ALLOWANCE FOR CREDIT LOSSES FOR LOANS

6 Months Ended

Jun. 30, 2025

Allowance for Loan Losses [Abstract]

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 June 30, 2025
Allowance for credit losses
Beginning balance	$	4,951	$	21	$	11,860	$	1,661	$	7	$	18,500	$	540
Charge-offs		(93)		—		—		—		(2)		(95)		—
Recoveries		13		—		68		1		—		82		—
(Reversal of) provision for credit losses		(404)		120		399		99		(1)		213		(10)
Ending balance	$	4,467	$	141	$	12,327	$	1,761	$	4	$	18,700	$	530

Six months ended June 30, 2025
Allowance for credit losses:
Beginning balance	$	4,681	$	72	$	11,365	$	1,780	$	2	$	17,900	$	600
Charge-offs		(193)		—		—		(1)		(5)		(199)		—
Recoveries		15		—		68		1		—		84		—
(Reversal of) provision for credit losses		(36)		69		894		(19)		7		915		(70)
Ending balance	$	4,467	$	141	$	12,327	$	1,761	$	4	$	18,700	$	530

June 30, 2025
Allowance for credit losses:
Loans individually evaluated	$	248	$	—	$	591	$	—	$	—	$	839
Loans collectively evaluated		4,219		141		11,499		1,760		4		17,623
PCD loans		—		—		237		1		—		238

Loans receivable:
Individually evaluated	$	889	$	—	$	16,383	$	929	$	—	$	18,201
Collectively evaluated		181,264		2,589		1,675,116		104,465		611		1,964,045
PCD loans		—		—		17,216		161		—		17,377
Total loans	$	182,153	$	2,589	$	1,708,715	$	105,555	$	611	$	1,999,623


	Commercial		Construction		Commercial								Reserve for
	and industrial		and land		real estate		Residential		Consumer		Total		unfunded commitments
Three months ended June 30, 2024
Allowance for credit losses
Beginning balance	$	4,191	$	312	$	13,432	$	947	$	8	$	18,890	$	215
Charge-offs		(178)		—		—		—		—		(178)		—
Recoveries		2		—		—		99		1		102		—
(Reversal of) provision for credit losses		(28)		(207)		263		159		(1)		186		(15)
Ending balance	$	3,987	$	105	$	13,695	$	1,205	$	8	$	19,000	$	200

Six months ended June 30, 2024
Allowance for loan losses
Beginning balance	$	4,216	$	298	$	16,498	$	979	$	9	$	22,000	$	225
Charge-offs		(356)		—		(3,206)		—		(1)		(3,563)		—
Recoveries		15		—		—		99		1		115		—
Provision for (reversal of) credit losses		112		(193)		403		127		(1)		448		(25)
Ending balance	$	3,987	$	105	$	13,695	$	1,205	$	8	$	19,000	$	200

June 30, 2024
Allowance for credit losses:
Loans individually evaluated	$	1,140	$	—	$	350	$	—	$	—	$	1,490
Loans collectively evaluated		2,847		105		12,935		1,200		8		17,095
PCD loans		—		—		410		5		—		415

Loans receivable:
Individually evaluated	$	1,436	$	366	$	18,782	$	1,291	$	—	$	21,875
Collectively evaluated		153,545		3,087		1,556,047		103,581		602		1,816,862
PCD loans		165		16		24,914		350		—		25,445
Total loans	$	155,146	$	3,469	$	1,599,743	$	105,222	$	602	$	1,864,182

For the three months ended June 30, 2025, the minimal provision for credit losses was primarily driven by loan growth, with minimal charge-offs during the quarter. Net charge-offs were $13,000 for the second quarter of 2025, compared to $76,000 for the same period in 2024.

For the six months ended June 30, 2025, the provision for credit losses and the related change in the allowance for credit losses on loans was mainly driven by loan growth, an increase in the reserve for pooled loans, an increase in the reserve for individually evaluated loans, and the replenishment of the allowance during the period. The increase in the reserve for pooled loans reflected changes in portfolio mix, including growth in higher-risk loan categories, changes in the risk level of one qualitative factor, as well as updated historical loss rates and modest changes in forecasted economic conditions. Net charge-offs totaled $115,000 for the six months ended June 30, 2025, compared to $3.5 million for the six months ended June 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
June 30, 2025
Commercial and industrial	$	—	$	—	$	—	$	—	$	—	$	—	$	889	$	889	$	248
Construction and land		—		—		—		—		—		—		—		—		—
Commercial real estate		2,683		62		—		9,105		4,533		—		—		16,383		591
Residential		—		—		—		—		—		929		—		929		—
Consumer		—		—		—		—		—		—		—		—		—
Total	$	2,683	$	62	$	—	$	9,105	$	4,533	$	929	$	889	$	18,201	$	839

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 June 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	$	628	$	291	$	919	$	—	$	293	$	293
Construction and land		—		—		—		—		—		—
Commercial real estate		9,806		1,770		11,576		6,055		1,792		7,847
Residential		929		47		976		984		119		1,103
Consumer		—		—		—		—		4		4
Total	$	11,363	$	2,108	$	13,471	$	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 June 30, 2025 and December 31, 2024, the Company had $11.7 million and $17.7 million, respectively, of loans enrolled in this loan program. The Company had a loss reserve account of $7.4 million and $10.4 million as of June 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 $5.5 million and $8.9 million during the three and six months ended June 30, 2025 and $1.1 million and $4.5 million during the three and six months ended June 30, 2024, respectively. As of June 30, 2025, the Company had $21.2 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.

BayCom Corp 10-Q