Risk Factors Dashboard

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Because our loan portfolio is more geographically concentrated than those of larger financial institutions, adverse changes in California’s economy, including those tied to immigration policy shifts, may have a greater impact on our earnings and capital. Any deterioration in real estate markets could significantly affect borrowers’ repayment capabilities and collateral values. Real estate values are influenced by a range of factors, including economic conditions, regulatory changes, natural disasters (such as fires, droughts, earthquakes, and flooding), and trade-related issues affecting construction costs and material availability. If we must liquidate a significant amount of collateral during a period of reduced real estate values, our financial condition and profitability could be adversely affected.

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

Our financial condition and results of operations are affected by credit policies of monetary authorities, particularly the FRB. Actions by monetary and fiscal authorities, including the FRB, could lead to inflation, deflation, or other economic phenomena that could adversely affect our financial performance. Higher U.S. tariffs on imported goods could exacerbate inflationary pressures by increasing the cost of goods and materials for businesses and consumers. This may particularly affect small to medium-sized businesses, as they are less able to leverage economies of scale to mitigate cost pressures compared to larger businesses. Consequently, our business customers may experience increased financial strain, reducing their ability to repay loans and adversely impacting our results of operations and financial condition. Furthermore, a prolonged period of inflation could cause wages and other costs to us to increase, which could adversely affect our results of operations and financial condition. Virtually all of our assets and liabilities are monetary in nature, and as a result, interest rates tend to have a more significant impact on our performance than general levels of inflation or deflation. However, interest rates do not necessarily move in the same direction or magnitude as the prices of goods and services, creating additional uncertainty in the economic environment.

Risks Related to our Lending Activities

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

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At June 30, 2026, $565.9 million, or 55% of our loans held for investment, were secured by single-family residential real property. This type of lending is generally sensitive to regional and local economic conditions that may significantly impact the ability of borrowers to meet their loan payment obligations, making loss levels difficult to predict. Jumbo single-family loans which do not conform to secondary market mortgage requirements for our market areas are not immediately saleable in the secondary market and may expose us to increased risk because of their larger balances. Higher market interest rates, recessionary conditions or declines in the volume of single-family real estate sales and/or the sales prices as well as elevated unemployment rates, may result in higher than expected loan delinquencies or problem assets, and a decline in demand for our products and services. These potential negative events may cause us to incur losses, adversely affect our capital and liquidity and damage our financial condition and business operations.

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A few of our legacy residential mortgage loans are secured by properties in which the borrowers have little or no equity because either we originated a first mortgage with an 80% loan-to-value ratio and a concurrent second mortgage for a combined loan-to-value ratio of up to 100% or because of a decline in home values in our market areas. Residential loans with high loan-to-value ratios will be more sensitive to declining property values than those with lower combined loan-to-value ratios and therefore may experience a higher incidence of default and severity of losses.

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Our multi-family and commercial real estate loans involve higher principal amounts than other loans and repayment of these loans may be dependent on factors outside our control or the control of our borrowers.

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We originate multi-family and commercial real estate loans for individuals and businesses for various purposes, which are secured by residential and non-residential properties. At June 30, 2026, we had $462.6 million or 45% of total loans held for investment in multi-family and commercial real estate loans. These loans typically involve higher principal amounts than other types of loans and some of our commercial borrowers have more than one loan outstanding with us. Consequently, an adverse development with respect to one loan or one credit relationship can expose us to a significantly greater risk of loss compared to an adverse development with respect to a single-family residential loan. Repayment on these loans typically is dependent upon income generated, or expected to be generated, by the property securing the loan

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in amounts sufficient to cover operating expenses and debt service, which may be adversely affected by changes in the economy or local market conditions. For example, if the cash flow from the borrower's project is reduced as a result of leases not being obtained or renewed, the borrower's ability to repay the loan may be impaired. Multi-family and commercial real estate loans also expose a lender to greater credit risk than loans secured by single-family residential real estate because the collateral securing these loans typically cannot be sold as easily as single-family residential real estate. In addition, many of our multi-family and commercial real estate loans are not fully amortizing and contain large balloon payments upon maturity, which would require the borrower to either sell or refinance the underlying property to make the balloon payment at maturity, thus increasing the risk of default or non-payment. In addition, many of our multi-family and commercial real estate loans are not fully amortizing and contain large balloon 36 Table of Contentspayments upon maturity, which would require the borrower to either sell or refinance the underlying property to make the balloon payment at maturity, thus increasing the risk of default or non-payment.

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A secondary market for many types of multi-family and commercial real estate loans is not readily liquid, so we have less opportunity to mitigate credit risk by selling part or all of our interest in these loans. As a result of these characteristics, if we foreclose on a multi-family or commercial real estate loan, our holding period for the collateral typically is longer than for a single-family residential mortgage loan because there are fewer potential purchasers of the collateral. Accordingly, charge-offs on multi-family and commercial real estate loans may be larger on a per loan basis than those incurred within the single-family residential loan portfolio.

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We may from time to time purchase loans in bulk or “pools.” We may experience lower yields or losses on loan “pools” because the assumptions we use when purchasing loans in bulk may not prove correct.

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In order to achieve our loan growth objectives and/or improve earnings, we may purchase loans, either individually, through participations, or in bulk. When we determine the purchase price we are willing to pay to purchase loans in bulk, management makes certain assumptions about, among other things, how fast borrowers will prepay their loans, the real estate market, our ability to collect on loans successfully and, if necessary, our ability to dispose of any real estate that may be acquired through foreclosure. We did not purchase any loans in fiscal 2025 and 2024. When we determine the purchase price we are willing to pay to purchase loans in bulk, management makes certain assumptions about, among other things, how fast borrowers will prepay their loans, the real estate market, our ability to collect on loans successfully and, if necessary, our ability to dispose of any real estate that may be acquired through foreclosure. In addition, when we purchase loans, we perform certain due diligence procedures and typically require customary limited indemnities. To the extent that our underlying assumptions prove to be inaccurate or the basis for those assumptions change, the purchase price paid for “pools” of loans may prove to have been excessive, resulting in a lower yield or a loss of some or all of the loan principal. For example, if we purchase pools of loans at a premium and some of the loans are prepaid before we modeled prepayment, we will earn less interest income on the purchase than expected. For example, if we purchase pools of loans at a premium and some of the loans are prepaid before we modeled, we will earn less interest income on the purchase than expected. Our success in growing our loan portfolio through purchases of loan “pools” depends on our ability to price loan “pools” properly and on the general economic conditions within the geographic areas where the underlying properties of the purchased loans are located.

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Acquiring loans through bulk purchases may involve acquiring loans of a type or in geographic areas where management may not have substantial prior experience. We may be exposed to a greater risk of loss to the extent that bulk purchases contain such loans. We did not purchase any loans in fiscal year 2026 and 2025, but we may do so in the future.

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Our allowance for credit losses may not be sufficient to absorb losses in our loan portfolio.

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Our business relies significantly on the creditworthiness of our customers. To account for potential defaults and nonperformance in our loan portfolio, we maintain an ACL on loans using the CECL methodology. This allowance represents management's best estimate of the lifetime expected credit losses in our loan portfolio. The amount of this allowance is determined by management through periodic reviews and consideration of several factors, including, but not limited to:

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The determination of the appropriate ACL involves a significant degree of subjectivity, relying on substantial estimates of both current credit risks and future trends, all of which are subject to potential material changes. Inaccuracies in our estimations could lead to an insufficient ACL, necessitating increases through provisions for credit losses, adversely impacting our recorded net income.

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Included in our single-family residential loan portfolio, which comprised 55% of our total loan portfolio at June 30, 2026, were $14.8 million or 1% of total loans held for investment that were non-traditional single-family loans, which include negative amortization and more than 30-year amortization loans, stated income loans and low FICO score loans, all of which have a higher risk of default and loss than conforming residential mortgage loans. Additionally, significant portfolio growth, new loan products, and refinancing activities may result in portfolios consisting of unseasoned loans that may not perform as anticipated, elevating the risk of an inadequate allowance to absorb losses without additional provisions. A material decrease in the credit quality of our loan portfolio, significant changes in the risk profile of markets, industries, or customer groups, or inadequacy in the ACL could have a materially adverse impact on our business, financial condition, liquidity, capital, and results of operations.

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Our estimate of expected credit losses reflects management's assessment of current and forecasted economic conditions, collateral values, and other factors that may affect borrower repayment and credit performance. Unexpected events, including natural disasters such as wildfires, earthquakes, floods, and other natural disasters or severe weather events, as well as changes in property insurance availability or affordability, particularly in California, could adversely affect our borrowers’ ability to repay their loans, reduce the value of collateral securing our loans, and increase credit losses in ways that differ materially from our estimates. Because substantially all of our real estate collateral is located in California, we are particularly exposed to these risks.

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Bank regulatory agencies also periodically review our ACL and may require an increase in the provision for credit losses or the recognition of further loan charge-offs, based on their judgment about information available to them at the time of their examination.

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If charge-offs in future periods exceed the ACL, we may need additional provisions to increase the ACL. Any increases in the ACL will result in a decrease in net income and, most likely, capital, and may have a material negative effect on our financial condition, results of operations, liquidity and capital.

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

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Non-performing assets, consisting of non-performing loans and real estate acquired through foreclosure, adversely affect our earnings in various ways. We reverse accrued interest on non-performing loans and do not record interest income on foreclosed assets. Additionally, non-performing assets increase our loan administration costs, as well as costs related to the improvement, maintenance and repairs of foreclosed assets. Additionally, non-performing loans increase our loan administration costs, including increased costs related to the improvement, maintenance and repairs of the foreclosed assets. Upon foreclosure or similar proceedings, we record the repossessed asset at the estimated fair value, less costs to sell, which may result in a write-down or loss. A significant increase in the level of non-performing assets from current levels would also increase our risk profile and may impact the capital levels our regulators believe are appropriate in light of the increased risk profile. While we attempt to reduce problem assets through various means such as collection efforts, asset sales, workouts and modifications, a decline in the value of the underlying collateral or in the borrower’s performance or financial condition could adversely affect our business, results of operations and financial condition. In addition, the resolution of non-performing assets often requires a significant time commitment from management, diverting their attention from other aspects of our operations.

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The rising cost and reduced availability of property and casualty insurance in California could adversely affect our borrowers, the value of our collateral, and our results of operations.

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Substantially all of our loans are secured by real property located in California, where the market for property insurance has deteriorated significantly in recent years. Following a series of catastrophic wildfires over several years, a number of major insurers have limited or ceased writing new homeowners insurance policies in the state, declined to renew existing policies, or sought substantial rate increases. As a result, insurance premiums and deductibles have risen significantly, and an increasing number of property owners have been required to rely on the California FAIR Plan, the state's insurer of last resort, which generally provides more limited coverage than standard homeowners insurance policies.

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These developments could adversely affect us in several ways. Higher insurance costs increase the operating expenses of our borrowers and may reduce their ability to service debt, particularly with respect to multi-family and commercial real estate loans for which insurance is a significant operating expense. Borrowers who are unable to obtain or maintain adequate insurance coverage, or who are underinsured, expose us to a greater risk of uncompensated collateral loss in the

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event of a wildfire or other disaster. Reduced insurance availability may also depress real estate values and transaction activity in affected areas, reducing the value of our collateral and demand for our loan products. Although we require borrowers to maintain hazard insurance on properties securing our loans and may obtain lender-placed (force-placed) insurance when borrowers fail to do so, such insurance generally protects only our interest in the collateral, may provide less comprehensive coverage than borrower-obtained insurance, and may not fully protect us against loss. In addition, changes in California insurance regulations or insurer underwriting practices could further limit the availability or affordability of insurance coverage. Any of these developments could have a material adverse effect on our business, financial condition, and results of operations

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Risks Related to Market and Interest Rate Changes

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Fluctuating interest rates can adversely affect our profitability.

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

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

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A sustained increase in market interest rates could adversely affect our earnings. As is the case with many financial institutions, we attempt to increase our proportion of deposits comprising either no or relatively low interest-bearing accounts, which has been challenging over the last couple of years. At June 30, 2026, we had $317.1 million in time deposits that mature within one year, $86.9 million in noninterest-bearing checking accounts and $470.3 million in interest-bearing checking, savings and money market accounts. We would incur a higher cost of funds to retain these deposits in a rising interest rate environment. We would incur a higher cost of funds to retain these deposits in a 38 Table of Contentsrising interest rate environment. Earnings could also be adversely affected if the interest rates received on loans and other investments fall more quickly than the interest rates paid on deposits and borrowings.

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In addition, most of our mortgage loans have adjustable interest rates. As a result, these loans may experience a higher rate of default in a rising interest rate environment. Conversely, a declining interest rate environment also presents risks to our earnings. Decreases in market interest rates could compress our net interest margin if the yields on our loans and investments, many of which bear adjustable rates, reprice downward more quickly than our cost of funds. Declining rates may also accelerate loan prepayments and calls of securities, requiring us to reinvest the resulting cash flows at lower yields, and could intensify price competition for loans, further pressuring asset yields.

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Changes in interest rates also affect the value of our securities portfolio available for sale. Generally, the fair value of fixed-rate securities fluctuates inversely with changes in interest rates. Unrealized gains and losses on securities available for sale are reported as a separate component of stockholders’ equity, net of tax. Decreases in the fair value of securities available for sale resulting from increases in interest rates could have an adverse effect on stockholders’ equity.

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While we employ asset and liability management strategies to mitigate interest rate risk, unexpected, substantial, or prolonged rate changes could materially affect our financial condition and results of operations. Additionally, our interest rate risk models and assumptions may not fully capture the impact of actual rate changes on our balance sheet or projected operating results. For additional information concerning the effect of interest rates on our loan portfolio, see Item 7A, “Quantitative and Qualitative Disclosures about Market Risk” of this Form 10-K.

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

Factors beyond our control may impact the fair value of securities within our portfolio, potentially leading to adverse changes in their value.Factors beyond our control can significantly impact the fair value of securities within our portfolio, potentially leading to adverse changes in their value. These factors include, but are not limited to, actions taken by rating agencies regarding the securities, defaults by the issuer, adverse events affecting either the issuer or the underlying securities, and shifts in market interest rates along with continued instability in the capital markets. These influences could result in credit losses or other

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impairment charges, leading to realized and/or unrealized losses in future periods. Such developments could also lead to declines in other comprehensive income, thereby potentially affecting our business, financial condition, and results of operations in a significant manner. We evaluate individual investment securities quarterly for expected credit losses based on ASC 326, “Financial Instruments – Credit Losses,” since the adoption on July 1, 2023. The process usually requires complex, subjective judgments about the future financial performance and liquidity of the issuer and any collateral underlying the security to assess the probability of receiving all contractual principal and interest payments on the security. Despite our efforts to evaluate these factors, there can be no assurance that the declines in market value will not result in credit losses on these assets. Such credit losses could lead to accounting charges that might materially impact our net income and capital levels.

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Risks Related to Regulatory, Legal and Compliance Matters

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We are subject to an extensive body of accounting rules, standards and reporting requirements. Periodic changes to such rules, standards or reporting requirements may change the treatment and recognition of critical financial line items and affect our profitability. Periodic changes to such rules may change the treatment and recognition of critical financial line items and affect our profitability.

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Our business operations are significantly influenced by the extensive body of accounting regulations in the United States, which are subject to periodic updates and changes. Regulatory bodies, including the FASB and the SEC, periodically issue new guidance or alter existing accounting rules and reporting requirements, which can substantially impact the preparation and reporting of our financial statements. These changes may require us to adopt new accounting standards, leading to potential adjustments in how we report our financial position, performance, and risk exposures. Additionally, such regulatory changes could necessitate retrospective application, which might result in the restatement of prior period financial statements. Additionally, such 39 Table of Contentsregulatory changes could necessitate retrospective application, which might result in the restatement of prior period financial statements.

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One such significant change in fiscal 2024 was the implementation of the CECL model, which we adopted on July 1, 2023. Under the CECL model, financial assets carried at amortized cost, such as loans held for investment and held-to-maturity debt securities, are presented at the net amount expected to be collected. Because CECL requires estimates of lifetime expected credit losses based on historical experience, current conditions, and reasonable and supportable forecasts, changes in economic conditions, borrower performance, collateral values, or other assumptions may require significant changes to our allowance for credit losses and could increase earnings volatility. In addition, future changes in accounting standards or regulatory interpretations could require us to modify our methodologies or financial reporting, which could materially affect our financial condition and results of operations.

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

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The USA Patriot and Bank Secrecy Acts require financial institutions to develop programs to prevent financial institutions from being used for money laundering and terrorist activities. If such activities are detected, financial institutions are obligated to file suspicious activity reports with the U.S. Treasury’s Office of Financial Crimes Enforcement Network. These rules require financial institutions to establish procedures for identifying and verifying the identity of customers seeking to open new financial accounts. Additionally, any actual or alleged failure to comply with these requirements could result in enforcement actions, civil money penalties, restrictions on our operations, reputational harm, or limitations on obtaining regulatory approvals. These outcomes could have a material adverse effect on our business, financial condition, results of operations, and growth prospects. These outcomes could have a material adverse effect on our business, financial condition, results of operations, and growth prospects.

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If our enterprise risk management framework is not effective at mitigating risk and loss, we could suffer unexpected losses and our results of operations could be materially adversely affected.

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Our enterprise risk management framework seeks to achieve an appropriate balance between risk and return, which is critical to optimizing stockholder value. We have established processes and procedures intended to identify, measure, monitor, report, analyze, and control the types of risk to which we are exposed. These risks include, among others, liquidity, credit, market, interest rate, operational, legal and compliance, and reputational risk. Our framework also includes financial or other modeling methodologies that involve management assumptions and judgment. We cannot assure that our risk management and compliance programs, along with other related controls, will effectively mitigate risk under all circumstances or that we will identify all risks to which we are exposed. As with any risk management framework, there

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are inherent limitations to our risk management strategies, including the possibility that risks may exist or develop in the future that we have not appropriately anticipated or identified.. If our risk management framework proves ineffective, we could suffer unexpected losses and our business, financial condition, results of operations, or growth prospects could be materially adversely affected. We may also be subject to potentially adverse regulatory consequences.

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We are subject to litigation and other legal proceedings that could adversely affect our business.

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We are subject to a variety of legal proceedings that have arisen in the ordinary course of the Bank's business. Our involvement in litigation may increase significantly. The expenses of some legal proceedings will adversely affect our results of operations until they are resolved. Further, there can be no assurance that loan workouts and other activities will not expose us to additional legal actions, including lender liability or environmental claims.

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Risks Related to Cybersecurity, Data and Fraud

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

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Our security measures may not be sufficient to mitigate the risk of a cyberattack or other security breach, which could result in financial losses, business disruption, regulatory consequences and reputational damage. Communications and information systems are essential to the conduct of our business, as we use such systems to manage our customer relationships, our general ledger and virtually all other aspects of our business. Our operations rely on the secure processing, storage, and transmission of confidential and other information in our computer systems and networks. Although we take protective measures and endeavor to modify them as circumstances warrant, our computer systems, software, networks and other technologies may be vulnerable to breaches, fraudulent or unauthorized access, denial or degradation of service attacks, misuse, computer viruses, malware or other malicious code, cyberattacks and other security threats. Although we take protective measures and endeavor to modify them as circumstances warrant, the security of our computer systems, software, and networks may be vulnerable to breaches, fraudulent or unauthorized access, denial or degradation of service attacks, misuse, computer viruses, malware or other malicious code and cyber-attacks that could have a security impact. These threats may arise from external attacks or from intentional or unintentional acts by persons who have access to our systems or our customers’ or counterparties’ confidential information, including employees. If one or more of these events occur, they could compromise confidential or personally identifiable information, result in fraudulent transactions or misappropriation of assets, or otherwise cause interruptions or malfunctions in our operations or the operations of our customers or counterparties. We are regularly the target of attempted cyber and other security threats and must continuously monitor and develop our information technology networks and infrastructure to prevent, detect, address and mitigate the risk of unauthorized access, misuse, computer viruses and other events that could have a security impact. The increasing sophistication of cyber criminals, advances in computer capabilities, and vulnerabilities in third-party technologies, including browsers and operating systems, may increase these risks.

Further, our cardholders use their debit and credit cards to make purchases from third parties or through third-party processing services. As such, we are subject to risk from data breaches of such third parties’ information systems or their payment processors. Such a data security breach could compromise our customers’ account information. The payment methods that we offer also subject us to potential fraud and theft by criminals, who are becoming increasingly more sophisticated, seeking to obtain unauthorized access to or exploit weaknesses that may exist in the payment systems. If we fail to comply with applicable rules or requirements for the payment methods we accept, or if payment-related data is compromised due to a breach or misuse of data, we may be liable for losses associated with reimbursing our customers for such fraudulent transactions on customers' card accounts, as well as costs incurred by payment card issuing banks and other third parties, or may be subject to fines and higher transaction fees, or our ability to accept or facilitate certain types of payments may be impaired. We may also incur other costs related to data security breaches, such as replacing cards associated with compromised card accounts or credit monitoring services. In addition, our customers could lose confidence in certain payment types, which may result in a shift to other payment types or potential changes to our payment systems that may result in higher costs.

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We are not aware that we have experienced any material misappropriation, loss or other unauthorized disclosure of confidential or personally identifiable information as a result of a cybersecurity breach or other act; however, some of our customers may have been affected by breaches, which could increase their risk of identity theft, debit card fraud and other fraudulent activity involving their accounts with us. Despite our efforts to protect our systems and information, our security measures may not prevent or detect all security breaches or cyberattacks. A compromise or breach of our security measures could result in losses to us or our customers, loss of business or customers, damage to our reputation, additional expenses,

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disruption to our business, additional regulatory scrutiny or penalties, or civil litigation and financial liability, any of which could have a material adverse effect on our business, financial condition and results of operations.

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Our reliance on third-party service providers and our dependence on information systems could expose us to system failures, interruptions and security breaches that could adversely affect our business. While we have established policies and procedures to prevent or limit the impact of system failures and interruptions, there can be no assurance that such events will not occur or that they will be adequately addressed if they do. While we have established policies and procedures to prevent or limit the impact of systems failures and interruptions, there can be no assurance that such events will not occur or that they will be adequately addressed if they do. We outsource certain aspects of our data processing and other operational functions to certain third-party providers. In addition, we outsource certain aspects of our data processing and other operational functions to certain third-party providers. While we select our third-party vendors carefully, we do not control their actions. If our third-party providers encounter difficulties, including those resulting from breakdowns or other disruptions in communication services provided by a vendor, failure of a vendor to handle current or higher transaction volumes, cyberattacks and security breaches, or if we otherwise have difficulty in communicating with them, our ability to adequately process and account for transactions could be affected, and our ability to deliver products and services to our customers and otherwise conduct business operations could be adversely impacted. If our third-party providers encounter difficulties including those resulting from breakdowns or other disruptions in communication services provided by a vendor, failure of a vendor to handle current or higher transaction volumes, cyber-attacks and security breaches or if we otherwise have difficulty in communicating with them, our ability to adequately process and account for transactions could be affected, and our ability to deliver products and services to our customers and otherwise conduct business operations could be adversely impacted. Threats to information security also exist in the processing of customer information through various other vendors and their personnel. We cannot ensure that such breaches, failures or interruptions will not occur or, if they do occur, that they will be adequately addressed by us or the third parties on which we rely. We may not be insured against all types of losses as a result of third-party failures, and insurance coverage may be inadequate to cover all losses resulting from breaches, system failures or other disruptions. Replacing third-party vendors could also entail significant delays and expense, and we may not be able to negotiate terms that are as favorable to us or obtain services with similar functionality without the need to expend substantial resources, if at all. Any system failure, interruption, security breach or other disruption involving us or a third-party service provider could damage our reputation, result in a loss of customers or business, subject us to additional regulatory scrutiny or legal liability, or otherwise adversely affect our financial condition and results of operations.

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

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We are susceptible to fraudulent activity that may be committed against us or our customers, which may result in financial losses or increased costs to us or our customers, disclosure or misuse of our information or our customers’ information, misappropriation of assets, privacy breaches involving our customers, litigation or damage to our reputation. Such fraudulent activity may take many forms, including check fraud, electronic fraud, wire fraud, phishing, social engineering and other dishonest acts. Fraud and other financial crimes have become increasingly prevalent and sophisticated, particularly as criminals use technology and other methods to target financial institutions and their customers. We have also experienced losses due to apparent fraud and other financial crimes. Such activity could result in additional financial losses, increased operating costs, regulatory scrutiny, litigation, reputational damage or loss of customer confidence, any of which could have a material adverse effect on our business, financial condition and results of operations.

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Our current and future uses of Artificial Intelligence (“AI”) and other emerging technologies may create operational, legal, regulatory, cybersecurity, and reputational risks.

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We use or may use and expect to continue to evaluate and implement, AI and other emerging technologies to enhance certain aspects of our business and may increasingly rely on third-party service providers that incorporate AI into the products and services they provide to us. If AI systems we use, or that are used by our third-party service providers, produce inaccurate, biased, or unreliable results, rely on flawed data, or malfunction, they could adversely affect our operations, customer service, fraud detection, compliance, or other business functions. To the extent AI is used in connection with lending, customer interactions, or other decision-making processes, errors or unintended outcomes could result in inaccurate decisions, discrimination claims, regulatory violations, litigation, or reputational harm.

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The use of AI may also increase our exposure to cybersecurity and data privacy risks. AI systems may be vulnerable to cyberattacks, including attempts to manipulate models or compromise sensitive data, and generally require the collection, processing, and analysis of significant amounts of information, increasing the risk of unauthorized access, disclosure, or misuse of customer or proprietary information. In addition, certain AI models may be difficult to interpret or explain, and regulators are increasingly focused on the governance, oversight, transparency, and accountability of AI systems. The legal and regulatory framework governing AI continues to evolve rapidly at the federal and state levels, including in California, and new or changing laws, regulations, regulatory guidance, or supervisory expectations could increase our compliance costs, restrict our use of AI, or require changes to our business practices.

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Any failure to appropriately develop, implement, oversee, or manage our use of AI or AI-enabled technologies, or those used by our third-party service providers, could result in operational disruptions, cybersecurity incidents, data breaches, legal or regulatory actions, increased compliance costs, reputational harm, loss of customer confidence, or other adverse effects on our business, financial condition, and results of operations.

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Risks Related to Our Business and Industry Generally

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

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Liquidity is essential to our business. We rely on a number of different sources in order to meet our potential liquidity demands. Our primary sources of liquidity are increases in deposit accounts, cash flows from loan payments and our securities portfolio. Borrowings also provide us with a source of funds to meet liquidity demands. An inability to raise funds through deposits, borrowings or other sources could have a substantial negative effect on our liquidity. Our access to funding sources in amounts adequate to finance our activities on terms acceptable to us could be impaired by factors that affect us specifically, or the financial services industry or economy in general. Factors that could detrimentally impact our access to liquidity sources include a decrease in the level of our business activity as a result of a downturn in the California markets in which our loans are concentrated, negative operating results, or adverse regulatory action against us. Our ability to borrow could also be impaired by factors that are not specific to us, such as a disruption in the financial markets or negative views and expectations about the prospects for the financial services industry or deterioration in credit markets. Any decline in available funding in amounts adequate to finance our activities on acceptable terms could adversely impact our ability to originate loans, invest in securities, meet our expenses, or fulfill obligations such as repaying our borrowings or meeting deposit withdrawal demands, any of which could, in turn, have a material adverse effect on our business, financial condition and results of operations. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources” of this Form 10-K.

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

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We rely on numerous external vendors to provide products and services necessary for our day-to-day operations. Accordingly, our operations are exposed to risk that these vendors will not perform in accordance with the contracted arrangements under service level agreements. If a vendor fails to meet its contractual obligations due to changes in its organizational structure, financial condition, support for existing products and services, strategic focus, or any other reason, our operations could be disrupted, potentially causing a material adverse impact on our financial condition and results of operations. Furthermore, we could be adversely affected if a vendor agreement is not renewed or is renewed on terms less favorable to us. Regulatory agencies also require financial institutions to remain accountable for all aspects of vendor performance, including activities delegated to third parties. Additionally, disruptions or failures in the physical infrastructure or operating systems supporting our business and customers, or cyber-attacks or security breaches involving networks, systems, or devices used by our customers to access our products and services, could result in customer attrition, regulatory fines or penalties, reputational damage, reimbursement or compensation costs, and increased compliance expenses. Any of these outcomes could materially and adversely affect our financial condition and results of operations.

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Managing reputational risk is important to attracting and maintaining customers, investors and employees.

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Threats to our reputation can come from many sources, including adverse sentiment about financial institutions generally, unethical practices, employee misconduct, failure to deliver minimum standards of service or quality, compliance deficiencies, and questionable or fraudulent activities of our customers. We have policies and procedures in place to protect our reputation and promote ethical conduct, but these policies and procedures may not be fully effective. Negative publicity regarding our business, employees, or customers, with or without merit, may result in the loss of customers, investors and employees, costly litigation, a decline in revenues and increased governmental regulation.

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

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We are required by federal regulatory authorities to maintain adequate levels of capital to support our operations. Our ability to raise additional capital, if needed, will depend on conditions in the capital markets at that time, which are outside

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of our control, and on our financial condition and performance. Accordingly, we cannot make assurances that we will be able to raise additional capital if needed on terms that are acceptable to us, or at all. If we cannot raise additional capital when needed, our ability to further expand our operations could be materially impaired and our financial condition and liquidity could be materially and adversely affected. In addition, any additional capital we obtain may dilute the interests of existing holders of our common stock. Further, if we are unable to raise additional capital when required by our bank regulators, we may be subject to adverse regulatory action.

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

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

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Natural disasters and climate-related risks in our primary market area may result in material losses because of damage to collateral properties and borrowers' inability to repay loans.

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Since our geographic concentration is in California, we are exposed to natural disasters and severe weather events, including earthquakes, wildfires, mudslides, flooding, droughts and extreme heat. These events may damage real property securing our loans, disrupt the operations of our borrowers and adversely affect regional and local economic activity, our customers and the communities in which we operate. Climate change may contribute to an increase in the frequency or severity of certain weather-related events, including wildfires, droughts, flooding and extreme heat, which could increase the risk of losses associated with these events. A major earthquake, wildfire, mudslide or other natural disaster may disrupt our business operations and could result in material losses. Consistent with general practice among lenders in our market area, we generally do not require earthquake insurance as a condition of making a loan, and properties securing our loans may not be insured against earthquake damage. In addition to possibly sustaining damage to our own properties, we face the risk that some of our borrowers may experience uninsured or underinsured property losses, business interruptions, or sustained job interruptions or losses that may impair their ability to meet their loan obligations. In addition to possibly sustaining damage to our own properties, if there is a major earthquake, fire, mudslide, or other natural disaster, we face the risk that many of our borrowers may experience uninsured property losses, or sustained job interruption and/or loss which may materially impair their ability to meet the terms of their loan obligations.

The risk of uninsured or underinsured losses may be heightened by the reduced availability and increased cost of property insurance in California, as discussed under "The rising cost and reduced availability of property and casualty insurance in California could adversely affect our borrowers, the value of our collateral, and our results of operations." If insurance coverage is unavailable, inadequate, or insufficient to cover losses, the value of collateral securing our loans could be adversely affected and our ability to recover amounts owed to us may be impaired.

In addition, legislative, regulatory and supervisory approaches to climate-related matters continue to evolve at the federal, state and local levels. New or changing laws, regulations, regulatory guidance or supervisory expectations relating to climate-related risks could increase our compliance costs, affect the operations or creditworthiness of our borrowers, require changes to our business practices, or otherwise adversely affect our business, financial condition and results of operations.

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Any breach of representations and warranties made by us to our loan purchasers or credit default on our loan sales may require us to repurchase or substitute such loans we have sold.

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We have previously engaged in bulk loan sales pursuant to agreements that generally require us to repurchase or substitute loans in the event of a breach of a representation or warranty made by us to the loan purchaser. Any misrepresentation during the mortgage loan origination process or, in some cases, upon any fraud or early payment default on such mortgage loans, may require us to repurchase or substitute loans. Any claims asserted against us in the future by one of our loan

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purchasers may result in liabilities or legal expenses that could have a material adverse effect on our results of operations and financial condition. During fiscal year 2026 and 2025, the Bank did not repurchase any loans. During fiscal 2025 and 2024, the Bank did not repurchase any loans. Additionally, the Bank did not have any claims or settlements for previously sold loans during fiscal year 2026 and 2025.

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We may not be able to realize the full value of our deferred tax assets[, and the outcome of tax audits or examinations could adversely affect us].

We recognize deferred tax assets and liabilities based on differences between the financial statement carrying amounts and the tax bases of assets and liabilities. At June 30, 2026, we had gross deferred tax assets of approximately $5.2 million, primarily related to loss reserves and deferred compensation, which were offset by gross deferred tax liabilities of approximately $6.4 million, resulting in a net deferred tax liability of approximately $1.2 million.

We analyze our deferred tax assets to determine whether a valuation allowance is required based on whether it is more likely than not that such assets will be realized through future taxable income. This analysis requires management to make judgments regarding our historical earnings, expected future profitability and the timing of the reversal of temporary differences. Although we determined that a valuation allowance was not necessary at June 30, 2026, if our future taxable income is lower than expected or the timing of the reversal of temporary differences differs from our expectations, we may be required to establish a valuation allowance against some or all of our deferred tax assets, which could adversely affect our financial condition and results of operations.

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We are also subject to tax audits and examinations that could result in additional tax liabilities. Although we believe our tax positions are fully supported, an unfavorable resolution of the examination or any other tax audit or review could result in additional tax liabilities, interest or penalties and could have a material adverse effect on our financial condition, results of operations or cash flows. While we attempt to reduce problem assets through various means such as collection efforts, asset sales, workouts and modifications, a decline in the value of the underlying collateral or in the borrower’s performance or financial condition could adversely affect our business, results of operations and financial condition.

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Regulatory changes to diversity, equity and inclusion (“DEI”) and environmental, social and governance (“ESG”) practices could impact our reputation, compliance costs, and operations.

In January 2025, the federal government issued an executive order titled “Ending Illegal Discrimination and Restoring Merit-Based Opportunity,” rescinding prior directives that promoted DEI initiatives, including Executive Order 11246 applicable to federal contractors.In March 2025, the federal government issued an executive order titled “Ending Illegal Discrimination and Restoring Merit-Based Opportunity,” rescinding prior directives that promoted DEI initiatives, including Executive Order 11246 applicable to federal contractors. This order signals a shift in regulatory priorities, directing agencies to scrutinize DEI practices for consistency with federal nondiscrimination laws. Changes in federal and state laws, regulations and policies relating to DEI and ESG may affect our employment practices, vendor relationships, training programs, disclosures and other business practices.

As a financial services provider, we face ongoing scrutiny from regulators, investors, and the public regarding ESG and DEI commitments. Changes in federal policy may prompt reassessment of our employment practices, vendor policies, training programs, and disclosures. California may impose additional requirements relating to employment practices, diversity, reporting or other DEI- and ESG-related matters, which could increase our compliance obligations. Any required changes to our DEI or ESG practices or disclosures could increase operational complexity, compliance costs and legal exposure. Any required changes to our DEI or ESG strategies, could increase operational complexity and legal exposure.

Failure to adapt effectively to these shifting requirements could lead to reputational harm, regulatory investigations, litigation, or limitations on federal program participation. At the same time, changes to our DEI or ESG practices or policies could affect our relationships with employees, customers, investors and communities. Given the unsettled regulatory landscape, we continuously monitor developments and strive to align our practices with legal obligations and stakeholder expectations. Failure to appropriately respond to changes in applicable laws, regulations or stakeholder expectations could adversely affect our reputation, employee relationships, customer relationships, financial condition or results of operations.

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We rely on dividends from the Bank for substantially all of our revenue at the holding company level.

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We are an entity separate and distinct from our principal subsidiary, the Bank, and derive substantially all of our revenue at the holding company level in the form of dividends from that subsidiary. Accordingly, we are, and will continue to be, dependent upon dividends from the Bank to pay the principal of and interest on our indebtedness, to satisfy our other cash needs, to pay for share buybacks and to pay dividends on our common stock. The Bank's ability to pay dividends is subject to its ability to earn net income and to meet certain regulatory requirements. In the event the Bank is unable to pay dividends to us, we may not be able to pay dividends on our common stock or conduct share buybacks. Also, our right to participate in a distribution of assets upon a subsidiary's liquidation or reorganization is subject to the prior claims of the subsidiary's creditors. In fiscal year 2026 and 2025, the Bank paid cash dividends to its holding company totaling $10.5 million and $9.0 million, respectively. In fiscal 2025 and 2024, the Bank paid cash dividends to its holding company totaling $9.0 million and $7.0 million, respectively.

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Item 1B. Unresolved Staff Comments

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None.

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Item 1C. Cybersecurity

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The Corporation also monitors risks from third parties, such as service providers, through activities including monitoring, information sharing, risk assessments, audits, contractual due diligence, and adherence to third-party security standards. Senior management governs risk management and is informed about and monitors the prevention, detection, mitigation, and response to cybersecurity incidents. This is facilitated through working review committees, on which the ISO and/or CIO serve. These committees receive risk management reports appropriate to their scope of review, covering assessment results, risk ratings, and critical issues. They report significant matters to enterprise-wide risk committees, which oversee the broader scope of risk management for the enterprise. Through these efforts, senior management makes decisions and sets priorities for allocating resources to address risk management issues.

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