As filed with the Securities and Exchange Commission on August 4, 2025.

Registration Statement No. 333-288743

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Amendment No.1

FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

AVIDBANK HOLDINGS, INC.
(Exact name of registrant as specified in its charter)

California

6022

26-1731009

(State or other jurisdiction of

incorporation or organization)

(Primary Standard Industrial

Classification Code Number)

(I.R.S. Employer
Identification Number)

1732 North First Street

6^th Floor

San Jose, CA 95112

(408) 200-7390

(Address, including zip code and telephone number, including area code, of registrant’s principal executive offices)

Mark D. Mordell

Chairman and Chief Executive Officer

Avidbank Holdings, Inc.

1732 North First Street

6^th Floor

San Jose, CA 95112

(408) 200-7390

(Name, address, including zip code and telephone number, including area code, of agent for service)

Craig D. Miller

Veronica Lah

Manatt, Phelps & Phillips, LLP

One Embarcadero Center, 30^th Floor

San Francisco, California 94111

(415) 291-7400

Shane Tintle

Hillary A. Coleman

Davis Polk & Wardwell LLP

450 Lexington Avenue

New York, New York 10017

(212) 450-4000

Approximate date of commencement of proposed sale to the public: As soon as practicable after this registration statement becomes effective.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. ☐

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

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

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

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The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities or accept your offer to buy any of them until the registration statement filed with the Securities and Exchange Commission is declared effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED August 4, 2025

Preliminary Prospectus

2,610,000 Shares

Common Stock

This prospectus relates to the initial public offering of shares of common stock of Avidbank Holdings, Inc., a California corporation and the bank holding company for Avidbank, our principal subsidiary and a California state-chartered bank headquartered in San Jose, California.

We are offering 2,610,000 shares of our common stock, no par value per share. Prior to this offering, shares of our common stock were quoted on the Pink Open Market operated by the OTC Markets Group, Inc., or the Pink Market, under the symbol “AVBH.” On August 1, 2025, the last reported sales price for shares of our common stock as reported on the Pink Market was $21.49 per share. We have applied to list our common stock on the Nasdaq Global Select Market under the symbol “AVBH.” We believe that upon the completion of this offering, we will meet the standards for listing on the Nasdaq Global Select Market, and the completion of this offering is contingent upon such listing.

We anticipate that the public offering price of our common stock will be between $22.00 and $24.00 per share.

We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 and a “smaller reporting company,” as defined in Rule 12b-2 in the Exchange Act. As a result, we are subject to reduced public company disclosure standards. See the section entitled “Implications of Being an Emerging Growth Company and a Smaller Reporting Company” for more information.

Investing in our common stock involves risks. See the section entitled “Risk Factors,” beginning on page 24 to read about factors you should consider before investing in our common stock.

	Per Share	Total
Initial public offering price	$	$
Underwriting discount⁽¹⁾	$	$
Proceeds before expenses, to us	$	$

(1)

The offering of our common stock will be conducted on a firm commitment underwritten basis. See the section entitled “Underwriting” for additional information regarding underwriting compensation.

The underwriters have an option to purchase up to an additional 391,500 shares of our common stock at the initial public offering price less the underwriting discount within 30 days of the date of this prospectus.

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None of the United States Securities and Exchange Commission, any state securities commission, the Federal Deposit Insurance Corporation, the Board of Governors of the Federal Reserve System nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.

These securities are not deposits, savings accounts or other obligations of any bank or savings association and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other governmental agency and are subject to investment risks, including the possible loss of the entire amount you invest.

The underwriters expect to deliver the shares of our common stock to purchasers on or about , 2025, subject to customary closing conditions.

Joint Bookrunners

Piper Sandler

Stephens Inc.

Lead Manager	Co-manager

D.A. Davidson & Co.	Janney Montgomery Scott

The date of this prospectus is , 2025.

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TABLE OF CONTENTS

		Page
ABOUT THIS PROSPECTUS		ii
INDUSTRY AND MARKET DATA		iii
IMPLICATIONS OF BEING AN EMERGING GROWTH COMPANY AND A SMALLER REPORTING COMPANY		iv
PROSPECTUS SUMMARY		1
THE OFFERING		17
SUMMARY OF HISTORICAL CONSOLIDATED FINANCIAL DATA OF THE COMPANY		19
NON-GAAP PERFORMANCE AND FINANCIAL MEASURES RECONCILIATION		20
SUMMARY OF RISK FACTORS		22
RISK FACTORS		24
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS		55
USE OF PROCEEDS		57
CAPITALIZATION		59
DILUTION		60
MARKET FOR COMMON STOCK AND DIVIDEND POLICY		62
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		63
BUSINESS		96
SUPERVISION AND REGULATION		112
MANAGEMENT		127
EXECUTIVE COMPENSATION		134
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS		145
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT		148
DESCRIPTION OF CAPITAL STOCK		151
SHARES ELIGIBLE FOR FUTURE SALE		155
MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS TO NON-U.S. HOLDERS		157
UNDERWRITING		161
LEGAL MATTERS		170
EXPERTS		170
WHERE YOU CAN FIND MORE INFORMATION		170
INDEX TO FINANCIAL STATEMENTS		F-1

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ABOUT THIS PROSPECTUS

In this prospectus, “we,” “our,” “us,” or “the Company” refers to Avidbank Holdings, Inc., a California corporation, and our consolidated subsidiary, Avidbank, a California state-chartered bank, unless the context indicates that we refer only to the parent company, “Avidbank Holdings”. In this prospectus, the “Bank” refers to Avidbank, our banking subsidiary.

Neither we nor the underwriters have authorized anyone to provide you with different or additional information other than what is contained in this prospectus and in the registration statement of which this prospectus forms a part. Neither we nor the underwriters take responsibility for, or can provide any assurance as to the reliability of, any different or additional information that others may give you. If anyone provides you with different or inconsistent information, you should not rely on it.

We are not, and the underwriters are not, making an offer to sell our common stock in any jurisdiction where the offer or sale is not permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of the delivery of this prospectus or any sale of our common stock. Our business, financial condition, results of operations and growth prospects may have changed since that date. Any references to our website herein are not intended to be active links and the information on, or that can be accessed through, our website is not, and you must not consider the information to be, a part of this prospectus or any other filings we make with the United States Securities and Exchange Commission, or the SEC.

You should not interpret the contents of this prospectus or any free writing prospectus to be legal, business, investment or tax advice. You should consult with your own advisors for that type of advice and consult with them about the legal, tax, business, financial and other issues that you should consider before investing in our common stock.

Our and the Bank’s logos and other trademarks referred to and included in this prospectus belong to us. Solely for convenience, we refer to our trademarks in this prospectus without the “^®,” “℠” or the “™” symbols, but such references are not intended to indicate that we will not assert, to the fullest extent under applicable law, our rights to our trademarks. Other service marks, trademarks and trade names referred to in this prospectus, if any, are the property of their respective owners, although for presentation convenience we may not use the “^®,” “℠” or the “™” symbols to identify such trademarks.

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INDUSTRY AND MARKET DATA

This prospectus includes statistical and other industry and market data that we obtained from government reports and other third-party sources. Our internal data, estimates and forecasts are based on information obtained from government reports, trade and business organizations and other contacts in the markets in which we operate and our management’s understanding of industry conditions. In addition, estimates, forecasts and assumptions are necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described in the section entitled “Risk Factors” and elsewhere in this prospectus. Finally, forward-looking information obtained from these sources is subject to the same qualifications and the additional uncertainties regarding the other forward-looking statements in this prospectus.

iii

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IMPLICATIONS OF BEING AN EMERGING GROWTH COMPANY AND A SMALLER REPORTING COMPANY

We qualify as an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. An emerging growth company may take advantage of specified reduced reporting requirements and is relieved of other significant requirements that are otherwise generally applicable to other public companies. Among other factors, as an emerging growth company:

●

we may present only two years of audited financial statements and discuss only our results of operations for two years in “Management’s Discussion and Analysis of Financial Condition and Results of Operations”;

●

we are exempt from the requirement to provide an opinion from our auditors on the design and operating effectiveness of our internal control over financial reporting pursuant to the Sarbanes-Oxley Act of 2002, as amended, or the Sarbanes-Oxley Act;

●

we are permitted to provide less extensive disclosure regarding our executive compensation arrangements pursuant to the rules applicable to smaller reporting companies, which means we are not required to include a compensation discussion and analysis and other disclosure regarding our executive compensation in this prospectus; and

●

we are not required to hold nonbinding advisory votes on executive compensation or golden parachute arrangements.

We may take advantage of these provisions for up to five years unless we earlier cease to qualify as an emerging growth company. We would cease to be an emerging growth company upon the earliest of: (i) the last day of the fiscal year following the fifth anniversary of the date of this initial public offering; (ii) the last day of the fiscal year in which our annual gross revenues are $1.235 billion or more; (iii) the date on which we have during the previous three-year period, issued more than $1 billion in non-convertible debt securities; or (iv) the date on which we are deemed to be a “large accelerated filer” under the rules of the United States Securities and Exchange Commission (“SEC”). We have elected to adopt the reduced disclosure requirements described above regarding the number of periods for which we are providing audited financial statements and selected financial data, and our executive compensation arrangements for purposes of the registration statement of which this prospectus is a part. In addition, we expect to take advantage of the reduced reporting and other requirements under the JOBS Act with respect to the periodic reports we will file with the SEC and proxy statements that we use to solicit proxies from our shareholders. Accordingly, the information contained herein may be different than the information you receive from other public companies in which you invest.

The JOBS Act exempts emerging growth companies from compliance with new or revised financial accounting standards until private companies (that is, those that have not had a registration statement declared effective under the Securities Act of 1933, as amended, or the Securities Act, or do not have a class of securities registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of this extended transition period and comply with the requirements that apply to non-emerging growth companies, but any such election to opt out is irrevocable. We have elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make our consolidated financial statements not comparable with those of a public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period because of the potential differences in accounting standards used. We cannot predict if investors will find our common stock less attractive as a result of our election to rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.

We are also a smaller reporting company, as defined in the Exchange Act. Even after we no longer qualify as an emerging growth company, we may still qualify as a smaller reporting company, which would allow us to continue taking advantage of many of the same exemptions from disclosure requirements, including reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements. In addition, for so long as we continue to qualify as a non-accelerated filer, we will not be required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act.

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PROSPECTUS SUMMARY

This summary highlights selected information contained in this prospectus. This summary does not contain all the information that you should consider before investing in our common stock. You should read the entire prospectus carefully, including the sections entitled “Risk Factors,” “Cautionary Note Regarding Forward-Looking Statements” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and our historical financial statements and the accompanying notes included in this prospectus before making an investment decision.

Company Overview

We are Avidbank Holdings, a bank holding company based in San Jose, California that operates through our wholly owned subsidiary, Avidbank, a California state-chartered bank. Founded in 2003, we are a full-service commercial bank dedicated to providing innovative banking solutions to a diverse client base, including small-to-medium sized businesses, technology companies, and individuals through robust portfolios of lending products, deposit services, and digital banking capabilities. We provide competitive deposit products and treasury management solutions with a high-touch, relationship-driven approach, guided by our commitment to being Responsive, Collaborative & Accountable—principles we embody in every client interaction. Our experienced management team focuses on loan growth while maintaining excellent credit quality, core deposit expansion, noninterest income growth and improving operational efficiency. We focus on corporate banking, commercial real estate, and real estate construction lending in the Bay Area (which we define as the counties of Alameda, Contra Costa, Marin, Monterey, Napa, San Francisco, San Mateo, Santa Clara, Santa Cruz, Solano, and Sonoma), while also maintaining a growing national presence in Venture Lending and Specialty Finance.

As of March 31, 2025, we had total assets of $2.3 billion, total loans of $1.8 billion, total deposits of $1.9 billion and total shareholders’ equity of $196.6 million. The local and national business focus of our five banking divisions is summarized below.

Avidbank Holdings is registered as a bank holding company under the Bank Holding Company Act of 1956, as amended. Avidbank Holdings was incorporated under the laws of the State of California in 2007 for the principal purpose of engaging in activities permitted for a bank holding company. As a bank holding company, Avidbank Holdings is authorized to engage in the activities permitted under the Bank Holding Company Act of 1956, as amended, and the regulations thereunder. Avidbank Holdings owns 100% of the issued and outstanding common shares of the Bank. Our deposit accounts are insured to the maximum extent permitted by applicable law.

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As a bank holding company, we are subject to the supervision of the Board of Governors of the Federal Reserve System (the “Federal Reserve” or “FRB”). We are required to file with the FRB reports and other information regarding our business operations and the business operations of our subsidiaries. As a state-chartered commercial bank, the Bank is subject to primary supervision, periodic examination and regulation by the California Department of Financial Protection and Innovation (the “DFPI”) and by the Federal Deposit Insurance Corporation (the “FDIC”), as its primary federal bank regulator.

History and Mission

The Bank was organized in April 2003 under the name “The Private Bank of the Peninsula” by a group of long-time, Palo Alto-based entrepreneurs deeply invested in the community who envisioned a private business bank that would provide the kind of exceptional banking services they desired themselves. With the approval of the DFPI and the FDIC, the Bank commenced business on October 1, 2003. In 2007, we reorganized into a bank holding company structure, whereby the Bank became a subsidiary of Peninsula Bank Holding Co. As our business model and vision expanded, we recognized that our original name did not reflect the Bank’s broader aspirations to offer a diverse range of products and services to a wide array of individuals and businesses. Accordingly, The Private Bank of the Peninsula changed its name to Avidbank on April 1, 2011, and Peninsula Bank Holding Co. formally changed its name to Avidbank Holdings, Inc. on August 1, 2011. We moved our headquarters to San Jose in 2017 to improve our ability to attract and retain Bank employees.

The Bank’s overall goal and mission is to continue to scale our Corporate Banking, Venture Lending, and Specialty Finance banking divisions, maintain measured growth in our Commercial Real Estate and Construction divisions, be opportunistic in hiring quality personnel, capitalize on market disruption throughout our operating markets, maintain a culture of elevated credit quality, and manage our balance sheet to maximize profitability without taking undue risk. We aim to consistently deliver value which exceeds our clients’ expectations.

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Markets

The Bank operates with one branch located in San Jose, California and one loan production office in each of San Francisco, California and Redwood City, California. In addition, our Specialty Finance and Venture Lending divisions have bankers and customers located throughout the United States. We have banking relationships in 37 states with approximately 22% of our loan balances located outside of California as of March 31, 2025.

According to the U.S. Census data and reports from S&P Capital IQ Pro, median Household Income in the San Jose-Sunnyvale-Santa Clara Metropolitan Statistical Area (“MSA”) was approximately $157,000 as of March 31, 2025, compared to nationwide Median Household Income of approximately $79,000. Projected Household Income Growth for 2025-2030 was 9.8% for the San Jose-Sunnyvale-Santa Clara MSA, compared to 8.8% nationwide.

Financial Performance & Positioning

Throughout the Bank’s history, we believe we have delivered consistent and solid performance. Our broad-based commercial banking platform delivers innovative financial solutions across multiple verticals that drove historically strong growth in loans and deposits. From 2017 to 2022, we achieved asset growth with a compound annual growth rate (“CAGR”) of over 19%, supported by both strategic organic expansion and favorable market conditions.

In 2019, we entered the venture banking business, which provided a significant boost to deposit growth, as venture relationships traditionally generate higher deposit balances relative to loan demand. Excess deposits generated by our Venture Lending division are invested in our securities portfolio and used to fund loan growth in other divisions. Our Venture Lending division focuses on banking for early-stage, growth-stage and a small number of late-stage technology companies that have received funding primarily from venture capital funds. The technology companies typically have limited borrowing needs, which results in our average deposit levels in excess of loan balances. As these technology companies utilize cash, their corresponding deposit levels decrease until they receive another round of venture capital funding. The Federal Reserve actions in response to COVID-19 led to a surge in deposits across the banking industry, including the venture-backed companies in our Venture Lending division, further increasing our funding base in 2021.

During the first quarter of 2023, we faced significant challenges as several high-profile bank failures, including institutions headquartered in California, disrupted the banking industry and triggered market-wide deposit liquidity concerns. As a result, our deposit balances declined by 11.2% during the first quarter of 2023, leading to a decrease in profitability primarily from higher funding costs. The impact on profitability included our return on average assets decreasing from 1.61% in the fourth quarter of 2022 to 0.87% in the second quarter of 2023 and our net interest margin decreasing from 4.41% to 3.39% during this same time period. Our net interest margin in the second quarter of 2023 was negatively impacted primarily by the rapid increase in cost of interest-bearing deposits along with the replacement of deposits with higher cost borrowings. We quickly navigated these challenges by implementing strategic measures to fortify our balance sheet and maintain our clients’ confidence. These strategies included offering our clients expanded deposit insurance and expanding our treasury management team.

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In response to market-wide depositor demands, we provided clients with expanded deposit insurance solutions with the use of reciprocal deposit networks, reducing our estimated uninsured deposit exposure from 85% at December 31, 2022 to 34% at December 31, 2023. Our focus on retaining existing deposit relationships along with taking advantage of the market disruption to add new relationships, resulted in an increase in total deposits of 14% in 2024.

A key initiative that started in 2023 was bolstering our treasury management team, which provided our bankers with additional resources to generate core deposit growth and expanded our suite of deposit offerings. We believe our successful response to these recent industry-wide deposit liquidity challenges underscores our ability to identify and execute on strategic opportunities that enhance funding stability.

In 2024, the outcome of these strategic management actions was a return to solid profitability, and a decrease in our loan-to-deposit ratio driven primarily by robust core deposit growth. We believe we are well-positioned to attract high-quality talent and continue to deliver sustained growth and profitability.

Highlights of Fundamental Performance

The tables below include financial measures that are not presented in accordance with accounting principles generally accepted in the United States, or GAAP. See section entitled “Non-GAAP Performance and Financial Measures Reconciliation” for more information.

Robust Balance Sheet Growth

Figure 1: Total Assets ($ in millions)		Figure 2: Total Loans ($ in millions)

Figure 3: Total Deposits ($ in millions)		Figure 4: Loan / Deposit Ratio (%)

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Solid Profitability with Compelling Net Income Growth

Figure 5: Adjusted Earnings Per Share ($)		Figure 6: Adjusted Return on Average Assets (%)

Figure 7: Adjusted Return on Average Equity (%)		Figure 8: Net Interest Margin (%)

Figure 9: Tangible Book Value Per Share ($)		Figure 10: Efficiency Ratio (%)

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Consistent & Diversified Loan Growth

Our consistent organic loan growth is originated by a high-quality team of knowledgeable bankers with deep sector expertise. This commitment to growth is reflected in a compound annual growth rate (“CAGR”) of 16% since 2017. From 2017 through 2022, prior to the 2023 banking disruptions, our CAGR was approximately 19%, reflecting the team’s ability to drive higher loan growth under stable market conditions.

We believe our loan portfolio is well-diversified, with the focus on commercial and industrial lending in our Corporate Banking, Venture Lending, and Specialty Finance divisions totaling 44% of total loans as of March 31, 2025. Our commercial real estate (“CRE”) portfolio spans owner-occupied and non-owner-occupied properties, as well as multifamily, and represents 42% of total loans, while construction lending represents 12% of total loans as of March 31, 2025. Our CRE owner-occupied portfolio consists primarily of properties owned by commercial customers in our Corporate Banking division. We believe this composition exhibits best-in-class yields, a diversified commercial loan portfolio across multiple industries and property types, and strong portfolio performance.

Growing Foundation of Core Deposits

Growing deposits is one of the core strategies for the Bank, which has resulted in a CAGR of 17% since 2017 through December 31, 2024. Our deposit strategy prioritizes relationship-driven banking with tailored treasury management services primarily supporting small-to-medium-sized businesses. In addition to developing deposit relationships at loan origination, we expanded into specialized verticals, including professional firms, 1031 exchange providers, and escrow services, to enhance deposit diversification.

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The following table represents our funding composition over the past several years.

To enhance deposit stability and client confidence, we leveraged reciprocal deposit networks, allowing customers to access full FDIC insurance on larger balances while keeping funds within our institution. This strategy not only mitigates risk but also supports liquidity management by diversifying funding sources. As of March 31, 2025, reciprocal deposits totaled $868.3 million, or 45% of total deposits, reducing our estimated uninsured deposit exposure from 85% at December 31, 2022 to 35% at March 31, 2025. We are subject to various fees associated with the placement and management of deposits within these networks.

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Reciprocal deposits are deposits exchanged through various reciprocal deposit networks to increase deposit insurance coverage. They allow us to offer our clients access to additional FDIC insurance coverage while receiving back the full amount of the client’s deposit. These programs help us efficiently manage our balance sheet and liquidity position by accessing additional funding from other institutions while mitigating risk and complying with regulatory requirements. Participation in the networks also requires us to pay various fees associated with the placement and management of deposits within the network, which increase the cost of our interest-bearing deposits.

While we strategically use brokered deposits as an additional funding source, we have reduced reliance on these sources reflecting our commitment to strengthening our liquidity position. In addition, FDIC regulations impose a cap on reciprocal deposits that may be exempt from brokered deposits classification depending on a bank’s capitalization and rating status, including a general cap equal to 20% of the Bank’s total liabilities. As of March 31, 2025, $86.9 million of our total deposits plus an additional $447.8 million of our reciprocal deposits in excess of the regulatory cap were considered brokered deposits by the FDIC, for an aggregate of $534.7 million of brokered deposits as defined by FDIC regulations. A lower percentage of uninsured deposits has a positive impact on our liquidity position given it decreases the volatility of our deposit base due to the higher level of FDIC insurance coverage. The FDIC limits the ability of a bank to accept brokered deposits to those insured depository institutions that are “well capitalized”. Institutions that are less than “well capitalized” cannot accept, renew or roll over any brokered deposit unless they have applied for and been granted a waiver by the FDIC.

The following table presents the components of FDIC-classified brokered deposits as of the dates indicated:

	March 31, 2025		December 31, 2024
Interest-bearing reciprocal deposits in excess of 20% general cap	$	447,757	$	469,980
Brokered deposits		86,915		70,763
Total FDIC-Classified Brokered Deposits	$	534,672	$	540,743

As of March 31, 2025, our deposit portfolio is stratified across multiple business lines, with the Venture Lending, Corporate Banking, and Specialty Finance divisions accounting for 86% of our total deposits. Deposits in our Commercial Real Estate division, Construction division, 1031 exchange deposits, and brokered deposits (exclusive of reciprocal deposits classified as brokered deposits by the FDIC) account for the remaining 14% of our total deposits.

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Investment Securities Portfolio

As of March 31, 2025, the available-for-sale securities portfolio totaled $296.6 million with an unrealized loss of $65.6 million. The yield on the available-for-sale investment portfolio in the first quarter of 2025 was 2.40% with an effective duration of 6.2 years and average life of 7.6 years. The portfolio primarily consists of agency mortgage-backed securities and collateralized mortgage obligations, totaling 97% of the total portfolio. See section entitled “Use of Proceeds-Potential Repositioning of Our Available-for-Sale Securities Portfolio” for discussion on how we may potentially use the proceeds from this offering to reposition a substantial portion of such portfolio.

Disciplined Credit Culture and Strong Credit Quality

We believe our ability to maintain exceptional credit quality while achieving rapid organic growth is a key differentiator for the Bank. Our team has a proven track record of solid asset quality through various economic cycles. We adhere to a collaborative and proactive approach designed to selectively originate loans that are best suited for our clients’ needs and aim to minimize future loss exposure.

We maintain a disciplined underwriting approach with approval processes tied to loan size and risk rating. Credit approvals follow a structured hierarchy with smaller credits approved by individual credit officers and larger credits approved by management loan committees and the Board’s credit committee. We believe this structured approval process enables efficient execution for our clients, ensuring timely credit decisions while maintaining strong risk controls and proactively offering innovative financing solutions tailored to client needs.

Through our credit administration structure, we maintain a proactive loan monitoring process that regularly evaluates loan grading and monitoring systems. We conduct periodic internal reviews on problem loans at the division level and a twice-monthly special asset committee meeting to assess watch-rated (or worse) loans and implement risk-mitigation strategies. We engage a third-party loan review firm to conduct an evaluation of our loan portfolios twice annually. The third-party reviewing firm reviews more than 90% of the dollar balance of our loan portfolios annually.

In summary and as a testament to our disciplined approach of portfolio management, nonperforming loans accounted for only 0.07% of total loans as of March 31, 2025 and net charge-offs for as of March 31, 2025 represented only -0.01% of the average loan balances. The ratio of our loan loss reserves to nonperforming assets was 1,397% as of March 31, 2025. Our historical data on nonperforming assets and net charge-offs was as follows:

Figure 11: NPAs / Assets (%)		Figure 12: ACL / Loans and NCOs / Average Loans (%)

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Our Competitive Strengths

We believe we differentiate ourselves through our deep expertise, tailored financial solutions and commitment to building lasting client relationships. With a focus on commercial banking, we offer specialized lending and treasury management services designed to meet the unique needs of businesses, entrepreneurs and private equity firms. Our team of experienced bankers provides high-touch service, ensuring swift decision-making and customized financial strategies. Particularly, our venture lending and specialty finance teams have built relationships with an extensive network of venture capital firms, institutional investors and private equity firms that invest in companies on a national basis. We believe we maintain strong domain expertise and deep relationships with these investors, who are a key referral source for our bankers to companies located across the country. Unlike larger institutions, we offer the agility and responsiveness that growing businesses require while maintaining the security and sophistication of a leading financial partner. Additionally, our strong presence in the Bay Area, combined with a national reach, allows us to serve clients with both regional insight and expansive capabilities.

Experienced Management Team

Our leadership team brings deep industry expertise and a strong network of business relationships across various sectors, driving growth and market expansion. Led by our Chairman and Chief Executive Officer, we believe our executive management team is composed of proven professionals with a track record of accelerating business development, enhancing client relationships and expanding market presence. With an average tenure of almost 10 years at the Bank and more than 20 years in commercial banking, we believe our executive team and division managers provide the insight and strategic vision that set us apart. Our division managers have a deep understanding of their respective markets and lending verticals, allowing us to identify opportunities and execute with precision. Our management is committed to identifying and developing talent within the organization, including mentoring, encouraging employees to pursue growth opportunities, and preparing successors to take on key leadership roles and executive positions in the Company and the Bank. For example, our current executive team includes individuals who joined us in non-managerial roles and have been promoted to leadership positions throughout the years.

Proven Organic Growth Capabilities

We have demonstrated a proven ability to drive organic growth, consistently expanding both our loan and deposit portfolios through strategic execution and strong client relationships. Over the past seven years, loans have grown an annual average growth rate of approximately 16% per year and deposits have grown an annual average growth rate of approximately 17% per year, diversified across multiple commercial business lines. We manage our deposit base with stability in mind, with estimated uninsured deposits representing 35% of total deposits as of March 31, 2025 as compared to 85% of total deposits at December 31, 2022. We believe our deposit growth reflects the confidence our clients place in us.

Diversified Business with Expertise in Niche Business Lines

The Bank’s diversified loan portfolio is strategically structured to support growth while effectively managing risk across various sectors. As of March 31, 2025, 70% of total loans are from our Bay Area customers, while the remaining loans are primarily from our national business lines, namely our Specialty Finance and Venture Lending divisions. Based on the location of customers for commercial borrowers and the location of collateral for real estate loans, 78% of our total loans are based in California with the remainder dispersed nationally. We believe this geographic and sector diversification not only strengthens our ability to navigate market fluctuations, but also allows for risk management flexibility within our five banking divisions.

Each division operates with its own specialized focus, contributing to a broader and more balanced approach to lending. We believe the organizational structure of these divisions enables seamless credit migration when necessary, ensuring the best possible outcomes for both clients and the Bank. Managing multiple divisions under one roof enables us to pivot quickly and move credit across business lines, optimizing our ability to address clients’ evolving needs while mitigating concentration risk. We intend for this approach to enhance both the stability of our portfolio and our capacity to provide tailored solutions to a wide range of clients, creating additional opportunities for growth.

Within our commercial real estate (CRE) segment, as of March 31, 2025, non-owner occupied CRE loans include a mix of office (8%), hotel/motel (4%), retail (4%), industrial (3%), warehouse (1%), and other properties (2%), totaling $405.8 million, or 22% of the overall portfolio. The non-owner occupied office loans have an average balance of just $2.8 million. This well-rounded mix helps further balance risks across different asset classes.

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Scalable Business Model and Expense Management

We have a strong foundation of technology and infrastructure that supports our commercial clients. We offer our clients internet and mobile banking services, advanced digital banking, remote deposit capture, and a suite of online treasury management tools.

Our investments in technology include the nCino loan origination system, a scalable platform that facilitates loan underwriting and approvals, as well as a document repository to support an efficient loan portfolio. Additionally, we utilize the Q2 online and mobile banking platform, which offers a comprehensive suite of treasury management services including Automated Clearing House (ACH), domestic and international wire transfers, positive pay, remote deposit capture, credit cards, bill pay, electronic statements and mobile capture. This robust, scalable infrastructure is designed to meet the needs of all client types while maintaining efficiency across operations.

Our existing technology investments and corporate infrastructure have provided us with a scalable operating platform that enables future growth without the need for significant additional investments in the short term. As we continue to enhance our technological capabilities, these investments will empower employees, engage clients and expand our digital service offerings.

We intend to selectively incorporate artificial intelligence (“AI”) to enhance employee efficiency by automating routine tasks and streamlining workflows. AI-driven solutions will enable our teams to focus more on high-value tasks and client interactions, driving productivity and improving overall operational efficiency. Through these advancements, we are committed to enhancing employee performance and empowering our workforce to deliver even greater value to our clients. As an initial step, we currently use a software product with AI technology to enhance our fraud detection capabilities for our customers’ banking activity. We have also selectively employed AI technologies to assist in drafting standardized documents and communications, and to search information on the internet. We believe our current implementation of such AI technologies can assist us to proactively monitor our customer’s activity, respond to suspicious behavior, help prevent losses, and enhance efficiency in work processes.

Strategic Focus

We aim to drive sustainable organic growth by leveraging our established platform, capitalizing on market disruption, and adapting to an evolving banking landscape. Our strategic goals include:

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Focusing on delivering an excellent customer experience by building strong client relationships, personalized service, and competitive offerings and products.

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Maintaining strong credit quality and culture.

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Continuing to scale our Corporate Banking, Venture Lending and Specialty Finance divisions by hiring new bankers opportunistically, while maintaining measured growth in our Commercial Real Estate and Construction divisions.

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Expanding our deposit base through a balanced mix of commercial relationships, treasury management services, and specialized deposit products, improving liquidity and increasing noninterest income;

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Continuing to deliver consistently strong organic loan growth.

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Periodically evaluating our available-for-sale securities portfolio for repositioning strategies that would improve profitability and potentially reduce our reliance on noncore funding.

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Enhancing our disciplined cost management culture and improving the efficiency of our bank operations.

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Focusing on a culture that enhances employee engagement, satisfaction, and productivity.

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Our Banking Divisions

The Bank is a full-service commercial bank with a focus in the Bay Area (which we define as the counties of Alameda, Contra Costa, Marin, Monterey, Napa, San Francisco, San Mateo, Santa Clara, Santa Cruz, Solano and Sonoma) through our Corporate Banking, Commercial Real Estate, and Construction Lending divisions, and expanded reach both in the Bay Area and nationally through our Venture Lending and Specialty Finance divisions. In addition to providing products and services, the Bank emphasizes long-standing client relationships and tailors its products and services to meet the unique needs of its customers. Each loan is sourced and placed in a specific division based on product type and source of repayment.

The Bank’s commercial and industrial lending takes place in three divisions: Corporate Banking, Venture Lending, and Specialty Finance. Each of these divisions caters to different borrower profiles based on our initial loan origination assessment, which are defined as follows. Generally, Corporate Banking clients generate positive cash flow but have no institutional investors, whereas Venture Lending clients are backed by institutional investors but have negative cash flow, and Sponsor Finance clients within the Specialty Finance division are backed by institutional investors generate positive cash flow, and the use of proceeds is to help facilitate an acquisition. In addition to Sponsor Finance, the Specialty Finance division also offers Asset-Based Lending and Accounts Receivable Factoring/Finance products. Because the latter two products include more stringent funding controls, occasionally after the loans are successfully originated, clients have been transitioned from other divisions into these products as a risk management tool.

More detail on our five banking divisions is as follows:

Corporate Banking Division

The Corporate Banking division specializes in delivering customized Commercial & Industrial lending solutions to small to mid-sized privately held businesses across a wide range of industries in the Bay Area. These loans are primarily used for funding operations, expansions, acquisitions and owner-occupied real estate loan acquisitions or refinances. Borrowers typically demonstrate consistent historical profitability, low balance sheet leverage and high liquidity. Every loan is personally guaranteed by the primary business owner(s). Our primary source of repayment is cash flow generated by the business, which is typically bolstered by personal guarantees. Loan terms range from 12 months for short-term working capital needs to 10 years for long-term real estate holdings. The loans typically have sizes of up to $20 million. The Bank’s client relationships include the borrower’s banking business in addition to the business of its owner(s) and often one or more affiliated entities.

To a significantly lesser extent, the Bank also offers home equity lines of credit and consumer loans in our Corporate Banking, Commercial Real Estate, and Construction Lending divisions. Home equity lines of credit are loans made with a residence serving as collateral and may have a variety of reasons for the borrowing including providing funding to a business or paying for large personal expenditures. Consumer loans are primarily extended to individuals that may be unsecured or secured by collateral other than real estate. The unsecured loans are generally revolving personal lines of credit to established clients. As of March 31, 2025, our Corporate Banking deposits and loans totaled approximately $609 million and approximately $396 million, respectively.

Commercial Real Estate Division

This division is focused on term financing for commercial, multi-family and mixed-use properties throughout the Bay Area. Our team of local lenders provides financing for commercial real estate purchases and refinances, leveraging deep market expertise to structure loans that align with borrower needs and their investment objectives. The loans typically have sizes of up to $20 million, and include acquisition and bridge to long term/permanent commercial real estate financing. Our commercial real estate loans are typically secured by multifamily, office, industrial, retail or other commercial properties. Our commercial real estate loans generally have amortization terms of 15 to 25 years with adjustable interest rates. As of March 31, 2025, our commercial real estate deposits and loans totaled approximately $41 million and approximately $507 million, respectively.

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Construction Lending Division

The Construction Lending division specializes in financing the construction of high-end residential properties for experienced local developers and homeowners throughout the Bay Area. With deep roots in the community and long-standing relationships with local developers, our team brings extensive skill and knowledge of the region’s development landscape. We offer financing across all stages of development, including land acquisition, pre-development and construction for residential and commercial projects. These loans are designed to support both individual and commercial development projects and normally have sizes of up to $18 million. The maximum loan-to-value ratio is generally 70% of the lesser of the appraised value or the purchase price of the property, which ratio is subject to increase over the term of the loan if there are significant cost overruns or a decrease in the value of the property. As of March 31, 2025, our Construction Lending deposits and loans totaled approximately $22 million and approximately $272 million, respectively.

Venture Lending Division

Started in 2019, our Venture Lending division provides banking services to a broad spectrum of venture-backed technology companies and directly to venture capital and private equity firms. With team members positioned in key innovation hubs nationwide, we support emerging technology companies across the country that have secured equity capital from institutional investors, including venture capital and private equity firms. The banking needs of these clients are such that Venture Lending clients commonly generate balances of deposits well in excess of their borrowing needs.

Our targeted venture-backed technology clients are primarily companies that have received at least one round of funding from institutional investors and operate in industries such as software, information technology, fintech, telecommunications and digital healthcare. These technology companies normally have strong revenue growth with negative operating cash flows and no record of profitability while typically relying on future rounds of investor funding as our primary source of repayment. Loan sizes are typically up to $20 million. As of March 31, 2025, our Venture Lending deposits and loans totaled approximately $685 million and approximately $292 million, respectively, with 75% of deposits tied to existing lending relationships.

Specialty Finance Division

Specialty Finance is made up of three teams providing unique credit solutions: Sponsor Finance Lending, Asset Based Lending and Accounts Receivable Factoring/Finance.

Sponsor Finance Lending provides traditional private equity and search fund backed acquisition financing to lower-middle market businesses across the United States, with loan typically sized up to $20 million. Our portfolio spans a diverse range of industries, including software, healthcare, managed services, industrial services, staffing, manufacturing, behavioral health, media, retail, and education. Our primary source of repayment is cash flow generated from the business. With over a decade of experience, we have cultivated strong relationships with institutional funds and search fund sponsors.

Asset-Based Lending provides tailored financing solutions to businesses across the United States secured by assets such as accounts receivable and inventory. Loan sizes are typically up to $20 million. Our target customers typically represent manufacturing, wholesaling and technology companies. Our primary source of repayment is collections from such collaterals (i.e., accounts receivable and inventory sales), and these loans have more stringent controls including a Lockbox and/or Bancontrol account than the accounts receivable based lines provided to Venture Lending or Sponsor Finance clients, which clients generally have stronger balance sheets and/or generate positive cash flow. We endeavor to work with a diverse set of clients in order to avoid industry concentration risk in our Asset-Based Lending portfolio.

Accounts Receivable Factoring/Finance provides invoice finance solutions to a variety of businesses nationally. Loan sizes are typically up to $10 million. Our primary source of repayment is collections from account debtors. This group has a diversified industry focus representing manufacturing, wholesaling and technology companies.

As of March 31, 2025, Specialty Finance deposits and loans totaled approximately $364 million and approximately $367 million, respectively.

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Treasury Management Services

Our Treasury Management team plays a critical role in working with our bankers to grow deposits and noninterest income by leveraging client relationships. A key initiative that started in 2023 was bolstering this team with the addition of our Executive Vice President of Treasury Management Services and key treasury management sales and support hires. The expanded treasury management team is responsible for deposit growth and pricing, treasury product management, and non-interest income growth though services charges, credit cards, foreign exchange, and trade finance. This team shifted the treasury management team’s focus from operational support to proactive outreach, providing our bankers with additional resources to generate core deposit growth and expanding our suite of deposit offerings. Additionally, the team is developing new deposit initiatives, including 1031 exchange deposits. These deposits, held through qualified intermediaries, totaled approximately $91.4 million as of March 31, 2025.

The Bank offers a competitive suite of treasury management services to enable clients to best support their cash management requirements, including online and mobile banking, bill payments, ACH, domestic and international wires, remote deposit capture, positive pay, ZBA accounts and sweeps. In addition, the Bank offers clients access to business and commercial credit cards, foreign exchange services, merchant services, lockbox and trade finance, inclusive of standby and commercial letters of credit.

Highlights

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Assets. Total assets were $2.3 billion as of March 31, 2025, as compared with $2.3 billion as of December 31, 2024, $2.2 billion as of December 31, 2023 and $2.1 billion as of December 31, 2022.

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Loans. Total loans, net of deferred loan fees, were $1.8 billion as of March 31, 2025, as compared with $1.9 billion as of December 31, 2024, $1.7 billion as of December 31, 2023 and $1.6 billion as of December 31, 2022.

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Deposits. Total deposits were $1.9 billion as of March 31, 2025, as compared with $1.9 billion as of December 31, 2024, $1.7 billion as of December 31, 2023 and $1.8 billion as of December 31, 2022.

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Shareholders’ Equity. Total shareholders’ equity was $196.6 million as of March 31, 2025, as compared with $186.4 million as of December 31, 2024, $165.3 million as of December 31, 2023 and $137.5 million as of December 31, 2022.

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Net Income. Total net income was $5.4 million for the three months ended March 31, 2025, as compared with $5.2 million for the three months ended March 31, 2024. Total net income was $21.0 million for the year ended December 31, 2024 as compared with $16.8 million for the year ended December 31, 2023 and $25.0 million for the year ended December 31, 2022.

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Net interest margin. Net interest margin was 3.52% for the three months ended March 31, 2025, as compared with 3.54% for the three months ended March 31, 2024. Net interest margin was 3.44% for the twelve months ended December 31, 2024, as compared with 3.53% for the twelve months ended December 31, 2023 and 3.78% for the twelve months ended December 31, 2022.

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Earnings per share. Earnings per share (diluted) was $0.71 for the three months ended March 31, 2025 as compared with $0.69 for the three months ended March 31, 2024. Earnings per share (diluted) was $2.76 for the twelve months ended December 31, 2024 as compared with $2.24 for the twelve months ended December 31, 2023 and $3.60 for the twelve months ended December 31, 2022.

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Recent Developments

Our unaudited consolidated financial statements as of and for the three and six months ended June 30, 2025 are not yet available. The following preliminary unaudited consolidated financial information regarding our performance and financial condition as of and for the three and six months ended June 30, 2025 is based solely on management’s estimates reflecting preliminary financial information, and remains subject to additional procedures and our consideration of subsequent events, particularly as they relate to material estimates and assumptions used in preparing management’s estimates, which we expect to complete following this offering. These additional procedures could result in material changes to the preliminary financial information set forth below. Our unaudited consolidated financial statements as of and for the three and six months ended June 30, 2025, may differ materially from our estimates and interim balances indicated below. The following consolidated financial data as of and for the three months ended March 31, 2025, is derived from our consolidated financial statements, which are included elsewhere in this prospectus.

The preliminary information set forth below is not a complete presentation of our financial results for the three and six months ended June 30, 2025. The following estimates constitute forward-looking statements and are subject to risks and uncertainties, including those described in the sections entitled “Risk Factors” and . “Cautionary Note Regarding Forward-Looking Statements.” The following preliminary financial information should be read together with the sections entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the related notes to those financial statements that are included elsewhere in this prospectus. There are material limitations with making preliminary estimates of our financial results as of and for the three and six months ended June 30, 2025 prior to the completion of our and our auditors’ financial review procedures for such periods. These limitations include that our independent registered public accounting firm, Crowe LLP, has not audited, reviewed, compiled or applied agreed-upon procedures with respect to the preliminary financial information, and as such, does not express an opinion, or any assurance, with respect to this preliminary financial information.

Selected Financial Highlights for the Three and Six Months Ended June 30, 2025

	●	Assets. Total assets were $2.39 billion as of June 30, 2025, compared to $2.32 billion at March 31, 2025.

	●	Cash and Cash Equivalents. Cash and cash equivalents were $129.9 million as of June 30, 2025, compared to $125.0 million at March 31, 2025.

	●	Loans. Total loans, net of deferred fees, were $1.91 billion as of June 30, 2025, representing a $70.5 million, or 15% annualized increase, from $1.84 billion at March 31, 2025.

	●	Securities. Available-for-sale securities were $292.8 million as of June 30, 2025, compared to $296.6 million as of March 31, 2025. The net unrealized loss on the available for sale securities portfolio total $63.4 million as of June 30, 2025 compared to a net unrealized loss of $65.6 million as of March 31, 2025.

	●	Allowance for Credit Losses. The allowance for credit losses on loans was $19.6 million at June 30, 2025, compared to $18.7 million at March 31, 2025. The allowance for credit losses on loans as a percent of total loans was 1.03% at June 30, 2025, versus 1.02% at March 31, 2025. The allowance for credit losses on loans and unfunded commitments as a percent of total loans was 1.15% at June 30, 2025, compared to 1.14% at March 31, 2025.

	●	Deposits. Total deposits were $2.00 billion as of June 30, 2025, representing a $73.3 million, or 15% annualized increase, from $1.93 billion at March 31, 2025. Brokered deposits (including reciprocal brokered deposits) totaled $520.4 million at June 30, 2025, down $14.3 million, or 3%, from $534.7 million at March 31, 2025. Non-reciprocal brokered deposits totaled $25.0 million at June 30, 2025, down $61.9 million from $86.9 million at March 31, 2025.

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Stockholders’ Equity. Total stockholders’ equity was $204.4 million as of June 30, 2025, compared to $196.6 million as of March 31, 2025. Book value per common share increased to $25.80 at June 30, 2025 from $24.85 at March 31, 2025. Common shares outstanding were 7,923,946 and 7,912,184 as of June 30, 2025 and March 31, 2025, respectively.

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Net Income. The Company’s net income was $5.8 million, or $0.75 per diluted share, for the second quarter of 2025, compared to $5.4 million, or $0.71 per diluted share, for the first quarter of 2025. The increase in net income for the second quarter of 2025 was primarily due to increased interest income earned on increased average loan balances, partially offset by an increase in the provision for credit losses.

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Net Interest Income. Net interest income was $20.3 million for the three months ended June 30, 2025, an increase of $938,000, or 19% annualized, compared to $19.4 million for the three months ended March 31, 2025.

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Net Interest Margin. Net interest margin was 3.60% for the three months ended June 30, 2025, compared to 3.52% for the three months ended March 31, 2025.

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Provision for Credit Losses. Provision for credit losses on loans and unfunded commitments was $925,000 for the three months ended June 30, 2025, compared to $0 for the three months ended March 31, 2025. The overall increase in the provision was primarily related to the growth in the loan portfolio.

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Noninterest Income. Noninterest income was $1.5 million for the three months ended June 30, 2025, an increase of $367,000, compared to $1.2 million for the three months ended March 31, 2025.

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Noninterest Expense. Noninterest expense was $12.6 million for the three months ended June 30, 2025, a decrease of $233,000, compared to $12.8 million for the three months ended March 31, 2025.

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Income Taxes. The provision for income taxes was $2.5 million for the three months ended June 30, 2025, compared to $2.2 million for three months ended March 31, 2025.

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Return on Average Assets (“ROAA”). The Company’s ROAA was 1.00% for the three months ended June 30, 2025, compared to 0.96% for the three months ended March 31, 2025.

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Return on Average Equity (“ROAE”). The Company’s ROAE was 11.59% for the three months ended June 30, 2025, compared to 11.49% for the three months ended March 31, 2025.

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Nonperforming Assets. Nonperforming assets to total assets totaled 0.06% as of June 30, 2025, unchanged from March 31, 2025.

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Net Charge-offs. Annualized net charge-offs to average loans totaled (0.01)% year-to-date 2025.

Corporate Information

Our principal executive office is located at 1732 North First Street, 6^th Floor, San Jose, California 95112 and our telephone number is (408) 200-7390. We maintain a website at www.avidbank.com. This reference to our website is included for the convenience of investors only and our website and the information contained therein or limited thereto is not incorporated into this prospectus or the registration statement of which it forms a part.

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THE OFFERING

The following summary of the offering contains basic information about the offering and our common stock and is not intended to be complete. It does not contain all the information that may be important to you. For a more complete description of our common stock, see the section entitled “Description of Capital Stock.”

Issuer		Avidbank Holdings, Inc.

Common Stock Offered		2,610,000 shares (or 3,001,500 shares including the underwriters’ option to purchase additional shares).

Shares Outstanding After the Offering		10,522,184 shares (or 10,913,684 shares if the underwriters’ option to purchase additional shares is exercised in full).

Price Per Share		We currently expect the initial public offering price per share of our common stock to be between $22.00 and $24.00.

Use of Proceeds		Assuming an initial public offering price of $23.00 per share (the midpoint of the price range set forth on the cover page of this prospectus), we estimate that the net proceeds to us from this offering, after deducting underwriting discounts and commissions and the estimated offering expenses payable by us, will be approximately $53.8 million, or approximately $62.2 million if the underwriters’ option to purchase additional shares is exercised in full. We intend to use a substantial amount of the net proceeds to us from this offering to increase the capital of the Bank to support our organic growth strategies, including expanding our overall market share and our lending activities, strengthening our regulatory capital, the potential optimization of the balance sheet which may include repositioning of a substantial portion of our available-for-sale securities portfolio, and for working capital and other general corporate purposes. Our management will have broad discretion in the application of the net proceeds from this offering to us, and investors will be relying on the judgment of our management regarding the application of the proceeds. See the section entitled “Use of Proceeds” for further information.

Dividend Policy		The declaration of all future dividends, if any, will be at the discretion of our board of directors and will depend on many factors, including the financial condition, earnings and liquidity requirements applicable to us and the Bank, regulatory constraints and any other factors that our board of directors deems relevant in making such a determination. Our ability to pay dividends is subject to restrictions under applicable banking laws and regulations. In addition, dividends from the Bank are the principal source of funds for the payment of dividends on our stock. The Bank is subject to certain restrictions under corporate and banking laws and regulations that may limit its ability to pay dividends to us. Therefore, there can be no assurance that we will pay any dividends to holders of our common stock, or as to the amount of any such dividends.

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Exchange Listing		We have applied to list our common stock on the Nasdaq Global Select Market under the symbol “AVBH.”

Directed Share Program		At our request, the underwriters have reserved up to 5% of the shares of our common stock offered by this prospectus for sale, at the initial public offering price, to our directors, officers, principal shareholders, employees, business associates and related persons who have expressed an interest in purchasing our common stock in this offering. We will offer these shares to the extent permitted under applicable regulations in the United States through a directed share program. See the section entitled “Underwriting—Directed Share Program.”

Risk Factors		Investing in our common stock involves risks. See the sections entitled “Risk Factors,” “Summary of Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” for a discussion of factors that you should carefully consider before making an investment decision.

Unless otherwise noted, references in this prospectus to the number of shares of our common stock outstanding after this offering are based on 7,912,184 shares of our common stock issued and outstanding as of March 31, 2025. Except as otherwise indicated, the information in this prospectus:

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includes unvested portions of stock awards granted to certain of our directors, executive officers and employees;

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Excludes 129,788 shares of our common stock reserved for issuance under the Avidbank Holdings 2022 Equity Incentive Plan, as amended;

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assumes no exercise of the underwriters’ option to purchase additional shares of our common stock;

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assumes an initial public offering price of $23.00 per share, which is the midpoint of the price range set forth on the cover page of this prospectus; and

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does not attribute to any director, officer, principal shareholder or related person any purchases of shares of our common stock in this offering, including through the directed share program described in the section entitled “Underwriting — Directed Share Program.”

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SUMMARY OF HISTORICAL CONSOLIDATED FINANCIAL DATA OF THE COMPANY

The following table sets forth summary historical consolidated financial data for the Company as of the dates and for the periods shown. The summary balance sheet data as of March 31, 2025 and 2024 and the summary income statement data for the three month period ended March 31, 2025 and 2024 have been derived from our unaudited interim condensed consolidated financial statements included elsewhere in this prospectus. The summary balance sheet data as of December 31, 2024 and 2023 and the summary income statement data for the years then ended have been derived from our audited consolidated financial statements included elsewhere in this prospectus. The summary balance sheet data as of December 31, 2022, 2021 and 2020 and the summary income statement data for the years then ended is derived from our audited financial statements not included in this prospectus. Our results of operations for any period are not necessarily indicative of the results to be expected in any future period.

The summary historical consolidated financial data presented below should be read in conjunction with sections titled “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the related notes included elsewhere in this prospectus. The summary of historical consolidated financial data in this section are not intended to replace the consolidated financial statements and are qualified in their entirety by our consolidated financial statements and related notes included elsewhere in this prospectus. The historical financial information presented below contains financial measures that are not presented in accordance with accounting principles generally accepted in the United States, or GAAP, and which have not been audited. See the section entitled “Non-GAAP Performance and Financial Measures Reconciliation.”

	(Unaudited) As of or for the Three Months Ended March 31,						As of or for the Years Ended December 31,
*(in thousands, except share and per share data)*	2025			2024			2024			2023			2022			2021			2020
INCOME STATEMENT
Net interest income	$	19,352		$	18,885		$	75,222		$	73,559		$	74,446		$	51,301		$	45,138
Provision for credit losses		-			319			4,096			3,042			3,510			3,572			1,702
Total noninterest income		1,171			1,283			6,010			(2,652	)		4,303			5,041			2,438
Total noninterest expense		12,842			12,427			47,333			43,893			40,790			35,616			33,167
Income before income taxes		7,681			7,422			29,803			23,972			34,449			17,154			12,707
Provision for income taxes		2,245			2,176			8,788			7,171			9,426			4,890			3,080
Net income	$	5,436		$	5,246		$	21,015		$	16,801		$	25,023		$	12,264		$	9,627

INCOME HIGHLIGHTS
Net income	$	5,436		$	5,246		$	21,015		$	16,801		$	25,023		$	12,264		$	9,627
Loss on sale of securities, net of tax		-			-			-			4,483			295			-			-
Severance, net of income tax		-			-			-			233			-			-			-
BOLI surrender tax expense		-			-			-			478			-			-			-
Adjusted net income (non-GAAP)⁽²⁾	$	5,436		$	5,246		$	21,015		$	21,995		$	25,318		$	12,264		$	9,627

PER SHARE DATA
Basic earnings per share	$	0.73		$	0.71		$	2.83		$	2.29		$	3.68		$	2.08		$	1.64
Diluted earnings per share		0.71			0.69			2.76			2.24			3.60			2.02			1.61
Adjusted diluted earnings per share (non-GAAP)⁽²⁾		0.71			0.69			2.76			2.94			3.64			2.02			1.61
Book value per share		24.85			21.41			23.57			21.27			17.99			21.91			20.74

PERFORMANCE MEASURES
Return on average assets⁽¹⁾		0.96	%		0.95	%		0.93	%		0.77	%		1.21	%		0.72	%		0.72	%
Adjusted return on average assets (non-GAAP)⁽¹⁾⁽²⁾		0.96	%		0.95	%		0.93	%		1.01	%		1.22	%		0.72	%		0.72	%
Return on average equity⁽¹⁾		11.49	%		12.64	%		11.98	%		11.20	%		18.42	%		9.18	%		7.86	%
Adjusted return on average equity (non-GAAP)⁽¹⁾⁽²⁾		11.49	%		12.64	%		11.98	%		14.66	%		18.64	%		9.18	%		7.86	%
Net interest margin		3.52	%		3.54	%		3.44	%		3.53	%		3.78	%		3.12	%		3.53	%
Efficiency ratio		62.57	%		61.62	%		58.27	%		61.90	%		51.80	%		63.21	%		69.71	%
Average loans to average deposits		98.55	%		101.85	%		100.10	%		95.75	%		70.12	%		68.68	%		84.95	%

CAPITAL
Tier 1 leverage ratio		10.39	%		9.88	%		10.35	%		9.77	%		9.46	%		6.89	%		8.67	%
Common equity tier 1 capital ratio		11.10	%		10.03	%		10.59	%		9.88	%		9.82	%		8.90	%		10.35	%
Tier 1 risk-based capital ratio		11.10	%		10.03	%		10.59	%		9.88	%		9.82	%		8.90	%		10.35	%
Total risk-based capital ratio		12.86	%		12.01	%		12.30	%		11.86	%		11.76	%		11.11	%		13.15	%
Tangible common equity ratio		8.48	%		7.40	%		8.09	%		7.41	%		6.45	%		6.34	%		8.94	%

SHARES OUTSTANDING
Number of common shares outstanding		7,912,184			7,803,900			7,906,761			7,770,439			7,645,428			6,256,682			6,168,313
Average common shares outstanding - basic		7,488,051			7,386,639			7,426,096			7,323,172			6,801,330			5,890,216			5,859,547
Average common shares outstanding - diluted		7,682,884			7,551,406			7,604,442			7,490,779			6,952,758			6,062,482			5,967,780

ASSET QUALITY
Allowance for credit losses - loans and unfunded commitments to total loans		1.14	%		1.21	%		1.12	%		1.22	%		1.09	%		1.10	%		1.30	%
Nonperforming assets to total assets		0.06	%		0.06	%		0.06	%		0.06	%		0.67	%		0.15	%		0.25	%
Nonperforming loans to total loans		0.07	%		0.08	%		0.07	%		0.08	%		0.92	%		0.27	%		0.36	%
Net charge-offs to average loans⁽¹⁾		-0.01	%		0.00	%		0.24	%		0.01	%		0.01	%		0.29	%		0.04	%

AVERAGE BALANCES⁽³⁾
Loans, net of deferred loan fees	$	1,858,716		$	1,756,770		$	1,797,626		$	1,621,283		$	1,321,177		$	1,052,779		$	982,747
Investment securities		296,422			319,440			311,662			382,108			472,371			222,204			49,734
Total assets		2,289,935			2,222,778			2,252,814			2,173,969			2,072,989			1,713,888			1,331,510
Deposits		1,885,993			1,724,845			1,795,904			1,693,195			1,884,233			1,532,883			1,156,871
Shareholders’ equity		191,891			166,907			175,348			150,045			135,841			133,646			122,510

PERIOD END BALANCES
Loans, net of deferred loan fees	$	1,841,187		$	1,783,024		$	1,864,942		$	1,740,647		$	1,554,222		$	1,223,344		$	993,483
Investment securities		296,617			314,793			296,556			325,320			444,664			380,170			163,631
Net unrealized (loss) gain on available-for-sale securities		(65,588	)		(74,060	)		(72,599	)		(68,753	)		(83,269	)		(6,580	)		926
Total assets		2,319,922			2,256,511			2,304,488			2,230,836			2,133,268			2,162,478			1,430,626
Deposits		1,929,488			1,757,858			1,891,355			1,654,329			1,823,235			1,979,410			1,253,754
Shareholders’ equity		196,619			167,084			186,362			165,312			137,538			137,100			127,924

(1)

Annualized for Q1 2025.

(2)

A Non-GAAP performance measure. We provide detailed reconciliations in the “Non-GAAP Performance and Financial Measures Reconciliation” table.

(3)

Average balances are computed using daily average balances.

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NON-GAAP PERFORMANCE AND FINANCIAL MEASURES RECONCILIATION

This prospectus contains certain non-GAAP (Generally Accepted Accounting Principles) financial measures in addition to results presented in accordance with GAAP. Adjusted net income, adjusted diluted earnings per share and adjusted return on average assets are non-GAAP financial measures. Each of the foregoing non-GAAP measures have been adjusted to exclude the impact of losses on sales of investment securities, expenses related to severance and expenses related to surrender of bank-owned life insurance.

Management has presented these non-GAAP financial measures because we believe that these measures provide useful information to management and investors that is supplementary to our financial condition, results of operations and cash flows computed in accordance with GAAP. Management believes that adjusted net income, adjusted diluted earnings per share, adjusted return on average assets and adjusted return on average equity are reasonable measures to understand the Company’s core operating performance and are important to many investors in the marketplace who are interested in understanding our profitability prospects from our core operations.

Specifically, the following reconciling adjustments from GAAP or reported financial measures to non-GAAP adjusted financial measures are limited to:

(i).

loss on sales of investment securities related to our investment portfolio, net of income tax, of an aggregate of $4.49 million in the first and fourth quarter of 2023 and $295,000 in the fourth quarter of 2022;

(ii).

expense related to severance, net of income tax, of $233,000 in the fourth quarter of 2023; and

(iii).

expense related to surrender of bank-owned life insurance of $478,000 in the fourth quarter of 2023.

However, we acknowledge that our non-GAAP financial measures have a number of limitations. As such, you should not view these disclosures as a substitute for results determined in accordance with GAAP, and they are not necessarily comparable to non-GAAP financial measures that other banking companies use. Other banking companies may use names similar to those we use for the non-GAAP financial measures we disclose, but may calculate them differently. You should understand how we and other companies each calculate their non-GAAP financial measures when making comparisons. The income tax effect was calculated using the Company’s effective tax rates for their respective periods.

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	(Unaudited)
	As of or for the						As of or for the
	Three Months Ended						Years Ended
	March 31,						December 31,
*(in thousands, except share and per share data)*	2025			2024			2024			2023			2022			2021			2020
Non-GAAP adjusted net income reconciliation
Net income - GAAP	$	5,436		$	5,246		$	21,015		$	16,801		$	25,023		$	12,264		$	9,627
Loss on sale of securities, net of income tax		-			-			-			4,483			295			-			-
Severance, net of income tax		-			-			-			233			-			-			-
BOLI surrender tax expense		-			-			-			478			-			-			-
Adjusted net income (non-GAAP)	$	5,436		$	5,246		$	21,015		$	21,995		$	25,318		$	12,264		$	9,627

Non-GAAP adjusted diluted earnings per share reconciliation
Diluted earnings per share - GAAP	$	0.71		$	0.69		$	2.76		$	2.24		$	3.60		$	2.02		$	1.61
Loss on sale of securities, net of income tax		-			-			-			0.60			0.04			-			-
Severance, net of income tax		-			-			-			0.03			-			-			-
BOLI surrender tax expense		-			-			-			0.06			-			-			-
Adjusted diluted earnings per share (non-GAAP)	$	0.71		$	0.69		$	2.76		$	2.94		$	3.64		$	2.02		$	1.61

Non-GAAP adjusted return on average assets reconciliation
Net income - GAAP	$	5,436		$	5,246		$	21,015		$	16,801		$	25,023		$	12,264		$	9,627
Average total assets		2,289,935			2,222,778			2,252,814			2,173,969			2,072,989			1,713,888			1,331,510
Return on average assets - GAAP		0.96	%		0.95	%		0.93	%		0.77	%		1.21	%		0.72	%		0.72	%

Adjusted net income (non-GAAP)	$	5,436		$	5,246		$	21,015		$	21,995		$	25,318		$	12,264		$	9,627
Average total assets		2,289,935			2,222,778			2,252,814			2,173,969			2,072,989			1,713,888			1,331,510
Adjusted return on average assets (non-GAAP)		0.96	%		0.95	%		0.93	%		1.01	%		1.22	%		0.72	%		0.72	%

Non-GAAP adjusted return on average equity reconciliation
Net income - GAAP	$	5,436		$	5,246		$	21,015		$	16,801		$	25,023		$	12,264		$	9,627
Average total equity		191,891			166,907			175,348			150,045			135,841			133,646			122,510
Return on average equity - GAAP		11.49	%		12.64	%		11.98	%		11.20	%		18.42	%		9.18	%		7.86	%

Adjusted net income (non-GAAP)	$	5,436		$	5,246		$	21,015		$	21,995		$	25,318		$	12,264		$	9,627
Average total equity		191,891			166,907			175,348			150,045			135,841			133,646			122,510
Adjusted return on average equity (non-GAAP)		11.49	%		12.64	%		11.98	%		14.66	%		18.64	%		9.18	%		7.86	%

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SUMMARY OF RISK FACTORS

This offering involves various risks, and the following is a summary of some of these risks. You should carefully read and consider the matters discussed in the section entitled “Risk Factors” for a more thorough description of these and other risks.

●

Our business and operations are concentrated in California generally, and the Bay Area in particular, and we are more sensitive than our more geographically diversified competitors to adverse changes in the local economy.

●

Economic and political uncertainties, including, changes in the market for public equity offerings, M&A, a slowdown in private equity or venture capital investment levels, or government policy changes have affected and may continue to affect the needs of our borrowers for our lending products. Since our clients’ borrowing needs may be unpredictable, we may not be able to meet our unfunded credit commitments, or adequately reserve for losses associated with our unfunded credit commitments.

●

Because of the credit profile of a portion of our loan portfolio, our levels of nonperforming assets and charge-offs can be volatile. If we need to make material provisions for credit losses in any period, it could reduce net income and/or increase net losses in that period.

●

We participate in reciprocal deposit networks to provide additional FDIC deposit insurance coverage to support our clients and to efficiently manage our balance sheet and liquidity position, which exposes us to risks and if the Bank is not “well capitalized” for regulatory purposes, our ability to participate in reciprocal deposit networks could be limited.

●

The financial services industry and broader economy may be subject to new or changing government policy, legislation and regulation.

●

We operate in a highly competitive market and face increasing competition from a variety of traditional and new financial services providers and rapid technological changes in the financial services industry.

●

Our business is significantly dependent on the real estate markets in which we operate, as a significant percentage of our loan portfolio is secured by real estate. A lack of a liquid secondary market for real estate mortgage loans and mortgage-backed securities could negatively affect our business. We may also be forced to foreclose on the collateral and own the underlying real estate, subjecting us to various risks, including but not limited to, cost of foreclosure, consumer protection initiatives, environmental risks.

●

Our commercial and industrial loans are often dependent on the cash flows of the borrower, which may be unpredictable, and the collateral securing these loans may fluctuate in value.

●

We may not be able to maintain a strong core deposit base or other low-cost funding sources.

●

Liquidity risk could impair our ability to fund our operations and meet our obligations as they become due.

●

Our largest deposit relationships represent a material percentage of our total deposits. The withdrawal of funds by one or more of these significant depositors could require us to rely on more expensive and less stable funding sources. Similarly, our largest loan relationships constitute a material percentage of our total loan portfolio, and any credit issues associated with these loans could have a negative impact on our financial condition and results of operations.

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●

Our industry is highly regulated, and the regulatory framework, together with any future legislative or regulatory changes, may have a materially adverse effect on our operations.

●

We are subject to stringent capital requirements, monetary policies and regulations of the Federal Reserve which could have an adverse effect on our business, financial condition and results of operations.

●

We are subject to laws regarding the privacy, information security and protection of personal information and any violation of these laws or another incident involving personal, confidential, or proprietary information of individuals, including, among others, system failures, cybersecurity breaches of our network security, or wrongful use of artificial intelligence, could damage our reputation and otherwise adversely affect our business.

●

We are a bank holding company and are dependent upon the Bank for cash flow, and the Bank’s ability to make cash distributions is restricted.

●

The net proceeds of the offering may be used for a balance sheet repositioning of our available-for-sale securities portfolio which will result in a pre-tax loss.

●

California law and the provisions of our articles of incorporation and amended and restated bylaws may have an anti-takeover effect, and there are substantial regulatory limitations on changes of control of bank holding companies.

●

We may not pay dividends on our common stock in the future and our ability to pay dividends is subject to certain restrictions.

●

An investment in our common stock is not an insured deposit.

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RISK FACTORS

An investment in our common stock involves a significant degree of risk. The material risks and uncertainties that management believes affect us are described below. Before you decide to invest in our common stock, you should carefully read and consider the risk factors described below as well as the other information included in this prospectus, including our consolidated financial statements and the related notes included elsewhere in this prospectus. Any of these risks, if they are realized, could have an adverse effect on our business, financial condition and results of operations, and consequently, the value of our common stock. In any such case, you could lose all or a portion of your original investment. Further, additional risks and uncertainties not currently known to us or that we currently believe to be immaterial may also adversely affect us. This prospectus also contains forward-looking statements that involve risks and uncertainties. See the section entitled “Cautionary Note Regarding Forward-Looking Statements.”

Risks Related to Our Business

We primarily serve businesses and individuals located in the Bay Area of California (which we define as the counties of Alameda, Contra Costa, Marin, Monterey, Napa, San Francisco, San Mateo, Santa Clara, Santa Cruz, Solano and Sonoma). As a result, we are exposed to risks associated with lack of geographic diversification. As of March 31, 2025, 70% of our loan portfolio was located in the Bay Area and 78% of our loan portfolio was located in California, based on the location of customers for commercial borrowers and based on the location of collateral for real estate loans. Our business is directly impacted by factors such as economic, political and market conditions, broad trends in industry and finance, legislative and regulatory changes, changes in government monetary and fiscal policies and inflation, all of which are beyond our control. Any deterioration in economic conditions, whether caused by national or local concerns, in particular any economic slowdown in California generally, and in the Bay Area in particular, could result in the following consequences, any of which could adversely affect the value of our assets, revenues, results of operations and financial condition: loan delinquencies may increase; problem assets and foreclosures may increase; demand for our products and services may decrease; low cost or noninterest-bearing deposits may decrease; and collateral for loans made by us, especially real estate, may decline in value, in turn reducing customers’ borrowing power, and reducing the value of assets and collateral associated with our existing loans.

Our success significantly depends upon the growth in investments, jobs, income levels, deposits, and occupancy rates in our markets. If the communities in which we operate do not grow or if prevailing economic conditions locally or nationally are unfavorable, our business may not succeed. An economic downturn or prolonged recession would likely result in deterioration of the quality of our loan portfolio and reduce our level of deposits, which in turn would hurt our business. If we experience an economic downturn or a prolonged economic recession occurs in the economy as a whole, borrowers will be less likely to repay their loans as scheduled. Moreover, in many cases the value of the real estate or other collateral that secures many of our loans would be adversely affected by an economic downtown or a prolonged economic recession. Unlike many larger institutions, we are not able to spread the risks of unfavorable local economic conditions across a large number of diversified economies. An economic downturn could, therefore, result in losses that adversely affect our business, financial condition and results of operations.

Our commercial real estate loan portfolio could be impacted by a decline in the Bay Area commercial real estate market.

As of March 31, 2025, 96% of our commercial real estate loan portfolio was located within the Bay Area. While the Bay Area historically had a strong, robust real estate market, it has experienced significant disruption due to shifting work patterns still resulting from the Covid-19 pandemic along with the overall high cost of real estate ownership in the area. The San Francisco office market recovery, in particular, has been slower than other parts of the country with office vacancy rates of approximately 30% as of March 31, 2025, as return to office policies have been implemented slowly. Additionally, workforce reductions within the technology sector and declining demand from the life sciences industry have further impacted demand for office space in the Bay Area. Continued weakness in the Bay Area commercial real estate market could negatively affect our financial condition and results of operations through deterioration in the quality of our commercial real estate portfolio and reduced demand for many of our banking products and services.

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The small to medium-sized businesses to which we lend may have fewer resources to weather adverse business developments, which may impair a borrower’s ability to repay a loan.

We target our business development and marketing strategy primarily to serve the banking and financial services needs of small to medium-sized businesses. These businesses generally have fewer financial resources in terms of capital or borrowing capacity than larger entities, frequently have smaller market shares than their competition, may be more vulnerable to economic downturns, often need substantial additional capital to expand or compete, and may experience substantial volatility in operating results, any of which may impair their ability as a borrower to repay a loan. In addition, the success of small and medium-sized businesses often depends on the management skills, talents and efforts of one or two people or a small group of people, and the death, disability or resignation of one or more of these people could have an adverse impact on the business and its ability to repay its loan. If general economic conditions negatively impact the markets in which we operate or any of our borrowers otherwise are affected by adverse business developments, our small to medium-sized borrowers may be disproportionately affected and their ability to repay outstanding loans may be negatively affected, resulting in an adverse effect on our business, financial condition and results of operations.

Our business is significantly dependent on the real estate markets in which we operate, as a significant percentage of our loan portfolio is secured by real estate.

As of March 31, 2025, approximately 54% of our loan portfolio was comprised of owner and non-owner occupied construction, land & development and commercial real estate loans, with substantially all of these real estate loans concentrated in California. Real property values in our market may be different from real property values in other markets or in the United States as a whole and may be affected by a variety of factors outside of our control and the control of our borrowers, including national and local economic conditions, generally. Declines in real estate values, including prices for homes and commercial properties, could result in a deterioration of the credit quality of our borrowers, an increase in the number of loan delinquencies, defaults and charge-offs, and reduced demand for our products and services, generally. Our commercial real estate loans may have a greater risk of loss than residential mortgage loans, in part because these loans are generally larger or more complex to underwrite. In addition, real estate construction and acquisition and development loans have risks not present in other types of loans, including risks associated with construction cost overruns, project completion risk, general contractor credit risk and risks associated with the ultimate sale or use of the completed construction. In addition, declines in real property values in California could reduce the value of any collateral we realize following a default on these loans and could adversely affect our ability to continue to grow our loan portfolio consistent with our underwriting standards. We may have to foreclose on real estate assets if borrowers default on their loans, in which case we are required to record the related asset to the then fair market value of the collateral, which may ultimately result in a loss. An increase in the level of nonperforming assets increases our risk profile and may affect the capital levels regulators believe are appropriate in light of the ensuing risk profile. Our failure to effectively mitigate these risks could have an adverse effect on our business, financial condition and results of operations.

A portion of our loan portfolio has a credit profile different from that of many other banking companies. The credit profile of our clients varies across our loan portfolio, based on the nature of the lending we do for different market segments. Our Venture Lending division generally makes loans to companies with modest or negative cash flows and no established record of profitable operations. Repayment of these loans is generally dependent upon receipt by borrowers of additional equity financing from venture firms or others, or in some cases, a successful sale to a third party, public offering or other form of liquidity event. If there is an overall decline in venture capital financing activity, as well as mergers and acquisitions and initial public offerings, which are activities on which venture firms rely to “exit” investments to realize returns, the financial health of some of our client companies may deteriorate. Venture firms may continue to provide financing in a more selective manner, at lower levels, and/or on less favorable terms, any of which may have an adverse effect on our borrowers that are otherwise dependent on such financing to repay their loans to us. Because of the intense competition and rapid technological change that characterizes the companies in certain industry sectors, a borrower’s financial position can deteriorate rapidly.

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Through our fund finance loans, many of our clients have lines of credit, the repayment of which is dependent on the payment of capital calls or management fees by the underlying limited partner investors in the funds managed by these firms. These limited partner investors may face liquidity issues or have difficulties meeting their financial commitments, especially during unstable economic times, which may lead to our clients’ inability to meet their repayment obligations to us.

Based on the credit profile of a portion of our loan portfolio, our level of nonperforming loans, loan charge-offs and allowance for credit losses can be volatile and can vary materially from period to period. Although our average nonperforming loans and loan charge-offs have been relatively low historically, due to the credit profile of a portion of our loan portfolio and the nature of our borrowers, we can potentially have quarterly or interim periods where nonperforming loans and charge-offs significantly exceed our historical averages. Increases in our level of nonperforming loans or loan charge-offs may require us to increase our provision for credit losses on loans in any period, which could reduce our net income or cause net losses in that period. Additionally, such increases in our level of nonperforming loans or loan charge-offs may also have an adverse effect on our capital ratios, financial condition, results of operations and market perceptions of us.

Changes in the market for public equity offerings, M&A or a slowdown in private equity or venture capital investment levels have affected and may continue to affect the needs of our borrowers for our lending products.

Our Venture Lending division and Specialty Finance division provide commercial loans to start-up, growth stage, and lower middle market companies which are supported by private equity and venture capital investors. While an active market for public equity offerings, financings and M&A activity generally has positive implications for our business, one negative consequence is that some of these commercial borrowers may pay off or reduce their loans with us if they complete a public equity offering, are acquired by or merge with another entity or otherwise receive a significant equity investment.

Further, a slowdown in overall private equity or venture capital investment levels may reduce the need for our borrowers to utilize our fund finance lending products, including borrowing from our capital call lines of credit, which are typically utilized by our private equity and venture capital fund clients to make investments prior to receipt of capital called from their respective limited partners. Any significant reduction in the outstanding amounts of our loans or under our lines of credit could have an adverse effect on our business, financial condition and results of operations.

The borrowing needs of our clients may be unpredictable, especially during a challenging economic environment. We may not be able to meet our unfunded credit commitments, or adequately reserve for losses associated with our unfunded credit commitments, which could have an adverse effect on our business, financial condition, results of operations and reputation.

A commitment to extend credit is a formal agreement to lend funds to a client as long as there is no violation of any condition established under the agreement. The actual borrowing needs of our clients under these credit commitments have historically been lower than the contractual amount of the commitments. A significant portion of these commitments expire without being drawn upon. Because of the credit profile of our clients we serve primarily through our Venture Lending, Corporate Banking and Construction divisions, we typically have a substantial amount of total unfunded credit commitments, which are not reflected on our balance sheet. Actual borrowing needs of our clients may exceed our expected funding requirements, especially during a challenging economic environment when our client companies may be more dependent on our credit commitments due to the lack of available credit elsewhere, the increasing costs of credit, or the limited availability of financings from venture firms. In addition, limited partner investors of our venture capital clients may fail to meet their underlying investment commitments due to liquidity or other financing issues, which may increase our clients’ borrowing needs. Any failure to meet our unfunded credit commitments in accordance with the actual borrowing needs of our clients may have an adverse effect on our business, financial condition, results of operations and reputation.

Additionally, we establish a reserve for losses associated with our unfunded credit commitments. The level of the reserve for unfunded credit commitments is determined by following a methodology similar to that used to establish our allowance for credit losses in our funded loan portfolio. The reserve is based on credit commitments outstanding, credit quality of the loan commitments, and management’s estimates and judgment, and is susceptible to significant changes. There can be no assurance that our reserve for unfunded credit commitments will be adequate to provide for actual losses associated with our unfunded credit commitments. An increase in the reserve for unfunded credit commitments in any period would result in a charge to our earnings, which would reduce our net income or increase net losses in that period.

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We are subject to interest rate risk, which could adversely affect our profitability.

Our profitability, like that of most financial institutions of our type, depends largely on our net interest income, the difference between interest income on interest-earning assets, such as loans and investment securities, and interest expense on interest-bearing liabilities, such as deposits and borrowings. Changes in interest rates can increase or decrease our net interest income, because different types of assets and liabilities may react differently, and at different times, to market interest rate changes.

Interest rates are highly sensitive to many factors that are beyond our control, including general economic conditions and policies of various governmental and regulatory agencies and, in particular, the Board of Governors of the Federal Reserve System (the “Federal Reserve” or “FRB”). Changes in monetary policy, including changes in interest rates, could influence not only the interest we receive on loans and securities and the interest we pay on deposits and borrowings, but such changes could affect our ability to originate loans and obtain deposits, the fair value of our financial assets and liabilities, and the average duration of our assets and liabilities. Our interest sensitivity profile was asset sensitive as of March 31, 2025. If the interest rates paid on deposits and other borrowings increase at a faster rate than the interest rates received on loans and other investments, our net interest income, and therefore earnings, could be adversely affected. 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 other borrowings. Any substantial, unexpected or prolonged change in market interest rates could have an adverse effect on our business, financial condition and results of operations.

In addition, an increase in interest rates could also have a negative impact on our results of operations by reducing the demand for loans, decreasing the ability of borrowers to repay their current loan obligations, and increasing early withdrawals on term deposits. These circumstances could not only result in increased loan defaults, foreclosures and charge-offs, but also reduce collateral values and necessitate further increases to the allowance for credit losses, which could have an adverse effect on our business, financial condition and results of operations. While the Federal Reserve has recently lowered the target range for the federal funds rate, it has also indicated that it will assess incoming data, evolving outlook and balance of risks in making any future decisions regarding the federal funds rate. Changes to the target range are inherently unpredictable. A decrease in the general level of interest rates, may affect us through, among other things, increased prepayments on our loan portfolio, and our cost of funds may not fall as quickly as yields on earning assets. Our asset-liability management strategy may not be effective in mitigating exposure to the risks related to changes in market interest rates.

Increases in interest rates have in the past resulted in, and could in the future result in, unrealized losses on our investment securities portfolio.

We invest a portion of assets in investment securities. As of March 31, 2025, we held approximately 13% of our assets in an investment securities portfolio containing primarily of agency mortgage-backed securities and agency collateralized mortgage obligations that are sensitive to changes in interest rates. Interest rate increases have resulted in, and could in the future result in, unrealized losses in our investment securities portfolio, as increases in interest rates ordinarily decrease the estimated fair value of fixed income securities and result in decreased unrealized gains or increased unrealized losses on fixed income securities. We recognize the accumulated change in estimated fair value of these fixed income securities in net income when we realize a gain or loss upon the sale of the security. As of March 31, 2025, our net unrealized losses on securities available for sale totaled $65.6 million or $46.4 million net of tax, which collectively equaled 19% of our Tier 1 capital. If we determined to sell all or a material portion of our investment securities portfolio, we may recognize significant losses that would adversely affect our business, financial condition or results of operations and reduce our regulatory capital ratios. See section entitled “Use of Proceeds-Potential Repositioning of Our Available-for-Sale Securities Portfolio” for discussion on how we may potentially use the proceeds from this offering to reposition a substantial portion of such portfolio.

GAAP requires that we carry our available-for-sale debt securities at fair value on our consolidated balance sheets. Unrealized gains or losses on these debt securities, reflecting the difference between the fair value and the amortized cost, net of its tax effect, are reported as a component of shareholders’ equity. In certain instances, GAAP requires recognition through earnings of declines in the fair value of securities that are deemed to be other than temporarily impaired. If our debt securities decline in fair value and other than temporary impairments of these assets results, we would be required to recognize a loss which could materially reduce our net income and capital levels.

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We participate in reciprocal deposit networks to provide additional FDIC deposit insurance coverage to support our clients and to efficiently manage our balance sheet and liquidity position, which exposes us to risks that may adversely affect our business, financial condition or results of operations.

Reciprocal deposits are deposits exchanged through various reciprocal deposit networks to increase deposit insurance coverage. They allow us to offer our clients access to additional FDIC insurance coverage while receiving back the full amount of the client’s deposit. These programs help us efficiently manage our balance sheet and liquidity position by accessing additional funding from other institutions while mitigating risk and complying with regulatory requirements. Further, under FDIC regulations, qualifying reciprocal deposits of over 20% of the liabilities of the Bank may be classified as brokered deposits. As of March 31, 2025, we had $868.3 million of reciprocal deposits, or 45% of our total deposit portfolio, of which $447.8 million are classified as brokered deposits pursuant to FDIC regulations, as well as an additional $86.9 million of other brokered deposits resulting in the Bank having an aggregate of $534.7 million of brokered deposits.

We are subject to various fees associated with the placement and management of deposits within the networks, which increase our interest-bearing deposits and overall cost of funds, and could lower our net interest margin. If for any reason, we or our clients were no longer able to participate in these reciprocal deposit networks we may experience deposit withdrawals, lose access to deposits funding sources, and have to find alternative sources of borrowing, which could adversely affect our liquidity and capital. Further, our ability to provide our clients with deposit placement services in these networks depends on the participation of other banks within the networks, and any issues affecting these banks, including concerns related to participating banks’ financial stability, could disrupt our ability to provide these services to our clients.

Participation in the networks is also subject to certain terms and conditions, which include limitations on the amount of each participating client’s deposits that may be placed at other banks within the network, on the maximum amount of deposits that a bank may place at other banks as reciprocal deposits, and limitations on a bank’s ability to receive reciprocal deposits if the Bank is not “well capitalized” under the applicable federal banking regulations. The FDIC limits the ability of a bank to accept brokered deposits to those insured depository institutions that are “well capitalized.” Institutions that are less than “well capitalized” cannot accept, renew or roll over any brokered deposit unless they have applied for and been granted a waiver by the FDIC. Any of these conditions could limit our ability to participate in the networks, potentially preventing us from achieving the intended benefits and thus adversely affect our business, financial condition or results of operations.

The financial services industry and broader economy may be subject to new or changing government policy, legislation and regulation.

Our success depends, to a certain extent, upon local, national and global economic and political conditions, as well as governmental monetary, trade and interest rate policies. Conditions such as an economic recession, rising unemployment, the effects of tariffs, trade wars, inflationary prices and other factors beyond our control may adversely affect our asset quality, deposit levels, loan demand, demand for our products and services and the ability to manage costs associated with employees and vendors. The occurrence of any of the foregoing events could have an adverse effect on our business, financial condition or results of operations.

If the Bank is not “well capitalized” for regulatory purposes, our ability to participate in reciprocal deposit networks could be limited.

The FDIC limits the ability of a bank to accept brokered deposits to those insured depository institutions that are “well capitalized”. Institutions that are less than “well capitalized” cannot accept, renew or roll over any brokered deposit unless they have applied for and been granted a waiver by the FDIC. As of March 31, 2025, the Bank had an aggregate of $534.7 million of deposit liabilities categorized as brokered deposits. FDIC regulations impose a cap on reciprocal deposits that may be exempt from being classified as brokered deposits depending on a bank’s capitalization and rating status, including a general cap equal to 20% of the Bank’s total liabilities. As a result, as of March 31, 2025, $447.8 million of our total reciprocal deposits were considered brokered deposits by the FDIC and are included within the aggregate of $534.7 million of brokered deposits. Accordingly, if the Bank became less than “well capitalized” for regulatory purposes, our ability to participate in any reciprocal deposit network (or otherwise accept other brokered deposits) could be limited which could adversely affect our liquidity, business, financial condition or results of operations.

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We operate in a highly competitive market and face increasing competition from a variety of traditional and new financial services providers.

We have many competitors. Our principal competitors are commercial and community banks, credit unions, savings and loan associations, venture debt lenders and consumer finance companies, including large national financial institutions that operate in our market. Many of these competitors are larger than us, have significantly more resources, greater brand recognition and more extensive and established branch networks or geographic footprints than we do, and may be able to attract customers more effectively than we can. Because of their scale, many of these competitors can be more aggressive than we can on loan and deposit pricing, and may better afford and make broader use of media advertising, support services and electronic technology than we do. Also, many of our non-bank competitors have fewer regulatory constraints and may have lower cost structures. We compete with these other financial institutions both in attracting deposits and making loans. We expect competition to continue to increase as a result of legislative, regulatory and technological changes, the continuing trend of consolidation in the financial services industry and the emergence of alternative banking sources. Our profitability in large part depends upon our continued ability to compete successfully with traditional and new financial services providers, some of which maintain a physical presence in our market and others of which maintain only a virtual presence. Increased competition could require us to increase the rates we pay on deposits or lower the rates that we offer on loans, which could reduce our profitability.

Additionally, like many of our competitors, we rely on customer deposits as our primary source of funding for our lending activities, and we continue to seek and compete for customer deposits to maintain this funding base. Our future growth will largely depend on our ability to retain and grow our deposit base. As of March 31, 2025, we had $1.9 billion in deposits and a loan to deposit ratio of 95%. As of the same date, using deposit account related information such as tax identification numbers, account vesting and account size, we estimate that 35% of our deposits exceeded the insurance limits established by the FDIC. Although we have historically maintained a high deposit customer retention rate, these deposits are subject to potentially dramatic fluctuations in availability or price due to certain factors outside of our control, such as increasing competitive pressures for deposits, changes in interest rates and returns on other investment classes, customer perceptions of our financial health and general reputation, or a loss of confidence by customers in us or the banking sector generally, which could result in significant outflows of deposits within short periods of time or significant changes in pricing necessary to maintain current customer deposits or attract additional deposits. Additionally, any such loss of funds could result in lower loan originations, which could have an adverse effect on our business, financial condition and results of operations. Our failure to compete effectively in our market could restrain our growth or cause us to lose market share, which could have an adverse effect on our business, financial condition and results of operations.

The deposit concentration in our Venture Lending Division may expose us to heightened liquidity risk.

Our Venture Lending division provides banking services to a broad spectrum of venture-backed technology companies. The banking needs of these clients are such that Venture Lending clients commonly generate balances of deposits in excess of their borrowing needs. These clients tend to maintain larger deposit balances, which can be volatile since the clients are primarily early-to late-stage startup companies that rely on future rounds of funding and have negative operating cash flow.

At March 31, 2025, we had approximately $685 million in Venture Lending deposits. Approximately 25% of these deposits are provided by clients who hold deposit accounts with us without a corresponding lending or credit relationship. These deposit-only clients, particularly those with large balances, may be more inclined to withdraw funds quickly in response to market stress or perceived concerns about our financial stability, as they may lack broader, long-term ties to the Bank.

Should we experience a loss of depositor confidence with these clients, whether due to broader market disruptions, idiosyncratic events affecting our financial condition, or negative perceptions related to our venture-focused strategy, we may face deposit outflows. This could require us to rely on more expensive or less stable sources of liquidity, such as wholesale funding or the sale of investment securities, which could adversely affect our financial condition, results of operations, and reputation.

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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.

Rapid technological changes are regularly occurring in the financial services industry, with frequent introductions of new technology-driven products and services. The effective use of technology increases efficiency and enables financial institutions to better serve customers and reduce costs. Our future success will depend, in part, upon our ability to address the needs of our customers by using technology to provide products and services that will satisfy customer demands for convenience, as well as to create additional efficiencies in our operations. Many of our competitors have substantially greater resources to invest in technological improvements than we have. We may not be able to implement new technology-driven products and services effectively or be successful in marketing these products and services to our customers. Failure to keep pace successfully with technological change affecting the financial services industry could harm our ability to compete effectively and could have an adverse effect on our business, financial condition and results of operations. As these technologies improve in the future, we may be required to make significant capital expenditures in order to remain competitive, which may increase our overall expenses and have an adverse effect on our business, financial condition and results of operations.

We are dependent on the use of data and modeling in both our management’s decision-making generally and in meeting regulatory expectations in particular.

The use of statistical and quantitative models and other quantitatively-based analyses is endemic to bank decision making and regulatory compliance processes, and the employment of such analyses is becoming increasingly widespread in our operations. Liquidity stress testing, interest rate sensitivity analysis, allowance for credit loss measurement, portfolio stress testing and the identification of possible violations of anti-money laundering regulations are examples of areas in which we are dependent on models and the data that underlie them. We anticipate that model-derived insights will be used more widely in our decision making in the future. While these quantitative techniques and approaches improve our decision making, they also create the possibility that faulty data or flawed quantitative approaches could yield adverse outcomes or regulatory scrutiny. Secondarily, because of the complexity inherent in these approaches, misunderstanding or misuse of their outputs could similarly result in suboptimal decision making, which could have an adverse effect on our business, financial condition and results of operations.

Our allowance for credit losses may be inadequate to absorb losses inherent in the loan portfolio.

Experience in the banking industry indicates that a portion of our loans will become delinquent, and that some may only be partially repaid or may never be repaid at all. We may experience losses for reasons beyond our control, such as the impact of general economic conditions on customers and their businesses. Accordingly, we maintain an allowance for credit losses that represents management’s judgment of probable losses and risks inherent in our loan portfolio. In determining the size of our allowance for credit losses, we rely on an analysis of our loan portfolio considering historical loss experience, volume and types of loans, trends in classification, volume and trends in delinquencies and nonaccruals, economic conditions and other pertinent information. The determination of the appropriate level of the allowance for credit losses is inherently highly subjective and requires us to make significant estimates of and assumptions regarding current credit risk and future trends, all of which may change materially. Although we endeavor to maintain our allowance for credit losses at a level adequate to absorb any inherent losses in the loan portfolio, these estimates of loan losses are necessarily subjective and their accuracy depends on the outcome of future events. As of March 31, 2025, our allowance for credit losses on loans and unfunded commitments was $21.0 million.

Deterioration of economic conditions affecting borrowers, new information regarding existing loans, inaccurate management assumptions, identification of additional problem loans, temporary modifications, loan forgiveness, automatic forbearance and other factors, both within and outside of our control, may result in our experiencing higher levels of nonperforming assets and charge-offs, and incurring loan losses in excess of our current allowance for credit losses, requiring us to make material additions to our allowance for credit losses, which could have an adverse effect on our business, financial condition and results of operations.

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Additionally, federal and state banking regulators, as an integral part of their supervisory function, periodically review the allowance for credit losses. These regulatory agencies may require us to increase our provision for loan losses or to recognize further loan charge-offs based upon their judgments, which may be different from ours. If we need to make significant and unanticipated increases in the loss allowance in the future, or to take additional charge-offs for which we have not established adequate reserves, our business, financial condition and results of operations could be adversely affected at that time.

Effective January 1, 2023, we adopted the Financial Accounting Standards Board (“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 (the “CECL”). CECL changes the ALL 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 allowance for credit loss (“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 adversely affect our operating results.

We are exposed to higher credit risk by our commercial real estate loans.

Commercial real estate loans usually involve higher credit risks than other types of mortgage loans. As of March 31, 2025, 42% of our loan portfolio consisted of commercial real estate, both owner-occupied, non-owner occupied and multifamily. These types of loans also involve larger loan balances to a single borrower or groups of related borrowers. These higher credit risks are further heightened when the loans are concentrated in a small number of larger borrowers leading to relationship exposure.

Non-owner occupied commercial real estate loans may be affected to a greater extent than residential loans by adverse conditions in real estate markets or the economy because commercial real estate borrowers’ ability to repay their loans depends on successful development of their properties, in addition to the factors affecting residential real estate borrowers. These loans also involve greater risk because they generally are not fully amortizing over the loan period, but have a balloon payment due at maturity. A borrower’s ability to make a balloon payment typically will depend on being able to either refinance the loan or sell the underlying property in a timely manner.

Banking regulators closely supervise banks’ commercial real estate lending activities, and may require banks with higher levels of commercial real estate loans to implement improved underwriting, internal controls, risk management policies and portfolio stress testing, as well as possibly higher levels of allowances for losses and capital levels as a result of commercial real estate lending growth and exposures.

Owner-occupied commercial real estate loans are typically based on the borrowers’ ability to repay the loans from the cash flow of their businesses. These loans may involve greater risk because the availability of funds to repay each loan depends substantially on the success of the business itself. In addition, the assets securing the loans have the following characteristics: (i) they depreciate over time; (ii) they are difficult to appraise and liquidate; and (iii) they fluctuate in value based on the success of the business.

Commercial real estate loans and construction loans are more susceptible to a risk of loss during a downturn in the business cycle. For example, the COVID-19 pandemic had adverse effects on our loans for office and hospitality space, which are dependent for repayment on the successful operation and management of the associated commercial real estate. Our underwriting, review and monitoring cannot eliminate all of the risks related to these loans.

Our commercial and industrial loans are often dependent on the cash flows of the borrower, which may be unpredictable, and the collateral securing these loans may fluctuate in value.

At March 31, 2025, we had $803.9 million of commercial and industrial loans, which comprised 44% of our total loan portfolio. Our commercial and industrial loans are originated primarily based on the anticipated cash flow and general liquidity of the borrower and secondarily on the underlying collateral provided by the borrower and the repayment capacity of any guarantor. A borrower’s cash flow may be unpredictable, however, and collateral securing these loans may fluctuate in value. Although these loans are often collateralized by equipment, inventory, accounts receivable, or other business assets, the liquidation of collateral in the event of default is often an insufficient source of repayment because accounts receivable may be uncollectible and inventories may be obsolete or of limited use. In addition, business assets may depreciate over time, may be difficult to appraise, and may fluctuate in value based on the success of the business. Accordingly, the repayment of commercial loans depends primarily on the cash flow and credit worthiness of the borrower and secondarily on the underlying collateral value provided by the borrower and liquidity of the guarantor.

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A portion of our loan portfolio consists of construction loans, which may expose us to increased credit risk.

At March 31, 2025, $227.2 million, or 12%, of our total loan portfolio consisted of construction loans. Construction lending is generally considered to involve a higher degree of risk than single-family permanent mortgage lending because funds are advanced upon the collateral for the project based on an estimate of the costs that will produce a future value at completion. Because of the uncertainties inherent in estimating construction costs, as well as the market value of the completed project and the effects of governmental regulation on real property, it is relatively difficult to evaluate accurately the total funds required to complete a project and the completed project loan-to-value ratio. With regard to loans originated to builders for speculative projects, changes in the demand, such as for new housing and higher than anticipated building costs, may cause actual results to vary significantly from those estimated. A downturn in the housing, or the real estate market, could increase loan delinquencies, defaults, and foreclosures, and significantly impair the value of our collateral and our ability to sell the collateral upon foreclosure.

We may not be able to maintain a strong core deposit base or other low-cost funding sources.

We depend on checking, savings and money market deposit account balances and other forms of customer deposits as our primary source of funding for our lending activities. Future growth in our banking business will largely depend on our ability to maintain and grow a strong and low-cost deposit base. There is no assurance that we will be able to grow and maintain our deposit base. Deposit balances can decrease when customers perceive alternative investments, such as higher yielding money market funds, the stock market, bond market or real estate, as providing a better risk/return tradeoff. If customers move money out of bank deposits and into investments (or similar deposit products at other institutions that may provide a higher rate of return), we could lose a relatively low cost source of funds, increasing our funding costs and reducing our net interest income and net income. Additionally, any such loss of funds could result in lower loan originations, which could adversely impact our growth strategy and have an adverse effect on our business, financial condition or results of operations.

Liquidity risk could impair our ability to fund operations and meet our obligations as they become due.

Liquidity is essential to our business and we monitor our liquidity and manage our liquidity risk at the holding company and bank level. We require sufficient liquidity to fund asset growth, meet customer loan requests, customer deposit maturities and withdrawals, payments on our debt obligations as they come due and other cash commitments under both normal operating conditions and other unpredictable circumstances, including events causing industry or general financial market stress. Liquidity risk can increase due to several factors, which include, but are not limited to, an over-reliance on a particular source of funding, changes in the liquidity needs of our depositors, adverse regulatory actions against us, or a downturn in the markets in which our loans are concentrated.

Market conditions or other events could also negatively affect the level or cost of funding, affecting our ongoing ability to accommodate liability maturities and deposit withdrawals, meet contractual obligations, and fund asset growth and new business transactions at a reasonable cost, in a timely manner, and without adverse consequences. Particularly, the deposits in our Venture Lending division can be volatile since our Venture Lending clients are primarily early to late-stage startup companies and they rely on future rounds of funding and have negative operating cash flow. Our inability to raise funds through deposits, borrowings, the sale of loans, and other sources could have an adverse effect on our business, financial condition and results of operations, and could result in the closure of the Bank.

Other primary sources of funds consist of cash flows from operations, maturities and sales of investment securities and proceeds from issuance and sale of our equity and debt securities. Additional liquidity is provided by the ability to borrow from the Federal Home Loan Bank of San Francisco (“FHLB”), and the Federal Reserve Bank of San Francisco to fund our operations. We may also borrow funds from third-party lenders, such as other financial institutions, and have access to other funding avenues including brokered deposits. Our access to funding sources in amounts adequate to finance our activities or on acceptable terms could be impaired by factors that affect our organization specifically or the financial services industry or economy in general. Our access to funding sources could also be affected by a decrease in the level of our business activity as a result of a downturn in our primary market or by one or more adverse regulatory actions against us.

Any substantial, unexpected, and/or prolonged change in the level or cost of liquidity could impair our ability to fund operations and meet our obligations as they become due and could have an adverse effect on our business, financial condition and results of operations. Although we have historically been able to replace maturing deposits and advances if desired, we may not be able to replace such funds in the future if our financial condition, the financial condition of the FHLB or market conditions change. FHLB borrowings and other current sources of liquidity may not be available or, if available, sufficient to provide adequate funding for operations and to support our continued growth. The unavailability of sufficient funding could have an adverse effect on our business, financial condition and results of operations.

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We may be adversely affected by changes in the actual or perceived soundness or condition of other financial institutions.

Financial services institutions may be interconnected as a result of trading, investment, liquidity management, clearing, counterparty and other relationships. Within the financial services industry, loss of public confidence, including through default by any one institution, could lead to liquidity challenges or to defaults by other institutions. Concerns about, or a default by or failure of, one institution could lead to significant liquidity problems and losses or defaults by other institutions, as the commercial and financial soundness of many financial institutions is closely related as a result of these credit, trading, clearing and other relationships. Even the perceived lack of creditworthiness of, or questions about, a counterparty may lead to market-wide liquidity problems and losses or defaults by various institutions. This systemic risk may adversely affect financial intermediaries, such as clearing agencies, banks and exchanges with which we interact on a daily basis or key funding providers such as the Federal Home Loan Bank of San Francisco (“FHLB”), any of which could have an adverse effect on our access to liquidity or otherwise have an adverse effect on our business, financial condition or results of operations. For example, we faced significant challenges in 2023 as several high-profile bank failures, including institutions headquartered in California, disrupted the banking industry and triggered market-wide liquidity concern. As a result, we suffered a decrease in deposits of approximately $205.2 million, or approximately 11% of total deposits, during the first quarter of 2023.

Our risk management framework may not be effective in mitigating risks and/or losses to us.

Our risk management framework is comprised of various processes, systems, strategies, and governances, and is designed to manage the types of risk to which we are subject, including, among others, credit, market, liquidity, interest rate, operational and compliance. Our framework also includes financial or other modeling methodologies that involve management assumptions and judgment. Our risk management framework may not be effective under all circumstances. Our risk management framework may not adequately mitigate any risk or loss to us. If our risk management framework is not effective, we could suffer unexpected losses and our business, financial condition and results of operations could be adversely affected. We may also be subject to potentially adverse regulatory consequences.

We engage in lending secured by real estate and may be forced to foreclose on the collateral and own the underlying real estate, subjecting us to the costs and potential risks associated with the ownership of real property, or consumer protection initiatives or changes in state or federal law may substantially raise the cost of foreclosure or prevent us from foreclosing at all.

Since we originate loans secured by real estate, we may have to foreclose on the collateral property to protect our investment and may thereafter own and operate such property, in which case we would be exposed to the risks inherent in the ownership of real estate. The amount that we, as a mortgagee, may realize after a foreclosure depends on factors outside of our control, including, but not limited to, general or local economic conditions, environmental cleanup liabilities, assessments, insurance coverage, interest rates, real estate tax rates, operating expenses of the mortgaged properties, our ability to obtain and maintain adequate occupancy of the properties, zoning laws, governmental and regulatory rules, and natural disasters. Our inability to manage the amount of costs or size of the risks associated with the ownership of real estate, or write-downs in the value of other real estate owned (“OREO”), could have an adverse effect on our business, financial condition and results of operations.

Additionally, consumer protection initiatives or changes in state or federal law may substantially increase the time and expenses associated with the foreclosure process or prevent us from foreclosing at all. A number of states in recent years have either considered or adopted foreclosure reform laws that make it substantially more difficult and expensive for lenders to foreclose on properties in default. Additionally, federal and state regulators have prosecuted or pursued enforcement action against a number of mortgage servicing companies for alleged consumer law violations. If new federal or state laws or regulations are ultimately enacted that significantly raise the cost of foreclosure or raise outright barriers to foreclosure, they could have an adverse effect on our business, financial condition and results of operations.

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Regulatory requirements affecting our loans secured by commercial real estate could limit our ability to leverage our capital and adversely affect our growth and profitability.

The federal banking agencies have issued guidance regarding concentrations in commercial real estate lending for institutions that are deemed to have particularly high concentrations of commercial real estate loans within their lending portfolios. Under this guidance, an institution that has (i) total reported loans for construction, land development, and other land which represent 100% or more of the institution’s total risk-based capital; or (ii) total commercial real estate loans representing 300% or more of the institution’s total risk-based capital, where the outstanding balance of the institution’s commercial real estate loan portfolio has increased 50% or more during the prior 36 months, is identified as having potential commercial real estate concentration risk. An institution that is deemed to have concentrations in commercial real estate lending is expected to employ heightened levels of risk management with respect to its commercial real estate portfolios, and may be required to maintain higher levels of capital. We have a concentration in commercial real estate loans and we have experienced significant growth in our commercial real estate portfolio in recent years. As of March 31, 2025, commercial real estate loans represented 276% of our total risk-based capital. We cannot guarantee that any risk management practices we implement will be effective to prevent losses relating to our commercial real estate portfolio. Management has extensive experience in commercial real estate lending, and has implemented and continues to maintain heightened portfolio monitoring and reporting, and we believe strong underwriting criteria with respect to our commercial real estate portfolio. Nevertheless, we could be required to maintain higher levels of capital as a result of our commercial real estate concentration, which could limit our growth, require us to obtain additional capital, and have an adverse effect on our business, financial condition and results of operations.

We could be subject to environmental risks and associated costs on our foreclosed real estate assets.

Our loan portfolio includes loans secured by real property. During the ordinary course of business, we may foreclose on and take title to properties securing loans. There is a risk that hazardous or toxic substances could be found on these properties and that we could be liable for remediation costs, as well as personal injury and property damage. Environmental laws may require us to incur substantial expenses and may materially reduce the affected property’s value or limit our ability to sell the affected property. The remediation costs and any other financial liabilities associated with an environmental hazard could have an adverse effect on our business, financial condition and results of operations.

Our recovery on commercial real estate loans could be further reduced by a lack of a liquid secondary market for such mortgage loans and mortgage-backed securities.

Our current business strategy includes an emphasis on commercial real estate lending. A secondary market for most types of 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 commercial real estate loan, our holding period for the collateral typically is longer than for residential mortgage loans because there are fewer potential purchasers of the collateral. Accordingly, charge-offs on commercial real estate loans may be larger as a percentage of the total principal outstanding than those incurred with our residential or consumer loan portfolios.

The appraisals and other valuation techniques we use in evaluating and monitoring loans secured by real property and other real estate owned may not accurately reflect the net value of the asset.

In considering whether to make a loan secured by real property, we generally require an appraisal of the property. However, an appraisal is only an estimate of the value of the property at the time the appraisal is made, and, as real estate values may change significantly in value in relatively short periods of time (especially in periods of heightened economic uncertainty), this estimate may not accurately reflect the net value of the collateral after the loan is made. As a result, we may not be able to realize the full amount of any remaining indebtedness when we foreclose on and sell the relevant property. In addition, we rely on appraisals and other valuation techniques to establish the value of other real estate owned (“OREO”) that we acquire through foreclosure proceedings and to determine loan impairments. If any of these valuations are inaccurate, our consolidated financial statements may not reflect the correct value of our OREO, if any, and our allowance for credit losses may not reflect accurate loan impairments. Inaccurate valuation of OREO or inaccurate provisioning for loan losses could have an adverse effect on our business, financial condition and results of operations.

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Federal, state and local consumer lending laws may restrict our ability to originate certain loans or increase our risk of liability with respect to such loans.

Federal, state and local laws have been adopted that are intended to prevent certain lending practices considered “predatory.” These laws prohibit practices such as steering borrowers away from more affordable products, selling unnecessary insurance to borrowers, repeatedly refinancing loans and making loans without a reasonable expectation that the borrowers will be able to repay the loans irrespective of the value of the underlying property. It is our policy not to make predatory loans and to determine borrowers’ ability to repay. Nonetheless, the law and related rules create the potential for increased liability with respect to our lending and loan investment activities. Compliance with these laws increases our cost of doing business.

Additionally, consumer protection initiatives or changes in state or federal law may substantially increase the time and expenses associated with the foreclosure process or prevent us from foreclosing at all. A number of states in recent years have either considered or adopted foreclosure reform laws that make it substantially more difficult and expensive for lenders to foreclose on properties in default, and we cannot be certain that the states in which we operate will not adopt similar legislation in the future. Additionally, federal regulators have prosecuted or pursued enforcement actions against a number of mortgage servicing companies for alleged consumer law violations. If new state or federal laws or regulations are ultimately enacted that significantly raise the cost of foreclosure or raise outright barriers to foreclosure, such laws or regulations could have an adverse effect on our business, financial condition and results of operations.

Our largest loan relationships make up a material percentage of our total loan portfolio and credit risks relating to these would have a disproportionate impact.

As of March 31, 2025, our 10 largest borrowing relationships ranged from approximately $22.4 million to $28.0 million (including unfunded commitments) and totaled approximately $244.7 million in total commitments, which represented, in the aggregate, 9.8% of our total outstanding commitments as of March 31, 2025. Each of the loans associated with these relationships has been underwritten in accordance with our underwriting policies and limits. Along with other risks inherent in these loans, such as the deterioration of the underlying businesses or property securing these loans, this concentration of borrowers presents a risk that, if one or more of these relationships were to become delinquent or suffer default, we could be exposed to material losses. The allowance for credit losses may not be adequate to cover losses associated with any of these relationships, and any loss or increase in the allowance would negatively affect our earnings and capital. Even if these loans are adequately collateralized, an increase in classified assets could harm our reputation with our regulators and inhibit our ability to execute our business plan.

Our largest deposit relationships currently make up a material percentage of our deposits and the withdrawal of deposits by our largest depositors could force us to fund our business through more expensive and less stable sources.

Withdrawals of deposits by any one or more of our largest depositors or by one or more of our related customer groups could force us to rely more heavily on borrowings and other sources of funding for our business and withdrawal demands, adversely affecting our net interest margin and results of operations. At March 31, 2025, our ten (10) largest deposit relationships, accounted for $431 million, or 22%, of our total deposits with each relationship accounting for more than $22 million. Deposits within our Corporate Banking and Venture Lending lines of business represented 72% of the top 10 deposits and 50% were located in the Bay Area as of March 31, 2025. If a significant amount of these deposits were withdrawn within a short period of time, it could have a negative impact on our short-term liquidity and have an adverse impact on our earnings. All of our non-brokered deposits are based on a relationship with the client rather than a contractual agreement. We may also be forced, as a result of withdrawals of deposits, to rely more heavily on other, potentially more expensive and less stable funding sources. Additionally, such circumstances could require us to raise deposit rates in an attempt to attract new deposits, which would adversely affect our results of operations.

We utilize excess deposits from our Venture Lending division to fund loan growth in other divisions.

Our Venture Lending division has provided a significant boost to deposit growth, as venture relationships traditionally generate higher deposit balances relative to loan demand. Excess deposits generated by our venture lending divisions are invested in our securities portfolio and used to fund loan growth in other divisions. A slowdown in the economy in the Bay Area or a decline in overall private equity or venture capital investment levels may reduce our overall deposit levels, particularly if Venture Lending clients burn through cash which is not replaced through subsequent rounds of financing or liquidity events. If we experience a decline in deposits from our Venture Lending clients, our ability to fund loan growth in our other divisions will be reduced, which could have an adverse effect on our business, financial condition and results of operations.

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Warrant income or success fee income, if any, cannot be predicted.

We have historically obtained rights to acquire stock, in the form of warrants, or the right to obtain a cash success fee in certain clients as part of credit facilities within our Venture Lending division or Specialty Finance division. We may not be able to realize gains from the equity instruments in future periods or may experience a decrease in the fair value of our warrant portfolio due to fluctuations in the market prices of the underlying common stock of these companies. Similarly, the timing and amount of income, if any, from the disposition of client warrants or the right to any cash success fee typically depend upon factors beyond our control, including the general condition of the public equity markets, levels of mergers and acquisitions activity, and, in the case of warrants, the legal and contractual restrictions on our ability to sell the underlying securities. Therefore, gains from the exercise of warrants, if any, or the achievement of any success fee cannot be predicted with any degree of accuracy and are likely to vary materially from period to period. In addition, a significant portion of the income we may realize from the disposition of client warrants or the obtaining of a success fee may be offset by expenses related to our efforts to build an infrastructure sufficient to support our present and future business activities, as well as expenses incurred in evaluating and pursuing new business opportunities. As of March 31, 2025, we had a total of 125 warrants positions in 81 clients with a total fair value of $849,000.

We depend on the accuracy and completeness of information provided by customers and counterparties.

In deciding whether to extend credit or enter into other transactions with customers and counterparties, we may rely on information furnished by or on behalf of customers and counterparties, including financial information. We may also rely on representations of customers and counterparties as to the accuracy and completeness of that information. In deciding whether to extend credit, we may rely upon customers’ representations that their financial statements conform to GAAP and present fairly the financial condition, results of operations and cash flows of the customer. We also may rely on customer representations and certifications, or other audit or accountants’ reports, with respect to the business and financial condition of our customers. We employ various processes to verify the accuracy of information provided to us, such as independently pulling credit reports, asset verifications, property appraisals, and background checks, but such processes may contain limitations. Our business, financial condition and results of operations could be adversely affected if we rely on misleading, false, inaccurate or fraudulent information.

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Risks Related to Our Industry and Regulation

Our industry is highly regulated, and the regulatory framework, together with any future legislative or regulatory changes, may have a materially adverse effect on our operations.

The banking industry is highly regulated and supervised under both federal and state laws and regulations that are intended primarily for the protection of depositors, customers, the public, the banking system as a whole or the FDIC Deposit Insurance Fund (“DIF”), not for the protection of our shareholders and creditors. We are subject to regulation and supervision by the Federal Reserve, and our Bank is subject to regulation and supervision by the FDIC and the California Department of Financial Protection and Innovation (“DFPI”). Compliance with these laws and regulations can be difficult and costly, and changes to laws and regulations can impose additional compliance costs. The Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”), which imposed significant regulatory and compliance changes on financial institutions, is an example of this type of federal law. The laws and regulations applicable to us govern a variety of matters, including permissible types, amounts and terms of loans and investments we may make, the maximum interest rate that may be charged, the types of deposits we may accept and the rates we may pay on such deposits, maintenance of adequate capital and liquidity, changes in control of us and our Bank, transactions between us and our Bank, handling of nonpublic information, restrictions on dividends and establishment of new offices. We must obtain approval from our regulators before engaging in certain activities, and there is risk that such approvals may not be granted, either in a timely manner or at all. These requirements may constrain our operations, and the adoption of new laws and changes to or repeal of existing laws may have an adverse effect on our business, financial condition and results of operations. Also, the burden imposed by those federal and state regulations may place banks in general, including our Bank in particular, at a competitive disadvantage compared to their non-bank competitors. Compliance with current and potential regulation, as well as supervisory scrutiny by our regulators, may significantly increase our costs, impede the efficiency of our internal business processes, require us to increase our regulatory capital, and limit our ability to pursue business opportunities in an efficient manner by requiring us to expend significant time, effort and resources to ensure compliance and respond to any regulatory inquiries or investigations. Our failure to comply with any applicable laws or regulations, or regulatory policies and interpretations of such laws and regulations, could result in sanctions by regulatory agencies, civil money penalties or damage to our reputation, all of which could have an adverse effect on our business, financial condition and results of operations.

Applicable laws, regulations, interpretations, enforcement policies and accounting principles have been subject to significant changes in recent years, and may be subject to significant future changes including under President Trump’s administration. It is difficult to anticipate the impact of any potential changes and we actively monitor the regulatory environment for revisions to the banking regulatory framework.

Additionally, federal and state regulatory agencies may change the manner in which existing regulations are applied. We cannot predict the substance or effect of pending or future legislation or regulation or changes to the application of laws and regulations to us. Future changes could have an adverse effect on our business, financial condition and results of operations.

In addition, regulators may elect to alter standards or the interpretation of the standards used to measure regulatory compliance or to determine the adequacy of liquidity, risk management or other operational practices for financial service companies in a manner that impacts our ability to implement our strategy and could affect us in substantial and unpredictable ways, and could have an adverse effect on our business, financial condition and results of operations. Furthermore, the regulatory agencies have broad discretion in their interpretation of laws and regulations and their assessment of the quality of our loan portfolio, securities portfolio and other assets. Based on our regulators’ assessment of the quality of our assets, operations, lending practices, investment practices, capital structure or other aspects of our business, we may be required to take additional charges or undertake, or refrain from taking, actions that could have an adverse effect on our business, financial condition and results of operations.

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Monetary policies and regulations of the Federal Reserve could have an adverse effect on our business, financial condition and results of operations.

Our earnings and growth are affected by the policies of the Federal Reserve. An important function of the Federal Reserve is to regulate the money supply and credit conditions. Among the instruments used by the Federal Reserve to implement these objectives are open market purchases and sales of U.S. government securities, adjustments of the discount rate and changes in banks’ reserve requirements against bank deposits. These instruments are used in varying combinations to influence overall economic growth and the distribution of credit, bank loans, investments and deposits. Their use also affects interest rates charged on loans or paid on deposits.

The monetary policies and regulations of the Federal Reserve have had a significant effect on the operating results of commercial banks in the past and are expected to continue to do so in the future. The effects of such policies could have an adverse effect on our business, financial condition and results of operations but cannot be predicted.

Federal and state regulators periodically examine our business and may require us to remediate adverse examination findings or may take enforcement action against us.

The Federal Reserve, the FDIC and the DFPI periodically examine our business, including our compliance with laws and regulations. If, as a result of an examination, the Federal Reserve, the FDIC, or the DFPI were to determine that our financial condition, capital resources, asset quality, earnings prospects, management, liquidity or other aspects of any of our operations had become unsatisfactory, or that we were in violation of any law or regulation, they may take a number of different remedial actions as they deem appropriate. These actions may include requiring us to remediate any such adverse examination findings. Evolving regulatory requirements at the federal and state levels can impose additional compliance burdens, leading to increased operational costs and potential penalties for non-compliance.

In addition, these agencies have the power to take enforcement action against us to enjoin “unsafe or unsound” practices, to require affirmative action to correct any conditions resulting from any violation of law or regulation or unsafe or unsound practice, to issue an administrative order that can be judicially enforced, to direct an increase in our capital, to direct the sale of subsidiaries or other assets, to limit dividends and distributions, to restrict our growth, to assess civil money penalties against us or our officers or directors, to remove officers and directors and, if it is concluded that such conditions cannot be corrected or there is imminent risk of loss to depositors, to terminate our deposit insurance and place our Bank into receivership or conservatorship. Any regulatory enforcement action against us could have an adverse effect on our business, financial condition and results of operations.

We are subject to stringent capital requirements, which could have an adverse effect on our operations.

Federal regulations establish minimum capital requirements for insured depository institutions, including minimum risk-based capital and leverage ratios, and defines “capital” for calculating these ratios. The capital rules require bank holding companies and banks to maintain a common equity Tier 1 capital to risk-weighted assets ratio of at least 7.0% (a minimum of 4.5% plus a capital conservation buffer of 2.5%), a Tier 1 capital to risk-weighted assets ratio of at least 8.5% (a minimum of 6.0% plus a capital conservation buffer of 2.5%), a total capital to risk-weighted assets ratio of at least 10.5% (a minimum of 8% plus a capital conservation buffer of 2.5%), and a leverage ratio of Tier 1 capital to total consolidated assets of at least 4.0%. An institution’s failure to exceed the capital conservation buffer with common equity Tier 1 capital would result in limitations on an institution’s ability to make capital distributions and discretionary bonus payments. In addition, for an insured depository institution to be “well-capitalized” under the banking agencies’ prompt corrective action framework, it must have a common equity Tier 1 capital ratio of at least 6.5%, Tier 1 capital ratio of at least 8.0%, a total capital ratio of at least 10.0%, and a leverage ratio of at least 5.0%, and must not be subject to any written agreement, order or capital directive, or prompt corrective action directive issued by its primary federal or state banking regulator to meet and maintain a specific capital level for any capital measure.

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We operate under the Federal Reserve’s Small Bank Holding Company Policy Statement, which exempts from the Federal Reserve’s risk-based-capital and leverage rules bank holding companies with assets of less than $3.0 billion that are not engaged in significant nonbanking activities, do not conduct significant off-balance sheet activities and that do not have a material amount of debt or equity securities registered with the SEC. Historically, the Federal Reserve has not usually deemed a bank holding company ineligible for application of this policy statement solely because its common stock is registered under the Exchange Act. However, there can be no assurance that the Federal Reserve will continue this practice, and as a result, the IPO may result in the loss of its eligibility under the Small Bank Holding Company Policy Statement for these purposes.

Any new or revised standards adopted in the future may require us to maintain materially more capital, with common equity as a more predominant component, or manage the configuration of our assets and liabilities to comply with formulaic capital requirements. Failure to maintain capital to meet current or future regulatory requirements could have an adverse effect on our business, financial condition and results of operations.

We may need to raise additional capital, but additional capital may not be available.

We may need to raise additional capital in the future to support our growth, strategic objectives or to meet regulatory or other internal requirements. This may include capital to replace our existing $22 million of ten-year subordinated debt which we issued in 2019, is currently callable and loses 20% of its Tier 2 capital treatment for each of the last five years of their term (with 20% of its Tier 2 capital treatment first lost on December 31, 2024). Our ability to access the capital markets, if needed, will depend on a number of factors, including our consolidated financial condition, our business prospectus and the state of the financial markets. If capital is not available on favorable terms when we need it, we may have to either issue common stock or other securities on less than desirable terms or curtail our growth until market conditions become more favorable. Any diminished ability to raise additional capital, if needed, could restrict our ability to grow, require us to take actions that would affect our earnings negatively or otherwise affect our business and our ability to implement our business plan, capital plan and strategic goals adversely. Such events could have an adverse effect on our business, financial condition and results of operations.

We are subject to numerous banking laws and other laws and regulations designed to protect consumers, and failure to comply with these laws could lead to a wide variety of sanctions.

The Equal Credit Opportunity Act (“ECOA”), the Fair Housing Act and other fair lending laws and regulations, including state laws and regulations, prohibit discriminatory lending practices by financial institutions. The Federal Trade Commission Act prohibits unfair or deceptive acts or practices, and the Dodd-Frank Act prohibits unfair, deceptive, or abusive acts or practices by financial institutions. The U.S. Department of Justice federal and state banking agencies, and other federal and state agencies, including the Consumer Financial Protection Bureau (“CFPB”), are responsible for enforcing these fair and responsible banking laws and regulations. Because the Company and the Bank have less than $10 billion in assets, most consumer protection aspects of the Dodd-Frank Act will continue to be applied to the Company by the Federal Reserve and to the Bank by the FDIC. But smaller banks, including the Bank, are subject to rules promulgated by the CFPB and thus CFPB rulemaking has the potential to have a significant impact on the operations of the Bank.

A challenge to an institution’s compliance with banking laws and regulations could result in a wide variety of sanctions, including damages and civil money penalties, injunctive relief, restrictions on mergers and acquisitions activity, restrictions on expansion, and restrictions on entering new business lines. Private parties may also have the ability to challenge an institution’s performance under fair lending laws in private litigation, including through class action litigation. Such actions could have an adverse effect on our business, financial condition and results of operations.

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Our business requires the collection and retention of large volumes of customer data, including personally identifiable information (“PII”), in various information systems that we maintain and in those maintained by third party service providers. We also maintain important internal company data such as PII about our employees and information relating to our operations. We are subject to complex and evolving laws and regulations governing the privacy and protection of PII of individuals (including customers, employees, and other third parties). For example, our business is subject to the Gramm-Leach-Bliley Act (“GLBA”) which, among other things: (i) imposes certain limitations on our ability to share nonpublic PII about our customers with nonaffiliated third parties; (ii) requires that we provide certain disclosures to customers about our information collection, sharing and security practices and afford customers the right to “opt out” of any information sharing by us with nonaffiliated third parties (with certain exceptions); and (iii) requires that we develop, implement and maintain a written comprehensive information security program containing appropriate safeguards based on our size and complexity, the nature and scope of our activities, and the sensitivity of customer information we process, as well as plans for responding to data security breaches. Various federal and state banking regulators and states have also enacted data breach notification requirements with varying levels of individual, consumer, regulatory or law enforcement notification in the event of a security breach. The California Consumer Privacy Act grants California residents the rights to know about personal information collected about them, to delete certain of this personal information, to opt-out of the sale of personal information, and to non-discrimination for exercising these rights.

Ensuring that our collection, use, transfer and storage of PII complies with all applicable laws and regulations can increase our costs. Furthermore, we may not be able to ensure that customers and other third parties have appropriate controls in place to protect the confidentiality of the information that they exchange with us, particularly where such information is transmitted by electronic means. If personal, confidential or proprietary information of customers or others were to be mishandled or misused (in situations where, for example, such information was erroneously provided to parties who are not permitted to have the information, or where such information was intercepted or otherwise compromised by third parties), we could be exposed to litigation or regulatory sanctions under privacy and data protection laws and regulations. Concerns regarding the effectiveness of our measures to safeguard PII, or even the perception that such measures are inadequate, could cause us to lose customers or potential customers and thereby reduce our revenues. Accordingly, any failure or perceived failure to comply with applicable privacy or data protection laws and regulations may subject us to inquiries, examinations and investigations that could result in requirements to modify or cease certain operations or practices or in significant liabilities, fines or penalties, and could damage our reputation and otherwise have an adverse effect on our business, financial condition and results of operations.

We are a bank holding company and are dependent upon the Bank for cash flow, and the Bank’s ability to make cash distributions is restricted.

We are a bank holding company with no material activities other than activities incidental to holding the common stock of the Bank. Our principal source of funds to pay distributions on our common stock and service any of our obligations, other than further issuances of securities, is dividends received from the Bank. Furthermore, the Bank is not obligated to pay dividends to us, and any dividends paid to us would depend on the earnings or financial condition of the Bank, various business considerations and applicable law and regulation. As is generally the case for banking institutions, the profitability of the Bank is subject to the fluctuating cost and availability of money, changes in interest rates and economic conditions in general. In addition, various federal and state statutes and regulations limit the amount of dividends that the Bank may pay to the Company without regulatory approval.

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The Federal Reserve may require us to commit capital resources to support the Bank.

The Federal Reserve requires a bank holding company to act as a source of financial and managerial strength to its subsidiary banks and to commit resources to support its subsidiary banks. Under the “source of strength” doctrine that was codified by the Dodd-Frank Act, the Federal Reserve may require a bank holding company to make capital injections into a subsidiary bank at times when the bank holding company may not be inclined to do so and may charge the bank holding company with engaging in unsafe and unsound practices for failure to commit resources to such a subsidiary bank. Accordingly, we could be required to provide financial assistance to the Bank if it experiences financial distress.

A capital injection may be required at a time when our resources are limited, and we may be required to borrow the funds or raise capital to make the required capital injection. Any loan by a bank holding company to its subsidiary bank is subordinate in right of payment to deposits and certain other indebtedness of such subsidiary bank. In the event of a bank holding company’s bankruptcy, the bankruptcy trustee will assume any commitment by the holding company to a federal bank regulatory agency to maintain the capital of a subsidiary bank. Moreover, bankruptcy law provides that claims based on any such commitment will be entitled to a priority of payment over the claims of the holding company’s general unsecured creditors, including the holders of any note obligations. Thus, any borrowing by a bank holding company for the purpose of making a capital injection to a subsidiary bank may become more difficult and expensive relative to other corporate borrowings.

We face a risk of noncompliance with the Bank Secrecy Act and its implementing regulations and other laws and regulations that impose anti-money laundering requirements, which could lead to civil and criminal enforcement actions.

The Bank Secrecy Act of 1970 (“BSA”), as amended by the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (“USA PATRIOT Act”), and its implementing regulations and other laws and regulations that impose anti-money laundering obligations require financial institutions to, among other duties, implement and maintain an effective anti-money laundering and countering the financing of terrorism (“AML/CFT”) compliance program and file reports, such as suspicious activity reports and currency transaction reports. Our federal and state banking regulators, the U.S. Treasury Department’s Financial Crimes Enforcement Network (“FinCEN”), and other government agencies are authorized to impose significant civil money penalties for violations of the BSA and its implementing regulations and other applicable anti-money laundering requirements. We are also subject to increased scrutiny of compliance with the regulations issued and enforced by the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”), which is responsible for administering U.S. economic sanctions programs. If our compliance programs are deemed deficient, we could be subject to liability, including fines, civil money penalties and other regulatory actions, which may include restrictions on our business operations and our ability to pay dividends, restrictions on mergers and acquisitions activity, restrictions on expansion, and restrictions on entering new business lines. Failure to maintain and implement adequate AML/CFT and sanctions compliance programs could also have significant reputational consequences for us. Any of these circumstances could have an adverse effect on our business, financial condition and results of operations.

Our Bank’s FDIC deposit insurance premiums and assessments may increase.

Our Bank’s deposits are insured by the FDIC up to legal limits and, accordingly, our Bank is subject to insurance assessments based on our Bank’s average consolidated total assets less its average tangible equity. Our Bank’s regular assessments are determined by its CAMELS composite rating (a supervisory rating system developed to classify a bank’s overall condition by taking into account capital adequacy, assets, management capability, earnings, liquidity and sensitivity to market and interest rate risk), taking into account other factors and adjustments. In order to maintain a strong funding position and the reserve ratios of the DIF required by statute and FDIC estimates of projected requirements, the FDIC has the power to increase deposit insurance assessment rates and impose special assessments on all FDIC-insured financial institutions. Any future increases or special assessments could reduce our profitability and could have an adverse effect on our business, financial condition and results of operations.

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Risks Related to an Investment in Our Common Stock and the Offering

Our management will have broad discretion in allocating the net proceeds of this offering. Our failure to effectively utilize such net proceeds may have an adverse effect on our financial performance and the value of our common stock.

We are not required to apply any portion of the net proceeds of this offering for any particular purpose. Accordingly, our management will have broad discretion as to the application of the net proceeds of this offering and could use them for purposes other than those contemplated at the time of this offering. We intend to use a substantial amount of the net proceeds to us from this offering to increase the capital of the Bank in order to support our organic growth strategies, including expanding our overall market share and our lending activities, strengthening our regulatory capital, the potential repositioning of a portion of our available-for-sale securities portfolio, and for working capital and other general corporate purposes. Our shareholders may not agree with the manner in which our management chooses to allocate and invest the net proceeds. We may not be successful in using the net proceeds from this offering to increase our profitability or market value and we cannot predict whether the proceeds will be invested to yield a favorable return.

The net proceeds of the offering may be used for a balance sheet repositioning of our available-for-sale securities portfolio which will result in a pre-tax loss.

We are not required to apply any portion of the net proceeds of this offering for any particular purpose but we may use the net proceeds in connection with repositioning a substantial portion of our available-for-sale securities portfolio. The timing and execution of the repositioning will be dependent on market conditions. If we undertake the repositioning, we would recognize a pre-tax loss representing a significant portion of the overall unrealized loss of our available-for-sale securities portfolio. As of March 31, 2025, the available-for-sale securities portfolio totaled $296.6 million with an unrealized loss of $65.6 million. Such a loss would have an adverse effect on our business, financial condition and results of operations. In addition, such a loss would negatively impact the ability of the Bank to pay dividends to the Company and the Company’s ability to pay dividends to our shareholders. See section entitled “Use of Proceeds-Potential Repositioning of Our Available-for-Sale Securities Portfolio” for discussion on how we may potentially use the proceeds from this offering to reposition a substantial portion of such portfolio.

If we generate operating losses as a result of a balance sheet repositioning, our ability to use net operating loss carry-forwards to reduce future tax payments may be limited or restricted.

If we undertake the repositioning of our available-for-sale securities portfolio, we may generate net operating losses (“NOLs”). We generally would be able to carry NOLs forward to reduce taxable income in future years, subject to applicable expiration dates and annual taxable income limitations under the Internal Revenue Code and relevant state tax codes. We may not generate sufficient taxable income in future periods to be able to realize fully the tax benefits of any NOL carryforwards. Although, under existing tax rules, we are generally allowed to use those NOL carryforwards to offset up to 80% of taxable income annually in subsequent taxable years at the federal level our ability to use those NOL carryforwards to offset income may be severely limited to the extent that we experience an ownership change within the meaning of Section 382 of the Internal Revenue Code. These provisions could also limit our ability to deduct certain losses (built-in losses) we recognize after an ownership change with respect to assets we own at the time of the ownership change. In general, an ownership change, as defined by Section 382, results from transactions increasing ownership of certain stockholders or public groups in our stock by more than 50% over a three-year period. Any limitation on our NOL carryforwards that could be used to offset taxable income could adversely affect our liquidity and cash flow. We cannot ensure that our ability to use our NOLs to offset income will not become limited in the future. As a result, we could pay taxes earlier and in larger amounts than would be the case if our NOLs were available to reduce our federal income taxes without restriction. See section entitled “Use of Proceeds-Potential Repositioning of Our Available-for-Sale Securities Portfolio” for discussion on how we may potentially use the proceeds from this offering to reposition a substantial portion of such portfolio.

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No active public market exists for our common stock, and one may not develop.

Prior to this offering our common stock has traded on the Pink Open Market operated by the OTC Markets Group, Inc. at an average of approximately shares per trading day in the most recently completed fiscal quarter. Accordingly, there has not been an active public market for our common stock. An active trading market for shares of our common stock may never develop or may not be sustained following this offering. If an active trading market does not develop, you may have difficulty selling your shares of common stock. The initial public offering price for our common stock will be determined by negotiations between us and the representatives of the underwriters. This price may not be indicative of the price at which our common stock will trade after the offering. The market price of our common stock may decline below the initial offering price, and you may not be able to sell your common stock at or above the price you paid in this offering, or at all. An inactive market may also impair our ability to raise capital by selling our common stock and may impair our ability to expand our business through acquisitions using our common stock as consideration, should we elect to do so.

Investors in this offering will experience accretion in the net tangible book value of their investment based on the net tangible book value per share of our common stock as of March 31, 2025.

The initial public offering price of our stock is lower than the net tangible book value per share of our common stock immediately following the offering. Therefore, if you purchase shares in this offering, you will experience immediate accretion in net tangible book value per share in relation to the price that you paid for your shares. Based on an assumed initial public offering price of $23.00 per share, which is the midpoint of the price range set forth on the cover of this prospectus, and our net tangible book value as of March 31, 2025, if you purchase our common stock in this offering, you will incur immediate accretion of approximately $0.80 per share in net tangible book value, representing the difference between our as adjusted net tangible book value per share as of March 31, 2025 and the public offering price per share of common stock.

Future sales of our common stock could depress the market price of our common stock.

Following the completion of this offering, based on 7,912,184 shares of common stock outstanding as of March 31, 2025, we will have 10,522,184 shares of common stock issued and outstanding (10,913,684 shares if the underwriters elect to their option to purchase additional shares of common stock in full), which will be freely transferable without restriction or further registration under the Securities Act except for any shares held by our “affiliates,” as that term is defined in Rule 144 under the Securities Act of 1933, including those shares purchased from us by certain of our directors, officers, and greater than 10% shareholders through the directed stock program described in the section entitled “Underwriting.” We, our executive officers, directors and 10% or greater holders of our currently outstanding shares of common stock holding, in the aggregate, 1,812,585 shares of our common stock as of March 31, 2025 (representing approximately 22.91% of our outstanding common stock as of such date), have agreed not to sell any shares of our common stock for a period of 180 days from the date of this prospectus, subject to certain exceptions. See the section entitled “Underwriting.” Following the expiration of this lock-up period, all of these shares will be eligible for resale under Rule 144 of the Securities Act, subject to any remaining holding period requirements and, if applicable, volume limitations. See the section entitled “Shares Eligible for Future Sale.” Actual or anticipated issuances or sales of substantial amounts of our common stock following this offering could cause the market price of our common stock to decline significantly and make it more difficult for us to sell equity or equity-related securities in the future at a time and on favorable terms, or at all. We may issue all of these shares without any action or approval by our shareholders, and these shares, once issued (including upon exercise of outstanding options), will be available for sale into the public market, subject to the restrictions described in this registration statement, if applicable, for affiliate holders. The market price for our common stock may decline significantly when the restrictions on resale by our existing shareholders lapse. A decline in the price of our common stock might impede our ability to raise capital through the issuance of additional common stock or other equity securities.

Our stock price may be volatile, and you could lose part or all of your investment as a result.

Stock price volatility may negatively impact the price at which our common stock may be sold, and may also negatively impact the timing of any sale. Our stock price may fluctuate widely in response to a variety of factors including the risk factors described herein and, among other things:

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actual or anticipated variations in quarterly or annual operating results, financial conditions or credit quality;

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	●	changes in business or economic conditions;

	●	changes in accounting standards, policies, guidance, interpretations or principles;

	●	changes in recommendations or research reports about us or the financial services industry in general published by securities analysts;

	●	the failure of securities analysts to cover, or to continue to cover, us after this offering;

	●	changes in financial estimates or publication of research reports and recommendations by financial analysts or actions taken by rating agencies with respect to us or other financial institutions;

	●	news reports relating to trends, concerns and other issues in the financial services industry;

	●	reports related to the impact of natural or manmade disasters in our market;

	●	perceptions in the marketplace regarding us and or our competitors;

	●	sudden increases in the demand for our common stock, including as a result of any “short squeezes;”

	●	significant acquisitions or business combinations, strategic partnerships, joint ventures or capital commitments by or involving us or our competitors;

	●	additional investments from third parties;

	●	additions or departures of key personnel;

	●	future sales or issuance of additional shares of common stock;

	●	fluctuations in the stock price and operating results of our competitors;

	●	changes or proposed changes in laws or regulations, or differing interpretations thereof affecting our business, or enforcement of these laws or regulations;

	●	new technology used, or services offered, by competitors;

	●	additional investments from third parties; or

	●	geopolitical conditions such as acts or threats of terrorism, pandemics, trade wars, or military conflicts.

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In particular, the realization of any of the risks described in this section could have an adverse effect on the market price of our common stock and cause the value of your investment to decline. In addition, the stock market in general has experienced extreme volatility that has often been unrelated to the operating performance of particular companies. These broad market fluctuations may adversely affect the trading price of our common stock over the short, medium or long term, regardless of our actual performance.

We are an “emerging growth company,” as defined in the JOBS Act, and a “smaller reporting company,” as defined in Rule 12b-2 in the Exchange Act, and will be able to avail ourselves of reduced disclosure requirements applicable to emerging growth companies and smaller reporting companies, which could make our common stock less attractive to investors and adversely affect the market price of our common stock.

We are an “emerging growth company,” as defined in the JOBS Act. For as long as we continue to be an emerging growth company, we may take advantage of certain exemptions from various requirements generally applicable to public companies. These exemptions allow us, among other things, to present only two years of audited financial statements and discuss our results of operations for only two years in related Management’s Discussions and Analyses; not to provide an auditor attestation of our internal control over financial reporting; to take advantage of an extended transition period to comply with the new or revised accounting standards applicable to public companies; to provide reduced disclosure regarding our executive compensation arrangements pursuant to the rules applicable to smaller reporting companies, which means we do not have to include a compensation discussion and analysis and certain other disclosure regarding our executive compensation; and not to seek a non-binding advisory vote on executive compensation or golden parachute arrangements.

We may take advantage of these exemptions until we are no longer an emerging growth company. We would cease to be an emerging growth company upon the earliest of: (i) the last day of our fiscal year following the fifth anniversary of the date of this initial public offering; (ii) the last day of the fiscal year after our annual gross revenues are $1.235 billion or more; (iii) the date on which we have during the previous three-year period, issued more than $1 billion in non-convertible debt securities; or (iv) the date on which we are deemed to be a large accelerated filer under the rules of the SEC.

Even after we no longer qualify as an emerging growth company, we may still qualify as a “smaller reporting company,” as defined in Rule 12b-2 in the Exchange Act, which would allow us to take advantage of many of the same exemptions from disclosure requirements, including not being required to provide an auditor attestation of our internal control over financial reporting and reduced disclosure regarding our executive compensation arrangements in our periodic reports and proxy statements.

We cannot predict whether investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may a less active trading market for our common stock, and our stock price may be more volatile or decline.

Our directors, executive officers and greater than 10% shareholders will have the ability to influence significant corporate activities after the completion of this offering and their interests may not coincide with yours.

As of March 31, 2025, our directors, executive officers and principal shareholders (ten percent (10%) or greater shareholders) beneficially owned an aggregate of 1,812,585 shares of our common stock, or approximately 22.91% of our issued and outstanding shares of common stock. Following the completion of this offering, that same group will beneficially own in the aggregate approximately 17.23% of our outstanding common stock (or 16.61% if the underwriters exercise in full their option to purchase additional shares). Consequently, our directors, executive officers and principal shareholders will be able to influence our affairs and policies, including the outcome of the election of directors and the potential outcome of other matters submitted to a vote of our shareholders, such as mergers, the sale of substantially all of our assets and other extraordinary corporate matters. This influence may also have the effect of delaying or preventing changes of control or changes in management, or limiting the ability of our other shareholders to approve transactions that they may deem to be in the best interests of our Company. The interests of these insiders could conflict with the interests of our other shareholders, including you.

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If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline.

The trading market for our common stock will depend in part on the research and reports that securities or industry analysts publish about us or our business. We may be unable to attract or sustain research coverage by securities and industry analysts. If no securities or industry analysts commence coverage of our company, the trading price for our stock would be negatively impacted. If we obtain securities or industry analyst coverage and if one or more of the analysts who covers us downgrades our stock or publishes inaccurate or unfavorable research about our business, our stock price would likely decline. If we fail to meet the expectations of analysts for our operating results, our stock price would likely decline. If one or more of these analysts ceases coverage of us or fails to publish reports on us regularly, demand for our stock could decrease, which could cause our stock price and trading volume to decline.

We may not pay dividends on our common stock in the future, and our ability to pay dividends is subject to certain restrictions.

Holders of our common stock are entitled to receive only such dividends as our board of directors may declare out of funds legally available for such payments. We have never paid dividends on our common stock and have no current intention of paying any dividends on our common stock in the future. The Company’s ability to pay dividends is dependent on the Bank paying dividends to the Company. The ability of the Bank to declare a cash dividend to the Company is subject to California law, which restricts the amount available for cash dividends to the lesser of a bank’s retained earnings or net income for its last three fiscal years (less any distributions to shareholders made during such period). Where the above test is not met, cash dividends may still be paid, with the prior approval of the DFPI, in an amount not exceeding the greatest of (1) retained earnings of the bank; (2) the net income of the bank for its last fiscal year; or (3) the net income of the bank for its current fiscal year. Further, the Bank may not pay a dividend to the Company if, after the payment of the dividend, the Bank would be undercapitalized pursuant to the FDIC’s prompt corrective active framework. In addition, under the Basel III Capital Rules, the Bank must maintain the required capital conservation buffer to avoid becoming subject to restrictions on certain capital distributions, including paying dividends to the Company. Finally, as a bank holding company our ability to declare and pay dividends is dependent on federal regulatory considerations, including the guidelines of the Federal Reserve regarding capital adequacy and dividends. It is the policy of the Federal Reserve that bank holding companies should generally pay dividends on common stock only out of earnings, and only if prospective earnings retention is consistent with the organization’s expected future needs, asset quality and financial condition, and that bank holding companies should inform and consult with the Federal Reserve in advance of declaring and paying a dividend that exceeds earnings for the period for which the dividend is being paid. Accordingly, if we undertake a balance sheet repositioning and incur an unrealized pre-tax loss, such a loss would negatively impact the ability of the Bank to pay dividends to the Company and the Company’s ability to pay dividends to our shareholders.

The holders of our debt obligations and preferred stock will have priority over our common stock with respect to payment in the event of liquidation, dissolution or winding up and with respect to the payment of interest and dividends, and our common stock is effectively subordinated to all the indebtedness and other non-common equity claims against our subsidiaries.

In any liquidation, dissolution or winding up of the Company, our common stock would rank below all claims of debt holders against us as well as any preferred stock that has been issued. As of March 31, 2025, we had an aggregate of $22.0 million of subordinated notes outstanding, net of debt issuance costs, and we did not have any outstanding preferred stock. We could incur such debt obligations or issue preferred stock in the future to raise additional capital. In such event, holders of our common stock will not be entitled to receive any payment or other distribution of assets upon the liquidation, dissolution or winding up of the Company until after all of our obligations to the debt holders are satisfied and holders of subordinated debt and senior equity securities, including preferred shares, if any, have received any payment or distribution due to them. In addition, we will be required to pay interest on the subordinated notes and dividends on any preferred stock before we will be able to pay any dividends on our common stock. Furthermore, our right to participate in a distribution of assets upon any of our subsidiaries’ liquidation or reorganization is subject to the prior claims of that subsidiary’s creditors, including holders of any preferred stock of that subsidiary.

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California corporate law and provisions of our articles of incorporation, as amended, and our third amended and restated bylaws, could make it more difficult for a third party to acquire us, even if doing so would be perceived to be beneficial by our shareholders. Furthermore, with certain limited exceptions, federal regulations prohibit a person or company or a group of persons deemed to be “acting in concert” from, directly or indirectly, acquiring 10% or more (5% or more if the acquirer is a bank holding company) of any class of our voting stock or obtaining the ability to control in any manner the election of a majority of our directors or otherwise direct the management or policies of our Company without prior notice or application to and the approval of the Federal Reserve. Accordingly, prospective investors must comply with these requirements, if applicable, in connection with any purchase of shares of our common stock. Collectively, provisions of our articles of incorporation and amended and restated bylaws and other statutory and regulatory provisions may delay, prevent or deter a merger, acquisition, tender offer, proxy contest or other transaction that might otherwise result in our shareholders receiving a premium over the market price for their common stock. Moreover, the combination of these provisions effectively inhibits certain business combinations, which, in turn, could adversely affect the market price of our common stock.

An investment in our common stock is not an insured deposit.

An investment in our common stock is not a bank deposit and, therefore, is not insured against loss by the FDIC, any other deposit insurance fund or by any other public or private entity. Investment in our common stock is inherently risky for the reasons described herein, and is subject to the same market forces that affect the price of common stock in any company. As a result, if you acquire our common stock, you could lose some or all of your investment.

The requirements of being a public company may strain our resources and divert management’s attention.

As a public company, we will incur significant legal, accounting, insurance and other expenses. We will be subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act and applicable securities rules and regulations. These laws and regulations increase the scope, complexity and cost of corporate governance, reporting and disclosure practices over those of non-public or non-reporting companies. Despite our conducting business in a highly regulated environment, these laws and regulations have different requirements for compliance than we have experienced prior to becoming a public company. Among other things, the Exchange Act requires that we file annual, quarterly and current reports with respect to our business and operating results and maintain effective disclosure controls and procedures and internal control over financial reporting. As a Nasdaq listed company, we will be required to prepare and file proxy materials which meet the requirements of the Exchange Act and the SEC’s proxy rules. Compliance with these rules and regulations will increase our legal and financial compliance costs, make some activities more difficult, time-consuming or costly, and increase demand on our systems and resources, particularly after we are no longer an “emerging growth company” as defined in the JOBS Act. In order to maintain, appropriately document and, if required, improve our disclosure controls and procedures and internal control over financial reporting to meet the standards required by the Sarbanes-Oxley Act, significant resources and management oversight may be required. As a result, management’s attention may be diverted from other business concerns, which could harm our business and operating results. Additionally, any failure by us to file our periodic reports with the SEC in a timely manner could harm our reputation and cause our investors and potential investors to lose confidence in us, and restrict trading in, and reduce the market price of, our common stock, and potentially impact our ability to access the capital markets.

If we fail to design, implement and maintain effective internal control over financial reporting or remediate any future material weakness in our internal control over financial reporting, we may be unable to accurately report our financial results or prevent fraud.

Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of the financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Effective internal control over financial reporting is necessary for us to provide reliable reports and prevent fraud. We may not be able to identify all significant deficiencies and/or material weaknesses in our internal control over financial reporting in the future, and our failure to maintain effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act could have an adverse effect on our business, financial condition and results of operations.

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In the normal course of our operations, we may identify deficiencies that would have to be remediated to satisfy the SEC rules for certification of our internal control over financial reporting. A material weakness is defined by the standards issued by the PCAOB, as a deficiency, or combination of deficiencies, in internal control over financial reporting that results in a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. As a consequence, we would have to disclose in periodic reports we file with the SEC any material weakness in our internal control over financial reporting. The existence of a material weakness would preclude management from concluding that our internal control over financial reporting is effective and, when we cease to be an emerging growth company under the JOBS Act, preclude our independent registered public accounting firm from rendering their report addressing an assessment of the effectiveness of our internal control over financial reporting. In addition, disclosures of deficiencies of this type in our SEC reports could cause investors to lose confidence in our financial reporting, and may negatively affect the market price of our common stock, and could result in the delisting of our securities from the securities exchanges on which they trade. Moreover, effective internal controls are necessary to produce reliable financial reports and to prevent fraud. If we have deficiencies in our disclosure controls and procedures or internal control over financial reporting, such deficiencies could have an adverse effect on our business, financial condition or results of operations.

General Risk Factors

We are dependent on our management team and key employees.

Our success depends, in large part, on the retention of our management team and key employees. Our management team and other key employees, including those who conduct our loan origination and other business development activities, have significant industry experience. We cannot ensure that we will be able to retain the services of any members of our management team or other key employees. Though we have employment agreements in place with certain members of our management team they may still elect to leave or retire at any time. The loss of any of our management team or our key employees could adversely affect our ability to execute our business strategy, and we may not be able to find adequate replacements on a timely basis, or at all.

Our future success also depends on our continuing ability to attract, develop, motivate and retain key employees. Qualified individuals are in high demand, and we may incur significant costs to attract and retain them. Because the market for qualified individuals is highly competitive, we may not be able to attract and retain qualified officers or candidates. Failure to attract and retain a qualified management team and qualified key employees could have an adverse effect on our business, financial condition and results of operations.

Our business and operations could be negatively affected by a transition to a new Chief Executive Officer.

We depend upon all of our executive officers to direct our business strategy and operations. Mark Mordell, our Chairman, President and Chief Executive Officer, has served as our CEO since 2012 and he has discussed with our board of directors (the “Board”), given his tenure, his eventual retirement. Although his retirement is not imminent and Mr. Mordell has not provided our Board with any specific date for when he intends to retire from his position as our CEO, our Board believes it is prudent to work with Mr. Mordell to ensure an orderly and timely transition to a new and qualified CEO and to prepare for his eventual retirement. The Board has incentivized Mr. Mordell to facilitate a successful CEO succession plan by the end of the second quarter of 2027. In connection therewith, on June 19, 2024, we provided a restricted stock grant of 53,763 shares of common stock to Mr. Mordell. This restricted stock grant will vest in full provided that both (i) Mr. Mordell has not been terminated by the Company for cause or voluntarily resigned prior to the third (3rd) anniversary year of the grant date and (ii) Mr. Mordell has successfully executed a CEO succession plan, which includes, without limitation (a) identification of successor CEO candidates; (b) vetting of potential CEO candidates; (c) negotiation and preparation of a CEO compensation package and (d) employment of a successor CEO (the “Performance Condition”). The Performance Condition may be waived by the Board in its sole discretion. The Board’s and Mr. Mordell’s current intent is to have Mr. Mordell continue to serve as the Company’s Chairman of the Board even if he eventually retires as our CEO.

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A transition to a new CEO, even if successful, could negatively affect our business strategy, growth plans, relationships with other members of executive management and with customers. As a result, our ability to successfully transition to a new CEO could have an adverse effect on our business, financial condition or results of operations.

Our success is largely dependent upon our ability to successfully execute our business strategy.

There can be no assurance that we will be able to continue to grow and to remain profitable in future periods, or, if profitable, that our overall earnings will remain consistent with our prior results of operations, or increase in the future. A downturn in economic conditions in our market locally or nationally, particularly in the real estate market, heightened competition from other financial services providers, an inability to retain or grow our core deposit base, regulatory and legislative considerations, and failure to attract and retain high-performing talent, among other factors, could limit our ability to grow assets, or increase profitability, as rapidly as we have in the past. Sustainable growth requires that we manage our risks by following prudent loan underwriting standards, balancing loan and deposit growth without materially increasing interest rate risk or compressing our net interest margin, maintaining more than adequate capital at all times, managing a growing number of customer relationships, scaling technology platforms, hiring and retaining qualified employees and successfully implementing our strategic initiatives. We must also successfully implement improvements to, or integrate, our management information and control systems, procedures and processes in an efficient and timely manner and identify deficiencies in existing systems and controls. In particular, our controls and procedures must be able to accommodate an increase in loan volume in various markets and the infrastructure that comes with expanding operations, including new branches. Our growth strategy may require us to incur additional expenditures to expand our administrative and operational infrastructure. If we are unable to effectively manage and grow our banking franchise, we may experience compliance and operational problems, have to slow the pace of growth, or have to incur additional expenditures beyond current projections to support such growth. We may not have, or may not be able to develop, the knowledge or relationships necessary to be successful in new markets. Our failure to sustain our historical rate of growth, adequately manage the factors that have contributed to our growth or successfully enter new markets could have an adverse effect on our earnings and profitability and, therefore on our business, financial condition and results of operations.

We may pursue strategic acquisitions in the future, and we may not be able to overcome risks associated with such transactions.

Although we plan to continue to grow our business organically, we may explore opportunities to invest in, or to acquire, other financial institutions and businesses that we believe would complement our existing business. Our investment or acquisition activities could be material to our business and involve a number of risks including the following:

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investing time and incurring expense associated with identifying and evaluating potential investments or acquisitions and negotiating potential transactions, resulting in our attention being diverted from the operation of our existing business;

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the lack of history among our management team in working together on acquisitions and related integration activities;

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the time, expense and difficulty of integrating the operations and personnel of the combined businesses;

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unexpected asset quality problems with acquired companies;

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inaccurate estimates and judgments used to evaluate credit, operations, management and market risks with respect to the target institution or assets;

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risks of impairment to goodwill or other-than-temporary impairment of investment securities;

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potential exposure to unknown or contingent liabilities of banks and businesses we acquire;

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an inability to realize expected synergies or returns on investment;

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potential disruption of our ongoing banking business; and

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loss of key employees or key customers following our investment or acquisition.

We may not be successful in overcoming these risks or other problems encountered in connection with potential investments or acquisitions. Our inability to overcome these risks could have an adverse effect on our ability to implement our business strategy and enhance shareholder value, which, in turn, could have an adverse effect on our business, financial condition and results of operations. Additionally, if we record goodwill in connection with any acquisition, our business, financial condition and results of operations may be adversely affected if that goodwill is determined to be impaired, which would require us to take an impairment charge.

New lines of business, products, product enhancements or services may subject us to additional risk.

From time to time, we may implement new lines of business or offer new products and product enhancements as well as new services within our existing lines of business. There are substantial risks and uncertainties associated with these efforts. In developing, implementing or marketing new lines of business, products, product enhancements or services, we may invest significant time and resources. We may underestimate the appropriate level of resources or expertise necessary to make new lines of business or products successful or to realize their expected benefits. We may not achieve the milestones set in initial timetables for the development and introduction of new lines of business, products, product enhancements or services, and price and profitability targets may not prove feasible. External factors, such as compliance with regulations, competitive alternatives and shifting market preferences, may also impact the ultimate implementation of a new line of business or offerings of new products, product enhancements or services. Any new line of business, product, product enhancement or service could have a significant impact on the effectiveness of our system of internal controls. We may also decide to discontinue businesses or products, due to lack of customer acceptance or unprofitability. Failure to successfully manage these risks in the development and implementation of new lines of business or offerings of new products, product enhancements or services could have an adverse effect on our business, financial condition and results of operations.

Our reputation is critical to our business, and damage to it could have an adverse effect on us.

A key differentiating factor for our business is the strong reputation we are building in our markets. Maintaining a positive reputation is critical to attracting and retaining customers and employees. Adverse perceptions of us could make it more difficult for us to execute on our strategy. Harm to our reputation can arise from many sources, including actual or perceived employee misconduct, errors or misconduct by our third party vendors or other counterparties, litigation or regulatory actions, our failure to meet our high customer service and quality standards and compliance failures.

In particular, it is not always possible to prevent employee error or misconduct, and the precautions we take to prevent and detect this activity may not be effective in all cases. Because the nature of the financial services business involves a high volume of transactions, certain errors may be repeated or compounded before they are discovered and successfully rectified. Our necessary dependence upon processing systems to record and process transactions and our large transaction volume may further increase the risk that employee errors, tampering or manipulation of those systems will result in losses that are difficult to detect. Employee error or misconduct could also subject us to financial claims. If our internal control systems fail to prevent or detect an occurrence, or if any resulting loss is not insured, exceeds applicable insurance limits or if insurance coverage is denied or not available, it could have an adverse effect on our business, financial condition and results of operations.

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Additionally, as a financial institution, we are inherently exposed to operational risk in the form of theft and other fraudulent activity by employees, customers and other third parties targeting us and our customers or data. Such activity may take many forms, including check fraud, electronic fraud, wire fraud, phishing, social engineering and other dishonest acts. Although we devote substantial resources to maintaining effective policies and internal controls to identify and prevent such incidents, given the increasing sophistication of possible perpetrators, we may experience financial losses or reputational harm as a result of fraud.

Negative publicity about us, whether or not accurate, may also damage our reputation, which could have an adverse effect on our business, financial condition and results of operations.

Our operations could be interrupted if our third-party service providers experience difficulty, terminate their services or fail to comply with banking regulations.

We outsource some of our operational activities and accordingly depend on relationships with third-party providers for services such as core systems support, informational website hosting, internet services, online account opening and other processing services. Our business depends on the successful and uninterrupted functioning of our information technology and telecommunications systems, many of which also depend on third party providers. The failure of these systems, a cybersecurity breach involving any of our third-party service providers or the termination or change in terms of a third-party software license or service agreement on which any of these systems is based could interrupt our operations. Because our information technology and telecommunications systems interface with and depend on third-party systems, we could experience service denials if demand for such services exceeds capacity or such third-party systems fail or experience interruptions. Replacing vendors or addressing other issues with our third-party service providers could entail significant delay, expense and disruption of service.

As a result, if these third-party service providers experience difficulties, are subject to cybersecurity breaches, or terminate their services, and we are unable to replace them with other service providers, particularly on a timely basis, our operations could be interrupted. If an interruption were to continue for a significant period of time, our business, financial condition and results of operations could be adversely affected. Even if we are able to replace third-party service providers, it may be at a higher cost to us, which could adversely affect our business, financial condition and results of operations.

Furthermore, third-party service providers, and banking organizations’ relationships with those providers, are subject to demanding regulatory requirements and attention by bank regulators. Our regulators may hold us responsible for any deficiencies in our oversight or control of our third-party service providers and in the performance of the parties with which we have these relationships. As a result, if our regulators assess that we have not exercised adequate oversight and control over our third-party service providers or that such providers have not performed adequately, we could be subject to administrative penalties, fines or other forms of regulatory enforcement action as well as requirements for consumer remediation, any of which could have an adverse effect on our business, financial condition and results of operations.

System failure or cybersecurity breaches of our network security could subject us to increased operating costs as well as litigation, damage to our reputation and other potential losses.

Failures in, or breaches of, our computer systems and network infrastructure, or those of our third-party vendors or other service providers or our customers, including as a result of cyber attacks, could disrupt our business, result in the disclosure or misuse of confidential or proprietary information, damage our reputation, increase our costs and cause losses. Our operations are dependent upon our ability to protect our computer equipment against damage from fire, power loss, telecommunications failure or a similar catastrophic event. Any damage or failure that causes an interruption in our operations could have an adverse effect on our business, financial condition and results of operations. In addition, our operations are dependent upon our ability to protect our computer systems and network infrastructure, including our digital banking activities, against damage from physical break-ins, cybersecurity breaches and other disruptive problems caused by the internet or other users. Cybersecurity breaches and other disruptions would jeopardize the security of information stored in and transmitted through our computer systems and network infrastructure, which may result in significant liability to us and damage to our reputation, and may discourage current and potential customers from using our digital banking services. Our security measures, including firewalls and penetration testing, may not prevent or detect future potential losses from system failures or cybersecurity breaches.

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In the normal course of business, we collect, process, and retain sensitive and confidential information regarding our customers. Although we devote significant resources and management focus to ensuring the integrity of our systems through information security and business continuity programs, our facilities and systems, and those of our third-party service providers, are vulnerable to external or internal security breaches, acts of vandalism, computer viruses, misplaced or lost data, programming or human errors, or other similar events. We and our third-party service providers have experienced these types of events in the past and expect to continue to experience them in the future. These events could interrupt our business or operations, result in significant legal and financial exposure, supervisory liability, regulatory enforcement action, damage to our reputation, loss of customers and business or a loss of confidence in the security of our systems, products and services. The techniques used in cyber attacks change rapidly and are increasingly sophisticated, including through the use of generative artificial intelligence and deepfakes, and we expect in the future through the use of quantum computing, and we may not be able to anticipate cyber attacks or data security breaches. Any of these occurrences could have an adverse effect on our business, financial condition and results of operations.

Information security risks for financial institutions like us have increased recently in part because of new technologies, the use of the internet and telecommunications technologies (including mobile devices) to conduct financial and other business transactions and the increased sophistication and activities of organized crime, perpetrators of fraud, hackers, terrorists and others. In addition to cyber attacks or other security breaches involving the theft of sensitive and confidential information, hackers recently have engaged in attacks against large financial institutions that are designed to disrupt key business services, such as consumer-facing web sites. We are not able to anticipate or implement effective preventive measures against all security breaches of these types, especially because the techniques used change frequently and because attacks can originate from a wide variety of sources. Our early detection and response mechanisms may be thwarted by sophisticated attacks and malware designed to avoid detection.

The development and use of artificial intelligence present risks and challenges that may adversely impact our business.

We intend to selectively incorporate AI technology in certain business processes, fraud detections, services or products, including technologies that process sensitive financial and/or personal data. For example, as an initial step, we currently use a software product with AI technology to enhance our fraud detection capabilities for our customers’ banking activity. We have also selectively employed AI technologies to assist in drafting standardized documents and communications, and to search information on the internet. Furthermore, our third-party vendors, clients or counterparties may develop or incorporate AI technology in their business processes, services or products.

The development and use of AI present a number of risks and challenges to our business. The legal and regulatory environment relating to AI is uncertain and rapidly evolving and includes regulation targeted specifically at AI as well as provisions in intellectual property, privacy, consumer protection, employment and other laws applicable to the use of AI. These evolving laws and regulations could require changes in our implementation of AI technology and increase our compliance costs and the risk of non-compliance, including in relation to data privacy and security requirements under laws such as the Gramm-Leach-Bliley-Act (“GLBA”), which mandates the protection of consumer financial information.

AI models, particularly generative AI models, may produce output or take action that is incorrect, that results in the release of private, confidential or proprietary information, that reflects biases included in the data on which they are trained, that produces output that is, or is perceived to be, discriminatory or unfair, that infringes on the intellectual property rights of others, or that is otherwise harmful.

While we have policies prohibiting our employees from using non-approved generative AI applications or websites on the Company or the Bank’s network, there can be no assurances that our employees will adhere to these policies or that such policies will be effective in mitigating the risks associated with using AI technology. Furthermore, although we have not authorized the use of any AI tools with personally identifiable or nonpublic information, employees may intentionally or inadvertently violate our policy by using personally identifiable or nonpublic information, including sensitive client information, with AI technologies.

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Since personally identifiable or nonpublic information may be used with such technologies, there is a risk that these technologies generate output that improperly discloses such personally identifiable or nonpublic information. The use of personally identifiable or nonpublic information could result in a violation of certain laws, including data privacy laws and the data privacy and security requirements of the GLBA, exposing us to legal liability or regulatory penalties. In addition, the complexity of many AI models makes it challenging to understand why they are generating particular outputs. This limited transparency increases the challenges associated with assessing the proper operation of AI models, understanding and monitoring the capabilities of the AI models, ensuring adherence to our privacy policies, reducing erroneous output, eliminating bias and discrimination and complying with regulations that require documentation or explanation of the basis on which decisions are made. Further, we may rely on AI models developed by third parties, and, to that extent, would be dependent in part on the manner in which those third parties develop and train their models, including risks arising from the inclusion of any unauthorized material in the training data for their models, and the effectiveness of the steps these third parties have taken to limit the risks associated with the output of their models, matters over which we may have limited visibility.

Any of these risks could expose us to liability or adverse legal or regulatory consequences and harm our reputation and the public perception of our business or the effectiveness of our security measures, which could have an adverse effect on our business, financial condition or results of operations.

Our ability to conduct our business could be disrupted by natural or man-made disasters, including pandemic viruses.

All of our offices, and a significant portion of the real estate securing loans we make, and our borrowers’ business operations in general, are located in California. California has had and will continue to have major earthquakes in areas where a significant portion of the collateral and assets of our borrowers are concentrated, including the Bay Area. California is also prone to fires, mudslides, floods and other natural disasters. Additionally, acts of terrorism, pandemic viruses (including COVID-19 and bird flu), war, terrorism, civil unrest, violence, or other man-made disasters could also cause disruptions to our business or to the economy as a whole. The occurrence of natural or man-made disasters could destroy, or cause a decline in the value of, mortgaged properties or other assets that serve as our collateral and increase the risk of delinquencies, defaults, foreclosures and losses on our loans, damage our banking facilities and offices, negatively impact regional economic conditions, adversely affect our customers, result in a decline in loan demand and loan originations, result in drawdowns of deposits by customers impacted by disasters and negatively impact the implementation of our growth strategy. Natural or man-made disasters could also disrupt our business operations more generally. We have implemented a business continuity program that allows us to move critical functions to a backup data center in the event of a catastrophe. Although this program has been tested, we cannot guarantee its effectiveness in any disaster scenarios. Regardless of the effectiveness of our disaster recovery and business continuity plan, the occurrence of any natural or man-made disaster could have an adverse effect on our business, financial condition and results of operations.

Litigation and regulatory actions, including possible enforcement actions, could subject us to significant fines, penalties, judgments or other requirements resulting in increased expenses or restrictions on our business activities.

In the normal course of business, from time to time, we have in the past been and may in the future be named as a defendant in various legal actions, arising in connection with our current and/or prior business activities. Legal actions could include claims for substantial compensatory or punitive damages or claims for indeterminate amounts of damages. Further, in the future our regulators may impose consent orders, civil money penalties, matters requiring attention, or similar types of supervisory criticism. We may also, from time to time, be the subject of subpoenas, requests for information, reviews, investigations and proceedings (both formal and informal) by governmental agencies regarding our current and/or prior business activities. Any such legal or regulatory actions may subject us to substantial compensatory or punitive damages, significant fines, penalties, obligations to change our business practices or other requirements resulting in increased expenses, diminished income and damage to our reputation. Our involvement in any such matters, whether tangential or otherwise and even if the matters are ultimately determined in our favor, could also cause significant harm to our reputation and divert management attention from the operation of our business. Further, any settlement, consent order or adverse judgment in connection with any formal or informal proceeding or investigation by government agencies may result in litigation, investigations or proceedings as other litigants and government agencies begin independent reviews of the same activities. As a result, the outcome of legal and regulatory actions could have an adverse effect on our business, financial condition and results of operations.

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We are subject to an extensive body of accounting rules and best practices. Periodic changes to such rules may change the treatment and recognition of critical financial line items.

The nature of our business makes us sensitive to the large body of accounting rules in the United States. From time to time, the governing bodies that oversee changes to accounting rules and reporting requirements may release new guidance for the preparation of our consolidated financial statements. These changes can materially impact how we record and report our financial condition and results of operations. In some instances, we could be required to apply a new or revised standard retroactively, resulting in the restatement of prior period financial statements. These changes could adversely affect our capital, regulatory capital ratios, ability to make larger loans, earnings and performance metrics. Any such changes could have an adverse effect on our business, financial condition and results of operations.

The accuracy of our consolidated financial statements and related disclosures could be affected if the judgments, assumptions or estimates used in our critical accounting policies are inaccurate.

The preparation of financial statements and related disclosures in conformity with GAAP requires us to make judgments, assumptions and estimates that affect the amounts reported in our consolidated financial statements and accompanying notes. Our critical accounting policies, which are included in the section captioned “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this prospectus, describe those significant accounting policies and methods used in the preparation of our consolidated financial statements that we consider “critical” because they require judgments, assumptions and estimates that materially affect our consolidated financial statements and related disclosures. As a result, if future events or regulatory views concerning such analysis differ significantly from the judgments, assumptions and estimates in our critical accounting policies, those events or assumptions could have a material impact on our consolidated financial statements and related disclosures, in each case resulting in our possible need to revise or, if in error, restate prior period financial statements, cause damage to our reputation and the price of our common stock and could have an adverse effect on our business, financial condition and results of operations.

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains, and future oral and written statements by us and our management may contain, forward-looking statements. These forward-looking statements represent plans, estimates, objectives, goals, guidelines, expectations, intentions, projections and statements of our beliefs concerning future events, business plans, objectives, expected operating results and the assumptions upon which those statements are based. Forward-looking statements include without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements, and are typically identified with words such as “may,” “could,” “should,” “will,” “would,” “believe,” “anticipate,” “estimate,” “expect,” “aim,” “strive,” “intend,” “plan” or words or phases of similar meaning. We caution that the forward-looking statements are based largely on our expectations and are subject to a number of known and unknown risks and uncertainties that are subject to change based on factors which are, in many instances, beyond our control. Such forward-looking statements are based on various assumptions (some of which may be beyond our control) and are subject to risks and uncertainties, which change over time, and other factors which could cause actual results to differ materially from those currently anticipated. Such risks and uncertainties include, but are not limited to:

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uncertain market conditions and economic trends nationally, regionally and particularly in the Bay Area and California;

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economic conditions affecting the venture capital and private equity industries, including any decline in overall portfolio company investment, merger and acquisition activity and other liquidity events affecting venture and private equity fund and their portfolio companies;

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risks related to the concentration of our business in California, and specifically within the Bay Area, including risks associated with any downturn in the real estate sector;

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our inability to successfully reposition our available-for-sale securities portfolio utilizing the proceeds from this offering;

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incurrence of any losses in connection with any repositioning of our available-for-sale securities portfolio utilizing the proceeds from this offering;

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the occurrence of significant natural disasters, including fires and earthquakes, and acts of war or terrorism;

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our ability to conduct our business could be disrupted by natural or man-made disasters, including the effects of pandemic viruses;

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changes in market interest rates that affect the pricing of our loans and deposits and our net interest income;

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risks related to our strategic focus on lending to small to medium-sized businesses;

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the sufficiency of the assumptions and estimates we make in establishing reserves for potential loan losses and the value of loan collateral and securities;

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our ability to attract and retain executive officers and key employees and their customer and community relationships;

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adverse changes in the financial performance and/or condition of our borrowers and, as a result, increased loan delinquency rates, deterioration in asset quality and losses in our loan portfolio;

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the costs of and effects of legal and regulatory developments, including legal proceedings and lawsuits we are or may become subject to;

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the results of regulatory examinations or reviews and the effect of and our ability to comply with, any regulations or regulatory orders or actions we are or may become subject to;

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our level of nonperforming assets and the costs associated with resolving problem loans;

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our ability to maintain adequate liquidity and to raise necessary capital to fund our growth strategy and operations or to meet increased minimum regulatory capital levels;

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the effects of increased competition from a wide variety of local, regional, national and other providers of financial services;

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technological changes and developments;

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negative trends in our market capitalization and adverse changes in the price of our common stock;

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risks associated with unauthorized access, cyber-crime and other threats to data security;

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the effects of any acquisitions or dispositions we may make or evaluate, and the costs associated with any potential or actual acquisition or disposition;

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our ability to comply with various governmental and regulatory requirements applicable to financial institutions, including supervisory actions by federal and state banking agencies;

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the impact of recent and future legislative and regulatory changes, including changes in banking, accounting, securities and tax laws and regulations and their application by our regulators, and economic stimulus programs;

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governmental monetary and fiscal policies, including the policies of the Federal Reserve and policies related to tariffs;

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our ability to implement, maintain and improve effective internal controls;

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our use of the net proceeds from this offering;

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our success at managing any of the risks involved in the foregoing items; and

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other factors that are discussed in the sections entitled “Risk Factors,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

The foregoing factors should not be considered exhaustive and should be read together with other cautionary statements that are included in this prospectus, including those discussed in the section entitled “Risk Factors.” New risks and uncertainties may emerge from time to time, and it is not possible for us to predict their occurrence or how they will affect us. If one or more of the factors affecting our forward-looking information and statements proves incorrect, then our actual results, performance or achievements could differ materially from those expressed in, or implied by, forward-looking information and statements contained in this prospectus. Therefore, we caution you not to place undue reliance on our forward-looking information and statements. We disclaim any duty to revise or update the forward-looking statements, whether written or oral, to reflect actual results or changes in the factors affecting the forward-looking statements, except as specifically required by law.

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USE OF PROCEEDS

Assuming an initial public offering price of $23.00 per share (the midpoint of the price range set forth on the cover page of this prospectus), we estimate that the net proceeds to us from this offering, after deducting underwriting discounts and commissions and the estimated offering expenses payable by us, will be approximately $53.8 million, or approximately $62.2 million if the underwriters exercise their option to purchase additional shares from us in full.

Each $1.00 increase (decrease) in the assumed initial public offering price per share of $23.00, which is the midpoint of the price range set forth on the cover page of this prospectus, would increase (decrease) our net proceeds, after deducting underwriting discounts and commissions and estimated offering expenses payable by us, by $2.4 million, or approximately $2.8 million if the underwriters exercise their option to purchase additional shares from us in full, assuming the number of shares we sell, as set forth on the cover of this prospectus, remains the same.

We may also increase or decrease the number of shares we are offering. Each increase (decrease) of 1.0 million in the number of shares offered by us would increase (decrease) the net proceeds to us from this offering by approximately $21.4 million, assuming no change in the assumed initial public offering price and after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

We intend to use a substantial amount of the net proceeds to us from this offering to increase the capital of the Bank in order to support our organic growth strategies, including expanding our overall market share and our lending activities, strengthening our regulatory capital, the potential optimization of the balance sheet, which may include repositioning of a substantial portion of our available-for-sale securities portfolio, and for working capital and other general corporate purposes. We may temporarily invest funds that we do not immediately need for these purposes in investment securities.

We reserve the right to use the net proceeds we receive in this offering in any manner we consider to be appropriate. Although we do not contemplate changes in the proposed use of proceeds, to the extent we find that adjustment is required for other uses by reason of existing business conditions, the use of proceeds may be adjusted. The actual use of the proceeds of this offering could differ from those outlined above as a result of several factors including those set forth in the section entitled “Risk Factors” and elsewhere in this prospectus. Our management will have broad discretion in the application of the net proceeds from this offering, and investors will be relying on the judgment of our management regarding the application of the proceeds.

Potential Repositioning of our Available-for-Sale Securities Portfolio

A substantial portion of the proceeds from this offering may be used to execute a balance sheet restructuring through the repositioning of a substantial portion of our available-for-sale debt securities portfolio as well as the repayment of short-term borrowings and noncore funding. If the repositioning is executed, a portion of the net proceeds of this offering would be allocated to offset the negative impact on regulatory capital related to the repositioning. The objectives of a potential repositioning transaction would include improving our overall profitability, reducing borrowings and increasing the yield of our investment portfolio. Our board of directors and management will have broad discretion in the application of the net proceeds from this offering, and investors will be relying on the judgment of our board of directors and management with regard to the use of these net proceeds. Please see sections entitled “Risk Factors — ‘Risks Related to an Investment in our Common Stock and the Offering’ and ‘Risks Related to Our Business’” for additional information.

As of March 31, 2025, the fair value of the available-for-sale securities portfolio totaled $296.6 million with an unrealized loss of $65.6 million. The yield on the available-for-sale securities portfolio in the first quarter of 2025 was 2.40% with an effective duration of 6.2 years and average life of 7.6 years. The portfolio primarily consists of agency mortgage-backed securities and collateralized mortgage obligations, totaling 97% of the total portfolio.

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If pursued, the timing and execution of any repositioning transaction will be dependent on market conditions. We anticipate that the repositioning could involve the following:

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The sale of debt securities with a fair value of up to $280.2 million as of March 31, 2025, and an unrealized pre-tax loss of up to $64.5 million. Securities to be sold in a repositioning strategy are expected to have an average life and yield similar to the total available-for-sale portfolio.

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The net proceeds from the sale of investment securities will primarily be invested in debt securities at current market yields of approximately 4.75% to 5.50%.

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Some portion of the proceeds from the sale of investment securities may be used to repay short-term borrowings and noncore funding or held in cash at the Federal Reserve or other high-quality liquid cash alternatives. Short term borrowings had a cost of 4.56% as of March 31, 2025.

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CAPITALIZATION

The following table sets forth our capitalization and regulatory capital ratios on a consolidated basis as of March 31, 2025:

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on an actual basis; and

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on a pro forma basis to give effect to the issuance and sale by us of 2,610,000 shares of common stock in this offering (assuming the underwriters do not exercise their option to purchase any additional shares to cover over-allotments, if any), and the receipt and application of the net proceeds from the sale of these shares at an assumed initial public offering price of $23.00 per share (the midpoint of the price range set forth on the front cover page of this prospectus) after deducting underwriting discounts and commissions and the estimated offering expenses payable by us.

The following should be read together with the sections entitled “Use of Proceeds,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Selected Historical Financial Data” and our consolidated financial statements and accompanying notes that are included elsewhere in this prospectus.

	As of March 31, 2025
(in thousands)	Actual			Pro Forma
Cash and cash equivalents		125,001			178,803

Total Liabilities:
Total Deposits		1,929,488			1,929,488
Subordinated debt, net		22,000			22,000
Short-term borrowings		155,000			155,000
Accrued interest payable and other liabilities		16,815			16,815
Total liabilities		2,123,303			2,123,303
Shareholders’ equity:
Preferred stock, no par value; 5,000,000 shares authorized, no shares issued and outstanding at March 31, 2025 and no shares issued and outstanding on pro forma basis		0			0
Common stock, no par value; 15,000,000 shares authorized¹; 7,912,184 shares issued and outstanding at March 31, 2025 and 10,522,184 shares issued and outstanding on pro forma basis.		106,839			160,641
Retained earnings		136,139			136,139
Accumulated other comprehensive (loss) income, net of taxes		(46,359	)		(46,359	)
Total shareholders’ equity		196,619		$	250,421
Book value per share	$	24.85		$	23.80
Capital ratios:
Tier 1 leverage		10.39	%		12.40	%
Common equity Tier 1 capital		11.10			13.56
Tier 1 risk-based capital		11.10			13.56
Total risk-based capital		12.86			15.32
Tangible common equity ratio		8.48			10.55

On May 20, 2025, the Company’s shareholders approved an amendment to the Company’s Articles of Incorporation to increase the authorized shares of common stock from fifteen million (15,000,000) shares to twenty-five million (25,000,000) shares and such amendment was effected on May 21, 2025 upon filing of the certificate of charter amendment with the California Secretary of State.

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DILUTION

If you invest in our common stock, your ownership interest will be immediately diluted to the extent of the difference between the initial public offering price per share of our common stock in this offering and the net tangible book value per share of common stock upon completion of this offering.

Book value per common share represents the amount of common equity divided by the number of shares of common stock outstanding. Our net book value as of March 31, 2025 was $196.6 million, or $24.85 per share of common stock, based upon 7,912,184 shares of common stock outstanding as of such date. There were no intangible assets as of March 31, 2025.

After giving effect to the sale of 2,610,000 shares of our common stock by us at the assumed initial public offering price of $23.00 per share, the midpoint of the estimated initial public offering price range set forth on the cover page of this prospectus, and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us, our net book value as of March 31, 2025 would have been approximately $250.4 million, or approximately $23.80 per share of common stock. This represents an immediate decrease in net tangible book value of $1.05 per share to existing common shareholders, and an immediate accretion of $0.80 per share to investors participating in this offering. If the initial public offering price is higher or lower, the accretion to new shareholders will be less or greater, respectively.

The following table illustrates this accretion on a per share basis:

Assumed initial public offering price per share				$	23.00
Net tangible book value per share at March 31, 2025	$	24.85
Decrease in net tangible book value per share attributable to this offering		(1.05	)

As adjusted tangible book value per share after this offering					23.80

Accretion in net tangible book value per share to new investors				$	0.80

A $1.00 increase (or decrease) in the assumed initial public offering price of $23.00 per share, which is the midpoint of the estimated initial public offering price range set forth on the cover page of this prospectus, would increase (or decrease) the as adjusted net tangible book value per common share after this offering by approximately $0.23, and decrease (or increase) the accretion in net tangible book value per common share to new investors by approximately $0.77, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. If the underwriters exercise in full their option to purchase additional shares of our common stock in this offering, the as adjusted net tangible book value after this offering would be $23.71 per share, the decrease in net tangible book value to existing shareholders would be $1.14 per share and the accretion to new investors would be $0.71 per share, in each case assuming an initial public offering price of $23.00 per share, which is the midpoint of the estimated initial public offering price range set forth on the cover page of this prospectus.

The following table summarizes, as of March 31, 2025, the differences between our existing shareholders and new investors with respect to the number of shares of our common stock purchased from us, the total consideration paid and the average price per share paid. The calculations with respect to shares purchased by new investors in this offering reflect an assumed offering price of $23.00 per share, which is the midpoint of the estimated initial public offering price range set forth on the cover page of this prospectus, before deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us:

	Shares Purchased					Total Consideration					Average Price
	Number		Percentage			Amount		Percentage			Per Share
Existing shareholders as of March 31, 2025		7,912,184		75.2	%		106,839		64.0	%	$	13.50
New Investors		2,610,000		24.8	%		60,030		36.0	%	$	23.00
Total		10,522,184		100.0	%		166,869		100.0	%	$	15.86

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If the underwriters exercise their option to purchase additional shares in full, then our pro forma net tangible book value of our common stock as of March 31, 2025, would be approximately $258.8 million, or $23.71 per share, representing an immediate decrease in net tangible book value to our existing shareholders of approximately $1.14 per share and immediate accretion in net tangible book value to investors purchasing shares in this offering of approximately $0.71 per share.

The table above excludes 129,788 aggregate shares of our common stock reserved for issuance in connection with equity awards available for issuance under our 2022 Equity Incentive Plan, as amended (the “2022 Plan”) as of March 31, 2025. If equity awards are issued under our 2022 Plan, investors purchasing in this offering will experience further dilution.

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MARKET FOR COMMON STOCK AND DIVIDEND POLICY

Market for Common Stock

Existing shares of our common stock are quoted on the Pink Open Market operated by the OTC Markets Group, Inc. (the “Pink Market”) under the symbol “AVBH.” As of July 18, 2025, there were approximately 472 holders of record of our common stock. Upon completion of the offering, we expect that shares of our common stock will be traded on the Nasdaq Global Select Market under the symbol “AVBH.”

The following table sets forth the high and low bid prices for shares of our common stock for the periods indicated, as obtained from the Pink Market. These reported market quotations reflect inter-dealer prices, without retail mark-up, markdown or commission and may not necessarily represent actual transactions.

Fiscal Year Ending December 31, 2025	High		Low
Third Quarter (to July 31, 2025)	$	24.10		20.24
Second Quarter		23.29	$	19.75
First Quarter		26.59		20.15

Fiscal Year Ending December 31, 2024	High		Low
Fourth Quarter	$	22.49	$	19.32
Third Quarter		19.99		18.16
Second Quarter		19.30		18.30
First Quarter		21.70		18.45

Fiscal Year Ending December 31, 2023	High		Low
Fourth Quarter	$	22.00	$	20.30
Third Quarter		22.00		16.01
Second Quarter		16.84		13.25
First Quarter		22.80		10.70

Although our shares have been quoted on the Pink Market, the prices at which such transactions occurred may not necessarily reflect the price that would be paid for our common stock in a more active market. We anticipate that this offering and the listing of our common stock on the Nasdaq Global Select Market will result in a more active trading market for our common stock. However, we cannot assure you that a liquid trading market for our common stock will develop or be sustained after this offering. You may not be able to sell your shares quickly or at the market price if trading in our common stock is not active. See section entitled “Underwriting” for more information regarding our arrangements with the underwriters.

Dividend Policy

Holders of our common stock are entitled to receive dividends only when, as and if declared by our board of directors out of funds legally available for dividends.

We have never declared or paid any cash dividends on our capital stock and do not anticipate paying any cash dividends in the foreseeable future. We currently expect to retain future earnings, if any, to finance the growth and development of our business. Any future determination to declare cash dividends will be made at the discretion of our board of directors, subject to applicable federal and state laws, and will depend on a number of factors, including our financial condition, results of operations, capital requirements, contractual restrictions, general business conditions, and other factors that our board of directors may deem relevant. See section entitled “Supervision and Regulation — Dividends and Stock Repurchases.”

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations at and for the three months ended March 31, 2025 and 2024, and at and for the years ended December 31, 2024 and 2023 should be read in conjunction with our consolidated financial statements and the accompanying notes included elsewhere in this prospectus. This discussion and analysis contains forward-looking statements that are subject to certain risks and uncertainties and are based on certain assumptions that we believe are reasonable but may prove to be inaccurate. Certain risks, uncertainties and other factors, including those set forth under sections entitled “Cautionary Note Regarding Forward-Looking Statements,” “Risk Factors” and elsewhere in this prospectus, may cause actual results to differ materially from those projected results discussed in the forward-looking statements appearing in this discussion and analysis. We assume no obligation to update any of these forward-looking statements.

The following discussion presents management’s perspective on our results of operations and financial condition on a consolidated basis. However, because we conduct all of our material business operations through our bank subsidiary, Avidbank, the discussion and analysis relates to activities primarily conducted by the Bank.

Company Overview

Avidbank Holdings is a bank holding company headquartered in San Jose, California that operates through our wholly owned subsidiary, Avidbank (the “Bank”), a California state-chartered bank. Avidbank Holdings is registered under the Bank Holding Company Act of 1956, as amended. Avidbank Holdings was incorporated under the laws of the State of California in 2007 for the principal purpose of engaging in activities permitted for a bank holding company. As a bank holding company, Avidbank Holdings is authorized to engage in the activities permitted under the Bank Holding Company Act of 1956, as amended, and the regulations thereunder. Avidbank Holdings owns 100% of the issued and outstanding common shares of the Bank.

We specialize in commercial and industrial lending, commercial real estate lending, real estate construction, venture lending, structured finance, asset-based lending, sponsor finance, and fund finance. In addition to providing products and services, the Bank emphasizes the establishment of long-standing relationships with its customers and regularly modifies the products and services it offers to meet the unique demands of its customers. Our mission is to collaborate with our customers to meet their individual and business banking needs. We aim to consistently deliver value that exceeds our clients’ expectations.

Key Factors Affecting Our Business

Public Company Costs

Following the completion of this offering, we expect to incur additional costs associated with operating as a public company. We expect that these costs will include additional personnel, legal, consulting, regulatory, insurance, accounting, investor relations and other expenses that we did not incur as a private company.

The Sarbanes-Oxley Act, as well as rules adopted by the SEC, the FDIC, the DFPI and national securities exchanges, requires public companies to implement specified corporate governance practices that are currently inapplicable to us as a private company. These additional rules and regulations will increase our legal, regulatory and financial compliance costs and will make some activities more time-consuming and costly.

Interest Rates

Net interest income is the most significant contributor to our net income and is the difference between the interest and fees earned on interest-earning assets and the interest expense incurred in connection with interest-bearing liabilities. Net interest income is primarily a function of the average balances and yields of these interest-earning assets and interest-bearing liabilities. These factors are influenced by internal considerations such as product mix and risk appetite as well as external influences such as economic conditions, competition for loans and deposits and market interest rates.

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The cost of our deposits and short-term borrowings is primarily based on short-term interest rates, which are largely driven by the Federal Reserve’s actions and market competition. The yields generated by our loans and securities are typically affected by short-term and long-term interest rates, which are driven by market competition and market rates often impacted by the Federal Reserve’s actions and economic conditions. The level of net interest income is influenced by movements in such interest rates and the pace at which such movements occur.

Noninterest Income

Noninterest income is also a contributor to our net income. Noninterest income consists primarily of service charges on deposit accounts, foreign exchange income, earnings on bank owned life insurance, our net gains on the sale of investment securities and loans and other fee income including warrant and success fee income, and other miscellaneous fees.

Noninterest Expense

Noninterest expense includes salaries and employee benefits, occupancy and equipment, data processing, professional fees, FDIC insurance assessment, legal and professional fees, and other expenses. In evaluating our level of noninterest expense, we closely monitor our efficiency ratio. The efficiency ratio is calculated by dividing noninterest expense by net interest income plus noninterest income. We continue to seek to identify ways to streamline our business and operate more efficiently.

Credit Quality

Our loan policies and underwriting practices have historically resulted in low levels of charge-offs and nonperforming assets. Based upon selective deal origination and strong portfolio management, we will maintain the credit quality of our loan portfolio. However, credit trends in the markets in which we operate are largely impacted by economic conditions beyond our control. Negative trends affecting our clients’ performance could adversely impact our financial condition.

Competition

The industry and businesses in which we operate are highly competitive. We may see increased competition through more aggressive interest rates, underwriting standards, product offerings and structure. While we seek to maintain an appropriate return on our investments, we anticipate that we will experience continued pressure on our net interest margins as we operate in this competitive environment.

Potential Impact of Balance Sheet Repositioning on Future Operating Results and Financial Condition

As discussed in the section entitled “Use of Proceeds”, a substantial portion of the proceeds from this offering may be used to execute a balance sheet restructuring through the repositioning of a substantial portion of our available-for-sale debt securities portfolio as well as the repayment of short-term borrowings and noncore funding. If the repositioning is executed, a portion of the net proceeds of this offering would be allocated to offset the negative impact on regulatory capital related to the repositioning. The objectives of a potential repositioning transaction would include improving our overall profitability, reducing borrowings and increasing the yield of our investment portfolio. More specifically, the sale of investment securities from this balance sheet repositioning would result in a loss from continuing operations. The operating loss would lower our regulatory capital ratios but have limited impact on shareholders’ equity. If we engage in the balance sheet repositioning, we would use a portion of the net proceeds from our capital offering to help replenish our regulatory capital that was reduced by the loss on sale of investment securities. In addition, we would use the net proceeds to repay borrowings to decrease future interest expense and also to purchase new investment securities at higher yields to increase future interest income. The amount of investment securities sold and level of loss taken from the sale will depend upon the fair value of the securities and amount of net proceeds raised from this offering. We are not required to apply any portion of the net proceeds of this offering for any particular purpose and the timing and execution of the repositioning will be dependent on market conditions.

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Economic Conditions

Our business and financial performance are affected by economic conditions generally in the United States and more directly in the Bay Area and California where we primarily operate. The economic factors that are most relevant to our business and our financial performance include, but are not limited to, real estate values, interest rates, gross domestic product and unemployment rates.

Regulatory Trends

We operate in a highly regulated environment and nearly all of our operations are subject to extensive regulation and supervision. Regulators appointed by President Trump and his administration, Congress, the State of California and the DFPI may revise the laws and regulations applicable to us, may impose new laws and regulations, increase the level of scrutiny of our business in the supervisory process, and pursue additional enforcement actions against financial institutions. Future legislative and regulatory changes such as these may increase our costs and have an adverse effect on our business, financial condition and results of operations. The legislative and regulatory trends that will affect us in the future are impossible to predict with any certainty.

Critical Accounting Policies and Estimates

The Company’s consolidated financial statements are prepared in accordance with GAAP and follow general practices within the financial services industry. It is management’s opinion that accounting estimates covering certain aspects of the Company’s business have more significance than others due to the relative importance of those areas to overall performance, or the level of subjectivity required in making such estimates. We believe that the estimate most susceptible to significant change in the near term relates to determining the allowance for credit losses on loans and fair value of financial instruments.

Our most significant accounting policies are described in Note 1 to our consolidated financial statements for the years ended December 31, 2024 and 2023, which are contained elsewhere in this prospectus. We have identified the following accounting policies and estimates that, due to the difficult, subjective or complex judgments and assumptions inherent in those policies and estimates and the potential sensitivity of our consolidated financial statements to those judgments and assumptions, are critical to an understanding of our consolidated financial condition and results of operations. We believe that the judgments, estimates and assumptions used in the preparation of our financial statements are reasonable and appropriate.

Pursuant to the JOBS Act, as an emerging growth company, we can elect to opt out of the extended transition period for adopting any new or revised accounting standards. We have elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we may adopt the standard on the application date for private companies.

We have elected to take advantage of the scaled disclosures and other relief under the JOBS Act, and we may take advantage of some or all of the reduced regulatory and reporting requirements that will be available to us under the JOBS Act, so long as we qualify as an emerging growth company.

Allowance for Credit Losses on Loans

The allowance for credit losses on loans is a valuation account that is deducted from the loans’ amortized cost basis to present the net amount expected to be collected on the loans. Loans are charged off against the allowance when management believes and confirms the loan balance is not collectible and recoveries are credited to the allowance when received. The Company may also account for expected recoveries should information of an anticipated recovery become available. In the case of actual or expected recoveries, amounts may not exceed the aggregate of amounts previously charged off.

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Management utilizes relevant available information, from internal and external sources, relating to past events, current conditions, historical loss experience, and reasonable and supportable forecasts. The allowance is calculated using a discounted cash flow methodology applied at the loan level. The Company uses the FOMC Civilian Unemployment Rate, Median and Real GDP Seasonally Adjusted Annual Rate to obtain various forecast scenarios to determine the loan portfolio’s quantitative portion of expected credit loss. The Company has elected to forecast the first four quarters of the credit loss estimate and revert on a straight-line basis over eight quarters. Adjustments to historical loss information are made when management determines historical data are not likely reflective of the current portfolio such as limited data sets or lack of default or loss history. These adjustments include factors such as differences in underwriting standards, local economic conditions, portfolio mix, credit quality, concentrations, collateral or other relevant factors. Management may selectively apply external market data to subjectively adjust the Company’s own loss history including index or peer data. The Company utilizes an external vendor model as well as internally developed tools and nonstatistical estimation approaches. Accrued interest receivable is excluded from the estimate of credit losses for loans.

The allowance for credit losses on loans is measured on a collective (pool) basis when similar risk characteristics exist. The Company determines a separate allowance for each portfolio segment (loan type). These portfolio segments include commercial and industrial, construction, residential real estate, commercial real estate and consumer loans.

The general reserve component of the allowance for credit losses also consists of reserve factors based on management’s assessment of the following for each portfolio segment: (1) inherent credit risk, (2) historical losses and (3) other qualitative factors. Management estimates an allowance based upon loans outstanding as well as unfunded commitments. These reserve factors are inherently subjective and are driven by the repayment risk associated with each category described below:

Commercial and Industrial

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Commercial and industrial loans consist of working capital and term loans which are generally underwritten to existing cash flows of operating businesses. Debt coverage is provided by business cash flows and economic trends influenced by unemployment rates and other key economic indicators which are closely correlated to the credit quality of these loans.

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Asset-based loans are generally made against accounts receivable and inventory to companies generating consistent sales without yet having reached consistent profitability. As such, these loans are more collateral focused and are primarily subject to the risks of collecting and liquidating the collateral.

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Sponsor finance loans are made to companies based upon their cash flow and often have risks associated with merger and acquisition activities. Additional risks for this loan category include insufficient levels of collateral in the form of accounts receivable, inventory or equipment. Declines in general economic conditions and other events can cause cash flows to fall to levels insufficient to service debt.

●

Venture loans are made to companies with modest or negative cash flows and no established record of profitable operations. Repayment of these loans may be dependent upon receipt by borrowers of additional equity financing from venture firms or others, or in some cases, a successful sale to a third party, public offering or other form of liquidity event. Declines in venture capital financing activity, as well as mergers and acquisitions and initial public offerings – may impact the financial health of some of our clients.

●

Our venture loans are typically originated by examining and evaluating the quality of the investor syndicate, experience of the company’s senior management team, strength of relationships with management and investors, projected liquidity, performance to plan, size of addressable market, strength of product and intellectual property, if any. The loan terms vary depending on the borrowers’ business, credit rating, and financial position. We provide working capital, revolving lines of credit, as well as term loans, which typically include an interest only draw period typically up to 24 months followed by an amortization period typically up to 36 months. We also attempt to negotiate the receipt of a de minimis amount of equity warrants or a success fee at loan originations and renewals. Once a loan is originated, we collect financial reporting monthly to monitor performance and compliance with any covenants and assess the likelihood of additional equity financing. Particularly, through our proactive loan monitoring and risk accessing process as further described under the Business section of this prospectus, we closely review the borrowers’ liquidity and cash balances on a regular basis and evaluate their ability for loan repayment and the need for new funding.

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Construction

●

Construction loans, including land and development loans are comprised of loans collateralized by land or real estate. The primary source of repayment is the eventual sale or refinance of the completed project. Risk arises from the necessity to complete projects within specified cost and timelines. Trends in the construction industry significantly impact the credit quality of these loans, as demand drives construction activity. In addition, trends in real estate values significantly impact the credit quality of these loans, as property values determine the economic viability of construction projects.

Commercial real estate

●

Non-owner occupied commercial real estate loans are collateralized by real estate where the owner is not the primary tenant. Adverse economic developments or an overbuilt market impact commercial real estate projects and may result in troubled loans. Trends in vacancy rates of commercial properties impact the credit quality of these loans. High vacancy rates reduce operating revenues and the ability for properties to produce sufficient cash flow to service debt obligations. Another common risk for this loan category includes a lack of a suitable alternative use for the property.

●

Owner-occupied commercial real estate loans are collateralized by real estate where the owner is the primary tenant. These loans are generally underwritten to existing cash flows of operating businesses. Debt coverage is provided by business cash flows and economic trends influenced by unemployment rates and other key economic indicators which are closely correlated to the credit quality of these loans.

Residential real estate

●

Residential real estate loans are typically home equity lines of credit secured by residential real estate. These are not typical mortgage loans and may have a variety of reasons for the borrowing including providing funding to a business or paying for large personal expenditures. The degree of risk in home equity loans depends primarily on the loan amount in relation to collateral value, the interest rate and the borrower’s ability to repay in an orderly fashion. Risks common to home equity lines of credit are general economic conditions, including an increase in unemployment rates, and declining real estate values that reduce or eliminate the borrower’s home equity.

Consumer

●

Consumer loans are primarily loans to individuals that may be unsecured or secured by collateral other than real estate. The unsecured loans are generally revolving personal lines of credit to established clients. The high quality of the clients who are offered these products has historically caused this loan product to have less risk of loss than commercial loan products. Risks common to consumer loans include unemployment and changes in local economic conditions as well as the inability to monitor collateral consisting of personal property.

●

Loans that do not share risk characteristics are evaluated on an individual basis. Loans evaluated individually are also not included in the collective evaluation. When management determines that foreclosure is probable or when the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral, expected credit losses are based on the fair value of the collateral, adjusted for selling costs as appropriate.

Allowance for Credit Losses on Available-for-Sale Securities

For available-for-sale securities in an unrealized loss position, management first assesses whether it intends to sell, or is more likely than not required to sell, the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through income. For debt securities held as available-for-sale that do not meet the aforementioned criteria, we evaluate whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis. Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income (“OCI”).

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Stock-Based Compensation

The Company provides stock-based compensation to its executives in the form of restricted stock awards. Compensation cost is recognized for restricted stock awards based on the fair value of these awards at the date of grant. The market price of our common stock at the date of grant is used for the fair value of restricted stock awards. Compensation cost is recognized over the required service period, generally defined as the vesting period. For awards with graded vesting, compensation cost is recognized on a straight-line basis over the requisite service period for the entire award. Our accounting policy is to recognize forfeitures as they occur.

Results of Operations Highlights

Three Months Ended March 31, 2025 Compared to March 31, 2024

Our net income for the first three months of 2025 was $5.4 million, or $0.71 per diluted share, an increase of $190,000, or 4%, compared to $5.2 million, or $0.69 per diluted share, for the same period in 2024. The following provides highlights of our financial results for three months ended March 31, 2025:

●

Net interest income on a fully taxable equivalent basis increased $469,000, or 2%, compared to the first quarter of 2024. Comparing the same periods, our net interest margin decreased 2 basis points to 3.52%.

●

We recorded a provision for credit losses of $0 for the three months ended March 31, 2025, compared to $319,000 for the three months ended March 31, 2024 primarily due to lower loan balances offset by an increase in qualitative adjustments to reflect increased economic uncertainty.

●

Noninterest income for the three months ended March 31, 2025 was down $112,000, or 9%, compared to the same period in 2024.

●

Noninterest expense increased $415,000, or 3%, compared to the same period in 2024. Most notably, salaries and employee benefits increased $303,000, primarily due to growth in our employee headcount from 141 to 143.

Full-Year 2024 Compared to 2023

We reported net income of $21.0 million in 2024 compared to $16.8 million in 2023. The following provides highlights of our financial results for 2024:

●

Net interest income increased $1.7 million, compared to the prior year. During 2024, our net interest margin decreased 11 basis points to 3.44%, which reflects steeper increases in deposit rates compared to that of loans and a decrease in noninterest-bearing deposits.

●

We recorded a provision for credit losses of $4.1 million in 2024 compared to $3.0 million in 2023. The increase in provision expense correlated with the increase in net charge-offs of $4.3 million, which was primarily driven by one venture lending relationship charge-off of $4.3 million.

●

Noninterest income for 2024 was up $8.7 million compared to 2023, which was mostly attributable to bond portfolio losses of $6.2 million in 2023. In addition, other investment income increased $1.0 million due to distributions on fund investments, and other income for 2024 reflected $625,000 in proceeds from the settlement related to a previously foreclosed property.

●

Noninterest expense increased $3.4 million, or 8%, compared to 2023. Most notably, salaries and employee benefits increased $1.9 million, primarily due to growth in our employee headcount from 143 to 148.

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Net Interest Income

The following table shows the composition of average earning assets and average funding sources, average yields and rates, and the net interest margin for the three months ended March 31, 2025 and 2024.

	For the Three Months Ended March 31,
*(in thousands; taxable equivalent)*	2025							2024
	Average Balance		Interest Income/ Expense		Yields or Rates⁽⁵⁾			Average Balance		Interest Income/ Expense		Yields or Rates⁽⁵⁾
ASSETS
Interest earning assets:
Loans⁽¹⁾	$	1,858,716	$	31,885		6.96	%	$	1,758,201	$	31,828		7.28	%
Fed funds sold/interest-bearing deposits		64,376		706		4.45	%		59,391		819		5.46	%
Investment securities
Taxable investment securities		293,736		1,718		2.37	%		317,572		1,802		2.28	%
Non-taxable investment securities⁽²⁾		2,686		39		5.84	%		1,868		28		5.93	%
Total investment securities		296,422		1,757		2.40	%		319,440		1,830		2.30	%
FHLB stock		8,409		185		8.92	%		8,409		190		9.11	%
Total interest earning assets		2,227,923		34,533		6.29	%		2,145,441		34,667		6.50	%

Noninterest-earning assets:
Cash and due from banks		12,851							13,038
All other assets⁽³⁾		49,161							64,299

TOTAL ASSETS	$	2,289,935						$	2,222,778

LIABILITIES AND SHAREHOLDERS’ EQUITY
Interest-bearing liabilities:
Deposits
Demand	$	956,994	$	8,530		3.61	%	$	746,916	$	7,439		4.01	%
Money market and savings		385,434		2,871		3.02	%		303,593		2,270		3.01	%
Time		60,282		558		3.75	%		56,783		555		3.93	%
Brokered		77,537		868		4.54	%		134,453		1,770		5.29	%
Total interest-bearing deposits		1,480,247		12,827		3.51	%		1,241,745		12,034		3.90	%

Short-term borrowings		170,111		1,911		4.56	%		282,066		3,442		4.91	%
Subordinated debt		22,000		435		8.02	%		21,917		300		5.51	%

Total interest-bearing liabilities		1,672,358		15,173		3.68	%		1,545,728		15,776		4.10	%

Noninterest-bearing liabilities:
Demand deposits		405,746							483,100
Accrued expenses and other liabilities		19,940							27,043
Shareholders’ equity		191,891							166,907

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	2,289,935						$	2,222,778

Net interest spread						2.61	%						2.40	%
Net interest income and margin⁽⁴⁾			$	19,360		3.52	%			$	18,891		3.54	%

Non-taxable equivalent net interest margin						3.52	%						3.54	%

Cost of deposits	$	1,885,993	$	12,827		2.76	%	$	1,724,845	$	12,034		2.81	%
Cost of funds	$	2,078,104	$	15,173		2.96	%	$	2,028,828	$	15,776		3.13	%

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(1)	Nonperforming loans are included in average loan balances. No adjustment has been made for these loans in the calculation of yields. Interest income on loans includes amortization of deferred loan fees / (costs) of $496,000 and $455,000, respectively.
(2)	Interest income on tax-exempt securities has been increased to reflect comparable interest on taxable securities. The rate used was 21%, reflecting the statutory federal income tax rate.

(3)

Including negative balance on average allowance for credit losses on loans of $18.8 million and $19.1 million, respectively.

(4)

Net interest margin is net interest income divided by total interest-earning assets.

(5)

Annualized.

Net interest income, the primary difference between interest earned on loans and investments and interest paid on deposits and borrowings, is the principal component of our earnings. Net interest income is affected by changes in the nature and volume of earning assets and interest-bearing liabilities held during the period, the rates earned on such assets and the rates paid on interest-bearing liabilities.

Net interest income on a taxable equivalent basis for the three months ended March 31, 2025, was $19.4 million, an increase of $469,000, or 2%, compared to $18.9 million for the three months ended March 31, 2024. The increase in net interest income was primarily attributable to lower rates paid on deposits and a $100.5 million increase in the average balance of loans in the first quarter of 2025 compared to the same period in 2024.

Average earning assets for the three months ended March 31, 2025 increased $82.5 million compared to the same period in 2024, which included increases of $100.5 million in average total loans, partially offset by a $23.0 million decrease in average investment securities. Average interest-bearing liabilities increased $126.6 million for the three months ended March 31, 2025 compared to the same period in 2024, primarily due to a $238.5 million increase in average interest-bearing deposits, partially offset by decreases of $112.0 million in average short-term borrowings. Average noninterest-bearing deposits for the three months ended March 31, 2025 decreased to $405.7 million from $483.1 million for the same period in 2024.

Taxable equivalent net interest margin for the three months ended March 31, 2025 was 3.52% compared to 3.54% for the same period in 2024. The decrease was primarily due to an increase in the rate for subordinated debt coupled with lower yields on loans compared to the same period in 2024. As of December 30, 2024, the $22 million of subordinated debt repriced from a fixed rate of 5.00% to a quarterly floating rate of SOFR plus 359.5 basis points, or 7.91%. Partially offsetting these impacts to net interest margin were a lower cost of deposits and lower rates on short-term borrowings.

The yield on total loans of 6.96% for the three months ended March 31, 2025 declined 32 basis points compared to the same period in 2024 and the yield on earning assets decreased to 6.29% for the three months ended March 31, 2025 compared to 6.50% for the same period in 2024. The average cost of total deposits decreased to 2.76% for the three months ended March 31, 2025 from 2.81% for the same period in 2024 and total funding costs, including all deposits, short-term borrowings and subordinated debt, decreased to 3.68% for the three months ended March 31, 2025 compared to 4.10% for the same period 2024. Reciprocal deposits are included in the cost of total deposits with rates similar to overall total interest-bearing deposits. Brokered deposits include brokered CDs with terms typically up to six months and overnight One-Way Buy deposits. As of March 31, 2025, the cost of brokered CDs and One-Way Buy deposits ranged from 4.30% to 4.65%.

The average rate paid for short-term borrowings for the three months ended March 31, 2025 was 4.56% compared to 4.91% for the same period in 2024. The short-term borrowings are typically overnight borrowings. Total funding costs, including all deposits, short-term borrowings and subordinated debt, decreased to 3.68% for the three months ended March 31, 2025 compared to 4.10% for the same period in 2024.

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The following table shows the composition of average earning assets and average funding sources, average yields and rates, and the net interest margin for the years ended December 31, 2024 and 2023.

*(in thousands; taxable equivalent)*	For the Years Ended December 31,
*(in thousands; taxable equivalent)*	2024							2023
	Average Balance		Interest Income/ Expense		Yields or Rates			Average Balance		Interest Income/ Expense		Yields or Rates
ASSETS
Interest earning assets:
Loans⁽¹⁾	$	1,798,951	$	130,878		7.28	%	$	1,622,731	$	112,494		6.93	%
Fed funds sold/interest-bearing deposits		68,722		3,649		5.31	%		61,331		3,140		5.12	%
Investment securities
Taxable investment securities		309,652		7,067		2.28	%		374,638		8,387		2.24	%
Non-taxable investment securities⁽²⁾		2,010		120		5.97	%		7,470		343		4.59	%
Total investment securities		311,662		7,187		2.31	%		382,108		8,730		2.28	%
FHLB stock		8,409		752		8.94	%		8,199		690		8.42	%
Total interest earning assets		2,187,744		142,466		6.51	%		2,074,369		125,054		6.03	%

Noninterest-earning assets:
Cash and due from banks		13,048							20,375
All other assets⁽³⁾		52,022							79,225

TOTAL ASSETS	$	2,252,814						$	2,173,969

LIABILITIES AND SHAREHOLDERS’ EQUITY
Interest-bearing liabilities:
Deposits
Demand	$	857,409	$	35,112		4.10	%	$	524,591	$	19,548		3.73	%
Money market and savings		326,934		10,729		3.28	%		461,352		12,226		2.65	%
Time		76,846		3,144		4.09	%		46,318		937		2.02	%
Brokered		97,078		5,161		5.32	%		73,179		3,703		5.06	%
Total interest-bearing deposits		1,358,267		54,146		3.99	%		1,105,440		36,414		3.29	%

Short-term borrowings		233,290		11,879		5.09	%		282,596		13,808		4.89	%
Subordinated debt		21,956		1,194		5.44	%		21,855		1,201		5.50	%

Total interest-bearing liabilities		1,613,513		67,219		4.17	%		1,409,891		51,423		3.65	%

Noninterest-bearing liabilities:
Demand deposits		437,637							587,755
Accrued expenses and other liabilities		26,316							26,278
Shareholders’ equity		175,348							150,045

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	2,252,814						$	2,173,969

Net interest spread						2.34	%						2.38	%
Net interest income and margin⁽⁴⁾			$	75,247		3.44	%			$	73,631		3.55	%

Non-taxable equivalent net interest margin						3.44	%						3.55	%

Cost of deposits	$	1,795,904	$	54,146		3.01	%	$	1,693,195	$	36,414		2.15	%
Cost of funds	$	2,051,150	$	67,219		3.28	%	$	1,997,646	$	51,423		2.57	%

	(1)	Nonperforming loans are included in average loan balances. No adjustment has been made for these loans in the calculation of yields. Interest income on loans includes amortization of deferred loan fees/(costs) of $1.8 million and $1.9 million, respectively.
	(2)	Interest income on tax-exempt securities has been increased to reflect comparable interest on taxable securities. The rate used was 21%, reflecting the statutory federal income tax rate.
	(3)	Including negative balance on average allowance for credit losses on loans of $20.9 million and $17.2 million, respectively.
	(4)	Taxable equivalent net interest income divided by total interest-earning assets.

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Net interest income on a taxable equivalent basis for the year ended December 31, 2024, was $75.2 million, an increase of $1.6 million, or 2%, over $73.6 million for the year ended December 31, 2023. The increase in net interest income was primarily attributable to an increase in the volume and yields earned on loans, offset by higher rates paid on deposits and a decrease in noninterest-bearing deposits.

Average earning assets for the year ended December 31, 2024 increased $113.4 million compared to the same period in 2023, which included increases of $176.2 million in average total loans, partially offset by a $70.4 million decrease in average investment securities. Average interest-bearing liabilities increased $203.6 million for the year ended December 31, 2024 compared to the same period in 2023, primarily due to a $252.8 million increase in average interest-bearing deposits, partially offset by decreases of $49.3 million in average short-term borrowings. Average noninterest-bearing deposits for the year ended December 31, 2024 decreased to $437.6 million from $587.8 million for the same period in 2023.

Taxable equivalent net interest margin for the year ended December 31, 2024 was 3.44% compared to 3.55% for 2023. The decrease was primarily due to an increase in interest-bearing deposit rates, partially offset by higher yields on loans compared to the same period in 2023.

The yield on total loans of 7.28% for the year ended December 31, 2024 was up 35 basis points compared to the same period in 2023 and the yield on earning assets increased to 6.51% for the year ended December 31, 2024 compared to 6.03% for the same period in 2023. The average cost of total deposits increased to 3.01% for 2024 from 2.15% for the same period in 2023 and total funding costs, including all deposits, short-term borrowings and subordinated debt, increased to 4.17% for 2024 compared to 3.65% for the same period 2023. Reciprocal deposits are included in the cost of total deposits with rates similar to overall total interest-bearing deposits. Brokered deposits include brokered CDs with terms typically up to six months and overnight One-Way Buy deposits. As of December 31, 2024, the cost of brokered CDs and One-Way Buy deposits ranged from 4.30% to 5.25%.

The average rate paid for short-term borrowings for the year ended December 31, 2024 was 5.09% compared to 4.89% for the same period in 2023. The short-term borrowings are typically overnight borrowings. Total funding costs, including all deposits, short-term borrowings and subordinated debt, decreased to 4.17% for the year ended December 31, 2024 compared to 3.65% for the same period in 2023.

The following table shows the effect of the interest differential of volume and rate changes for the three months ended March 31, 2025 compared to the same period in 2024 and for the years ended December 31, 2024 and 2023. The change in interest due to both rate and volume has been allocated in proportion to the relationship of absolute dollar amounts of change in each.

	For the Three Months Ended March 31, 2025 vs. 2024 Increase (Decrease) Due to Change in:									For the Years Ended December 31, 2024 vs. 2023 Increase (Decrease) Due to Change in:
*(in thousands)*	Average Volume			Average Rate			Net Change			Average Volume			Average Rate			Net Change
Interest income:
Loans	$	1,724		$	(1,667	)	$	57		$	12,820		$	5,564		$	18,384
Fed funds sold/interest-bearing deposits		55			(168	)		(113	)		392			117			509
Investment securities		(136	)		63			(73	)		(1,625	)		82			(1,543	)
FHLB stock		-			(5	)		(5	)		19			43			62
Interest expense:
Deposits
Demand		1,872			(781	)		1,091			13,629			1,935			15,564
Money market and savings		610			(9	)		601			(4,411	)		2,914			(1,497	)
Time		32			(29	)		3			1,249			958			2,207
Brokered		(637	)		(265	)		(902	)		1,271			187			1,458
Short-term borrowings		(1,258	)		(273	)		(1,531	)		(2,511	)		582			(1,929	)
Subordinated debt		2			133			135			5			(12	)		(7	)
Net interest income	$	1,022		$	(553	)	$	469		$	2,374		$	(758	)	$	1,616

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Interest Income

Interest income decreased $134,000 for the three months ended March 31, 2025, compared to the same period of 2024, primarily due to declines in rates on average federal funds sold and interest-bearing deposits and volume of average securities. Specifically, the yield on federal funds sold and interest-bearing deposits decreased 101 basis points from the first quarter of 2024 to the first quarter of 2025. Average securities decreased $23.0 million, or 7%, for the first quarter of 2025 compared to the same period in 2024.

Interest income increased by $17.4 million for the year ended December 31, 2024, compared to the same period of 2023, primarily due to volume and rate growth in average loans. The increase in interest earned on our loan portfolio of $18.4 million for the year ended December 31, 2024, compared to the same period of 2023 was comprised of $12.7 million attributable to a $176.2 million increase in average loans outstanding, and approximately $5.7 million attributable to the increase in the yield earned on loans to 7.28% from 6.93%.

Interest Expense

Interest expense increased by $603,000 during the three months ended March 31, 2025, compared to the same period of 2024. Partially offsetting the increase was a decline in the rates paid on average interest-bearing deposits of 39 basis points and lower rates on short-term borrowings. The average rate paid on subordinated debt for the three months ended March 31, 2025 compared to the same period one year earlier increased 251 basis points to 8.02% from 5.51%.

Interest expense increased by $15.8 million during the year ended December 31, 2024, compared to the same period of 2023. The average rate paid on interest-bearing liabilities for the year ended December 31, 2024 compared to the same period one year earlier increased 52 basis points to 4.17% from 3.65%. In addition, average interest-bearing demand balances increased $332.8 million, or 63%, from 2023 to 2024, offsetting the $150.1 million decrease in average noninterest-bearing balances.

Provision for Credit Losses

Management considers a number of factors in determining the required level of the allowance for credit losses and the provision required to achieve what is believed to be appropriate reserve level, including historical loss experience, loan growth, credit risk rating trends, nonperforming loan levels, delinquencies, loan portfolio concentrations, economic forecasts, and market trends. The provision for credit losses represents management’s determination of the amount necessary to be charged against the current period’s earnings to maintain the allowance for credit losses at a level that it considered adequate in relation to the estimated lifetime losses expected in the loan portfolio.

The provision for credit losses was $0 for the three months ended March 31, 2025, a decrease of $319,000, compared to the same period in 2024. The allowance for credit losses – loans and unfunded commitments to total loans was 1.14% at March 31, 2025 and 1.12% at December 31, 2024. See further discussion of the Provision for Credit Losses and Allowance for Credit Losses in “Financial Condition—Allowance for Credit Losses.”

The provision for credit losses was $4.1 million in 2024, an increase of $1.1 million, compared to 2023. We recorded net loan charge-offs of $4.3 million in the year ended December 31, 2024 compared to net loan charge-offs of $100,000 during the same period of 2023. The allowance for credit losses – loans and unfunded commitments to total loans was 1.12% at December 31, 2024 and 1.22% at December 31, 2023. See further discussion of the Provision for Credit Losses and Allowance for Credit Losses in “Financial Condition—Allowance for Credit Losses.”

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Noninterest Income

Noninterest income decreased by $112,000 for the three months ended March 31, 2025 compared to the same period of 2024. The decrease was primarily attributable to a decrease in other investment income and a decrease in income from bank-owned life insurance. The increase in service charges and bank fees partially offset the decrease in noninterest income.

The following table reflects the major components of the Company’s noninterest income for the three months ended March 31, 2025 and 2024.

*(in thousands)*	For the Three Months Ended March 31,				Increase/(Decrease)
	2025		2024		Amount			Percent
Service charges and bank fees	$	762	$	618	$	144			23	%
Foreign exchange income		220		251		(31	)		(12	)
Bank-owned life insurance income		90		187		(97	)		(52	)
Other investment income		47		155		(108	)		(70	)
Other income		52		72		(20	)		(28	)

Total noninterest income	$	1,171	$	1,283	$	(112	)		(9	)%

Service charges and bank fees for the three months ended March 31, 2025, increased $144,000, or 23%, from the same period in 2024, primarily due to an increase in the number of client relationships.

During the first quarter of 2025, foreign exchange income decreased $31,000, or 12%, compared to the same period in 2024 as a result of lower transaction rates. Foreign exchange income represents commissions earned on foreign exchange transactions, net of related commissions charged by our correspondent bank partners.

Income from bank-owned life insurance for the three months ended March 31, 2025, decreased $97,000, or 52%, compared to the same period in 2024 due to the surrender of approximately $21 million in policies in the first quarter of 2024.

Other investment income for the three months ended March 31, 2025, decreased $108,000, or 70%, compared to the same period in 2024 primarily due to a decrease in distribution income and a smaller increase in the change fair value marks on fund investments.

Noninterest income increased by $8.7 million for the year ended December 31, 2024 compared to the same period of 2023. The increase was primarily attributable to a loss on sale of securities in 2023 totaling $6.2 million.

The following table reflects the major components of the Company’s noninterest income for the years ended December 31, 2024 and 2023.

*(in thousands)*	For the Years Ended December 31,					Increase/(Decrease)
	2024		2023			Amount			Percent
Service charges, fees and other income	$	2,600	$	2,209		$	391			18	%
Foreign exchange income		896		411			485			118
Bank owned life insurance		508		894			(386	)		(43	)
Warrant and success fee income		65		23			42			183
Other investment income		1,092		56			1,036			1,850
Loss on sale of investment securities		-		(6,214	)		6,214			NM	*
Loss on sale of ORE		-		(165	)		165			NM	*
Other income		849		134			715			534

Total noninterest income	$	6,010	$	(2,652	)	$	8,662			327	%

NM — Comparisons from positive to negative values or to zero values are considered not meaningful.

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Service charges and bank fees for the year ended December 31, 2024 increased $391,000, or 18% from 2023, primarily due to an increase in the number of client relationships.

Foreign exchange income increased $485,000, or 118%, compared to 2023 as a result of higher transaction volume as well as an increase in commission rates. Foreign exchange income represents commissions earned on foreign exchange transactions, net of related commissions charged by our correspondent bank partners.

Income from bank-owned life insurance decreased $386,000, or 43%, compared to 2023 due to the surrender of approximately $21 million in policies in the first quarter of 2024.

During 2023, we sold $92.4 million in investment securities for a loss of $6.2 million. Other investment income for the year ended December 31, 2024 increased $1.0 million primarily due to increased distribution income and favorable fair value marks on fund investments. Other income for 2024 included $625,000 in settlement proceeds related to a previously sold foreclosed property.

Noninterest Expense

During the three months ended March 31, 2025, noninterest expense increased by $415,000, or 3%, to $12.8 million compared to $12.4 million in the same period in 2024. Noninterest expense for the three months ended March 31, 2025, included higher salaries and benefits expense related to increased investment in personnel across the entire Bank.

The following table reflects the major components of the Company’s noninterest expense for the three months ended March 31, 2025 and 2024.

*(in thousands)*	For the Three Months Ended March 31,				Increase/(Decrease)
	2025		2024		Amount			Percent
Salaries and employee benefits	$	9,097	$	8,794	$	303			3	%
Occupancy and equipment		996		1,028		(32	)		(3	)
Data processing		615		564		51			9
Regulatory assessments		544		446		98			22
Legal and professional fees		511		611		(100	)		(16	)
Director’s fees and expenses		149		195		(46	)		(24	)
Correspondent bank charges		170		160		10			6
Advertising and marketing		127		86		41			48
Travel and meals		107		70		37			53
Business software and subscriptions		285		275		10			4
Other expense		241		198		43			22

Total noninterest expense	$	12,842	$	12,427	$	415			3	%

Salaries and employee benefits expense for the three months ended March 31, 2025 was $9.1 million, an increase of $303,000, or 3%, from the same period in 2024, primarily due to severance expense of $222,000 and merit increases during the first quarter of 2025. Full time equivalent headcount totaled 143 at March 31, 2025 compared to 141 at March 31, 2024.

Data processing expense was $615,000 for the three months ended March 31, 2025, an increase of $51,000, or 9%, compared to the same period in 2024. The increase was primarily due to an increase in online banking transaction volume.

Regulatory assessments expense was $544,000 for the three months ended March 31, 2025, an increase of $98,000, or 22%, from the same period in the prior year, primarily due to growth in assets.

Legal and professional fees were $511,000 for the three months ended March 31, 2025, a decrease of $100,000, or 16%, from 2024. The decrease was driven by legal costs related to foreclosed property litigation in early 2024.

During the year ended December 31, 2024, noninterest expense increased by $3.4 million or 8% to $47.3 million compared to $43.9 million in the same period of 2023. Noninterest expense for the year ended December 31, 2024 included higher salaries and benefits expense related to increased investment in personnel across the entire Bank.

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The following table reflects the major components of the Company’s noninterest expense for the years ended December 31, 2024 and 2023.

*(in thousands)*	For the Years Ended December 31,				Increase/(Decrease)
	2024		2023		Amount			Percent
Salaries and employee benefits	$	32,499	$	30,572	$	1,927			6	%
Occupancy and equipment		4,019		3,954		65			2
Data processing		2,412		2,041		371			18
Regulatory assessments		2,083		1,663		420			25
Legal and professional fees		2,139		1,839		300			16
Director’s fees and expenses		746		745		1			0
Correspondent bank charges		608		588		20			3
Advertising and marketing		412		349		63			18
Travel and meals		545		593		(48	)		(8	)
Business software and subscriptions		1,051		841		210			25
Other		819		708		111			16

Total noninterest expense	$	47,333	$	43,893	$	3,440			8	%

Salaries and employee benefits expense for the year ended December 31, 2024 was $32.5 million, an increase of $1.9 million, or 6%, from 2023. Full time equivalent headcount totaled 148 at December 31, 2024 compared to 143 at December 31, 2023, a net increase of five positions.

Data processing expense was $2.4 million for the year ended December 31, 2024, an increase of $371,000, or 18%, compared to the same period in 2023. The increase was primarily due to an increase in online banking transaction volume as well as software and model validation costs.

Regulatory assessments expense was $2.1 million for 2024, an increase of $420,000, or 25% from the prior year, primarily due to growth in assets.

Legal and professional fees were $2.1 million for the year ended December 31, 2024, an increase of $300,000, or 16% from 2023. The increase was driven by legal costs related to foreclosed property litigation as well as higher internal audit fees.

Income Taxes

We monitor and evaluate the potential impact of current events on the estimates used to establish income tax expenses and income tax liabilities. Periodically, we evaluate our income tax positions based on current tax law and positions taken by various tax auditors within the jurisdictions where we are required to file income tax returns.

Income tax expense was $2.2 million for the three months ended March 31, 2025, unchanged compared to the same period of the prior year. The effective tax rates for the three months ended March 31, 2025 and 2024 were 29.2% and 29.3%, respectively.

Income tax expense was $8.8 million for the year ended December 31, 2024, compared to $7.2 million for the same period of the prior year. The effective tax rates for 2024 and 2023 were 29.5% and 29.8%, respectively.

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Financial Condition

Total assets of the Company were $2.32 billion at March 31, 2025, $2.30 billion at December 31, 2024 and $2.23 billion at December 31, 2023. Cash and cash equivalents as of March 31, 2025 increased compared to December 31, 2024 and was partially offset by a decrease in the loan portfolio. For December 31, 2024 compared to December 31, 2023, an increase in the loan portfolio was offset by a decrease in investment securities and other assets.

Loans

As of March 31, 2025, gross loans totaled $1.84 billion compared to $1.87 billion at December 31, 2024 and $1.74 billion at December 31, 2023. The decline from December 31, 2024 to March 31, 2025, was primarily due to the decrease in commercial and industrial loans and construction loans. The increase from December 31, 2023 to December 31, 2024 was due to the increase in commercial and industrial loans and residential real estate loans. The loan portfolio was comprised of approximately 44% of commercial and industrial loans at both March 31, 2025 and December 31, 2024 and 44% of commercial and industrial loans at December 31, 2023. Commercial real estate loans comprised 42% of our loans at March 31, 2025 compared to 41% and 42% at December 31, 2024 and December 31, 2023, respectively. The loan portfolio information presented in this section should be read in conjunction with Note 3 — Loans and Note 4 — Allowance for Credit Losses of the consolidated financial statements for the three months ended March 31, 2025 and 2024 and the years ended December 31, 2024 and 2023, which are contained elsewhere in this prospectus, for information on loan maturity and interest sensitivity.

The following table reflects the composition of the Company’s loan portfolio and the percentage distribution of each major loan type as of the dates indicated.

*(in thousands)*	March 31, 2025						December 31, 2024						December 31, 2023
	Amount			% of Loans			Amount			% of Loans			Amount			% of Loans
Commercial and industrial	$	803,822			44	%	$	817,422			44	%	$	716,948			41	%
Construction		227,246			12	%		247,055			13	%		237,534			14	%
Residential real estate		32,892			2	%		27,422			2	%		16,746			1	%
Commercial real estate		776,014			42	%		773,259			41	%		770,515			44	%
Consumer		2,080			0	%		957			0	%		305			0	%

Total loans, gross		1,842,054						1,866,115						1,742,048
Deferred loan origination costs, net		(867	)					(1,173	)					(1,401	)
Allowance for loan losses		(18,722	)					(18,679	)					(19,131	)

Total loans, net	$	1,822,465					$	1,846,263					$	1,721,516

The following tables show the maturity distribution for total loans outstanding as of March 31, 2025 and December 31, 2024.

	Contractual Loan Maturities at March 31, 2025
*(in thousands)*		One year or less		After one year Through Five Years		After five years and through fifteen years		After fifteen years		Total
Commercial and industrial	$	183,012	$	590,468	$	30,342	$	-	$	803,822
Construction		167,962		59,284		-		-		227,246
Residential real estate		606		20,644		11,642		-		32,892
Commercial real estate		59,681		237,278		479,055		-		776,014
Consumer		478		1,597		-		5		2,080

Total loans, gross	$	411,739	$	909,271	$	521,039	$	5	$	1,842,054

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	Contractual Loan Maturities at December 31, 2024
*(in thousands)*	One year or less		After one year Through five years		After five years and through fifteen years		After fifteen years		Total
Commercial and industrial	$	245,655	$	464,545	$	107,222	$	-	$	817,422
Construction		203,904		43,151		-		-		247,055
Residential real estate		438		15,049		11,935		-		27,422
Commercial real estate		65,758		206,018		501,483		-		773,259
Consumer		61		887		-		9		957

Total loans, gross	$	515,816	$	729,650	$	620,640	$	9	$	1,866,115

The principal balances of loans are indicated by both fixed and variable rate categories as of March 31, 2025 and December 31, 2024 in the tables below.

	March 31, 2025
*(in thousands)*	Fixed interest rates		Adjustable interest rates		Floating interest rates		Total
Commercial and industrial	$	125,434	$	81	$	678,307	$	803,822
Construction		35,304		-		191,942		227,246
Residential real estate		2,230		5,604		25,058		32,892
Commercial real estate		315,192		428,450		32,372		776,014
Consumer		1,602		-		478		2,080

Total loans, gross	$	479,762	$	434,135	$	928,157	$	1,842,054

	December 31, 2024
*(in thousands)*	Fixed interest rates		Adjustable interest rates		Floating interest rates		Total
Commercial and industrial	$	154,766	$	82	$	662,574	$	817,422
Construction		42,063		-		204,992		247,055
Residential real estate		2,247		5,653		19,522		27,422
Commercial real estate		315,677		423,221		34,361		773,259
Consumer		957		-		-		957

Total loans, gross	$	515,710	$	428,956	$	921,449	$	1,866,115

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Commercial and industrial loans consist of financing for commercial purposes in various lines of businesses, including manufacturing, service industry and professional service areas. Commercial and industrial loans can be secured or unsecured but are generally secured with the assets of the company and/or the personal guarantee of the business owners. Our Venture Lending Division provides banking services to emerging growth technology companies that have received an infusion of equity capital from institutional investors such as venture capital and private equity firms. Repayment of these loans may be dependent upon receipt by borrowers of additional equity financing from venture firms or others, or in some cases, a successful sale to a third party, public offering or other form of liquidity event. Asset Based Lending creates lending solutions that are designed to provide capital against assets such as accounts receivable and inventory, Sponsor Finance loans are backed by well-known institutional funds/sponsors that have stepped up in distressed scenarios to provide follow on capital and right size bank debt.

The following table presents the various product types of commercial and industrial loans as of March 31, 2025, December 31, 2024 and December 31, 2023.

(in thousands)	March 31, 2025					December 31, 2024					December 31, 2023
	Amount		% of Loans			Amount		% of Loans			Amount		% of Loans
Venture	$	292,229		16	%	$	298,562		16	%	$	242,379		14	%
Asset-based lending (ABL)		115,367		6	%		89,601		5	%		87,749		5	%
Sponsor finance		223,418		12	%		253,689		14	%		223,670		13	%
Invoice financing		29,400		2	%		34,780		2	%		65,814		4	%
Other C&I		143,506		8	%		140,331		7	%		96,463		5	%

Total commercial loans, net of deferred fees	$	803,920				$	816,963				$	716,075

As of March 31, 2025, December 31, 2024 and December 31, 2023, we had $776.0 million, $777.3 million and $770.5 million, respectively, in commercial real estate loans representing 42%, 41% and 42% respectively, of our total loans. Our commercial real estate loans consist of commercial, multifamily and mixed-use property loans for investors and owner-users. Our commercial real estate loans are typically secured by multifamily, hotel/motel, retail, industrial, warehouse or other commercial properties. At March 31, 2025, December 31, 2024 and December 31, 2023, 22%, 22% and 23%, respectively, of our commercial real estate loans were for non-owner occupied purposes. All commercial real estate loans were collateralized by properties in California as of March 31, 2025, December 31, 2024 and December 31, 2023.

The following table presents the components of commercial real estate loans as of the dates indicated.

(in thousands)	March 31, 2025					December 31, 2024					December 31, 2023
	Amount		% of Loans			Amount		% of Loans			Amount		% of Loans
Non-owner occupied, net of deferred fees
Office	$	146,762		8	%	$	151,693		8	%	$	142,885		8	%
Hotel/motel		79,524		4	%		80,037		4	%		78,729		5	%
Retail		69,617		4	%		74,296		4	%		78,021		4	%
Industrial		58,424		3	%		58,747		3	%		57,468		3	%
Warehouse		15,552		1	%		15,585		1	%		15,702		1	%
Other		35,909		2	%		34,193		2	%		38,641		2	%
Total non-owner occupied, net of deferred fees	$	405,788				$	414,551				$	411,446
Owner-occupied, net of deferred fees		142,764		8	%		142,650		8	%		158,728		9	%
Multi-family, net of deferred fees		227,003		12	%		216,018		12	%		200,152		11	%
Total commercial real estate, net of deferred fees	$	775,555				$	773,219				$	770,326

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Nonperforming Assets

Nonperforming assets are comprised of loans on nonaccrual status, loans 90 days or more past due and still accruing interest, and other real estate owned. We had no loans 90 days or more past due and still accruing interest and no other real estate owned at March 31, 2025, December 31, 2024 or December 31, 2023. A loan is placed on nonaccrual status if there is concern that principal and interest may not be fully collected or if the loan has been past due for a period of 90 days or more, unless the obligation is both well secured and in process of legal collection. When loans are placed on nonaccrual status, all interest previously accrued but not collected is reversed against current period interest income. Income on nonaccrual loans is subsequently recognized only to the extent that cash is received, and the loan’s principal balance is deemed collectible. Loans are returned to accrual status when they are brought current with respect to principal and interest payments and future payments are reasonably assured. Additionally, assets that have been restructured due to the borrower’s financial difficulties may also be classified as nonperforming if the restructuring does not restore the asset to a performing status.

The following table presents information regarding the Company’s nonperforming assets at the dates indicated.

	March 31,			December 31,
*(in thousands)*	2025			2024			2023
Nonaccrual loans
Commercial and industrial	$	1,340		$	1,347		$	1,378
Construction		-			-			-
Residential real estate		-			-			-
Commercial real estate		-			-			-
Consumer		-			-			-
Loans over 90 days past due and still accruing		-			-			-
Total nonperforming loans		1,340			1,347			1,378
Other real estate owned		-			-			-
Total nonperforming assets	$	1,340		$	1,347		$	1,378

Nonperforming assets to total assets		0.06	%		0.06	%		0.06	%
Nonperforming loans to total loans		0.07	%		0.07	%		0.08	%

Allowance for Credit Losses

The allowance for credit losses (“ACL”) represents an amount that is intended to absorb the lifetime expected credit losses that may be sustained on outstanding loans at the balance sheet date. Additional information regarding the ACL evaluation can be found in Note 1 and Note 4 to our consolidated financial statements for the three months ended March 31, 2025 and 2024 and for the years ended December 31, 2024 and 2023, which are contained elsewhere in this prospectus.

The estimate for expected credit losses is based on an evaluation of the various factors, including, but not limited to, size and current risk characteristics of the loan portfolio, past events, current conditions, reasonable and supportable forecasts of future economic conditions, and prepayment experience as related to credit contractual term information. The ACL is generally measured on a collective (pool) basis when similar risk characteristics exist and is typically recorded upon the initial recognition of a financial asset.

The ACL may be adjusted by charge-offs, net of recoveries of previous losses, and may be increased or decreased by a provision for or recapture of credit losses, which is recorded in the consolidated statements of income. Management estimates the allowance balance using various information sources, both internal and external, relating to past events, current conditions, and reasonable and supportable forecasts. Historical credit loss experience typically provides a basis for the estimation of expected credit losses. Adjustments to historical loss information may be made for differences in current loan-specific risk characteristics and changes in environmental conditions. Expected credit losses are typically estimated over the contractual term of the loans, adjusted for expected prepayments when appropriate. The contractual term generally excludes expected extensions, renewals, and modifications.

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For loans that do not share risk characteristics with a pool of other loans, expected credit losses are measured on an individual loan basis. Management individually evaluates the expected credit loss for certain loans, such as those that are collateral-dependent, or are identified as having risk characteristics dissimilar to those of the established loan pools.

For loans considered collateral-dependent, the Company has adopted a practical expedient to the ACL, which allows recording an ACL based on the fair value of the collateral rather than by estimating expected losses over the life of the loan.

While the ACL on loans follows these guidelines, and management believes the allowance is appropriate based on current information, the judgmental nature of the calculation could lead to fluctuations due to ongoing evaluations of the loan portfolio. These evaluations may be influenced by economic conditions in our local area, changes in asset quality, or loan portfolio growth, among other factors which could potentially require additional provisions for the allowance for credit losses.

The quality of the loan portfolio and the adequacy of the allowance are subject to review by our internal and external auditors as well as our regulators.

Potential Problem Loans

We assign a risk rating to all loans, and periodically perform detailed reviews of all such loans exhibiting variances in expected payment and/or financial performance to identify credit risks and to assess the overall collectability of the portfolio. These risk ratings are also subject to examination by independent specialists engaged by us and by our regulators. During these internal reviews, management monitors and analyzes the financial condition of borrowers and guarantors, trends in the industries in which borrowers operate and the fair values of collateral securing these loans. These credit quality indicators are used to assign a risk rating to each individual loan. We individually rate loans based on internal credit risk ratings using numerous factors, including thorough analysis of historical and expected cash flows, LTV (loan-to-value) ratios, collateral, collection experience, and other internal metrics. The risk ratings can be grouped into six major categories, defined as follows:

Pass – A pass loan is a strong credit with no existing or known potential weaknesses deserving of management’s close attention.

Special Mention – A special mention loan has potential weaknesses deserving management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or in the Company’s credit position at some future date. Special Mention loans are not adversely classified and we believe do not expose us to sufficient risk to warrant adverse classification.

Substandard – A substandard loan is not adequately protected by the current net worth and paying capacity of the borrower or the value of the collateral pledged, if any. Loans classified as substandard have a well-defined weakness or weaknesses jeopardizing the liquidation of the loan. Well-defined weaknesses include the potential for: lack of marketability, inadequate cash flow or collateral support, failure to complete construction on time or the project’s failure to fulfill economic expectations. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.

Substandard - Nonaccrual – These loans are typically on nonaccrual and have many of the same weaknesses as substandard loans.

Doubtful – Loans classified as doubtful have all the weaknesses inherent in those classified as substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently known facts, conditions and values, highly questionable and improbable.

Loss – Loans classified as loss are considered uncollectible and charged off immediately.

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The following table provides information on the activity within the allowance for loan losses as of and for the periods indicated.

	For the Three Months Ended March 31,			For the Years Ended December 31,
*(in thousands)*	2025			2024			2023
Allowance for credit losses on loans at the beginning of period	$	18,679		$	19,131		$	16,481
Adoption of ASU 2016-13		-			-			(249	)
Provision for credit losses on loans		-			3,909			2,999
Charge-offs
Commercial and industrial		-			(4,361	)		(100	)
Construction		-			-			-
Residential real estate		-			-			-
Commercial real estate		-			-			-
Consumer		-			-			-
Total charge-offs		-			(4,361	)		(100	)
Recoveries
Commercial and industrial		43			-			-
Construction		-			-			-
Residential real estate		-			-			-
Commercial real estate		-			-			-
Consumer		-			-			-
Total recoveries		43			-			-
Net charge-offs		43			(4,361	)		(100	)
Allowance for credit losses on loans at the end of period	$	18,722		$	18,679		$	19,131

Average loans, net of deferred loans fees		1,858,716			1,797,626			1,621,283
Loans at the end of period		1,841,187			1,864,942			1,740,647
Net charge-offs to average loans⁽¹⁾		-0.01	%		0.24	%		0.01	%
Allowance for credit losses on loans to total loans		1.02	%		1.00	%		1.10	%
Allowance for credit losses on loans to nonperforming loans		1397.16	%		1386.71	%		1388.32	%
Nonperforming loans to total loans		0.07	%		0.07	%		0.08	%

(1)

Annualized for Q1 2025.

There was no provision for credit losses on loans for the three months ended March 31, 2025, due to lower loan balances offset by an increase in qualitative adjustments to reflect increased economic uncertainty. Our provision for credit losses on loans of $3.9 million for the year ended December 31, 2024 is primarily attributable to growth in the loan portfolio compared to the prior year and the charge-off of a venture lending relationship. The following table presents the allocation of the allowance for credit losses as of the dates indicated.

	For the Three Months Ended March 31,					For the Years Ended December 31,
*(in thousands)*	2025					2024					2023
	Amount		% of Loans			Amount		% of Loans			Amount		% of Loans
Commercial and industrial	$	10,989		59	%	$	10,170		55	%	$	9,794		52	%
Construction		2,822		15	%		3,005		16	%		3,156		16	%
Residential real estate		367		2	%		286		2	%		145		1	%
Commercial real estate		4,523		24	%		5,207		27	%		6,035		31	%
Consumer		21		0	%		11		0	%		1		0	%

Total	$	18,722		100	%	$	18,679		100	%	$	19,131		100	%

The allocations of the allowance between loan segments did not vary significantly during the periods presented.

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Investment Securities

Investment securities available-for-sale totaled $296.6 million at March 31, 2025 compared to $296.6 million at December 31, 2024 and $325.3 million at December 31, 2023. Available-for-sale securities are reported at their aggregate fair value, and unrealized gains and losses are included as a component of other comprehensive income, net of deferred taxes. At March 31, 2025, investment securities available-for-sale had a net unrealized loss of $65.6 million compared to net unrealized losses of $72.6 million and $68.8 million as of December 31, 2024 and 2023, respectively. Market changes in interest rates and credit spreads will result in temporary unrealized gains or losses as the market price of securities fluctuates. Management evaluated all available-for-sale securities in an unrealized loss position at March 31, 2025, December 31, 2024 and December 31, 2023, and concluded no impairment existed at the balance sheet dates.

During the first quarter of 2023, we sold our entire portfolio of held-to-maturity securities to reduce reliance on borrowings and to improve profitability. In connection with this sale of held-to-maturity securities, we realized a gain of $189,000.

Our investments provide a source of liquidity as they can be pledged to support borrowed funds or can be liquidated to generate cash proceeds. The investment portfolio is also a resource to us in managing interest rate risk, as the maturity and interest rate characteristics of this asset class can be changed to match changes in the loan and deposit portfolios. We consider AFS security interest rate sensitivity as part of total interest rate risk management. For further discussion, see sub-section entitled “— Interest Rate Sensitivity and Market Risk.” The majority of our available-for-sale investment portfolio is comprised of mortgage-backed securities (MBSs) that are either issued or guaranteed by U.S. government agencies or government-sponsored enterprises (GSEs).

The following table reflects the amortized cost and fair market values for the total portfolio of investments in our securities portfolio March 31, 2025, December 31, 2024 and December 31, 2023. As of the dates indicated, none of our investment securities were classified as held-to-maturity.

*(in thousands)*	March 31, 2025				December 31, 2024				December 31, 2023
	Amortized		Fair		Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value		Cost		Value
Available-for-Sale
U.S. agencies	$	526	$	497	$	578	$	538	$	737	$	683
Commercial mortgage-backed securities		3,137		2,901		3,161		2,863		1,443		1,232
Residential mortgage-backed securities		353,837		288,586		360,713		288,461		389,125		320,469
U.S. states and political subdivisions		4,705		4,633		4,703		4,694		2,768		2,936

Total	$	362,205	$	296,617	$	369,155	$	296,556	$	394,073	$	325,320

As of March 31, 2025, the average life of the Bank’s securities was 7.6 years, and the effective duration was 6.2 years, compared to an average life of 7.9 years and 8.0 years and effective duration of 6.2 years and 6.2 years as of December 31, 2024 and December 31, 2023, respectively.

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The following table presents the amortized cost of securities by contractual maturity of investment securities and weighted-average yields. Yields on state and political subdivision securities are shown on a tax equivalent basis, assuming a 21% federal income tax rate. The composition and maturity/repricing distribution of the securities portfolio is subject to change depending on rate sensitivity, capital and liquidity needs.

	March 31, 2025
*(in thousands)*	1 to 5 years					6 to 10 years					More than 10 years					Total
	Amortized Cost		WA Yield⁽¹⁾			Amortized Cost		WA Yield⁽¹⁾			Amortized Cost		WA Yield⁽¹⁾			Amortized Cost		WA Yield⁽¹⁾
U.S. agencies	$	-		-	%	$	526		2.38	%	$	-		-	%	$	526		2.38	%
Commercial mortgage-backed securities		1,013		3.73			-		-			2,124		2.86			3,137		3.14
Residential mortgage-backed securities		-		-			-		-			353,837		1.88			353,837		1.88
U.S. states and political subdivisions		-		-			-		-			4,705		5.62			4,705		5.62

	$	1,013		3.73	%	$	526		2.38	%	$	360,666		1.93	%	$	362,205		1.94	%

(1)

Weighted average yields are computed based on the amortized cost of the individual underlying securities.

	December 31, 2024
*(in thousands)*	1 to 5 years					6 to 10 years					More than 10 years					Total
	Amortized Cost		WA Yield⁽¹⁾			Amortized Cost		WA Yield⁽¹⁾			Amortized Cost		WA Yield⁽¹⁾			Amortized Cost		WA Yield
U.S. agencies	$	-		-	%	$	578		2.32	%	$	-		-	%	$	578		2.32	%
Commercial mortgage-backed securities		1,014		3.73			-		-			2,147		2.86			3,161		3.14
Residential mortgage-backed securities		-		-			-		-			360,713		1.87			360,713		1.87
U.S. states and political subdivisions		-		-			-		-			4,703		5.70			4,703		5.70

	$	1,014		3.73		$	578		2.32		$	367,563		1.92		$	369,155		1.93

(1)

Weighted average yields are computed based on the amortized cost of the individual underlying securities.

	December 31, 2023
*(in thousands)*	1 to 5 years					6 to 10 years					More than 10 years					Total
	Amortized Cost		WA Yield⁽¹⁾			Amortized Cost		WA Yield⁽¹⁾			Amortized Cost		WA Yield⁽¹⁾			Amortized Cost		WA Yield⁽¹⁾

U.S. agencies	$	-		-	%	$	737		2.28	%	$	-		-	%	$	737		2.28	%
Commercial mortgage-backed securities		-		-			-		-			1,443		1.69			1,443		1.69
Residential mortgage-backed securities		-		-			-		-			389,125		1.53			389,125		1.53
U.S. states and political subdivisions		-		-			-		-			2,768		5.39			2,768		5.39

	$	-		-	%	$	737		2.28	%	$	393,336		1.55	%	$	394,073		1.56	%

(1)

Weighted average yields are computed based on the amortized cost of the individual underlying securities.

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Deposits

Our deposits are generated through our bankers’ commercial banking relationships. Many of our business customers maintain liquid balances in their demand deposit accounts and use the Bank’s treasury management services.

We participate in a reciprocal deposits network to provide our clients with access to FDIC insurance beyond the standard maximum deposit insurance amount at a single insured depository institution. A reciprocal position means that we receive an equal amount of network deposits for our enrolled accounts, and those deposits are reflected on our balance sheet. If we elect to receive reciprocal deposits, we are required to pay a fee equal to our reciprocal deposits balances multiplied by an annualized rate. The reciprocal deposit placement fee represents an additional cost that is not incurred with traditional deposit accounts and is factored into our overall cost of deposits. Our participation in the reciprocal deposit network is subject to certain terms and conditions, and there can be no assurances that we will be able to participate in the network in the future. In particular, under FDIC regulations, qualifying reciprocal deposits which do not exceed 20% of the liabilities of the Bank may be excluded from being classified as brokered deposits. See section entitled “Risk Factors — We participate in reciprocal deposit networks to provide additional FDIC deposit insurance coverage to support our clients and to efficiently manage our balance sheet and liquidity position.” As of March 31, 2025, December 31, 2024 and December 31, 2023, our total reciprocal interest-bearing checking deposits totaled $851.4 million, $869.1 million and $712.9 million, respectively. As a result, as of March 31, 2025, December 31, 2024, and December 31, 2023 an additional $447.8, $470.0 million and $325.9 million of our deposits were considered brokered deposits by the FDIC due to being in excess of the general 20% cap.

At March 31, 2025, December 31, 2024 and December 31, 2023, approximately 22%, 22% and 29%, respectively, of our deposits were in noninterest-bearing demand deposits. The balance of our deposits at March 31, 2025, December 31, 2024 and December 31, 2023, were held in interest-bearing checking, savings and money market accounts, time and brokered deposits. Approximately 71%, 71% and 63% of total deposits were held in interest-bearing demand, savings and money market deposit accounts at March 31, 2025, December 31, 2024 and December 31, 2023, respectively, which provide our customers with interest and liquidity. Time and brokered deposits comprised the remaining 7%, 7% and 9% of our deposits at March 31, 2025, December 31, 2024 and December 31, 2023.

Information concerning average balances and rates paid on deposits by deposit type for the past two fiscal years is contained in the Distribution, Yield and Rate Analysis of Net Income table located in the previous section entitled “Results of Operations—Net Interest Income.” The following table provides a comparative distribution of our deposits by outstanding balance as well as by percentage of total deposits at the dates indicated.

*(in thousands)*	Balance		% of Total
At March 31, 2025
Non-interest bearing demand	$	419,823		22	%
Interest-bearing checking		965,467		50	%
Money market and savings		399,010		21	%
Time		58,273		3	%
Brokered⁽¹⁾		86,915		4	%

Total deposits	$	1,929,488		100	%

At December 31, 2024
Non-interest bearing demand	$	414,327		22	%
Interest-bearing checking		993,219		53	%
Money market and savings		338,578		18	%
Time		74,468		3	%
Brokered⁽¹⁾		70,763		4	%

Total deposits	$	1,891,355		100	%

At December 31, 2023
Non-interest bearing demand	$	472,517		29	%
Interest-bearing checking		740,902		45	%
Money market and savings		298,117		18	%
Time		46,676		2	%
Brokered⁽¹⁾		96,117		6	%

Total deposits	$	1,654,329		100	%

(1)

FDIC regulations impose a cap on reciprocal deposits that may be exempt from brokered deposits classification depending on a bank’s capitalization and rating status, including a general cap equal to 20% of the Bank’s total liabilities. As of March 31, 2025, December 31, 2024 and December 31, 2023, an additional $447.8 million, $470.0 million, $325.9 million of our deposits were considered brokered deposits by the FDIC due to being in excess of the general cap, respectively.

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FDIC deposit insurance covers $250,000 per depositor (subject to the rules and regulations of the FDIC), per FDIC-insured bank, for each account ownership category. We estimate total uninsured deposits were $670.6 million, $632.6 million and $562.0 million as of March 31, 2025, December 31, 2024 and December 31, 2023, respectively, representing approximately 35%, 33% and 34% of our total deposit portfolio as of March 31, 2025, December 31, 2024 and December 31, 2023, respectively.

The following table sets forth the scheduled maturities of time deposits of $250,000 and greater as of March 31, 2025, December 31, 2024 and December 31, 2023.

	March 31, 2025
			Greater Than (or Equal To) $250,000
	Less than		(or Equal To)
*(in thousands)*	$250,000		$250,000		Total
Remaining maturity:
Three months or less	$	15,739	$	21,314	$	37,053
Over three through six months		3,501		5,486		8,987
Over six through twelve months		669		10,389		11,058
Over twelve months		51		1,124		1,175
	$	19,960	$	38,313	$	58,273

	December 31, 2024
	Less Than		Greater Than (or Equal To)
*(in thousands)*	$250,000		$250,000		Total
Remaining maturity:
Three months or less	$	8,193	$	24,718	$	32,911
Over three through six months		14,071		14,109		28,180
Over six through twelve months		1,144		11,066		12,210
Over twelve months		51		1,116		1,167
	$	23,459	$	51,009	$	74,468

	December 31, 2023
	Less Than		Greater Than (or Equal To)
*(in thousands)*	$250,000		$250,000		Total
Remaining maturity:
Three months or less	$	9,566	$	10,952	$	20,518
Over three through six months		11,446		3,858		15,304
Over six through twelve months		1,716		8,319		10,035
Over twelve months		65		754		819
	$	22,793	$	23,883	$	46,676

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Borrowings

The Bank has several supplementary funding sources, including a secured line of credit with the Federal Home Loan Bank of San Francisco (“FHLB”) and various available secured and unsecured lines of credit with correspondent banks. The regional bank failures in the first half of 2023 had a direct impact on the Bank’s deposits, resulting in a decrease in deposits of $169 million from December 31, 2022 to December 31, 2023, and an increased reliance on wholesale funding, including short-term borrowings and brokered deposits. As of December 31, 2023, wholesale funding totaled 20% of total assets compared to 6% as of December 31, 2022.

The Bank’s 2024 strategy included reducing the reliance on wholesale funding by increasing core deposits. During 2024, the Bank increased deposits $237 million from the prior year-end and reduced wholesale funding to 11% of total assets as of December 31, 2024, compared to the 20% as of December 31, 2023.

As of March 31, 2025, total deposits increased $38.1 million compared to December 31, 2024. The Bank further reduced wholesale funding to 10% of total assets at March 31, 2025, compared to 11% as of December 31, 2024.

The following table summarizes our borrowings as of the periods indicated.

*(in thousands)*	March 31, 2025		December 31, 2024		December 31, 2023
Fed funds lines of credit	$	70,000	$	115,000	$	136,000
Federal Home Loan Bank advances		85,000		70,000		-
Federal Reserve Bank Term Funding Program		-		-		224,000
Subordinated notes, net		22,000		22,000		21,906
	$	177,000	$	207,000	$	381,906

Federal Home Loan Bank Advance. The Bank has a secured line of credit with the FHLB, which requires the Bank to pledge collateral to establish credit availability. The Bank has historically pledged multifamily and commercial real estate loans within the Bank’s loan portfolio to establish credit availability. As of March 31, 2025 and December 31, 2024, the secured line of credit had an outstanding balance of $85.0 million and $70.0 million and $373.9 million and $391.2 million in remaining borrowing capacity, respectively. As of December 31, 2023, for the same secured line, the Bank had no outstanding balance with $389.4 million in remaining borrowing capacity.

Other Short-Term Borrowings. As of March 31, 2025, December 31, 2024 and December 31, 2023, the Company had unsecured Federal Funds lines of credit from correspondent banks with an outstanding balance of $70.0 million, $115.0 million and $136.0 million, respectively. The Company has a short-term borrowing arrangement with the Federal Reserve Bank through the Discount Window with a borrowing capacity of $843.4 million as of March 31, 2025. There were no borrowings outstanding under the agreement at March 31, 2025, December 31, 2024 or December 31, 2023.

Long-Term Debt. On December 20, 2019, the Company issued $22.0 million in ten-year, fixed-to-floating rate subordinated notes to certain qualified institutional buyers and institutional accredited investors. The subordinated notes have a maturity date of December 30, 2029 and bear interest at the rate of 5.0% per annum, payable semiannually for the first five years of the term, and then quarterly at a variable rate based on the then current 3-month Secured Overnight Financing Rate plus 359.5 basis points. The interest rate as of April 1, 2025 was 7.88%. The notes are currently redeemable, subject to certain conditions. The indebtedness evidenced by the subordinated notes, including principal and interest, is unsecured and subordinate and junior to general and secured creditors and depositors. On the balance sheet the subordinated notes are carried net of debt issuance costs, and these were fully amortized as of December 31, 2024.

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Liquidity and Capital Resources

Liquidity Management

Liquidity refers to our capacity to meet cash and collateral obligations in a timely manner. Maintaining appropriate levels of liquidity depends on our ability to address both expected and unexpected cash flows and collateral needs while aiming to avoid adverse effects on our daily operations or the financial condition of the Bank. Effective liquidity management is considered essential to our business model, as deposits, which can generally be withdrawn on demand, form a primary source of our funding. For regulatory reporting purposes, the liquidity ratio is typically calculated as the sum of our cash and cash equivalents plus unpledged securities classified as investment grade divided by total liabilities. Based on this calculation method, as of March 31, 2025, December 31, 2024, and 2023 our reported liquidity ratios were 19.1%, 17.2% and 9.2%, respectively.

We maintain secured lines of credit with the FHLB and the Federal Reserve Discount Window, for which we can borrow up to the allowable amount of pledged collateral. As of March 31, 2025, we had remaining borrowing capacity totaling $373.9 million and $843.4 million with the FHLB and Federal Reserve, respectively. The Bank maintains unsecured lines of credit with five correspondent banks that provide combined availability of $175.0 million at both March 31, 2025 and December 31, 2024 and $171.0 million at December 31, 2023. There were outstanding balances on these unsecured lines of credit of $70.0 million, $115.0 million and $136.0 million as of March 31, 2025, December 31, 2024 and December 31, 2023, respectively.

In addition to these sources of liquidity, we also utilize the ICS^® network for One-Way Buy^® deposits. One-Way Buy^® deposits involve receiving brokered deposits from other banks’ customers through the ICS^® network. This mechanism can provide an additional source of liquidity by allowing us to increase our brokered deposits without reciprocating. At March 31, 2025, December 31, 2024 and December 31, 2023, One-Way Buy^® deposits totaled $58.1 million, $20.0 million and $50.0 million, respectively.

As an intermediate source of liquidity, we may sell AFS securities or allow AFS securities to mature without reinvestment in the securities portfolio. As of both March 31, 2025 and December 31, 2024, our AFS securities portfolio had a fair value of $296.6 million and an amortized cost of $362.2 million and $369.2 million, respectively, including zero bonds maturing within five years. At December 31, 2023, our AFS securities portfolio had a fair value of $325.3 million and an amortized cost of $394.1 million. In the event liquidity is needed from the bond portfolio, management will take into consideration a number of factors when determining which investments to sell including the marketability of the bonds, current prices and estimated losses.

Liquidity Risk Management

Liquidity risk refers to the potential that the Bank’s financial condition or overall safety and soundness could be adversely affected by a real or perceived inability to meet contractual obligations. This risk category includes potential challenges in managing unplanned decreases or changes in funding sources. Liquidity risk management involves efforts to identify, measure, monitor and control liquidity events.

The Bank’s Asset/Liability Committee (ALCO) of the Board typically reviews the current liquidity position and projected liquidity scenarios, including stressed scenarios, at its quarterly meetings. The ALCO seeks to ensure that measurement systems are designed to identify and quantify the Bank’s liquidity exposure, and that reporting systems and practices are intended to communicate relevant information about the level and sources of that exposure. Management is responsible for implementing board-approved policies, strategies, and procedures, and for monitoring liquidity on both a daily and long-term basis.

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Capital Resources

Capital adequacy is generally considered an important indicator of financial stability and performance. Our objectives include maintaining capitalization at levels that we believe are sufficient to support asset growth and to promote confidence among our depositors, investors, and regulators. We recognize that robust capital management practices are integral to addressing various financial and operational challenges, which may include managing credit risk, liquidity risk, balance sheet growth, new products, regulatory changes and competitive pressures. Our Board of Directors reviews our capital position on an ongoing basis to ensure it is adequate, including but not limited to, the need for raising additional capital (whether in the form of debt and/or equity).

Shareholders’ equity as of March 31, 2025, was $196.6 million, an increase of $10.3 million compared to $186.4 million as of December 31, 2024. Net income for the three months ended March 31, 2025, contributed $5.4 million to the increase in shareholders’ equity. Accumulated other comprehensive loss decreased $5.0 million during the first quarter of 2025, related to an increase in the market value of the AFS securities portfolio.

Book value per share as of March 31, 2025, December 31, 2024 and December 31, 2023, was $24.85, $23.57 and $21.27, respectively. The increase from December 31, 2024, is primarily the result of earnings, which were $0.71 per diluted share for the three months ended March 31, 2025, compared to $2.76 per diluted share for the year ended December 31, 2024.

Because total assets on a consolidated basis are less than $3.0 billion, we are not subject to the consolidated capital requirements imposed by federal regulations. However, the Bank is subject to various regulatory capital requirements administered by the federal banking agencies. Certain regulatory measurements of capital adequacy are “risk based,” meaning they utilize a formula that considers the individual risk profile of the financial institution’s assets. For example, certain assets, such as cash at the Federal Reserve and investments in U.S. Treasury securities, are deemed to carry zero risk by the regulators because of explicit or implied federal government guarantees. As of March 31, 2025, December 31, 2024 and December 31, 2023, respectively, 7.7%, 6.2% and 6.4% of the Bank’s total assets were invested in such zero-risk assets. The tier 1 leverage ratio, another regulatory capital measurement, does not consider the riskiness of assets. The leverage ratio is computed as tier 1 capital divided by total average assets for the relevant quarter.

Accumulated other comprehensive income, which includes unrealized gains and losses on securities available-for-sale and unrealized gains and losses on derivatives qualifying as cash flow hedges, is excluded in the calculation of regulatory capital ratios. The Bank’s capital level is characterized as “well capitalized” for regulatory purposes. A summary of the Company’s consolidated and Bank’s regulatory capital ratios are presented for the periods indicated below.

Avidbank Holdings, Inc. S-1/A