-balance sheet credit exposures at January 1, 2023, as well as management’s current expectation of future economic conditions.
As of December 31, 2024, our CRE loans for purposes of this guidance represented 459.0% of our total risk-based capital.
As of December 31, 2024, total loans secured by CRE under construction and land development represented 45.5% of our total risk-based capital.

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Sentence-level comparison of Item 1A in the two most recent 10-Ks (FY2024 ↗, FY2025 ↗). A reworded sentence counts as one dropped and one added, so heavy edits read as low “kept”. Headings and page furniture are stripped; nothing is summarised by a model.

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