# EDGAR Filing Document

**Accession Number:** 0001137547
**File Stem:** 0001137547-26-000011
**Filing Date:** 2026-3
**Character Count:** 602424
**Document Hash:** f9a13a965ee8b1038a760da1600b4a53
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001137547-26-000011.hdr.sgml**: 20260326

**ACCESSION NUMBER**: 0001137547-26-000011

**CONFORMED SUBMISSION TYPE**: 10-K

**PUBLIC DOCUMENT COUNT**: 167

**CONFORMED PERIOD OF REPORT**: 20251231

**FILED AS OF DATE**: 20260326

**DATE AS OF CHANGE**: 20260326

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** UNITED SECURITY BANCSHARES
- **CENTRAL INDEX KEY:** 0001137547
- **STANDARD INDUSTRIAL CLASSIFICATION:** NATIONAL COMMERCIAL BANKS [6021]
- **ORGANIZATION NAME:** 02 Finance
- **EIN:** 912112732
- **STATE OF INCORPORATION:** CA
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 10-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 000-32897
- **FILM NUMBER:** 26794187

**BUSINESS ADDRESS:**
- **STREET 1:** 2126 INYO STREET
- **CITY:** FRESNO
- **STATE:** CA
- **ZIP:** 93721
- **BUSINESS PHONE:** 5594906261

**MAIL ADDRESS:**
- **STREET 1:** 2126 INYO STREET
- **CITY:** FRESNO
- **STATE:** CA
- **ZIP:** 93721

?xml version='1.0' encoding='ASCII'? ubfo-20251231

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

**FORM 10-K**

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2025.

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM <u>&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;</u> TO <u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;.</u>

<u>Commission file number: 000-32987</u>

**<u>UNITED SECURITY BANCSHARES</u>**

(Exact name of registrant as specified in its charter)

<u>CALIFORNIA</u> <u>91-2112732</u> <br> (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)

<u>2126 Inyo Street, Fresno, California</u> <u>93721</u> <br> (Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code <u>(888) 683-6030</u>

Securities registered pursuant to Section 12(b) of the Act: <u>Common Stock, no par value</u>&nbsp;&nbsp;&nbsp;&nbsp;<u>UBFO</u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Nasdaq</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (Title of Class)&nbsp;&nbsp;&nbsp;&nbsp; (Trading Symbol) (Exchange)

Securities registered pursuant to Section 12(g) of the Act: <u>NONE</u>

Indicate by check mark whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Securities Act.

Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark if disclosure of delinquent filers pursuant to item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrants knowledge, in the definitive proxy or information statements incorporated by reference in Part III of this form 10-K or any amendment to this Form 10-K. ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a small 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.

Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ <br> Small 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 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Aggregate market value of the Common Stock held by non-affiliates as of the last business day of the registrant's most recently completed second fiscal quarter - June 30, 2025: $104,165,322

Shares outstanding as of March 24, 2026: 17,255,505

------

*<u>[**Table of Contents**](#id2ed6aa3183b4645838731577039388e_10)</u>* 

**UNITED SECURITY BANCSHARES**

**TABLE OF CONTENTS**

---

| | | |
|:---|:---|:---|
| PART I: |  |  |
|  | <u>[Item 1 - Business](#id2ed6aa3183b4645838731577039388e_16)</u> | <u>[4](#id2ed6aa3183b4645838731577039388e_16)</u> |
|  | <u>Item 1A - Risk Factors</u> | <u>[18](#id2ed6aa3183b4645838731577039388e_19)</u> |
|  | <u>[Item 1B – Unresolved Staff Comments](#id2ed6aa3183b4645838731577039388e_22)</u> | <u>[18](#id2ed6aa3183b4645838731577039388e_22)</u> |
|  | <u>Item 1C - Cybersecurity</u> | <u>[18](#id2ed6aa3183b4645838731577039388e_25)</u> |
|  | <u>[Item 2 - Properties](#id2ed6aa3183b4645838731577039388e_28)</u> | <u>[19](#id2ed6aa3183b4645838731577039388e_28)</u> |
|  | <u>[Item 3 - Legal Proceedings](#id2ed6aa3183b4645838731577039388e_31)</u> | <u>[19](#id2ed6aa3183b4645838731577039388e_31)</u> |
|  | <u>[Item 4 – Mine Safety Disclosures](#id2ed6aa3183b4645838731577039388e_34)</u> | <u>[19](#id2ed6aa3183b4645838731577039388e_34)</u> |
| PART II: |  |  |
|  | <u>[Item 5 - Market for the Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities](#id2ed6aa3183b4645838731577039388e_40)</u> | <u>[20](#id2ed6aa3183b4645838731577039388e_40)</u> |
|  | <u>Item 6 - [Reserved]</u> | <u>[21](#id2ed6aa3183b4645838731577039388e_43)</u> |
|  | <u>[Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations](#id2ed6aa3183b4645838731577039388e_46)</u> | <u>[21](#id2ed6aa3183b4645838731577039388e_46)</u> |
|  | <u>I[tem 7A - Quantitative and Qualitative Disclosures about Market Risk](#id2ed6aa3183b4645838731577039388e_58)</u> | <u>[43](#id2ed6aa3183b4645838731577039388e_58)</u> |
|  | <u>[Item 8 - Financial Statements and Supplementary Data](#id2ed6aa3183b4645838731577039388e_64)</u> | <u>[44](#id2ed6aa3183b4645838731577039388e_64)</u> |
|  | <u>[Item 9 - Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](#id2ed6aa3183b4645838731577039388e_181)</u> | <u>[89](#id2ed6aa3183b4645838731577039388e_181)</u> |
|  | <u>[Item 9A – Controls and Procedures](#id2ed6aa3183b4645838731577039388e_184)</u> | <u>[89](#id2ed6aa3183b4645838731577039388e_184)</u> |
|  | <u>[Item 9B – Other Information](#id2ed6aa3183b4645838731577039388e_187)</u> | <u>[90](#id2ed6aa3183b4645838731577039388e_187)</u> |
|  | <u>[Item 9C – Disclosures Regarding Foreign Jurisdictions that Prevent Inspections](#id2ed6aa3183b4645838731577039388e_190)</u> | <u>[90](#id2ed6aa3183b4645838731577039388e_187)</u> |
| PART III: |  |  |
|  | <u>[Item 10 – Directors, Executive Officers, and Corporate Governance](#id2ed6aa3183b4645838731577039388e_196)</u> | <u>[90](#id2ed6aa3183b4645838731577039388e_196)</u> |
|  | <u>[Item 11 - Executive Compensation](#id2ed6aa3183b4645838731577039388e_199)</u> | <u>[98](#id2ed6aa3183b4645838731577039388e_199)</u> |
|  | <u>[Item 12 - Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](#id2ed6aa3183b4645838731577039388e_202)</u> | <u>[109](#id2ed6aa3183b4645838731577039388e_202)</u> |
|  | <u>[Item 13 - Certain Relationships and Related Transactions, and Director Independence](#id2ed6aa3183b4645838731577039388e_205)</u> | <u>[111](#id2ed6aa3183b4645838731577039388e_205)</u> |
|  | <u>[Item 14 – Principal Accounting Fees and Services](#id2ed6aa3183b4645838731577039388e_208)</u> | <u>[112](#id2ed6aa3183b4645838731577039388e_208)</u> |
| PART IV: |  |  |
|  | <u>[Item 15 – Exhibits and Financial Statement Schedules](#id2ed6aa3183b4645838731577039388e_214)</u> | <u>[113](#id2ed6aa3183b4645838731577039388e_214)</u> |

---

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*<u>[**Table of Contents**](#id2ed6aa3183b4645838731577039388e_10)</u>* 

**PART 1**

Certain matters discussed or incorporated by reference in this Annual Report on Form 10-K (this "Report") including, but not limited to, those described in "Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations," are forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. All statements contained in this Report that are not clearly historical in nature are forward-looking, and the words "anticipate," "assume," "intend," "believe," "forecast," "expect," "estimate," "plan," "continue," "will," "should," "look forward" and similar expressions are generally intended to identify forward-looking statements. You should not place undue reliance on these statements as they involve risks, uncertainties, and contingencies, many of which are beyond our control, which may cause actual results, performance, or achievements to differ materially from those expressed in them. Factors that might cause such differences include, but are not limited to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the possibility that any of the anticipated benefits of the proposed merger with Community West Bancshares (the "Merger") will not be realized or will not be realized within the expected time period;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the risk that integration of the Company's operations with those of Community West Bancshares ("CWBC") will be materially delayed or will be more costly or difficult than expected;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the inability to complete the proposed Merger due to the failure of the Company's shareholders to adopt the Merger Agreement, or the failure of CWBC's shareholders to adopt the Merger Agreement or to approve the issuance of CWBC's common stock in connection with the Merger;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the failure to satisfy other conditions to completion of the proposed Merger;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the failure of the proposed Merger to close for any other reason;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the challenges of integrating and retaining key employees;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the effect of the announcement of the proposed Merger on the Company's, CWBC's or the combined company's respective customer and employee relationships and operating results;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• adverse developments with respect to U.S. or global economic conditions and other uncertainties, including the impact of supply chain disruptions, inflationary pressures, labor shortages, and global conflict and unrest;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the impact of natural disasters, droughts, earthquakes, floods, wildfires, terrorist attacks, health epidemics, and threats of war or actual war, including current military actions involving the Russian Federation and Ukraine and the conflict in the Middle East, which may impact the local economy and/or the condition of real estate collateral;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• geopolitical and domestic political developments that can increase levels of political and economic unpredictability, contribute to rising energy and commodity prices, and increase the volatility of financial markets;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• changes in general economic and financial market conditions, either nationally or locally;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• fiscal policies of the U.S. government, including interest rate policies of the Board of Governors of the Federal Reserve System and the resulting impact on the Company's interest-rate sensitive assets and liabilities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• changes in banking laws or regulations and government policies that could lead to a tightening of credit and/or a requirement that the Company raise additional capital;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• increased competition in the Company's markets, impacting the ability to execute its business plans;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• continued or increasing competition from other financial institutions, credit unions, and non-bank financial services companies, many of which are subject to different regulations than the Company is, and the Company's response to competitive pressure;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• loss of, or inability to attract, key personnel;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• unanticipated deterioration in the loan portfolio, credit losses, and the sufficiency of the allowance for credit losses;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the ability to grow the loan portfolio due to constraints on concentrations of credit;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• challenges arising from unsuccessful attempts to expand into new geographic markets, products, or services;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the impact of technological changes and the ability to develop and maintain secure and reliable electronic systems, including failures in or breaches of the Company's operational and/or security systems or infrastructure, and the Company's ability to identify and address cyber-security risks such as data security breaches, "denial of service" attacks, "hacking" and identity theft, and other attacks on the Company's information technology systems or on the third-party vendors who perform functions for the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the failure to maintain effective controls over financial reporting;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• risks related to the sufficiency of liquidity, including the quality and quantity of the Company's deposits and the ability to attract and retain deposits and other sources of funding and liquidity;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• adverse developments in the financial services industry generally, such as the bank failures in 2023 and 2024 and any related impact on depositor behavior or investor sentiment;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the possibility that the recorded goodwill could become impaired which may have an adverse impact on earnings and capital;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• asset/liability matching risks;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• and changes in accounting policies or procedures.

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*<u>[**Table of Contents**](#id2ed6aa3183b4645838731577039388e_10)</u>* 

Therefore, the information set forth therein should be carefully considered when evaluating the business prospects of the Company.

**Item 1 - Business**

***General***

United Security Bancshares is a California corporation incorporated in March 2001 and is registered with the Board of Governors of the Federal Reserve System (FRB) as a bank holding company under the Bank Holding Company Act of 1956, as amended (BHCA). The common stock of United Security Bancshares is listed on Nasdaq under the symbol "UBFO."

United Security Bank was chartered under the laws of the State of California in 1987 as a commercial bank. On June 12, 2001, United Security Bank reorganized into the bank holding company form of ownership and thereby became the wholly-owned subsidiary of United Security Bancshares and each share of United Security Bank stock was exchanged for a share of United Security Bancshares stock on a one-for-one basis. The principal business of United Security Bancshares is to serve as the holding company for United Security Bank.

References to the "Bank" refer to United Security Bank together with its wholly-owned subsidiary, York Monterey Properties. References to "we," "us," or the "Company" refer to United Security Bancshares together with its subsidiaries on a consolidated basis. References to the "Holding Company," refer to United Security Bancshares, the parent company, on a stand-alone basis.

On December 16, 2025, the Company announced the signing of an Agreement and Plan of Merger with Community West Bancshares (NASDAQ: CWBC), headquartered in Fresno, California, together with its banking subsidiary, Community West Bank, pursuant to which the companies will combine in an all-stock merger transaction. Under the terms of the agreement, United Security Bancshares will merge with and into Community West Bancshares and United Security Bank will merge with and into Community West Bank. The United Security Bancshares and Community West Bancshares Boards of Directors have unanimously approved the transaction. The merger is expected to be completed during the second quarter of 2026.

***United Security Bank***

The Bank is a California state-chartered bank headquartered in Fresno, California. At December 31, 2025, the Bank operates three branches (including its main office), one construction lending office, and one commercial lending office in Fresno, California and one branch each in Oakhurst, Caruthers, San Joaquin, Firebaugh, Coalinga, Bakersfield, Taft, Campbell, Mendota, and Fowler, California. The Bank has Interactive Teller Machines (ITMs) at all branch locations and nine off-site ITMs at non-branch locations. In addition, the Holding Company and the Bank have administrative headquarters located at 2126 Inyo Street, Fresno, California, 93721.

***York Monterey Properties, Inc.***

York Monterey Properties, Inc. (YMP) was incorporated in California on April 17, 2019, for the purpose of holding specific parcels of real estate acquired by the Bank through, or in lieu of, foreclosures in Monterey County. These properties exceeded the 10-year regulatory holding period for other real estate owned, or "OREO." The Bank acquired five lots through a non-judicial foreclosure on or about May 29, 2009, and purchased three lots from another bank. The Bank capitalized YMP through the transfer of these eight unimproved lots at a historical cost of $5.3 million. YMP was originally funded with a $250,000 cash investment and the transfer of those lots by the Bank to YMP. During 2025, the Bank acquired an additional six lots through a second non-judicial foreclosure and transferred the loan balances of $3.6 million to YMP. As of December 31, 2025, these properties are included within the consolidated balance sheets as part of "other real estate owned." Please see "Note<u>[20](#id2ed6aa3183b4645838731577039388e_163)</u> - Investment in York Monterey Properties."

***USB Capital Trust II***

During July 2007, the Company formed USB Capital Trust II as a wholly-owned special purpose entity for the purpose of issuing Trust Preferred Securities. USB Capital Trust II is a Variable Interest Entity and a deconsolidated entity pursuant to current accounting standards related to variable interest entities. On July 23, 2007, USB Capital Trust II issued $15 million in

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*<u>[**Table of Contents**](#id2ed6aa3183b4645838731577039388e_10)</u>* 

Trust Preferred Securities. These securities have a thirty-year maturity and bear a floating rate of interest (repricing quarterly) of 1.29% over the forward 3-month SOFR rate. Interest is payable quarterly.

Concurrent with the issuance of the Trust Preferred Securities, USB Capital Trust II used the proceeds of the Trust Preferred Securities offering to purchase a like amount of junior subordinated debentures (TruPS) issued by the Company. The Company pays interest on the junior subordinated debentures to USB Capital Trust II, which represents the sole source of dividend distributions to the holders of the Trust Preferred Securities. During 2015, $3.0 million of the original $15.0 million principal balance of the subordinated debentures related to the Trust Preferred Securities was purchased by the Bank and subsequently purchased by the Company from the Bank. During 2025, an additional $6.0 million was purchased by the Bank and subsequently the Company. The Company has now redeemed a total of $9.0 million in par value of the subordinated debentures, resulting in a remaining contractual principal balance of $6.0 million. The Company may redeem the junior subordinated debentures at any time at par.

The following discussion of services should be read in conjunction with "<u>[Item 7](#id2ed6aa3183b4645838731577039388e_46)</u> - Management's Discussion and Analysis of Financial Condition and Results of Operations."

***Bank Services***

The Bank offers a full range of commercial banking services primarily to the business and professional community and individuals located in Fresno, Madera, Kern, and Santa Clara Counties, including a variety of deposit instruments including personal and business checking accounts and savings accounts, interest-bearing negotiable order of withdrawal (NOW) accounts, money market accounts, and time certificates of deposit. Most deposits are comprised of accounts from individuals and from small- and medium-sized, business-related sources.

The Bank also offers a full complement of lending products, including real estate loans, real estate construction loans, commercial and industrial loans, agricultural loans, and installment loans.

Real estate mortgage loans are secured by deeds of trust primarily on commercial property. The repayment of real estate mortgage loans generally is from the cash flow of the borrower. Commercial and industrial loans are diversified by industry. Loans may be originated in the Bank's market area, purchased, or participated with other financial institutions outside the market area. A substantial portion of commercial and industrial loans are secured by accounts receivable, inventory, leases, or other collateral. The remainder are unsecured. However, extensions of credit are predicated on the financial capacity of the borrower to repay. Repayment of commercial loans is generally from the cash flow of the borrower. Real estate construction loans consist of loans to residential and commercial contractors, which are secured by single-family residential or multi-family properties. All real estate loans have established equity requirements. The repayment of real estate construction loans is generally from long-term mortgages with other lending institutions. Agricultural loans are generally secured by land, equipment, inventory, and receivables. Repayment of agricultural loans is generally from the expected cash flow of the borrower.

While the Bank has a high concentration of commercial real estate loans, it is not in the business of making residential mortgage loans to individuals. The residential mortgage loan portfolio is primarily comprised of purchased fixed-rate 30-year residential mortgage pools. The Bank does not originate, or have in the loan portfolio, any subprime, Alt-A, or option adjustable-rate loans. The Bank does originate interest-only loans which are generally revolving lines of credit to commercial and agricultural businesses or for real estate development where the borrowers business may be seasonal or cash flows may be restricted until the completion of the project.

Loan participations are purchased from and sold to other financial institutions. The underwriting standards for loan participations and purchases are the same as non-participated loans, and are subject to the same limitations, collateral requirements, and borrower requirements.

In the normal course of business, the Bank makes various loan commitments, including granting customers collateralized and uncollateralized lines of credit, and incurs certain contingent liabilities. Due to the nature of the business of the Bank's customers, there is no absolute predictability to the utilization of unused loan commitments, including collateralized and uncollateralized lines of credit, and, therefore, it is not possible to forecast the extent to which these commitments will be exercised within the current year. While no assurance can be provided, it is not believed that any such utilization will constitute a material liquidity demand.

In addition to the loan and deposit services discussed above, the Bank also offers a wide range of specialized services designed to attract and service the needs of commercial customers and account holders. These services include online banking, mobile

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*<u>[**Table of Contents**](#id2ed6aa3183b4645838731577039388e_10)</u>* 

banking, safe deposit boxes, wire transfers, ITM services, payroll direct deposit, cashier's checks, and cash management services. While the Bank does not operate a trust department, arrangements with correspondent banks for trust services can be requested.

***Competition and Market Share***

The banking business in California as well as the Bank's market area is highly competitive with respect to both loans and deposits. The Bank competes for loans and deposits with other commercial banks, savings and loan associations, money market funds, credit unions, and other financial institutions. The Bank competes for loans and deposits by offering competitive interest rates and by seeking to provide a higher level of personalized service than is generally offered by larger competitors. Regulatory restrictions on interstate bank branching and acquisitions and on the provision of certain financial services, such as securities underwriting and insurance, have been reduced or eliminated. The availability of online and mobile banking services continues to expand. Changes in laws and regulations governing the financial services industry cannot be predicted; however, past legislation has served to intensify the competitive environment. Many of the major commercial banks operating in the Bank's market areas offer certain services, such as trust and wealth management services, which the Bank does not offer directly. In addition, banks with larger capitalization have larger lending limits and are thereby able to serve larger customers.

The Bank's primary market areas are Fresno, Madera, Santa Clara, and Kern County, California. There are 53 FDIC-insured financial institutions competing for business in those areas. The following table sets forth information regarding deposit market share and ranking by county as of June 30, 2025, which is the most current information available.

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| | | |
|:---|:---|:---|
| | **Rank** | **Share** |
| Fresno County | 9th | 4.75% |
| Madera County | 10th | 3.31% |
| Kern County | 14th | 0.73% |
| Santa Clara County | 42nd | 0.01% |
| &nbsp;&nbsp;&nbsp;&nbsp;Total of Fresno, Madera, Kern, and Santa Clara Counties | 17th | 0.56% |

---

***Supervision and Regulation***

Banking is a complex, highly regulated industry. Federal and state laws and the regulations of the federal and state bank regulatory agencies govern most aspects of a bank's business, including capital adequacy ratios, reserves against deposits, limitations on the nature and amount of loans which may be made, the location of branch offices, borrowings, and dividends. The primary goals of banking laws and regulations are to maintain a safe and sound banking system, to protect depositors and the FDIC's insurance fund, and to facilitate the conduct of sound monetary policy. In furtherance of these goals, Congress and the States have created several largely autonomous regulatory agencies and enacted numerous laws that govern banks, bank holding companies, and the financial services industry. Consequently, the growth and earnings performance of the Company and the Bank can be affected not only by management decisions and general economic conditions, but also by the requirements of applicable state and federal statutes, regulations, and the policies of various governmental regulatory authorities, including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The Federal Deposit Insurance Corporation, or FDIC,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The California Department of Financial Protection and Innovation, or DFPI,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The Federal Reserve Board, or FRB.

Changes in applicable law or regulations, and in their application by the regulatory agencies, whether as the result of changes in the political climate or otherwise, cannot be predicted and may have a material effect on the business, operations, and financial results of the Company or the Bank.

Described below are elements of selected laws and regulations applicable to the Company and/or the Bank. The descriptions are not intended to be complete and are qualified in their entirety by reference to the full text of the statutes and regulations described.

*Dodd-Frank Wall Street Reform and Consumer Protection Act*

The Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act"),which was enacted in 2010, significantly revised and expanded the rulemaking, supervisory and enforcement authority of the federal bank regulatory

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*<u>[**Table of Contents**](#id2ed6aa3183b4645838731577039388e_10)</u>* 

agencies. The numerous rules and regulations being promulgated pursuant to the Dodd-Frank Act are impacting banks' operations and compliance costs. Provisions of the Dodd-Frank Act include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• revisions in the deposit insurance assessment base for FDIC insurance and the permanent increase in deposit insurance coverage to $250,000;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• reduced interchange fees on debit card transactions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• interest payments on business checking accounts;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the removal of barriers to interstate branching; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• required disclosure and shareholder advisory votes on executive compensation.

Other provisions of the Dodd-Frank Act include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Capital Requirements*. The Dodd-Frank Act: increased the minimum Tier 1 capital ratio from 4.00% to 6.00% of risk-weighted assets; created a new category and required 4.50% of risk-weighted assets ratio for "common equity Tier 1" as a subset of Tier 1 capital limited to common equity; established a minimum non-risk-based leverage ratio set at 4.00%, eliminating a 3.00% exception for higher rated banks; changed the permitted composition of Tier 1 capital to exclude trust preferred securities (unless issued prior to May 19, 2010 by a bank holding company with less than $15 billion in assets), mortgage servicing rights and certain deferred tax assets and included unrealized gains and losses on available for sale debt and equity securities; added an additional capital conservation buffer of 2.5% of risk-weighted assets over each of the required capital ratios, which must be met to avoid limitations on the ability to pay dividends, repurchase shares or pay discretionary bonuses; changed the risk weights of certain assets for purposes of calculating the risk-based capital ratios for high volatility commercial real estate acquisition, development and construction loans, certain past due non-residential mortgage loans and certain mortgage-backed and other securities exposures.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Deposit Insurance*. The Dodd-Frank Act broadened the base for FDIC insurance assessments. Assessments are now based on the average consolidated total assets less tangible equity capital of a financial institution. The Dodd-Frank Act requires the FDIC to increase the reserve ratio of the Deposit Insurance Fund to 1.35% of insured deposits and eliminates the requirement that the FDIC pay dividends to insured depository institutions when the reserve ratio exceeds certain thresholds.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Corporate Governance*. The Dodd-Frank Act directed the federal banking regulators to promulgate rules prohibiting excessive compensation paid to executives of depository institutions and their holding companies with assets in excess of $1.0 billion.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Interstate Branching*. The Dodd-Frank Act authorized national and state banks to establish branches in other states to the same extent as a bank chartered by that state would be permitted to branch.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Consumer Financial Protection Bureau*. The Dodd-Frank Act created an independent federal agency called the Consumer Financial Protection Bureau (CFPB), which has been granted broad rulemaking, supervisory, and enforcement powers under various federal consumer financial protection laws, including the Equal Credit Opportunity Act, Truth in Lending Act, Real Estate Settlement Procedures Act, Fair Credit Reporting Act, Fair Debt Collection Practices Act, the Consumer Financial Privacy provisions of the GLBA, and certain other statutes. The CFPB has examination and primary enforcement authority with respect to depository institutions with $10 billion or more in assets. Smaller institutions are subject to rules promulgated by the CFPB but are still examined and supervised by their federal banking regulators for consumer compliance purposes. The CFPB has authority to prevent unfair, deceptive or abusive practices in connection with the offering of consumer financial products. The Dodd-Frank Act authorized the CFPB to establish certain minimum standards for the origination of residential mortgages including a determination of the borrower's ability to repay. In addition, the Dodd-Frank Act allows borrowers to raise certain defenses to foreclosure if they receive any loan other than a "qualified mortgage" as defined by the CFPB. The Dodd- Frank Act permits states to adopt consumer protection laws and standards that are more stringent than those adopted at the federal level and, in certain circumstances, permits state attorneys general to enforce compliance with both the state and federal laws and regulations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Final Volcker Rule*. In December 2013, the federal bank regulatory agencies adopted final rules that implemented a part of the Dodd-Frank Act commonly referred to as the "Volcker Rule." The final rules were amended in October 2019. Under these rules and subject to certain exceptions, banking entities, including the Bank, are restricted from engaging in activities that are considered proprietary trading and from sponsoring or investing in certain entities, including hedge or private equity funds that are considered "covered funds." Banks that do not have significant trading activities, such as the Bank, will be assumed to operate under a presumption of compliance.

The Dodd-Frank Act also resulted in the creation of a new systemic risk oversight body, the Financial Stability Oversight Council to oversee and coordinate the efforts of the primary U.S financial regulatory agencies in establishing regulations to

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address financial stability matters.

The Dodd-Frank Act was enacted under the administration of former President Barack Obama. In 2018, the subsequent administration, under President Donald Trump, rolled back key pieces of the Dodd-Frank Act as part of its efforts to loosen regulatory restrictions on financial institutions including, but not limited to, easing the "Volker Rule," stress tests, and other constraints on financial institutions. In response to the banking crisis of 2023, the Biden administration expressed a commitment to reemphasize restrictions on financial institutions which were loosened during the previous administration. However, due to a divided congress, Biden was unable to pass legislation strengthening banking regulations. Under the new Trump administration, it is believed that banking regulations may be loosened further. Less than a month into his term, he took steps to further lessen the Consumer Financial Protection Bureau (CFPB), a key provision of the Dodd-Frank Act, and has indicated further deregulation is in order. The Company cannot predict which provisions of the Dodd-Frank Act will be repealed, put in to effect, delayed, or enforced and, therefore, cannot predict the effect, if any, that the Dodd-Frank Act and regulations promulgated thereunder or actions initiated by the Trump administration will have on its future results of operations and financial condition.

***The Company***

*&nbsp;&nbsp;&nbsp;&nbsp;General*

The Company is a bank holding company within the meaning of the Bank Holding Company Act of 1956, as amended, and is registered with, and regulated and examined by, the Board of Governors of the Federal Reserve System, or FRB. The Company is subject to regulation by the Securities and Exchange Commission (SEC) and to the disclosure and regulatory requirements of the Securities Act of 1933, as amended (the "Securities Act"), and the Securities Exchange Act of 1934, as amended (the "Exchange Act"). In addition, as the Company lists its common stock on Nasdaq, it is subject to the listing standards and rules of Nasdaq.

*&nbsp;&nbsp;&nbsp;&nbsp;Dodd-Frank Act*

The Dodd-Frank Act codified existing FRB policy requiring the Company to act as a source of financial strength to the Bank, and to commit resources to support the Bank in circumstances where it might not otherwise do so. However, because the Gramm-Leach-Bliley Act (GLBA) provides for functional regulation of financial holding company activities by various regulators, the GLBA prohibits the FRB from requiring payment by a holding company to a depository institution if the functional regulator of the depository institution objects to the payment. In those cases, the FRB could instead require the divestiture of the depository institution and impose operating restrictions pending the divestiture. As a result of the Dodd-Frank Act, non-bank subsidiaries of a holding company that engage in activities permissible for an insured depository institution must be examined and regulated in a manner that are at least as stringent as if the activities were conducted by the lead depository institution of the holding company.

*&nbsp;&nbsp;&nbsp;&nbsp;Bank Holding Company Liquidity*

As a legal entity, separate and distinct from the Bank, the Company must rely on its own resources to pay its operating expenses and dividends to its shareholders. In addition to raising capital on its own behalf or borrowing from external sources, the Company may also obtain funds from dividends paid by, and fees charged for services provided to, the Bank. However, statutory and regulatory constraints on the Bank may restrict or totally preclude the payment of dividends by the Bank to the Company.

*&nbsp;&nbsp;&nbsp;&nbsp;Transactions with Affiliates and Insiders*

The Company and any subsidiaries it may purchase or organize are deemed to be affiliates of the Bank within the meaning of Sections 23A and 23B of the Federal Reserve Act, and the FRB's Regulation W. Under Sections 23A and 23B and Regulation W, loans by the Bank to affiliates, investments by them in affiliates' stock, and taking affiliates' stock as collateral for loans to any borrower is limited to 10% of the Bank's capital, in the case of any one affiliate, and is limited to 20% of the Bank's capital, in the case of all affiliates. In addition, transactions between the Bank and any affiliates must be on terms and conditions that are consistent with safe and sound banking practices and substantially the same, or at least as favorable to the Bank, as those prevailing at the time for comparable transactions with or involving non-affiliates. In particular, a bank and its subsidiaries generally may not purchase from an affiliate a low-quality asset, as defined in the Federal Reserve Act. These restrictions also prevent a bank holding company and a bank subsidiary's other affiliates from borrowing from the bank subsidiary unless the loans are secured by marketable collateral of designated amounts.

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The Company and the Bank are also subject to certain restrictions with respect to engaging in the underwriting, public sale and distribution of securities.

The Federal Reserve Act and FRB Regulation O place limitations and conditions on loans or extensions of credit to a bank or bank holding company's executive officers, directors and principal shareholders; any company controlled by any such executive officer, director or shareholder; or any political or campaign committee controlled by such executive officer, director or principal shareholder. Additionally, such loans or extensions of credit must comply with loan-to-one-borrower limits; require prior full board approval when aggregate extensions of credit to the person exceed specified amounts; must be made on substantially the same and follow credit-underwriting procedures no less stringent than those prevailing at the time for comparable transactions with non-insiders; must not involve more than the normal risk of repayment, or present other unfavorable features; and must not exceed the bank's unimpaired capital and unimpaired surplus in the aggregate.

*&nbsp;&nbsp;&nbsp;&nbsp;Limitations on Business and Investment Activities*

Under the BHCA, a bank holding company must obtain the FRB's approval before: (i) directly or indirectly acquiring more than 5% ownership or control of any voting shares of another bank or bank holding company; (ii) acquiring all or substantially all of the assets of another bank; (iii) or merging or consolidating with another bank holding company.

The FRB may allow a bank holding company to acquire banks located in any state of the United States without regard to whether the acquisition is prohibited by the law of the state in which the target bank is located. In approving interstate acquisitions however, the FRB must give effect to applicable state laws limiting the aggregate amount of deposits that may be held by the acquiring bank holding company and its insured depository institutions in the state in which the target bank is located, provided that those limits do not discriminate against out-of-state depository institutions or their holding companies, and state laws which require that the target bank have been in existence for a minimum period of time, not to exceed five years, before being acquired by an out-of-state bank holding company.

In addition to owning or managing banks, bank holding companies may own subsidiaries engaged in certain businesses that the FRB has determined to be "so closely related to banking as to be a proper incident thereto." The Holding Company, therefore, is permitted to engage in a variety of banking-related businesses.

Additionally, qualifying bank holding companies making an appropriate election to the FRB may engage in a full range of financial activities, including insurance, securities, and merchant banking. The Company has not elected to qualify for these financial services.

Federal law prohibits a bank holding company and any subsidiary banks from engaging in certain tie-in arrangements in connection with the extension of credit. Thus, for example, the Bank may not extend credit, lease or sell property, or furnish any services, or fix or vary the consideration for any of the foregoing on the condition that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the customer must obtain or provide some additional credit, property, or services from or to the Bank other than a loan, discount, deposit or trust services;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the customer must obtain or provide some additional credit, property, or service from or to the Company or any subsidiaries; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the customer must not obtain some other credit, property, or services from competitors, except reasonable requirements to assure soundness of credit extended.

*&nbsp;&nbsp;&nbsp;&nbsp;Capital Adequacy*

Bank holding companies must maintain minimum levels of capital under the FRB's risk-based capital adequacy guidelines. If capital falls below minimum guideline levels, a bank holding company, among other things, may be denied approval to acquire or establish additional banks or non-bank businesses.

The FRB's risk-based capital adequacy guidelines, discussed in more detail below in the section entitled "The Bank - Capital Standards," assign various risk percentages or weights to different categories of assets and capital is measured as a percentage of risk-weighted assets. Under the terms of the guidelines, bank holding companies are expected to meet capital adequacy guidelines based both on total risk-weighted assets and on total assets, without regard to risk weights.

The risk-based guidelines are minimum requirements. Higher capital levels will be required if warranted by the particular circumstances or risk profiles of individual organizations. For example, the FRB's capital guidelines contemplate that additional capital may be required to take adequate account of, among other things, interest rate risk, or the risks posed by

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concentrations of credit, nontraditional activities or securities trading activities. Moreover, any banking organization experiencing or anticipating significant growth or expansion into new activities, particularly under the expanded powers under the GLBA, would be expected to maintain capital ratios, including tangible capital positions, well above the minimum levels.

*&nbsp;&nbsp;&nbsp;&nbsp;Limitations on Dividend Payments*

As applicable to the Company, California Corporations Code Section 500 provides that neither the Company nor any of its subsidiaries shall make a distribution to the Company's shareholders unless the board of directors has determined in good faith that either:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The amount of retained earnings of the Company immediately prior to the distribution equals or exceeds the sum of (A) the amount of the proposed distribution plus (B) the preferential dividends arrears amount; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Immediately after the distribution, the value of the Company's assets would equal or exceed the sum of its total liabilities plus the preferential rights amount.

Additionally, the FRB's policy regarding dividends provides that a bank holding company should not pay cash dividends exceeding its net income for the past year or which can only be funded in ways that weaken the bank holding company's financial health, such as by borrowing. The FRB also possesses enforcement powers over bank holding companies and their non-bank subsidiaries to prevent or remedy actions that represent unsafe or unsound practices or violations of applicable statutes and regulations.

*&nbsp;&nbsp;&nbsp;&nbsp;Securities Registration and Listing*

The Company's common stock is registered with the SEC under the Exchange Act and, as a result, is subject to the information, proxy solicitation, insider trading, corporate governance, and other disclosure requirements and restrictions of the Exchange Act, as well as the Securities Act, both administered by the SEC. The Company is required to file annual, quarterly and other current reports with the SEC. The SEC maintains an Internet site, http://www.sec.gov, where SEC filings may be accessed. The SEC filings are also available on the Bank's website at http://investors.unitedsecuritybank.com/Docs.

The Company's common stock is listed on Nasdaq and trades under the symbol "UBFO." The Company is subject to Nasdaq standards for listed companies. Nasdaq has adopted corporate governance rules, which are intended to allow shareholders and investors to more easily and efficiently monitor the performance of companies and their directors.

***The Bank***

*General*

As a California state-chartered bank and a member of the FRB, the Bank is subject to regulation, supervision and regular examination by the FRB and the DFPI. The Bank is subject to California laws insofar as they are not preempted by federal banking law. Deposits of the Bank are insured by the FDIC up to the applicable limits in an amount up to $250,000 per customer and, as such, the Bank is subject to the applicable provisions of the Federal Deposit Insurance Act and the regulations of the FDIC. As a consequence of the extensive regulation of commercial banking activities in California and the United States, the Bank's business is particularly susceptible to changes in California and federal legislation and regulation, which may have the effect of increasing the cost of doing business, limiting permissible activities or increasing competition.

*Capital Standards*

Federal regulations require FDIC-insured depository institutions, including the Bank, to maintain adequate capital based on the size, asset composition, and complexity of the institution. Generally, FDIC-insured depository institutions must maintain several minimum capital ratios: a common equity tier 1 capital to risk-based assets ratio; a tier 1 capital to risk-based assets ratio; a total capital to risk-based assets; and a tier 1 capital to total assets leverage ratio. These ratios involve complex calculations of various categories of capital and various categories of assets. Failure to meet minimum capital requirements can initiate certain mandates and possible additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the institution's financial condition and results of operations.

Effective January 1, 2020, pursuant to the Economic Growth, Regulatory Relief, and Consumer Protection Act, enacted in May 2018, the Federal regulatory agencies adopted simplified capital requirements for certain qualifying "community" banking organizations. Depository institutions and depository institution holding companies that have less than $10 billion in total

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consolidated assets and meet other qualifying criteria, including a leverage ratio (equal to tier 1 capital divided by average total consolidated assets) of greater than nine percent, are eligible to opt into the community bank leverage ratio framework. Qualifying community banking organizations that elect to use the community bank leverage ratio framework and that maintain a leverage ratio of greater than nine percent are considered to have satisfied the applicable risk-based and leverage capital requirements in the agencies' capital rules and are considered to have met the "well capitalized" ratio requirements. Institutions that cease meeting the qualifying criteria have two calendar quarters within which to re-qualify, so long as the institution maintains a leverage ratio of greater than eight percent during the grace period.

The Company and the Bank met the criteria and adopted the community bank leverage ratio framework during 2020.

As of December 31, 2025, the Company and the Bank were "well capitalized" under the applicable standards. The actual capitalization ratios for the Bank and the Company as of December 31, 2025 can be found at "<u>[Note 22 - Regulatory Matters](#id2ed6aa3183b4645838731577039388e_172)</u>" to the consolidated financial statements.

*Prompt Corrective Action*

The Federal Deposit Insurance Corporation Improvement Act (FDICIA) requires each federal banking agency to take prompt corrective action to resolve the problems of insured depository institutions, including but not limited to those that fall below one or more prescribed minimum capital ratios. Pursuant to FDICIA, the FRB promulgated regulations defining the following five categories in which an insured depository institution will be placed, based on the level of its capital ratios:

Under the regulations, a bank shall be deemed to be:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "well capitalized" if it has a total risk-based capital ratio of 10% or more, has a Tier 1 risk-based capital ratio of 8% or more, has a common equity Tier 1 capital ratio of 6.5% or more, has a Tier 1 leverage capital ratio of 5% or more, and is not subject to specified requirements to meet and maintain a specific capital level for any capital measure;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "adequately capitalized" if it has a total risk-based capital ratio of 8% or more, a Tier 1 risk-based capital ratio of 6% or more and a leverage capital ratio of 4% or more (3% under certain circumstances) and does not meet the definition of "well capitalized";

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "undercapitalized" if it has a total risk-based capital ratio that is less than 8%, a Tier 1 risk-based capital ratio that is less than 4%, or a leverage capital ratio that is less than 4% (3% under certain circumstances);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "significantly undercapitalized" if it has a total risk-based capital ratio that is less than 6%, a Tier 1 risk-based capital ratio that is less than 3% or a leverage capital ratio that is less than 3%; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "critically undercapitalized" if it has a ratio of tangible equity to total assets that is equal to or less than 2%.

A bank's category is determined solely for the purpose of applying prompt corrective action regulations, and the capital category may not constitute an accurate representation of the bank's overall financial condition or prospects for other purposes.

While these benchmarks have not changed, due to market turbulence, the regulators have strongly encouraged and, in many instances, required, banks and bank holding companies to achieve and maintain higher ratios as a matter of safety and soundness.

Banks are prohibited from paying dividends or management fees to controlling persons or entities if, after making the payment, the bank would be "undercapitalized," that is, the bank fails to meet the required minimum level for any relevant capital measure. Asset growth and branching restrictions apply to "undercapitalized" banks. Banks classified as "undercapitalized" are required to submit acceptable capital plans guaranteed by its holding company, if any. Broad regulatory authority was granted with respect to "significantly undercapitalized" banks, including forced mergers, growth restrictions, ordering new elections for directors, forcing divestiture by its holding company, if any, requiring management changes, and prohibiting the payment of bonuses to senior management. Even more severe restrictions are applicable to "critically undercapitalized" banks. Restrictions for these banks include the appointment of a receiver or conservator. All of the federal banking agencies have promulgated substantially similar regulations to implement this system of prompt corrective action.

A bank, based upon its capital levels, that is classified as "well capitalized," "adequately capitalized" or "undercapitalized" may be treated as though it were in the next lower capital category if the appropriate federal banking agency, after notice and opportunity for a hearing, determines that an unsafe or unsound condition, or an unsafe or unsound practice, warrants such treatment. Further, a bank that otherwise meets the capital levels to be categorized as "well capitalized," will be deemed to be "adequately capitalized," if the bank is subject to a written agreement requiring that the bank maintain specific capital levels. At each successive lower capital category, an insured bank is subject to more restrictions. The federal banking agencies, however, may not treat an institution as "critically undercapitalized" unless its capital ratios actually warrant such treatment.

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Banking organizations that meet the criteria and have adopted the community bank leverage ratio framework, such as the Company and the Bank, are deemed to be "well capitalized" for "prompt corrective action" purposes.

In addition to measures taken under the prompt corrective action provisions, commercial banking organizations, such as the Bank, may be subject to potential enforcement actions by the federal or state banking agencies for unsafe or unsound practices in conducting their businesses or for violations of any law, rule, regulation or any condition imposed in writing by the agency or any written agreement with the agency. Enforcement actions may include the imposition of a conservator or receiver, the issuance of a cease-and-desist order that can be judicially enforced, the termination of insurance for deposits (in the case of a depository institution), the imposition of civil money penalties, the issuance of directives to increase capital, the issuance of formal and informal agreements, and the issuance of removal and prohibition orders against institution-affiliated parties.

*Brokered Deposit Restrictions*

While well-capitalized institutions are not subject to limitations on brokered deposits, adequately-capitalized institutions must obtain an FDIC waiver prior to accepting, renewing, or rolling over brokered deposits and are subject to restrictions on the rates paid on such deposits. Undercapitalized institutions are generally not permitted to accept, renew, or roll over brokered deposits. As of December 31, 2025, the Bank was deemed to be "well-capitalized" and, therefore, eligible to accept brokered deposits.

*Limitations on Dividend Payments*

California law restricts the amount available for cash dividends the Bank may pay to the Company. Under California law, funds available for cash dividend payments by a bank are restricted to the lesser of: (1) retained earnings; or (2) the bank's net income for its last three fiscal years (less any distributions to shareholders made during such period). Cash dividends may also be paid out of the greater of: (i) net income for a bank's last preceding fiscal year; (ii) a bank's retained earnings; or (iii) net income for a bank's current fiscal year, upon the prior approval of the DFPI. If the DFPI finds that the stockholders' equity of a bank is not adequate or that the payment of a dividend would be unsafe or unsound for the bank, the DFPI may order the bank not to pay any dividends.

*Premiums for Deposit Insurance*

The FDIC insures deposits up to $250,000 per qualified account. The FDIC utilizes a risk-based assessment system to set quarterly insurance premium assessments which categorizes banks into four risk categories based on capital levels and supervisory "CAMELS" ratings and names them Risk Categories I, II, III and IV. The CAMELS rating system is based upon an evaluation of the six critical elements of an institution's operations: Capital adequacy, Asset quality, Management, Earnings, Liquidity, and Sensitivity to risk. This rating system is designed to take into account and reflect all significant financial and operational factors financial institution examiners assess in their evaluation of an institution's performance.

The Federal Deposit Insurance Act required the FDIC to maintain a reserve ratio of the FDIC's deposit insurance fund at not less than 1.35% of insured deposits and to adopt a restoration plan to achieve the statutory minimum within eight years if the ratio falls below 1.35%. During 2020 the reserve ratio fell below 1.35% to 1.30% due to extraordinary growth in insured deposits and, accordingly, in September 2020, the FDIC adopted a restoration plan providing for FDIC monitoring deposit balance trends, potential losses, and other factors that affect the reserve ratio, while maintaining the current schedule of assessment rates for all insured institutions. Under the restoration plan, the FDIC is to provide updates at least semi-annually. In setting the assessments, the FDIC is required to offset the effect of the higher reserve ratio against insured depository institutions with total consolidated assets of less than $10 billion. Assessments are based on the average consolidated total assets less average tangible equity capital of a financial institution rather than on its insured deposits. The semi-annual update as of March 31, 2022, showed a decline of four basis points to 1.23%. As a result, on October 20, 2022, the FDIC adopted an amendment to the restoration plan resulting in a uniform increase in the base deposit insurance assessment of two basis points beginning with the first quarter of 2023 in order to meet the requirement of 1.35% by September 30, 2028. On November 16, 2023, the FDIC adopted a final rule to implement a special assessment to recover the loss to the Deposit Insurance Fund associated with protecting uninsured depositors following the closure of Silicon Valley Bank and Signature Bank. Under the final rule, the assessment base for an insured depository institution will be equal to the institution's estimated uninsured deposits as of December 31, 2022, adjusted to exclude the first $5 billion in estimated uninsured deposits.

The FDIC is authorized to terminate a depository institution's deposit insurance upon a finding by the FDIC that the institution's financial condition is unsafe or unsound or that the institution has engaged in unsafe or unsound practices or has violated any applicable rule, regulation, order or condition enacted or imposed by the institution's regulatory agency. The termination of deposit insurance would result in the forced closure of the Bank which would have a material adverse effect on

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the Company's business, financial condition, and results of operations.

*Safety and Soundness Standards*

The federal banking agencies have adopted guidelines designed to assist the federal banking agencies in identifying and addressing potential safety and soundness concerns before capital becomes impaired. The guidelines set forth operational and managerial standards relating to: (i) internal controls, information systems and internal audit systems; (ii) loan documentation; (iii) credit underwriting; (iv) asset growth; (v) earnings; and (vi) compensation, fees and benefits. In addition, the federal banking agencies have also adopted safety and soundness guidelines with respect to asset quality and earnings standards. These guidelines provide nine standards for establishing and maintaining a system to identify problem assets and prevent those assets from deteriorating.

*Federal Home Loan Bank System*

The Bank is a member of the Federal Home Loan Bank of San Francisco (FHLB-SF). Among other benefits, each Federal Home Loan Bank (FHLB) serves as a reserve or central bank for its members within its assigned region. Each FHLB is financed primarily from the sale of consolidated obligations of the FHLB system. Each FHLB makes available loans or advances to its members in compliance with the policies and procedures established by the Board of Directors of the individual FHLB. The FHLB-SF utilizes a single class of stock with a par value of $100 per share, which may be issued, exchanged, redeemed and repurchased only at par value. As an FHLB member, the Bank is required to own FHLB –SF capital stock in an amount equal to the greater of:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a membership stock requirement with an initial cap of $25 million (100% of "membership asset value" as defined), or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• an activity-based stock requirement (based on percentage of outstanding advances).

The FHLB – SF capital stock is redeemable with five year's written notice, subject to certain conditions. At December 31, 2025, the Bank owned 67,374 shares of the FHLB-SF capital stock valued at $6,737,400.

*Federal Reserve Bank* 

The FRB no longer requires depository institutions to maintain non-interest bearing reserves at specified levels against their transaction accounts and non-personal time deposits.

As a member of the Federal Reserve Bank, the Bank is required to subscribe to the stock of the Federal Reserve Bank of San Francisco in an amount equal to 6% of the Bank's capital and surplus of which 3% must be paid in and 3% is subject to call by the Board of Governors of the Federal Reserve System. Capital stock shares may not be transferred or hypothecated. The capital stock of the Federal Reserve Bank is divided into shares of $100 each.

At December 31, 2025, the Bank owned 39,440 shares of FRB-SF stock with paid-in capital totaling $1,972,000.

*Consumer Regulation*

The Company is subject to a number of federal and state consumer protection laws that extensively govern relationships with customers. These laws include the Equal Credit Opportunity Act, the Fair Credit Reporting Act, the Truth in Lending Act, the Truth in Savings Act, the Electronic Fund Transfer Act, the Expedited Funds Availability Act, the Home Mortgage Disclosure Act, the Fair Housing Act, the Real Estate Settlement Procedures Act, the Fair Debt Collection Practices Act, the Service Members Civil Relief Act, and these laws' respective state-law counterparts, as well as state usury laws and laws regarding unfair and deceptive acts and practices. Violations of applicable consumer protection laws can result in significant potential liability from litigation brought by customers, including actual damages, restitution and attorneys' fees. Federal bank regulators, state attorneys general and state and local consumer protection agencies may also seek to enforce consumer protection requirements and obtain these and other remedies, including regulatory sanctions, customer rescission rights, action by the state and local attorneys general in each jurisdiction in which we operate, and civil money penalties. Failure to comply with consumer protection regulations may result in the failure to obtain required bank regulatory approval for merger or acquisition transactions or other transactions where approval is not required.

The CFPB has broad rulemaking, supervisory, and enforcement powers under various federal consumer financial protection laws. The CFPB is also authorized to engage in consumer financial education, track consumer complaints, request data, and promote the availability of financial services to underserved consumers and communities. The CFPB has broad supervisory, examination, and enforcement authority over various consumer financial products and services, including the ability to require

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reimbursements and other payments to customers for alleged legal violations and to impose significant penalties, as well as injunctive relief that prohibits lenders from engaging in allegedly unlawful practices. The CFPB also has the authority to obtain cease and desist orders providing for affirmative relief or monetary penalties. State regulation of financial products and potential enforcement actions could also adversely affect business, financial condition, or results of operations. For example, on November 29, 2021, the DFPI proposed rules under the California Consumer Financial Protection Law to allow the DFPI to require businesses that provide financial products such as debt settlement, student debt relief, education financing, and wage-based advances to register with the DFPI and provide records to facilitate the oversight of the registrants in their interaction with consumers in California. The DFPI's expanding its authority to have an increased emphasis on consumer protection that may be viewed as an effort to create a state-run equivalent of the CFPB.

*USA PATRIOT Act*

The PATRIOT Act, designed to deny terrorists and others the ability to obtain access to the United States financial system, has significant implications for depository institutions, brokers, dealers, and other businesses involved in the transfer of money. The PATRIOT Act, as implemented by various federal regulatory agencies, requires the Company and the Bank to establish and implement policies and procedures with respect to, among other matters, anti-money laundering, compliance, suspicious activity and currency transaction reporting and due diligence on customers and prospective customers. The PATRIOT Act and its underlying regulations permit information sharing for counter-terrorist purposes between federal law enforcement agencies and financial institutions, as well as among financial institutions, subject to certain conditions, and require the FRB, the FDIC and other federal banking agencies to evaluate the effectiveness of an applicant in combating money laundering activities when considering a bank holding company acquisition and/or a bank merger.

The Bank regularly evaluates and continues to enhance the systems and procedures to continue to comply with the PATRIOT Act and other anti-money laundering initiatives. Failure of a financial institution to maintain and implement adequate programs to combat money laundering and terrorist financing, or to comply with all of the relevant laws or regulations, could have serious legal, strategic, and reputational consequences for the institution and result in material fines and sanctions.

*ANTI-MONEY LAUNDERING ACT OF 2020*

The Anti-Money Laundering Act of 2020 (AML Act) was enacted effective January 1, 2021 and presents the most comprehensive revisions and enhancements to anti-money laundering and counter terrorism laws since the Currency and Foreign Transactions Reporting Act of 1970 and the USA PATRIOT Act of 2001 (BSA). The impact of the new legislation will not be fully known until required regulations are adopted and implemented, but the AML Act represents significant changes and reaffirms and broadens the government's oversight and commitment to addressing the illicit activities and financing of terrorism.

Many of the provisions of the AML Act deal with the operations of the federal agencies primarily responsible for addressing terrorism financing and the safeguarding of the national security of the United States, such as the U.S. Treasury and its Financial Crimes Enforcement Network (FinCEN), including the requirement for FinCEN to engage anti-money laundering (AML) and terrorist financing investigations experts and the requirement to facilitate information sharing with other federal and state and even foreign law enforcement agencies. On June 30, 2021, FinCEN issued the first government-wide priorities for anti-money laundering and countering the financing of terrorism to encourage banks to incorporate the priorities into their risk-based BSA compliance programs. The priorities identified were:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• (i) corruption;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• (ii) cybercrime and cybersecurity;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• (iii) terrorist financing;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• (iv) fraud;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• (v) transnational crime organizations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• (vi) drug trafficking;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• (vii) human trafficking; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• (viii) proliferation financing through support networks.

The AML Act also expands the reach of federal AML laws by extending their applicability to a broader range of industries, such as entities involved in futures, precious metals, precious stones and jewels, antiquities, and cryptocurrency. On September 24, 2021, FinCEN issued proposed rules to include a person engaged in the trade of antiquities under the definition of "financial institution" subjecting such person to regulations prescribed by the Secretary of the Treasury.

The AML Act aims to balance the burdens imposed by reporting on financial institutions and the benefits derived by Federal law enforcement agencies. The AML Act requires a review of currency transaction and suspicious activity reports submitted by

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financial institutions to determine to what extent the reporting can be streamlined and made more useful. Included is the obligation to review the dollar thresholds for reporting currency transactions and to establish automated processes for filing simple, non-complex categories of reports. It calls for greater integration between financial institution systems and the electronic filing system to allow for automatic population of report fields and the submission of transaction data.

Other provisions of the AML Act enhance enforcement. The Act provides protection for financial institutions keeping open a customer's account or transaction at the request of a federal law enforcement agency or at the request of a state or local agency with the concurrence of FinCEN and increases civil penalties for financial institutions and persons violating the recordkeeping and reporting obligations. Persons found to have committed repeated "egregious violations" may be barred from serving on boards of directors of financial institutions and fined in an amount that is equal to the profit gained by such person by reason of such violation. If that person is a partner, director, officer or employee of a financial institution, that person may be ordered to repay any bonus paid to that person, irrespective of the amount of the bonus or how it was calculated. New criminal penalties have been created for concealing from or misrepresenting to a financial institution any material facts concerning:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• (i) the ownership or control of assets involved in a monetary transaction involving a senior foreign political figure in amounts exceeding $1 million; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• (ii) the source of funds in a monetary transaction involving an entity found to be a primary money laundering concern.

The AML Act also authorize the Treasury to pay whistleblower awards leading to fines or forfeitures of at least $50,000 up to the lower of $150,000 or 25% of the fine or forfeiture and allows for the payment to whistleblowers of up to 30% of the fine or forfeiture.

One of the most significant portions of the AML Act is The Corporate Transparency Act (CTA), which will requires the reporting of certain information regarding "beneficial owners" of "reporting companies" to a confidential FinCEN database. Reporting companies are defined as any corporation, limited liability company or other entity formed in the U.S. under the laws of a state or Indian Tribe or registered as a foreign entity to do business in the U.S., other than those specifically excluded, such as:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• (i) companies reporting or with a class of securities registered with the SEC under the Securities Act of 1934;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• (ii) banks, bank holding companies, and credit unions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• (iii) money transmitters, registered broker-dealers, registered investment advisors, and investment companies;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• (iv) public utilities and insurance companies;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• (v) 503(c)(3) entities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• (vi) entities that employ more than 20 employees, have reported gross receipts or sales to the Internal Revenue Service in excess of $5.0 million in the prior year, <u>and</u> have an operating presence in the U.S.; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• (vii) certain "inactive" entities.

A beneficial owner is any individual who directly, or indirectly exercises substantial control over an entity or owns or controls 25% or more of the ownership interest of an entity. The reporting company is required to provide FinCEN with the legal name, date of birth, current resident or business address, and an acceptable identification number of the beneficial owner. In 2022, FinCEN issued a final rule requiring the reporting of beneficial ownership information by entities "created" or "doing business" in the United States before January 1, 2024, beginning January 1, 2025. Recently, the Trump administration through the Treasury Department indicated it would not seek enforcement of the required beneficial ownership reporting.

Under the CTA, the Treasury is to minimize the burden on reporting companies and ensure the information deposited in the database is maintained in the strictest confidence and made available for inspection or disclosure by FinCEN only for the purposes set forth in the AML Act and only to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• (i) federal agencies engaged in national security, intelligence or law enforcement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• (ii) state, local or Tribal law enforcement agencies, subject to authorization by a court of competent jurisdiction;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• (iii) financial institutions subject to customer due diligence requirements with the consent of the reporting company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• (iv) requests by a federal or other appropriate regulatory agency;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• (v) certain Treasury officials for tax administration purposes;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• (vi) authorized federal agencies on behalf of a properly recognized foreign authority.

During 2022, FinCEN issued proposed regulations for a pilot program to permit financial institutions to share suspicious activity information with their foreign branches, subsidiaries and affiliates to combat illicit finance risks under the AML Act.

The foregoing is only a summary of selected provisions of the AML Act. Given that regulations implementing the new AML Act are being proposed but have not yet been adopted or implemented, the Company cannot determine at this time the effect, if any, the AML Act will have on the Company's future results of operations or financial condition.

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*Office of Foreign Assets Control ("OFAC") Regulation*

The United States has imposed economic sanctions that affect transactions with designated foreign countries, designated nationals, and others. These rules are based on their administration by OFAC. The OFAC-administered sanctions targeting designated countries take many different forms. Generally, however, they contain one or more of the following elements: (i) restrictions on trade with or investment in a sanctioned country, including prohibitions against direct or indirect imports from and exports to a sanctioned country and prohibitions on "U.S. persons" engaging in financial transactions relating to making investments in, or providing investment-related advice or assistance to, a sanctioned country; and (ii) a blocking of assets in which the government or specially designated nationals of the sanctioned country have an interest, by prohibiting transfers of property subject to U.S. jurisdiction (including property in the possession or control of U.S. persons). Blocked assets (e.g., property and bank deposits) cannot be paid out, withdrawn, set off, or transferred in any manner without a license from OFAC. Failure to comply with these sanctions could have serious legal, strategic, and reputational consequences, and result in civil money penalties on the Company and the Bank.

*Community Reinvestment Act*

The Community Reinvestment Act (CRA) generally requires the Bank to identify the communities it serves and to make loans and investments, offer products, make donations in, and provide services designed to meet the credit needs of these communities. The CRA also requires the Bank to maintain comprehensive records of its CRA activities to demonstrate how we are meeting the credit needs of the Bank's communities. These documents are subject to periodic examination by the FRB. During these examinations, the FRB rates such institutions' compliance with CRA as "Outstanding," "Satisfactory," "Needs to Improve" or "Substantial Noncompliance." The CRA requires the FRB to take into account the record of a bank in meeting the credit needs of all of the communities served, including low- and moderate-income neighborhoods, in determining such rating. Failure of an institution to receive at least a "Satisfactory" rating could inhibit such institution or its holding company from undertaking certain activities, including acquisitions. The Bank received a CRA rating of "Satisfactory" as of its most recent examination. In the case of a bank holding company, such as the Company, when applying to acquire a bank, savings association, or a bank holding company, the FRB will assess the CRA record of each depository institution of the applicant bank holding company in considering the application.

On October 24, 2023, the FRB and FDIC released a joint final rule to amend the CRA with the following objectives: promoting greater access to credit, investment, and banking services in low- and moderate-income (LMI) communities; adjusting to industry changes, such as the rise of internet and mobile banking; ensuring clearer and more consistent CRA regulations; and customizing CRA evaluations and data collection based on bank size and type. In March 2024, bank regulators issued an interim final rule to delay the effective date of certain provisions from April 1, 2024, to January 1, 2026. The Company continues to monitor challenges to the CRA regulations raised by various trade groups and stakeholders, as it relates to the Bank.

*Customer Information Privacy and Cybersecurity*

The FRB and other bank regulatory agencies have adopted guidelines for safeguarding confidential, personal, and non-public customer information. These guidelines require each financial institution, under the supervision and ongoing oversight of its board of directors or an appropriate committee thereof, to create, implement, and maintain a comprehensive written information security program designed to ensure the security and confidentiality of customer information, protect against any anticipated threats or hazard to the security or integrity of such information, and protect against unauthorized access to or use of such information that could result in substantial harm or inconvenience to any customer. We have adopted a customer information security program to comply with these requirements.

In March 2015, federal regulators issued two related statements regarding cybersecurity. One statement indicates that financial institutions should design multiple layers of security controls to establish lines of defense and to ensure that their risk management processes also address the risk posed by compromised customer credentials, including security measures to reliably authenticate customers accessing internet-based services of the financial institution. The other statement indicates that a financial institution's management is expected to maintain sufficient business continuity planning processes to ensure the rapid recovery, resumption and maintenance of the institution's operations after a cyber-attack involving destructive malware. A financial institution is also expected to develop appropriate processes to enable recovery of data and business operations and address rebuilding network capabilities and restoring data if the institution or its critical service providers fall victim to this type of cyber-attack. If we fail to observe the regulatory guidance, we could be subject to various regulatory sanctions, including financial penalties.

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In July 2023, the SEC adopted new rules to enhance and standardize disclosures regarding cybersecurity risk management, strategy, governance, and incidents by public companies. There are two main components:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Material cybersecurity incidents must be filed on Form 8-K within four business days of a determination that a cybersecurity incident is material.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Annual disclosure of cybersecurity risk management, strategy, and governance must be disclosed on Form 10-K. The Company's cybersecurity disclosure can be found in <u>[Item 1C. Cybersecurity](#id2ed6aa3183b4645838731577039388e_25)</u>.

*Privacy*

The GLBA and the California Financial Information Privacy Act require financial institutions to implement policies and procedures regarding the disclosure of non-public personal information about consumers to non-affiliated third parties. In general, the statutes require disclosures to consumers on policies and procedures regarding the disclosure of such non-public personal information and, except as otherwise required by law, prohibit disclosing such information except as provided in the Bank's policies and procedures. We have implemented privacy policies addressing these restrictions that are distributed regularly to all existing and new customers of the Bank.

*Bank Merger Act*

The Bank Merger Act grants the FDIC and other bank regulatory agencies the authority to review and approve or deny proposed bank mergers. It is part of the broader regulatory framework designed to ensure that such transactions do not harm competition, financial stability, or public interest. Understanding the regulatory framework of the Bank Merger Act ensures that the Company and the Bank are prepared for any potential changes in the competitive landscape, including shifts in market dynamics or new entrants that could arise from future mergers in the industry.

In September 2024, the FDIC issued a final statement of policy outlining its approach to reviewing Bank Merger Act applications for FDIC-supervised institutions, including the Bank. This policy establishes higher expectations for the statutory factors the FDIC must consider when evaluating such applications. Additionally, in September 2024, the DOJ withdrew its 1995 Bank Merger Guidelines and introduced the 2024 Banking Addendum, clarifying that it will evaluate competition concerns related to bank and bank holding company mergers using the 2023 Merger Guidelines and the 2024 Banking Addendum. This analysis may involve considering theories of harm and relevant markets not addressed by the 1995 guidelines, which primarily focused on deposit and branch concentrations. Recently, the FDIC board of directors approved a proposal to revoke that policy statement, reverting on an interim basis to guidelines published in 2008 for consideration of bank mergers, and indicated the FDIC was conducting a broader reevaluation of its bank merger review process. In May 2025, the FDIC rescinded the agency's 2024 Statement of Policy on Bank Merger Transactions (2024 Statement of Policy) and reinstated the Statement of Policy on Bank Merger Transactions (Bank Merger Statement of Policy) that was in effect prior to 2024.

*Other Aspects of Banking Law*

The Bank is subject to federal statutory and regulatory provisions covering, among other things, security procedures, management interlocks, funds availability and truth-in-savings. There are also a variety of federal statutes that regulate acquisitions of control and the formation of bank holding companies, and the activities beyond owning banks that are permissible.

Moreover, additional initiatives may be proposed or introduced before Congress, the California Legislature, and other government bodies in the future which, if enacted, may further alter the structure, regulation, and competitive relationship among financial institutions and may subject the bank holding companies and banks to increased supervision and disclosure, compliance costs and reporting requirements. In addition, the various bank regulatory agencies often adopt new rules and regulations and policies to implement and enforce existing legislation. Bank regulatory agencies have been very aggressive in responding to concerns and trends identified in examinations, and this has resulted in the increased issuance of enforcement actions to financial institutions requiring action to address credit quality, liquidity and risk management, capital adequacy, compliance with the Bank Secrecy Act, as well as other safety and soundness concerns.

It cannot be predicted whether, or in what form, any such legislation or regulatory changes in policy may be enacted or the extent to which the Bank's businesses would be affected thereby. In addition, the outcome of examinations, any litigation, or any investigations initiated by state or federal authorities may result in necessary changes in the Bank's operations and increased compliance costs.

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***Human Capital***

The Company employed 113 full-time equivalent staff as of December 31, 2025. The employees are not represented by a collective bargaining unit, and the Company believes its relationship with its employees is good.

The Company's ability to attract, retain, and develop employees is a key to its success. We provide competitive pay that is consistent with the employee's position and experience. Annual increases in compensation are based on merit, which is documented throughout internal systems and communicated at the time of review and upon promotion or transfer. Certain employees participate in the Company's performance-based incentive programs, which may include additional bonus and incentive compensation and equity-based awards. Certain benefits are subject to eligibility, vesting, and performance requirements. Employee performance is measured formally at least annually.

Our employees' health, wellness, and safety are a priority to the Company. Employees receive a comprehensive benefits package that includes paid time off, sick time, Company matching contributions of 100% up to 4% of salary contributions to a qualified retirement plan, and other health and wellness benefits including participation in Company paid or subsidized medical, dental, term-life, accidental death and dismemberment, long-term disability insurance, and employee assistance programs.

The Company's code of ethics prohibits discrimination or harassment. The Company requires all employees to agree to the code of ethics and participate in harassment prevention training annually.

***Available Information***

The Company files periodic reports and other reports under the Securities Exchange Act of 1934 with the Securities and Exchange Commission. These reports, as well as the Company's Code of Ethics, are posted and are available at no cost on the Company's website at <u>http://www.unitedsecuritybank.com</u> as soon as reasonably practical after the Company files such reports with the SEC. The Company's periodic and other reports filed with the SEC are also available at the SEC's website (<u>http://www.sec.gov</u>).

**Item 1A - Risk Factors**

Not required for smaller reporting companies.

**Item 1B - Unresolved Staff Comments**

The Company had no unresolved staff comments at December 31, 2025.

**Item 1C - Cybersecurity**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Management of the Company's wholly-owned subsidiary, United Security Bank (Bank), reports to the Board of Directors, or an appropriate committee of the board, at least annually. This report describes the overall status of the information security program and the Bank's compliance with these guidelines.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The report discusses material matters related to the information security program, addressing issues such as: risk assessment; risk management and control decisions; service provider arrangements; results of testing; security breaches or violations and management's responses; and recommendations for changes in the information security program.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The intent of this report is to communicate the overall status of the information security program, including any updates to the program components.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• In regard to cybersecurity threats and controls, the information security program addresses the Bank's cybersecurity strategy.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Cybersecurity is an element of information security. Information security deals with information, regardless of its format – paper documents, digital and intellectual property, and verbal or visual communications.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Cybersecurity focuses on protecting digital assets from intentional attacks. These assets include networks, computer hardware/software, and information that is processed, stored, or transported by networked systems and devices.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The Information Security Program was initially designed, and is regularly updated, to comply with the following laws and regulations:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ The Gramm-Leach-Bliley Act (GLBA) regarding protection of nonpublic personal information,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ The Federal Financial Institutions Examination Council's "Interagency Guidelines Establishing Information Security Standards,"

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ Supplemental federal and state banking regulations and guidelines regarding protection of nonpublic customer information, as applicable to this program.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Oversight of the Bank's cybersecurity program is the responsibility of the IT Committee of the Board of Directors. This committee is also responsible for approving the program's budget and staffing. Management of the program is the responsibility of the Bank's information security officer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• To ensure appropriate segregation of duties, the information security officer is independent of IT operations staff and reports to the Bank's chief risk officer. The information security officer is responsible for responding to security events by ordering emergency actions to protect the institution and its customers from imminent loss of information; managing the negative effects on the confidentiality, integrity, availability, or value of information; and minimizing the disruption or degradation of critical services.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The IT Committee of the Board of Directors meets bi-monthly, or as needed, to review risks resulting from cybersecurity threats.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Testing is conducted annually using external third-party penetration testing and internal vulnerability assessments.

While cybersecurity risks have the potential to materially affect the Company's business, financial condition, and results of operations, the Company does not believe that risks from cybersecurity threats or attacks, including as a result of any previous cybersecurity incidents, have materially affected the Company, including its business strategy, results of operations or financial condition. However, the sophistication of cyber threats continues to increase, and the Company's cybersecurity risk management and strategy may be insufficient or may not be successful in protecting against all cyber incidents. Accordingly, no matter how well designed or implemented the Company's controls are, it will not be able to anticipate all cyber security breaches. Preventative measures cannot provide absolute security and may not be sufficient in all circumstances or mitigate all potential risks, and the Company may not be able to implement effective preventive measures against cyber security breaches in a timely manner.

**Item 2 - Properties**

The Company provides traditional banking services through 13 branches and two loan production offices located primarily throughout California's Central Valley. Bank branches are located in Fresno, Madera, Kern, and Santa Clara Counties. The Company also has nine remote ITM locations. Both loan production offices are housed at branch facilities in Fresno County. The administration building is located in Fresno, California, and does not provide branch services.

At December 31, 2025, the Company held leases for seven of the branches and the seven remote ITM locations, and owned the remaining six branches. The Company also owns its headquarters in Fresno, California. Most of the leases have renewal options and, in management's opinions, all properties are adequately covered by insurance. The Company considers its existing facilities to be sufficient for current and future use. Please see "<u>[Note 5 - Premises and equipment](#id2ed6aa3183b4645838731577039388e_112)</u>" and <u>["Note 9 - Leases"](#id2ed6aa3183b4645838731577039388e_124)</u> in the "Notes to Consolidated Financial Statements" for further detail.

**Item 3 - Legal Proceedings**

From time to time, the Company is party to claims and legal proceedings arising in the ordinary course of business. At this time, the Company is not aware of any pending legal proceedings to which it is a party or of which any of its property is the subject, nor is the Company aware of any such proceedings known to be contemplated by governmental entities, which proceedings will have a material adverse effect on the financial condition or results of operations of the Company.

**Item 4 - Mine Safety Disclosures**

Not applicable.

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**PART II**

**Item 5 - Market for the Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities**

***Trading History***

The Company's common stock trades on The Nasdaq Global Select Market and is traded under the symbol UBFO. At December 31, 2025, there were approximately 492 record holders of common stock. This does not reflect the number of persons or entities who hold their stock in nominee or street name through various brokerage firms.

*The following table sets forth the high and low closing sales prices by quarter for the common stock, for the years ended December 31, 2025, and 2024.*

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| | | | |
|:---|:---|:---|:---|
| | **Closing Prices** | **Closing Prices** | |
|<br>**Quarter** | **High** | **Low** |<br>**Volume** |
| 4th Quarter 2025 | $10.40 | $8.54 | 2261700 |
| 3rd Quarter 2025 | $9.84 | $8.27 | 1599200 |
| 2nd Quarter 2025 | $9.34 | $7.56 | 3534000 |
| 1st Quarter 2025 | $10.13 | $8.80 | 1566800 |
| 4th Quarter 2024 | $10.31 | $8.14 | 1587500 |
| 3rd Quarter 2024 | $8.91 | $7.07 | 2016700 |
| 2nd Quarter 2024 | $7.53 | $7.12 | 661000 |
| 1st Quarter 2024 | $8.28 | $7.15 | 971000 |

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***Dividends***

The Company's shareholders are entitled to dividends when and if declared by the Board of Directors out of funds legally available therefore. Dividends paid to shareholders are subject to restrictions set forth in the California General Corporation Law, which provides that a California corporation may make a distribution, including paying dividends on its capital stock, from retained earnings to the extent that the retained earnings exceed (a) the amount of the proposed distribution plus (b) the amount, if any, of dividends in arrears on shares with preferential dividend rights. Alternatively, a California corporation may make a distribution, if, immediately after the distribution, the value of its assets equals or exceeds the sum of (a) its total liabilities plus (b) the liquidation preference of any shares which have a preference upon dissolution over the rights of shareholders receiving the distribution. As a bank holding company without significant assets other than its equity position in the Bank, the ability to pay dividends to shareholders depends primarily upon dividends received from the Bank. Such dividends paid by the Bank to the Company are subject to certain limitations. See "<u>[Item 7 - Management's Discussion and Analysis of Financial and Results of Operations - Liquidity and Capital Resources - Capital and Dividends."](#id2ed6aa3183b4645838731577039388e_52)</u>

*Cash dividends declared during 2025 and 2024 are as follows:*

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **2025** | **2025** | **2025** | **2024** | **2024** | **2024** |
| **Date Declared** | **Date Paid** | **Dividend Amount** | **Date Declared** | **Date Paid** | **Dividend Amount** |
| March 25, 2025 | April 22, 2025 | $0.12 | March 26, 2024 | April 22, 2024 | $0.12 |
| June 24, 2025 | July 22, 2025 | $0.12 | June 25, 2024 | July 23, 2024 | $0.12 |
| September 23, 2025 | October 21, 2025 | $0.12 | September 24, 2024 | October 23, 2024 | $0.12 |
| December 16, 2025 | January 13, 2026 | $0.12 | December 17, 2024 | January 17, 2025 | $0.12 |

---

The amount and payment of dividends to our shareholders are set by the Board of Directors with numerous factors being taken into consideration including but not limited to earnings, financial condition, and the need for capital for expanded growth and general economic conditions. No assurance can be given that cash or stock dividends will be paid in the future.

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***Securities Authorized for Issuance under Equity Compensation Plans***

*The following table sets forth securities authorized for issuance under equity compensation plans as of December 31, 2025. All of our equity compensation plans have been approved by the shareholders.*

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Plan Category** | **Number of securities to be issued upon exercise of outstanding options,warrants and rights (column (a))** | | **Weighted-average exercise price of outstanding options, warrants and rights** | **Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))** |
| Equity compensation plans approved by security holders | 75000 | (1) | $9.54 | 1099074 |
| Equity compensation plans not approved by security holders | N/A |  | N/A | N/A |
| &nbsp;&nbsp;Total | 75000 |  | $9.54 | 1099074 |

---

Under the United Security Bancshares 2025 Equity Incentive Award Plan (2025 Plan), we are authorized to issue restricted stock awards and units. Restricted stock awards and restricted stock units are not included in the total in column (a). At December 31, 2025, there were 13,787 unvested restricted stock awards and 280,717 shares of restricted stock units issued and outstanding under both the 2025 Plan and the United Security Bancshares 2015 Equity Incentive Award Plan (2015 Plan).

A complete description of the above plans is included in "Item 8 - <u>[Note 12 - Stock-Based Compensation](#id2ed6aa3183b4645838731577039388e_133)</u> in the Notes to the Consolidated Financial Statements and is hereby incorporated by reference.

***Purchases of Equity Securities by the Issuer and Affiliated Purchasers***

On April 25, 2017, the Company's Board of Directors approved the repurchase of up to $3 million of the outstanding common stock of the Company. The duration of the program is open-ended and the timing of purchases will depend on market conditions. The Company did not repurchase any common shares under the stock repurchase plan during the years ended December 31, 2025, and 2024.

**Item 6 - [Reserved]**

**Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations**

**The following discussion and analysis of the Company's financial condition and results of operations should be read together with the consolidated financial statements and related notes included in this report.**

**<u>Overview</u>**

***The Company***

United Security Bancshares, a California corporation, is a bank holding company registered under the BHCA with corporate headquarters located in Fresno, California. The principal business of United Security Bancshares is to serve as the holding company for its wholly-owned subsidiary, United Security Bank. References to the "Bank" refer to United Security Bank together with its wholly-owned subsidiary, York Monterey Properties, Inc. References to the "Company" refer to United Security Bancshares together with its subsidiaries on a consolidated basis. References to the "Holding Company" refer to United Security Bancshares, the parent company, on a stand-alone basis. The Bank currently has 13 banking branches, which provide banking services in Fresno, Madera, Kern, and Santa Clara counties in the state of California. In addition to full-service branches, the Bank has several stand-alone ITM machines within its geographic footprint.

***Proposed Merger***

On December 16, 2025, the Company announced the signing of an Agreement and Plan of Merger with Community West Bancshares (NASDAQ: CWBC), headquartered in Fresno, California, together with its banking subsidiary, Community West Bank, pursuant to which the companies will combine in an all-stock merger transaction. Under the terms of the agreement, United Security Bancshares will merge with and into Community West Bancshares and United Security Bank will merge with and into Community West Bank. The United Security Bancshares and Community West Bancshares Boards of Directors have unanimously approved the transaction. The merger is expected to close in the second quarter of 2026.

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***Executive Summary***

During 2025, the Company focused on its strategy of serving the banking needs of its customers and retaining deposit balances in a competitive deposit rate environment.

***2025 Financial Summary and 2024 Comparison***

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;▪ On December 16, 2025, the Company signed a definitive merger agreement with Community West Bancshares pursuant to which the companies will combine in an all-stock merger transaction.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;▪ Net interest margin increased to 4.41% at December 31, 2025 compared to 4.26% at December 31, 2024.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;▪ Annualized average cost of deposits was 1.08% for the year ended December 31, 2025, compared to 0.96% for the year ended December 31, 2024.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;▪ Net income decreased to $12.3 million for the year ended December 31, 2025, compared to $14.8 million during the year ended December 31, 2024.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;▪ Interest and fees on loans increased $190,000 to $55.4 million for the year ended December 31, 2025, compared to $55.2 million for the year ended December 31, 2024.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;▪ Interest income increased $61,000 to $60.8 million for the year ended December 31, 2025, compared to $60.8 million for the year ended December 31, 2024.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;▪ Interest expense decreased 13.38% to $12.0 million for the year ended December 31, 2025, compared to $13.9 million for the year ended December 31, 2024.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;▪ Noninterest income increased $373,000 to $5.1 million for the year ended December 31, 2025, compared to $4.7 million for the year ended December 31, 2024.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;▪ Partial redemptions of the junior subordinated debentures (TruPS) of $3.0 million each were made on July 1, 2025, and October 1, 2025, leaving a remaining contractual balance of $6.0 million at December 31, 2025. The partial redemptions resulted in realized gains of $481,000 which were recorded through the income statement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;▪ The total fair value of TruPS changed by $840,000 during the year ended December 31, 2025. A gain of $391,000 was recorded through the income statement and a loss of $1.2 million was recorded through accumulated other comprehensive income. The total fair value of TruPS changed by $368,000 during the year ended December 31, 2024. A loss of $614,000 was recorded through the income statement and a gain of $245,000 was recorded through accumulated other comprehensive income.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;▪ The Company recorded a provision for credit losses of $5.6 million for the year ended December 31, 2025, compared to a provision for credit losses of $3.0 million for the previous year.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;▪ Noninterest expense increased 11.70% to $31.6 million, compared to $28.3 million for the year ended December 31, 2024.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;▪ Annualized return on average assets ("ROAA") decreased to 1.01%, compared to 1.22% for the year ended December 31, 2024.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;▪ Annualized return on average equity ("ROAE") decreased to 9.02%, compared to 11.52% for the year ended December 31, 2024.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;▪ Total loans, net of unearned fees, decreased 1.4% to $915.4 million, compared to $928.5 million at December 31, 2024.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;▪ Total deposits increased 2.9% to $1.09 billion, compared to $1.06 billion at December 31, 2024.

***Current Trends Affecting Results of Operations and Financial Position***

The Company's overall operations are impacted by a number of factors, including not only interest rates and margin spreads, which impact the results of operations, but also the composition of the Company's balance sheet. One of the primary strategic goals of the Company is to maintain a mix of assets that will generate a reasonable rate of return without undue risk, and to finance those assets with a low-cost and stable source of funds. Liquidity and capital resources must also be considered in the planning process to mitigate risk and allow for growth.

Because the Bank primarily conducts banking operations in California's Central Valley, its operations and cash flows are subject to changes in the economic condition of the Central Valley. Our business results are dependent in large part upon the business activity, population, income levels, deposits, and real estate activity in the Central Valley, and declines in economic conditions can have adverse material effects upon the Bank. In addition, the Central Valley remains largely dependent on agriculture. A downturn in agriculture and agricultural-related business could indirectly and adversely affect the Company as many borrowers and customers are involved in, or are impacted to some extent by, the agricultural industry. While a great number of our borrowers are not directly involved in agriculture, they would likely be impacted by difficulties in the agricultural industry since many jobs in our market areas are ancillary to the regular production, processing, marketing, and sale of agricultural commodities. The agricultural industry has been affected by declines in prices and changes in yields of various

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crops and other agricultural commodities. Weaker prices could reduce the cash flows generated by farms and the value of agricultural land in our local markets and thereby increase the risk of default by our borrowers or reduce the foreclosure value of agricultural land and equipment that serve as collateral for our loans. In particular, farm income has seen recent declines and, in line with the downturn in farm income, farmland prices are coming under pressure. Additionally, the Trump administration's potential for abrupt policy shifts, and in particular impacts on the market from tariffs (and threats thereof), may cause fluctuations in market conditions, impacting our investment portfolio, lending activities, and overall financial performance, and those of our borrowers. Such impacts may be exacerbated in the agriculture industry, which could directly impact the financial health and operations of our borrowers.

The state of California periodically experiences severe droughts resulting in significantly reduced water allocations for farmers in the Central Valley. Due to these water issues, the impact on businesses and consumers located in the Company's market areas is not possible to quantify. In response, the California state legislature passed the Sustainable Groundwater Management Act with the purpose of promoting better local and regional management of groundwater use and sustainable groundwater management in California by 2042. The local districts began to develop, prepare, and implement the Groundwater Sustainability Plans in 2020. The effect of such plans on Central Valley agriculture, if any, is still unknown.

The Company's earnings are impacted by monetary and fiscal policies of the United States government and its agencies. The Federal Reserve Bank ("FRB") has, and is likely to continue to have, an important impact on the operating results of depository institutions through its power to implement national monetary policy, among other things, to curb inflation or combat a recession. The FRB affects the levels of bank loans, investments and deposits through its control over the issuance of United States government securities, its regulation of the discount rate applicable to member banks, and its influence over reserve requirements to which member banks are subject. Since 2024, the FOMC has lowered interest rates five times for a total reduction of 175 basis points. Current market expectations are for one to two cuts during 2026, dependent on inflation and unemployment rates, as well as market impacts from the U.S. military operations in Iran.

Inflation may negatively affect the market value of investment securities and lead to increased interest expense on deposits and higher costs for borrowings as well as increased labor costs due to higher wages. Additionally, increased inflation levels, in particular related to the U.S. military operations in Iran, could lead to higher oil and gas prices, which may negatively impact the net operating income of borrowers and affect their ability to repay their loans.

While inflation has slowed at present, new tariff implementations and uncertainties related to President Trump's policies and Supreme Court rulings, may lead to more increases in inflation rates. Elevated inflation and expectations for elevated future inflation can adversely impact economic growth, consumer and business confidence, and our financial condition and results. In addition, elevated inflation may cause unexpected changes in monetary policies and actions which may adversely affect consumer confidence, the economy, and our financial condition and results.

Supply chain constraints and a tightening of labor markets could potentially exacerbate inflation and sustain it at elevated levels, even as growth slows. The risk of sustained high inflation would likely be accompanied by monetary policy tightening with potential negative effects on various elevated asset classes.

The Company continually evaluates its strategic business plan as economic and market factors change in its market area. Balance sheet management, enhancing revenue sources, and maintaining market share will continue to be of primary importance.

**<u>Results of Operations</u>**

The following table sets forth selected historical consolidated financial information for each of the years in the three-year period ended December 31, 2025. The selected financial data should be read in conjunction with the consolidated financial statements as of December 31, 2025 and 2024, and the related Notes to Consolidated Financial Statements contained in "<u>[Item 8 - Financial Statements and Supplementary Data](#id2ed6aa3183b4645838731577039388e_64)</u>."

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| | | | |
|:---|:---|:---|:---|
| | **For the Years Ended December 31,** | **For the Years Ended December 31,** | **For the Years Ended December 31,** |
|<br>&nbsp;&nbsp;&nbsp;*(In thousands, except per-share data and ratios)* | **2025** | **2024** | **2023** |
| <u>Summary of Year-to-Date Earnings:</u> |  |  |  |
| Interest income | $60812 | $60751 | $60377 |
| Interest expense | 12041 | 13901 | 11056 |
| &nbsp;&nbsp;&nbsp;&nbsp;Net interest income | 48771 | 46850 | 49321 |
| Provision for credit losses | 5574 | 2963 | 1460 |
| &nbsp;&nbsp;&nbsp;Net interest income after provision for credit losses | 43197 | 43887 | 47861 |
| Noninterest income | 5086 | 4713 | 5569 |
| Noninterest expense | 31588 | 28280 | 25954 |
| &nbsp;&nbsp;&nbsp;&nbsp;Income before provision for income taxes | 16695 | 20320 | 27476 |
| Provision for income taxes | 4407 | 5537 | 7680 |
| &nbsp;&nbsp;&nbsp;&nbsp;Net income | $12288 | $14783 | $19796 |
| <u>Per Share Data:</u> |  |  |  |
| Net income - Basic | $0.70 | $0.85 | $1.16 |
| Net income - Diluted | $0.70 | $0.85 | $1.16 |
| Weighted average common shares outstanding - Basic | 17493576 | 17188384 | 17114214 |
| Weighted average common shares shares outstanding - Diluted | 17498322 | 17199817 | 17125186 |
| Book value per share | $7.94 | $7.51 | $7.14 |
| <u>Financial Position at Year End:</u> |  |  |  |
| Total assets | $1248313 | $1211718 | $1211045 |
| Total net loans | 900589 | 912416 | 904384 |
| Total deposits | 1088780 | 1057622 | 1004477 |
| Total shareholders' equity | 139683 | 130362 | 122542 |
| <u>Selected Financial Ratios:</u> |  |  |  |
| Return on average assets | 1.01% | 1.22% | 1.57% |
| Return on average equity | 9.02% | 11.52% | 17.05% |
| Average equity to average assets | 11.23% | 10.60% | 9.2% |
| Net interest margin (1) | 4.41% | 4.26% | 4.29% |
| Allowance for credit losses as a percentage of total nonperforming assets | 106.69% | 93.29% | 95.15% |
| Net charge-offs to net loans | 0.67% | 0.28% | 0.25% |
| Loan-to-deposit ratio | 84.08% | 87.79% | 91.59% |
| Net charge-offs to average loans | 0.65% | 0.28% | 0.24% |
| Nonaccrual loans to total loans | 0.62% | 1.31% | 1.24% |
| Allowance for credit losses as a percentage of nonaccrual loans | 259.31% | 131.55% | 136.77% |
| Allowance for credit losses as a percentage of period-end loans | 1.62% | 1.72% | 1.70% |
| Dividend payout ratio | 68.37% | 56.35% | 40.67% |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Fully taxable-equivalent

Net income for the year ended December 31, 2025 was $12.3 million, or $0.70 per basic and diluted share, compared to $14.8 million, or $0.85 per basic and diluted share, for the year ended December 31, 2024. The decrease of $2.5 million between December 31, 2024 and December 31, 2025 is primarily the result of increases in interest paid on deposits and increases in the provision for credit losses, partially offset by an increase in the fair value of TruPS and decreases in short-term borrowing expenses. A gain of $391,000 was recorded on TruPS for the year ended December 31, 2025, compared to a loss of $614,000 recorded for the year ended December 31, 2024. Also included in the decrease in income were $674,000 in merger-related

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expenses related to the proposed merger with Community West Bank. Interest income increased by $61,000, or 0.10%, between December 31, 2024 and December 31, 2025. The provision for income taxes decreased by $1.1 million, or 20.41%.

Return on average assets was 1.01% for the year ended December 31, 2025 compared to 1.22% for the year ended December 31, 2024. Return on average equity was 9.02% for the year ended December 31, 2025 compared to 11.52% for the year ended December 31, 2024.

The lower return on average assets experienced by the Company between 2025 and 2024 was the result of decreases in income due to the higher interest rates reflected in interest expenses on deposits as well as lower rates on interest-earning assets and an increase in average assets. Decreases in the return on average equity were the result of decreases in net income outpacing growth in shareholder's equity. The growth in equity is affected by our dividend payout ratio as well as changes in accumulated other comprehensive income.

***Net Interest Income***

Net interest income, the most significant component of earnings, is the difference between the interest and fees received on earning assets and the interest paid on interest-bearing liabilities. Earning assets consist primarily of loans and, to a lesser extent, investments in securities issued by federal, state and local authorities, and corporations, as well as interest-bearing deposits and overnight investments in federal funds loaned to other financial institutions. These earning assets are funded by a combination of interest-bearing and noninterest-bearing liabilities, primarily customer deposits, and may include short-term and long-term borrowings.

Net interest income before the provision for credit losses was $48.8 million for the year ended December 31, 2025, representing an increase of $1.9 million, or 4.1%, compared to net interest income before the provision for credit losses of $46.9 million for the year ended December 31, 2024. Increased interest income on loans and overnight deposits held at the Federal Reserve and decreases in expense on short-term borrowings, partially offset by increased deposit interest expense, led to the increase in the net interest margin, as shown in the table below. The net interest margin increased to 4.41% for the year ended December 31, 2025, compared to 4.26% for the year ended December 31, 2024.

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<u>Distribution of Average Assets, Liabilities and Shareholders' Equity:</u>

The following table summarizes the distribution of average assets, liabilities and shareholders' equity, as well as interest income and yields earned on average interest-earning assets and interest expense and rates paid on average interest-bearing liabilities, presented on a tax-equivalent basis for the years indicated:

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | | **2025** | | | **2024** | |
|<br>&nbsp;&nbsp;*(Dollars in thousands)* | **Average Balance** | **Interest** | **Average Yield/Rate** | **Average Balance** | **Interest** | **Average Yield/Rate** |
| **Assets:** |  |  |  |  |  |  |
| Interest-earning assets: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Loans and leases (1) (2) | $931247 | $55426 | 5.95% | $925993 | $55236 | 5.97% |
| &nbsp;&nbsp;Investment securities (at fair value) | 151550 | 4380 | 2.89% | 168740 | 5209 | 3.09% |
| &nbsp;&nbsp;&nbsp;Interest-bearing deposits in FRB | 23860 | 1006 | 4.22% | 5901 | 306 | 5.19% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total interest-earning assets | 1106657 | $60812 | 5.50% | 1100634 | $60751 | 5.52% |
| Allowance for credit losses | (15872) |  |  | (15727) |  |  |
| Noninterest-earning assets: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Nonaccrual loans | 6250 |  |  | 11906 |  |  |
| &nbsp;&nbsp;&nbsp;Cash and due from banks | 32743 |  |  | 33457 |  |  |
| &nbsp;&nbsp;&nbsp;Premises and equipment, net | 8843 |  |  | 8986 |  |  |
| &nbsp;&nbsp;&nbsp;Accrued interest receivable | 6899 |  |  | 7267 |  |  |
| &nbsp;&nbsp;&nbsp;Other real estate owned | 7648 |  |  | 4582 |  |  |
| &nbsp;&nbsp;&nbsp;Other assets | 59769 |  |  | 59879 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total average assets | $1212937 |  |  | $1210984 |  |  |
| **Liabilities and Shareholders' Equity:** |  |  |  |  |  |  |
| Interest-bearing liabilities: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;NOW accounts | $98805 | $346 | 0.35% | $125295 | $746 | 0.60% |
| &nbsp;&nbsp;&nbsp;Money market accounts | 386628 | 8868 | 2.29% | 321776 | 6541 | 2.03% |
| &nbsp;&nbsp;&nbsp;Savings accounts | 116264 | 128 | 0.11% | 116900 | 129 | 0.11% |
| &nbsp;&nbsp;&nbsp;Time deposits | 76717 | 1971 | 2.57% | 75756 | 2163 | 2.86% |
| &nbsp;&nbsp;&nbsp;Other borrowings | 3296 | 155 | 4.70% | 62212 | 3506 | 5.64% |
| &nbsp;&nbsp;&nbsp;Junior subordinated debentures | 10196 | 573 | 5.62% | 12464 | 816 | 6.55% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total interest-bearing liabilities | 691906 | $12041 | 1.74% | 714403 | $13901 | 1.95% |
| Noninterest-bearing liabilities: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Noninterest-bearing checking | 371859 |  |  | 358212 |  |  |
| &nbsp;&nbsp;&nbsp;Accrued interest payable | 478 |  |  | 388 |  |  |
| &nbsp;&nbsp;&nbsp;Other liabilities | 12431 |  |  | 9677 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total average liabilities | 1076674 |  |  | 1082680 |  |  |
| Total average shareholders' equity | 136263 |  |  | 128304 |  |  |
| Total average liabilities and shareholders' equity | $1212937 |  |  | $1210984 |  |  |
| Interest income as a percentage of average earning assets |  |  | 5.50% |  |  | 5.52% |
| Interest expense as a percentage of average earning assets |  |  | 1.09% |  |  | 1.26% |
| Net interest margin |  |  | 4.41% |  |  | 4.26% |

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&nbsp;&nbsp;&nbsp;&nbsp;(1) Loan interest income includes deferred loan fees and costs of approximately $1.1 million for the year ended December 31, 2025 and deferred loan fees and costs of approximately $903,000 for the year ended December 31, 2024.

&nbsp;&nbsp;&nbsp;&nbsp;(2) Average loans do not include nonaccrual loans but do include interest income recovered from previously charged-off loans.

The prime rate decreased from 8.50% for the year ended 2024 to 6.75% for the year ended 2025. Future increases or decreases will affect rates for both interest income and expense and the resultant net interest margin.

Both net interest income and net interest margin are affected by changes in the amount and mix of interest-earning assets and interest-bearing liabilities, referred to as "volume change." Both are also affected by changes in yields on interest-earning assets and rates paid on interest-bearing liabilities, referred to as "rate change." The following table sets forth the changes in interest income and interest expense for each major category of interest-earning asset and interest-bearing liability, and the amount of change attributable to volume and rate changes for the years ended December 31, 2025, and 2024.

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<u>Rate and Volume Analysis:</u>

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| | | | |
|:---|:---|:---|:---|
| | **2025 compared to 2024** | **2025 compared to 2024** | **2025 compared to 2024** |
|<br>&nbsp;&nbsp;&nbsp;*(In thousands)* | **Total** | **Rate** | **Volume** |
| Increase (decrease) in interest income: |  |  |  |
| &nbsp;&nbsp;&nbsp;Loans | $190 | $(123) | 313 |
| &nbsp;&nbsp;&nbsp;Investment securities | (829) | (319) | (510) |
| &nbsp;&nbsp;&nbsp;Interest-bearing deposits in FRB | 700 | 107 | 593 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total interest income | 61 | (335) | 396 |
| Increase (decrease) in interest expense: |  |  |  |
| &nbsp;&nbsp;&nbsp;Interest-bearing demand accounts | 1927 | 1266 | 661 |
| &nbsp;&nbsp;&nbsp;Savings accounts | (1) |  | (1) |
| &nbsp;&nbsp;&nbsp;Time deposits | (191) | (218) | 27 |
| &nbsp;&nbsp;&nbsp;Other borrowings | (3351) | (495) | (2856) |
| &nbsp;&nbsp;&nbsp;Subordinated debentures | (244) | (107) | (137) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total interest expense | (1860) | 446 | (2306) |
| Increase (decrease) in net interest income | $1921 | $(781) | 2702 |

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The net interest margin increased in 2025 due to decreases in rates on interest-bearing liabilities outpacing decreases in rates on interest-earning assets. Rates on interest-bearing liabilities decreased due to decrease in rates on short-term borrowings and TruPS, partially offset by increases in rates paid on interest-bearing deposits. The increase in deposit costs was primarily a result of the higher rates paid on purchased brokered deposits. The decrease in loan yields is a result of the repricing of variable-rate loans and lower rates on loan originations. Investment yields decreased due to decreases in rates on floating-rate investment securities and calls on, and maturities of, higher-yield corporate securities. The yield on the loan portfolio was 5.95% for the year ended December 31, 2025, compared to 5.97% for the year ended December 31, 2024. For the year ended December 31, 2025, total interest income increased approximately $61,000, or 0.10%, compared to the year ended December 31, 2024, reflective of increases of $700,000 on overnight deposits held at FRB and $190,000 in loan interest income, offset by decreases of $829,000 in investment income. Average interest-earning assets increased approximately $6.0 million between 2025 and 2024 while the rate on interest-earning assets decreased 2.0 basis points between the two periods. The increase in average earning assets between 2025 and 2024 was the result of increases of $18.0 million in overnight deposits held at FRB and increases of $5.3 million in loans, offset by decreases of $17.2 million in investment securities due to calls, maturities, and paydowns.

For the year ended December 31, 2025, total interest expense decreased approximately $1.9 million, or 13.38%, compared to the year ended December 31, 2024, due to decreased expense on short-term borrowings, offset by increased deposit interest expense. Between the two periods, average interest-bearing liabilities decreased by $22.5 million, while the average rates paid on these liabilities decreased by 21 basis points. At December 31, 2025, the Company held $75.2 million in brokered deposits, compared to $100.3 million at December 31, 2024. These brokered deposits were purchased in order to reduce short-term borrowings, fund loan growth, and offset deposit runoff as part of the Bank's cash management strategy.

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*The following table summarizes the year-to-date averages of the components of interest-earning assets as a percentage of total interest-earning assets, and the components of interest-bearing liabilities as a percentage of total interest-bearing liabilities:*

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| | | |
|:---|:---|:---|
| | **Year-to-Date Average** | **Year-to-Date Average** |
| | **2025** | **2024** |
| Loans | 84.15% | 84.13% |
| Investment securities available for sale | 13.69% | 15.33% |
| Interest-bearing deposits in FRB | 2.16% | 0.54% |
| &nbsp;&nbsp;&nbsp;Total earning assets | 100.00% | 100.00% |
| NOW accounts | 14.28% | 17.55% |
| Money market accounts | 55.88% | 45.04% |
| Savings accounts | 16.80% | 16.36% |
| Time deposits | 11.09% | 10.60% |
| Other borrowings | 0.48% | 8.71% |
| Subordinated debentures | 1.47% | 1.74% |
| &nbsp;&nbsp;&nbsp;Total interest-bearing liabilities | 100.00% | 100.00% |

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***Provision for Credit Losses***

Provisions for credit losses are determined on the basis of management's periodic credit review of the loan portfolio, consideration of past loan loss experience, current and future economic conditions, and other pertinent factors. After reviewing these factors, management, at times, makes adjustments in order to maintain an allowance for credit losses adequate for the coverage of estimated losses inherent in the loan portfolio. Based on the condition of the loan portfolio, management believes the allowance is appropriate to cover risk elements in the loan portfolio.

For the year ended December 31, 2025, a $5.6 million provision was made to the allowance for credit losses. A provision totaling $3.0 million was made for the year ended December 31, 2024.

The allowance for credit losses decreased to 1.62% of total loans at December 31, 2025, compared to 1.72% at December 31, 2024. The provisions of $5.6 million recorded in 2025 and $3.0 million recorded in 2024, were primarily the result of deterioration within the student loan portfolio. For further discussion, refer to "<u>[Item 7 – Management's Discussion and Analysis of Financial Condition and Results of Operations – Asset Quality and Allowance for Credit Losses](#iaa503c7e8c1046d598261360965835dc_20559)</u>."

***Noninterest Income***

*The following table summarizes significant components of noninterest income for the years indicated:*

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| | | | | |
|:---|:---|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;*(In thousands)* | **2025** | **% of Total** | **2024** | **% of Total** |
| Customer service fees | $2954 | 58.08% | $2918 | 61.91% |
| Increase in cash surrender value of bank-owned life insurance | 561 | 11.03% | 551 | 11.69% |
| Gain on proceeds from bank-owned life insurance |  | —% | 573 | 12.16% |
| Gain (loss) on fair value of junior subordinated debentures | 391 | 7.69% | (614) | (13.03)% |
| Other | 1180 | 23.20% | 1285 | 27.27% |
| &nbsp;&nbsp;&nbsp;Total | $5086 | 100.00% | $4713 | 100.00% |

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Noninterest income consists primarily of fees and commissions earned on services provided to banking customers, fair value adjustments to the value of TruPS, and, to a lesser extent, gain or loss on sales of Company assets and other miscellaneous income.

Noninterest income for the year ended December 31, 2025 increased $373,000, or 7.91%, when compared to 2024. Customer service fees, the primary component of noninterest income, totaled $3.0 million for both periods. The increase in noninterest income of $373,000 between the two periods is primarily the result of changes in the fair value of TruPS, offset by a gain on life insurance proceeds realized during 2024. A gain of $391,000 was recorded on TruPS during the year ended 2025 compared to a loss of $614,000 recorded during 2024. The change in the fair value of TruPS was primarily caused by fluctuations in the

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SOFR yield curve. During the year ended December 31, 2024, gains of $573,000 were realized on proceeds from bank-owned life insurance.

***Noninterest Expense***

*The following table sets forth the components of total noninterest expense in dollars and as a percentage of average earning assets for the years ended December 31, 2025, and 2024:*

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| | | | | |
|:---|:---|:---|:---|:---|
| | **2025** | **2025** | **2024** | **2024** |
|<br>&nbsp;&nbsp;*(Dollars in thousands)* | **Amount** | **% of<br>Average<br>Earning Assets** | **Amount** | **% of<br>Average<br>Earning Assets** |
| Salaries and employee benefits | $15557 | 1.41% | $13884 | 1.26% |
| Occupancy expense | 3863 | 0.35% | 3686 | 0.33% |
| Data processing | 1623 | 0.15% | 1114 | 0.10% |
| Technology | 2766 | 0.25% | 2680 | 0.24% |
| Professional fees | 1643 | 0.15% | 1716 | 0.16% |
| Merger-related expenses | 674 | 0.06% |  | —% |
| Loan-related expenses | 343 | 0.03% | 861 | 0.08% |
| Regulatory assessments | 698 | 0.06% | 697 | 0.06% |
| Director fees | 780 | 0.07% | 436 | 0.04% |
| Other | 3641 | 0.33% | 3206 | 0.29% |
| &nbsp;&nbsp;&nbsp;Total | $31588 | 2.85% | $28280 | 2.57% |

---

Noninterest expense increased $3.3 million, or 11.70%, between the years ended December 31, 2025, and 2024. The net increase in noninterest expense between the comparative periods is primarily the result of increases in salaries and employee benefits and data processing expense as well as merger-related expenses. The increase in salaries and employee benefits for the year are related to increased salary expense, stock compensation expense, and group insurance costs. Increases in data processing expenses are related to core processing expenses.

***Income Taxes***

The provision for income taxes is impacted to some degree by permanent taxable differences between income reported for book purposes and income reported for tax purposes, as well as certain tax credits which are not reflected in the statements of operations and comprehensive income. As pretax income or loss amounts become greater, the impact of these differences becomes less significant and is reflected as a variance in the effective tax rate for the periods presented. In general, the permanent differences and tax credits affecting tax expense have a positive impact and tend to reduce the effective tax rates shown in the statements of income and comprehensive income. The effective tax rate for the year ended December 31, 2025, was 26.40% compared to 27.20% for the year ended December 31, 2024. The decrease in the tax rate between the two periods was due primarily to a permanent adjustment to a state tax accrual due to the expiration of a California statute.

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*<u>[**Table of Contents**](#id2ed6aa3183b4645838731577039388e_10)</u>* 

**<u>Financial Condition</u>**

*The following table sets forth key financial data as of and for the years ended:*

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **December 31,** | **December 31,** | **December 31,** | **December 31,** |
|<br>&nbsp;&nbsp;*(dollars in thousands)* | **2025** | **2024** | **$ Change** | **% Change** |
| Due from Federal Reserve Bank (FRB) | $91202 | $24411 | $66791 | 273.61% |
| Loans, net of unearned income | $900589 | $912416 | $(11827) | (1.37)% |
| Investment securities | $143255 | $160708 | $(17453) | (10.86)% |
| Total assets | $1248313 | $1211718 | $36595 | 3.02% |
| Total deposits | $1088780 | $1057622 | $31158 | 2.95% |
| Total liabilities | $1108630 | $1081356 | $27274 | 2.52% |
| Average interest-earning assets | $1106657 | $1100634 | $6023 | 0.55% |
| Average interest-bearing liabilities | $691906 | $714403 | $(22497) | (3.15)% |

---

Net loans decreased due to loan payoffs and maturities. Investment securities decreased due to principal repayments of $10.5 million as well as calls on, and maturities of, $14.3 million in corporate securities. Both overnight interest-bearing deposits in the Federal Reserve Bank and total deposits increased due to increases in noninterest-bearing deposits.

***Loans***

The Company's primary business is that of acquiring deposits and making loans, with the loan portfolio representing the largest component of earning assets. Gross loans totaled $917.5 million at December 31, 2025, a decrease of $12.7 million, or 1.37%, from $930.2 million at December 31, 2024. During 2025, average loans decreased 0.04% compared to the year ended December 31, 2024. Average loans, including nonaccrual loans, totaled $937.5 million and $937.9 million for the years ended December 31, 2025 and 2024, respectively.

*The following table sets forth the amounts of loans, net of unearned income, outstanding by category and the category percentages as of the year-end dates indicated:*

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **2025** | **2025** | **2024** | **2024** | |
|<br>&nbsp;&nbsp;&nbsp;*(In thousands)* | **Dollar Amount** | **% of Loans** | **Dollar Amount** | **% of Loans** |<br>**Change** |
| Commercial and industrial | $46184 | 5.05% | $63715 | 6.86% | $(17531) |
| Real estate mortgage | 666741 | 72.83% | 666694 | 71.81% | $47 |
| Real estate construction and development | 118841 | 12.98% | 111145 | 11.97% | $7696 |
| Agricultural | 51868 | 5.67% | 49462 | 5.33% | $2406 |
| Installment and student loans | 31793 | 3.47% | 37446 | 4.03% | $(5653) |
| &nbsp;&nbsp;Total loans | $915427 | 100.00% | $928462 | 100.00% | $(13035) |

---

Loan volume continues to be highest in what has historically been the Bank's primary lending emphasis: real estate mortgage and construction lending. Total loans, net of unearned income, decreased 1.40% during 2025. Real estate construction and development loans increased 6.92%, agricultural loans increased 4.86%, real estate mortgage loans increased 0.01%, commercial and industrial loans decreased 27.51%, and installment loans decreased 15.10%.

The real estate mortgage loan portfolio, totaling $666.7 million at December 31, 2025, consists of commercial real estate, residential mortgages, and home equity loans. Commercial real estate loans have remained a significant percentage of total loans over the past year, amounting for 47.00% and 45.17% of the total loan portfolio at December 31, 2025 and December 31, 2024, respectively. Commercial real estate balances increased to $430.3 million at December 31, 2025 from $419.4 million at December 31, 2024. Commercial real estate loans are generally a mix of short- to medium-term, fixed- and floating-rate instruments and are mainly secured by commercial income and multi-family residential properties. Residential mortgage loans are generally 30-year amortizing loans with an average life of six to eight years. These loans totaled $236.5 million, or 25.83%, of the portfolio at December 31, 2025, and $247.2 million, or 26.63%, of the portfolio at December 31, 2024. Real estate mortgage loans in total increased $47,000, or 0.01%, during 2025. The home equity loan portfolio totaled $14,000 at December 31, 2025, and $24,000 at December 31, 2024.

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*<u>[**Table of Contents**](#id2ed6aa3183b4645838731577039388e_10)</u>* 

Real estate construction and development loans, representing 12.98% and 11.97% of total loans at December 31, 2025 and December 31, 2024, respectively, consist of loans for residential and commercial construction projects, as well as land acquisition and development, or land held for future development. Loans in this category are secured by real estate including improved and unimproved land, as well as single-family residential, multi-family residential, and commercial properties in various stages of completion. All real estate loans have established equity requirements. Repayment of construction loans generally comes from long-term mortgages with other lending institutions obtained at project completion or from the sale of the constructed homes to individuals.

Purchased loan participations totaled $5.4 million at December 31, 2025 compared to $3.6 million at December 31, 2024. Loan participations sold decreased from $4.21 million, or 0.45%, of the portfolio at December 31, 2024, to $4.02 million, or 0.44%, at December 31, 2025.

At December 31, 2025, approximately 33.21% of commercial and industrial loans have floating rates and, although some may be secured by real estate, many are secured by accounts receivable, inventory, and other business assets. Construction loans are generally short-term, floating-rate obligations, which consist of both residential and commercial projects. Agricultural loans, are primarily short-term, floating-rate loans for crop financing.

Included in installment loans at December 31, 2025 are $27.1 million in unsecured student loans made to medical and pharmacy school students in the U.S. and Caribbean, all of whom are U.S. citizens. Student loans decreased $6.8 million from the balance of $33.9 million reported at December 31, 2024, due to paydowns, consolidations with other lenders, and charge-offs. The outstanding balance of student loans for students who are either in school or a grace period and have not begun repayment totaled $702,000 at December 31, 2025. Accrued interest on student loans that are in school or a grace period totaled $589,000 at December 31, 2025. At December 31, 2025, there were 545 loans within repayment, deferment, and forbearance which represented $16.1 million, $8.1 million, and $2.3 million in outstanding balances, respectively. Student loans have not been purchased or originated since 2019.

Repayment of the unsecured student loans is premised on the medical and pharmacy students graduating and becoming high-income earners. Under program guidelines, repayment terms can vary per borrower; however, repayment occurs on average within 10 to 20 years. Additional repayment capacity is provided by non-student, co-borrowers for roughly one-third of the portfolio. The average student loan balance per borrower as of December 31, 2025, was approximately $119,400. Loan interest rates are variable and currently range from 6.00% to 12.00%.

At December 31, 2025, $16.1 million of student loans were in repayment compared to $19.6 million as of December 31, 2024. Accrued interest on student loans totaled $2.9 million and $3.6 million as of December 31, 2025, and 2024, respectively. At December 31, 2025, the reserve against the student loan portfolio totaled $7.7 million. During the year ended December 31, 2025, $496,000 in accrued interest receivable was reversed, due to charge-offs of $6.3 million. At December 31, 2024, the reserve totaled $7.0 million and $328,000 in accrued interest was reversed due to charge-offs of $2.8 million.

*The following table sets forth the Bank's student loan portfolio activity from December 31, 2024 and December 31, 2025:* 

---

| | |
|:---|:---|
| &nbsp;&nbsp;*(In thousands)* |  |
| Balance as of December 31, 2023 | $38493 |
| Capitalized Interest | 2611 |
| Payments Received | (1301) |
| Loan Consolidations/Payoffs | (3072) |
| Loans Charged-off | (2842) |
| &nbsp;&nbsp;Balance as of December 31, 2024 | 33889 |
| Capitalized Interest | 2292 |
| Payments Received | (993) |
| Loan Consolidations/Payoffs | (1706) |
| Loans Charged-off | (6343) |
| &nbsp;&nbsp;Balance as of December 31, 2025 | $27139 |

---

Student Loan Finance Corporation (ZuntaFi) is the third-party servicer for the student loan portfolio. ZuntaFi provides servicing for the student loan portfolio, including application administration, processing, approval, documenting, funding, and

------

*<u>[**Table of Contents**](#id2ed6aa3183b4645838731577039388e_10)</u>* 

collection of current and charged off balances. They also provide file custodial responsibilities. Except in cases where applicants/loans do not meet program requirements, or extreme delinquency, ZuntaFi provides complete program management. ZuntaFi is paid a monthly servicing fee based on the principal balance outstanding. This servicing fee is presented as part of professional fees within noninterest expense.

*The following table sets forth the maturities of the Bank's loan portfolio, net of unearned fees, at December 31, 2025. Amounts presented are shown by maturity dates rather than repricing periods:*

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| &nbsp;&nbsp;*(In thousands)* | **Due in one year or less** | **Due between one to five years** | **Due between five to 15 years** | **Due after 15 years** | **Total** |
| Commercial and agricultural | $72662 | $19565 | $5825 | $— | $98052 |
| Real estate construction and development | 87303 | 30083 | 1455 |  | 118841 |
| Real estate – mortgage | 130259 | 246546 | 71454 | 218482 | 666741 |
| All other loans | 714 | 3940 | 27139 |  | 31793 |
| &nbsp;&nbsp;&nbsp;Total loans | $290938 | $300134 | $105873 | $218482 | $915427 |

---

For the years ended December 31, 2025 and 2024, the average yield on loans was 5.95% and 5.97%, respectively. Rate floors are occasionally used to mitigate interest rate risk if interest rates fall, as well as to compensate for additional credit risk under current market conditions. The loan portfolio is generally comprised of short-term or floating-rate loans that adjust in alignment to changes in market rates of interest.

At December 31, 2025 and 2024, approximately 30.54% and 29.40%, respectively, of the loan portfolio consisted of floating-rate instruments, with the majority of those tied to the prime rate.

*The following table sets forth the contractual maturities of the Bank's fixed- and floating-rate loans at December 31, 2025. Amounts presented are shown by maturity dates rather than repricing periods, and do not consider renewals or prepayments of loans:*

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| &nbsp;&nbsp;*(In thousands)* | **Due in one year or less** | **Due between one to five years** | **Due between five to 15 years** | **Due after 15 years** | **Total** |
| Loans with fixed rates: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Commercial and industrial | $25292 | $5409 | $148 | $— | $30849 |
| &nbsp;&nbsp;&nbsp;&nbsp;Real estate mortgage | 112289 | 193919 | 26417 | 210869 | 543494 |
| &nbsp;&nbsp;&nbsp;&nbsp;Real estate construction and development | 31527 | 2460 | 599 |  | 34586 |
| &nbsp;&nbsp;&nbsp;&nbsp;Agricultural | 5402 | 11777 | 5677 |  | 22856 |
| &nbsp;&nbsp;&nbsp;&nbsp;Installment and student loans | 130 | 3940 |  |  | 4070 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total loans with fixed rates | 174640 | 217505 | 32841 | 210869 | 635855 |
| Loans with variable rates: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Commercial and industrial | 15295 | 40 |  |  | 15335 |
| &nbsp;&nbsp;&nbsp;&nbsp;Real estate mortgage | 17971 | 52626 | 45037 | 7613 | 123247 |
| &nbsp;&nbsp;&nbsp;&nbsp;Real estate construction and development | 55777 | 27622 | 856 |  | 84255 |
| &nbsp;&nbsp;&nbsp;&nbsp;Agricultural | 26671 | 2341 |  |  | 29012 |
| &nbsp;&nbsp;&nbsp;&nbsp;Installment and student loans | 584 |  | 27139 |  | 27723 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total loans with variable rates | 116298 | 82629 | 73032 | 7613 | 279572 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Loans | $290938 | $300134 | $105873 | $218482 | $915427 |

---

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*<u>[**Table of Contents**](#id2ed6aa3183b4645838731577039388e_10)</u>* 

***Securities***

*The following table sets forth certain information regarding carrying values and percentage of total carrying value of available-for-sale securities for the years indicated:*

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **December 31, 2025** | **December 31, 2025** | **December 31, 2024** | **December 31, 2024** |
|<br>&nbsp;&nbsp;*(In thousands)* | **Carrying Value** | **Percent of Total** | **Carrying Value** | **Percent of Total** |
| <u>Available-for-sale:</u> |  |  |  |  |
| U.S. Government agencies | $1265 | 0.90% | $2644 | 1.68% |
| U.S. Government sponsored entities and agencies collateralized by mortgage obligations | 73593 | 52.63% | 78881 | 50.12% |
| Corporate bonds | 20101 | 14.38% | 33490 | 21.28% |
| Municipal bonds | 44864 | 32.09% | 42367 | 26.92% |
| &nbsp;&nbsp;&nbsp;Total available-for-sale | $139823 | 100.00% | $157382 | 100.00% |

---

As of December 31, 2025, and 2024, there were no securities classified as held-to-maturity.

*The contractual maturities of investment securities as well as yields based on carrying value of those securities at December 31, 2025 are shown below. Actual cash flows may differ from contractual maturities because issuers have the right to call or prepay obligations with or without call or prepayment penalties.*

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **One year or less** | **One year or less** | **Between one to five years** | **Between one to five years** | **Between five to 10 years** | **Between five to 10 years** | **After 10 years** | **After 10 years** | **Total** | **Total** |
|<br>&nbsp;&nbsp;*(Dollars in thousands)* | **Amount** | **Yield (1)** | **Amount** | **Yield (1)** | **Amount** | **Yield (1)** | **Amount** | **Yield (1)** | **Amount** | **Yield (1)** |
| Available-for-sale: |  |  |  |  |  |  |  |  |  |  |
| U.S. Government agencies | $— | —% | $1265 | 4.79% | $— | —% | $— | —% | $1265 | 4.79% |
| U.S. Government sponsored entities and agencies collateralized by mortgage obligations |  | —% | 3882 | 3.12% | 1272 | 3.38% | 68439 | 2.69% | 73593 | 2.72% |
| Corporate bonds |  | —% | 14662 | 3.67% | 5439 | 4.12% |  | —% | 20101 | 3.79% |
| Municipal bonds | 99 | 1.48% | 20092 | 1.53% | 24673 | 1.95% |  | —% | 44864 | 1.76% |
| &nbsp;&nbsp;&nbsp;Total amortized cost | $99 | 1.48% | $39901 | 2.57% | $31384 | 2.38% | $68439 | 2.69% | $139823 | 2.58% |
| &nbsp;&nbsp;&nbsp;&nbsp;*(1) Weighted average yields are not computed on a tax-equivalent basis* | &nbsp;&nbsp;&nbsp;&nbsp;*(1) Weighted average yields are not computed on a tax-equivalent basis* | &nbsp;&nbsp;&nbsp;&nbsp;*(1) Weighted average yields are not computed on a tax-equivalent basis* | &nbsp;&nbsp;&nbsp;&nbsp;*(1) Weighted average yields are not computed on a tax-equivalent basis* | &nbsp;&nbsp;&nbsp;&nbsp;*(1) Weighted average yields are not computed on a tax-equivalent basis* | &nbsp;&nbsp;&nbsp;&nbsp;*(1) Weighted average yields are not computed on a tax-equivalent basis* | &nbsp;&nbsp;&nbsp;&nbsp;*(1) Weighted average yields are not computed on a tax-equivalent basis* | &nbsp;&nbsp;&nbsp;&nbsp;*(1) Weighted average yields are not computed on a tax-equivalent basis* | &nbsp;&nbsp;&nbsp;&nbsp;*(1) Weighted average yields are not computed on a tax-equivalent basis* | &nbsp;&nbsp;&nbsp;&nbsp;*(1) Weighted average yields are not computed on a tax-equivalent basis* | &nbsp;&nbsp;&nbsp;&nbsp;*(1) Weighted average yields are not computed on a tax-equivalent basis* |

---

At December 31, 2025, and 2024, available-for-sale securities with an amortized cost of approximately $84.5 million and $90.7 million, respectively (fair value of $74.8 million and $77.8 million, respectively) were pledged as collateral for public funds and FHLB borrowings.

During the year ended December 31, 2025, the Company recognized gains of $106,000 related to marketable equity securities within the consolidated statements of income, compared to losses of $28,000 recognized during the year ended December 31, 2024.

***Deposits***

The Bank attracts commercial deposits primarily from local businesses and professionals, as well as retail checking accounts, savings accounts, and time deposits. Core deposits, consisting of all deposits other than time deposits of $250,000 or more and brokered deposits, continue to provide the foundation for the Bank's principal sources of funding and liquidity. Core deposits amounted to 90.00% and 87.38% of the total deposit portfolio at December 31, 2025, and 2024, respectively. The Bank held $75.2 million in brokered deposits at December 31, 2025, compared to $100.3 million at December 31, 2024. These brokered deposits were purchased in order to reduce short-term borrowings, fund loan growth, and offset deposit runoff as part of the Bank's cash management strategy.

------

*<u>[**Table of Contents**](#id2ed6aa3183b4645838731577039388e_10)</u>* 

*The following table sets forth the year-end amounts of deposits and balances as a percentage of total deposits by category for the years indicated:*

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **December 31,** | **December 31,** | **December 31,** | **December 31,** | **December 31,** |
|<br>&nbsp;&nbsp;*(In thousands)* | **2025** | **2025** | **2024** | **2024** | **Change** |
| Noninterest-bearing deposits | $421897 | 38.75% | $360152 | 34.05% | $61745 |
| Interest-bearing deposits: |  |  |  |  |  |
| &nbsp;&nbsp;NOW and money market accounts | 472169 | 43.37% | 504466 | 47.70% | $(32297) |
| &nbsp;&nbsp;&nbsp;Savings accounts | 117935 | 10.83% | 114648 | 10.84% | $3287 |
| &nbsp;&nbsp;&nbsp;Time deposits: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under $250,000 | 43052 | 3.95% | 45141 | 4.27% | $(2089) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;$250,000 and over | 33727 | 3.10% | 33215 | 3.14% | $512 |
| Total interest-bearing deposits | 666883 | 61.25% | 697470 | 65.95% | $(30587) |
| Total deposits | $1088780 | 100.00% | $1057622 | 100.00% | $31158 |

---

The Bank's deposit base consists of two major components represented by noninterest-bearing (demand) deposits and interest-bearing deposits. Interest-bearing deposits consist of time certificates, NOW and money market accounts, and savings deposits. During the year ended December 31, 2025, noninterest-bearing deposits increased 17.14%, savings accounts increased 2.87%, NOW and money market deposits decreased 6.40%, and total time deposits decreased 2.01%. Included in NOW and money market account totals at December 31, 2025, and December 31, 2024, were purchased brokered deposits totaling $75.2 million and $100.3 million, respectively.

On a year-to-date average basis, total deposits increased $52.3 million, or 5.24%, between the years ended December 31, 2024, and December 31, 2025. Interest-bearing deposits increased by $38.7 million, or 6.05%, and noninterest-bearing deposits increased $13.6 million, or 3.81%, during 2025. On average, money market accounts increased 20.15%, time deposit balances increased 1.27%, NOW accounts decreased 21.14%, and savings accounts decreased 0.54% between December 31, 2024, and December 31, 2025.

*The following table sets forth the average deposits and average rates paid on those deposits for the years ended December 31, 2025, and 2024:*

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **2025** | **2025** | **2024** | **2024** |
|<br>&nbsp;&nbsp;*(Dollars in thousands)* | **Average Balance** | **Yield** | **Average Balance** | **Yield** |
| Interest-bearing deposits: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;NOW and money market accounts | $485433 | 1.90% | $447071 | 1.63% |
| &nbsp;&nbsp;&nbsp;Savings | 116264 | 0.11% | 116900 | 0.11% |
| &nbsp;&nbsp;&nbsp;Time deposits | 76717 | 2.57% | 75756 | 2.86% |
| &nbsp;&nbsp;Total interest-bearing deposits | 678414 |  | 639727 |  |
| Noninterest-bearing deposits | 371859 |  | 358212 |  |
| &nbsp;&nbsp;Total deposits | $1050273 |  | $997939 |  |

---

*The following table set forth estimated total deposits exceeding the FDIC insurance limits for the years indicated:*

---

| | | |
|:---|:---|:---|
| | **December 31,** | **December 31,** |
| &nbsp;&nbsp;*(Dollars in thousands)* | **2025** | **2024** |
| Uninsured deposits | $501513 | $524116 |

---

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*<u>[**Table of Contents**](#id2ed6aa3183b4645838731577039388e_10)</u>* 

*The following table set forth estimated time deposits exceeding the FDIC insurance limits for the years indicated:*

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** |
| *(Dollars in thousands)* | **Three months of less** | **Over three months through six months** | **Over six months through 12 months** | **Over 12 months** | **Total** |
| Uninsured time deposits (1) | $4911 | $2233 | $2916 | $10316 | $20376 |
|  | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** |
| *(Dollars in thousands)* | **Three months of less** | **Over three months through six months** | **Over six months through 12 months** | **Over 12 months** | **Total** |
| Uninsured time deposits (1) | $2142 | $7946 | $2201 | $10002 | $22291 |

---

(1) Represents amount over insurance limit

***Short-Term Borrowings***

The Bank has access to short-term borrowings which may consist of federal funds purchased, discount window borrowings, securities sold under agreements to repurchase ("repurchase agreements"), and Federal Home Loan Bank (FHLB) advances as alternatives to retail deposit funds. Collateralized and uncollateralized lines of credit have been established with several correspondent banks. The FRB discount window, as well as a securities dealer, may also be accessed as needed.

Funds may be borrowed in the future as part of the Company's asset/liability strategy, and may be used to acquire assets as deemed appropriate by management for investment purposes or for capital utilization purposes. Federal funds purchased represent temporary overnight borrowings from correspondent banks and are generally unsecured. Repurchase agreements are collateralized by mortgage backed securities and securities of U.S. Government agencies, and generally have maturities of one to six months, but may have longer maturities if deemed appropriate. FHLB advances are collateralized by investments in securities and certain qualifying mortgage loans and typically have maturities of one to three months. Additionally, borrowings collateralized by pledged loans may be secured from the Federal Reserve Bank of San Francisco (FRB). Credit lines are subject to periodic review by the credit lines grantors relative to the Company's financial statements. Lines of credit may be modified or revoked at any time.

Lines of credit with the FRB of $480.8 million and $499.1 million, as well as FHLB lines of credit totaling $124.9 million and $135.6 million were available at December 31, 2025, and 2024, respectively. In addition, the Company maintains a $50 million uncollateralized line of credit with Pacific Coast Bankers Bank, a $20 million uncollateralized line of credit with Zion's Bank, and a $20 million uncollateralized line of credit with US Bank. At December 31, 2025 and December 31, 2024, the Bank held no short-term borrowings. These lines of credit generally have interest rates tied to the Federal Funds rate or are indexed to short-term U.S. Treasury rates or SOFR.

***Asset Quality and Allowance for Credit Losses***

Lending money is the principal business activity, and ensuring appropriate evaluation, diversification, and control of credit risks is a primary management responsibility. Losses are implicit in lending activities and the amount of such losses will vary, depending on the risk characteristics of the loan portfolio as affected by local economic conditions and the financial experience of borrowers.

The Company utilizes a current expected credit loss (CECL) methodology which relies on segmenting the loan portfolio into pools with similar risks, tracking the performance of the pools over time, and using the data to determine pool loss experience. The allowance for credit losses on most loans is measured on a collective (pool) basis for loans with similar characteristics. The Company estimates the appropriate level of allowance for credit losses for collateral-dependent loans by evaluating them separately. A loan is evaluated individually when it does not share similar risk characteristics with the pool being evaluated. The Company also uses the CECL model to calculate the allowance for credit losses on off-balance sheet credit exposures, such as undrawn amounts on lines of credit. While the allowance for credit losses on loans is reported as a contra-asset, the allowance for credit losses on off-balance sheet credit exposure is reported as a liability.

------

*<u>[**Table of Contents**](#id2ed6aa3183b4645838731577039388e_10)</u>* 

*The eight segments of the loan portfolio are as follows (subtotals are provided as needed to allow the reader to reconcile the amounts to loan classifications reported elsewhere in this report):*

---

| | | |
|:---|:---|:---|
| | **December 31,** | **December 31,** |
| &nbsp;&nbsp;**Loan Segments for Allowance for Credit Loss Analysis**<br>&nbsp;&nbsp;&nbsp;*(In thousands)* | **2025** | **2024** |
| Commercial and business loans | $46131 | $63653 |
| Government program loans | 53 | 62 |
| &nbsp;&nbsp;&nbsp;Total commercial and industrial | 46184 | 63715 |
| Real estate – mortgage: |  |  |
| &nbsp;&nbsp;Commercial real estate | 430261 | 419422 |
| &nbsp;&nbsp;Residential mortgages | 236466 | 247248 |
| &nbsp;&nbsp;Home improvement and home equity loans | 14 | 24 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total real estate mortgage | 666741 | 666694 |
| Real estate construction and development | 118841 | 111145 |
| Agricultural | 51868 | 49462 |
| Installment and student loans | 31793 | 37446 |
| &nbsp;&nbsp;Total loans | $915427 | $928462 |

---

<u>Individually-Evaluated Loans and Specific Reserves:</u>

*The following table summarizes the components of individually-evaluated loans and their related specific reserves:*

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **December 31, 2025** | **December 31, 2025** | **December 31, 2024** | **December 31, 2024** |
|<br>&nbsp;&nbsp;*(In thousands)* | **Balance** | **Allowance** | **Balance** | **Allowance** |
| Real estate construction and development | $5685 | $— | $12185 | $— |
| Agricultural |  |  | 390 |  |
| &nbsp;&nbsp;&nbsp;Total individually-evaluated loans | $5685 | $— | $12575 | $— |

---

Individually-evaluated loans decreased $6.9 million to $5.7 million at December 31, 2025 compared to $12.6 million at December 31, 2024, and included one real estate construction and development loan. There were no reserves for individually-evaluated loans at December 31, 2025 or December 31, 2024.

<u>Collateral-Dependent Loans</u>

A loan is considered collateral-dependent when the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral.

*The following table presents the recorded investment in collateral-dependent loans by type of loan:*

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **December 31, 2025** | **December 31, 2025** | **December 31, 2024** | **December 31, 2024** |
|<br>*(Dollars in thousands)* | **Amount** | **Number of Collateral-Dependent Loans** | **Amount** | **Number of Collateral-Dependent Loans** |
| Real estate construction and development loans | $5685 | 1 | $12185 | 3 |
| Agricultural loans |  |  | 390 | 1 |
| &nbsp;&nbsp;Total | $5685 | 1 | $12575 | 4 |

---

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*<u>[**Table of Contents**](#id2ed6aa3183b4645838731577039388e_10)</u>* 

<u>Credit Quality Indicators for Outstanding Student Loans:</u>

*The following table summarizes the credit quality indicators for outstanding student loans as of:*

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** |
|<br>*(In thousands, except number of loans)* | **Number of Loans** | **Principal Amount** | **Accrued Interest** | **Number of Loans** | **Principal Amount** | **Accrued Interest** |
| School | 23 | $642 | $546 | 26 | $692 | $512 |
| Grace | 1 | 60 | 43 | 3 | 100 | 63 |
| Repayment | 329 | 16066 | 244 | 406 | 19647 | 324 |
| Deferment | 165 | 8051 | 1987 | 219 | 9954 | 2593 |
| Forbearance | 51 | 2320 | 102 | 65 | 3496 | 133 |
| &nbsp;&nbsp;Total | 569 | $27139 | $2922 | 719 | $33889 | $3625 |

---

Included in installment loans are $27.1 million and $33.9 million in student loans at December 31, 2025 and December 31, 2024, respectively, made to medical and pharmacy school students. As of December 31, 2025, and December 31, 2024, the reserve against the student loan portfolio totaled $7.7 million and $7.0 million, respectively. Loan interest rates on the student loan portfolio range from 6.00% to 12.00% and 6.00% to 12.875% at December 31, 2025, and December 31, 2024, respectively.

*The following table provides a summary of the Company's allowance for credit losses, provisions made to that allowance, and charge-off and recovery activity affecting the allowance for the years indicated:*

---

| | | |
|:---|:---|:---|
| | **December 31,** | **December 31,** |
|<br>&nbsp;&nbsp;*(Dollars in thousands)* | **2025** | **2024** |
| Total loans, net of deferred loan fees, outstanding at end of period before deducting allowances for credit losses | $915427 | $928462 |
| Average net loans outstanding during period | 937497 | 925993 |
| Balance of allowance at beginning of period | 16046 | 15658 |
| Loans charged off: |  |  |
| &nbsp;&nbsp;&nbsp;Installment and student loans | (6343) | (2862) |
| Recoveries of loans previously charged off: |  |  |
| &nbsp;&nbsp;&nbsp;Real estate | 2 | 6 |
| &nbsp;&nbsp;&nbsp;Commercial, industrial and agricultural | 1 | 1 |
| &nbsp;&nbsp;&nbsp;Installment and student loans | 236 | 224 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total loan recoveries | 239 | 231 |
| Net loans charged off | (6104) | (2631) |
| Provision charged to operating expense | 4896 | 3019 |
| Balance of allowance for credit losses at end of period (1) | $14838 | $16046 |
| Net loan charge-offs to total average loans | 0.65% | 0.28% |
| Net loan charge-offs to loans at end of period | 0.68% | 0.29% |
| Allowance for credit losses to total loans at end of period | 1.62% | 1.72% |
| Net loan charge-offs to allowance for credit losses | 41.14% | 16.40% |
| Net loan charge-offs to provision for credit losses | 124.67% | 87.15% |

---

(1) Includes a provision made to unfunded commitments of $678,000 for the year ended December 31, 2025 and a reversal of provision made to unfunded commitments of $56,000 for the year ended December 31, 2024.

Loan charge-offs increased $3.5 million during the year ended December 31, 2025, compared to the year ended December 31, 2024. Loan recoveries increased $8,000 during the same period. Student loan charge-offs totaled $6.3 million and $2.8 million for the years ended 2025 and 2024, respectively.

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*<u>[**Table of Contents**](#id2ed6aa3183b4645838731577039388e_10)</u>* 

*The following provides a summary of the Company's net charge-offs as a percentage of average loan balances in each category for the years indicated:*

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **December 31,** | **December 31,** | **December 31,** | **December 31,** | **December 31,** | **December 31,** |
| | | **2025** | | | **2024** | |
|<br>&nbsp;&nbsp;*(Dollars in thousands)* | **Net Charge-offs (Recoveries)** | **Average Loan Balance** | **Percentage** | **Net Charge-offs (Recoveries)** | **Average Loan Balance** | **Percentage** |
| Commercial and industrial | (1) | 50613 | <0.01% | (1) | 56411 | <0.01% |
| Real estate mortgages | (2) | 664786 | <0.01% | (6) | 666891 | <0.01% |
| Real estate construction and development |  | 121975 |  |  | 117364 |  |
| Agricultural |  | 64173 | —% |  | 56206 |  |
| Installment and student loans | 6107 | 35950 | 16.99% | 2638 | 41027 | 6.43% |
| &nbsp;&nbsp;&nbsp;Total | 6104 | 937497 | 0.65% | 2631 | 937899 | 0.28% |

---

Net charge-offs during the year ended December 31, 2025, totaled $6.1 million as compared to net charge-offs of $2.6 million for the year ended December 31, 2024. The Company charged off or had partial charge-offs on 104 loans to 34 borrowers during the year ended December 31, 2025, compared to 52 loans to 20 borrowers during the same period ended December 31, 2024. Most of these charge-offs were the result of delinquencies within the student loan portfolio where borrowers typically carry more than one loan. The annualized percentage of net charge-offs to average loans was 0.65% for the year ended December 31, 2025, and 0.28% for the year ended December 31, 2024. The Company's loans, net of unearned fees, decreased from $928.5 million at December 31, 2024, to $915.4 million at December 31, 2025.

The allowance for credit losses at December 31, 2025, was 1.62% of outstanding loan balances, as compared to 1.72% at December 31, 2024, and 1.69% at December 31, 2023. At December 31, 2025, and December 31, 2024, unfunded loan commitment reserves of $1.46 million and $780,000, respectively, were reported in other liabilities.

Management believes that the loan allowance for credit losses, totaling 1.62% of the loan portfolio at December 31, 2025, is adequate to absorb both known and inherent risks in the loan portfolio. No assurance can be given, however, regarding future economic conditions, or other circumstances, which may adversely affect the Company's service areas and result in losses in the loan portfolio not captured by the current allowance for credit losses. Management is not currently aware of any conditions that may adversely affect the levels of losses incurred in the Company's loan portfolio.

*The following table sets forth the allowance for credit loss and total loan percentages by category for the years ended:*

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **December 31,** | **December 31,** | **December 31,** | **December 31,** |
| | **2025** | **2025** | **2024** | **2024** |
|<br>&nbsp;&nbsp;*(Dollars in thousands)* | **Allowance<br>for Credit Losses** | **% of Total Allowance for Credit Losses** | **Allowance<br>for Credit Losses** | **% of Total Allowance for Credit Losses** |
| Commercial and industrial | $2039 | 13.74% | $2839 | 17.69% |
| Real estate – mortgage | 1645 | 11.09% | 2634 | 16.42% |
| Real estate construction and development | 2310 | 15.57% | 2504 | 15.61% |
| Agricultural | 1037 | 6.99% | 1028 | 6.41% |
| Installment and student loans | 7807 | 52.61% | 7041 | 43.87% |
| &nbsp;&nbsp;&nbsp;Total | $14838 | 100.00% | $16046 | 100.00% |

---

The credit loss allowance has been determined under the "Current Expected Credit Losses (CECL)" model. CECL is a forward-looking measure which applies prospective loss rates based on both historical loss patterns and reasonable, supportable forecasts on loan pools based on loans sharing similar characteristics.

During 2025, reserve allocations as a percentage of the allowance for credit losses increased for real estate mortgage loans, real estate construction and development loans, and agricultural. Reserve allocations for commercial and industrial loans and installment and student loans decreased due to decreases in loan balances while reserve allocations for real estate mortgage loans increased due to increases in those balances.

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*<u>[**Table of Contents**](#id2ed6aa3183b4645838731577039388e_10)</u>* 

During 2024, reserve allocations as a percentage of the allowance for credit losses increased for commercial and industrial loans and real estate mortgage loans. Reserve allocations for real estate construction and development loans, agricultural loans, and installment and student loans decreased due to decreases in loan balances while reserve allocations for commercial and industrial loan and real estate mortgage loans increased due to increases in those balances.

*The following table sets forth nonperforming assets as of the dates indicated:*

---

| | | |
|:---|:---|:---|
| | **December 31,** | **December 31,** |
|<br>&nbsp;&nbsp;*(Dollars in thousands)* | **2025** | **2024** |
| Nonaccrual loans | $5722 | $12198 |
| Loans, past due 90 days or more, still accruing |  | 421 |
| &nbsp;&nbsp;&nbsp;Total non-performing loans | 5722 | 12619 |
| Other real estate owned | 8185 | 4582 |
| &nbsp;&nbsp;&nbsp;Total non-performing assets | $13907 | $17201 |
| Non-performing loans to total gross loans | 0.63% | 1.36% |
| Non-performing assets to total assets | 1.12% | 1.42% |
| Allowance for credit losses to nonperforming loans | 258.68% | 127.16% |

---

The accrual of interest income on loans is discontinued when reasonable doubt exists with respect to the timely collectability of interest or principal due to the inability of the borrower to comply with the terms of the loan agreement. With the exception of student loans, loans are typically placed on nonaccrual status when the payment of principal or interest is 90 days past due, or earlier if warranted. Interest collected thereafter is credited to principal to the extent necessary to eliminate doubt as to the collectability of the net carrying amount of the loan. Exceptions may be granted to this policy if the loans are well-secured and in the process of collection.

Non-performing assets, which are primarily related to the real estate loan and other-real-estate-owned portfolio decreased $3.3 million between December 31, 2025 and December 31, 2024. Decreases of $6.5 million in nonaccrual loans were offset by increases of $3.6 million in other-real-estate-owned. The decrease in nonaccrual loans was related to the transfer of one nonaccrual loan to other-real-estate-owned and the payoff of one nonaccrual loan with a book balance of $3.2 million. The increase in other-real-estate-owned was due to the foreclosure on the transferred nonaccrual loan totaling $3.3 million. Nonaccrual loan totals at December 31, 2025, consisted of one loan which was well-collateralized and in the process of collection.

The loan portfolio decreased from $928.5 million at December 31, 2024, to $915.4 million at December 31, 2025. Non-performing assets decreased from $17.2 million at December 31, 2024, to $13.9 million at December 31, 2025. Non-accrual loans, accruing loans past due 90 days, and OREO are included in non-performing loans.

*The following table summarizes various components of the loan portfolio for the years ended:*

---

| | | |
|:---|:---|:---|
| | **December 31,** | **December 31,** |
|<br>&nbsp;&nbsp;*(Dollars in thousands)* | **2025** | **2024** |
| Provision for credit losses during period | $5574 | $2963 |
| Allowance as % of nonaccrual loans | 259.31% | 131.55% |
| Non-performing loans as % total loans | 0.63% | 1.36% |
| Allowance as % of total loans | 1.62% | 1.72% |

---

In determining the adequacy of the underlying collateral related to these loans, management monitors trends within specific geographical areas, loan-to-value ratios, appraisals, and other credit issues related to specific loans.

Management continues to monitor and reduce the level of problem assets by working with borrowers to identify options, such as loan modifications, which may help borrowers facing difficulties. Net loan charge-offs during the year ended December 31, 2025, totaled $6.1 million, compared to $2.6 million for the year ended December 31, 2024. Charge-offs related to the student loan portfolio totaled $6.3 million for the year ended December 31, 2025, and $2.8 million for the year ended December 31, 2024, and were partially offset by recoveries within the portfolio. The percentage of net charge-offs to average loans was 0.65%, for the year ended December 31, 2025 and 0.28% for the year ended December 31, 2024.

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*<u>[**Table of Contents**](#id2ed6aa3183b4645838731577039388e_10)</u>* 

*The following table summarizes the non-accrual loans by loan category for the years ended:*

---

| | | | |
|:---|:---|:---|:---|
| | **December 31,** | **December 31,** | |
|<br>&nbsp;&nbsp;*(In thousands)* | **2025** | **2024** |<br>**Change** |
| Real estate - construction | 5685 | 12198 | (6513) |
| Installment and student loans | 37 |  | 37 |
| &nbsp;&nbsp;&nbsp;Total | $5722 | $12198 | $(6476) |

---

Other than the non-performing loans described above, there were no loans at December 31, 2025, where the known credit problems of a borrower made doubtful their ability to comply with present loan repayment terms.

Loans past due more than 30 days receive management attention and are monitored for increased risk. As of December 31, 2025, and 2024, loans past due more than 30 days totaled $7.5 million and $15.8 million, respectively.

**<u>Liquidity and Capital Resources</u>**

The Company's asset/liability management, liquidity strategy, and capital planning are guided by policies, formulated and monitored by the Asset/Liability Committee (ALCO) and Management, to provide adequate liquidity and maintain an appropriate balance between interest-sensitive assets and interest-sensitive liabilities.

***Liquidity***

Liquidity management may be described as the ability to maintain sufficient cash flows to fulfill both on- and off-balance sheet financial obligations, including loan funding commitments and customer deposit withdrawals, without straining the Company's equity structure. To maintain an adequate liquidity position, the Company relies on, in addition to cash and cash equivalents, cash inflows from deposits and short-term borrowings, repayments of principal on loans and investments, and net interest income received. The Company's principal cash outflows are for loan origination, purchases of investment securities, depositor withdrawals, and payment of operating expenses.

The Company's liquid asset base, which generally consists of cash and due from banks, federal funds sold, and investment securities, is maintained at levels deemed sufficient to provide the cash necessary to fund loan growth, unfunded loan commitments, and deposit runoff. Included in this framework is the objective of maximizing the yield on earning assets. This is generally achieved by maintaining a high percentage of earning assets in loans and investment securities, which are higher yielding assets compared to cash.

*The following table sets forth asset balances for the period ended:*

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **December 31,** | **December 31,** | **December 31,** | **December 31,** |
| | **2025** | **2025** | **2024** | **2024** |
|<br>&nbsp;&nbsp;*(Dollars in thousands)* | **Balance** | **% Total Assets** | **Balance** | **% Total Assets** |
| Cash and cash equivalents | $120955 | 9.69% | $56211 | 4.64% |
| Loans, net of unearned income | 915427 | 73.33% | 928462 | 76.62% |
| Unpledged investment securities | 65052 | 5.21% | 79623 | 6.57% |

---

At December 31, 2025, the loan-to-deposit ratio was 84.1% compared to 87.8% at December 31, 2024.

Liabilities used to fund liquidity sources include core and non-core deposits as well as short-term borrowings. Core deposits comprised approximately 90.00% of total deposits at December 31, 2025, and 87.38% at December 31, 2024. At December 31, 2025, and December 31, 2024, there were no short-term borrowings. At December 31, 2025, unused lines of credit with the Federal Home Loan Bank, Pacific Coast Banker's Bank, Zion's Bank, US Bank and the Federal Reserve Bank totaling $695.7 million were collateralized in part by investment securities and certain qualifying loans in the Company's loan portfolio. The carrying value of securities and loans pledged on these used and unused borrowing lines totaled $808.7 million at December 31, 2025. Credit lines totaling $724.7 million were partially collateralized by pledged securities and qualifying loans of $847.9 million at December 31, 2024. For a further detail of the Company's borrowing arrangements, see "<u>[Note 8](#id2ed6aa3183b4645838731577039388e_121)</u> - Short-Term Borrowings/Other Borrowings," in the consolidated financial statements.

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*<u>[**Table of Contents**](#id2ed6aa3183b4645838731577039388e_10)</u>* 

Cash and cash equivalents increased $64.7 million during the year ended December 31, 2025, and increased $15.4 million during the year ended December 31, 2024.

*The following table sets forth changes in cash flows for the period ended:*

---

| | | |
|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;*(In thousands)* | **2025** | **2024** |
| Cash and cash equivalents at beginning of year: | $56211 | $40784 |
| &nbsp;&nbsp;&nbsp;Cash flows from operating activities: | 22056 | 19635 |
| &nbsp;&nbsp;&nbsp;Cash flows from investing activities: | 25916 | 12953 |
| &nbsp;&nbsp;&nbsp;Cash flows from financing activities: | 16772 | (17161) |
| Cash and cash equivalents at end of year: | $120955 | $56211 |

---

Net cash inflows from operations increased to $22.1 million during the year ended December 31, 2025, compared to $19.6 million for the year ended December 31, 2024. Net cash inflows from investing activities of $25.9 million for the year ended December 31, 2025, were primarily the result of principal paydowns of $10.5 million on securities as well as corporate security calls and maturities of $14.4 million. For the year ended December 31, 2025, net cash inflows from financing activities of $16.8 million were primarily the result of increases of $32.7 million in demand deposits and savings accounts, partially offset by the redemption of $6.0 million in TruPS contractual balances. Net cash inflows from investing activities of $13.0 million for the year ended December 31, 2024, were the result of principal paydowns, treasury security maturities, and proceeds from bank-owned life insurance. For the year ended December 31, 2024, net cash outflows from financing activities, totaling $17.2 million, were due primarily to decreases of $62.0 million in short-term borrowings, partially offset by an increase of $46.6 million in demand deposits, NOW and money market accounts, and savings accounts.

Liquidity risk arises from the possibility that the Company may not be able to satisfy current or future financial commitments or may become unduly reliant on alternative funding sources. The Company maintains a liquidity risk management policy and contingency funding plan to address and manage this risk. The policy identifies the primary sources of liquidity, sets wholesale funding limits, establishes procedures for monitoring and measuring liquidity, and establishes minimum liquidity requirements in compliance with regulatory guidance. Liquidity is continually monitored and reported on a monthly basis to the Board of Directors. Additionally, the Company performs liquidity stress testing in accordance with industry practices to ensure cash flow requirements are met under stressed scenarios.

The liquidity of the Holding Company is separate from the Bank and is primarily dependent on the payment of cash dividends by the Bank, subject to limitations imposed by the Financial Code of the State of California and federal and state banking regulations. During the year ended December 31, 2025, the Bank paid $16.6 million in cash dividends to the Holding Company. During the year ended December 31, 2024, the Bank paid $9.3 million in cash dividends to the Holding Company. The increase in cash dividends of $7.3 million between the years ended December 31, 2025 and December 31, 2024, was due primarily to the partial redemption of $6.0 million in TruPS balances, necessitating an additional transfer of $6.0 million in cash dividends from the Bank to the Holding Company.

***Capital and Dividends***

The Company and the Bank are subject to various regulatory capital requirements adopted by the Board of Governors of the Federal Reserve System (the "Board of Governors"). Failure to meet minimum capital requirements can initiate certain mandates and possible additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company's consolidated financial statements. Under capital adequacy guidelines and the regulatory framework, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of their assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

The Company has adopted a capital plan that includes guidelines and trigger points to ensure sufficient capital is maintained at the Bank and the Company, and that capital ratios are maintained at a level deemed appropriate under regulatory guidelines given the level of classified assets, concentrations of credit, allowance for credit losses, current and projected growth, and projected retained earnings. The capital plan also contains contingency strategies to obtain additional capital as required to fulfill future capital requirements for both the Bank, as a separate legal entity, and the Company on a consolidated basis. The capital plan includes a target for the Bank to maintain a ratio of tangible shareholders' equity to total tangible assets equal to or

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*<u>[**Table of Contents**](#id2ed6aa3183b4645838731577039388e_10)</u>* 

greater than 9%. The Bank's ratio of tangible shareholders' equity to total tangible assets was 12.07% and 12.70% at December 31, 2025, and 2024, respectively.

The Company's equity capital totaled $139.7 million at December 31, 2025, compared to $130.4 million at December 31, 2024. During the year ended December 31, 2025, the Company paid $8.4 million in cash dividends to shareholders. During the year ended December 31, 2024, the Company paid $8.3 million in cash dividends to shareholders.

For a more detailed discussion of regulatory capital requirements and dividends, see "<u>[Note 22](#id2ed6aa3183b4645838731577039388e_172)</u> - Regulatory Matters" to the consolidated financial statements, as well as under the captions "*Supervision and Regulation* - *The Company - Capital Adequacy*" and "*Supervision and Regulation* - *The Bank - Capital Standards*" set forth in Part I, Item I., of this Annual Report.

As of December 31, 2025, the Company and the Bank meet all capital adequacy requirements to which they are subject. Management believes that, under the current regulations, both will continue to meet their minimum capital requirements in the foreseeable future.

***Reserve Balances***

The FRB no longer requires depository institutions to maintain non-interest bearing reserves at specified levels against their transaction accounts and non-personal time deposits. At December 31, 2025 and December 31, 2024, the Bank was not subject to a reserve requirement.

**<u>Critical Accounting Estimates and Policies</u>**

In preparing the consolidated financial statements in accordance with generally accepted accounting principles in the United States of America (GAAP), management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet and revenues and expenses for the period. Actual results could differ significantly from those estimates. Our most significant accounting policies and estimates and their related application are discussed below.

*Allowance for Credit Losses* 

The allowance for credit losses (ACL) represents the estimated probable credit losses in our loan and investment portfolios and is estimated as of December 31, 2025, using CECL. The Company's method for assessing the appropriateness of the ACL includes specific allowances for individually-analyzed loans, formula allowance factors for pools of credits, and qualitative considerations which include, among other things, current and forecast economic and environmental factors. Allowance factors for loan pools are based on historical loss experience by product type.

Management estimates the ACL balance using relevant information from internal and external sources relating to past events, current conditions, and reasonable and supportable forecasts. The allowance for credit losses is measured on a collective (pool) basis when similar risk characteristics exist. Historical credit loss experience provides the basis for the estimation of expected credit losses, which captures loan balances as of a point in time to form a cohort, and then tracks the respective losses generated by that cohort of loans over the remaining life. The Company has identified and accumulated loan cohort historical loss data beginning with the first quarter of 2006 and through the current period. Adjustments to historical loss information are made using qualitative adjustments for differences in relevant current and forecasted loan-specific risk characteristics, such as the historical timing of losses relative to the loan origination.

A significant amount of the allowance for credit losses is measured on a collective (pool) basis by loan and investment security type when similar risk characteristics exist. Pools are determined based primarily on regulatory reporting codes as the loans and investment securities within each pool share similar risk characteristics and there is sufficient historical peer loss data from the FFIEC to provide statistically meaningful support in the models developed for pools where the Company has limited historical loss experience. Reserves for credit losses identified on a pooled basis are then adjusted for qualitative factors to reflect current conditions. The most significant components of qualitative factors used to estimate the ACL are adjustments relating to prevailing economic conditions, concentrations within the loan portfolio, internal factors, and external factors. These estimates are subject to significant judgment and could potentially significantly increase or decrease the ACL.

Certain loans are not included in pools of loans that are collectively evaluated. The segregation of these loans is based on the results from an analysis of individually identified credits that meet management's criteria for individual evaluation. These loans are first reviewed individually to determine if such loans have a unique risk profile that would warrant individual

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*<u>[**Table of Contents**](#id2ed6aa3183b4645838731577039388e_10)</u>* 

evaluation. When management has concluded that it is probable that the borrower will be unable to pay all amounts due under the original contractual terms, the loan is removed from collectively evaluated loan pools. The loan is reviewed and evaluated individually by management for loss potential by evaluating sources of repayment, including collateral, as applicable. A specified allowance for credit losses is established when necessary.

Because current economic conditions and forecasts can change and future events make it inherently difficult to predict the anticipated amount of estimated credit losses on loans, management's determination of the appropriateness of the ACL could change significantly. It is difficult to estimate how potential changes in any one economic factor or input might affect the overall allowance. A wide variety of factors and inputs are considered in estimating the allowance and changes in those factors and inputs may not occur at the same rate and may not be consistent across all product types. Additionally, changes in factors and inputs may move inversely in relation to one another, such that improvement in one factor or input may offset deterioration in another. Thus, as a result of the significant size of the loan portfolio, the numerous assumptions in the model, and the high degree of potential change in such assumptions, there is a high degree of subjectivity in the reported amounts. Management believes the ACL is adequate as of December 31, 2025.

*Fair Value of Junior Subordinated Debentures (TruPS)*

The Company's junior subordinated debentures (TruPS) are measured at fair value. The accounting standards related to fair value measurements define how applicable assets and liabilities are to be valued and require expanded disclosures in regard to financial instruments carried at fair value. The fair value measurement accounting standard establishes a hierarchical disclosure framework associated with the level of pricing observability utilized in measuring financial instruments at fair value. The degree of judgment utilized in measuring the fair value of financial instruments generally correlates to the level of pricing observability. Financial instruments with readily available actively quoted prices, or whose fair value can be measured from actively quoted prices of related financial instruments, generally will have a higher degree of pricing observability and a lesser degree of judgment utilized in measuring fair value. Conversely, financial instruments that are traded infrequently or not quoted in an active market will generally have little or no pricing observability and a higher degree of subjectivity. Pricing observability is impacted by a number of factors, including the type of financial instrument, whether the financial instrument is new to the market, and the characteristics specific to the transaction. Determining fair values under the accounting standards may include judgments related to measurement factors that may vary from actual transactions executed in the marketplace. For example, fluctuations in financial market interest rates can have a significant impact on the fair value determination, as well as the Company's selection of bond credit ratings used in pricing modeling. Fair value adjustments related to TruPS resulted in a recorded loss of $486,000 for the year ended December 31, 2025, and a recorded loss of $368,000 for the year ended December 31, 2024. (See Notes <u>[10](#id2ed6aa3183b4645838731577039388e_127)</u> and <u>[15](#id2ed6aa3183b4645838731577039388e_145)</u> of the *Notes to Consolidated Financial Statements* for additional information about financial instruments carried at fair value.)

*Other Accounting Policies and Estimates that are Not Considered Critical*

On an ongoing basis, the Company evaluates its estimates, including those that may materially affect the financial statements and are related to investments, fair value measurements, retirement plans, and intangible assets. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The Company's policies related to these estimates can be found in <u>[Note 1](#id2ed6aa3183b4645838731577039388e_94)</u> of the *Notes to Consolidated Financial Statements*.

**Item 7A - Quantitative and Qualitative Disclosures about Market Risk**

Not required for smaller reporting companies.

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*<u>[**Table of Contents**](#id2ed6aa3183b4645838731577039388e_10)</u>* 

**Item 8 - Financial Statements and Supplementary Data**

---

| | |
|:---|:---|
| **Index to Consolidated Financial Statements:** | |
| <u>[Report of Independent Registered Public Accounting Firm](#id2ed6aa3183b4645838731577039388e_67) (PCAOB ID: 23)</u> | <u>[45](#id2ed6aa3183b4645838731577039388e_67)</u> |
| <u>[Consolidated Balance Sheets](#id2ed6aa3183b4645838731577039388e_70)</u> | <u>[47](#id2ed6aa3183b4645838731577039388e_70)</u> |
| <u>[Consolidated Statements of Income](#id2ed6aa3183b4645838731577039388e_76)</u> | <u>[48](#id2ed6aa3183b4645838731577039388e_76)</u> |
| <u>[Consolidated Statements of Comprehensive Income](#id2ed6aa3183b4645838731577039388e_82)</u> | <u>[49](#id2ed6aa3183b4645838731577039388e_82)</u> |
| <u>[Consolidated Statements Changes in Shareholders' Equity](#id2ed6aa3183b4645838731577039388e_85)</u> | <u>[49](#id2ed6aa3183b4645838731577039388e_85)</u> |
| <u>[Consolidated Statements of Cash Flows](#id2ed6aa3183b4645838731577039388e_88)</u>  | <u>[50](#id2ed6aa3183b4645838731577039388e_88)</u> |
| <u>[Notes to Consolidated Financial Statements](#id2ed6aa3183b4645838731577039388e_91)</u> | <u>[51](#id2ed6aa3183b4645838731577039388e_91)</u> |

---

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*<u>[**Table of Contents**](#id2ed6aa3183b4645838731577039388e_10)</u>* 

**Report of Independent Registered Public Accounting Firm**

To the Shareholders and the Board of Directors of

United Security Bancshares

***Opinion on the Financial Statements***

We have audited the accompanying consolidated balance sheets of United Security Bancshares (the "Company") as of December 31, 2025 and 2024, the related consolidated statements of income, comprehensive income, changes in shareholders' equity and cash flows for the years then ended, and the related notes (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2025 and 2024, and the consolidated results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

***Basis for Opinion***

These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures to respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

***Critical Audit Matter***

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

**Allowance for Credit Losses on Loans**

*Critical Audit Matter Description*

As described in Notes 1 and 3 to the consolidated financial statements, the Company's measurement of expected credit losses on loans is based on relevant available information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. The allowance for credit losses is measured on a collective (pool) basis when similar risk characteristics exist. Historical credit loss experience provides the basis for the estimation of expected credit losses, which captures loan balances as of a point in time to form a cohort, and then tracks the respective losses generated by that cohort of loans over the remaining life. The cumulative loss rate used as the basis for the estimate of credit losses is comprised of the Company's historical loss experience from 2006 to 2025, which is adjusted for certain qualitative factors to reflect the extent to which management expects current conditions and reasonable and supportable forecasts to differ from the conditions that existed for the period over which historical information was evaluated. The Company's allowance for credit losses on loans was $14,838,000 as of December 31, 2025.

We identified auditing the qualitative adjustments to the allowance for credit losses on loans as a critical audit matter. Estimation of the lifetime expected credit losses for loans, particularly as it relates to the qualitative factors, requires significant

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*<u>[**Table of Contents**](#id2ed6aa3183b4645838731577039388e_10)</u>* 

management judgment. Auditing management's judgments and assumptions involved significant audit effort as well as especially challenging and subjective auditor judgment when performing audit procedures and evaluating the results of those procedures.

*How We Addressed the Matter in Our Audit*

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. Our audit procedures related to the qualitative adjustments within the allowance for credit losses on loans included the following, among others:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Evaluating the appropriateness of the methodology used.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Evaluating the reasonableness of the qualitative adjustments used by management by comparing the qualitative adjustments to the relevant internal and external data, including historical trends.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Testing the mathematical accuracy of the computation, including testing completeness and accuracy of the internal data used and evaluating the relevance and reliability of the external data used in the calculation, the historical loss rates and qualitative adjustments determined by management and used in the calculation.

/s/ Baker Tilly US, LLP

San Francisco, California

March 25, 2026

We have served as the Company's auditor since 1999.

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*<u>[**Table of Contents**](#id2ed6aa3183b4645838731577039388e_10)</u>* 

**United Security Bancshares and Subsidiaries**

**Consolidated Balance Sheets**

**December 31, 2025, and 2024** 

---

| | | |
|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;*(In thousands except share data)* | **December 31, 2025** | **December 31, 2024** |
| **Assets** |  |  |
| &nbsp;&nbsp;&nbsp;Cash and cash equivalents | $120955 | $56211 |
| &nbsp;&nbsp;&nbsp;Investment securities (at fair value) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Available-for-sale (AFS) debt securities net of allowance for credit losses of $0 (amortized cost of $154,517 and $179,753, respectively) | 139823 | 157382 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Marketable equity securities | 3432 | 3326 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total investment securities | 143255 | 160708 |
| &nbsp;&nbsp;&nbsp;Loans | 917528 | 930244 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Unearned fees and unamortized loan origination costs - net | (2101) | (1782) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Allowance for credit losses - loans | (14838) | (16046) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net loans | 900589 | 912416 |
| &nbsp;&nbsp;&nbsp;Premises and equipment - net | 9434 | 8668 |
| &nbsp;&nbsp;&nbsp;Accrued interest receivable | 7160 | 8104 |
| &nbsp;&nbsp;&nbsp;Other real estate owned ("OREO") | 8185 | 4582 |
| &nbsp;&nbsp;&nbsp;Goodwill | 4488 | 4488 |
| &nbsp;&nbsp;&nbsp;Deferred tax assets - net | 12076 | 14419 |
| &nbsp;&nbsp;&nbsp;Cash surrender value of life insurance - net | 21253 | 20692 |
| &nbsp;&nbsp;&nbsp;Investment in limited partnerships | 4275 | 4275 |
| &nbsp;&nbsp;&nbsp;Operating lease right-of-use assets | 3190 | 3069 |
| &nbsp;&nbsp;&nbsp;Other assets | 13453 | 14086 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total assets** | $1248313 | $1211718 |
| **Liabilities & Shareholders' Equity** |  |  |
| **Liabilities** |  |  |
| &nbsp;&nbsp;&nbsp;Deposits |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Noninterest-bearing | $421897 | $360152 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest-bearing | 666883 | 697470 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total deposits | 1088780 | 1057622 |
| &nbsp;&nbsp;&nbsp;Operating lease liabilities | 3355 | 3161 |
| &nbsp;&nbsp;&nbsp;Other liabilities | 10199 | 9001 |
| &nbsp;&nbsp;&nbsp;Junior subordinated debentures (at fair value) | 6296 | 11572 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total liabilities** | 1108630 | 1081356 |
| Commitments and contingencies (<u>[Note 14](#id2ed6aa3183b4645838731577039388e_139)</u>) |  |  |
| **Shareholders' Equity** |  |  |
| &nbsp;&nbsp;&nbsp;Common stock, no par value; 20,000,000 shares authorized; issued and outstanding: 17,582,116 at December 31, 2025 and 17,364,894 at December 31, 2024 | 62236 | 61267 |
| &nbsp;&nbsp;&nbsp;Retained earnings | 87324 | 83447 |
| &nbsp;&nbsp;&nbsp;Accumulated other comprehensive loss, net of tax | (9877) | (14352) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total shareholders' equity** | 139683 | 130362 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total liabilities and shareholders' equity** | $1248313 | $1211718 |

---

See accompanying notes to consolidated financial statements.

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*<u>[**Table of Contents**](#id2ed6aa3183b4645838731577039388e_10)</u>* 

**United Security Bancshares and Subsidiaries**

**Consolidated Statements of Income**

**Years Ended December 31, 2025, and 2024** 

---

| | | |
|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;*(In thousands except share and per-share data)* | **2025** | **2024** |
| **Interest Income:** |  |  |
| Interest and fees on loans | $55426 | $55236 |
| Interest on investment securities | 4380 | 5209 |
| Interest on deposits in FRB | 1006 | 306 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total interest income | 60812 | 60751 |
| **Interest Expense:** |  |  |
| Interest on deposits | 11313 | 9578 |
| Interest on other borrowed funds | 728 | 4323 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total interest expense | 12041 | 13901 |
| **Net Interest Income** | 48771 | 46850 |
| Provision for credit losses | 5574 | 2963 |
| **Net Interest Income after Provision for Credit Losses** | 43197 | 43887 |
| **Noninterest Income:** |  |  |
| Customer service fees | 2954 | 2918 |
| Increase in cash surrender value of bank-owned life insurance | 561 | 551 |
| &nbsp;&nbsp;Gain on proceeds from bank-owned life insurance |  | 573 |
| &nbsp;&nbsp;Gain (loss) on fair value and partial redemption of junior subordinated debentures (TruPS) | 391 | (614) |
| Other | 1180 | 1285 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total noninterest income | 5086 | 4713 |
| **Noninterest Expense:** |  |  |
| &nbsp;&nbsp;&nbsp;Salaries and employee benefits | 15557 | 13884 |
| &nbsp;&nbsp;&nbsp;Occupancy expense | 3863 | 3686 |
| &nbsp;&nbsp;&nbsp;Data processing | 1623 | 1114 |
| &nbsp;&nbsp;&nbsp;Technology | 2766 | 2680 |
| &nbsp;&nbsp;&nbsp;Professional fees | 1643 | 1716 |
| &nbsp;&nbsp;&nbsp;Loan-related expenses | 343 | 861 |
| &nbsp;&nbsp;&nbsp;Merger-related expenses | 674 |  |
| &nbsp;&nbsp;&nbsp;Regulatory assessments | 698 | 697 |
| &nbsp;&nbsp;&nbsp;Director fees | 780 | 436 |
| &nbsp;&nbsp;&nbsp;Other | 3641 | 3206 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total noninterest expense | 31588 | 28280 |
| **Income before provision for taxes** | 16695 | 20320 |
| **Provision for income taxes** | 4407 | 5537 |
| **Net income** | $12288 | $14783 |
| **Net income per common share** |  |  |
| &nbsp;&nbsp;&nbsp;Basic | $0.70 | $0.85 |
| &nbsp;&nbsp;&nbsp;Diluted | $0.70 | $0.85 |
| **Weighted average common shares outstanding** |  |  |
| &nbsp;&nbsp;&nbsp;Basic | 17493576 | 17312530 |
| &nbsp;&nbsp;&nbsp;Diluted | 17498322 | 17314951 |

---

See accompanying notes to consolidated financial statements.

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*<u>[**Table of Contents**](#id2ed6aa3183b4645838731577039388e_10)</u>* 

**United Security Bancshares and Subsidiaries**

**Consolidated Statements of Comprehensive Income**

**Years Ended December 31, 2025, and 2024** 

---

| | | |
|:---|:---|:---|
| &nbsp;&nbsp;*(In thousands)* | **2025** | **2024** |
| Net Income | $12288 | $14783 |
| &nbsp;&nbsp;&nbsp;Unrealized holding gains on AFS debt securities | 7677 | 753 |
| &nbsp;&nbsp;&nbsp;Unrealized gain (loss) on unrecognized post-retirement costs | 3 | (24) |
| &nbsp;&nbsp;&nbsp;Unrealized (loss) gain on junior subordinated debentures | (396) | 245 |
| &nbsp;&nbsp;&nbsp;Reclassification effect of partial redemption of junior subordinated debentures | (834) |  |
| Other comprehensive income, before tax | 6450 | 974 |
| &nbsp;&nbsp;&nbsp;Tax expense related to AFS debt securities | (2269) | (223) |
| &nbsp;&nbsp;&nbsp;Tax (expense) benefit related to unrecognized post-retirement costs | (1) | 7 |
| &nbsp;&nbsp;&nbsp;Tax benefit (expense) related to junior subordinated debentures | 117 | (72) |
| &nbsp;&nbsp;&nbsp;Tax effect on reclassification of partial redemption of junior subordinated debentures | 178 |  |
| Total other comprehensive income | 4475 | 686 |
| Comprehensive income | $16763 | $15469 |

---

See accompanying notes to consolidated financial statements.

**United Security Bancshares and Subsidiaries**

**Consolidated Statements of Changes in Shareholders' Equity**

**Years Ended December 31, 2025, and 2024** 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Common Stock** | **Common Stock** | | **Accumulated Other Comprehensive Loss** | |
|<br>&nbsp;&nbsp;&nbsp;*(In thousands, except share data)* | **Number of Shares** | **Amount** |<br>**Retained Earnings** | **Accumulated Other Comprehensive Loss** |<br>**Total** |
| **Balance December 31, 2023 (1)** | 17167895 | $60585 | $76995 | $(15038) | $122542 |
| &nbsp;&nbsp;Other comprehensive income |  |  |  | 686 | 686 |
| &nbsp;&nbsp;Dividends on common stock ($0.36 per share) |  |  | (6248) |  | (6248) |
| &nbsp;&nbsp;Dividends payable ($0.12 per share) |  |  | (2083) |  | (2083) |
| &nbsp;&nbsp;Restricted stock units released | 28710 |  |  |  |  |
| &nbsp;&nbsp;Restricted stock award granted | 168289 |  |  |  |  |
| &nbsp;&nbsp;Stock-based compensation expense, net |  | 682 |  |  | 682 |
| &nbsp;&nbsp;Net income |  |  | 14783 |  | 14783 |
| **Balance December 31, 2024 (2)** | 17364894 | 61267 | 83447 | (14352) | 130362 |
| &nbsp;&nbsp;Other comprehensive income |  |  |  | 4475 | 4475 |
| &nbsp;&nbsp;Dividends on common stock ($0.36 per share) |  |  | (6300) |  | (6300) |
| &nbsp;&nbsp;Dividends payable ($0.12 per share) |  |  | (2111) |  | (2111) |
| &nbsp;&nbsp;Restricted stock units released | 6917 |  |  |  |  |
| &nbsp;&nbsp;Restricted stock award granted | 210305 |  |  |  |  |
| &nbsp;&nbsp;Stock-based compensation expense, net |  | 969 |  |  | 969 |
| &nbsp;&nbsp;Net income |  |  | 12288 |  | 12288 |
| **Balance December 31, 2025 (3)** | 17582116 | $62236 | $87324 | $(9877) | $139683 |
| (1) Excludes 7,000 unvested restricted shares |  |  |  |  |  |
| (2) Excludes 15,538 unvested restricted shares |  |  |  |  |  |
| (3) Excludes 13,787 unvested restricted shares |  |  |  |  |  |

---

See accompanying notes to consolidated financial statements.

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*<u>[**Table of Contents**](#id2ed6aa3183b4645838731577039388e_10)</u>* 

**United Security Bancshares and Subsidiaries**

**Consolidated Statements of Cash Flows**

**Years Ended December 31, 2025, and 2024** 

---

| | | |
|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;*(In thousands)* | **2025** | **2024** |
| **Cash Flows From Operating Activities:** |  |  |
| &nbsp;&nbsp;&nbsp;Net Income | $12288 | $14783 |
| &nbsp;&nbsp;&nbsp;Adjustments to reconcile net income to cash provided by operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;Provision for credit losses | 5574 | 2963 |
| &nbsp;&nbsp;&nbsp;Depreciation and amortization | 1458 | 1469 |
| &nbsp;&nbsp;&nbsp;Amortization of operating lease right-of-use assets | 829 | 646 |
| &nbsp;&nbsp;&nbsp;Amortization of premium/discount on investment securities, net | 371 | 417 |
| &nbsp;&nbsp;Operating lease payments | (755) | (650) |
| &nbsp;&nbsp;&nbsp;Decrease (increase) in accrued interest receivable | 944 | (176) |
| &nbsp;&nbsp;&nbsp;(Decrease) increase in accrued interest payable | (12) | 4 |
| &nbsp;&nbsp;&nbsp;Decrease in unearned fees and unamortized loan origination costs, net | 319 | 483 |
| &nbsp;&nbsp;&nbsp;(Increase) decrease in income taxes receivable | (510) | 1272 |
| &nbsp;&nbsp;&nbsp;Stock-based compensation expense and tax benefit | 969 | 682 |
| &nbsp;&nbsp;&nbsp;Provision (benefit) for deferred income taxes | 284 | (472) |
| &nbsp;&nbsp;&nbsp;Increase (decrease) in accounts payable and accrued liabilities | 407 | (368) |
| &nbsp;&nbsp;&nbsp;Write down on other real estate owned | 73 |  |
| &nbsp;&nbsp;&nbsp;(Gain) loss on marketable equity securities | (106) | 28 |
| &nbsp;&nbsp;&nbsp;Loss on fair value option of junior subordinated debentures | 90 | 614 |
| &nbsp;&nbsp;&nbsp;Gain on partial redemption of junior subordinated debentures | (481) |  |
| &nbsp;&nbsp;&nbsp;Gain on calls of investment securities | (17) |  |
| &nbsp;&nbsp;Gain on proceeds from bank-owned life insurance |  | (573) |
| &nbsp;&nbsp;&nbsp;Increase in cash surrender value of bank-owned life insurance | (561) | (551) |
| &nbsp;&nbsp;&nbsp;Loss (gain) on sale of assets | 57 | (11) |
| &nbsp;&nbsp;&nbsp;Net decrease (increase) in other assets | 835 | (925) |
| &nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by operating activities | 22056 | 19635 |
| **Cash Flows From Investing Activities:** |  |  |
| &nbsp;&nbsp;&nbsp;Purchases of FHLB stock, FRB stock, and other securities | (27) | (16) |
| &nbsp;&nbsp;&nbsp;Maturities and calls of available-for-sale securities | 14415 | 15609 |
| &nbsp;&nbsp;&nbsp;Principal payments on available-for-sale securities | 10468 | 8611 |
| &nbsp;&nbsp;&nbsp;Net decrease (increase) in loans | 3341 | (11534) |
| &nbsp;&nbsp;&nbsp;Proceeds from bank-owned life insurance |  | 2397 |
| &nbsp;&nbsp;&nbsp;Capital expenditures of premises and equipment | (2281) | (1039) |
| &nbsp;&nbsp;&nbsp;Investment in limited partnerships |  | (1075) |
| &nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by investing activities | 25916 | 12953 |
| **Cash Flows From Financing Activities:** |  |  |
| &nbsp;&nbsp;&nbsp;Increase in demand deposit and savings accounts | 32736 | 46638 |
| &nbsp;&nbsp;&nbsp;Net (decrease) increase in time deposits | (1579) | 6508 |
| &nbsp;&nbsp;&nbsp;Partial redemption of junior subordinated debentures | (6000) |  |
| &nbsp;&nbsp;&nbsp;Net decrease is short-term borrowings |  | (62000) |
| &nbsp;&nbsp;&nbsp;Dividends on common stock | (8385) | (8307) |
| &nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by (used in) financing activities | 16772 | (17161) |
| **Net increase in cash and cash equivalents** | 64744 | 15427 |
| **Cash and cash equivalents at beginning of year** | 56211 | 40784 |
| **Cash and cash equivalents at end of year** | $120955 | $56211 |

---

See accompanying notes to consolidated financial statements.

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*<u>[**Table of Contents**](#id2ed6aa3183b4645838731577039388e_10)</u>* 

**Notes to Consolidated Financial Statements**

***1.Organization and Summary of Significant Accounting and Reporting Policies***

***Basis of Presentation*** – The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States, with rules and regulations of the Securities and Exchange Commission (SEC), and with prevailing practices within the banking industry. The consolidated financial statements include the accounts of United Security Bancshares, and its wholly-owned subsidiaries, United Security Bank and subsidiary (the "Bank") and USB Capital Trust II (the "Trust"). The Trust is deconsolidated pursuant to Accounting Standards Codification (ASC) 810. As a result, the Trust Preferred Securities are not presented on the Company's consolidated financial statements as equity, but instead they are presented as junior subordinated debentures (TruPS) and are presented as a separate liability category (see <u>[Note 10](#id2ed6aa3183b4645838731577039388e_127)</u> to the Company's consolidated financial statements). Intercompany accounts and transactions have been eliminated in consolidation. In the following notes, references to the Bank are references to United Security Bank. References to the Company are references to United Security Bancshares (including the Bank). United Security Bancshares operates as one business segment providing banking services to commercial establishments and individuals primarily in the San Joaquin Valley, and the greater Oakhurst/East Madera County area, as well as the Campbell area of Santa Clara County. The Company's participation loans with other financial institutions are primarily in the state of California.

***Nature of Operations*** – United Security Bancshares is a bank holding company, incorporated in the state of California for the purpose of acquiring all the capital stock of the Bank through a holding company reorganization (the "Reorganization") of the Bank. United Security Bancshares has provided the Company greater operating and financial flexibility and has permitted expansion into a broader range of financial services and other business activities.

The Bank was founded in 1987 and currently operates 13 branches, one commercial lending office, one consumer lending office, and one construction lending office in an area from eastern Madera County to western Fresno County, as well as Taft and Bakersfield in Kern County, and Campbell in Santa Clara County. The Bank's primary source of revenue is interest income from loans to customers, who are predominantly small- and middle-market businesses and individuals. The Bank engages in a full complement of lending activities, including real estate mortgage, commercial and industrial, real estate construction, agricultural, and consumer loans, with particular emphasis on short- and medium-term obligations.

The Bank offers a wide range of deposit instruments. These include personal and business checking accounts and savings accounts, interest-bearing negotiable order of withdrawal (NOW) accounts, money market accounts and time certificates of deposit. Most of the Bank's deposits are attracted from small- and medium-sized business-related sources and from individuals.

The Bank also offers a wide range of specialized services designed to attract and service the needs of commercial customers and account holders. These services include cashiers checks, foreign drafts, and person-to-person and bank-to-bank transfers for consumer customers. In addition, the Bank offers internet banking services to its commercial and retail customers. The Bank does not operate a trust department; however, it makes arrangements with its correspondent bank to offer trust services to its customers upon request.

The Bank's wholly-owned subsidiary, York Monterey Properties, Inc. (YMP), was incorporated in California on April 17, 2019, for the purpose of holding specific parcels of real estate acquired by the Bank through, or in lieu of, loan foreclosures in Monterey County. These properties exceeded the 10-year holding period for other real estate owned, or "OREO." YMP was funded with a $250,000 cash investment and the transfer of those parcels by the Bank to YMP. As of December 31, 2025, and 2024, these properties are included within the consolidated balance sheets as part of OREO.

***Proposed Merger -*** On December 16, 2025, the Company announced the signing of an Agreement and Plan of Merger with Community West Bancshares (NASDAQ: CWBC), headquartered in Fresno, California, together with its banking subsidiary, Community West Bank, pursuant to which the companies will combine in an all-stock merger transaction. Under the terms of the agreement, United Security Bancshares will merge with and into Community West Bancshares and United Security Bank will merge with and into Community West Bank. The United Security Bancshares and Community West Bancshares Boards of Directors have unanimously approved the transaction. The merger is expected to close in the second quarter of 2026.

***Use of Estimates in the Preparation of Financial Statements*** - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

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Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for credit losses and fair value of TruPS.

***Significant Accounting Policies*** - The Company follows accounting standards set by the Financial Accounting Standards Board, commonly referred to as "FASB." FASB sets generally accepted accounting principles (GAAP) that the Company follows to ensure the consistent reporting of its consolidated financial condition, consolidated results of operations, and consolidated cash flows. References to GAAP issued by FASB in these footnotes are to *FASB Accounting Standards Codification*, sometimes referred to as the Codification, or ASC. The following is a summary of significant policies:

*a.Cash and cash equivalents* – Cash and cash equivalents include cash on hand and amounts due from correspondent banks. At times throughout the year, balances can exceed FDIC insurance limits. Generally, federal funds sold and repurchase agreements are sold for one-day periods. The Bank did not have any repurchase agreements during 2025 or 2024. All cash and cash equivalents have maturities when purchased of three months or less.

*b.Investment Securities* - Debt securities classified as available-for-sale are reported at fair value, with unrealized gains and losses excluded from net income and reported, net of tax, as a separate component of comprehensive income (loss) and shareholders' equity. Debt securities classified as held-to-maturity are carried at amortized cost. Gains and losses on disposition are reported using the specific identification method for the adjusted basis of the securities sold. Premiums and discounts are recognized in interest income using the interest method over the period to maturity.

The Company periodically reviews its investment portfolio on an individual security basis. Securities that are to be held for indefinite periods of time are classified as available-for-sale. Those include, but are not limited to, securities that management intends to use as part of its asset/liability management strategy, as well as those which may be sold in response to changes in interest rates, changes in prepayments, or other factors. Securities which the Company has the ability and intent to hold to maturity are classified as held-to-maturity. There were no securities classified as held-to-maturity as of December 31, 2025 and 2024.

Available-for-sale debt securities in an unrealized loss position are evaluated when the amortized cost of a security exceeds its fair value. If it is determined that it will be necessary to sell a security before the fair value increases to the amortized cost, the amortized cost will be written down to fair value through income. At that point, any previously recorded allowance for credit loss (ACL) would be written off and any additional impairment would be recognized through earnings. If it is believed that the Company will not be required to sell a security before the fair value recovers, a determination will be made as to whether or not the decline in fair value is the result of a credit loss or noncredit factors such as changes in current market rates. If it is determined that the decline is due to a credit loss, the amount recognized as the credit loss will be determined using a discounted cash flow approach. Cash flows expected to be collected would be discounted at the effective interest rate established at acquisition. 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 would be 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.

Changes in the allowance for credit losses on investments are recorded as credit loss expense (or reversal). Losses are charged against the allowance when management believes the uncollectibility of an available-for-sale security is confirmed or when either of the criteria regarding intent or requirement to sell is met.

Marketable equity securities are reported at fair value with gains and losses included in noninterest income on the Consolidated Statements of Income.

*c.Loans* - Interest income on loans is credited to income as earned and is calculated by using the simple interest method on the daily balance of the principal amounts outstanding. With the exception of student loans, loans are typically placed on non-accrual status when principal or interest is past due for 90 days and/or when management believes the collection of amounts due is doubtful. Student loans are typically placed on non-accrual status when principal or interest is past due for 120 days. For loans placed on nonaccrual status, the accrued and unpaid interest receivable may be reversed based upon management's assessment of collectability, and interest is thereafter credited to principal to the extent necessary to eliminate doubt as to the collectability of the net carrying amount of the loan.

Nonrefundable fees and related direct costs associated with the origination or purchase of loans are deferred and netted against outstanding loan balances. The net deferred fees and costs are generally amortized into interest income over the

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loan's term using the simple interest method. Other credit-related fees, such as standby letters of credit fees and loan placement fees, are recognized as noninterest income during the period the related service is performed.

*d.Allowance for credit losses on loans and* r*eserve for unfunded loan commitments* - The Company utilizes the Current Expected Credit Loss ("CECL") cohort methodology analysis which relies on segmenting the loan portfolio into pools with similar risks, tracking the performance of the pools over time, and using the data to determine pool loss experience. Management estimates the allowance for credit loss balance using relevant available information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. The cumulative loss rate used as the basis for the estimate of credit losses is comprised of the Company's historical loss experience from 2006 to 2025.

Unfunded loan commitment reserves are included in other liabilities in the consolidated balance sheets. Provisions for unfunded loan commitments are included in provision for credit losses in the consolidated statements of income.

The Company analyzes risk characteristics inherent in each loan portfolio segment as part of the quarterly review of the adequacy of the allowance for loan losses. The following summarizes the loan portfolio's key risk characteristics:

*<u>Commercial and business loans</u>* – Commercial loans are subject to the effects of economic cycles and tend to exhibit increased risk as economic conditions deteriorate, or if an economic downturn is prolonged. The Company considers this segment to be one of higher risk given the size of individual loans and the balance in the overall portfolio.

*<u>Government program loans</u>* – This is a relatively small part of the Company's loan portfolio, but has historically had a high percentage of loans that have migrated from pass to substandard given their vulnerability to economic cycles.

*<u>Commercial real estate loans</u>* – This segment is considered to have more risk in part because of the vulnerability of commercial businesses to economic cycles as well as the exposure to fluctuations in real estate prices because most of these loans are secured by real estate. Losses in this segment have however been historically low because most of the loans are real-estate secured, and the bank maintains appropriate loan-to-value ratios.

*<u>Residential mortgages</u>* – This segment is considered to have low risk factors based on the Company's experience and peer statistics. These loans are secured by first deeds of trust.

*<u>Home improvement and home equity loans</u>* – Because of their junior lien position, these loans have an inherently higher risk level.

*<u>Real estate construction and development loans</u>* –This segment of loans is considered to have a higher risk profile due to construction and market value issues in conjunction with normal credit risks.

*<u>Agricultural loans</u>* – This segment is considered to have risks associated with weather, insects, and marketing issues. In addition, concentrations in certain crops or certain agricultural areas can increase risk. Additionally, California may experience severe droughts, which can significantly harm the business of customers and the credit quality of the loans to those customers. Water resources and related issues affecting customers are closely monitored. Signs of deterioration within the loan portfolio are also monitored in an effort to manage credit quality and work with borrowers where possible to mitigate any losses.

*<u>Installment and student loans</u>* – This segment, which includes consumer loans, student loans, overdrafts, and overdraft protection lines, is considered higher risk because most of the loans are unsecured. Additionally, in the case of student loans, there are increased risks associated with liquidity due to the time lag between funding of a student loan and eventual repayment.

*e.Nonaccrual loans -* Loans are placed on non-accrual status under the following circumstances:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• When there is doubt regarding the full repayment of interest and principal.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• When principal and/or interest on the loan has been in default for a period of 90 days or more, unless the asset is both well secured and in the process of collection that will result in repayment in the near future.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• When the loan is identified as having loss elements and/or is risk rated "8" Doubtful.

When loans are placed on nonaccrual status, the accrual of interest for financial statement purposes is discontinued. Previously accrued but unpaid interest is reversed and charged against interest income. Student loans past due more than

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90-days are not placed on nonaccrual status, but are charged-off once 120-days past due. See "<u>[Note 4](#id2ed6aa3183b4645838731577039388e_106)</u>- Student Loans" for specific information on the student loan portfolio.

When a loan is placed on non-accrual status and subsequent payments of interest (and principal) are received, the interest received may be accounted for in two separate ways.

*<u>Cost recovery method</u>*: If the loan is in doubt as to full collection, the interest received in subsequent payments is reversed out of interest income and treated as a reduction of principal for financial reporting purposes.

*<u>Cash basis</u>*: This method is only used if the recorded investment or total contractual amount is expected to be fully collectible, under which circumstances the subsequent payments of interest is credited to interest income as received.

Loans on non-accrual status may be returned to accruing status when all delinquent principal and/or interest has been brought current, there is no identified element of loss (on the contractual amount of the loan), and current and continued satisfactory performance is expected. Repayment ability is generally demonstrated through the timely receipt of at least six monthly payments on a loan with monthly amortization.

*f.Individually-evaluated loans -* When a financial asset does not share similar risk characteristics with the pool being evaluated, it is evaluated individually.

*g.Collateral-dependent loans -* A loan is deemed collateral-dependent when either, it enters foreclosure, or it is determined that the borrower is experiencing financial difficulties. Repayment of these loans is expected to be provided substantially through the operation or sale of the collateral.

*h.Bank-owned life insurance and company-owned life insurance policies* - The Company owns bank-owned life insurance policies (BOLI) and company-owned life insurance policies (COLI) on certain officers, including those covered under the salary continuation plan, with a portion of the post-retirement benefit available to the officers' beneficiaries. The initial net cash surrender value of BOLI and COLI policies is equivalent to the premium paid, and adds income through non-taxable increases in cash surrender value, net of the cost of insurance, plus any death benefits ultimately received by the Company.

*i.Off-balance sheet financial instruments -* In order to meet the needs of its customers, the Company offers financial instruments including commitments to extend credit and standby letters of credit (SBLC). SBLCs are used to guarantee financing arrangements or performance with third parties.

*j.Premises and equipment* - Premises and equipment are carried at cost less accumulated depreciation. Depreciation expense is computed principally on the straight-line method over the estimated useful lives of the assets. Estimated useful lives are as follows:

<u>Buildings</u> <u>31 years</u> <u>Furniture and equipment</u> <u>3 -7 years</u>

*k.Other-real-estate-owned* - Real estate properties acquired through, or in lieu of, loan foreclosure are to be sold and are initially recorded at fair value of the property, less estimated costs to sell. The excess, if any, of the loan amount over the fair value is charged to the allowance for credit losses. Subsequent declines in the fair value of other-real-estate-owned, along with related revenue and expenses from operations, are charged to noninterest expense.

*l.Investment in Limited Partnerships -* The Bank owns interests in local area limited partnerships which provide private capital for small- to mid-sized businesses. The investments are accounted for under the cost method.

*m.Goodwill* - Goodwill amounts resulting from acquisitions are considered to have an indefinite life and are not amortized. At December 31, 2025, and 2024, the Company reported goodwill totaling $4.5 million. The Company did not recognize any impairment charges on goodwill during 2025 or 2024.

*n.Income taxes* - Deferred income taxes result from the temporary differences between the financial reporting basis and the tax basis of the Company's assets and liabilities using the liability method, and are reflected at income tax rates applicable to the period in which the deferred tax assets or liabilities are expected to be realized or settled. Estimates are based on the enacted tax rate of the applicable period.

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*o.Net income per common share* - Basic income per common share is computed based on the weighted average number of common shares outstanding. Diluted income per share includes the effect of stock options and other potentially dilutive securities using the treasury stock method. If applicable, net income per common share is retroactively adjusted for all stock dividends declared.

*p.Cash flow reporting* - For purposes of reporting cash flows, cash and cash equivalents includes cash on hand, noninterest-bearing amounts due from banks, federal funds sold and securities purchased under agreements to resell. Federal funds and securities purchased under agreements to resell are generally sold for one-day periods. Net cash flows are reported for interest-bearing deposits with other banks, loans to customers, deposits held for customers, and short-term borrowings.

*q.Transfers of financial assets* - Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company, (2) the transferee obtains the right (free of conditions that constrain the taking advantage of that right, beyond a trivial benefit) to pledge or exchange the transferred assets, and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase before maturity.

*r.Stock based compensation -* The Company maintains a stock-based employee compensation plan, which is described more fully in "<u>[Note 12](#id2ed6aa3183b4645838731577039388e_133)</u> - Stock Based Compensation." All share-based payments to employees and directors, including grants of employee stock options and restricted stock units and awards, are recognized in the consolidated financial statements based on the grant date fair value of the award. The fair value is amortized over the requisite service period (generally the vesting period).

*s.Federal Home Loan Bank stock and Federal Reserve Bank stock* **-** As a member of the Federal Home Loan Bank of San Francisco (FHLB), the Company is required to maintain an investment in the capital stock of the FHLB. In addition, as a member of the Federal Reserve Bank of San Francisco (FRB), the Company is required to maintain an investment in the capital stock of the FRB. The investments in both the FHLB and the FRB are carried at cost in the accompanying consolidated balance sheets, are included in other assets, and are subject to certain redemption requirements by the FHLB and FRB. Stock redemptions are at the discretion of the FHLB and FRB.

While technically these are considered equity securities, there is no market for the FHLB or FRB stock; therefore, the shares are considered restricted investment securities. Management periodically evaluates the stock for other-than-temporary impairment through an assessment of the ultimate recoverability of cost rather than the recognition of temporary declines in value. The determination of the ultimate recoverability of cost is based upon (i) the significance and length of time of any decline in net assets of the FHLB or FRB compared to the capital stock amount of the FHLB or FRB, (ii commitments by the FHLB or FRB to make payments required by law or regulation and the level of such payments in relation to the operating performance of the FHLB or FRB, (iii) the impact of legislative and regulatory changes on institutions, and (iv) the liquidity position of the FHLB or FRB.

*t.Comprehensive income (loss)* - Comprehensive income (loss) is comprised of net income and other comprehensive income (loss). Other comprehensive income (loss) includes items recorded directly to equity, such as unrealized gains and losses on securities available-for-sale, unrecognized costs of salary continuation defined benefit plans, and unrealized gains and losses on trust preferred securities related to instrument-specific credit risk. Comprehensive income (loss) is presented in the "Consolidated Statements of Other Comprehensive Income."

*u.Segment reporting* - The Company's operations are solely in the financial services industry and provide its customers traditional banking and other financial services. The Company operates primarily in California's San Joaquin Valley. Management's operating decisions and performance assessment are based on an ongoing review of the Company's consolidated financial results. The Company is considered one operating segment for financial reporting purposes.

*v.Revenue from contracts with customers* - The Company records revenue from contracts with customers in accordance with ASC Topic 606, "Revenue from Contracts with Customers" (Topic 606). Under Topic 606, the Company must identify the contract with a customer, identify the performance obligations in the contract, determine the transaction price, allocate the transaction price to the performance obligations in the contract, and recognize revenue when (or as) the Company satisfies a performance obligation. The Company's primary sources of revenue are derived from interest earned on loans, investment securities, and other financial instruments that are not within the scope of Topic 606. The Company has evaluated the nature of its contracts with customers and determined that further disaggregation of revenue from contracts with customers into more granular categories beyond what is presented in the "Consolidated Statements of Income" is not warranted. The Company, in general, satisfies its performance obligations on its contracts with customers as services are rendered. Transaction prices are typically fixed and are charged either on a periodic basis or as activity warrants. Contracts evaluated under the scope of Topic 606 are primarily related to service charges, fees on deposit accounts, debit

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card fees, ITM processing fees, and other service charges, commissions and fees. Because performance obligations are satisfied as services are rendered and the transaction prices are fixed, there is little judgment involved in applying Topic 606 to the determination of the amount and timing of revenue from contracts with customers.

*w.Leases -* The Company recognizes lease assets and lease liabilities on the consolidated balance sheet. Disclosures related to key lease components and leasing arrangements are included within the footnotes. The Company combines lease and associated non-lease components by class of underlying asset in contract that meet certain criteria. The lease and related non-lease components have the same timing and pattern of transfer, and the lease component, when accounted for on a stand-alone basis, is classified as an operating lease.

*x.Recently Issued Accounting Standards -* 

In December 2023, the Financial Accounting Standards Board ("FASB") issued ASU 2023-09, *"Income Taxes (Topic 740): Improvements to Tax Disclosures."* This ASU requires disaggregated tax reconciliation disclosures and income tax expense detail. Tabular reconciliations and disclosure of specified categories of reconciling items are required as well as breakouts of certain reconciling items totaling more than 5%, by nature and jurisdiction. Qualitative disclosures of state and local jurisdictions are also required. The Bank adopted this standard on December 31, 2025, and incorporated the new requirements in "The Notes to Consolidated Financial Statements." Please see "<u>[Note 11](#id2ed6aa3183b4645838731577039388e_130)</u> - "Income Taxes."

*y.Subsequent events -* Subsequent events are events or transactions that occur after the balance sheet date but before financial statements are issued. Recognized subsequent events are events or transactions that provide additional evidence about conditions that existed at the date of the balance sheet, including the estimates inherent in the process of preparing financial statements. Nonrecognized subsequent events are events that provide evidence about conditions that did not exist at the date of the balance sheet but arose after that date.

***2.Investment Securities***

*Following is a comparison of the amortized cost and approximate fair value of available-for-sale debt securities at December 31, 2025, and December 31, 2024:*

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| | | | | |
|:---|:---|:---|:---|:---|
| &nbsp;&nbsp;*(In thousands)* | **Amortized Cost** | **Gross Unrealized Gains** | **Gross Unrealized Losses** | **Fair Value (Carrying Amount)** |
| **December 31, 2025** |  |  |  |  |
| Securities available for sale: |  |  |  |  |
| U.S. Government agencies | $1274 | $— | $(9) | $1265 |
| U.S. Government sponsored entities and agencies collateralized by mortgage obligations | 82814 | 14 | (9235) | 73593 |
| Municipal bonds | 49782 |  | (4918) | 44864 |
| Corporate bonds | 20647 | 34 | (580) | 20101 |
| &nbsp;&nbsp;&nbsp;Total securities available for sale | $154517 | $48 | $(14742) | $139823 |
| **December 31, 2024** |  |  |  |  |
| Securities available for sale: |  |  |  |  |
| U.S. Government agencies | $2666 | $— | $(22) | $2644 |
| U.S. Government sponsored entities and agencies collateralized by mortgage obligations | 92121 | 4 | (13244) | 78881 |
| Municipal bonds | 50082 |  | (7715) | 42367 |
| Corporate bonds | 34884 | 34 | (1428) | 33490 |
| &nbsp;&nbsp;&nbsp;Total securities available for sale | $179753 | $38 | $(22409) | $157382 |

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At December 31, 2025, and at December 31, 2024, an allowance for credit losses was neither required nor recorded for any investment securities.

No proceeds or gross realized gains or losses from sales of available-for-sale debt securities were recorded for the years ended December 31, 2025, and 2024. During the years ended December 31, 2025 and December 31, 2024, the Company sold no equity securities.

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As market interest rates or risks associated with a security's issuer continue to change and impact the actual or perceived values of investment securities, the Company may determine that selling these securities and using the proceeds to purchase securities that better suit the Company's current risk profile is appropriate and beneficial to the Company. There were no losses recorded due to credit-related factors for the periods ended December 31, 2025 or December 31, 2024.

*The amortized cost and fair value of securities available for sale at December 31, 2025, by contractual maturity, are shown below:*

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| | | |
|:---|:---|:---|
| | **December 31, 2025** | **December 31, 2025** |
|<br>&nbsp;&nbsp;&nbsp;*(In thousands)* | **Amortized Cost** | **Fair Value (Carrying Amount)** |
| Due in one year or less | $100 | $99 |
| Due after one year through five years | 37647 | 36021 |
| Due after five years through ten years | 33956 | 30110 |
| Due after ten years |  |  |
| U.S. Government sponsored entities & agencies collateralized by mortgage obligations | 82814 | 73593 |
|  | $154517 | $139823 |

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Actual cash flows may differ from contractual maturities because issuers have the right to call or prepay obligations with or without call or prepayment penalties. Contractual maturities on collateralized mortgage obligations cannot be anticipated due to allowed paydowns.

At December 31, 2025, and 2024, available-for-sale debt securities with an amortized cost of approximately $84.5 million and $90.7 million (fair value of $74.8 million and $77.8 million, respectively) were pledged as collateral for FHLB borrowings, securitized deposits, and public funds balances.

*The following summarizes available-for-sale debt securities in an unrealized loss position for which a credit loss has not been recorded at December 31, 2025, and 2024:*

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **Less than 12 Months** | **Less than 12 Months** | **12 Months or More** | **12 Months or More** | **Total** | **Total** |
|<br>*(In thousands)* | **Fair Value (Carrying Amount)** | **Unrealized Losses** | **Fair Value (Carrying Amount)** | **Unrealized Losses** | **Fair Value (Carrying Amount)** | **Unrealized Losses** |
| **December 31, 2025** |  |  |  |  |  |  |
| Securities available for sale: |  |  |  |  |  |  |
| U.S. Government agencies | $67 | $(1) | $1141 | $(8) | $1208 | $(9) |
| U.S. Government sponsored entities and agencies collateralized by mortgage obligations | 1455 | (1) | 70950 | (9234) | 72405 | (9235) |
| Municipal bonds |  |  | 44862 | (4918) | 44862 | (4918) |
| Corporate bonds |  |  | 9855 | (580) | 9855 | (580) |
| &nbsp;&nbsp;&nbsp;Total available-for-sale | $1522 | $(2) | $126808 | $(14740) | $128330 | $(14742) |
| **December 31, 2024** |  |  |  |  |  |  |
| Securities available for sale: |  |  |  |  |  |  |
| U.S. Government agencies | $— | $— | $2644 | $(22) | $2644 | $(22) |
| U.S. Government sponsored entities and agencies collateralized by mortgage obligations | 1640 | (6) | 76686 | (13238) | 78326 | (13244) |
| Municipal bonds | 2509 | (501) | 39858 | (7214) | 42367 | (7715) |
| Corporate bonds | 2791 | (28) | 24696 | (1400) | 27487 | (1428) |
| &nbsp;&nbsp;&nbsp;Total available-for-sale | $6940 | $(535) | $143884 | $(21874) | $150824 | $(22409) |

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*The following summarizes the number of available-for-sale debt securities in an unrealized loss position for which a credit loss has not been recorded at December 31, 2025, and 2024*

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| | | |
|:---|:---|:---|
| | **December 31,** | **December 31,** |
| | **2025** | **2024** |
| Securities available for sale: |  |  |
| &nbsp;&nbsp;U.S. Government agencies | 3 | 3 |
| &nbsp;&nbsp;U.S. Government sponsored entities and agencies collateralized by mortgage obligations | 38 | 43 |
| &nbsp;&nbsp;Municipal bonds | 45 | 46 |
| &nbsp;&nbsp;Corporate bonds | 3 | 8 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total available-for-sale | 89 | 100 |

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Management has evaluated each available-for-sale investment security in an unrealized loss position to determine if it would be required to sell the security before the fair value increases to amortized cost and whether any unrealized losses are due to credit losses or noncredit factors such as current market rates, which would not require the establishment of an allowance for credit losses. At December 31, 2025, the decline in fair value of the available-for-sale securities is attributed to changes in interest rates and not credit quality. Increases in interest rates during 2022 and 2023 led to large decreases in bond prices and increases in yields. The reductions in interest rates which began in 2024 have led to some price increases but have not returned bonds to their previous values. Because the Company does not intend to sell these securities, and because it is more likely than not that it will not be required to sell these securities before their anticipated recovery, the Company does not consider it necessary to provide an allowance for any available-for-sale security at December 31, 2025.

During the year ended December 31, 2025, the Company recognized a $106,000 gain related to one marketable equity security compared to a $28,000 loss recognized during the year ended December 31, 2024.

The Company had no held-to-maturity securities at December 31, 2025 and December 31, 2024.

***3. Loans***

*Loans, net of unearned fees and unamortized loan origination costs, are comprised of the following:*

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| | | | | |
|:---|:---|:---|:---|:---|
| | **December 31,** | **December 31,** | **December 31,** | **December 31,** |
| | **2025** | **2025** | **2024** | **2024** |
|<br>*(In thousands)* | **Loan Balance** | **% of Total Loans** | **Loan Balance** | **% of Total Loans** |
| Commercial and business loans | $46131 | 5.04% | $63653 | 6.86% |
| Government program loans | 53 | <0.01% | 62 | <0.01% |
| &nbsp;&nbsp;&nbsp;Total commercial and industrial | 46184 | 5.05% | 63715 | 6.86% |
| Real estate – mortgage: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Commercial real estate | 430261 | 47.00% | 419422 | 45.17% |
| &nbsp;&nbsp;&nbsp;Residential mortgages | 236466 | 25.83% | 247248 | 26.63% |
| &nbsp;&nbsp;&nbsp;Home improvement and home equity loans | 14 | <0.01% | 24 | <0.01% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total real estate mortgage | 666741 | 72.83% | 666694 | 71.81% |
| Real estate construction and development | 118841 | 12.98% | 111145 | 11.97% |
| Agricultural | 51868 | 5.67% | 49462 | 5.33% |
| Installment and student loans | 31793 | 3.47% | 37446 | 4.03% |
| &nbsp;&nbsp;&nbsp;Total loans | $915427 | 100.00% | $928462 | 100.00% |

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The Company's loans are predominantly in the San Joaquin Valley, and the greater Oakhurst/East Madera County area, as well as the Campbell area of Santa Clara County. The Company's participation loans with other financial institutions are primarily in the state of California.

Commercial and industrial loans are generally made to support the ongoing operations of small- and medium-sized commercial businesses. Commercial and industrial loans have a high degree of industry diversification and provide working capital,

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financing for the purchase of manufacturing plants and equipment, or funding for growth and general expansion of businesses. A substantial portion of commercial and industrial loans are secured by accounts receivable, inventory, leases, or other collateral, including real estate. While the remainder are unsecured, those extensions of credit are predicated upon the financial capacity of the borrower. Repayment of commercial and industrial loans generally comes from the cash flow of the borrower.

Real estate mortgage loans are secured by trust deeds on primarily commercial property and by trust deeds on single family residences. Repayment of real estate mortgage loans is generally from the cash flow of the borrower.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Commercial real estate mortgage loans comprise the largest segment of this loan category and are available on all types of income producing and commercial properties, including: office buildings and shopping centers, apartments and motels, owner-occupied buildings, manufacturing facilities, and other properties. Commercial real estate mortgage loans can also be used to refinance existing debt. Commercial real estate loans typically receive payment from the borrower's business operations, rental income associated with the real property, or personal assets.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Residential mortgage loans are provided to individuals to finance or refinance single-family residences. Residential mortgages are not a primary business line offered by the Company, and a majority are conventional mortgages that were purchased as a pool.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Home improvement and home equity loans comprise a relatively small portion of total real estate mortgage loans. Home equity loans are generally secured by junior trust deeds, but may be secured by 1<sup>st</sup> trust deeds.

Real estate construction and development loans consist of loans for residential and commercial construction projects, as well as land acquisition and development, or land held for future development. Loans in this category are secured by real estate including improved and unimproved land, as well as single-family residential, multi-family residential, and commercial properties in various stages of completion. All real estate loans have established equity requirements. Repayment on construction loans generally comes from long-term mortgages with other lending institutions obtained at completion of the project or from the sale of the constructed homes to individuals.

Agricultural loans are generally secured by land, equipment, inventory and receivables. Repayment is from the cash flow of the borrower.

Installment loans consist primarily of student loans as well as loans to individuals for household, family, and other personal expenditures such as credit cards, automobiles or other consumer items. See "<u>[Note 4](#id2ed6aa3183b4645838731577039388e_106)</u> - Student Loans" for specific information on the student loan portfolio.

In the normal course of business, the Company is party to financial instruments with off-balance sheet risk to meet the financing needs of its customers. At December 31, 2025, and 2024, these financial instruments include commitments to extend credit of $273.4 million and $204.0 million, respectively, and standby letters of credit of $4.9 million and $29.2 million, respectively. These instruments involve elements of credit risk in excess of the amount recognized on the consolidated balance sheet. The contract amounts of these instruments reflect the extent of the involvement the Company has in off-balance sheet financial instruments.

The Company's exposure to credit loss in the event of nonperformance by the counterparty to the financial instrument for commitments to extend credit and standby letters of credit is represented by the contractual amounts of those instruments. The Company applies the same credit policies as it does for on-balance sheet instruments.

Commitments to extend credit are agreements to lend to a customer, as long as there is no violation of any condition established in the contract. Substantially all of these commitments are at floating interest rates based on the prime rate. Commitments generally have fixed expiration dates. The Company evaluates each customer's creditworthiness on a case-by-case basis. The amount of collateral obtained, if necessary, is based on management's credit evaluation. Collateral held varies but includes accounts receivable, inventory, leases, property, plant and equipment, residential real estate, and income-producing properties.

Standby letters of credit are generally unsecured and are issued by the Company to guarantee the performance of a customer to a third party. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to customers.

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*<u>[**Table of Contents**](#id2ed6aa3183b4645838731577039388e_10)</u>* 

*Loans to directors, officers, principal shareholders and their affiliates are summarized below:*

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| | | |
|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;*(In thousands)* | **2025** | **2024** |
| Aggregate amount outstanding, beginning of year | $2681 | $3039 |
| New loans or advances during year | 125 | 400 |
| Repayments during year | (287) | (758) |
| Aggregate amount outstanding, end of year | $2519 | $2681 |
| Undisbursed commitments, end of year | $1875 | $1803 |

---

Key terms and conditions for loans to directors, officers, principal shareholders and their affiliates do not differ from those of other borrowers.

*<u>Past Due Loans</u>*

The Company monitors delinquent and potentially problematic loans on an ongoing basis through weekly reports to the loan committee and monthly reports to the Board of Directors.

*The following is a summary of delinquent loans, net of unearned fees and loan origination costs, at December 31, 2025, (in thousands):*

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| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| **December 31, 2025** | **Loans<br>30-60 Days Past Due** | **Loans<br>61-89 Days Past Due** | **Loans<br>90 or More<br>Days Past Due** | **Total Past Due Loans** | **Current Loans** | **Total Loans** | **Accruing<br>Loans 90 or<br>More Days Past Due** |
| Commercial and business loans | $— | $— | $— | $— | $46131 | $46131 | $— |
| Government program loans |  |  |  |  | 53 | 53 |  |
| &nbsp;&nbsp;&nbsp;Total commercial and industrial |  |  |  |  | 46184 | 46184 |  |
| Commercial real estate loans |  |  |  |  | 430261 | 430261 |  |
| Residential mortgages |  |  |  |  | 236466 | 236466 |  |
| Home improvement and home equity loans |  |  |  |  | 14 | 14 |  |
| &nbsp;&nbsp;&nbsp;Total real estate mortgage |  |  |  |  | 666741 | 666741 |  |
| Real estate construction and development loans |  |  | 5685 | 5685 | 113156 | 118841 |  |
| Agricultural loans |  |  |  |  | 51868 | 51868 |  |
| Installment and student loans | 1204 | 602 | 37 | 1843 | 29950 | 31793 |  |
| &nbsp;&nbsp;Total loans | $1204 | $602 | $5722 | $7528 | $907899 | $915427 | $— |

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*<u>[**Table of Contents**](#id2ed6aa3183b4645838731577039388e_10)</u>* 

*The following is a summary of delinquent loans, net of unearned fees and loan origination costs, at December 31, 2024, (in thousands):*

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| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| **December 31, 2024** | **Loans 30-60 Days Past Due** | **Loans 61-89 Days Past Due** | **Loans 90 or More Days Past Due** | **Total Past Due Loans** | **Current Loans** | **Total Loans** | **Accruing Loans 90 or More Days Past Due** |
| Commercial and business loans | $— | $— | $— | $— | $63653 | $63653 | $— |
| Government program loans |  |  |  |  | 62 | 62 |  |
| &nbsp;&nbsp;&nbsp;Total commercial and industrial |  |  |  |  | 63715 | 63715 |  |
| Commercial real estate loans |  |  |  |  | 419422 | 419422 |  |
| Residential mortgages | 214 |  |  | 214 | 247034 | 247248 |  |
| Home improvement and home equity loans |  |  |  |  | 24 | 24 |  |
| &nbsp;&nbsp;&nbsp;Total real estate mortgage | 214 |  |  | 214 | 666480 | 666694 |  |
| Real estate construction and development loans |  |  | 12185 | 12185 | 98960 | 111145 |  |
| Agricultural loans |  |  |  |  | 49462 | 49462 |  |
| Installment and student loans | 1625 | 1373 | 421 | 3419 | 34027 | 37446 | 421 |
| &nbsp;&nbsp;Total loans | $1839 | $1373 | $12606 | $15818 | $912644 | $928462 | $421 |

---

*<u>Nonaccrual Loans</u>*

*The following table presents the amortized costs of loans on nonaccrual status and accruing loans more than 90 days past due: December 31, 2025, and 2024:*

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** |
|<br>*(In thousands)* | **Nonaccrual Loans With No Allowance For Credit Losses** | **Total Nonaccrual Loans** | **Accruing Loans 90 or More Days Past Due** | **Nonaccrual Loans With No Allowance For Credit Losses** | **Total Nonaccrual Loans** | **Accruing Loans 90 or More Days Past Due** |
| Real estate construction and development loans | 5685 | 5685 |  | 12198 | 12198 |  |
| Installment and student loans | 37 | 37 |  |  |  | 421 |
| &nbsp;&nbsp;Total | $5722 | $5722 | $— | $12198 | $12198 | $421 |

---

There were no remaining undisbursed commitments to extend credit on nonaccrual loans at December 31, 2025, and 2024.

*<u>Credit Quality Indicators</u>*

As part of its credit monitoring program, the Company utilizes a risk rating system which quantifies the risk the Company estimates it has assumed during the life of a loan. The system rates the strength of the borrower and the facility or transaction, and is designed to provide a program for risk management and early detection of problems.

For each new credit approval, credit extension, renewal, or modification of existing credit facilities, the Company assigns risk ratings utilizing the rating scale identified in this policy. In addition, on an on-going basis, loans and credit facilities are reviewed for internal and external influences which might impact the credit facility and warrant a change in the risk rating. Each loan credit facility is given a risk rating that takes into account factors that materially affect credit quality.

When assigning risk ratings, the Company evaluates two risk rating approaches, a facility rating and a borrower rating as follows:

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*<u>[**Table of Contents**](#id2ed6aa3183b4645838731577039388e_10)</u>* 

*Facility Rating:*

The facility rating is determined by the analysis of positive and negative factors that may indicate that the quality of a particular loan or credit arrangement requires that it be rated differently from the risk rating assigned to the borrower. The Company assesses the risk impact of these factors:

<u>Collateral</u> - The rating may be affected by the type and quality of the collateral, the degree of coverage, the economic life of the collateral, liquidation value, and the Company's ability to dispose of the collateral.

<u>Guarantees</u> - The value of third party support arrangements varies widely. Unconditional guarantees from persons with demonstrable ability to perform are more substantial than that of closely-related persons to the borrower who offer only modest support.

<u>Unusual Terms</u> - Credit may be extended on terms that subject the Company to a higher level of risk than indicated in the rating of the borrower.

*Borrower Rating:*

The borrower rating is a measure of loss possibility based on the historical, current and anticipated financial characteristics of the borrower in the current risk environment. To determine the rating, the Company considers at least the following factors:

-&nbsp;&nbsp;&nbsp;&nbsp;Quality of management

-&nbsp;&nbsp;&nbsp;&nbsp;Liquidity

-&nbsp;&nbsp;&nbsp;&nbsp;Leverage/capitalization

-&nbsp;&nbsp;&nbsp;&nbsp;Profit margins/earnings trend

-&nbsp;&nbsp;&nbsp;&nbsp;Adequacy of financial records

-&nbsp;&nbsp;&nbsp;&nbsp;Alternative funding sources

-&nbsp;&nbsp;&nbsp;&nbsp;Geographic risk

-&nbsp;&nbsp;&nbsp;&nbsp;Industry risk

-&nbsp;&nbsp;&nbsp;&nbsp;Cash flow risk

-&nbsp;&nbsp;&nbsp;&nbsp;Accounting practices

-&nbsp;&nbsp;&nbsp;&nbsp;Asset protection

-&nbsp;&nbsp;&nbsp;&nbsp;Extraordinary risks

The Company assigns risk ratings to loans other than consumer loans and other homogeneous loan pools based on the following scale. The risk ratings are used when determining borrower ratings as well as facility ratings. When the borrower rating and the facility ratings differ, the lowest rating applied is:

-&nbsp;&nbsp;&nbsp;&nbsp;*Grades 1 and 2* – These grades include loans which are given to high-quality borrowers with high credit quality and sound financial strength. Key financial ratios are generally above industry averages and the borrower's strong earnings history or net worth. These may be secured by deposit accounts or high-grade investment securities.

-&nbsp;&nbsp;&nbsp;&nbsp;*Grade 3* – This grade includes loans to borrowers with solid credit quality with minimal risk. The borrower's balance sheet and financial ratios are generally in line with industry averages, and the borrower has historically demonstrated the ability to manage economic adversity. Real estate and asset-based loans assigned this risk rating must have characteristics which place them well above the minimum underwriting requirements for those departments. Asset-based borrowers assigned this rating must exhibit extremely favorable leverage and cash flow characteristics, and consistently demonstrate a high level of unused borrowing capacity.

-&nbsp;&nbsp;&nbsp;&nbsp;*Grades 4 and 5* – These include "pass" grade loans to borrowers of acceptable credit quality and risk. The borrower's balance sheet and financial ratios may be below industry averages, but above the lowest industry quartile. Leverage is above and liquidity is below industry averages. Inadequacies evident in financial performance and/or management sufficiency are offset by readily available features of support, such as adequate collateral, or good guarantors having the liquid assets and/or cash flow capacity to repay the debt. While the borrower may have recognized a loss over three or four years, recent earnings trends, while perhaps somewhat cyclical, are improving and cash flows are adequate to cover debt service and fixed obligations. Real estate and asset-borrowers who fully comply with all underwriting standards and perform according to projections would be assigned this rating. These also include grade 5 loans which are "leveraged" or on management's "watch list." While still considered pass loans (loans given a grade 5), the borrower's financial condition, cash flow, or operations evidence more than average risk and short term weaknesses. These loans warrant a higher than average level of monitoring, supervision, and attention from the

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*<u>[**Table of Contents**](#id2ed6aa3183b4645838731577039388e_10)</u>* 

Company, but do not reflect credit weakness trends that weaken or inadequately protect the Company's credit position. Loans with a grade rating of 5 are not normally acceptable as new credits unless they are adequately secured or carry substantial endorsers/guarantors.

-&nbsp;&nbsp;&nbsp;&nbsp;*Grade 6* – This grade includes "special mention" loans which are loans that are currently protected but are potentially weak. This generally is an interim grade classification and these loans will usually be upgraded to an "acceptable" rating or downgraded to a "substandard" rating within a reasonable time period. Weaknesses in special mention loans may, if not checked or corrected, weaken the asset or inadequately protect the Company's credit position at some future date. Special mention loans are often loans which exhibit weaknesses inherent in the loan origination and loan servicing, and may have some technical deficiencies. The main theme in special mention credits is the distinct probability that the classification will deteriorate to a more adverse class if the noted deficiencies are not addressed by the loan officer or loan management.

-&nbsp;&nbsp;&nbsp;&nbsp;*Grade 7* – This grade includes "substandard" loans which are inadequately supported by the current sound net worth and paying capacity of the borrower or of the collateral pledged, if any. Substandard loans have a well-defined weakness or weaknesses that may impair the regular liquidation of the debt. When a loan has been downgraded to "substandard," there exists a distinct possibility that the Company will sustain a loss if the deficiencies are not corrected.

-&nbsp;&nbsp;&nbsp;&nbsp;*Grade 8* – This grade includes "doubtful" loans which exhibit the same characteristics as the "substandard" loans. Additionally, loan weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. The possibility of loss is extremely high, but because of certain important and reasonably specific pending factors, which may work to the advantage and strengthening of the loan, its classification as an estimated loss is deferred until its more exact status can be determined. Pending factors include a proposed merger, acquisition, or liquidation procedures, capital injection, perfecting liens on additional collateral, and refinancing plans.

-&nbsp;&nbsp;&nbsp;&nbsp;*Grade 9* – This grade includes loans classified "loss" which are considered uncollectible and of such little value that their continuance as bankable assets is not warranted. This classification does not mean that the asset has absolutely no recovery or salvage value, but rather it is not practical or desirable to defer writing off the asset even though partial recovery may be achieved in the future.

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*<u>[**Table of Contents**](#id2ed6aa3183b4645838731577039388e_10)</u>* 

*The following table presents loans by class, net of unearned fees and loan origination costs, by risk rating and period indicated as of December 31, 2025:*

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| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Term Loans Amortized Cost Basis by Origination Year - As of *December 31, 2025*** | **Term Loans Amortized Cost Basis by Origination Year - As of *December 31, 2025*** | **Term Loans Amortized Cost Basis by Origination Year - As of *December 31, 2025*** | **Term Loans Amortized Cost Basis by Origination Year - As of *December 31, 2025*** | **Term Loans Amortized Cost Basis by Origination Year - As of *December 31, 2025*** | **Term Loans Amortized Cost Basis by Origination Year - As of *December 31, 2025*** | **Revolving Loans Amortized Cost Basis** | **Revolving Loans Converted to Term Loans** | |
|<br>*(In thousands)* | **2025** | **2024** | **2023** | **2022** | **2021** | **Prior** | **Revolving Loans Amortized Cost Basis** | **Revolving Loans Converted to Term Loans** |<br>**Total** |
| **<u>Commercial and business</u>** | **<u>Commercial and business</u>** | **<u>Commercial and business</u>** |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Pass | $3817 | $1767 | $4231 | $604 | $— | $604 | $12828 | $— | $23851 |
| &nbsp;&nbsp;Special Mention |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Substandard |  |  |  | 44 |  | 6424 | 15812 |  | 22280 |
| &nbsp;&nbsp;Total | $3817 | $1767 | $4231 | $648 | $— | $7028 | $28640 | $— | $46131 |
| Current period gross charge-offs | $— | $— | $— | $— | $— | $— | $— | $— | $— |
| **<u>Government program</u>** | **<u>Government program</u>** | **<u>Government program</u>** |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Pass | $— | $— | $— | $— | $— | $53 | $— | $— | $53 |
| &nbsp;&nbsp;Special Mention |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Substandard |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Total | $— | $— | $— | $— | $— | $53 | $— | $— | $53 |
| Current period gross charge-offs | $— | $— | $— | $— | $— | $— | $— | $— | $— |
| **<u>Commercial real estate</u>** | **<u>Commercial real estate</u>** | **<u>Commercial real estate</u>** |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Pass | $30298 | $83141 | $27715 | $74106 | $30146 | $167426 | $4448 | $— | $417280 |
| &nbsp;&nbsp;Special Mention |  |  |  |  |  | 12451 |  |  | 12451 |
| &nbsp;&nbsp;Substandard |  |  |  |  | 530 |  |  |  | 530 |
| &nbsp;&nbsp;Total | $30298 | $83141 | $27715 | $74106 | $30676 | $179877 | $4448 | $— | $430261 |
| Current period gross charge-offs | $— | $— | $— | $— | $— | $— | $— | $— | $— |
| **<u>Residential mortgages</u>** | **<u>Residential mortgages</u>** | **<u>Residential mortgages</u>** |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Not graded | $— | $— | $— | $21751 | $187835 | $7974 | $— | $— | $217560 |
| &nbsp;&nbsp;Pass | 4340 | 4010 | 2848 | 1926 | 4186 | 1596 |  |  | 18906 |
| &nbsp;&nbsp;Special Mention |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Substandard |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Total | $4340 | $4010 | $2848 | $23677 | $192021 | $9570 | $— | $— | $236466 |
| Current period gross charge-offs | $— | $— | $— | $— | $— | $— | $— | $— | $— |
| **<u>Home improvement and home equity</u>** | **<u>Home improvement and home equity</u>** | **<u>Home improvement and home equity</u>** |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Not graded | $— | $— | $— | $— | $— | $14 | $— | $— | $14 |
| &nbsp;&nbsp;Pass |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Special Mention |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Substandard |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Total | $— | $— | $— | $— | $— | $14 | $— | $— | $14 |
| Current period gross charge-offs | $— | $— | $— | $— | $— | $— | $— | $— | $— |

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*<u>[**Table of Contents**](#id2ed6aa3183b4645838731577039388e_10)</u>* 

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| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Term Loans Amortized Cost Basis by Origination Year - As of *December 31, 2025*** | **Term Loans Amortized Cost Basis by Origination Year - As of *December 31, 2025*** | **Term Loans Amortized Cost Basis by Origination Year - As of *December 31, 2025*** | **Term Loans Amortized Cost Basis by Origination Year - As of *December 31, 2025*** | **Term Loans Amortized Cost Basis by Origination Year - As of *December 31, 2025*** | **Term Loans Amortized Cost Basis by Origination Year - As of *December 31, 2025*** | **Revolving Loans Amortized Cost Basis** | **Revolving Loans Converted to Term Loans** | |
|<br>*(In thousands)* | **2025** | **2024** | **2023** | **2022** | **2021** | **Prior** | **Revolving Loans Amortized Cost Basis** | **Revolving Loans Converted to Term Loans** |<br>**Total** |
| **<u>Real estate construction and development</u>** | **<u>Real estate construction and development</u>** | **<u>Real estate construction and development</u>** | **<u>Real estate construction and development</u>** | **<u>Real estate construction and development</u>** |  |  |  |  |  |
| &nbsp;&nbsp;Pass | $18777 | $16756 | $6808 | $— | $— | $2289 | $68512 | $— | $113142 |
| &nbsp;&nbsp;Special Mention |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Substandard |  |  |  |  |  | 5699 |  |  | 5699 |
| &nbsp;&nbsp;Total | $18777 | $16756 | $6808 | $— | $— | $7988 | $68512 | $— | $118841 |
| Current period gross charge-offs | $— | $— | $— | $— | $— | $— | $— | $— | $— |
| **<u>Agricultural</u>** | **<u>Agricultural</u>** | **<u>Agricultural</u>** | **<u>Agricultural</u>** | **<u>Agricultural</u>** |  |  |  |  |  |
| &nbsp;&nbsp;Pass | $5511 | $3084 | $— | $3856 | $421 | $13648 | $23866 | $— | $50386 |
| &nbsp;&nbsp;Special Mention |  |  |  | 902 |  | 580 |  |  | 1482 |
| &nbsp;&nbsp;Substandard |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Total | $5511 | $3084 | $— | $4758 | $421 | $14228 | $23866 | $— | $51868 |
| Current period gross charge-offs | $— | $— | $— | $— | $— | $— | $— | $— | $— |
| **<u>Installment and student loans</u>** | **<u>Installment and student loans</u>** | **<u>Installment and student loans</u>** | **<u>Installment and student loans</u>** | **<u>Installment and student loans</u>** |  |  |  |  |  |
| &nbsp;&nbsp;Not graded | $1913 | $108 | $1301 | $60 | $28 | $27799 | $583 | $— | $31792 |
| &nbsp;&nbsp;Pass | 1 |  |  |  |  |  |  |  | 1 |
| &nbsp;&nbsp;Special Mention |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Substandard |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Total | $1914 | $108 | $1301 | $60 | $28 | $27799 | $583 | $— | $31793 |
| Current period gross charge-offs | $— | $— | $— | $— | $— | $6343 | $— | $— | $6343 |
| **<u>Total loans outstanding (risk rating):</u>** | **<u>Total loans outstanding (risk rating):</u>** | **<u>Total loans outstanding (risk rating):</u>** |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Not graded | $1913 | $108 | $1301 | $21811 | $187863 | $35787 | $583 | $— | $249366 |
| &nbsp;&nbsp;Pass | 62744 | 108758 | 41602 | 80492 | 34753 | 185616 | 109654 |  | 623619 |
| &nbsp;&nbsp;Special Mention |  |  |  | 902 |  | 13031 |  |  | 13933 |
| &nbsp;&nbsp;Substandard |  |  |  | 44 | 530 | 12123 | 15812 |  | 28509 |
| Grand total loans | $64657 | $108866 | $42903 | $103249 | $223146 | $246557 | $126049 | $— | $915427 |
| Current period gross charge-offs | $— | $— | $— | $— | $— | $6343 | $— | $— | $6343 |

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------

*<u>[**Table of Contents**](#id2ed6aa3183b4645838731577039388e_10)</u>* 

*The following table presents loans by class, net of deferred fees, by risk rating and period indicated as of* December 31, 2024*:*

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| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Term Loans Amortized Cost Basis by Origination Year - As of *December 31, 2024*** | **Term Loans Amortized Cost Basis by Origination Year - As of *December 31, 2024*** | **Term Loans Amortized Cost Basis by Origination Year - As of *December 31, 2024*** | **Term Loans Amortized Cost Basis by Origination Year - As of *December 31, 2024*** | **Term Loans Amortized Cost Basis by Origination Year - As of *December 31, 2024*** | **Term Loans Amortized Cost Basis by Origination Year - As of *December 31, 2024*** | **Revolving Loans Amortized Cost Basis** | **Revolving Loans Converted to Term Loans** | |
|<br>*(In thousands)* | **2024** | **2023** | **2022** | **2021** | **2020** | **Prior** | **Revolving Loans Amortized Cost Basis** | **Revolving Loans Converted to Term Loans** |<br>**Total** |
| **<u>Commercial and business</u>** | **<u>Commercial and business</u>** | **<u>Commercial and business</u>** |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Pass | $2374 | $3640 | $2076 | $341 | $408 | $764 | $29349 | $— | $38952 |
| &nbsp;&nbsp;Special Mention |  | 2000 |  |  |  |  |  |  | 2000 |
| &nbsp;&nbsp;Substandard |  |  | 68 |  | 6989 |  | 15644 |  | 22701 |
| &nbsp;&nbsp;Total | $2374 | $5640 | $2144 | $341 | $7397 | $764 | $44993 | $— | $63653 |
| Current period gross charge-offs | $— | $— | $— | $— | $— | $— | $— | $— | $— |
| **<u>Government program</u>** | **<u>Government program</u>** | **<u>Government program</u>** |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Pass | $— | $— | $— | $— | $2 | $60 | $— | $— | $62 |
| &nbsp;&nbsp;Special Mention |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Substandard |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Total | $— | $— | $— | $— | $2 | $60 | $— | $— | $62 |
| Current period gross charge-offs | $— | $— | $— | $— | $— | $— | $— | $— | $— |
| **<u>Commercial real estate</u>** | **<u>Commercial real estate</u>** | **<u>Commercial real estate</u>** |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Pass | $78889 | $32794 | $80121 | $31376 | $37480 | $151066 | $1491 | $— | $413217 |
| &nbsp;&nbsp;Special Mention |  |  |  |  | 5653 |  |  |  | 5653 |
| &nbsp;&nbsp;Substandard |  |  |  | 552 |  |  |  |  | 552 |
| &nbsp;&nbsp;Total | $78889 | $32794 | $80121 | $31928 | $43133 | $151066 | $1491 | $— | $419422 |
| Current period gross charge-offs | $— | $— | $— | $— | $— | $— | $— | $— | $— |
| **<u>Residential mortgages</u>** | **<u>Residential mortgages</u>** | **<u>Residential mortgages</u>** |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Not graded | $— | $— | $23929 | $196340 | $2480 | $6226 | $— | $— | $228975 |
| &nbsp;&nbsp;Pass | 4824 | 3969 | 1926 | 4320 | 1580 | 1654 |  |  | 18273 |
| &nbsp;&nbsp;Special Mention |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Substandard |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Total | $4824 | $3969 | $25855 | $200660 | $4060 | $7880 | $— | $— | $247248 |
| Current period gross charge-offs | $— | $— | $— | $— | $— | $— | $— | $— | $— |
| **<u>Home improvement and home equity</u>** | **<u>Home improvement and home equity</u>** | **<u>Home improvement and home equity</u>** |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Not graded | $— | $— | $— | $— | $— | $24 | $— | $— | $24 |
| &nbsp;&nbsp;Pass |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Special Mention |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Substandard |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Total | $— | $— | $— | $— | $— | $24 | $— | $— | $24 |
| Current period gross charge-offs | $— | $— | $— | $— | $— | $— | $— | $— | $— |

---

------

*<u>[**Table of Contents**](#id2ed6aa3183b4645838731577039388e_10)</u>* 

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Term Loans Amortized Cost Basis by Origination Year - As of *December 31, 2024*** | **Term Loans Amortized Cost Basis by Origination Year - As of *December 31, 2024*** | **Term Loans Amortized Cost Basis by Origination Year - As of *December 31, 2024*** | **Term Loans Amortized Cost Basis by Origination Year - As of *December 31, 2024*** | **Term Loans Amortized Cost Basis by Origination Year - As of *December 31, 2024*** | **Term Loans Amortized Cost Basis by Origination Year - As of *December 31, 2024*** | **Revolving Loans Amortized Cost Basis** | **Revolving Loans Converted to Term Loans** | |
|<br>*(In thousands)* | **2024** | **2023** | **2022** | **2021** | **2020** | **Prior** | **Revolving Loans Amortized Cost Basis** | **Revolving Loans Converted to Term Loans** |<br>**Total** |
| **<u>Real estate construction and development</u>** | **<u>Real estate construction and development</u>** | **<u>Real estate construction and development</u>** | **<u>Real estate construction and development</u>** | **<u>Real estate construction and development</u>** |  |  |  |  |  |
| &nbsp;&nbsp;Pass | $13761 | $15743 | $8004 | $— | $32389 | $2473 | $26577 | $— | $98947 |
| &nbsp;&nbsp;Special Mention |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Substandard |  |  |  |  | 3524 | 8674 |  |  | 12198 |
| &nbsp;&nbsp;Total | $13761 | $15743 | $8004 | $— | $35913 | $11147 | $26577 | $— | $111145 |
| Current period gross charge-offs | $— | $— | $— | $— | $— | $— | $— | $— | $— |
| **<u>Agricultural</u>** | **<u>Agricultural</u>** | **<u>Agricultural</u>** | **<u>Agricultural</u>** | **<u>Agricultural</u>** |  |  |  |  |  |
| &nbsp;&nbsp;Pass | $3097 | $2115 | $3990 | $490 | $2861 | $11586 | $22705 | $— | $46844 |
| &nbsp;&nbsp;Special Mention |  |  | 1503 |  | 440 | 285 |  |  | 2228 |
| &nbsp;&nbsp;Substandard |  |  |  |  |  |  | 390 |  | 390 |
| &nbsp;&nbsp;Total | $3097 | $2115 | $5493 | $490 | $3301 | $11871 | $23095 | $— | $49462 |
| Current period gross charge-offs | $— | $— | $— | $— | $— | $— | $— | $— | $— |
| **<u>Installment and student loans</u>** | **<u>Installment and student loans</u>** | **<u>Installment and student loans</u>** | **<u>Installment and student loans</u>** | **<u>Installment and student loans</u>** |  |  |  |  |  |
| &nbsp;&nbsp;Not graded | $440 | $1607 | $103 | $99 | $8 | $34162 | $606 | $— | $37025 |
| &nbsp;&nbsp;Pass |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Special Mention |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Substandard |  |  |  |  |  | 421 |  |  | 421 |
| &nbsp;&nbsp;Total | $440 | $1607 | $103 | $99 | $8 | $34583 | $606 | $— | $37446 |
| Current period gross charge-offs | $— | $20 | $— | $— | $— | $2842 | $— | $— | $2862 |
| **<u>Total loans outstanding (risk rating):</u>** | **<u>Total loans outstanding (risk rating):</u>** | **<u>Total loans outstanding (risk rating):</u>** |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Not graded | $440 | $1607 | $24032 | $196439 | $2488 | $40412 | $606 | $— | $266024 |
| &nbsp;&nbsp;Pass | 102945 | 58261 | 96117 | 36527 | 74720 | 167603 | 80122 |  | 616295 |
| &nbsp;&nbsp;Special Mention |  | 2000 | 1503 |  | 6093 | 285 |  |  | 9881 |
| &nbsp;&nbsp;Substandard |  |  | 68 | 552 | 10513 | 9095 | 16034 |  | 36262 |
| Grand total loans | $103385 | $61868 | $121720 | $233518 | $93814 | $217395 | $96762 | $— | $928462 |
| Current period gross charge-offs | $— | $20 | $— | $— | $— | $2842 | $— | $— | $2862 |

---

*<u>Allowance for Credit Losses on Loans</u>*

*The following summarizes the activity in the allowance for credit losses by loan category for the years ended December 31, 2025, and 2024 (in thousands).*

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **December 31, 2025** | **Commercial and Industrial** | **Real Estate Mortgage** | **Real Estate Construction Development** | **Agricultural** | **Installment & Student Loans** | **Total** |
| Beginning balance | $2839 | $2634 | $2504 | $1028 | $7041 | $16046 |
| Provision for (reversal of) credit losses (1) | (801) | (991) | (194) | 9 | 6873 | 4896 |
| Charge-offs |  |  |  |  | (6343) | (6343) |
| Recoveries | 1 | 2 |  |  | 236 | 239 |
| Ending balance | $2039 | $1645 | $2310 | $1037 | $7807 | $14838 |

---

(1) Excludes a $678,000 provision for unfunded loan commitments during the year.

------

*<u>[**Table of Contents**](#id2ed6aa3183b4645838731577039388e_10)</u>* 

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **December 31, 2024** | **Commercial and Industrial** | **Real Estate Mortgage** | **Real Estate Construction and Development** | **Agricultural** | **Installment & Student Loans** | **Total** |
| Beginning balance | $1903 | $2524 | $3614 | $1250 | $6367 | $15658 |
| Provision for (reversal of) credit losses (1) | 935 | 104 | (1110) | (222) | 3312 | 3019 |
| Charge-offs |  |  |  |  | (2862) | (2862) |
| Recoveries | 1 | 6 |  |  | 224 | 231 |
| Ending balance | $2839 | $2634 | $2504 | $1028 | $7041 | $16046 |

---

(1) Excludes a $56,000 reversal of provision for unfunded loan commitments during the year.

*<u>Collateral-Dependent Loans</u>*

*The following table presents the recorded investment in collateral-dependent loans by type of loan:*

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **December 31, 2025** | **December 31, 2025** | **December 31, 2024** | **December 31, 2024** |
|<br>*(Dollars in thousands)* | **Amount** | **Number of Collateral-Dependent Loans** | **Amount** | **Number of Collateral-Dependent Loans** |
| Real estate construction and development loans | $5685 | 1 | $12185 | 3 |
| Agricultural loans |  |  | 390 | 1 |
| &nbsp;&nbsp;Total | $5685 | 1 | $12575 | 4 |

---

At December 31, 2025, the real estate and construction and development loan was secured by land. At December 31, 2024, two of the real estate construction and development loans were secured by land and one was secured by a multifamily property. The agricultural loan was secured by farmland.

*<u>Reserve for Unfunded Commitments</u>*

The allowance for off-balance sheet credit exposure relates to commitments to extend credit, letters of credit, and undisbursed funds on lines of credit. The Company evaluates credit risk associated with the off-balance sheet loan commitments in the same manner as it evaluates credit risk within the loan portfolio. There was a provision of $678,000 for unfunded loan commitments made during the year ended December 31, 2025, increasing the liability balance to $1.5 million. For the year ended December 31, 2024, there was a reversal of provision of $56,000 made for unfunded loan commitments. The balance for unfunded loan commitments totaled $780,000 at December 31, 2024. The reserve for the unfunded loan commitments is a liability on the Company's consolidated financial statements and is included in other liabilities.

*<u>Loan Modifications</u>*

Occasionally, the Company modifies loans to borrowers in financial distress by providing principal forgiveness, term extension, and other-than-insignificant payment delay or interest rate reduction. When principal forgiveness is provided, the amount of forgiveness is charged off against the allowance for credit losses.

*The following tables present loan modifications made to borrowers experiencing financial difficulties for the period indicated:*

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **Twelve Months Ended** | **Twelve Months Ended** | **Twelve Months Ended** | **Twelve Months Ended** | **Twelve Months Ended** | **Twelve Months Ended** |
| | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** |
|<br>*(In thousands)* | **Term Extension** | **Extension Period** | **% of Loans Outstanding** | **Term Extension** | **Extension Period** | **% of Loans Outstanding** |
| Commercial and business loans | $202 | 4 months | 0.04% | $6989 | 12 months | 0.75% |

---

At December 31, 2025 and December 31, 2024, there were no commitments to extend credit to borrowers whose loans had been modified. There were also no defaults on any loans modified during the 12 months preceding December 31, 2025 and 2024.

------

*<u>[**Table of Contents**](#id2ed6aa3183b4645838731577039388e_10)</u>* 

***4.Student Loans***

Included in installment loans are $27.1 million and $33.9 million in student loans at December 31, 2025, and 2024, made to medical and pharmacy school students. Accrued interest on student loans totaled $2.9 million and $3.6 million at December 31, 2025, and 2024, respectively. Upon graduation the loan is automatically placed in a grace period of six months. This may be extended up to 48 months for graduates enrolling in internship, medical residency, or fellowship. As approved, the student may receive additional deferment for hardship or administrative reasons in the form of forbearance for a maximum of 36 months throughout the life of the loan. Student loans have not been originated or purchased since 2019.

As of December 31, 2025 and 2024, the allowance for credit losses for the student loan portfolio was $7.7 million and $7.0 million, respectively. There were no student loans in the substandard category at December 31, 2025. At December 31, 2024, there were student loans totaling $421,000 in the substandard category.

*The following tables summarize the credit quality indicators for outstanding student loans as of December 31, 2025 and December 31, 2024:*

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** |
|<br>*(Dollars in thousands)* | **Number of Loans** | **Principal Amount** | **Accrued Interest** | **Number of Loans** | **Principal Amount** | **Accrued Interest** |
| School | 23 | $642 | $546 | 26 | $692 | $512 |
| Grace | 1 | 60 | 43 | 3 | 100 | 63 |
| Repayment | 329 | 16066 | 244 | 406 | 19647 | 324 |
| Deferment | 165 | 8051 | 1987 | 219 | 9954 | 2593 |
| Forbearance | 51 | 2320 | 102 | 65 | 3496 | 133 |
| &nbsp;&nbsp;Total | 569 | $27139 | $2922 | 719 | $33889 | $3625 |

---

*<u>School</u> -* The time in which the borrower is still actively in school at least half time. No payments are expected during this stage, though the borrower may begin immediate payments.

*<u>Grace</u> -* A six month period of time granted to the borrower immediately upon graduation, or withdrawal from school. Interest continues to accrue. Upon completion of the six month grace period the loan is transferred to repayment status. This status may also represent a borrower activated to military duty during their time in school. The borrower must return to at least half-time status within six-months of the active duty end-date in order to return to in-school status.

*<u>Repayment</u> -* The time in which the borrower is no longer actively in school at least half time, and has not received an approved grace, deferment, or forbearance. Regular payment is expected from these borrowers under an allotted payment plan.

*<u>Deferment</u> -* May be granted up to 48 months for borrowers who have begun the repayment period on their loans but are (1) actively enrolled in an eligible school at least half time, or (2) are actively enrolled in an approved and verifiable medical residency, internship, or fellowship program.

*<u>Forbearance</u> -* The period of time during which the borrower may postpone making principal and interest payments due to hardship or administrative reasons. Interest continues to accrue on loans during periods of authorized forbearance. If the borrower is delinquent at the time the forbearance is granted, accrued and unpaid interest from the date of delinquency, if any, will be capitalized at the end of the forbearance period. The loan-term will not change and payments may be increased to allow the loan to pay off in the required time frame. A forbearance that results in and insignificant payment delay is not considered a concessionary change in terms, provided the borrower affirms the obligation. Forbearance is not an uncommon status designation; this designation is standard industry practice, and is consistent with a student's migration to the medical profession. However, additional risk is associated with this designation.

*<u>Student Loan Aging</u>*

Student loans are generally charged off at the end of the month during which an account becomes 120 days contractually past due. Accrued but unpaid interest related to charged off student loans is reversed and charged against interest income. For the year ended December 31, 2025, $496,000 in accrued interest receivable was reversed due to charge-offs of $6.3 million within the student loan portfolio. For the year ended December 31, 2024, $328,000 in accrued interest receivable was reversed due to charge-offs of $2.8 million within the student loan portfolio.

------

*<u>[**Table of Contents**](#id2ed6aa3183b4645838731577039388e_10)</u>* 

*The following tables summarize the student loan aging for loans in repayment and forbearance as of December 31, 2025 and* December 31, 2024*:*

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **December 31, 2025** | **December 31, 2025** | **December 31, 2024** | **December 31, 2024** |
|<br> *(Dollars in thousands)* | **Number of Borrowers** | **Principal Amount** | **Number of Borrowers** | **Principal Amount** |
| Current or less than 31 days | 158 | $16618 | 185 | $19737 |
| 31 - 60 days | 11 | 1181 | 9 | 1625 |
| 61 - 90 days | 4 | 587 | 7 | 1360 |
| Greater than 90 days |  |  | 2 | 421 |
| &nbsp;&nbsp;Total | 173 | $18386 | 203 | $23143 |

---

***5.Premises and Equipment***

*The components of premises and equipment are as follows:*

---

| | | |
|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;*(In thousands)* | **December 31, 2025** | **December 31, 2024** |
| Land | $968 | $968 |
| Buildings and improvements | 18311 | 17186 |
| Furniture and equipment | 9984 | 11392 |
|  | 29263 | 29546 |
| Less accumulated depreciation and amortization | (19829) | (20878) |
| &nbsp;&nbsp;Total | $9434 | $8668 |

---

The depreciation and amortization expense on Company premises and equipment totaled $1.46 million and $1.47 million, for the years ended December 31, 2025, and 2024, respectively, and is included in occupancy expense in the accompanying consolidated statements of income.

***6.Investment in Limited Partnerships***

The Bank owns interests in three local-area limited partnerships that provide private capital for small- and medium-sized businesses. This capital is typically used for financing later-stage growth, strategic acquisitions, ownership transitions, recapitalizations, or mezzanine capital. At both December 31, 2025 and 2024, the total investment in these limited partnerships was $4.3 million and was accounted for under the cost method. Income received from the partnerships totaled $84,000 during the year ended December 31, 2025. There was no income received during the year ended December 31, 2024. Remaining unfunded commitments at both December 31, 2025, and 2024, totaled $2.2 million.

------

*<u>[**Table of Contents**](#id2ed6aa3183b4645838731577039388e_10)</u>* 

***7.Deposits***

*Deposits include the following:*

---

| | | |
|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;*(In thousands)* | **December 31, 2025** | **December 31, 2024** |
| Noninterest-bearing deposits | $421897 | $360152 |
| Interest-bearing deposits: |  |  |
| &nbsp;&nbsp;&nbsp;NOW and money market accounts | 472169 | 504466 |
| &nbsp;&nbsp;&nbsp;Savings accounts | 117935 | 114648 |
| &nbsp;&nbsp;&nbsp;Time deposits: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under $250,000 | 43052 | 45141 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;$250,000 and over | 33727 | 33215 |
| Total interest-bearing deposits | 666883 | 697470 |
| &nbsp;&nbsp;Total deposits | $1088780 | $1057622 |

---

*The scheduled maturities of all certificates of deposit and other time deposits are as follows:*

---

| | | |
|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;*(In thousands)* | **December 31, 2025** | **December 31, 2024** |
| One year or less | $47361 | $56246 |
| More than one year, but less than or equal to two years | 28881 | 21600 |
| More than two years, but less than or equal to three years | 330 | 112 |
| More than three years, but less than or equal to four years | 107 | 272 |
| More than four years, but less than or equal to five years | 100 | 126 |
| Greater than five years |  |  |
|  | $76779 | $78356 |

---

Deposit balances representing overdrafts reclassified as loan balances totaled $187,000 and $178,000 as of December 31, 2025, and 2024, respectively.

Deposits of directors, officers and other related parties to the Bank totaled $10.3 million and $11.5 million at December 31, 2025, and 2024, respectively. The rates paid on these deposits were similar to those customarily paid to the Bank's customers in the normal course of business.

At December 31, 2025 and December 31, 2024, the Bank held $75.2 million and $100.3 million in brokered deposits, respectively.

***8.Short-term Borrowings/Other Borrowings***

The Bank maintains lines of credit with the Federal Reserve Bank, the Federal Home Loan Bank, and correspondent banks which may be drawn upon, as needed, to cover short-term financial obligations, or for investment or capital utilization purposes.

------

*<u>[**Table of Contents**](#id2ed6aa3183b4645838731577039388e_10)</u>* 

*The following table sets forth the Bank's outstanding and available credit lines for the periods indicated:*

---

| | | |
|:---|:---|:---|
| *(In thousands)* | **December 31, 2025** | **December 31, 2024** |
| Unsecured credit lines: |  |  |
| &nbsp;&nbsp;&nbsp;Credit limit | $90000 | $90000 |
| &nbsp;&nbsp;&nbsp;Balance outstanding |  |  |
| Federal Home Loan Bank: |  |  |
| &nbsp;&nbsp;&nbsp;Credit limit | 124886 | 135634 |
| &nbsp;&nbsp;&nbsp;Balance outstanding |  |  |
| &nbsp;&nbsp;&nbsp;Collateral pledged | 224473 | 230001 |
| Federal Reserve Bank: |  |  |
| &nbsp;&nbsp;&nbsp;Credit limit | 480835 | 499069 |
| &nbsp;&nbsp;&nbsp;Balance outstanding |  |  |
| &nbsp;&nbsp;&nbsp;Collateral pledged | 584264 | 617860 |

---

At December 31, 2025, the Company's available lines of credit totaled $695.7 million. All lines of credit are on an "as available" basis and can be revoked by the grantor at any time. These lines of credit have interest rates that are generally tied to the Federal Funds rate or are indexed to short-term U.S. Treasury rates or SOFR. FHLB and FRB advances are collateralized by loans and investment securities. At December 31, 2025, $222.7 million in loans and $1.7 million in investment securities were pledged as collateral for FHLB advances. Additionally, $581.0 million in loans and $3.3 million in investment securities were pledged at December 31, 2025, as collateral for advances with the Federal Reserve Bank.

At December 31, 2024, the Company's available lines of credit totaled $724.7 million. As of December 31, 2024, $228.1 million in loans and $1.9 million in investment securities were pledged as collateral for FHLB advances. Additionally, $614.2 million in loans and $3.7 million in investment securities were pledged as collateral at the Federal Reserve Bank.

The Company held no borrowings at December 31, 2025, or December 31, 2024.

***9. Leases***

The Company leases land and premises for its branch banking offices, administration facilities, and ITMs. The initial terms of these leases expire at various dates through 2044. Under the provisions of most of these leases, the Company has the option to extend the leases beyond their original terms at rental rates adjusted for changes reported in certain economic indices or as reflected by market conditions. Lease terms may include options to extend or terminate the lease when it is reasonably certain the Company will exercise that option. As of December 31, 2025, the Company had 14 operating leases and no financing leases.

Upon adoption of *ASC Topic 842, Leases*, the Bank chose to apply the incremental borrowing rate in its determination of the lease liability. The incremental borrowing rate approximates the Bank's current rates for fully secured loans where the amount and terms applied are similar to the amount and terms of the lease.

Operating lease expenses for the years ended December 31, 2025, and 2024, totaled $828,000 and $762,000, respectively.

*Supplemental balance sheet information related to leases is as follows:*

---

| | | |
|:---|:---|:---|
| *(In thousands)* | **December 31, 2025** | **December 31, 2024** |
| Operating cash flows used in operating leases | $755 | $766 |
| Right-of-use assets obtained in exchange for new operating lease liabilities | 814 | 2374 |
| Weighted-average remaining lease terms in years for operating leases | 9.01 | 8.65 |
| Weighted-average discount rate for operating leases | 4.95% | 5.06% |

---

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*<u>[**Table of Contents**](#id2ed6aa3183b4645838731577039388e_10)</u>* 

*Maturities of lease liabilities are as follows as of December 31, 2025 (in thousands):*

---

| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;***Years Ending December 31,*** | **Lease Liabilities** |
| &nbsp;&nbsp;&nbsp;2026 | $481 |
| &nbsp;&nbsp;&nbsp;2027 | 525 |
| &nbsp;&nbsp;&nbsp;2028 | 527 |
| &nbsp;&nbsp;&nbsp;2029 | 445 |
| &nbsp;&nbsp;&nbsp;2030 | 397 |
| &nbsp;&nbsp;&nbsp;Thereafter | 1863 |
| Total undiscounted cash flows | 4238 |
| &nbsp;&nbsp;&nbsp;Less: present value discount | (883) |
| Present value of net future minimum lease payments | $3355 |

---

***10.Junior Subordinated Debt/Trust Preferred Securities***

The contractual principal balance of the Company's debentures relating to its trust preferred securities totaled $6.0 million at of December 31, 2025 and $12.0 million as of December 31, 2024. The Company may redeem the junior subordinated debentures (TruPS) at any time at par.

The Company accounts for its TruPS issued under USB Capital Trust II at fair value. The Company believes the election of fair value accounting for the TruPS better reflects the true economic value of the debt instrument on the consolidated balance sheet. As of December 31, 2025, the rate paid on TruPS issued under USB Capital Trust II is 3-month SOFR plus 129 basis points, and is adjusted quarterly.

At December 31, 2025, the Company performed a fair value measurement analysis on TruPS using a cash flow model approach to determine the present value of those cash flows. The cash flow model utilizes the forward 3-month SOFR curve to estimate future quarterly interest payments due over remaining life of the debt instrument. These cash flows are discounted at a rate which incorporates a current market rate for similar-term debt instruments, adjusted for additional credit and liquidity risks associated with TruPS. The 5.95% discount rate used represents what a market participant would consider under the circumstances based on current market assumptions. At December 31, 2025, and December 31, 2024, the total cumulative gain recorded on the debt was $253,000 and $1.1 million, respectively.

During 2025, the Company made partial redemptions of $6.0 million of TruPS, lowering the contractual principal balance from $12.0 million at December 31, 2024 to $6.0 million at December 31, 2025. The partial redemptions resulted in total gains of $481,000, which were recorded on the income statement.

*The following table provides detail on the Company's junior subordinated debt/trust preferred securities:*

---

| | | |
|:---|:---|:---|
| *(In thousands)* | **December 31, 2025** | **December 31, 2024** |
| Net fair value calculation loss | $(486) | $(368) |
| Other comprehensive income (loss) gain | (396) | 245 |
| Realized loss on fair value | (90) | (614) |
| Adjustment to fair value on partial redemptions | (354) |  |
| Adjustment to other comprehensive income on partial redemptions | (834) |  |
| Realized gain on partial redemptions | 481 |  |
| Cumulative fair value adjustment | 253 | 1093 |
| Discount rate | 5.95% | 6.40% |

---

The net fair value calculation performed as of December 31, 2025 resulted in a pretax loss adjustment of $486,000 for the year ended December 31, 2025, compared to a pretax loss adjustment of $368,000 for the year ended December 31, 2024.

------

*<u>[**Table of Contents**](#id2ed6aa3183b4645838731577039388e_10)</u>* 

For the year ended December 31, 2025, the $486,000 fair value loss adjustment was separately presented as a $90,000 loss recognized on the consolidated statements of income, and a $396,000 loss associated with the instrument-specific credit risk recognized in other comprehensive income. For the year ended December 31, 2024, the $368,000 fair value loss adjustment was separately presented as a $614,000 loss recognized on the consolidated statements of income, and a $245,000 gain associated with the instrument-specific credit risk recognized in other comprehensive income. The Company calculated the change in the discounted cash flows based on updated market credit spreads for the periods ended.

Included in the change in fair value for the period ended December 31, 2025, was a total gain of $481,000 resulting from the partial redemption of $6.0 million in TruPS. Additionally, adjustments to OCI of $834,000 and to fair value of $354,000 were recorded as a result of the partial redemptions.

***11.Income Taxes***

*The tax effects of significant items comprising the Company's net deferred tax assets (liabilities) are as follows:*

---

| | | |
|:---|:---|:---|
| | **December 31,** | **December 31,** |
| &nbsp;&nbsp;&nbsp;*(In thousands)* | **2025** | **2024** |
| Deferred tax assets: |  |  |
| &nbsp;&nbsp;&nbsp;Credit losses not currently deductible | $4742 | $5127 |
| &nbsp;&nbsp;&nbsp;Deferred compensation | 1770 | 1692 |
| &nbsp;&nbsp;&nbsp;Depreciation |  | 278 |
| &nbsp;&nbsp;&nbsp;Accrued reserves | 541 | 248 |
| &nbsp;&nbsp;&nbsp;Write-down on other real estate owned | 291 | 291 |
| &nbsp;&nbsp;&nbsp;Unrealized gain on retirement obligation | 62 | 63 |
| &nbsp;&nbsp;&nbsp;Deferred loss ASC 825 – fair value option | 230 | 354 |
| &nbsp;&nbsp;&nbsp;Unrealized loss on available for sale securities | 4343 | 6613 |
| &nbsp;&nbsp;&nbsp;Interest on nonaccrual loans | 1856 | 1733 |
| &nbsp;&nbsp;&nbsp;Lease liability | 1068 | 1006 |
| &nbsp;&nbsp;&nbsp;Other | 726 | 751 |
| Total deferred tax assets | 15629 | 18156 |
| Deferred tax liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;Depreciation | (336) |  |
| &nbsp;&nbsp;&nbsp;State tax | (622) | (636) |
| &nbsp;&nbsp;&nbsp;FHLB dividend | (46) | (46) |
| &nbsp;&nbsp;&nbsp;Loss on limited partnership investments | (706) | (841) |
| &nbsp;&nbsp;&nbsp;Fair value adjustments for purchase accounting | (93) | (93) |
| &nbsp;&nbsp;&nbsp;Unrealized loss on junior subordinated debentures | (260) | (471) |
| &nbsp;&nbsp;&nbsp;Deferred loan costs | (338) | (567) |
| &nbsp;&nbsp;&nbsp;Prepaid expenses | (136) | (106) |
| &nbsp;&nbsp;&nbsp;Right-of-use asset | (1016) | (977) |
| Total deferred tax liabilities | (3553) | (3737) |
| Net deferred tax assets | $12076 | $14419 |

---

The Company periodically evaluates its deferred tax assets to determine whether a valuation allowance is required based upon a determination that some or all of the deferred assets may not be ultimately realized. The Company did not record a valuation allowance at December 31, 2025, or December 31, 2024.

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*<u>[**Table of Contents**](#id2ed6aa3183b4645838731577039388e_10)</u>* 

*Income tax expense for the years ended December 31, consist of the following:*

---

| | | | |
|:---|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;*(In thousands)* | **Federal** | **State** | **Total** |
| **2025** |  |  |  |
| Current | $2770 | $1353 | $4123 |
| Deferred | 228 | 56 | 284 |
|  | $2998 | $1409 | $4407 |
| **2024** |  |  |  |
| Current | $3769 | $2240 | $6009 |
| Deferred | (295) | (177) | (472) |
|  | $3474 | $2063 | $5537 |

---

*A reconciliation of the statutory federal income tax rate to the effective income tax rate is as follows:*

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** |
| | **2025** | **2025** | **2024** | **2024** |
| | (in thousands) | (percent) | (in thousands) | (percent) |
| U.S. Federal statutory tax rate | $3506 | 21.0% | $4275 | 21.0% |
| State taxes, net of federal income tax effect (1) | 1118 | 6.7 | 1629 | 8.0 |
| Cash surrender value of life insurance | (117) | (0.7) | (122) | (0.6) |
| Other adjustments | (100) | (0.6) | (244) | (1.2) |
| Effective income tax rate | $4407 | 26.4% | $5537 | 27.2% |

---

(1) During the years ended December 31, 2025 and December 31, 2024, all state taxes were paid in California. No local taxes were paid.

The Company periodically reviews its tax positions under the accounting standards related to uncertainty in income taxes, which defines the criteria that an individual tax position would have to meet for some or all of the income tax benefit to be recognized in a taxable entity's financial statements. Under the guidelines, an entity should recognize the financial statement benefit of a tax position if it determines that it is more likely than not that the position will be sustained on examination. The term "more likely than not" means a likelihood of more than 50 percent. In assessing whether the more-likely-than-not criterion is met, the entity should assume that the tax position will be reviewed by the applicable taxing authority and all available information is known to the taxing authority. As of December 31, 2025, and 2024, the Company has no uncertain tax positions.

The Company and its subsidiary file income tax returns in the U.S federal jurisdiction and California. There are no filings in foreign jurisdictions. The Company is no longer subject to income tax examinations by taxing authorities for years before 2022 and 2021 for Federal and California jurisdictions, respectively.

The Company's policy is to recognize any interest or penalties related to uncertain tax positions in income tax expense. The decrease in the tax rate between the two periods was due primarily to a permanent adjustment to a state tax accrual due to the expiration of a California statute. Interest and penalties recognized during the periods ended December 31, 2025 and December 31, 2024 were insignificant.

***12.Stock Based Compensation***

Options and restricted stock units and awards have been granted to directors, officers and key employees at an exercise price equal to estimated fair value at the date of grant as determined by the Board of Directors. All options, units, and awards granted are service awards, and are based solely upon fulfilling a requisite service period (the vesting period). At December 31, 2025, the Company had one shareholder approved stock based compensation plan.

In May 2015, the Company adopted the United Security Bancshares 2015 Equity Incentive Award Plan (2015 Plan). The 2015 Plan provided for the granting of up to 758,000 shares of authorized and unissued shares of common stock in the form of stock options, restricted stock units, and restricted stock awards. The 2015 Plan required that the exercise price may not be less than the fair value of the stock at the date the option is granted, and that the option price must be paid in-full at the time it is

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*<u>[**Table of Contents**](#id2ed6aa3183b4645838731577039388e_10)</u>* 

exercised. While grants can no longer be made under the 2015 Plan due to its expiration in 2025, existing grants made prior to its expiration will continue to vest.

In May 2025, the Company adopted the United Security Bancshares 2025 Equity Incentive Award Plan (2025 Plan). The 2025 Plan provides for the granting of up to 1,200,000 shares of authorized and unissued shares of common stock in the form of stock options, restricted stock units, and restricted stock awards. The 2025 Plan requires that the exercise price may not be less than the fair value of the stock at the date the option is granted, and that the option price must be paid in-full at the time it is exercised.

The options granted (incentive stock options for employees and non-qualified stock options for Directors) have an exercise price at the prevailing market price on the date of grant. All options granted are exercisable 20% each year commencing one year after the date of grant and expire ten years after the date of grant. Restricted stock units are granted at the prevailing market price of the Company's stock, subject to time-based vesting. Restricted stock awards are subject to forfeiture if employment terminates prior to vesting. The cost of these awards is recognized over the vesting period of the awards based on the fair value of the common stock on the date of the grant.

Under the 2015 Plan, 268,578 granted stock instruments were outstanding as of December 31, 2025, of which 63,000 are exercisable. Of the 268,578 granted stock instruments, 13,787 are restricted stock units, 179,791 are restricted stock awards, and 75,000 are nonqualified stock options. At December 31, 2025, there were no shares available for future issuance under 2015 Plan.

Under the 2025 Plan, 100,926 restricted stock awards were outstanding as of December 31, 2025. Shares available for future issuance, including restricted stock awards, restricted stock units, and nonqualified stock options, totaled 1,099,074.

*A summary of the status of the Company's stock option plans and changes during the year are presented below:*

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Shares** | **Weighted Average Exercise Price** | **Weighted Average Remaining Contractual Term (Years)** | **Aggregate Intrinsic Value** |
| Options outstanding December 31, 2023 | 75000 | $9.54 |  |  |
| &nbsp;&nbsp;&nbsp;Granted during the year |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Exercised during the year |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Forfeited during the year |  |  |  |  |
| Options outstanding December 31, 2024 | 75000 | 9.54 | 4.49 | $65250 |
| &nbsp;&nbsp;&nbsp;Granted during the year |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Exercised during the year |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Forfeited during the year |  |  |  |  |
| Options outstanding December 31, 2025 | 75000 | $9.54 | 3.49 | $69300 |

---

As of December 31, 2025, and 2024 there was $27,000 and $53,000, respectively, of total unrecognized compensation expense related to non-vested stock options. Non-vested stock options totaled 12,000 shares at December 31, 2025, with a weighted average remaining vesting period of approximately 1.07 years. Non-vested stock options totaled 18,000 at December 31, 2024. The aggregate intrinsic value of the non-vested stock options was $22,800 at December 31, 2025 and $32,580 at December 31, 2024.

Included in total outstanding options at December 31, 2025, were 63,000 exercisable shares at a weighted average price of $9.80, a weighted average remaining contract term of 3.00 years, and an intrinsic value of $46,500.

*A summary of the status of the Company's stock option values and activity is presented below:*

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*<u>[**Table of Contents**](#id2ed6aa3183b4645838731577039388e_10)</u>* 

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| | | |
|:---|:---|:---|
| | **December 31, 2025** | **December 31, 2024** |
| Weighted average grant-date fair value per share of stock options granted | $— | $— |
| Weighted average fair value of stock options vested | $26000 | $26000 |
| Total intrinsic value of stock options exercised | $— | $— |

---

The Bank determines fair value of stock options at grant date using the Black-Scholes-Merton pricing model that takes into account the stock price at the grant date, the exercise price, the expected life of the option, the volatility of the underlying stock and the expected dividend yield and the risk-free interest rate over the expected life of the option.

The expected term of options granted is derived from management's experience, which is based upon historical data on employee exercise and post-vesting behavior. The risk free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of the grant. Expected volatility is based on the historical volatility of the Bank's stock over a period commensurate with the expected term of the options. The Company believes that historical volatility is indicative of expectations about its future volatility over the expected term of the options. The Bank expenses the fair value of the option on a straight-line basis over the vesting period for each separate service period portion of the award.

The Black-Scholes-Merton option valuation model requires the input of highly subjective assumptions, including the expected life of the stock based award and stock price volatility. The assumptions listed above represent management's best estimates, but these estimates involve inherent uncertainties and the application of management judgment. As a result, if other assumptions had been used, the Bank's recorded stock-based compensation expense could have been materially different from that previously reported in proforma disclosures.

*A summary of the status of the Company's restricted stock units and changes during the year are presented below:*

---

| | | |
|:---|:---|:---|
| | **Shares** | **Weighted Average Grant-Date Fair Value** |
| Non-vested units at December 31, 2023 | 7000 | $7.79 |
| &nbsp;&nbsp;&nbsp;Granted during the year | 15733 | $9.15 |
| &nbsp;&nbsp;&nbsp;Vested during the year | (6172) | $9.10 |
| &nbsp;&nbsp;&nbsp;Forfeited during the year | (1023) | $7.46 |
| Non-vested units at December 31, 2024 | 15538 | $8.67 |
| &nbsp;&nbsp;&nbsp;Granted during the year | 9421 | 9.65 |
| &nbsp;&nbsp;&nbsp;Vested during the year | (8001) | 8.63 |
| &nbsp;&nbsp;&nbsp;Forfeited during the year | (3171) | 10.26 |
| Non-vested units at December 31, 2025 | 13787 | $9.00 |

---

As of December 31, 2025, there was $97,000 of total unrecognized compensation expense related to restricted stock units. This cost is expected to be recognized over a weighted-average period of approximately 1.68 years. As of December 31, 2024, there was $123,000 of total unrecognized compensation expense related to restricted stock units. The Company determines fair value of restricted stock units based on the quoted stock price as of the grant date.

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*<u>[**Table of Contents**](#id2ed6aa3183b4645838731577039388e_10)</u>* 

*A summary of the status of the Company's restricted stock awards and changes during the year are presented below:*

---

| | | |
|:---|:---|:---|
| | **Shares** | **Weighted Average Grant-Date Fair Value** |
| Non-vested awards at December 31, 2023 | 14435 | $7.99 |
| &nbsp;&nbsp;&nbsp;Granted during the year | 191795 | 8.24 |
| &nbsp;&nbsp;&nbsp;Vested during the year | (60777) | 8.26 |
| &nbsp;&nbsp;&nbsp;Forfeited during the year |  |  |
| Non-vested awards at December 31, 2024 | 145453 | $8.21 |
| &nbsp;&nbsp;&nbsp;Granted during the year | 210305 | 9.61 |
| &nbsp;&nbsp;&nbsp;Vested during the year | (75041) | 9.38 |
| &nbsp;&nbsp;&nbsp;Forfeited during the year |  |  |
| Non-vested awards at December 31, 2025 | 280717 | 8.95 |

---

As of December 31, 2025, there was $2.3 million of total unrecognized compensation expense related to restricted stock awards. This cost is expected to be recognized over a weighted-average period of approximately 5.92 years. At December 31, 2024, there was $1.1 million of total unrecognized compensation expense related to restricted stock awards. The Company determines fair value of restricted stock awards based on the quoted stock price as of the grant date.

Included in salaries and employee benefits for the years ended December 31, 2025, and 2024 are $439,000 and $371,000 of stock-based compensation, respectively. Director's fees and restricted stock awards made to directors totaling $530,000 and $311,000 for the same periods, respectively, are also included in stock-based compensation as reflected in the Consolidated Statement of Changes in Shareholders' Equity. The related tax benefit on share-based compensation recorded in the provision for income taxes was not material to any year.

***13.Employee Benefit Plans***

<u>401K Plan</u>

The Company has a Cash or Deferred 401(k) Stock Ownership Plan (the "401(k) Plan") organized under Section 401(k) of the U.S. Code. Employees of the Company are eligible to participate in the 401(k) Plan upon the first day of the month after their date of hire. Under the terms of the plan, the participants may elect to make contributions to the 401(k) Plan as determined by the Board of Directors. Participants are automatically vested 100% in all employee contributions. Participants may direct the investment of their contributions to the 401(k) Plan in any of several authorized investment vehicles. The Company contributes funds to the Plan up to 4% of the employees' eligible annual compensation. Company contributions are 100% vested at the time of contribution. The Company made matching contributions of $394,000 and $312,000 to the 401(k) Plan for the years ended December 31, 2025, and 2024, respectively.

<u>Salary Continuation Plan</u>

The Company has an unfunded, non-qualified Salary Continuation Plan for certain current and prior senior executive officers and certain other key officers of the Company, which provides additional compensation benefits upon retirement for a period of at least 15 years. Future compensation under the Plan is earned by the employees for services rendered through retirement and vests over a period of 12 to 32 years. As of December 31, 2025, the Company maintained a total of 11 Salary Continuation agreements.

The Company's current benefit liability is determined based upon vesting and the present value of the benefits at a corresponding discount rate. The discount rate used is an equivalent rate for high-quality investment-grade bonds with lives matching those of the service periods remaining for the salary continuation contracts, which averages approximately 20 years. At both December 31, 2025, and 2024, $4.4 million had been accrued based on a discounted cash flow average rate of 4.67% and 4.92%, respectively, and was included in other liabilities on the consolidated balance sheets. Salary continuation expense is included in salaries and benefits expense, and totaled $252,000 and $306,000 for the years ended December 31, 2025, and 2024, respectively.

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*<u>[**Table of Contents**](#id2ed6aa3183b4645838731577039388e_10)</u>* 

Included within the 11 total Salary Continuation agreements are four separate agreements with officers of the Bank. The accrual for this salary continuation liability is based on the anticipated years of service and vesting schedules provided under each individual agreement. The four policies are considered individual contracts, and the Company applies guidance contained in ASC Topic 710. Additionally, the Company purchased company owned life insurance (COLI) and bank owned life insurance policies (BOLI) in connection with these salary continuation agreements. The COLI policy premiums were paid over a seven year period and the BOLI policy premiums were paid in whole upon the purchase of the policies. There was no premium expense for the years ended December 31, 2025 and December 31, 2024.

There were eight Salary Continuation agreements established prior to 2015. Per the guidance in ASC Topic 715 "*Compensation,"* the Company records in accumulated other comprehensive (loss) income the amounts that have not yet been recognized as components of net periodic benefit costs. These unrecognized costs arise from changes in the estimated interest rates used in the calculation of net liabilities under the Plan. As of December 31, 2025, and 2024, the Company had approximately $145,000 and $147,000, respectively in unrecognized net periodic benefit costs arising from changes in interest rates used in calculating the current post-retirement liability required under the Plan. This amount represents the difference between the plan liabilities calculated under net present value calculations, and the net plan liabilities actually recorded on the Company's books at December 31, 2025, and 2024.

<u>Officer Supplemental Life Insurance Plan</u>

The Company owns Bank-owned life insurance policies (BOLI) and Company-owned life insurance policies (COLI) on certain officers, including those covered under the Salary Continuation Plan above, with a portion of the post-retirement benefit available to the officers' beneficiaries. The BOLI and COLI initial net cash surrender value is equal to the premium paid. Non-taxable increases in the cash surrender value, net of the cost of insurance, plus any death benefits ultimately received by the Company, are recorded as income. The cash surrender value of the policies totaled $21.3 million and $20.7 million at December 31, 2025, and 2024, and are included on the consolidated balance sheet as cash surrender value of life insurance. Income, net of expense, totaled $561,000 and $551,000 for the years ended December 31, 2025, and 2024, respectively. As the Salary Continuation Plan remains unfunded, it is the Company's intention to utilize the policy proceeds to settle Plan obligations. Under Internal Revenue Service regulations, the life insurance policies are the property of the Company and are available, if necessary, to satisfy the Company's creditors**.** 

***14.Commitments and Contingent Liabilities***

*Financial Instruments with Off-Balance Sheet Risk:* The Company is party to financial instruments with off-balance sheet risk which arise in the normal course of business. These instruments may contain elements of credit risk, interest rate risk and liquidity risk, and include commitments to extend credit and standby letters of credit. The credit risk associated with these instruments is essentially the same as that involved in extending credit to customers and is represented by the contractual amount indicated in the table below:

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| | | |
|:---|:---|:---|
| | **December 31,** | **December 31,** |
|<br>&nbsp;&nbsp;&nbsp;*(In thousands)* | **2025** | **2024** |
| Commitments to extend credit | $273351 | $204033 |
| Standby letters of credit | 4948 | 29174 |

---

Commitments to extend credit are agreements to lend to a customer, as long as there are no violation of any conditions established in the contract. Substantially all of these commitments are at floating interest rates based on the prime rate, and most have fixed expiration dates. The Company evaluates each customer's creditworthiness on a case-by-case basis. The amount of collateral obtained is based on management's credit evaluation and may include accounts receivable, inventory, leases, property, plant and equipment, residential real estate, and income-producing properties. Many of the commitments are expected to expire without being drawn upon and, as a result, the total commitment amounts do not necessarily represent future cash requirements of the Company.

Standby letters of credit are generally unsecured and are issued by the Company to guarantee the performance of a customer to a third party. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to customers. The Company's letters of credit are short-term guarantees and generally have terms from less than one month to approximately three years. At December 31, 2025, the maximum potential amount of future undiscounted payments the Company could be required to make under outstanding standby letters of credit totaled $4.9 million.

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*<u>[**Table of Contents**](#id2ed6aa3183b4645838731577039388e_10)</u>* 

Remaining unfunded commitments for the investment in limited partnership as of December 31, 2025 and 2024, totaled $2.2 million for each period.

In the ordinary course of business, the Company becomes involved in litigation arising out of its normal business activities. Management, after consultation with legal counsel, believes that the ultimate liability, if any, resulting from the disposition of such claims would not be material to the financial position of the Company.

***15. Fair Value Measurements and Disclosure***

The following summary disclosures are made in accordance with the guidance provided by ASC Topic 825 "*Fair Value Measurements and Disclosures*" which requires the disclosure of fair value information for both on- and off-balance sheet financial instruments where it is practicable to estimate that value.

GAAP guidance clarifies the definition of fair value, describes methods used to appropriately measure fair value in accordance with generally accepted accounting principles and expands fair value disclosure requirements. This guidance applies whenever other accounting pronouncements require or permit fair value measurements.

The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Level 1 inputs are unadjusted quoted prices in active markets (as defined) for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Level 3 inputs are unobservable inputs for the asset or liability, and reflect the reporting entity's assumptions regarding the pricing of an asset or liability by a market participant (including assumptions about risk).

*The table below is a summary of fair value estimates for financial instruments and the level of the fair value hierarchy within which the fair value measurements are categorized at the periods indicated:*

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** |
|<br>&nbsp;&nbsp;&nbsp;*(In thousands)* | **Carrying Amount** | **Estimated Fair Value** | **Quoted Prices In Active Markets for Identical Assets Level 1** | **Significant Other Observable Inputs Level 2** | **Significant Unobservable Inputs Level 3** |
| Financial Assets: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Investment securities | $139823 | $139823 | $— | $139823 | $— |
| &nbsp;&nbsp;&nbsp;Marketable equity securities | 3432 | 3432 | 3432 |  |  |
| &nbsp;&nbsp;&nbsp;Loans, net | 900589 | 871021 |  |  | 871021 |
| Financial Liabilities: |  |  |  |  |  |
| &nbsp;&nbsp;Time deposits | 76779 | 76288 |  |  | 76288 |
| &nbsp;&nbsp;Junior subordinated debentures | 6296 | 6296 |  |  | 6296 |

---

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** |
|<br>&nbsp;&nbsp;&nbsp;*(In thousands)* | **Carrying Amount** | **Estimated Fair Value** | **Quoted Prices In Active Markets for Identical Assets Level 1** | **Significant Other Observable Inputs Level 2** | **Significant Unobservable Inputs Level 3** |
| Financial Assets: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Investment securities | $157382 | $157382 | $— | $157382 | $— |
| &nbsp;&nbsp;&nbsp;Marketable equity securities | 3326 | 3326 | 3326 |  |  |
| &nbsp;&nbsp;&nbsp;Loans, net | 912416 | 874105 |  |  | 874105 |
| Financial Liabilities: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Time deposits | 78356 | 77981 |  |  | 77981 |
| &nbsp;&nbsp;Junior subordinated debentures | 11572 | 11572 |  |  | 11572 |

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*<u>[**Table of Contents**](#id2ed6aa3183b4645838731577039388e_10)</u>* 

The Company performs fair value measurements on certain assets and liabilities as the result of the application of current accounting guidelines. Some fair value measurements, such as investment securities and TruPS are performed on a recurring basis, while others, such as impairment of loans, other real estate owned, goodwill and other intangibles, are performed on a nonrecurring basis.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Level 1 financial assets consist of money market funds and highly liquid mutual funds for which fair values are based on quoted market prices.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Level 2 financial assets include highly liquid debt instruments of U.S. Government agencies, collateralized mortgage obligations, corporate debt instruments, and debt obligations of states and political subdivisions, whose fair values are obtained from readily-available pricing sources for the identical or similar underlying security that may, or may not, be actively traded.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Level 3 financial assets include certain instruments where the assumptions may be made by the Company or third parties about assumptions that market participants would use in pricing the asset or liability.

The Company recognizes transfers between Level 1, 2, and 3 when a change in circumstances warrants a transfer. There were no transfers in or out of Level 1 and Level 2 fair value measurements during the year ended December 31, 2025.

The following methods and assumptions were used in estimating the fair values of financial instruments measured at fair value on a recurring and non-recurring basis:

***Investment Securities -*** Available-for-sale and marketable equity security values are based on open-market price quotes obtained from reputable third-party brokers. Market pricing is based upon specific CUSIP identification for each individual security. To the extent there are observable prices in the market, the mid-point of the bid/ask price is used to determine the fair value of individual securities. If that data is not available for the last 30 days, a Level 2-type matrix pricing-approach, based on comparable securities in the market, is utilized. Level 2 pricing may include the use of a forward spread from the last observable trade or may use a proxy bond, such as a TBA mortgage, to determine the price for the security being valued. Changes in fair market value are recorded through other-accumulated-comprehensive-income as an unrecognized gain or loss on fair value.

***Loans –*** Fair values of loans are estimated as follows: Fixed and variable loans are valued using discounted cash flow analysis, which takes into account various factors, including the type of loan, expected credit losses, and prepayment expectations. The cash flows from the loans are discounted to their present value by using a combination of current market rates, liquidity spreads, and the underlying index rates and margins on variable-rate loans. This process results in a Level 3 classification for the valuations.

***Individually-Evaluated Loans -*** Fair value measurements for individually-evaluated loans are performed pursuant to authoritative accounting guidance and are based upon either collateral values supported by third party appraisals or observed market prices. Collateral-dependent loans are measured for impairment using the fair value of the collateral. There were no individually-evaluated loans measured at fair value as of December 31, 2025, or December 31, 2024.

***Other Real Estate Owned -*** Nonrecurring adjustments to certain commercial and residential real estate properties classified as other real estate owned (OREO) are measured at the lower of carrying amount or fair value, less costs to sell. Fair values are generally based on third party appraisals of the property, resulting in a Level 3 classification. In cases where the carrying amount exceeds the fair value, less costs to sell, an impairment loss is recognized. No OREO properties were measured at fair value as of December 31, 2025, or December 31, 2024.

***Time Deposits* -** The fair value is calculated by applying the current SOFR/SWAP curve rate to the discounted value of contractual cash flows.

***Junior Subordinated Debentures -*** The fair value of junior subordinated debentures (TruPS) is based on a discounted cash flow model utilizing observable market rates and credit characteristics for similar debt instruments. In its analysis, the Company uses characteristics that market participants would generally use, and considers factors specific to the liability and the principal, or most advantageous, market for the liability. Cash flows are discounted at a rate which incorporates a current market rate for similar-term debt instruments, adjusted for credit and liquidity risks associated with similar debt and circumstances unique to the Company. The Company believes that the subjective nature of these inputs, credit concerns in the capital markets, and inactivity in the trust preferred markets, limit the observability of market spreads, requiring TruPS to be classified at a Level 3 fair value.

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*<u>[**Table of Contents**](#id2ed6aa3183b4645838731577039388e_10)</u>* 

*The following table provides a description of the valuation technique, unobservable input, and qualitative information about the unobservable inputs for the Company's liabilities classified as Level 3 and measured at fair value on a recurring basis at December 31, 2025, and 2024:*

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| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| **December 31, 2025** | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** |
| **Financial Instrument** | **Valuation Technique** | **Unobservable Input** | **Weighted Average** | **Financial Instrument** | **Valuation Technique** | **Unobservable Input** | **Weighted Average** |
| Junior Subordinated Debentures | Discounted cash flow | Market credit risk adjusted spreads | 5.95% | Junior Subordinated Debentures | Discounted cash flow | Market credit risk adjusted spreads | 6.40% |

---

Management believes that the credit risk-adjusted spread utilized in the fair value measurement of TruPS is indicative of the nonperformance risk premium a willing market participant would require under current, inactive market conditions. Management attributes the change in fair value of TruPS to market changes in the nonperformance expectations and pricing of this type of debt. Generally, an increase in the credit risk adjusted spread and/or a decrease in the forward three-month SOFR curve will result in a positive fair value adjustment and a decrease in the fair value measurement. Conversely, a decrease in the credit risk adjusted spread and/or an increase in the forward three-month SOFR curve will result in a negative fair value adjustment and an increase in the fair value measurement. The decrease in discount rate between the periods ended December 31, 2025, and December 31, 2024, is primarily due to decreases in rates for similar debt instruments.

*The following tables summarize the Company's assets and liabilities that were measured at fair value on a recurring basis as of December 31, 2025:* 

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(In thousands)* | **December 31, 2025** | **Quoted Prices in Active Markets for Identical Assets <br>(Level 1)** | **Significant Other Observable Inputs <br>(Level 2)** | **Significant Unobservable Inputs<br>(Level 3)** |
| **Assets:** |  |  |  |  |
| AFS Securities: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;U.S. Government agencies | $1265 | $— | $1265 | $— |
| &nbsp;&nbsp;&nbsp;U.S. Government collateralized mortgage obligations | 73593 |  | 73593 |  |
| &nbsp;&nbsp;&nbsp;Municipal bonds | 44864 |  | 44864 |  |
| &nbsp;&nbsp;&nbsp;Corporate bonds | 20101 |  | 20101 |  |
| Total AFS securities | 139823 |  | 139823 |  |
| Marketable equity securities | 3432 | 3432 |  |  |
| &nbsp;&nbsp;&nbsp;Total assets | $143255 | $3432 | $139823 | $— |
| **Liabilities:** |  |  |  |  |
| Junior subordinated debentures | $6296 | $— | $— | $6296 |
| &nbsp;&nbsp;&nbsp;Total liabilities | $6296 | $— | $— | $6296 |

---

There were no non-recurring fair value adjustments at December 31, 2025.

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*<u>[**Table of Contents**](#id2ed6aa3183b4645838731577039388e_10)</u>* 

*The following tables summarize the Company's assets and liabilities that were measured at fair value on a recurring basis as of December 31, 2024:*

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(In thousands)* | **December 31, 2024** | **Quoted Prices<br>in Active<br>Markets for<br>Identical<br>Assets <br>(Level 1)** | **Significant<br>Other<br>Observable<br>Inputs <br>(Level 2)** | **Significant<br>Unobservable<br>Inputs <br>(Level 3)** |
| **Assets:** |  |  |  |  |
| AFS Securities: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;U.S. Government agencies | $2644 | $— | $2644 | $— |
| &nbsp;&nbsp;&nbsp;U.S. Government collateralized mortgage obligations | 78881 |  | 78881 |  |
| &nbsp;&nbsp;&nbsp;Municipal bonds | 42367 |  | 42367 |  |
| &nbsp;&nbsp;&nbsp;U.S. Treasury securities |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Corporate bonds | 33490 |  | 33490 |  |
| Total AFS securities | 157382 |  | 157382 |  |
| Marketable equity securities | 3326 | 3326 |  |  |
| &nbsp;&nbsp;&nbsp;Total assets | $160708 | $3326 | $157382 | $— |
| **Liabilities:** |  |  |  |  |
| Junior subordinated debentures | $11572 | $— | $— | $11572 |
| &nbsp;&nbsp;&nbsp;Total liabilities | $11572 | $— | $— | $11572 |

---

There were no non-recurring fair value adjustments at December 31, 2024.

*The following tables provide a reconciliation of liabilities at fair value using significant unobservable inputs (Level 3) on a recurring basis during the years ended:*

---

| | | |
|:---|:---|:---|
| **Junior Subordinated Debentures** *(in thousands)* | **December 31, 2025** | **December 31, 2024** |
| | **Junior<br>Subordinated<br>Debt** | **Junior<br>Subordinated<br>Debt** |
| Beginning balance | $11572 | $11213 |
| Gross loss included in earnings | 90 | 614 |
| Gross loss related to changes in instrument-specific credit risk | 396 | (245) |
| Partial redemption of liability at par | (6000) |  |
| Adjustment to other comprehensive income - partial redemption | 834 |  |
| Realized gain on partial redemption | (481) |  |
| Decrease in accrued interest | (115) | (10) |
| Ending balance | $6296 | $11572 |
| The amount of total gains for the period included in earnings attributable to the change in unrealized gains or losses relating to liabilities still held at the reporting date | $(391) | $614 |

---

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*<u>[**Table of Contents**](#id2ed6aa3183b4645838731577039388e_10)</u>* 

***16.Supplemental Cash Flows Disclosures***

---

| | | |
|:---|:---|:---|
| | **Year Ended December 31,** | **Year Ended December 31,** |
|<br>&nbsp;&nbsp;&nbsp;&nbsp;*(In thousands)* | **2025** | **2024** |
| Cash paid during the period for: |  |  |
| &nbsp;&nbsp;&nbsp;Interest | $12054 | $13897 |
| &nbsp;&nbsp;&nbsp;Federal income taxes | 2950 | 4000 |
| &nbsp;&nbsp;&nbsp;State income taxes (1) | 1610 | 2450 |
| Noncash activities: |  |  |
| &nbsp;&nbsp;&nbsp;Transfer to other real estate owned | 3600 |  |
| &nbsp;&nbsp;&nbsp;Recognition of ROU asset | 814 | 2374 |
| &nbsp;&nbsp;&nbsp;Unrealized gains (losses) on junior subordinated debentures, net of tax | (935) | 173 |
| &nbsp;&nbsp;&nbsp;Unrealized gains on available for sale securities, net of tax | 5408 | 530 |
| &nbsp;&nbsp;&nbsp;Unrealized (losses) gains on unrecognized post-retirement costs, net of tax | 2 | (17) |
| &nbsp;&nbsp;&nbsp;Cash dividend declared | 2110 | 2083 |

---

(1) Income taxes paid to state of California.

***17.Earnings Per Common Share***

The following table provides a reconciliation of the numerator and the denominator of the basic net income per share computation with the numerator and the denominator of the diluted net income per share computation.

The two-class method is used in the calculation of basic and diluted earnings per share ("EPS"). Under the two-class method, earnings available to common shareholders for the period are allocated between common shareholders and participating securities according to dividends declared and participation rights in undistributed earnings. The restricted stock awards granted by the Company contain non-forfeitable rights to dividends and therefore are considered participating securities.

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---

| | | |
|:---|:---|:---|
| | **Year Ended December 31,** | **Year Ended December 31,** |
|<br>*(In thousands, except share and per share data)* | **2025** | **2024** |
| Basic: |  |  |
| Net income available to common shareholders | $12288 | $14783 |
| &nbsp;&nbsp;&nbsp;Less: Earnings allocated to participating securities | (177) | (106) |
| Net income allocated to common shareholders | $12111 | $14677 |
| Weighted average shares outstanding including participating securities | 17493576 | 17312530 |
| &nbsp;&nbsp;&nbsp;Less: participating securities (1) | (251826) | (124146) |
| Weighted average common shares outstanding | 17241750 | 17188384 |
| Basic earnings per common share | $0.70 | $0.85 |
| Diluted: |  |  |
| Net income allocated to common shareholders | $12111 | $14677 |
| Weighted average shares outstanding including participating securities | 17493576 | 17312530 |
| &nbsp;&nbsp;&nbsp;Add: dilutive effect of stock options | 4746 | 2421 |
| Average shares and dilutive potential common shares | 17498322 | 17314951 |
| &nbsp;&nbsp;&nbsp;Less: participating securities (1) | (251826) | (124146) |
| Weighted average common and equivalent shares outstanding | 17246496 | 17190805 |
| Diluted earnings per share | $0.70 | $0.85 |
| Weighted average anti-dilutive shares excluded from earnings per share calculation | 211000 | 115000 |

---

(1) Participating securities are restricted stock awards whereby the stock certificates have been issued but have not yet vested. These unvested shares are included in outstanding shares, receive dividends, and can be voted.

Dilutive income per share includes the effect of stock options, unvested restricted stock units, and other potentially dilutive securities using the treasury stock method. There is only one form of outstanding common stock. Holders of unvested restricted stock units do not receive dividends, while holders of unvested restricted stock awards do receive dividends.

***18.Accumulated Other Comprehensive Income***

The components of accumulated other comprehensive loss, included in shareholders' equity, are as follows for the years ended:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** |
|<br>*(in thousands)* | **Net unrealized loss on available for sale securities** | **Unfunded status of the supplemental retirement plans** | **Net unrealized gain on junior subordinated debentures** | **Net unrealized loss on available for sale securities** | **Unfunded status of the supplemental retirement plans** | **Net unrealized gain on junior subordinated debentures** |
| Beginning balance | $(15760) | $(147) | $1555 | $(16290) | $(130) | $1382 |
| Current period comprehensive (loss) income, net of tax | 5408 | 2 | (935) | $530 | $(17) | $173 |
| Ending balance | $(10352) | $(145) | $620 | $(15760) | $(147) | $1555 |
| Accumulated other comprehensive loss |  |  | $(9877) |  |  | $(14352) |

---

***19. Segment Information***

The Company's reportable segment is determined by the Chief Executive Officer, who is the designated chief operating decision maker, based upon information provided about the Company's products and services offered, primarily banking operations. The segment is also distinguished by the level of information provided to the chief operating decision maker, who

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uses such information to review performance of various components of the business, such as branches, which are then aggregated if operating performance, product and services, and customers are similar. The chief operating decision maker will evaluate the financial performance of the Company's business components by evaluating revenue streams, significant expenses, and budget to actual results in assessing the Company's segment and in the determination of resource allocations. The chief operating decision maker uses revenue streams to evaluate product pricing and uses significant expenses to assess performance and evaluate return on assets. The chief operating decision maker uses consolidated net income to benchmark the Company against its competitors. The benchmarking analysis coupled with monitoring of budget to actual results are used in assessment performance and in establishing compensation. Loans, investments, and deposits provide the revenues in the banking operation. Interest expense, provisions for credit losses, and payroll provide the significant expenses in the banking operation. All operations are domestic.

Accounting policies for segments are the same as those described in "<u>[Note 1 - Organization and Summary of Significant Accounting and Reporting Policies.](#id2ed6aa3183b4645838731577039388e_94)</u>" Segment performance is evaluated using consolidated net income. Information reported internally for performance assessment by the chief operating decision maker follows, inclusive of reconciliations of significant segment totals to the financial statements.

*Detailed information related to the Company's banking segment is as follows:*

---

| | | |
|:---|:---|:---|
| | **Banking Segment** | **Banking Segment** |
|<br>&nbsp;&nbsp;&nbsp;*(In thousands)* | **2025** | **2024** |
| Interest income | $60812 | $60751 |
| Noninterest income | 5086 | 4713 |
| &nbsp;&nbsp;&nbsp;Total revenue | 65898 | 65464 |
| Less: |  |  |
| &nbsp;&nbsp;Interest expense | 12041 | 13901 |
| Less: |  |  |
| &nbsp;&nbsp;Provision for credit losses | 5574 | 2963 |
| &nbsp;&nbsp;Salaries and employee benefits | 15557 | 13884 |
| &nbsp;&nbsp;Provision for income taxes | 4407 | 5537 |
| &nbsp;&nbsp;Occupancy Expense | 3863 | 3686 |
| &nbsp;&nbsp;Depreciation | 1458 | 1469 |
| &nbsp;&nbsp;Amortization | 1519 | 1546 |
| &nbsp;&nbsp;Other expenses (1) | 9191 | 7695 |
| &nbsp;&nbsp;&nbsp;&nbsp;Banking segment net income | $12288 | $14783 |
| Reconciliation of assets: |  |  |
| &nbsp;&nbsp;Banking segment assets | $1248313 | $1211718 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total consolidated assets | $1248313 | $1211718 |

---

(1) Other segment items include merger-related expenses, professional fees, regulatory assessments, director fees and data processing fees.

***20.Investment in York Monterey Properties***

The Bank wholly-owns the subsidiary, York Monterey Properties, Inc. ("Properties"), organized as a California corporation. The Bank capitalized the subsidiary through the transfer of eight unimproved lots at a historical cost of $5.3 million comprised of approximately 186.97 acres in the York Highlands subdivision of the Monterra Ranch residential development in Monterey County, California, together with cash contributions. The Bank transferred the properties to York Monterey Properties, Inc., in order to maintain ownership beyond the ten-year regulatory holding period applicable to a state bank. The Bank acquired five of the lots through a non-judicial foreclosure on or about May 29, 2009. In addition, the Bank purchased three of the lots from another bank. The Bank has continuously held the Properties since the date of foreclosure and acquisition until the time of transfer. At the time of transfer, the Properties had reached the end of the ten-year regulatory holding period limit. On January 14, 2025, the Bank acquired an additional six lots comprised of approximately 61.47 acres through a second non-judicial foreclosure. The additional lots were transferred to York Monterey Properties, Inc., and the related nonaccrual loans, totaling $3.3 million, were transferred to OREO.

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As of December 31, 2025, and 2024, the Bank's investment in York Monterey Properties, Inc. totaled $8.0 million and $5.0 million, respectively. York Monterey Properties, Inc. is included within the consolidated financial statements of the Company, with $8.2 million of the total investment recognized within the balance of OREO on the consolidated balance sheets. At December 31, 2024, $4.6 million of the total investment was recognized within the balance of other real estate owned.

***21. Parent Company Only Financial Statements***

*The following are the condensed financial statements of United Security Bancshares and should be read in conjunction with the consolidated financial statements:*

---

| | | |
|:---|:---|:---|
| **United Security Bancshares – (parent only)**<br>**Balance Sheets - December 31, 2025, and 2024**<br>&nbsp;&nbsp;&nbsp;*(In thousands)* | **2025** | **2024** |
| Assets |  |  |
| &nbsp;&nbsp;&nbsp;Cash and equivalents | $2955 | $2584 |
| &nbsp;&nbsp;&nbsp;Investment in bank subsidiary | 142754 | 139845 |
| &nbsp;&nbsp;&nbsp;Other assets | 2429 | 1588 |
| Total assets | $148138 | $144017 |
| Liabilities & Shareholders' Equity |  |  |
| Liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;Junior subordinated debentures (at fair value) | $6296 | $11572 |
| &nbsp;&nbsp;&nbsp;Dividends declared | 2110 | 2083 |
| &nbsp;&nbsp;&nbsp;Other liabilities | 49 |  |
| Total liabilities | 8455 | 13655 |
| Shareholders' Equity: |  |  |
| Common stock, no par value; 20,000,000 shares authorized; issued and outstanding: 17,582,116 at December 31, 2025 and 17,364,984 at December 31, 2024 | 62236 | 61267 |
| &nbsp;&nbsp;&nbsp;Retained earnings | 87324 | 83447 |
| &nbsp;&nbsp;&nbsp;Accumulated other comprehensive loss, net of tax | (9877) | (14352) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total shareholders' equity | 139683 | 130362 |
| Total liabilities and shareholders' equity | $148138 | $144017 |

---

---

| | | |
|:---|:---|:---|
| | **Years ended December 31,** | **Years ended December 31,** |
| | **Years ended December 31,** | **Years ended December 31,** |
| **United Security Bancshares – (parent only)**<br>**Income Statements**<br>&nbsp;&nbsp;&nbsp;*(In thousands)* | **2025** | **2024** |
| Income |  |  |
| &nbsp;&nbsp;&nbsp;Gain (loss) on fair value of junior subordinated debentures | $391 | $(614) |
| Dividends from subsidiary | 16636 | 9311 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total income | 17027 | 8697 |
| Expense |  |  |
| &nbsp;&nbsp;&nbsp;Interest expense | 573 | 816 |
| &nbsp;&nbsp;&nbsp;Other expense | 1201 | 511 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total expense | 1774 | 1327 |
| Income before taxes and equity in undistributed income of subsidiary | 15253 | 7370 |
| &nbsp;&nbsp;&nbsp;Benefit for income taxes | (504) | (574) |
| &nbsp;&nbsp;&nbsp;Equity in undistributed (loss) income of subsidiary | (3469) | 6839 |
| Net Income | $12288 | $14783 |

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| | | |
|:---|:---|:---|
| | **Years ended December 31,** | **Years ended December 31,** |
| | **Years ended December 31,** | **Years ended December 31,** |
| **United Security Bancshares – (parent only)**<br>**Statement of Cash Flows**<br>&nbsp;&nbsp;&nbsp;*(In thousands)* | **2025** | **2024** |
| Cash Flows From Operating Activities |  |  |
| &nbsp;&nbsp;&nbsp;Net income | $12288 | $14783 |
| Adjustments to reconcile net income to cash provided by operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;Equity in undistributed loss (income) of subsidiary | 3469 | (6839) |
| &nbsp;&nbsp;&nbsp;Benefit for deferred income taxes | (615) | (130) |
| &nbsp;&nbsp;&nbsp;(Loss) gain on fair value of junior subordinated debentures | (391) | 614 |
| &nbsp;&nbsp;&nbsp;Increase in income tax receivable | (173) | (394) |
| &nbsp;&nbsp;&nbsp;Net decrease (increase) in other assets | 178 | (45) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by operating activities | 14756 | 7989 |
| Cash Flows From Financing Activities |  |  |
| &nbsp;&nbsp;&nbsp;Dividends paid | (8385) | (8307) |
| &nbsp;&nbsp;&nbsp;Redemption of junior subordinated debentures | (6000) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash used in financing activities | (14385) | (8307) |
| Net increase (decrease) in cash and cash equivalents | 371 | (318) |
| Cash and cash equivalents at beginning of year | 2584 | 2902 |
| Cash and cash equivalents at end of year | $2955 | $2584 |

---

***22. Regulatory Matters***

*Capital Adequacy*

The Company and Bank are subject to various regulatory capital requirements adopted by the Board of Governors of the Federal Reserve System and the FDIC. Failure to meet minimum capital requirements can initiate certain mandates and possible additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company's consolidated financial statements. Under capital adequacy guidelines and the regulatory framework, the consolidated Company and the Bank must meet specific capital guidelines that involve quantitative measures of their assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. Prompt corrective action provisions are not applicable to bank holding companies.

The Basel III Capital Rules, a comprehensive capital framework for U.S. banking organizations, includes quantitative measures designed to ensure capital adequacy. The Basel III Rules require the Company and the Bank to maintain:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• (i) a minimum common equity Tier 1 ratio minimum of 4.50 percent plus a 2.50 percent "capital conservation buffer,"

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• (ii) Tier 1 risk-based capital minimum of 6.00 percent plus the capital conservation buffer,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• (iii) total risk-based capital ratio minimum of 8.00 percent plus the capital conservation buffer and,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• (iv) Tier 1 leverage capital ratio minimum of 4.00 percent.

The capital conservation buffer is designed to absorb losses during periods of economic stress and effectively increases the minimum required risk-weighted capital ratios. Failure to meet minimum capital requirements may result in certain actions by regulators that could have a direct material effect on the consolidated financial statements.

*Community Bank Leverage Ratio*: The federal banking agencies published a final rule on November 13, 2019, that provided a simplified measure of capital adequacy for qualifying community banking organizations. A qualifying community banking organization that opts into the community bank leverage ratio framework and maintains a leverage ratio greater than nine percent will be considered to have met the minimum capital requirements, the capital ratio requirements for the well capitalized category under the Prompt Corrective Action framework, and any other capital or leverage requirements to which the qualifying banking organization is subject. A qualifying community banking organization with a leverage ratio of greater than nine percent may opt into the community bank leverage ratio framework if it has average consolidated total assets of less than $10 billion, has off-balance-sheet exposures of 25% or less of total consolidated assets, and has total trading assets and trading

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liabilities of five percent or less of total consolidated assets. Further, the bank must not be an advance approaches banking organization.

The final rule became effective January 1, 2020, and was adopted by the Bank on September 30, 2020. As of December 31, 2025, and December 31, 2024, the Company and Bank met all capital adequacy requirements to which they were subject.

*The following table shows the Company's and the Bank's regulatory capital and regulatory capital ratios at December 31, 2025, and 2024, compared to the applicable capital adequacy guidelines:*

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Actual** | **Actual** | **Minimum requirement for Community Bank Leverage Ratio (1)** | **Minimum requirement for Community Bank Leverage Ratio (1)** |
|<br>*(In thousands)* | **Amount** | **Ratio** | **Amount** | **Ratio** |
| **As of December 31, 2025 (Company):** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Tier 1 Leverage (to Average Assets) | $152073 | 12.56% | $108974 | 9.00% |
| **As of December 31, 2025 (Bank):** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Tier 1 Leverage (to Average Assets) | 149931 | 12.40% | 108789 | 9.00% |
| **As of December 31, 2024 (Company):** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Tier 1 Leverage (to Average Assets) | 153673 | 12.57% | 110011 | 9.00% |
| **As of December 31, 2024 (Bank):** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Tier 1 Leverage (to Average Assets) | 153601 | 12.59% | 109829 | 9.00% |

---

&nbsp;&nbsp;&nbsp;&nbsp;(1) If the subsidiary bank's leverage ratio exceeds the minimum ratio under the *Community Bank Leverage Ratio Framework*, it is deemed to be "well capitalized" under all other regulatory capital requirements. The Company may revert back to the regulatory framework for "Prompt Corrective Action" if the subsidiary bank's leverage ratio falls below the minimum under the *Community Bank Leverage Ratio Framework*.

**Item 9 - Changes in and Disagreements with Accountants on Accounting and Financial Disclosure**

None.

**Item 9A. Controls and Procedures**

**CONCLUSION REGARDING THE EFFECTIVENESS OF DISCLOSURE CONTROLS AND PROCEDURES**

The Company's management, with the participation of the President and Chief Executive Officer and the Chief Financial Officer, has conducted an evaluation of the effectiveness of the Company's disclosure controls and procedures as of December 31, 2025, based on the framework in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based upon this evaluation, the Company's management has determined that the Company's disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports it files or submits under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. These disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits is accumulated and communicated to management, including the President and Chief Executive Officer and the Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

**INTERNAL CONTROL OVER FINANCIAL REPORTING** 

The Company's management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). The Company's management conducted an evaluation of the effectiveness of the Company's internal control over financial reporting based on the framework in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission as of December 31, 2025. Based on this evaluation, the Company's management concluded that the Company's internal control over financial reporting is effective as of December 31, 2025.

There were no changes in the Company's internal control over financial reporting that occurred during the fourth quarter of 2025 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

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**Item 9B. Other Information**

None.

**Item 9C. Disclosures Regarding Foreign Jurisdictions that Prevent Inspections**

Not applicable.

**PART III**

**Item 10 - Directors, Executive Officers, and Corporate Governance**

**Board of Directors and Executive Officers**

The following sets for the the names and certain other information concerning the Board of Directors of the Company.

---

| | | | |
|:---|:---|:---|:---|
| **Name and Title<br>Other than Director** | **Age** | **Year First<br>Appointed** | **Principal Occupation During the Past Five Years** |
| Stanley J. Cavalla | 75 | 2001 | President of Suburban Steel, Inc.; President of Tri State Stairway Corp. |
| Tom Ellithorpe | 83 | 2001 | Owner, Insurance Buying Service. |
| Jagroop "Jay" Gill | 61 | 2023 | Owner, Auto Dealerships. |
| Heather Hammack | 49 | 2021 | President, Famous Software. |
| Nabeel Mahmood | 48 | 2017 | Managing Director, CXO & Consultant, Mahmood, LLC (2014-Present); CIO, Instor (2020-Present); SCB Global (2021-Present); Managing Director, Nomad Futurist (2021-Present). President and CEO, Querai (2019-2020). Director, International Data Centers Authority (2018-2021). |
| Kenneth D. Newby | 80 | 2014 | Owner, Kenneth D. Newby, CPA. |
| Susan Quigley, Secretary | 80 | 2017 | Retired. Former Audit Managing Director at Deloitte & Touche, LLP, an international public accounting firm. |
| Brian C. Tkacz | 49 | 2017 | Senior Managing Director, Head of Central IT, Markel Corporation (2025-present). Managing Director, Information Technology, Markel Corporation (2024-2025). Senior Director, Head of Global IT Shared Services, IT Governance, and Risk & Compliance, Markel Corporation (2019-2024). |
| Dora Westerlund | 54 | 2021 | Founder and CEO, Fresno Area Hispanic Foundation. |
| Dennis R. Woods, Chairman, President, and Chief Executive Officer | 79 | 2001 | Chairman of the Board, President, and Chief Executive Officer of United Security Bancshares and United Security Bank. |

---

**Dennis R. Woods**

*Chairman of the Board*

*Director since 2001*

Mr. Woods is the founding chairman of the Bank, and assumed the additional duties of President and CEO in 1993. Prior to the inception of the Bank, Mr. Woods was the President, CEO, and a 50% shareowner of a wholesale and retail food distribution company, Hestbeck's Incorporated, for over 20 years. Mr. Woods has also been active in real estate investment, including ownership of commercial warehouses, apartments, and residential real estate for more than 30 years. Additionally, Mr. Woods has been involved with the development and cultivation of pistachio and almond farms from 1980 to present. Mr. Woods has continuously served on the boards of directors of a number of for-profit and non-profit organizations such as Hestbeck's Incorporated; Pacific Coast Bankers Bank; California State University Fresno Bulldog Foundation; State Center Community College; United Way of Fresno County; Northern California Loan Fund Advisory, and Denwoods Farm Company. Mr. Wood's background in various businesses qualifies him for service as a director.

**Stanley J. Cavalla**

*Director since 2001*

Mr. Cavalla has lived in Fresno County for over 70 years. He is President of Suburban Steel, Inc. and President of Tri State Stairway Corp. He is active in Fresno County as a businessman and farmer. He has over 50 years of experience in steel

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construction and farming. Mr. Cavalla's relevant experience as an executive in managing and operating manufacturing and farming businesses within the Company's market area, qualifies him for service as a director.

**Tom Ellithorpe**

*Director since 2001*

Mr. Ellithorpe has lived in Fresno, California for over 50 years. He is the owner of Insurance Buying Service. He is active in the Fresno community as an insurance broker and has been involved in the California insurance industry since 1972. He has also been involved in a number of business ventures in the Company's market area including agricultural ventures. Mr. Ellithorpe's relevant experience as an executive in the insurance industry and his understanding of risk management qualifies him for service as a director.

**Jagroop "Jay" Gill**

*Vice Chairman of the Board*

*Director since 2023*

Mr. Gill is the President and CEO of Gill Automotive Group, which owns and operates 11 automotive dealerships representing 13 different brands in California and Hawaii. In addition, he also has agricultural interests in central California. Jay is a graduate of California State University, Fresno where he received a bachelor's degree in engineering. Jay currently serves on the boards of directors of Mid-Valley Water, Cen-Cal SBA, Chrysler Minority Dealer Association, and Ford Minority Dealer Association. Mr. Gill's relevant experience as a local business executive, local board member, and long-time community member qualifies him for service as a director.

**Heather Hammack**

*Director since 2021*

Ms. Hammack is the President of Famous Software, LLC, one of the largest software solutions providers for the fresh produce industry. She is a graduate of California Polytechnic University, San Luis Obispo, where she received a degree in Agribusiness, with a concentration in Finance. Heather currently serves as a Business Advisory Council Member for the Craig School of Business at California State University, Fresno, and as a Dean's Advisory Council Member for the College of Agriculture, Food and Environmental Science at California Polytechnic University, San Luis Obispo. Ms. Hammack's relevant experience as an executive in the software industry and her understanding of finance qualifies her for service as a director.

**Nabeel Mahmood**

*Director since 2017*

Mr. Mahmood brings over 25 years of experience leading large-scale global technology organizations for companies experiencing robust growth through M&A, global expansion, implementing new business models, and technology innovation. His expertise includes leading organizations through transformational changes, connecting IT to the needs of the business, technology innovation, Big Data, Cloud, ERP, IoT, AI, ML, NLP, RPA, Mobility, unified communication, security, and Data Centers. Mr. Mahmood's relevant experience as a technologist, executive, and member of various boards qualifies him for service as a director.

**Kenneth D. Newby**

*Lead Independent Director*

*Director since 2014*

Mr. Newby is a well-respected Certified Public Accountant with long-standing ties to the community. He has been self-employed as a financial consultant in Fresno, California, since June 2008. Previously, he worked as a partner with the public accounting firm of Deloitte & Touche, LLP. He has also served the local community through the Fresno Business Council and the Fresno State Foundation Board of Governors. Mr. Newby is a graduate of California State University, Fresno, where he received his Bachelor of Science in Business Administration and Accounting in 1972. Mr. Newby's relevant experience as a certified public accountant and knowledge of auditing, accounting, and finance qualifies him for service as a director.

**Susan Quigley**

*Director since 2017*

Ms. Quigley is a long-term resident of the Fresno community. She served as an Audit Managing Director for Deloitte & Touche, LLP, until her retirement in 2010. While at Deloitte, she audited companies in many industries, including agribusiness,

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banking, and hospitals. She has made many presentations to boards of various companies. Ms. Quigley has been a member of the board of directors of various companies and not-profit organizations including National Raisin Company, San Joaquin Valley Town Hall, and Boys & Girls Club of Fresno County. She is also a Master Gardener. Ms. Quigley's relevant experience in accounting, auditing, finance, and as a member of various boards qualifies her for service as a director.

**Brian C. Tkacz**

*Director since 2017*

Mr. Tkacz is a business and information technology (IT) executive with 20+ years of experience in large-scale IT strategy and delivery roles. He is a Senior Managing Director for Markel, a holding company for insurance, reinsurance, and investment operations around the world. He earned his MBA from the University of Virginia's Darden Graduate School of Business and his BS in Managerial Economics from Cornell University. Mr. Tkacz's relevant experience as a business leader, general manager, and successful P&L owner in the financial services and insurance industries, combined with his understanding of analytical problem solving and defining and executing business and IT strategies, qualifies him for service as a Director.

**Dora Westerlund**

*Director since 2021*

Ms. Westerlund is the President and CEO of the Fresno Area Hispanic Foundation, which established the only bilingual business incubator in the western United States. She has been serving and collaborating with the Central Valley business community for the past 27 years. In addition to leading a micro-loan program for the past 12 years, she has also promoted business growth with a focus on rural America. An alumna of California State University, Fresno, she has strong ties to the Central Valley and currently serves on the Board of Governors of California State University, Fresno. Ms. Westerlund's relevant experience as an executive and her understanding of the community qualifies her for service as a director.

None of the directors were selected pursuant to any arrangement or understanding other than with the directors and executive officers of the Company acting within their capacities as such. There are no family relationships between any of the Company's directors and executive officers. No director serves as a director of any company that has a class of securities registered under, or which is subject to the periodic reporting requirements of, the Securities Exchange Act of 1934, or of any company registered as an investment company under the Investment Company Act of 1940.

***Executive Officers (not members of the Board):***

The following sets forth, as of the filing date, the names and certain other information concerning current executive officer of the Company.

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| | | |
|:---|:---|:---|
| **NEO** | **Age** | **Position and Principal Occupation For the Past Five Years** |
| Dennis R. Woods | 79 | President and Chief Executive Officer of United Security Bancshares and United Security Bank since 1993. |
| David A. Kinross | 61 | Senior Vice President and Chief Financial Officer of United Security Bancshares and United Security Bank since 2022. |
| Robert Oberg | 64 | Senior Vice President and Chief Risk Officer of United Security Bancshares and United Security Bank since 2018. |
| Porsche Saunders | 48 | Senior Vice President and Chief Lending Officer of United Security Bancshares and United Security Bank since 2024. |
| Kevin J. Williams | 51 | Senior Vice President and Chief Banking Officer of United Security Bancshares and United Security Bank since 2025. |
| William Yarbenet | 66 | Senior Vice President and Chief Credit Officer of United Security Bancshares and United Security Bank since 2013. |

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***Material Litigation Involving Directors and Executive Officers***

As of the date of this filing, none of the Company's Directors and/or Executive Officers is involved in any material proceeding as a party that is adverse to the Company or Bank or has a material interest adverse to the Company or Bank. In addition, none of the Company's Directors and/or Executive Officers have been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) during the ten-year period prior to the date of this Proxy Statement.

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***Significant Employees***

Although the Company and Bank considers each of their employees to be integral to the success of their respective operations in light of their individual contributions to the enterprise, neither the Company nor Bank has identified any "significant employees" within the meaning of Item 401(c) of SEC Regulation S-K.

**Certain Information Regarding the Board of Directors**

**Director Compensation**

Director compensation is evaluated and recommended by the Compensation Committee and approved by the Board of Directors. Non-employee directors receive cash and equity compensation for committee attendance and premiums for serving as chairpersons of certain committees. They may also receive equity grants in the form of stock options and awards.

Director compensation is paid in a 50/50 split of cash and restricted stock awards. The Board meeting fee is $1,610 per director per month. In addition, the Chairperson received an additional $345 per month and the Lead Director received an additional $230 per month. Also, directors, other than Mr. Woods and Mr. Newby, were paid $230 for Executive Committee meetings, $288 for Governance, ALCO, and 401(k) Committee meetings, and $403 for Audit, Compensation, IT, and Loan Committee meetings. The Chairpersons of the Audit, Compensation, Governance, and IT committees received $575 per meeting and the Chairperson of the 401(k) committee received $403 per meeting. The Lead Director, who facilitates the Executive Session, received $345 per month. Director fees are calculated and paid based on an estimated number of Board and Committee meetings per year.

Historically, the non-employee Company directors have received equity compensation in the form of nonqualified stock options, restricted stock units, and restricted stock awards. The Committee selected this form of equity compensation because it aligned the interests of the Board of Directors to those of the shareholders and also because of accounting and tax treatments of such awards.

The following table shows compensation paid or accrued for the last fiscal year to the Company's non-employee directors. Mr. Woods does not receive committee fees and his director meeting fees are disclosed in the "All Other Compensation" column in the Summary Compensation Table for the Named Executive Officers.

**NON-EMPLOYEE DIRECTOR COMPENSATION TABLE 2025** 

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| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| **Name** | **Fees Earned or Paid in Cash ($)** | **Stock Awards ($) (1) (2) (3)** | **Option Awards ($)** | **Non-Equity Incentive Plan Compensation ($)** | **Nonqualified Deferred Compensation Earnings ($)** | **All Other Compensation ($)** | **Total ($)** |
| Stanley Cavalla | $12804 | $113594 | $— | $— | $— | $— | $126398 |
| Tom Ellithorpe | 26798 | 132278 |  |  |  |  | 159076 |
| Jagroop "Jay" Gill | 11736 | 65602 |  |  |  |  | 77338 |
| Heather Hammack | 14833 | 68041 |  |  |  |  | 82874 |
| Nabeel Mahmood | 22296 | 78020 |  |  |  |  | 100316 |
| Kenneth D. Newby | 17835 | 120299 |  |  |  |  | 138134 |
| Susan Quigley | 17582 | 119973 |  |  |  |  | 137555 |
| Brian C. Tkacz | 15292 | 68655 |  |  |  |  | 83947 |
| Dora Westerlund | 46114 | 54760 |  |  |  |  | 100874 |

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(1) Board members received 50% of their 2025 monthly director fees in the form of stock awards on January 28, 2025 and October 28, 2025. The shares awarded on January 28, 2025, vested on May 28, 2025. The shares awarded October 28, 2025, will vest on May 20, 2026.

(2) Fair market value upon grant dates of January 28, 2025 and October 28, 2025.

(3) On January 28, 2025, directors received stock awards with a fair value of $24,125 for Ms. Westerlund, $48,250 for Mr. Gill, Ms.Hammack, Mr. Mahmood, and Mr. Tkacz, and $96,500 for Mr. Cavalla, Mr. Ellithorpe, Mr. Newby, and Ms. Quigley. These stock awards vested 50% at December 1, 2025. The remainder will vest on December 1, 2026.

**<u>Director Emeritus Plans</u>**

In 1995, the Bank established the Directors Emeritus Plan I, which was amended in May 2000. Those directors who (i) retired as directors of the Bank prior to 2015 or (ii) retired as directors of Golden Oak Bank and Legacy Bank and who signed a shareholder's agreement were eligible to participate in the Directors Emeritus Plan I. Directors Emerita under Directors Emeritus Plan I receive a monthly fee of $400, and receive preferential deposit and customer service with free checking as long

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as they serve as a Director Emeritus. Director Emeritus benefits terminate upon (i) the sale of a majority of the Director Emeritus' shares of the Company's common stock originally held, or (ii) the finding by the Company's board of directors that the Director Emeritus is engaging in activities or making statements which are detrimental to the Company or the Company's public image. At December 31, 2025, there were nine participants in the Directors Emeritus Plan. A total of $44,400 was paid under the Directors Emeritus Plan I in 2025.

In 2015, the Company established the Directors Emeritus Plan II. The new plan resets monthly fees every five years for directors retiring during that five-year period. Directors retiring during 2015-2019 receive $600 per month for life and will receive preferential deposit and customer service with free checking as long as they serve as a Director Emeritus. Directors retiring between 2020-2024 will receive $700 per month. To qualify, the retiring director must have served as a director for at least five years prior to retirement; and to continue receiving benefits the Director Emeritus must continue to own at least 25,000 shares of the Company's common stock and not engage in activities or speech detrimental to the Company or the Bank. At December 31, 2025, there were four participants in the Directors Emeritus Plan II. A total of $32,200 was paid under the Directors Emeritus Plan II in 2025.

Both Director Emeritus Plans terminate if the Company is merged, acquired, or dissolved. Directors who retire after December 31, 2024, will no longer be included in the Director Emeritus Plan II. In January 2025, in lieu of participation in a Director Emeritus Plan, current directors received restricted stock awards based on their years of service to the Bank. Mr Woods, Mr. Cavalla, Mr. Ellithorpe, Mr. Newby, and Ms. Quigley each received 10,000 shares with grant-date fair values of $96,500. Mr. Gill, Ms. Hammack, Mr. Mahmood, and Mr. Tkacz each received 5,000 shares with grant-date fair values of $48,250. Ms. Westerlund received a cash payment of $25,000 and 2,500 shares with a grant-date fair value of $24,125. The shares awarded to Mr. Cavalla, Mr. Ellithorpe, Mr. Mahmood, Mr. Newby, Ms. Quigley, Mr. Tkacz, and Mr. Woods vest over two years with 50% vesting on December 1, 2025, and 50% on December 1, 2026. The shares awarded to Ms. Hammack and Ms. Westerlund vest over three years with 33.3% vesting on December 1, 2025, 33.3% on December 1, 2026, and 33.4% on December 1, 2027. Mr. Gill's shares vest over five years at 20% per year beginning December 1, 2025.

**Corporate Governance Guidelines**

The Company is committed to having sound corporate governance principles that are important to the way the Company manages its business and to maintaining the Company's integrity in the marketplace. The Company's Corporate Governance Principles are available at www.unitedsecuritybank.com within the Investor Relations section.

**Board of Directors and Committees of the Company**

The Board of Directors of the Company oversees its business and monitors the performance of management. In accordance with Corporate Governance Principles, our Board of Directors does not involve itself in day-to-day operations. The directors keep themselves informed through, among other things, discussions with the Chief Executive Officer, other key executives, and our principal outside advisers (legal counsel, outside auditors, and other consultants), by reading reports and other materials provided by the Company, and by participating in board and committee meetings.

During 2025, the Board of Directors held ten meetings. No director attended less than 75% of all Board of Directors meetings and the meetings of any committee of the Board of Directors on which he or she served.

In 2025, the Board of Directors had the following committees: ALCO, Audit Committee, Compensation Committee, Corporate Governance/Nominating Committee, IT Committee, Loan Committee, and 401K Committee.

**Attendance at Annual Meetings**

The Company does not have a policy regarding director attendance at each Annual Meeting of Shareholders. The 2025 Annual Meeting of Shareholders was attended by Tom Ellithorpe, Ken Newby, and Dennis Woods.

**Shareholder Communications with the Board**

Shareholders who wish to communicate with the Board of Directors as a whole, or with an individual director, may do so by emailing the Board of Directors at roberg@unitedsecuritybank.com.

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**Selection and Evaluation of Director Nominees**

The Corporate Governance/Nominating Committee is responsible for identifying and presenting nominees for membership on the Board, as needed, by the following process:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The Corporate Governance/Nominating Committee identifies nominees by first evaluating the qualifications and willingness to continue in service of current members of the Board of Directors.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The Corporate Governance/Nominating Committee identifies if the Board of Directors needs to add new members with specific skills or to fill a vacancy on the Board.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The Corporate Governance/Nominating Committee initiates a search, working with staff support and seeking input from the members of the Board and executive management for nominee(s) including existing members that are willing to continue to serve as directors. The Corporate Governance/Nominating Committee also considers any nominee(s) recommended by shareholders.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The Corporate Governance/Nominating Committee identifies a potential slate of nominee(s), after taking into account the criteria discussed in the next section below.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The Corporate Governance/Nominating Committee determines if any Board members have contacts with the potential nominee(s).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The Corporate Governance/Nominating Committee interviews prospective nominee(s) other than existing board members.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The Corporate Governance/Nominating Committee keeps the Board informed of the selection progress.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The Corporate Governance/Nominating Committee meets to consider and approve its slate of recommended nominee(s) also using the criteria discussed in the next section below. The Corporate Governance/Nominating Committee, in evaluating existing directors as nominees and non-directors as nominees, balances the value of continuity of service by existing members of the Board with that of obtaining a new perspective.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The Corporate Governance/Nominating Committee presents its slate of recommended nominees to the Board and seeks the Board's endorsement of such nominee(s).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• There is no third party that is currently paid to assist in identifying or evaluating potential director nominees, although the Corporate Governance/Nominating Committee has sole authority to retain or terminate the services of a third-party search firm to identify director nominees. The Corporate Governance/Nominating Committee's process for identifying and evaluating nominees for directors will not materially differ based on whether or not the nominee is recommended by a shareholder.

**Director Independence**

It is the policy of the Board of Directors that a significant majority of its members be independent from management, and the Board has adopted director independence standards that meet the listing standards and applicable rules of The "NASDAQ Stock Market, LLC" (NASDAQ). These independence standards are included in our Corporate Governance Principles which can be found on the Company's website at www.unitedsecuritybank.com within the Investor Relations section.

In accordance with our Corporate Governance Principles, the Board undertook its annual review of director independence. During this review, the Board considered any and all commercial and charitable relationships of directors, including transactions and relationships between each director or any member of his or her immediate family and the Company and the Bank. Following the review, the Board affirmatively determined, by applying the director independence standards contained in the Corporate Governance Principles, that each of our directors nominated for election at this Meeting (Stanley J. Cavalla, Tom Ellithorpe, Jay Gill, Heather Hammack, Nabeel Mahmood, Kenneth D. Newby, Susan Quigley, Brian Tkacz, and Dora Westerlund) is independent of the Company and its management in that none has a direct or indirect material relationship with the Company, with the exception of Dennis R. Woods, who is considered an inside director because of his employment as President and CEO of the Company. In addition, all members of the Audit Committee, the Compensation Committee and the Corporate Governance / Nominating Committee satisfy the standards of independence applicable to members of such committees established under applicable law, the listing standards and applicable rules of NASDAQ, and the director independence standards set forth in the Company's Corporate Governance Principles.

**Nomination of Directors**

The Board of Directors maintains a Corporate Governance/Nominating Committee, which is responsible for assisting the Board of Directors in director selection, as well as review and consideration of developments in corporate governance practices. This committee consists solely of independent directors. This committee will also review director nominees submitted by shareholders. The Corporate Governance/Nominating Committee is responsible for annually reviewing and evaluating, in conjunction with the Board of Directors, the appropriate skills and characteristics required for Board of Directors members in

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the context of the current composition of the Board of Directors and goals for nominees to the Board of Directors, including nominees who are current directors.

The Board of Director's policies with respect to director nominees have been to consider, among other factors: (a) the business experience of the nominee; (b) his or her reputation and influence in the community and standards of moral and ethical responsibility; (c) availability and willingness to devote time to fully participate in the work of the Board of Directors and its committees; and (d) commitment to the Company as evidenced by personal investment. Directors are expected to have demonstrated notable achievement in business, education, or public service; possess the education and experience to make a significant contribution to the Board of Directors; bring a range of skills, diverse perspective, and background to the Board of Directors; and serve as active resources for referrals and business development.

The Board of Directors will consider properly submitted nominees to the Board of Directors proposed by shareholders, although the Board has no formal policy with regard to shareholder nominees as it considers all nominees on their merits, as discussed above. Any shareholder nominations proposed for consideration by the Board should include the nominee's name and qualifications for Board membership and should be addressed to:

Dennis R. Woods, Chairman of the BoardUnited Security Bancshares2126 Inyo StreetFresno, California 93721

In addition, the Bylaws of the Company permit shareholders to nominate directors for consideration at an Annual Meeting of Shareholders. For a description of the process for nominating directors in accordance with the Bylaws, please see the Notice of Annual Meeting of Shareholders accompanying this Proxy Statement.

**Board Leadership Structure**

Our Board of Directors is led by Dennis Woods, our Chairman of the Board, President, and Chief Executive Officer. The decision as to who should serve as Chairman of the Board, and who should serve as Chief Executive Officer, and whether those offices should be combined or separate, is properly the responsibility of our Board. The members of our Board possess considerable experience and unique knowledge of the challenges and opportunities we face, and are in the best position to evaluate our needs and how best to organize the capabilities of the directors and executive officers to meet those needs. The Board believes that the most effective leadership structure entails Mr. Wood's continued service as both Chairman of the Board and Chief Executive Officer. Mr. Woods was the founding Chairman of the Bank and has been the Company's Chairman of the Board and Chief Executive Officer since 2001. The Board of Directors believes that he is uniquely qualified through his experience and expertise to be the person who generally sets the agenda for, and leads discussions of, strategic issues for our Board. He was one of the key individuals behind our formation and his leadership was instrumental in the drafting and implementing of our strategic plan as well as our mission and vision statements. Mr. Woods' leadership, as both the Chairman of the Board and as the Chief Executive Officer, continues to ensure that we remain dedicated to and focused on our mission.

Like many companies, our Board of Directors has an Executive Committee and other committees through which our Board of Directors accomplishes most of its corporate governance role, including new director and succession planning. Some of the committees are chartered to undertake significant activities and are made up entirely of independent directors.

In addition, our independent directors participated in nine executive sessions during the year, in which our Chairman of the Board and Chief Executive Officer does not participate. Any independent director may request additional executive sessions at any meeting. Our executive sessions are led by our Lead Director, Ken Newby, who is an independent director recommended by our Corporate Governance/Nominating Committee and appointed by our Board. The Lead Director is responsible for setting the agenda for executive sessions and leading them.

**Board Role in Risk Oversight**

Risk is inherent with every business, and how well a business manages risk can ultimately determine its success. The Company faces a number of risks, including interest rate risk and credit, market, and operational risks, such as the impact of competition. Management is responsible for the day-to-day management of the risks the Company faces, while the Chief Risk Officer and the Board, as a whole and through its committees, have responsibility for the oversight of risk management. In its risk-oversight role, the Board of Directors is responsible for ensuring that the Bank's risk management policies and procedures are adequate and functioning as designed.

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The Audit Committee engages in regular discussions with the Chief Risk Officer, the Company's executive officers, and other Company officers as the Audit Committee may deem appropriate related to risk management. The committees consider risks within their areas of responsibility; for instance, the Compensation Committee considers risks that may result from changes in compensation programs.

**Corporate Governance/Nominating Committee**

The Corporate Governance/Nominating Committee held one meeting during 2025. During 2025, the committee members were Mr. Ellithorpe, Ms. Hammack, Mr. Tkacz, and Ms. Westerlund, who are all considered independent as defined by the applicable NASDAQ and SEC rules. The charter of the Corporate Governance/Nominating Committee can be found on the Company's website at www.unitedsecuritybank.com by clicking "About Us" and then "Governance."

**Compensation Committee**

The Compensation Committee held three meetings during 2025. The Compensation Committee consists of two directors, both of whom are independent as defined by the applicable NASDAQ and SEC rules. During 2025, the members of the Compensation Committee were Mr. Gill, Ms. Hammack, and Mr. Tkacz. The Compensation Committee reviews human resource policies, establishes the compensation for the Chief Executive Officer and other executive officers, reviews salary recommendations, grants stock based compensation, and approves other personnel matters, which are in excess of management's authority.

None of the Company's executive officers served on the Compensation Committee and none of the members of the Compensation Committee serves or has served as an officer or employee of the Company. The charter of the Compensation Committee can be found on the Company's website at www.unitedsecuritybank.com by clicking "About Us" and then "Governance."

**Audit Committee**

During 2025, the Audit Committee met 12 times. During 2025, the Audit Committee consisted of Ms. Quigley (Chairperson), Mr. Newby, and Mr. Ellithorpe, all of whom were independent as defined by the applicable NASDAQ and SEC rules. Ms. Quigley and Mr. Newby are deemed by the Company to be audit committee financial experts pursuant to the applicable rules and regulations of the SEC. Ms. Quigley and Mr. Newby have an understanding of generally accepted accounting principles (GAAP) and have the ability and experience to prepare, audit, evaluate and analyze financial statements which present the breadth and level of complexity of issues that are reasonably expected to be raised by the Company's financial statements.

The Audit Committee oversees the Company's corporate accounting and reporting practices and the quality and integrity of the Company's financial statements and reports; selects, hires, oversees and terminates the Company's independent auditors; monitors the Company's independent auditors' qualifications, independence and performance; monitors the Company and its affiliates' compliance with legal and regulatory requirements; and oversees all internal auditing functions and controls. The Audit Committee also oversees the risk management functions of the Bank.

The Board of Directors has adopted a written charter for the Audit Committee which is available on the Company's website at www.unitedsecuritybank.com by clicking "About Us" and then "Governance."

***Audit Committee Report***

The Report of the Audit Committee of the Board will not be deemed filed under the Securities Act of 1933, as amended (Securities Act), or under the Exchange Act.

In the performance of its oversight function, the Audit Committee considered and discussed the consolidated, audited financial statements with management and Baker Tilly US, LLP, with, and without, management present. The Audit Committee also discussed with Baker Tilly US, LLP, matters required to be discussed by the Public Company Accounting Oversight Board (PCAOB) "Auditing Standards 1301, Communications with Audit Committees," as currently in effect. The Audit Committee discussed with management and Baker Tilly US, LLP, the quality and adequacy of the internal controls of the Company. The Audit Committee received written disclosures and a letter from Baker Tilly US, LLP, required by Independence Standards Board Standard No. 1, and has discussed with them their independent status. Baker Tilly US, LLP, did not perform any prohibited services for the Company.

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Based on the review and discussions noted above, the Audit Committee recommended to the Board that the Company's audited, consolidated-financial statements be included in the Company's Annual Report on Form 10-K for the year ended December 31, 2025, for filing with the SEC.

The Audit Committee has also confirmed that there have been no new circumstances or developments since their respective appointments to the Audit Committee that would impair any member's ability to act independently. Respectfully submitted by the members of the Audit Committee:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

Dated: March 25, 2026&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Audit Committee of the Board of Directors of United Security Bancshares**

Susan Quigley, Chairperson

Kenneth Newby,

Tom Ellithorpe

**Section 16(a) Beneficial Ownership Reporting Compliance**

Section 16(a) of the Exchange Act requires the Company's directors and certain executive officers and persons who own more than ten percent (10%) of a registered class of the Company's equity securities (collectively, the "Reporting Persons"), to file reports of ownership and changes in ownership with the SEC. The Reporting Persons are required by SEC regulation to furnish the Company with copies of all Section 16(a) forms they file.

Based solely on its review of the copies of such forms received by it, or written representations from the Reporting Persons that no Forms 4 or 5 were required for those persons, the Company believes that during 2025 the Reporting Persons complied with all filing requirements applicable to them, except for Mr. Ellithorpe, who filed one late Form 4.

**Item 11 - Executive Compensation**

**Introduction**

This Compensation Discussion and Analysis (CD&A) explains our executive compensation program for our named executive officers (NEOs) listed below. The CD&A also describes the process followed by the Compensation Committee of the Board of Directors (the "Committee") for making pay decisions, as well as its rationale for specific decisions related to 2025.

The following table sets forth the name, age, and position, as of February 1, 2026, of the Company's NEOs. None of the executive officers was selected pursuant to any arrangement or understanding other than with the directors and executive officers of the Company acting within their capacities as such.

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| | | |
|:---|:---|:---|
| **NEO** | **Age** | **Position and Principal Occupation For the Past Five Years** |
| Dennis R. Woods | 79 | President and Chief Executive Officer of United Security Bancshares and United Security Bank since 1993. |
| David A. Kinross | 61 | Senior Vice President and Chief Financial Officer of United Security Bancshares and United Security Bank since 2022. |
| Kevin J. Williams | 51 | Senior Vice President and Chief Banking Officer of United Security Bancshares and United Security Bank since 2025. |

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**Executive Summary**

***2025 Executive Compensation Highlights***

Our executive compensation program is designed to align the interests of our NEOs with those of our shareholders. Based on our performance, and consistent with our desire to place greater emphasis on variable pay elements in our executive compensation program going forward, the Committee made the following executive compensation decisions for 2025:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• ***Base Salaries:*** The Committee approved base salary adjustments of 3.50% for Mr. Woods and Mr. Kinross, effective January 2025. Mr. Williams was hired on May 30, 2025, at a base salary of $295,000 per annum.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• ***2025 Short-Term Incentives:*** Based on our 2025 financial performance, Mr. Woods, Mr. Kinross, and Mr. Williams earned incentives of 24.6%, 21.3%, and 14.4%, respectively, of their base salaries, or approximately 32% to 55% of their respective maximum incentive opportunity. For details, please refer to "2025 Executive Compensation Program in Detail" discussion below.

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***Summary of Executive Compensation Practices***

Our executive compensation program includes the following practices and policies, which we believe promote sound compensation governance and are in the best interests of our shareholders:

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| | |
|:---|:---|
| **What we do** | **What we don't do** |
| Pay for performance and allocate individual awards based on actual results and how results were achieved. | No employment arrangements that provide for guaranteed salary increases, non-performance based bonuses or equity compensation for executive officers. |
| Restricted stock unit and restricted stock awards that are aligned with the long-term creation of shareholder value. | No severance benefits to our executive officers exceeding three times base salary and bonus. |
| Engage independent, external compensation consultants. | No excise tax gross-ups upon a change in control. |
| Clawback features incorporated into our executive employment agreements. | No repricing, buyout or exchange of underwater stock options. |
| Use of multiple performance measures and caps on potential incentive payments. | No excessive executive perquisites. |
| Annual review of executive incentive compensation programs. | No single trigger acceleration of vesting in the event of a change-in-control. |

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**What Guides Our Program**

***Compensation Philosophy***

Our executive compensation program is designed to achieve the following objectives:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Attract and retain the most qualified and experienced individuals available to further the Company's success.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Align the interests of executives and shareholders by linking a significant portion of executive compensation to the Company's financial performance.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Reward and motivate appropriate executive behavior that produces strong financial results, while managing risks and promoting safety and soundness.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Provide compensation opportunities competitive with those offered by our peers and consistent with the Company's level of performance.

***Elements of the Executive Compensation Program***

The three main elements of the Company's executive compensation program are base salary, short-term incentives, and long-term incentives, each of which is described below:

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| | | | | |
|:---|:---|:---|:---|:---|
| **Compensation Element** | **Fixed or Variable** | **Annual or Long Term** | **Cash or Equity** | **Purpose** |
| Base Salary | Fixed | Annual | Cash | To attract and retain the best talent. |
| Annual Short-Term Incentive Award | Variable | Annual | Cash | To motivate and maximize performance over a one-year period. |
| Restricted Stock Units and Restricted Stock Awards | Variable | Long- Term | Equity | To motivate and incent sustained performance over the long-term. Aligns interests of our NEOs with those of our shareholders. Also supports our leadership retention objectives. |

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***The Decision-Making Process***

<u>The Role of the Compensation Committee.</u> The Committee oversees the executive compensation program for our NEOs. The Committee works with its independent consultant and management to examine the effectiveness of the Company's executive compensation program annually. Details of the Committee's authority and responsibilities are specified in the Committee's charter, which may be accessed at our website, <u>www.unitedsecuritybank.com</u>.

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The Committee makes recommendations to the Board regarding the structure of incentive-based compensation plans and equity based plans, both of which require Board approval. Operating within the plans approved by the Board, the Committee makes all final compensation and equity award decisions regarding our NEOs.

<u>Role of the CEO.</u> The CEO provides recommendations to the Committee on compensation for NEOs other than himself. The CEO does not provide recommendations concerning his own compensation, nor is he present during discussions of the Committee about his compensation.

<u>Use of Independent Consultants and Advisors</u>. The Committee engaged the services of Pearl Meyer & Partners (Pearl Meyer) as its outside independent compensation consultant during 2022. Pearl Meyer advises the Compensation Committee on a range of executive and director compensation matters including plan design, competitive market assessments, trends, and best practices. Pearl Meyer does not provide any other services to the Company.

<u>The Role of Benchmarking and Market Data</u>. The companies comprising the comparator peer group are reviewed and selected by the Committee to ensure relevance, with data and recommendations provided to the Committee by Pearl Meyer. The companies comprising the 2025 peer group were selected based on the following considerations:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Size Characteristics: Assets, operating revenue, and market capitalization approximately two-thirds to twice the size of the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Geography: Headquartered in California, Nevada, or Washington;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Operations: Commercial banks with reasonably similar loan mix and ratio of non-interest income to operating revenue as the Company.

The 2025 peer group approved by the Committee consisted of the following companies:

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| | |
|:---|:---|
| American Riviera Bancorp | Plumas Bancorp |
| California BanCorp | Provident Financial Holdings, Inc. |
| Community West Bancshares | Riverview Bancorp, Inc. |
| FFB Bancorp | Sound Financial Bancorp, Inc. |
| First Northern Community Bancorp | Summit State Bank |
| Oak Valley Bancorp | Timberland Bancorp, Inc. |

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The Committee engaged Pearl Meyer in 2022 to review the compensation of the NEOs and provide the Committee with an analysis of competitive pay practices for senior executives at the peer-group companies listed above. The Committee established base salaries, variable cash incentive awards, and long-term, equity-based incentive awards on a case-by-case basis for each NEO taking into account, among other things, individual and company performance, length of service, market data, advancement potential, recruiting needs, internal equity, retention requirements, succession planning, and best compensation governance practices. While the Committee used the Pearl Meyer analysis to help inform its compensation decisions, it does not target individual compensation levels to specific market pay percentiles.

**2025 Executive Compensation Program in Detail**

***Base Salary***

Base salary represents annual fixed compensation and is a standard element of compensation necessary to attract and retain executive leadership talent. In making base salary decisions, the Committee considers the CEO's feedback as it relates to NEO performance, as well as each NEO's position and level of responsibility within the Company. The Committee takes into account factors such as relevant market data, individual performance and contributions, and length of service. The Committee initially determined the appropriate annual base salary rate for each NEO as follows:

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| | | | |
|:---|:---|:---|:---|
| **NEO** | **2024 Base Salary** | **2025 Base Salary** | **% Adjustment** |
| Dennis R. Woods | $664521 | $687779 | 3.50% |
| David A. Kinross | $288558 | $298657 | 3.50% |
| Kevin J. Williams (1) | $— | $295000 | —% |

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(1) Mr. Williams began employment with the Company on May 30, 2025.

***Short-term (Annual) Incentives***

All of our NEOs are eligible to receive annual incentive awards, which are designed to focus executives on short-term financial and strategic goals that contribute to long-term value.

The NEOs are eligible to participate in the Annual Incentive Plan, which provides an opportunity to receive an annual incentive award that is contingent on achieving pre-defined annual corporate objectives, as well as individual goals.

<u>Annual Incentive Plan.</u> The 2025 Annual Incentive Plan provided our NEOs the opportunity to earn a performance-based annual cash incentive award. Actual bonus payouts depend on the achievement of pre-established performance objectives. Maximum annual incentive opportunities are expressed as a percentage of base salary, and were established by the Committee based on the NEO's level of responsibility and his ability to impact overall results. The 2025 maximum award opportunities for the NEOs were as follows:

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| | |
|:---|:---|
| **NEO** | **Maximum Opportunity as % of Base Salary** |
| Dennis R. Woods | 45% |
| David A. Kinross | 45% |
| Kevin J. Williams (1) | 26% |

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(1) Mr. Williams' 2025 Annual Incentive was prorated as he began employment with the Company on May 30, 2025.

*<u>Performance Metrics and Assigned Weights</u>.* At the beginning of each year, the Committee approves the corporate financial measures, goals and assigned weights for each NEO. For 2025 the Committee selected the following performance metrics:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Core Net Income Before Tax (CNIBT):* Core net income is defined as pretax income less gain or loss on sales, OREO expenses, provision for loan loss, bonus expense, merger expenses, and gain or loss on fair value of financial liability.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*• Deposit Growth:* Deposit growth is defined as growth in average deposit balances over the prior year.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Non-performing Assets (NPA) Ratio:* NPA is defined as total nonaccrual loans, accruing loans past due 90 days or more, and other real estate owned as a percentage of total assets.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Regulatory Results:* This metric is based on regulatory examination results.

The following table shows the performance measures and assigned weights for 2025:

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| | | | | |
|:---|:---|:---|:---|:---|
| **NEO** | **CNIBT** | **NPA Ratio** | **Regulatory Results** | **Deposit Growth** |
| Dennis R. Woods | 53% | 13% | 13% | 21% |
| David A. Kinross | 52% | 19% | 19% | 10% |
| Kevin J. Williams | 53% | 13% | 13% | 21% |

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The following table shows the performance requirements assigned for each measure and 2025 results:

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| | | | |
|:---|:---|:---|:---|
| **Performance Measure** | **Threshold** | **Maximum** | **Results** |
| CNIBT Growth | (7.57)% | 12.44% | (4.41)% |
| NPA Ratio | 1.65% | 1.00% | 1.11% |
| Regulatory Results <sup>(1)</sup> | -- | -- | -- |
| Deposit Growth | (1.97)% | 10.04% | 2.54% |

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(1)Regulatory results cannot be publicly disclosed, but the outcome resulted in an earned payout.

Annual incentive awards are calculated based on actual performance as compared to the goals set forth. Performance below the threshold requirement results in non-payment for the respective measure. The Committee has the discretion to reduce or increase the payouts to the extent it determines appropriate to reflect the business environment and market conditions that may affect the Company's financial and stock price performance. No such discretion was exercised by the Committee for payouts earned in 2025.

<u>2025 Annual Incentive Plan Results.</u> Based on the corporate results and individual performance achievements described above, the Committee approved the following Annual Incentive Plan incentive award payouts:

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| | | |
|:---|:---|:---|
| **NEO** | **Earned Payout as a % of Base Salary** | **Actual Payout ($)** |
| Dennis R. Woods | 24.6% | $169366 |
| David A. Kinross | 21.3% | 63465 |
| Kevin J. Williams (1) | 14.4% | 42376 |

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1) Mr. Williams' 2025 Annual Incentive was prorated as he began employment with the Company on May 30, 2025.

The following table details the recommended long-term incentive values.

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| | | | |
|:---|:---|:---|:---|
| **Executive** | **2025 Salary** | **Long-Term Target Percentage** | **Long-Term Incentive Value** |
| Dennis Woods | $687779 | 15% | $103167 |
| Dave Kinross | 298657 | 10% | 29866 |
| Kevin J. Williams | 295000 | 10% | 29500 |

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Actual values of the awards totaled $104,061 for Mr. Woods, $30,127 for Mr. Kinross, and $29,760 for Mr. Williams based on the grant date fair value at January 27, 2026, resulting from a closing stock price of $10.49 on that day. Shares granted totaled 9,920 shares, 2,872 shares, and 2,837 shares for Mr, Woods, Mr. Kinross, and Mr. Williams, respectively.

***Pay versus Performance***

The Securities and Exchange Commission (SEC) requires that "pay versus performance" detail, as codified in the Dodd-Frank Act of 2010, be provided by companies filing proxy and information statements regarding executive compensation. The rules require a disclosure of what is "actually paid" to the PEO (principal executive officer) and NEOs (named executive officers), as well as total shareholder return for the company and its peers, net income, and a company-selected measure. Adjustments made to the summary compensation of the PEO and NEOs in order to determine what is "actually paid" are included in footnote 4 to the following table.

*The following table sets forth pay versus performance information:*

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| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | | | | | **Value of Initial Fixed $100 Investment Based on:** | **Value of Initial Fixed $100 Investment Based on:** | | |
| **Year** | **Summary Compensation Table Total for PEO (1)** | **Compensation Actually Paid to PEO (4)** | **Average Summary Compensation Table Total for Non-PEO NEOs (1)** | **Average Compensation Actually Paid to non-PEO NEOs (4)** | **Total Shareholder Return (2)** | **Peer Group Total Shareholder Return (2)** | **Net Income** | **Growth of Core Net Income before Taxes (year over year) (3)** |
| 2025 | $1284384 | $1298658 | $758623 | $776454 | $104.46 | $111.38 | $14783000 | (4.41)% |
| 2024 | 1140887 | 1114342 | 971835 | 960952 | 121.33 | 109.38 | 19796000 | 12.70% |

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(1) For 2025, the PEO (Principal Executive Officer) is Dennis Woods, President & CEO of the Company. The NEOs (Named Executive Officers) are David A. Kinross, the Company's SVP & Chief Financial Officer, and Kevin J. Williams, the Company's SVP & Chief Banking Officer. For 2024, the PEO (Principal Executive Officer) is Dennis Woods, President & CEO of the Company. The NEOs (Named Executive Officers) are David A. Kinross, the Company's SVP & Chief Financial Officer, and Porsche Saunders, the Company's SVP & Chief Lending Officer.

(2) Total shareholder return represents the cumulative change in the value of a $100 investment based on the value of common stock as measured at December 31, 2025, through and including the fiscal year-end for each reported period and dividend reinvestment during the period. Peer group includes the peers listed previously in the CD&A.

(3) Core net income before taxes is a non-GAAP financial number calculated by combing consolidated pretax earnings with incentive payments, OREO expenses, provisions for loan loss, and gains/losses on equity securities, sale of assets, merger expenses, and fair value of junior subordinated debt.

(4) The following table sets forth a reconciliation of summary compensation to compensation "actually paid" to the PEO and NEOs:

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **2025** | **2025** | **2024** | **2024** | **2024** |
| **Adjustments** | **PEO<br>($)** | **Average of Other NEOs<br>($)** | **PEO<br>($)** |  | **Average of Other NEOs<br>($)** |
| Total Compensation from Summary Compensation Table | $1284384 | $758623 | $1140887 |  | $971835 |
| Adjustments for defined benefit pension plan: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Subtraction: Aggregate change in actuarial present value of accumulated benefit plan during year | 13369 |  | 24480 |  | 11423 |
| Adjustment for stock awards: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Subtraction: Fair value of awards granted during the year | 228715 | 419934 | 132385 |  | 540715 |
| &nbsp;&nbsp;&nbsp;Addition: Fair value of equity awards granted during year that are outstanding and unvested at year end | 155501 | 429019 | 86880 |  | 436598 |
| &nbsp;&nbsp;&nbsp;Addition (subtraction): Year-over-year change in fair value of awards granted in prior years for which vesting conditions were satisfied during the year | (258) | (159) |  | $(1800) | 4552 |
| &nbsp;&nbsp;&nbsp;Addition (subtraction): Year-over-year change in fair value of awards granted in prior years that are outstanding and unvested at year end | (129) | (1079) |  |  | 11871 |
| &nbsp;&nbsp;&nbsp;Addition: Fair value at end-of-year of awards granted and vested during the year | 101244 | 9984 | 43440 |  | 88234 |
| Compensation actually paid (as calculated) | $1298658 | $776454 | $1114342 |  | $960952 |

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*The following tables set forth the weighting of performance objectives for incentive payout calculations:*

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| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| **2025 Incentive Payments** | **2025 Incentive Payments** | **2025 Incentive Payments** | **2025 Incentive Payments** | **2025 Incentive Payments** | **2025 Incentive Payments** | **2025 Incentive Payments** | **2025 Incentive Payments** |
| **Growth of Core Net Income before Taxes** | **Incentive Payout** | **Non-Performing Assets/Total Assets** | **Incentive Payout** | **Regulatory Issues** | **Incentive Payout** | **Deposit Growth** | **Incentive Payout** |
| >12.44% | 45% | < 1.00% | 45% |  |  | >10.04% | 45% |
| 9.94 - 12.44% | 40% | 1.00 - 1.10% | 40% |  |  | 8.54 - 10.04% | 40% |
| 7.44 - 9.94% | 35% | 1.10 - 1.25% | 35% | 0 | 35% | 7.04 - 8.54% | 35% |
| 4.94 - 7.44% | 30% | 1.25 - 1.35% | 30% |  |  | 5.54 - 7.04% | 30% |
| 2.44 - 4.94% | 25% | 1.35 - 1.45% | 25% | 1 | 25% | 4.04 - 5.54% | 25% |
| (2.56) - 2.44% | 15% | 1.45 - 1.55% | 15% |  |  | 1.04 - 4.04% | 15% |
| (7.56) - (2.56)% | 5% | 1.55% - 1.65% | 5% | 2 | 5% | (1.96) - 1.04% | 5% |
| < (7.56)% |  | > 1.65% |  | 3 |  | < (1.96)% |  |

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| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| **2024 Incentive Payments** | **2024 Incentive Payments** | **2024 Incentive Payments** | **2024 Incentive Payments** | **2024 Incentive Payments** | **2024 Incentive Payments** | **2024 Incentive Payments** | **2024 Incentive Payments** |
| **Growth of Core Net Income before Taxes** | **Incentive Payout** | **Non-Performing Assets/Total Assets** | **Incentive Payout** | **Regulatory Issues** | **Incentive Payout** | **Deposit Growth** | **Incentive Payout** |
| > (7.0)% | 45% | < 1.10% | 45% |  |  | > (3.25)% | 45% |
| (7.0) - (9.5)% | 40% | 1.10 - 1.20% | 40% |  |  | (3.25) - (4.75)% | 40% |
| (9.5) - (12)% | 35% | 1.20 - 1.35% | 35% | 0 | 35% | (4.75) - (6.25)% | 35% |
| (12) - (14.5)% | 30% | 1.35 - 1.45% | 30% |  |  | (6.25) - (7.75)% | 30% |
| (14.5) - (17)% | 25% | 1.45 - 1.55% | 25% | 1 | 25% | (7.75) - (9.25)% | 25% |
| (17) - (22)% | 15% | 1.55 - 1.65% | 15% |  |  | (9.25)-(12.25)% | 15% |
| (22) - (27)% | 5% | 1.65% - 1.75% | 5% | 2 | 5% | (12.25)-(15.25)% | 5% |
| < (27)% |  | > 1.75% |  | 3 |  | < (15.25)% |  |

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***Supplemental Executive Retirement Plan***

The Company has established and sponsors a supplemental executive retirement plan in order to appropriately incent key employees, including the NEOs, to remain with the Company and become long-term loyal leaders. For more information on the Company's supplemental executive retirement plan and the benefits payable to the NEOs thereunder, please see "Narrative Disclosure Regarding Retirement Benefits and Change in Control Benefits - Supplemental Executive Retirement Plan" below.

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***Other Benefits and Perquisites***

Group insurance premiums, including, medical, disability, dental, and vision are paid for by the Company for NEOs and their families. These benefits are common in the industry for similar positions. The Company pays these insurance benefits for all other employees, and employees may elect to pay for the cost of insurance for their families. The Company has also established a contributory 401(k) defined contribution plan that allows eligible employees to contribute a portion of their income to a trust on a tax-favored basis. The Company matches participant contributions up to 4% of their eligible annual compensation. For more information on the Company's 401(k) plan, please see "Narrative Disclosure Regarding Retirement Benefits and Change in Control Benefits - 401(k) Plan," below.

The Chief Executive Officer is provided with a Company-owned vehicle and given reimbursement for membership dues in a country club. The Chief Financial Officer and Chief Banking Officer receive monthly car allowances. See "All Other Compensation" in the Summary Compensation Table below. The Company provides these perquisites to certain of its NEOs because these perquisites are offered by many of its peers, and therefore, the Compensation Committee believes that providing these perquisites to these NEOs is necessary for their retention and for the recruitment of new executive officers.

***Employment Agreements and Executive Change in Control Agreements***

The Bank has employment agreements in place with Mr. Woods, Mr. Kinross, and Mr. Williams. For more information on the employment agreements and executive change in control agreements, please see "Narrative Disclosure Regarding Retirement Benefits and Change in Control Benefits" below.

**Other Practices, Policies and Guidelines**

***Clawback Policy***

The Company's "Clawback Policy" details procedures providing for the recovery of incentive-based compensation erroneously received by current or former executive officers during the three completed fiscal years immediately preceding the year in which the company is required to prepare an accounting restatement due to material noncompliance with financial reporting requirements. The policy requires that erroneous payments are recovered even if there is no misconduct or failure of oversight on the part an individual executive officer. The policy is included as an exhibit to our 2024 Annual Report on Form 10-K.

Our executive employment agreements contain a provision that, in the event of a material restatement of financial results, the Board of Directors, based on available remedies, may seek recovery or forfeiture from any executive officer of the portion of incentive compensation that was received by, or vested in, the executive officer prior to the determination that a restatement was required and that would not have been earned had performance been measured on the basis of the restated results where the Board of Directors reasonably determines that the executive engaged in knowing or intentional fraudulent or illegal conduct that materially contributed to the need for the restatement.

***Compensation Risk Assessment***

It is our belief that a material portion of our executives' total compensation should be variable compensation, tied to the Company's financial performance. However, we strive to ensure that incentives do not result in actions that may conflict with the long-term interests of the Company, our shareholders, or our customers. The Committee reviews an evaluation of all of our plans covered under the "Sound Incentive Compensation Policies" for attributes that could cause excessive risk-taking or unethical sales practices. We concluded that our programs and practices do not encourage excessive risk-taking nor do they encourage unethical sales practices which would potentially cause harm to the Company or our customers.

***Insider Trading Policies and Procedures***

The Company has adopted an insider trading policy (the "Insider Trading Policy") that applies to all (i) directors, (ii) executive officers and (iii) employees who are exposed to insider information (together, the "Covered Persons"). The Insider Trading Policy prohibits the use of material non-public information obtained by Covered Persons through their involvement with the Company when making decisions to purchase, sell, give away, or otherwise trade in the Company's securities or to provide such information to others outside the organization. Further, we have established black-out periods to which all Covered Persons are subject, including quarterly black-out periods, which commence up to two weeks before the end of each quarter and continue until the quarterly earnings results are disclosed on Form 8-K. The Company may impose black-out periods from time to time as other types of material non-public information occur when material non-public events or disclosures are pending. If the Company imposes a special black-out period, the Company will notify Covered Persons accordingly.

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***Stock Option Grant Timing Policy***

The Company has not granted stock options in more than 10 years. Accordingly, the Company has not adopted policies and practices on the timing of awards of stock options in relation to the disclosure of material nonpublic information of the Company, as contemplated by Item 402(x) of Regulation S-K. However, the United Securities Bancshares 2025 Equity Incentive Award Plan that is the subject of Proposal 2 generally prohibits grants of any equity award within four days before or one day after the planned release of material nonpublic information.

***Tax and Accounting Considerations***

The Compensation Committee believes that its primary responsibility is to provide a compensation program that attracts, retains, and rewards the executive talent necessary for our success.

***Compensation Committee Report***

***The information contained in this report shall not be deemed to be "soliciting material," to be "filed" with the SEC, or to be subject to Regulation 14A or Regulation 14C (other than as provided in Item 407 of Regulation S-K) or to the liabilities of Section 18 of the Securities Exchange Act of 1934, and shall not be deemed to be incorporated by reference in future filings with the SEC except to the extent that the Company specifically incorporates it by reference into a document filed under the Securities Act of 1933 or the Securities Exchange Act of 1934.***

The Compensation Committee has reviewed and discussed the "Compensation Discussion and Analysis" with management. Based on that review and those discussions, the Compensation Committee recommended to the Board of Directors that the "Compensation Discussion and Analysis" be included in the Proxy Statement.

Dated: March 25, 2026&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**&nbsp;&nbsp;&nbsp;&nbsp;**Compensation Committee of the Board of Directors of United Security Bancshares

Brian C. Tkacz, Chairman

Heather Hammack

Jay Gill

**Summary Compensation Table**

The following table sets forth, for the fiscal years ended December 31, 2025, and 2024, compensation information for services in all capacities to the Company's executive officers who served as: (i) the Company's principal executive officer and (ii) the two most highly compensated executive officers who were serving as executive officers at the end of 2025 and whose total compensation in 2025 exceeded $100,000 (collectively, the "Named Executive Officers").

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| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| **Summary Compensation** | **Summary Compensation** | **Summary Compensation** | **Summary Compensation** | **Summary Compensation** | **Summary Compensation** | **Summary Compensation** | **Summary Compensation** | **Summary Compensation** |
| **Name and Principal Position** | **Year** | **Salary ($) (1)** | **Bonus ($)** | **Stock Awards ($) (2)(3)** | **Non-Equity Incentive Plan Compensation ($) (4)** | **Non-Qualified Deferred Compensation Earnings ($) (5)** | **All Other Compensation ($)(6)** | **Total Compensation ($)** |
| Dennis R. Woods, President & CEO | 2025 | $742479 | $— | $228715 | $169366 | $13369 | $130455 | $1284384 |
| Dennis R. Woods, President & CEO | 2024 | 727350 |  | 132385 | 147856 | 24480 | 108816 | 1140887 |
| David A. Kinross, SVP & CFO | 2025 | 298657 |  | 57408 | 63465 |  | 86632 | 506162 |
| David A. Kinross, SVP & CFO | 2024 | 288558 |  | 764499 | 64024 |  | 68193 | 1185274 |
| Kevin J. Williams, SVP & CBO (7) | 2025 | 174806 |  | 782460 | 42376 |  | 11441 | 1011083 |
| Kevin J. Williams, SVP & CBO (7) | 2024 |  |  |  |  |  |  |  |

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| |
|:---|
| (1) Includes compensation for accrued personal days not used (maximum 10 days) plus imputed income for life insurance provided by the Company in excess of $50,000 of coverage. |
| (2) Represents the grant-date fair value determined in accordance with FASB ASC Topic 718, using the valuation assumptions described in the Notes to the Consolidated Financial Statements. On January 28, 2025, Mr. Woods and Mr. Kinross were granted RSAs totaling 13,701 shares and 5,949 shares, respectively. 33.3% of the shares vested on December 1, 2025, with future future vesting of 33.3% on December 1, 2026, and 33.4% on December 1, 2027. On September 23, 2025, Mr. Williams was granted 81,000 RSAs with a fair value of $782,460 at grant date. The shares vest at 10% over 10 years, beginning on May 30, 2026. |
| (3) Reflects the dollar amount recognized for financial statement report purposes for the fiscal years ended December 31, in accordance with FAS 123(R), of awards pursuant to the Company's Equity Incentive Award Plan. Assumptions used in the calculation of these amounts are included in the Company's audited consolidated financial statements for the fiscal years ended December 31. |
| (4) The amounts shown reflect payments made under the terms of the Annual Incentive Plan for performance, and in each case are paid in the first quarter of the following year. |
| (5) The amounts shown represent only the aggregate change in the actuarial present value of the accumulated benefit under each NEO's supplemental executive retirement plan salary continuation agreement for the given years. The amounts are established by the Company determined using interest rate assumptions consistent with those used in the Company's financial statements. |
| (6) See following table for details of All Other Compensation column amounts. |
| (7) Mr. Williams began employment with the Company on May 30, 2025. |

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**All Other Compensation**

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| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| **Name and Principal Position** | **Year** | **Auto ($)** | **Club Membership ($)** | **401(k) ($)** | **Health<br>Insurance ($)** | **Director<br>Fees ($) (1)** | **Total ($)** |
| Dennis R. Woods, President & CEO | 2025 | $26320 | $3600 | $14000 | $57340 | $29195 | $130455 |
| Dennis R. Woods, President & CEO | 2024 | 24592 | 3600 | 13800 | 42393 | 24431 | 108816 |
| David A. Kinross, SVP & CFO | 2025 | 12000 |  | 14000 | 60632 |  | 86632 |
| David A. Kinross, SVP & CFO | 2024 | 12000 |  | 13800 | 42393 |  | 68193 |
| Kevin J. Williams, SVP & CBO (2) | 2025 | 7000 |  | 3933 | 508 |  | 11441 |
| Kevin J. Williams, SVP & CBO (2) | 2024 |  |  |  |  |  |  |

---

(1) Mr. Woods received 50% of his 2025 monthly director fees in the form of restricted stock awards on January 28, 2025 and October 28, 2025, for a total of 1,795 shares of restricted stock with a total grant-date fair value of $16,694. He received 50% of his 2024 monthly director fees in the form of stock awards on February 27, 2024, June 25, 2024, September 24, 2024, and December 17, 2024, for a total of 1,565 shares of restricted stock with a total grant date fair value of $12,717.

(2) Mr. Williams began employment with the Company on May 30, 2025.

**Outstanding Equity Awards at Fiscal Year End**

*The following table sets forth certain information regarding the holdings of all equity awards by the Company's NEOs as of December 31, 2025.* 

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Option Awards** | **Option Awards** | **Option Awards** | **Option Awards** | **Option Awards** | **Stock Awards and Units** | **Stock Awards and Units** | **Stock Awards and Units** | **Stock Awards and Units** | **Stock Awards and Units** |
|<br>**Name** | **Number of Securities Underlying Unexercised Options (#) Exercisable** | **Number of Securities Underlying Unexercised Options (#) Un-exercisable** | **Equity Incentive Plan Awards: Number of securities Underlying Unexercised Unearned Options (#)** | **Option exercise price ($)** | **Option Expiration Date** | **Number of Shares of Stock That Have Not Vested (#) (1)** | | **Market Value of Shares of Stock That Have Not Vested ($) (2)** | **Equity Incentive Plan Awards: Number of Unearned Shares or Units That Have Not Vested (#)** | **Equity Incentive Plan Awards: Market Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)** |
| Dennis R. Woods |  |  |  |  |  | 19743 |  | $198812 |  |  |
| David A. Kinross |  |  |  |  |  | 84582 |  | 851741 |  |  |
| Kevin J. Williams |  |  |  |  |  | 81000 | (2) | 815670 |  |  |

---

(1) On December 1, 2023, Mr. Kinross received an RSA of 14,435 shares which will vest 20% per year over five years beginning December 1, 2024, and ending December 1, 2028. On December 17, 2024, Mr. Woods and Mr. Kinross were granted RSAs totaling 12,903 shares and 5,603 shares, respectively, with immediate vesting of 33.3% of the shares and future vesting of 33.3% on December 1, 2025, and 33.4% on December 1, 2026. On January 28, 2025, Mr. Woods and Mr. Kinross were granted RSAs totaling 13,701 shares and 5,949 shares, respectively, with vestings of 33.3% of the shares on December 1, 2025, 33.3% on December 1, 2026, and 33.4% on December 1, 2027. Mr. Woods was granted an additional 10,000 in RSAs on January 28, 2025 with 50% vesting on December 1, 2025 and 50% on December 1, 2026.

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(2) The value of shares underlying unvested RSAs is based on the closing price of the Company's common stock on December 31, 2025.

**Grant of Plan-Based Awards**

*The following table sets forth certain information regarding the granting of plan-based awards to the Company's NEOs during 2025.* 

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| **Grants of Plan-Based Awards** | **Grants of Plan-Based Awards** | **Grants of Plan-Based Awards** | **Grants of Plan-Based Awards** | **Grants of Plan-Based Awards** | **Grants of Plan-Based Awards** | **Grants of Plan-Based Awards** | **Grants of Plan-Based Awards** |
| | | **Estimated Future Payouts Under Non-Equity Incentive Plan Awards** | **Estimated Future Payouts Under Non-Equity Incentive Plan Awards** | **Estimated Future Payouts Under Non-Equity Incentive Plan Awards** | | | |
|<br>**NEO** |<br>**Grant Date** | **Threshold Level $** | **Target Level $** | **Maximum Level $** |<br>**All Other Stock Awards: Number of Shares of Stock or Units (#) (1)** |<br>**All Other Stock Awards: Number of Securities Underlying Options (#)** |<br>**Grant Date Fair Value of Stock Awards** |
| Dennis R. Woods | 01/28/2025 |  |  | $147856 | 12903 |  | $132385 |
| David A. Kinross | 01/28/2025 |  |  | 64024 | 5603 |  | 57847 |

---

(1) Of the shares granted January 28, 2025, 33.3% vested on December 1, 2025, with future vestings of 33.3% on December 1, 2026 and 33.4% on December 1, 2027.

***Stock Vesting***

*The following table presents information about the restricted stock that vested for each of the NEOs during 2025.*

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Option Awards** | **Option Awards** | **Stock Awards and Units** | **Stock Awards and Units** |
|<br>**NEO** | **Number of Shares Acquired on Exercise (#)** | **Value Realized on Exercise ($)** | **Number of Shares Acquired on Vesting (#)** | **Value Realized on Vesting ($) (1) (2) (3)** |
| Dennis Woods (2) |  |  | 14355 | $141778 |
| David A. Kinross (3) |  |  | 17999 | 178137 |

---

(1) The aggregate dollar value realized represents the value of shares received upon vesting of a restricted stock unit or restricted stock award.

(2) Mr. Woods received 50% of his monthly director fees for January through May 2025, in the form of restricted stock awards on January 28, 2025, for a total of 487 shares with a total grant-date fair value of $4,700. He received an award on October 28 2025, of 1,308 shares of restricted stock with a grant-date fair value of $11,994, for 50% of his director fees from June 2025 through May 2026. A total of 4,301 shares, 4,567 shares, and 5,000 shares of restricted stock awards with fair values of $42,666, $45,305 and $49,600, respectively, vested on December 1, 2025.

(3) Mr. Kinross's 2,500 restricted stock units with a fair value of $25,175 vested on December 31, 2025. A total of 8,761 shares of a restricted stock award vested on January 2, 2025 with a fair value of $86,121. A total of 2,887 shares, 1,868 shares, and 1,983 shares of restricted stock awards with fair values of $28,639, $18,531, and $19,671, respectively, vested on December 1, 2025.

**Narrative Disclosure Regarding Retirement Benefits and Change in Control Benefits** 

***401(k) Plan***

The Company has established a contributory 401(k) defined contribution plan (the "401(k) Plan") covering all eligible employees. The 401(k) Plan allows eligible employees to contribute a portion of their income to a trust on a tax-favored basis. All employees of the Company and/or the Bank are eligible to participate in the 401(k) Plan upon the first day of the month after completing three months of service. Participants are automatically vested 100% in all participant contributions which may be invested in any of several authorized investments. The Company also matches participant contributions up to 4% of their eligible annual compensation. During 2025, the Company reserved $394,000 to match all employee contributions to the 401(k) Plan, of which $31,933 was reserved to match contributions of the Company's Named Executive Officers and is included as "All Other Compensation" in the Summary Compensation Table above.

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***Potential Payment upon Change in Control***

*The following table reflects the estimated amounts of compensation that would be paid to each NEO in the event of a change in control of United Security Bank as of December 31, 2025.*

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| | | | | |
|:---|:---|:---|:---|:---|
| **Name and Principal Position** | **Voluntary Termination Prior to Change in Control** | **Potential Payment Post Change in Control (1)** | **Potential Gain from Acceleration of Unvested-Unexercised Equity Awards ($) (2)** | **Total Potential Income Triggered by a Change in Control ($)** |
| Dennis R. Woods, President & CEO | $— | $2210923 | $198812 | $2409735 |
| David A. Kinross, SVP & CFO |  | 661338 | 851741 | 1513079 |
| Kevin J. Williams, SVP & CBO |  | 295000 | 815670 | 1110670 |

---

(1) The Change in Control (CIC) agreement provides a lump sum payment to each executive based on the executive's base salary and bonus for such year. Mr. Woods would receive a payment of three year's base salary plus bonus, Mr. Kinross would receive two year's base salary plus bonus, and Mr. Williams would receive one year's base salary plus bonus.

(2) The calculation assumes the event triggering payments occurred on December 31, 2025.

***Supplemental Executive Retirement Plan***

As part of its incentives, the Company established and sponsored a supplemental executive retirement plan (SERP) pursuant to which the Company agreed to provide supplemental retirement income to key employees, including certain NEOs and their beneficiaries, if certain agreed upon eligibility and vesting conditions were met. The primary condition to the vesting of benefits under the Company's SERP was long-term service to the Company. Therefore, vesting was set pro-rata for each year over the term of the SERP. Prior service credit for any newly hired executive was not permitted, except at the discretion of the Compensation Committee, which oversees the management of the SERP. While the expected annual payment under the SERP was limited to not more than 50% of the annual base salary of the executive officer at the commencement of the SERP, the Compensation Committee may increase the annual payment amount of the SERP to 50% of the annual base salary averaged over the last five years of the executive officer's employment with the Company. The Compensation Committee may also approve a split-dollar agreement related to the SERP of an executive officer, and determine the terms of such split-dollar agreement including the treatment of imputed income of such split-dollar agreement to the executive officer and any gross up of taxes associated with the imputed income.

Dennis R. Woods, the Company's President and CEO, commenced participation in the Company's SERP in June 1996, and by June 2007, all benefits under his SERP were fully vested and could be drawn upon by Mr. Woods upon his retirement. Under the terms of his SERP, Mr. Woods will be entitled to compensation for 15 years at $100,000 per year.

The SERP also provided that benefits be paid to the executive officers' beneficiaries in the event of their deaths. The Company's obligation to pay begins in the month following death. The Company purchased single-premium life insurance policies for each SERP issued to protect the Company for this eventuality. The life insurance policies accrue tax-free income to the Company. The policies can remain in effect until the executive is deceased, even after all benefits under the SERP have been paid or can be liquidated at the option of the Company at the cash surrender value. The death benefit is designed to return to the Company the cost of the SERP expense. The cash value of the insurance is carried on its books as an asset.

In recent years, the Company has not offered such plans to new executive officers; therefore, Messrs. Kinross and Williams are not participants.

*The following table provides certain information regarding the retirement benefits for the NEOs.* 

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Pension Benefits** | **Pension Benefits** | **Pension Benefits** | **Pension Benefits** | **Pension Benefits** |
| **NEO** | **Plan Name** | **Number of Years Credited Service (#)** | **Present Value of Accumulated Benefit ($) (1)** | **Payments During Last Fiscal Year ($)** |
| Dennis R. Woods | SERP | 29 | $1081444 | $— |

---

(1) Present value of benefit earned in accordance with FAS 106. (See Note 13 to the Company's financial statements).

***Employment Agreements***

On April 28, 2015, the Company entered into an employment agreement with Mr. Dennis R. Woods for his service as President and Chief Executive Officer with an annual base salary of $499,392. The term of the employment agreement originally

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terminated on December 31, 2017, but, subject to early termination, renews annually for successive three-year terms unless prior notice of non-renewal is given by either party on an annual basis. Accordingly, Mr. Woods' employment agreement now terminates on December 31, 2026. The Board of Directors may from time to time review Mr. Woods' base salary and, at its sole discretion, may increase the base salary. Mr. Woods may also receive discretionary bonuses, if any, as determined by the Board of Directors and is eligible to earn incentive bonuses pursuant to any programs developed and implemented. The employment agreement provides that, in the event of involuntary termination without cause or voluntary termination for "Good Cause" (as defined), Mr. Woods would continue to receive his then current base salary for 24 months after such event, plus continuation of his group medical insurance benefits or payment of COBRA continuation benefits for 24 months. If Mr. Woods is terminated within one year following a change in control (as defined), he would be entitled to receive a lump sum payment equal to 36 months' then current base salary plus continuation of group medical insurance benefits or payment of COBRA continuation benefits for 36 months. Payments made in connection with a change in control would be reduced, if necessary, to ensure that no payments constitute an excess parachute payment under Internal Revenue Code Section 280G.

On November 1, 2022, the Company entered into an employment agreement with Mr. David A. Kinross for his service as Senior Vice President and Chief Financial Officer with an annual base salary of $275,000. The term of the employment agreement originally terminated on December 31, 2024 but, subject to early termination, renews annually for successive two-year terms unless prior notice of non-renewal is given by either party on an annual basis. Accordingly, Mr. Kinross's employment agreement now terminates on December 31, 2026. The Board of Directors may from time to time review Mr. Kinross' base salary and, in its sole discretion, may increase the base salary. Mr. Kinross may also receive discretionary bonuses, if any, as determined by the Board of Directors and is eligible to earn incentive bonuses pursuant to any programs developed and implemented. The employment agreement provides that, in the event of involuntary termination without cause or voluntary termination for "Good Cause" (as defined), Mr. Kinross would continue to receive his then current base salary for 12 months after such event plus continuation of his group medical insurance benefits or payment of COBRA continuation benefits for 12 months. If Mr. Kinross is terminated within one year following a change in control (as defined), he would be entitled to receive a lump sum payment equal to 24 months' then current base salary plus continuation of group medical insurance benefits or payment of COBRA continuation benefits for 24 months. Payments made in connection with a change in control would be reduced, if necessary, to ensure that no payments constitute an excess parachute payment under Internal Revenue Code Section 280G.

On May 30, 2025, the Company entered into an employment agreement with Mr. Kevin J. Williams for his service as Senior Vice President and Chief Banking Officer with an annual base salary of $295,000. The term of the employment agreement originally will terminate on May 29, 2026, but renew annually for successive one-year terms unless prior notice of non-renewal is given by either party on an annual basis. The Board of Directors may from time to time review Mr. William's base salary and, at its sole discretion, may increase the base salary. Mr. Williams may also receive discretionary bonuses, if any, as determined by the Board of Directors and is eligible to earn incentive bonuses pursuant to any programs developed and implemented. The employment agreement provides that, in the event of involuntary termination without cause or voluntary termination for "Good Cause" (as defined), Mr. Williams would continue to receive his then current base salary for 12 months after such event plus continuation of his group medical insurance benefits, or payment of COBRA continuation benefits, for 12 months. If Mr. Williams is terminated within one year following a change in control (as defined), he would be entitled to receive a lump sum payment equal to 12 months' then current base salary plus continuation of group medical insurance benefits or payment of COBRA continuation benefits for 12 months. Payments made in connection with a change in control would be reduced, if necessary, to ensure that no payments constitute an excess parachute payment under Internal Revenue Code Section 280G.

**Item 12 - Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters**

Management knows of no person who owns, beneficially or of record, either individually or together with associates, five percent (5%) or more of the outstanding shares of the Company's Common Stock, except as set forth in the table below. The following table sets forth, as of February 1, 2026, the number and percentage of shares of the Company's outstanding Common Stock beneficially owned, directly or indirectly, by each the Company's directors and nominees, Named Executive Officers (as defined below), principal shareholders, and by the directors and executive officers of the Company as a group. As used herein, the term "Executive Officers" refers to the Company's President and Chief Executive Officer, the Senior Vice President and Chief Banking Officer, the Senior Vice President and Chief Financial Officer, the Senior Vice President and Chief Credit Officer, Senior Vice President and Chief Lending Officer, and the Senior Vice President and Chief Risk Officer. See "Compensation of Executive Officers and Directors of the Company - Executive Officers" herein. The shares "beneficially owned" are determined under Rule 13d-3 of the Securities Exchange Act of 1934, as amended, and do not necessarily indicate ownership for any other purpose. In general, beneficial ownership includes shares over which a person has sole or shared voting or investment power and shares which such person has the right to acquire within 60 days of February 1, 2026. Unless otherwise indicated, the persons listed below have sole voting and investment powers of the shares beneficially owned. On

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December 16, 2025, the Company announced the signing of an Agreement and Plan of Merger with Community West Bancshares (NASDAQ: CWBC), headquartered in Fresno, California, together with its banking subsidiary, Community West Bank, pursuant to which the companies will combine in an all-stock merger transaction. Under the terms of the agreement, United Security Bancshares will merge with and into Community West Bancshares and United Security Bank will merge with and into Community West Bank. The United Security Bancshares and Community West Bancshares Boards of Directors have unanimously approved the transaction. The merger is expected to be completed during the second quarter of 2026 which, if completed, will result in a change of control of the Company.

---

| | | | |
|:---|:---|:---|:---|
| **Beneficial Owner** | **Amount and Nature of Beneficial Ownership** | **Amount and Nature of Beneficial Ownership** | **Percent of Class (1)** |
| **Directors and Executive Officers:** | | | |
| **Stanley J. Cavalla** | 679723 | (2) | 3.9% |
| &nbsp;&nbsp;&nbsp;Director |  |  |  |
| **Tom Ellithorpe** | 187534 | (3) | 1.1% |
| &nbsp;&nbsp;&nbsp;Director |  |  |  |
| **Jagroop "Jay" Gill** | 1289973 | (4) | 7.3% |
| &nbsp;&nbsp;&nbsp;Director |  |  |  |
| **Heather Hammack** | 28398 | (5) | 0.2% |
| &nbsp;&nbsp;&nbsp;Director |  |  |  |
| **David A. Kinross** | 123969 | (6) | 0.7% |
| &nbsp;&nbsp;&nbsp;Senior Vice President and Chief Financial Officer |  |  |  |
| **Nabeel Mahmood** | 38827 | (7) | 0.2% |
| &nbsp;&nbsp;&nbsp;Director |  |  |  |
| **Kenneth D. Newby, CPA** | 55500 | (8) | 0.3% |
| &nbsp;&nbsp;&nbsp;Director |  |  |  |
| **Robert Oberg** | 24385 | (9) | 0.1% |
| &nbsp;&nbsp;&nbsp;Senior Vice President and Chief Risk Officer |  |  |  |
| **Susan Quigley** | 39887 | (10) | 0.2% |
| &nbsp;&nbsp;&nbsp;Director |  |  |  |
| **Porsche Saunders** | 69834 | (11) | 0.4% |
| &nbsp;&nbsp;&nbsp;Senior Vice President and Chief Lending Officer |  |  |  |
| **Brian C. Tkacz** | 31871 | (12) | 0.2% |
| &nbsp;&nbsp;&nbsp;Director |  |  |  |
| **Dora Westerlund** | 30770 | (13) | 0.2% |
| &nbsp;&nbsp;&nbsp;Director |  |  |  |
| **Kevin J. Williams** | 83837 | (14) | 0.5% |
| &nbsp;&nbsp;&nbsp;Senior Vice President and Chief Banking Officer |  |  |  |
| **Dennis R. Woods** | 1189857 | (15) | 6.8% |
| &nbsp;&nbsp;&nbsp;Chairman, Nominee, President and Chief Executive Officer |  |  |  |
| **William Yarbenet** | 76244 | (16) | 0.4% |
| &nbsp;&nbsp;&nbsp;Senior Vice President and Chief Credit Officer |  |  |  |
| All Directors and Executive Officers as a Group |  |  |  |
| (15 in total) | 3950609 | (17) | 22.4% |
| **5% Stockholders:** |  |  |  |
| **Bridgewealth Advisory Group, LLC** | 1218400 | (18) | 6.9% |
| **Dimensional Fund Advisors, LP** | 920293 | (19) | 5.2% |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)Includes shares subject to stock options that are exercisable within 60 days of February 1, 2026. These are treated as issued and outstanding for the purpose of computing the percentage of each director, Named Executive Officer and for All Directors and Executive Officers as a Group, but not for the purpose of computing the percentage of class owned by any other person.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2)Mr. Cavalla has shared voting and investment powers as to 501,311 of these shares held in his wife's IRA or in a trust with Mr. Cavalla as a co-trustee. Mr. Cavalla disclaims ownership of 270 shares which are held in his wife's IRA.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3)Mr. Ellithorpe has sole voting and investment powers in all shares owned.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4)Mr. Gill has shared voting and investment powers in all shares held jointly with his wife.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5)Ms. Hammack has sole voting and investment power in all shares owned. Ms. Hammack has 12,000 shares subject to stock options that are exercisable within 60 days of February 1, 2026.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6)Mr. Kinross has shared voting and investment powers in all shares held jointly with his wife.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(7)Mr. Mahmood has 15,000 shares subject to stock options that are exercisable within 60 days of February 1, 2026.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(8)Mr. Newby has shared voting and investment powers as to 152 shares held jointly with his wife.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(9)Mr. Oberg has sole voting and investment powers in all shares owned.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(10)Ms. Quigley has shared voting and investment powers as to 24,887 shares held in a trust with Ms. Quigley as a co-trustee. Ms. Quigley has 15,000 shares subject to stock options that are exercisable within 60 days of February 1, 2026.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(11)Ms. Saunders has sole voting and investment powers in all shares owned.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(12)Mr. Tkacz has 15,000 shares subject to stock options that are exercisable within 60 days of February 1, 2026.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(13)Ms. Westerlund has shared voting and investment powers in all shares owned. Ms. Westerlund has 12,000 shares subject to stock options that are exercisable within 60 days of February 1, 2026.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(14)Mr. Williams has sole voting and investment powers in all shares owned.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(15)Mr. Woods has shared voting and investment powers as to 920,512 of these shares held in a trust with Mr. Woods as a co-trustee or in his wife's IRA. Mr. Woods disclaims ownership of 43,258 shares which are held in his wife's IRA.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(16)Mr. Yarbenet has sole voting and investment powers in all shares owned.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(17)Includes 69,000 shares that are subject to stock options which are exercisable and subject to vesting within 60 days of February 1, 2026.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(18)Based solely on a Schedule 13F-HR filed with the SEC on February 4, 2026 by Bridgewealth Advisory Group, LLC, 986 West Alluvial Ave., Suite 101, Fresno, CA 93711. This Schedule 13G/A reports that Bridgewealth Advisory Group, LLC has sole voting power with respect to 1,218,400 shares and sole dispositive power with respect to 1,218,400 shares beneficially owned as of December 31, 2025.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(19)Based solely on a Schedule 13F-HR filed with the SEC on February 12, 2026 by Dimensional Fund Advisors, LP, 6300 Bee Cave Road, Austin, TX 78746. This Schedule 13G/A reports that Dimensional Fund Advisors, LP, has sole voting power with respect to 920,293 shares and sole dispositive power with respect to 920,293 shares beneficially owned as of December 31, 2025.

**Item 13 - Certain Relationships and Related Transactions, and Director Independence**

During 2025, there were no existing or proposed, material transactions between the Company and its executive officers, directors, or principal shareholders (beneficial owners of 5% or more of the Company's Common Stock), or the immediate family or associates of any of the foregoing persons, except as indicated below.

Some of the Company's directors and executive officers, as well as the companies with which such directors and executive officers are associated, are customers of, and have had banking transactions with the Bank in the ordinary course of its business, and the Bank expects to have such ordinary banking transactions with such persons in the future. During the normal course of business, the Bank enters into loans with related parties, including executive officers and directors. These loans are made with substantially the same terms, including rates, collateral and repayment terms, as those prevailing at the same time with unrelated parties, and do not involve more than the normal risk of collectability or represent other unfavorable features. See "<u>[Note 3](#id2ed6aa3183b4645838731577039388e_103)</u> - Loans" in the audited consolidated financial statements in the Company's Annual Report for detail on outstanding loans and commitments to related parties. The Company may also engage in banking (non-lending) transactions with corporations of which the Company's directors or officers may own a controlling interest, or also serve as directors or officers. These transactions are made in the ordinary course of business, on substantially the same terms, including interest and collateral, as those prevailing for comparable transactions with persons not related to the Company, do not involve more than the normal risk of collectability or present other unfavorable features, and comply with the provisions of applicable federal and state law.

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**Item 14 - Principal Accounting Fees and Services**

Aggregate fees billed by the Company's independent registered public accounting firm during 2025 and 2024, respectively, are as follows:

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| | | |
|:---|:---|:---|
| | **2025 (4)** | **2024** |
| Audit Fees (1) | $498000 | $463117 |
| Audit-Related Fees (2) | 61000 | 28700 |
| Tax Fees (3) | 89000 | 48500 |
| Total Fees | $648000 | $540317 |

---

(1) Audit fees relate to professional services rendered in connection with the audit of the Company's annual financial statements, quarterly review of financial statements, and audit services provided in connection with other statutory and regulatory filings.

(2) Audit-related fees represent fees for professional services such as the audit of the Company's employee benefit plan, consent related procedures, and technical accounting, consulting, and research.

(3) Tax fees relate to professional services rendered in connection with tax compliance and preparation relating to tax return and tax audits, as well as for tax consulting and planning services.

(4) Moss Adams LLP served as our independent registered public accounting firm until its merger with and into Baker Tilly US LLP in June 2025. Baker Tilly US LLP has served as our independent registered public accounting firm since the merger.

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**PART IV**

**Item 15 - Exhibits and Financial Statement Schedules**

**(a)(1)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial Statements**

The following Consolidated Financial Statements are set forth in "Item 8. Financial Statements and Supplementary Data" of this Report.

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets - December 31, 2025, and 2024

Consolidated Statements of Income - Years Ended December 31, 2025, and 2024

Consolidated Statements of Comprehensive Income - Years Ended December 31, 2025, and 2024

Consolidated Statements of Changes in Shareholders' Equity - Years Ended December 31, 2025, and 2024

Consolidated Statements of Cash Flows - Years Ended December 31, 2025, and 2024

Notes to Consolidated Financial Statements

**(a)(2)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial Statement Schedules**

All financial statement schedules are omitted because they are not applicable or not required or because the information is included in the financial statements or notes thereto or is not material.

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**(a)(3)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Exhibits**

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| | |
|:---|:---|
| <u>[3.1](https://www.sec.gov/Archives/edgar/data/1137547/000091205701506921/a2044150zex-3_1.txt)</u> | Articles of Incorporation of Registrant (1) |
| <u>[3.1.1](https://www.sec.gov/Archives/edgar/data/1137547/000110465906079790/a06-24939_1s4.htm)</u> | Amended Articles of Incorporation |
| <u>[3.2](bylaws_amended03222011a0.htm)</u> | Bylaws of Registrant (1) |
| <u>[4.1](https://www.sec.gov/Archives/edgar/data/1137547/000091205701506921/a2044150zex-4.txt)</u> | Specimen common stock certificate of United Security Bancshares (1) |
| <u>[10.1](https://www.sec.gov/Archives/edgar/data/1137547/000114420408015516/v107010_ex10-1.htm)</u> | Amended and Restated Executive Salary Continuation Agreement for Dennis Woods (2) |
| <u>[10.2](https://www.sec.gov/Archives/edgar/data/1137547/000113754718000005/a12311710kex102.htm)</u> | Amended and Restated Employment Agreement for Dennis R. Woods (4) |
| <u>[10.3](https://www.sec.gov/Archives/edgar/data/1137547/000110465905016828/a05-6406_1def14a.htm)</u> | USB 2005 Stock Option Plan (3) |
| <u>[10.4](https://www.sec.gov/Archives/edgar/data/1137547/000113754715000009/unitedsecuritybancsharesde.htm)</u> | United Security Bancshares 2015 Equity Incentive Award Plan (4) |
| <u>[10.5](https://www.sec.gov/Archives/edgar/data/1137547/000113754718000005/a12311710kex109.htm)</u> | Executive Salary Continuation Agreement for William Yarbenet (5) |
| <u>[10.6](https://www.sec.gov/Archives/edgar/data/1137547/000113754718000005/a12311710kex1011.htm)</u> | Employment Agreement for William Yarbenet (5) |
| <u>[10.7](https://www.sec.gov/Archives/edgar/data/1137547/000162828019002383/a12311810kex1012.htm)</u> | Change in Control Agreement for Robert Oberg (6) |
| <u>[10.8](https://www.sec.gov/Archives/edgar/data/1137547/000113754722000004/ex1013obergscp.htm)</u> | Executive Salary Continuation Agreement for Robert Oberg (6) |
| <u>[10.9](https://www.sec.gov/Archives/edgar/data/1137547/000113754722000047/kinrossemploymentagreement.htm)</u> | Employment Agreement for David Kinross (7) |
| <u>[10.10](saundersamendmenttoemplo.htm)</u> | Employment Agreement for Porsche Saunders |
| <u>[10.11](https://www.sec.gov/Archives/edgar/data/1137547/000113754725000039/changeofcontrolporsche1.htm)</u> | Change in Control Agreement for Porsche Saunders |
| 10.12 | First Amendment to Employment Agreement for Porsche Saunders |
| <u>[10.13](https://www.sec.gov/Archives/edgar/data/1137547/000113754725000090/forms-8forubfo2025equitypl.htm#ifdcdd511f61c4119be1a5e5116492bd2_7)</u> | United Security Bancshares 2025 Equity Incentive Award Plan (9) |
| 10.14 | Employment Agreement for Kevin Williams |
| <u>[11.1](#id2ed6aa3183b4645838731577039388e_154)</u> | Computation of earnings per share. See <u>[Note 17](#id2ed6aa3183b4645838731577039388e_154)</u> to Consolidated Financial Statements set forth in "Item 8. Financial Statements and Supplementary Data" of this Report. |
| <u>[19.1](https://www.sec.gov/Archives/edgar/data/1137547/000113754725000039/unitedsecuritybancsharesin.htm)</u> | Insider Trading Policy |

---

------

*<u>[**Table of Contents**](#id2ed6aa3183b4645838731577039388e_10)</u>*

---

| | |
|:---|:---|
| <u>[21.1](ubfo-20251231exhibit211.htm)</u> | Subsidiaries of the Company |
| <u>[23.1](ubfo-20251231exhibit231.htm)</u> | Consent of Baker Tilly US, LLP, Independent Registered Public Accounting Firm (filed herewith) |
| <u>[31.1](ubfo-20251231exhibit311.htm)</u> | Certification of the Chief Executive Officer of United Security Bancshares pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith) |
| <u>[31.2](ubfo-20251231exhibit312.htm)</u> | Certification of the Chief Financial Officer of United Security Bancshares pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith) |
| <u>[32.1](ubfo-20251231exhibit321.htm)</u> | Certification of the Chief Executive Officer of United Security Bancshares pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith) |
| <u>[32.2](ubfo-20251231exhibit322.htm)</u> | Certification of the Chief Financial Officer of United Security Bancshares pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith) |
| <u>[97.1](https://www.sec.gov/ix?doc=/Archives/edgar/data/0001137547/000113754724000061/ubfo-20231231.htm)</u> | Clawback Policy, dated November 28, 2023 (8) |
| 101 | Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Consolidated Balance Sheets as of December 31, 2022 and 2021, (ii) the Consolidated Statements of Income for the years ended December 31, 2022 and 2021, (iii) the Consolidated Statements of Comprehensive Income for the years ended December 31, 2022 and 2021, (iv) the Consolidated Statement of Changes in Shareholders' Equity for the years ended December 31, 2022 and 2021, (v) the Consolidated Statements of Cash Flows for the years ended December 31, 2022 and 2021, and (vi) the Notes to Consolidated Financial Statements. (Pursuant to Rule 406T of Regulation S-T, this information is deemed furnished and not filed for purposes of Sections 11 and 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934.) (Filed herewith). |

---

(1) Previously filed on April 4, 2001 as an exhibit to the Company's filing on Form S-4 (file number 333-58256).

(2) Previously filed on March 17, 2008 as an exhibit to the Company's filing on Form 10-K for the year ended December 31, 2007 (file number 000-32897).

(3) Previously filed on April 18, 2005 as Exhibit B to the Company's 2005 Schedule 14A Definitive Proxy (file number 000-32897).

(4) Previously filed on April 13, 2015 as Appendix A to the Company's 2015 Schedule 14A Definitive Proxy (file number 000-32897).

(5) Previously filed on March 2, 2018 as an exhibit to the Company's filing on Form 10-K for the year ended December 31, 2017 (file number 000-32897).

(6) Previously filed on March 1, 2019 as an exhibit to the Company's filing on Form 10-K for the year ended December 31, 2018 (file number 000-32897).

(7) Previously filed on November 1, 2022 as an exhibit to the Company's filing on Form 8-K (file number 000-32897).

(8) Previously filed on March 26, 2024 as an exhibit to the Company's filing on Form 10-K (file number 000-32897).

(9) Previously filed on April 7, 2025 as Exhibit B to the Company's 2025 Schedule 14A Definitive Proxy (file number 000-32897).

**(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Exhibits filed:**

See Exhibit Index under Item 15(a)(3) above for the list of exhibits required to be filed by Item 601 of Regulation S-K with this Report.

**(c)**&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Financial statement schedules filed**:

See Item 15(a)(2) above.

------

*<u>[**Table of Contents**](#id2ed6aa3183b4645838731577039388e_10)</u>*

**Signatures**

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.

**United Security Bancshares**

---

| | |
|:---|:---|
| **March 25, 2026** | /s/ Dennis R. Woods |
| | Dennis R. Woods |
| | President and Chief Executive Officer |

---

---

| | |
|:---|:---|
| **March 25, 2026** | /s/ David A. Kinross |
| | David A. Kinross |
| | Senior Vice President and Chief Financial Officer |

---

------

*<u>[**Table of Contents**](#id2ed6aa3183b4645838731577039388e_10)</u>*

**POWERS OF ATTORNEY**

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Dennis R. Woods and David A. Kinross, and each of them severally, his or her true and lawful attorney-in-fact with power of substitution and resubstitution to sign in his or her name, place and stead, in any and all capacities, to do any and all things and execute any and all instruments that such attorney may deem necessary or advisable under the Securities Exchange Act of 1934 and any rules, regulations and requirements of the U.S. Securities and Exchange Commission in connection with this Annual Report on Form 10-K and any and all amendments hereto, as fully for all intents and purposes as he or she might or could do in person, and hereby ratifies and confirms all said attorneys-in-fact and agents, each acting alone, and his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

**Signatures**

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the registrant and in the capacities on the date indicated:

---

| | | |
|:---|:---|:---|
| Date: | March 25, 2026 | /s/ Stanley J. Cavalla |
|  |  | Director |
| Date: | March 25, 2026 | /s/ Tom Ellithorpe |
|  |  | Director |
| Date: | March 25, 2026 | /s/ Jay Gill |
|  |  | Director |
| Date: | March 25, 2026 | /s/ Heather Hammack |
|  |  | Director |
| Date: | March 25, 2026 | /s/ Nabeel Mahmood |
|  |  | Director |
| Date: | March 25, 2026 | /s/ Kenneth D. Newby |
|  |  | Director |
| Date: | March 25, 2026 | /s/ Sue Quigley |
|  |  | Director |
| Date: | March 25, 2026 | /s/ Brian Tkacz |
|  |  | Director |
| Date: | March 25, 2026 | /s/ Dora Westerlund |
|  |  | Director |

---

## Exhibit 3.2

![](bylaws_amended03222011a0001.jpg)

&nbsp;&nbsp;&nbsp;&nbsp;1 BYLAWS, AMENDED OF UNITED SECURITY BANCSHARES ARTICLE I Offices Section 1.1. Principal Office. The principal executive office of the corporation is hereby located at such place as the board of directors (the Aboard@) shall determine. The board is hereby granted full power and authority to change said principal executive office from one location to another. Section 1.2. Other Offices. Other business offices may, at any time, be established by the board at such other places as it deems appropriate. ARTICLE II Meetings of Shareholders Section 2.1. Place of Meetings. Meetings of shareholders may be held at such place within or outside the state of California designated by the board. In the absence of any such designation, shareholders' meetings shall be held at the principal executive office of the corporation. Section 2.2. Annual Meeting. The annual meeting of shareholders shall be held for the election of directors on a date and at a time designated by the board. The date so designated shall be within fifteen (15) months after the last annual meeting. At such meeting, directors shall be elected, and any other proper business within the power of the shareholders may be transacted. Section 2.3. Special Meetings. Special meetings of the shareholders may be called at any time by the board, the chairperson of the board, the president, or by the holders of shares entitled to cast not less than ten percent (10%) of the votes at such meeting. If a special meeting is called by any person or persons other than the board, the request shall be in writing, specifying the time of such meeting and the general nature of the business proposed to be transacted, and shall be delivered personally or by registered mail to the chairperson of the board, the president, any vice president or the secretary of the corporation. The officer receiving the request shall cause notice to be promptly given to the shareholders entitled to vote that a meeting will be held at a time requested by the person or persons calling the meeting, not less than 35 nor more than 60 days after receipt of the request, except if the special meeting called for by a shareholder is to be held for election of directors, in which case for nominations to be properly brought by a shareholder before a special meeting of shareholders pursuant to Section 3.3(b) of these bylaws, the

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![](bylaws_amended03222011a0002.jpg)

&nbsp;&nbsp;&nbsp;&nbsp;2 shareholder must have given timely notice thereof in writing to the secretary of the corporation. To be timely in the event of a special meeting called for by a shareholder for the election of directors, a shareholder's notice shall be delivered to or mailed and received at the principal executive offices of the corporation (A) not earlier than 120 days prior to the date of the special meeting and (B) not later than the later of 90 days prior to the date of the special meeting or the 10th day following the day on which public announcement of the date of the special meeting was first made. Such shareholder's notice to the secretary of the corporation shall also comply with the notice requirements of Section 3.3(a)(iii). If the notice of special meeting is not given within 20 days after receipt of the request for a special meeting (other than for a special meeting called for by a shareholder to be held for the election of directors), the person or persons requesting the meeting may give the notice. Nothing in this paragraph shall be construed as limiting, fixing or affecting the time when a meeting of shareholders called by action of the board may be held. [amended on March 22, 2011] Section 2.4. Notice of Meetings. Written notice, in accordance with Section 2.5 of this Article II, of each annual or special meeting of shareholders shall be given not less than 10 nor more than 60 days before the date of the meeting to each shareholder entitled to vote thereat. Such notice shall state the place, date and hour of the meeting and (a) in the case of a special meeting, the general nature of the business to be transacted, and no other business may be transacted, or (b) in the case of the annual meeting, those matters which the board, at the time of the mailing of the notice, intends to present for action by the shareholders, but, subject to the provisions of applicable law, any proper matter may be presented at the meeting for such action. The notice of any meeting at which directors are to be elected shall include the names of nominees intended at the time of the notice to be presented by the board for election. If action is proposed to be taken at any meeting for approval of (a) a contract or transaction in which a director has a direct or indirect financial interest, pursuant to Section 310 of the California Corporations Code, as amended (the ACode@), (b) an amendment of the articles of incorporation, pursuant to Section 902 of the Code, (c) a reorganization of the corporation, pursuant to Section 1201 of the Code, (d) a voluntary dissolution of the corporation, pursuant to Section 1900 of the Code, or (e) a distribution in dissolution other than in accordance with the rights of outstanding preferred shares, pursuant to Section 2007 of the Code, the notice shall also state the general nature of that proposal. Section 2.5. Manner of Giving Notice. Notice of a shareholders' meeting shall be given either personally or by first-class mail or telegraphic or other written communication, charges prepaid, addressed to the shareholder at the address of that shareholder appearing on the books of the corporation or given by the shareholder to the corporation for the purpose of notice. If no such address appears on the corporation's books or is given, notice shall be deemed to have been given if sent to that shareholder by first-class mail or telegraphic or other written communication to the corporation's principal executive office or if published at least once in a newspaper of general circulation in the county in which the principal executive office is located. Notice shall be deemed to have been given at the time when delivered personally or deposited in the mail or sent by telegram or other means of written communication. An affidavit of mailing or other means of giving any

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![](bylaws_amended03222011a0003.jpg)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3 notice in accordance with the above provisions, executed by the secretary, assistant secretary or any transfer agent, shall be prima facie evidence of the giving of the notice. If any notice addressed to the shareholder at the address of such shareholder appearing on the books of the corporation is returned to the corporation by the United States Postal Service marked to indicate that the United States Postal Service is unable to deliver the notice to the shareholder at such address, all future notices shall be deemed to have been duly given without further mailing if the same shall be available for the shareholder upon written demand of the shareholder at the principal executive office of the corporation for a period of one year from the date of the giving of the notice to all other shareholders. Section 2.6. Quorum. A majority of the shares entitled to vote, represented in person or by proxy, shall constitute a quorum at any meeting of shareholders. The shareholders present at a duly called or held meeting at which a quorum is present may continue to transact business until adjournment notwithstanding the withdrawal of enough shareholders to leave less than a quorum, if any action taken (other than adjournment) is approved by at least a majority of the shares required to constitute a quorum. Section 2.7. Adjourned Meeting and Notice Thereof. Any shareholders' meeting, whether or not a quorum is present, may be adjourned from time to time by the vote of a majority of the shares represented either in person or by proxy at the meeting, but in the absence of a quorum (except as provided in Section 2.6 of this Article II) no other business may be transacted at such meeting. When any meeting of shareholders, either annual or special, is adjourned to another time or place, notice need not be given of the adjourned meeting if the time and place are announced at the meeting at which the adjournment is taken. However, when any shareholders' meeting is adjourned for more than 45 days from the date set for the original meeting, or, if after adjournment a new record date is fixed for the adjourned meeting, notice of the adjourned meeting shall be given to each shareholder of record entitled to vote at the meeting. At any adjourned meeting the corporation may transact any business which might have been transacted at the original meeting. Section 2.8. Voting. The shareholders entitled to notice of any meeting or to vote at any such meeting shall be only persons in whose name shares stand on the stock records of the corporation on the record date determined in accordance with Section 2.9 of this Article II. Voting of shares of the corporation shall in all cases be subject to the provisions of Sections 700 through 711, inclusive, of the Code. The shareholders' vote may be by voice or ballot; provided, however, that any election for directors must be by ballot if demanded by any shareholder before the voting has begun. On any matter other than election of directors, any shareholder may vote part of the shares in favor of the proposal and refrain from voting the remaining shares or vote them against the proposal (other than the election of directors), but, if the shareholder fails to specify the number of shares which the shareholder is voting affirmatively, it will be conclusively presumed that the shareholder's approving vote is with respect to all shares that the shareholder is entitled to vote. If a quorum is present, the affirmative vote of the majority of the shares represented at the meeting and entitled to vote on any matter (other

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![](bylaws_amended03222011a0004.jpg)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4 than the election of directors) shall be the act of the shareholders, unless the vote of a greater number or voting by classes is required by the Code or by the articles of incorporation. Subject to the following sentence and the provisions of Section 708 of the Code, every shareholder entitled to vote at any election of directors may cumulate such shareholder's votes and give one candidate a number of votes equal to the number of directors to be elected multiplied by the number of votes to which the shareholder's shares are entitled, or distribute the shareholder's votes on the same principle among as many candidates as the shareholder thinks fit. No shareholder shall be entitled to cumulate votes for any candidate or candidates pursuant to the preceding sentence unless such candidate's or candidates' names have been placed in nomination prior to the voting and the shareholder has given notice at the meeting and prior to the voting of the shareholder's intention to cumulate the shareholder's votes. If any one shareholder has given such notice, all shareholders may cumulate their votes for candidates in nomination. In any election of directors, the candidates receiving the highest number of affirmative votes of the shares entitled to be voted for them, up to the number of directors to be elected, shall be elected. Votes against the director and votes withheld shall have no legal effect. Section 2.9. Record Date. The board may fix, in advance, a record date for the determination of the shareholders entitled to notice of any meeting or to vote or to receive payment of any dividend or other distribution, or allotment of any rights, or to exercise any rights in respect of any other lawful action. The record date so fixed shall be not more than 60 days nor less than 10 days prior to the date of the meeting nor more than 60 days prior to any other action. When a record date is so fixed, only shareholders of record on that date are entitled to notice of and to vote at the meeting or to receive the dividend, distribution, or allotment of rights, or to exercise rights, as the case may be, notwithstanding any transfer of shares on the books of the corporation after the record date. A record date for a meeting of shareholders shall apply to any adjournment of the meeting unless the board fixes a new record date for the adjourned meeting. The board shall fix a new record date if the meeting is adjourned for more than 45 days. If no record date is fixed by the board, the record date for determining shareholders entitled to notice of or to vote at a meeting of shareholders shall be at the close of business on the business day next preceding the day on which notice of the meeting is given or, if notice is waived, the close of business on the business day next preceding the day on which the meeting is held. The record date for determining shareholders for any purpose other than as set forth in this Section 2.9 or Section 2.11 of this Article II shall be at the close of business on the day on which the board adopts the resolution relating thereto, or the sixtieth day prior to the date of such other action, whichever is later. Section 2.10. Consent of Absentees. The transactions of any meeting of shareholders, however called and noticed, and wherever held, are as valid as though had at a meeting duly held after regular call and notice, if a quorum is present either in person or by proxy, and if, either before or after the meeting, each of the persons entitled to vote, who was not present in person or by proxy, signs a written waiver of notice, or a consent to the holding of the meeting or an approval of the minutes thereof. All such waivers, consents or approvals shall be filed with the corporate records or made a

------

![](bylaws_amended03222011a0005.jpg)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5 part of the minutes of the meeting. Attendance of a person at a meeting shall constitute a waiver of notice of and presence at such meeting, except when the person objects, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened and except that attendance at a meeting is not a waiver of any right to object to the consideration of matters required by the Code to be included in the notice but not so included, if such objection is expressly made at the meeting. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of shareholders need be specified in any written waiver of notice, consent to the holding of the meeting or approval of the minutes of the meeting, except that if action is taken or proposed to be taken for approval of any of those matters specified in the second paragraph of Section 2.4 of this Article II, the waiver of notice, consent or approval shall state the general nature of the proposal. Section 2.11. Action by Written Consent Without a Meeting. Subject to Section 603 of the Code, any action which may be taken at any annual or special meeting of shareholders may be taken without a meeting and without prior notice if a consent in writing, setting forth the action so taken, is signed by the holders of the outstanding shares, or their proxies, having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. All such consents shall be filed with the secretary of the corporation and shall be maintained in the corporate records; provided, however, that (1) unless the consents of all shareholders entitled to vote have been solicited in writing, notice of any shareholder approval without a meeting by less than unanimous consent shall be given, as provided by Section 603(b) of the Code, and (2) in the case of election of directors, such a consent shall be effective only if signed by the holders of all outstanding shares entitled to vote for the election of directors; provided, however, that subject to applicable law, a director may be elected at any time to fill a vacancy on the board that has not been filled by the directors, by the written consent of the holders of a majority of the outstanding shares entitled to vote for the election of directors. Any written consent may be revoked by a writing received by the secretary of the corporation prior to the time that written consents of the number of shares required to authorize the proposed action have been filed with the secretary. Unless a record date for voting purposes be fixed as provided in Section 2.9 of this Article II, the record date for determining shareholders entitled to give consent pursuant to this Section 2.11, when no prior action by the board has been taken, shall be the day on which the first written consent is given. Section 2.12. Proxies. Every person entitled to vote shares or execute written consents has the right to do so either in person or by one or more persons authorized by a written proxy executed and dated by such shareholder and filed with the secretary of the corporation prior to the convening of any meeting of the shareholders at which any such proxy is to be used or prior to the use of such written consent. A validly executed proxy which does not state that it is irrevocable continues in full force and effect unless: (1) revoked by the person executing it prior to the vote pursuant thereto, by a writing delivered to the corporation stating that the proxy is revoked or by a subsequent proxy executed by the person executing the prior proxy and presented to the meeting, or as to any meeting of shareholders, by attendance at such meeting and voting in person by the person executing the proxy; or (2) written notice of the death or incapacity of the maker of the proxy is received by the corporation before the vote pursuant thereto is counted; provided, however, that no proxy shall be

------

![](bylaws_amended03222011a0006.jpg)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6 valid after the expiration of 11 months from the date of its execution unless otherwise provided in the proxy. Section 2.13. Inspectors of Election. In advance of any meeting of shareholders, the board may appoint any persons other than nominees for office as inspectors of election to act at such meeting and any adjournment thereof. If no inspectors of election are so appointed, or if any persons so appointed fail to appear or refuse to act, the chairperson of any such meeting may, and on the request of any shareholder or shareholder's proxy shall, appoint inspectors of election at the meeting. The number of inspectors shall be either one (1) or three (3). If inspectors are appointed at a meeting on the request of one or more shareholders or proxies, the holders of a majority of shares or their proxies present shall determine whether one (1) or three (3) inspectors are to be appointed. The duties of such inspectors shall be as prescribed by Section 707(b) of the Code and shall include: determining the number of shares outstanding and the voting power of each; determining the shares represented at the meeting; determining the existence of a quorum; determining the authenticity, validity and the effect of proxies; receiving votes, ballots or consents; hearing and determining all challenges and questions in any way arising in connection with the right to vote; counting and tabulating all votes or consents; determining when the polls shall close; determining the result; and doing such acts as may be proper to conduct the election or vote with fairness to all shareholders. If there are three inspectors of election, the decision, act or certificate of a majority is effective in all respects as the decision, act or certificate of all. Section 2.14. Conduct of Meetings. The president shall preside at all meetings of the shareholders and shall conduct each such meeting in a businesslike and fair manner, but shall not be obligated to follow any technical, formal or parliamentary rules or principles of procedure. The presiding officer's rulings on procedural matters shall be conclusive and binding on all shareholders, unless at the time of ruling a request for a vote is made to the shareholders entitled to vote and represented in person or by proxy at the meeting, in which case the decision of a majority of such shares shall be conclusive and binding on all shareholders. Without limiting the generality of the foregoing, the presiding officer shall have all the powers usually vested in the presiding officer of a meeting of shareholders. ARTICLE III Directors Section 3.1. Powers. Subject to the provisions of the Code and any limitations in the articles of incorporation and these bylaws relating to actions required to be approved by the shareholders or by the outstanding shares, the business and affairs of the corporation shall be managed and all corporate powers shall be exercised by or under the direction of the board. The board may delegate the management of the day-to-day operations of the business of the corporation to a management company or other person provided that the business and affairs of the corporation shall be managed and all corporate powers shall be exercised under the ultimate direction of the board. Without prejudice to such general powers, but subject to the same limitations, it is hereby expressly declared

------

![](bylaws_amended03222011a0007.jpg)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7 that the board shall have the following powers in addition to the other powers enumerated in these bylaws: (a) to select and remove all the other officers, agents and employees of the corporation, prescribe any qualifications, powers and duties for them that are consistent with law, the articles of incorporation or these bylaws, fix their compensation, and require from them security for faithful service; (b) to conduct, manage and control the affairs and business of the corporation and to make such rules and regulations therefor not inconsistent with law, the articles of incorporation or these bylaws, as they may deem best; (c) to adopt, make and use a corporate seal, to prescribe the forms of certificates of stock, and to alter the form of such seal and of such certificates from time to time as in their judgment they may deem best; (d) to authorize the issuance of shares of stock of the corporation from time to time, upon such terms and for such consideration as may be lawful; (e) to borrow money and incur indebtedness for the purposes of the corporation, and to cause to be executed and delivered therefor, in the corporate name, promissory and capital notes, bonds, debentures, deeds of trust, mortgages, pledges, hypothecations or other evidences of debt and securities therefor and any agreements pertaining thereto; (f) to prescribe the manner in which and the person or persons by whom any or all of the checks, drafts, notes, contracts and other corporate instruments shall be executed; (g) to appoint and designate, by resolution adopted by a majority of the authorized number of directors, one or more committees, each consisting of two or more directors, including the appointment of alternate members of any committee who may replace any absent member at any meeting of the committee; and (h) generally, to do and perform every act or thing whatever that may pertain to or be authorized by the board of directors of a corporation incorporated under the laws of this state. Section 3.2. Number and Qualification of Directors. The authorized number of directors of the corporation shall not be less than eight (8) nor more than fifteen (15) until changed by an amendment of the articles of incorporation or by a bylaw amending this Section 3.2 duly adopted by the vote or written consent of holders of a majority of the outstanding shares entitled to vote. The exact number of directors shall be fixed from time to time, within the range specified in the articles of incorporation or in this Section 3.2: (i) by a resolution duly adopted by the board; (ii) by a bylaw or amendment thereof duly adopted by the vote of a majority of the shares entitled to vote represented at a duly held meeting at which a quorum is present, or by the written consent of the holders of a majority of the outstanding shares entitled to vote; or (iii) by approval of the shareholders (as defined in Section 153 of the Code.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8 Section 3.3. NOMINATIONS OF DIRECTORS AND SHAREHOLDER PROPOSALS. (a) Annual Meetings of Shareholders. (i) Nominations of persons for election to the board of directors of the corporation or the proposal of other business to be transacted by the shareholders may be made at an annual meeting of shareholders only (A) pursuant to the corporation's notice of meeting (or any supplement thereto), (B) by or at the direction of the board of directors or any committee thereof or (C) by any shareholder of the corporation who is a shareholder of record at the time of giving of notice provided for in this Section 3.3(a) and at the time of the annual meeting, who shall be entitled to vote at the meeting and who complies with the procedures set forth in this Section 3.3(a). (ii) For nominations or other business to be properly brought before an annual meeting of shareholders by a shareholder pursuant to clause (C) of paragraph (a)(i) of this Section 3.3, the shareholder must have given timely notice thereof in writing to the secretary of the corporation and any such proposed business (other than the nominations of persons for election to the board of directors) must constitute a proper matter for shareholder action. To be timely, a shareholder's notice shall be delivered to, or mailed and received by, the secretary of the corporation at the principal executive offices of the corporation not less than 90 days nor more than 120 days prior to the first anniversary of the date of the corporation's proxy statement release to shareholders for the previous shareholders annual meeting; provided, however, that in the event that the date of the annual meeting is advanced more than 30 days prior to such anniversary date or delayed more than 70 days after such anniversary date, then to be timely, such notice must be received by the corporation no earlier than 120 days prior to such annual meeting and no later than the later of 70 days prior to the date of the meeting or the 10th day following the day on which public announcement of the date of the meeting was first made by the corporation. In no event shall the public announcement of an adjournment or postponement of an annual meeting commence a new time period (or extend any time period) for the giving of a shareholder's notice as described above. (iii) A shareholder's notice to the secretary shall set forth (A) as to each person whom the shareholder proposes to nominate for election or reelection as a director: (1) all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934 (the "Exchange Act") (including such person's written consent to being named in the proxy statement as a nominee and to serving as a director if elected); (2) the address of each proposed nominee; (3) the number of shares of capital stock of any bank, bank holding company, savings and loan association or other depository institution owned beneficially by the nominee or by

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9 the notifying shareholder and the identities and locations of any such institutions; and (4) whether the proposed nominee is subject to an order, or an agreement that prohibits him or her from serving as a director of a parent corporation for an insured depository institution, (B) as to any other business that the shareholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting, the text of the proposal (including the text of any resolutions proposed for consideration and in the event that such business includes a proposal to amend these bylaws, the text of the proposed amendment), the reasons for conducting such business and any material interest in such business of such shareholder and the beneficial owner, if any, on whose behalf the proposal is made, and (C) as to the shareholder giving the notice and the beneficial owner, if any, on whose behalf the proposal is made: (1) the name and address of such shareholder (as they appear on the corporation's books) and of any such beneficial owner; (2) the class or series and number of shares of capital stock of the corporation which are held of record or are beneficially owned by such shareholder and by any such beneficial owner; (3) a description of any agreement, arrangement or understanding between or among such shareholder and any such beneficial owner, any of their respective affiliates or associates, and any other person or persons (including their names) in connection with the proposal of such nomination or other business; (4) a description of any agreement, arrangement or understanding (including the form of settlement of any derivative, long or short positions, profit interests, forwards, futures, swaps, options, warrants, convertible securities, stock appreciation or similar rights, hedging transactions and borrowed or loaned shares) that has been entered into by or on behalf of, or any other agreement, arrangement or understanding that has been made, the effect or intent of which is to create or mitigate loss to, manage risk or benefit of share price changes for, or increase or decrease the voting power of, such shareholder or any such beneficial owner [or any such nominee] with respect to the corporation's securities; (5) a representation that the shareholder is a holder of record of stock of the corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to bring such nomination or other business before the meeting; and (6) a representation signed by the shareholder as to whether such shareholder or any such beneficial owner intends or is part of a group that intends to (i) deliver a proxy statement and/or form of proxy to holders of at least the percentage of the voting power of the corporation's outstanding capital stock required to approve or adopt the proposal or to elect each such nominee and/or (ii) otherwise to solicit proxies from shareholders in

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10 support of such proposal or nomination. (b) Special Meetings of Shareholders. If the election of directors is included as business to be brought before a special meeting in the corporation's notice of meeting, then nominations of persons for election to the board of directors of the corporation at a special meeting of shareholders may be made by any shareholder who is a shareholder of record at the time of giving of notice provided for in this Section 3.3(b) and at the time of the special meeting, who shall be entitled to vote at the meeting and who complies with the procedures set forth in this Section 3.3(b). For nominations to be properly brought by a shareholder before a special meeting of shareholders pursuant to this Section 3.3(b), the shareholder must have given timely notice thereof in writing to the secretary of the corporation. To be timely, a shareholder's notice shall be delivered to or mailed and received at the principal executive offices of the corporation (A) not earlier than 120 days prior to the date of the special meeting and (B) not later than the later of 90 days prior to the date of the special meeting or the 10th day following the day on which public announcement of the date of the special meeting was first made. A shareholder's notice to the secretary of the corporation shall comply with the notice requirements of Section 3.3(a)(iii). (c) General. (i) At the request of the board of directors, any person nominated by the board of directors for election as a director shall furnish to the secretary of the corporation the information that is required to be set forth in a shareholder's notice of nomination that pertains to the nominee. No person shall be eligible to be nominated by a shareholder to serve as a director of the corporation unless nominated in accordance with the procedures set forth in this Section 3.3. No business proposed by a shareholder shall be conducted at a shareholder meeting except in accordance with this Section 3.3. The chairman of the meeting shall, if the facts warrant, determine and declare to the meeting that a nomination was not made in accordance with the procedures prescribed by these bylaws or that business was not properly brought before the meeting, and if he or she should so determine, he or she shall so declare to the meeting and the defective nomination shall be disregarded or such business shall not be transacted, as the case may be. Notwithstanding the foregoing provisions of this Section 3.3, unless otherwise required by law, if the shareholder (or a qualified representative of the shareholder) does not appear at the annual or special meeting of shareholders of the corporation to present a nomination or other proposed business, such nomination shall be disregarded or such proposed business shall not be transacted, as the case may be, notwithstanding that proxies in respect of such vote may have been received by the corporation. For purposes of this Section 3.3, to be considered a qualified representative of the shareholder, a person must be a duly authorized officer, manager or partner of such shareholder or must be authorized by a writing executed by such shareholder or an electronic transmission delivered by such shareholder to act for such shareholder as proxy at the meeting of shareholders and such person must produce such writing or electronic transmission, or a reliable reproduction of the writing or electronic transmission, at the meeting of shareholders.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12 A vacancy or vacancies on the board shall be deemed to exist in case of the death, resignation or removal of any director, or if the authorized number of directors is increased, or if the shareholders fail, at any annual or special meeting of shareholders at which any director or directors are elected, to elect the full authorized number of directors to be voted for at that meeting. The board may declare vacant the office of a director who has been declared of unsound mind by an order of court or convicted of a felony. No reduction of the authorized number of directors shall have the effect of removing any director prior to the expiration of the director's term of office. Section 3.6. Place of Meetings. Regular or special meetings of the board shall be held at any place within or outside the state of California which has been designated in the notice of meeting or if there is no notice, at the principal executive office of the corporation, or at a place designated by resolution of the board or by the written consent of the board. Any regular or special meeting is valid wherever held if held upon written consent of all members of the board given either before or after the meeting and filed with the secretary of the corporation. Section 3.7. Regular Meetings. Immediately following each annual meeting of shareholders, the board shall hold a regular meeting for the purpose of organization, any desired election of officers and the transaction of other business. Notice of this meeting shall not be required. Other regular meetings of the board shall be held at any place within the State of California which has been designated from time to time by resolution of the board or by written consent of all members of the board. In the absence of such designation, regular meetings shall be held at the principal executive office of the corporation. Special meetings of the board may be held either at a place so designated, within the State of California, or at the principal executive office. Call and notice of all regular meetings of the board are hereby dispensed with. Section 3.8. Special Meetings. Special meetings of the board for any purpose or purposes may be called at any time by the chairperson of the board, the president, any vice president, the secretary or by any two directors. Special meetings of the board shall be held upon four days written notice by mail or 48 hours notice delivered personally or by telephone, telegraph, telex or other similar means of communication. Any such notice shall be addressed or delivered to each director at the director's address as shown upon the records of the corporation or as given to the corporation by the director for purposes of notice or, if such address is not shown on such records or is not readily ascertainable, at the place in which the meetings of the directors are regularly held. Such notice may, but need not, specify the purpose of the meeting, or the place if the meeting is to be held at the principal executive office of the corporation. Notice by mail shall be deemed to have been given at the time a written notice is deposited in the United States mails, postage prepaid. Any other written notice shall be deemed to have been given at the time it is personally delivered to the recipient or is delivered to a common carrier for transmission, or actually transmitted by the person giving the notice by electronic means or by

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13 facsimile transmission, to the recipient. Oral notice shall be deemed to have been given at the time it is communicated, in person or by telephone or wireless, to the recipient or to a person at the office of the recipient whom the person giving the notice has reason to believe will promptly communicate it to the recipient. Section 3.9. Quorum. A majority of the authorized number of directors constitutes a quorum of the board for the transaction of business, except to adjourn as hereinafter provided. Every act or decision done or made by a majority of the directors present at a meeting duly held at which a quorum is present shall be regarded as the act of the board, unless a greater number be required by the articles of incorporation and subject to the provisions of Section 310 of the Code (as to approval of contracts or transactions in which a director has a direct or indirect material financial interest) and Section 317(e) of the Code (as to indemnification of directors). A meeting at which a quorum is initially present may continue to transact business notwithstanding the withdrawal of directors, if any action taken is approved by at least a majority of the required quorum for such meeting. Section 3.10. Participation in Meetings by Conference Telephone. Members of the board may participate in a meeting through use of a conference telephone or similar communications equipment, so long as all members participating in such meeting can hear one another. Participation in a meeting pursuant to this Section 3.10 constitutes presence in person at such meeting. Section 3.11. Waiver of Notice. Notice of a meeting need not be given to any director who signs a waiver of notice or a consent to holding the meeting or an approval of the minutes of the meeting, whether before or after the meeting, or who attends the meeting without protesting, before the meeting or at its commencement, the lack of notice to such director. All such waivers, consents or approvals shall be filed with the corporate records or made a part of the minutes of the meeting. Section 3.12. Adjournment. A majority of the directors present, whether or not a quorum is present, may adjourn any directors' meeting to another time and place. Notice of the time and place of holding an adjourned meeting need not be given, unless the meeting is adjourned for more than twenty-four hours, in which case notice of the time and place shall be given before the time of the adjourned meeting to the directors who were not present at the time of the adjournment. Section 3.13. Action Without Meeting. Any action required or permitted to be taken by the board may be taken without a meeting if all members of the board shall individually or collectively consent in writing to such action. Such written consent or consents shall be filed with the minutes of the proceedings of the board. Such action by written consent shall have the same effect as a unanimous vote of the board. Section 3.14. Fees and Compensation. Directors and members of committees may receive such compensation, if any, for their services, and such reimbursement for expenses, as may be fixed or determined by the board. This Section 3.14 shall not be construed to preclude any director from serving the corporation in any other capacity as an officer, agent, employee or otherwise, and receiving compensation for those services. Section 3.15. Rights of Inspection. Every director of the corporation shall have the absolute right at any reasonable time to inspect and copy all books, records and documents of every kind and to

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14 inspect the physical properties of the corporation and also of its subsidiary corporations, domestic or foreign. Such inspection by a director may be made in person or by agent or attorney, and the right of inspection includes the right to copy and make extracts. Section 3.16. Removal of Director without Cause. Any or all of the directors of the corporation may be removed without cause if the removal is approved by the outstanding shares, subject to the following: (a) Except if the corporation has a classified board, no director may be removed (unless the entire board is removed) when the votes cast against removal, or not consenting in writing to the removal, would be sufficient to elect the director if voted cumulatively at an election at which the same total number of votes were cast (or, if the action is taken by written consent, all shares entitled to vote were voted) and the entire number of directors authorized at the time of the director's most recent election were then being elected. (b) When by the provisions of the articles the holders of the shares of any class or series, voting as a class or series, are entitled to elect one or more directors, any director so elected may be removed only by the applicable vote of the holders of the shares of that class or series. (c) When the corporation has a classified board, a director may not be removed if the votes cast against removal of the director, or not consenting in writing to the removal, would be sufficient to elect the director if voted cumulatively (without regard to whether shares may otherwise be voted cumulatively) at an election at which the same total number of votes were cast (or, if the action is taken by written consent, all shares entitled to vote were voted) and either the number of directors elected at the most recent annual meeting of shareholders, or if greater, the number of directors for whom removal is being sought, were then being elected. Section 3.17. Removal of Directors by Shareholder's Suit. The superior court of the proper county may, at the suit of the shareholders holding at least 10 percent of the number of outstanding shares of any class, remove from office any director in case of fraudulent or dishonest acts or gross abuse of authority or discretion with reference to the corporation and may bar from reelection any director so removed for a period prescribed by the court. The corporation shall be made a party to such action. ARTICLE IV Officers Section 4.1. Officers. The officers of the corporation shall be a president, a secretary and a chief financial officer. The corporation may also have, at the discretion of the board, a chairperson of the board, a vice chairperson of the board, one or more vice presidents, one or more assistant secretaries, one or more assistant financial officers and such other officers as may be elected or appointed in accordance with the provisions of Section 4.3 of this Article IV. One person may hold two or more offices, except those of president and secretary.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15 Section 4.2. Appointment. The officers of the corporation, except such officers as may be appointed in accordance with the provisions of Section 4.3 or Section 4.5 of this Article IV, shall be chosen by, and shall serve at the pleasure of, the board, and shall hold their respective offices until their resignation, removal or other disqualification from service, or until their respective successors shall be appointed, subject to the rights, if any, of an officer under any contract of employment. Section 4.3. Subordinate Officers. The board may appoint, or may empower the president to appoint, such other officers as the business of the corporation may require, each to hold office for such period, have such authority and perform such duties as are provided in these bylaws or as the board may from time to time determine. Section 4.4. Removal and Resignation. Subject to the rights, if any, of an officer under any contract of employment, any officer may be removed, either with or without cause, by the board at any time, or, except in the case of an officer chosen by the board, by any officer upon whom such power of removal may be conferred by the board. Any officer may resign at any time by giving written notice to the corporation without prejudice to the rights, if any, of the corporation under any contract to which the officer is a party. Any such resignation shall take effect at the date of the receipt of such notice or at any later time specified therein; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. Section 4.5. Vacancies. A vacancy in any office because of death, resignation, removal, disqualification or any other cause shall be filled in the manner prescribed in these bylaws for regular appointment to such office. Section 4.6. Chairperson. The chairperson of the board, if there shall be such an officer, shall, if present, preside at all meetings of the board and exercise and perform such other powers and duties as may be assigned from time to time by the board. Section 4.7. Vice Chairperson. The vice chairperson of the board, if there shall be such an officer, shall, in the absence of the chairperson of the board, preside at all meetings of the board and exercise and perform such other powers and duties as may be assigned from time to time by the board. Section 4.8. President. Subject to such powers, if any, as may be given by the board to the chairperson of the board, if there shall be such an officer, the president is the general manager and chief executive officer of the corporation and has, subject to the control of the board, general supervision, direction and control of the business and affairs of the corporation. The president shall preside at all meetings of the shareholders and in the absence of both the chairperson of the board and the vice chairperson, or if there be none, at all meetings of the board. The president has the general powers and duties of management usually vested in the office of president and chief executive officer of a corporation and such other powers and duties as may be prescribed by the board. Section 4.9. Vice President. In the absence or disability of the president, the vice presidents in order of their rank as fixed by the board or, if not ranked, the vice president designated by the board,

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;16 shall perform all the duties of the president and, when so acting, shall have all the powers of, and be subject to all the restrictions upon, the president. The vice presidents shall have such other powers and perform such other duties as from time to time may be prescribed for them respectively by the bylaws, the board, the president or the chairperson of the board. Section 4.10. Secretary. The secretary shall keep or cause to be kept, at the principal executive office or such other place as the board may order, a book of minutes of all meetings of shareholders, the board and its committees, with the time and place of holding, whether regular or special, and, if special, how authorized, the notice or waivers of notice thereof given, the names of those present at the board and committee meetings, the number of shares present or represented at shareholders' meetings, and the proceedings thereof. The secretary shall keep, or cause to be kept, a copy of the bylaws of the corporation at the principal executive office or business office in accordance with Section 213 of the Code. The secretary shall keep, or cause to be kept, at the principal executive office or at the office of the corporation's transfer agent or registrar, if one is appointed, a record of its shareholders, or a duplicate record of its shareholders, giving the names and addresses of all shareholders and the number and class of shares held by each. The secretary shall give, or cause to be given, notice of all the meetings of the shareholders, of the board and of any committees thereof required by these bylaws or by law to be given, shall keep the seal of the corporation in safe custody, and shall have such other powers and perform such other duties as may be prescribed by the board. Section 4.11. Assistant Secretary. The assistant secretary or the assistant secretaries, in the order of their seniority, shall, in the absence or disability of the secretary, or in the event of such officer's refusal to act, perform the duties and exercise the powers of the secretary and shall have such additional powers and discharge such duties as may be assigned from time to time by the president or by the board. Section 4.12. Chief Financial Officer. The chief financial officer shall keep and maintain, or cause to be kept and maintained, adequate and correct books and records of the properties and financial and business transactions of the corporation, including accounts of its assets, liabilities, receipts, disbursements, gains, losses, capital, retained earnings and shares, and shall send or cause to be sent to the shareholders of the corporation such financial statements and reports that by law or these bylaws are required to be sent to them. The books of account shall at all times be open to inspection by any director of the corporation. The chief financial officer shall deposit all monies and other valuables in the name and to the credit of the corporation with such depositories as may be designated by the board. The chief financial officer shall disburse the funds of the corporation as may be ordered by the board, shall render to the president and directors, whenever they request it, an account of all transactions engaged in as chief financial officer and of the financial condition of the corporation, and shall have such other powers and perform such other duties as may be prescribed by the board.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;17 Section 4.13. Assistant Financial Officer. The assistant financial officer or the assistant financial officers, in the order of their seniority, shall, in the absence or disability of the chief financial officer, or in the event of such officer's refusal to act, perform the duties and exercise the powers of the chief financial officer, and shall have such additional powers and discharge such duties as may be assigned from time to time by the president or by the board. Section 4.14. Salaries. The salaries of the officers shall be fixed from time to time by the board and no officer shall be prevented from receiving such salary by reason of the fact that such officer is also a director of the corporation. Section 4.15. Officers Holding More Than One Office. Any two or more offices, except those of president and secretary, may be held by the same person, but no officer shall execute, acknowledge or verify any instrument in more than one capacity. Section 4.16. Inability to Act. In the case of absence or inability to act of any officer of the corporation and of any person herein authorized to act in his or her place, the board may from time to time delegate the powers or duties of such officer to any other officer, or any director or other person whom it may select. ARTICLE V Indemnification Section 5.1. Definitions. For use in this Article V, certain terms are defined as follows: (a) AAgent@: A director, officer, employee or agent of the corporation or a person who is or was serving at the request of the corporation as a director, officer, employee or agent of another foreign or domestic corporation, partnership, joint venture, trust, or other enterprise (including service with respect to employee benefit plans and service on creditors' committees with respect to any proceeding under the Bankruptcy Code, assignment for the benefit of creditors or other liquidation of assets of a debtor of the corporation), or a person who was a director, officer, employee or agent of a foreign or domestic corporation which was a predecessor corporation of the corporation or of another enterprise at the request of the predecessor corporation. (b) ALoss@: All expenses, liabilities, and losses including attorneys' fees, judgments, fines, ERISA excise taxes and penalties, amounts paid or to be paid in settlement, any interest, assessments, or other charges imposed thereon, and any federal, state, local, or foreign taxes imposed on any Agent as a result of the actual or deemed receipt of any payments under this Article. (c) AProceeding@: Any threatened, pending or completed action, suit or proceeding including any and all appeals, whether civil, criminal, administrative or investigative.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;18 Section 5.2. Right to Indemnification. Each person who was or is a party or is threatened to be made a party to or is involved (as a party, witness or otherwise) in any Proceeding, by reason of the fact that he or she, or a person of whom he or she is the legal representative, is or was an Agent, is entitled to indemnification. Agent shall be indemnified and held harmless by the corporation to the fullest extent authorized by law. The right to indemnification conferred in this Article V shall be a contract right. It is the corporation's intention that these bylaws provide indemnification in excess of that expressly permitted by Section 317 of the Code, as authorized by the corporation's articles of incorporation. Section 5.3. Authority to Advance Expenses. The right to indemnification provided in Section 5.2 of these bylaws shall include the right to be paid, in advance of a Proceeding's final disposition, expenses incurred in defending that Proceeding, provided, however, that if required by the California General Corporation Law, as amended, the payment of expenses in advance of the final disposition of the Proceeding shall be made only upon delivery to the corporation of an undertaking by or on behalf of the Agent to repay such amount if it shall ultimately be determined that he or she is not entitled to be indemnified by the corporation as authorized under this Article V or otherwise. The Agent's obligation to reimburse the corporation for advances shall be unsecured and no interest shall be charged thereon. Section 5.4. Right of Claimant to Bring Suit. If a claim under Section 5.2 or 5.3 of these bylaws is not paid in full by the corporation within thirty (30) days after a written claim has been received by the corporation, the claimant may at any time there-after bring suit against the corporation to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall be entitled to be paid also the expenses (including attorneys' fees) of prosecuting such claim. It shall be a defense to any such action (other than an action brought to enforce a claim for expenses incurred in defending a Proceeding in advance of its final disposition) that the claimant has not met the standards of conduct that make it permissible under the California General Corporation Law for the corporation to indemnify the claimant for the amount claimed. The burden of proving such a defense shall be on the corporation. Neither the failure of the corporation (including its board of directors, independent legal counsel, or its shareholders) to have made a determination prior to the commencement of such action that the indemnification of the claimant is proper under the circumstances because he or she has met the applicable standard of conduct set forth in the California General Corporation Law, nor an actual determination by the corporation (including its board of directors, independent legal counsel, or its shareholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that claimant has not already met the applicable standard of conduct. Section 5.5. Provisions Nonexclusive. The rights conferred on any person by this Article V shall not be exclusive of any other rights that such person may have or hereafter acquire under any statute, provision of the articles of incorporation, agreement, vote of shareholders or disinterested directors, or otherwise, both as to action in an official capacity and as to action in another capacity while holding such office. To the extent that any provision of the articles of incorporation, agreement, or vote of the shareholders or disinterested directors is inconsistent with these bylaws, the provision, agreement, or vote shall take precedence.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;19 Section 5.6. Authority to Insure. The corporation may purchase and maintain insurance to protect itself and any Agent against any Loss asserted against or incurred by such person, whether or not the corporation would have the power to indemnify the Agent against such Loss under applicable law or the provisions of this Article V. If the corporation owns all or a portion of the shares of the company issuing the insurance policy, the company and/or the policy must meet one of the two sets of conditions set forth in Section 317 of the Code. Section 5.7. Survival of Rights. The rights provided by this Article V shall continue as to a person who has ceased to be an Agent and shall inure to the benefit of the heirs, executors, and administrators of such person. Section 5.8. Settlement of Claims. The corporation shall not be liable to indemnify any Agent under this Article V: (a) for any amounts paid in settlement of any action or claim effected without the corporation's written consent, which consent shall not be unreasonably withheld; or (b) for any judicial award, if the corporation was not given a reasonable and timely opportunity, at its expense, to participate in the defense of such action. Section 5.9. Effect of Amendment. Any amendment, repeal or modification of this Article V shall not adversely affect any right or protection of any Agent existing at the time of such amendment, repeal or modification. Section 5.10. Subrogation. Upon payment under this Article V, the corporation shall be subrogated to the extent of such payment to all of the rights of recovery of the Agent, who shall execute all papers required and shall do everything that may be necessary to secure such rights, including the execution of such documents necessary to enable the corporation effectively to bring suit to enforce such rights. Section 5.11. No Duplication of Payments. The corporation shall not be liable under this Article V to make any payment in connection with any claim made against the Agent to the extent the Agent has otherwise actually received payment (under any insurance policy, agreement, vote or otherwise) of the amounts otherwise indemnifiable hereunder. ARTICLE VI Other Provisions Section 6.1. Inspection of Corporate Records. (a) A shareholder or shareholders of the corporation holding at least five percent (5%) in the aggregate of the outstanding voting shares of the corporation or who hold at least one percent (1%) of the outstanding voting shares and have filed a Schedule 14B with the United States Securities and Exchange Commission relating to the election of directors of the corporation shall have an absolute right to do either or both of the following:

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;21 have any power or authority to bind the corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose or amount. Section 6.4. Certificates of Stock. Every holder of shares of the corporation shall be entitled to have a certificate signed in the name of the corporation by the chairperson or the vice chairperson of the board or the president or a vice president and by the secretary or an assistant secretary or the chief financial officer or an assistant financial officer, certifying the number of shares and the class or series of shares owned by the shareholder. The signatures on the certificates may be facsimile signatures. If any officer, transfer agent or registrar who has signed a certificate or whose facsimile signature has been placed upon the certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if such person were an officer, transfer agent or registrar at the date of issue. Except as provided in this Section 6.4, no new certificate for shares shall be issued in lieu of an old certificate unless the latter is surrendered and canceled at the same time. The board may, however, in case any certificate for shares is alleged to have been lost, stolen or destroyed, authorize the issuance of a new certificate in lieu thereof, and the corporation may require that the corporation be given a bond or other adequate security sufficient to indemnify it against any claim that may be made against it (including any expense or liability) on account of the alleged loss, theft or destruction of such certificate or the issuance of such new certificate. Prior to the due presentment for registration of transfer in the stock transfer book of the corporation, the registered owner shall be treated as the person exclusively entitled to vote, to receive notifications and otherwise to exercise all the rights and powers of an owner, except as expressly provided otherwise by the laws of the state of California. Section 6.5. Representation of Shares of Other Corporations. The president or any other officer or officers authorized by the board or the president are each authorized to vote, represent and exercise on behalf of the corporation all rights incident to any and all shares or other securities of any other corporation or corporations standing in the name of the corporation. The authority herein granted may be exercised either by any such officer in person or by any other person authorized to do so by proxy or power of attorney duly executed by said officer. Section 6.6. Seal. The corporate seal of the corporation shall consist of two concentric circles, between which shall be the name of the corporation, and in the center shall be inscribed the word AIncorporated@ and the date of its incorporation. Section 6.7. Fiscal Year. The fiscal year of the corporation shall begin on the first day of January and end on the 31st day of December of each year. Section 6.8. Construction and Definitions. Unless the context otherwise requires, the general provisions, rules of construction and definitions contained in the Code and the California General Corporation Law shall govern the construction of these bylaws. Without limiting the generality of this provision, the singular number includes the plural, the plural number includes the singular, and the term Aperson@ includes both a corporation and a natural person.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;22 Section 6.9. Bylaw Provisions Contrary to or Inconsistent with Provisions of Law. Any article, section, subsection, subdivision, sentence, clause or phrase of these bylaws which, upon being construed in the manner provided in this Section 6.9, shall be contrary to or inconsistent with any applicable provision of the Code or other applicable laws of the state of California or of the United States shall not apply so long as said provisions of law shall remain in effect, but such result shall not affect the validity or applicability of any other portions of these bylaws, it being hereby declared that these bylaws would have been adopted and each article, section, subsection, subdivision, sentence, clause or phrase thereof, irrespective of the fact that any one or more articles, sections, subsections, subdivisions, sentences, clauses or phrases is or are illegal. ARTICLE VII Amendments Section 7.1. Amendment by Shareholders. New bylaws may be adopted or these bylaws may be amended or repealed by the vote or written consent of holders of a majority of the outstanding shares entitled to vote; provided, however, that if the articles of incorporation of the corporation set forth the number of authorized directors of the corporation, the authorized number of directors may be changed only by an amendment of the articles of incorporation and provided also that a bylaw reducing the fixed number or the minimum number of directors to a number less than five cannot be adopted if the votes cast against adoption at a meeting, or the shares not consenting in the case of action by written consent, are equal to more than 16 2/3 percent of the outstanding shares entitled to vote. Section 7.2. Amendment by Directors. Subject to the rights of the shareholders as provided in Section 7.1 of this Article VII, bylaws, other than a bylaw specifying or changing a fixed number of directors or the maximum or minimum number or changing from a fixed to a variable board or vice versa, may be adopted, amended or repealed by the board.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;23 CERTIFICATE OF SECRETARY I, the undersigned, do hereby certify: 1. That I am the duly elected and acting secretary of United Security Bancshares, a California corporation; and 2. That the foregoing Bylaws, as amended comprising 22 pages, constitute the Bylaws, as amended of United Security Bancshares as duly adopted by action of the board of directors of United Security Bancshares duly taken on March 22, 2011. _____/s/ Robert G. Bitter__________ Robert G. Bitter, Pharm. D., Secretary

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## Exhibit 10.10

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FIRST AMENDMENT TO EMPLOYMENT AGREEMENT This First Amendment to Employment Agreement ("Amendment") is made by and between United Security Bank, a California banking corporation (the "Bank"), having a principal place of business at 2126Inyo Street, Fresno, CA93721, and Porsche Saunders (ooExecutive"), to which united Security Bancshares is a party, with reference to the following. RECITALS A. On or about February 27, 2024, the Bank and Executive entered into an Employment Agreement speciS'ing the terms and conditions of Executive's employment as Senior Vice President and Chief Lending Officer of the Bank ("Agreement'o), attached hereto as Exhibit o'A" and incorporated herein by this reference. B. The Bank and Executive have agreed to make a change to the terms and conditions of the Agreement with respect to a vehicle allowance, which is reflected in this Amendment. AGREEMENT NOW THEREFORE, in consideration of the foregoing recitals and the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows: l. Defined Terms. All terms defined in the Agreement when used herein shall have their respective meanings as set forth in the Agreement unless expressly superseded by the terms of this Amendment. All references in this Amendment to an "Article," "Section," or ooParagraph" shall refer to the applicable article, section, or paragraph of the Agreement, unless otherwise specifically provided. 2. Amendment. a. Section D(3) of the Agreement is hereby deleted in its entirety and replaced with the following: "3. Bank Automobile Allowance. Commencing April 1, 2025 and continuing for the term of this Agreement, the Bank shall provide Executive with an automobile allowance of not less than One Thousand Dollars ($1,000) per month." 3. Ratification and Conflict. Except as expressly amended by this Amendment, the terms and conditions of the Agreement shall remain unaltered, are hereby reaffirmed, and shall continue in full force and effect. In the event of any conflict or inconsistency between the terms of the Agreement and the terms of this Amendment, the terms of this Amendment shall govem and control. 4. Incorporation. The Recitals set forth above are hereby incorporated into this Amendment as though fully set forth herein. 17 623 \| 007 / 0703242 1. DOCX) 4939-0470-6094, v. 1

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IT WITNESS WHEREOF, the parties have executed this Amendment as of the date set forth below: Dated this 25th day of March of the year 2025. aa tivett Saunders otBank'o UNITED SECURITY BANK By Its: President & CEO R. oods SECURITY BANCSHARES By: Its: R. Woods President & CEO 17 623 / OO7 / 0 1O3 Z42r.D O Cx\ 4939-0470-6094, v. 1

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Exhibit "A" Employment Agreement

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EMPLOYMENT AGREEMENT This Employment Agreement (this "Agreement") is made on this 27rh day of February 2024, between United Security Bank, a California banking corporation (the "Bank"), having a principal place of business at 2126 Inyo Street, Fresno, CA 93721, and Porsche Saunders ("Executive"), to which United Security Bancshares is a party, with reference to the following: RECITALS WHEREAS' the Bank is a California banking corporation duly organized, validly existing, and in good standing under the laws of the state of California, with power to own property and carry on its business as it is now being conducted; WHEREAS, the Bank is a wholly-owned subsidiary of United Security Bancshares, a California corporation (the "Parent"); WHEREAS, the Bank desires to continue to avail itself of the skill, knowledge and experience of Executive in order to insure the successful management of its business; and WHEREAS, the parties hereto desire to specify the terms of Executive's continued employment by the Bank. NOW, THEREFORE, in consideration of the mutual covenants hereinafter set fortlr, it is agreed that, effective February 27, 2024 (the "Effective Date"), the following terms and conditions shall apply to Executive's employment: AGREEMENT A. Term of Employment 1. Term. The Bank hereby agrees to employ Executive, and Executive hereby accepts employment with the Bank, for the period commencing with the Effective Date and terminating on December 31, 2024; provided, however, unless notice is given by either party to the other party of nonrenewal prior to each January I'r during the Term, effective each January I't during the Term the termination date shall be extended by one (l) calendar yea\ subject, however, to prior termination of this Agreement and Executive's employment as hereinafter provided. Thus, for example, unless notice to the contrary is delivered prior to January 1, 2025, effective January 1, 2025, the Terun will be extended to December 31, 2025. Where used herein, "Term" shall refer to the entire period of employment of Executive by the Bank hereunder, whether for the period provided above, including any extensions thereof, or whether terminated earlier as hereinafter provided. B. Duties of Executive L Duties. Executive shall perform the duties and responsibilities of Senior Vice President and Chief Lending Officer of the Bank, which include, but are not limited to those {-70s7 100 t lo t7 68874. Docx)

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duties and responsibilities specified on the Bank's Job Description for the positions of Senior Vice President and Chief Lending Officer, attached as Exhibit A hereto, and Executive shall have such authority and power as are inherent in her positions (and the undertakings applicable to her positions) and as are necessary to carry out the duties and responsibilities required of her hereunder, subject to the powers by law vested in the Chief Executive Officer, the Board of Directors of the Bank and in the Parent, as the Bank's sole shareholder. 2. Faithful Performance. Executive shall perform exclusively the services herein contemplated to be performed by Executive faithfully, diligently and to the best of Executive's ability, consistent with the highest and best standards of the banking industry and in compliance with all applicable laws and Bank's Articles of Incorporation and Bylaws. 3. Code of Ethics. Executive shall conduct herself at all times with due regard to public conventions and morals and shall abide by and reflect those conventions and morals in her personal actions for the Bank. Executive further agrees not to do or commit any act that will reasonably tend to degrade her or to bring her into public hatred, contempt or ridicule, or that will reasonably tend to shock or offend any community in which the Parent, the Bank, or any of their affiliates engages in business, or to reflect poorly on the Parent, the Bank, any other affiliate, or the banking industry in general. 4. Conflicts of Interests. Executive shall devote substantially all of Executive's full business time, ability and attention to the business of the Bank during the Term, Notwithstanding the foregoing, Executive may pursue other appropriate civic, charitable or religious activities so long as such activities do not interfere with Executive's performance of her duties hereunder. In addition, Executive shall be permitted to make passive investments in other business ventures provided such investments are not in businesses that compete with the Parent or the Bank and which arc fully discloscd to thc Boald of Dilectols uf the Bark priur to thy tirne uf suclt invostment (other than investments represcnting lcss thun fivc pcrccnt (5.096) of thc scsuriticg of companies that are regularly traded on a national securities exchange (as that term is used in the Securities Exchange Act of 1934, as amended)). Executive shall also be permitted to serve on the board of directors (but not as an officer) of any non-profit entity, subject to prior full disclosure to the Board of Directors of the Bank. Executive may not serve on the board of directors (or as an officer) of any for-profit entity without the express written prior approval of the Board of Directors of the Bank. Executive shall report to the Board of Directors of the Bank, on an annual basis, all positions held with other business, civic or charitable organizations. 5. Place of Performance, In connection with her employment with the Bank, Executive will be based at an office designated by the Bank, located in Fresno, California. C. Compensation t. Basc Salary. For Executive's services hereunder, the Bank shall pay or cause to be paid as base salary to Executive the amount of not less than per month. Said base salary shall be Eighteen Thousand Seven Hundred Fifty Dollars ($18,750.00) payable in equal installments on the l5th and the 30th of each month, less federal and state income tax withholding and other applicable payroll withholdings. The Board of Directors of the Bank from time to time may 2{70s7 100 t l0 t7 68874. Docx}

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review Executive's base salary, at its discrction, and Executive shall receive such base salary increases, if any, as the Board of Directors, in its sole discretion (or as may be recommended by the Compensation Committee), shall determine. 2. Incentive Bonus. During the Term Executive shall be eligible to earn an incentive bonus through the loan hub managers' incentive plan (or any other incentive bonus program that may be developed and implemented by the Board of Directors from time to time). 3. Discretionary Bonus. During the Term, Executive may receive such discretionary bonuses, if any, as the Board of Directors, in its sole discretion, shall determine. 4. Claw tlqck. If the Compensation Committee or the Board of Directors of either the Bank or the Parent determines, in good faith and within three (3) years of the date the incentive or discretionary bonus was paid, that any fraud, negligence or intentional misconduct by Executive was a significant contributing factor to the Parent having to restate all or a portion of its financial staternents, the Compensation Committee or the Board of Directors may require rEimbursement of the incentive or discretionary bonus to the extent the payout would have been reduced due to such restatement. The reimbursement shall be net of taxes, to the extent the claw back is not tax deductible by Executive, and shall be paid by Executive within sixty (60) days aftel demand. D. Execrrtive Benefits J. Vacation. Executive shall acciue twenty (20) days of paid vacation, and ten (10)days of Personal Time Off, atExecutive's regular base pay rate during each year of the Term, in accordance with the Bank's vacation policies; provided, however, that, during eaoh year of the Tcrm, Exccutivc is rcquircd to and shall takc at lcast ten (10) days of the vacatiorr (the "lVlandatory Vacation"), r'r,hich shall bo taken coneecr.rtivoly. Exeoutivo shall not bs entitlod to pay in lieu of the Mandatory Vacation. Executive's entitlementto the accumulation of vacation not used that is in excess of the Mandatory Vacation and Executive's entitlement to pay for vacation in lieu of accumulating vacation shall be governed by the Bank's Employee Handbook. In scheduling vacations, Executive shall take into consideration the needs and activities of the Bank. 2. Sick Leave Croup_Medical and Other Benefits. The Bank shall provide for Executive's participation in all benefit plans or programs sponsored by the Bank or Parent, including, without limitation, participation in any group health, medical reimbursement, dental, disability, accidental death or dismemberment or life insurance plan (the costs, including premiums, of which shall by paid exclusively by the Bank), and sick leave; provided that the plan and programs shall be maintained by the Bank or Parent on terms no less favorable to Executive than those plans and programs in effect on the date hereof. Notwithstanding the foregoing, if Executive shall be unable to render the services required hereunder on account of personal injuries or physical or mental illness that do not result in total disability, she shall continue to receive all payments provided in this Agreement (subject to early termination as provided elsewhere herein); provided, however, that any such payments may, at the sole option of the Bank, be reduced by any amount that the Executive receives for the period covered by J{7 0 s7 100 t I 0 t 7 688 74. DOCX}

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such payments as disability compensation under insurance policies, if any, maintained by the Bank or under government programs. 3. Intentionally Renroved. 4. Kev Man and Disabilitv Insurance. The Bank or Parent shall have the right to obtain and hold a "key man" life insurance policy on the life of Executive and/or a disability insurance policy with the Bank or Parent as the beneficiary of the policy. Executive agrees to provide any information required for the issuance of such policy and submit herself to any physical examination required for such policy. 5. Indemnification. The Bank and the Parent will, to the maximum extent permitted by law, defend, indemnify and hold harmless Executive and her heirs, estate, executors and administrators against any costs, losses, claims, suits, proceedings, damages or liabilities to which Executive may become subject which arise out of or are based upon or relate to Executive's employment by the Bank, or the Executive's service as an officer of the Bank or the Parent, including without limitation the advance of legal or other expenses reasonably incurred by Executive in connection with investigation and defending against any such costs, losses, claims, suits, proceedings, damages or liabilities, provided that any reimbursement provided by this Paragraph D.5 to Executive for costs or legal fees arising out of claims made against Executive shall be subject to compliance with Section 4094 of the Internal Revenue Code. The Bank or the Parent shall maintain directors' and officers' liability insurance in commercially reasonable amounts (as reasonably determined by the Board), and Executive shall be covered under such insurance to the same extent as other senior management employees of the Bank or the Parent. D. Business Dxpenses and Reimbursenreut l. Business Expenses. Executive shall be entitled to reimbursement by the Bank for any ordinary and necessary business expenses incurred by Executive in the performance of Executive's duties and in acting for the Bank during the Term, which types of expenditures shall be determined by the Board of Directors of the Bank but shall include, but not be limited to entertainment, meals, travel, cellular phone, and expenses associated with participation on the Board of Directors, provided that: (a) Each such expenditure is of a nature qualifying it as a proper deduction on the federal and state income tax returns of the Parent or the Bank as a business €xpense and not as deductible compensation to Executive; and (b) Executive furnishes to the Bank adequate records, including receipts for expenditures and other documentary evidence required by federal and state statutes and regulations issued by the appropriate taxing authority for the substantiation ofsuch expenditures as deductible business expenses of the Parent or the Bank and not as deductible compensation to Executive. 4{7057 l00l l0 t'7 688?4.DOCX}

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2. ftgirnbursenrent. Executive agrees to submit her expense reimburcement requests to the CEO for approval. Executive agrees that, if at any time payment made to Executive by the Bank for business expense reimbursement shall be disallowed in whole or in part as a deductible business expense by the appropriate taxing authorities, the amount so disallowed shall be treated as taxable compensation to Executive. F. Termination l. Termination for CArIse. The Bank may terminate this Agreement and Executive's employment at any time without further obligation or liability to Executive, by action of its Board of Directors: (a) If Executive commits an act or acts or an omission to act which constitutes: (i) willful misconduct or a willful breach of a material duty in the course of Executive's employment; (ii) a habitual neglect of a material duty; (iii) a willful violation of any applicable banking law or regulation; or (iv) a willful violation of any material policy, procedure, practice, method of operation or specific mode of conduct established by the Board of Directors or as set forth in any Bank policy; (b) If Executive engages in any activity which materially and adversely affects the Parent's or the Bank's reputation in the community, as determined by the Board of Direc,tors in goocl faith; (c) If Executive has committed any act which would cause termination of coverage under the Bank's Bankers Blanket Bond, as to Executive or as to the Bank as a whole; (d) IfExccutivc is deceased; or (e) If Executive is found to be physically or mentally incapable of performing Executive's duties for a period of at least six (6) months by the Board of Directors, in good faith. Such termination shall not prejudice any remedy that the Bank may have at law, in equity, or under this Agreement. Termination pursuant to this Paragraph F.1 shall become effective upon written notice of termination. 2. Actiqn by Sunervisor.v Authorit.v. This Agreement and Executive's employment shall terminate immediately without further liability or obligation to Executive: (a) If the Bank is closed or taken over by the California Department of Financial Protection and Innovation or other supervisory authority, including the Federal Deposit lnsurance Corporation; or (b) If such supervisory authority should exercise its statutory cease and desist powers to remove Executive from office. 5{7057/00 I /0 I 7688 74.DOCX}

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3. Merger or'l'ransfer qf Assetq. This Agreement and Executive's employment shall not be terminated due to: (a) a merger where the Parent or the Bank is not the surviving corporation; (b) a consolidation; (c) a transfer ofall or substantially all ofthe assets ofthe Parent or the Bank; or (d) a ooChange in Control" (as defined below). The Bank shall take all actions necessary to insure that the surviving or resulting corporation, if other than the Parent or the Bank, or a transferee ofthe Parent's or the Bank's assets, is bound by and shall have the benefit of the provisions of this Agreement. In the case of dissolution, this Agreement and Executive's employment shall be terminated, 4. Termination without Cause. Notwithstanding anything to the contrary herein, this Agreement and Executive's employment may be terminated at any time without cause by the Bank upon seven (7) days' written notice of termination to Executive and by Executive upon three (3) months' written notice of termination to the Bank. 5. Effect of Termination. (a) In the event of termination of this Agreement and Executive's employment prior to the completion of the Term for any of the reasons specified in Paragraphs F.l through F.4 or in the event of the termination of this Agreement and Executives employment upon expiration of the Term due to non-renewal, or in the event Executive elects to terminate this Agreement and Executive's employment pursuant to the provisions of Paragraph F,4 other than for "Good Cause" (as defined belorv) after a "Change in Control" (as defined below), Executive shall be entitled to the salary and other benefits earned by Executive prior to the date of termination as provided for in this Agreement including accrued but unpaid vacation computed pro rata up to and including that date, and Executive's incentive bonus, if any and prorated for any partial computation period; but Executive shall be entitled to no further compcnsation for scrvice rendered after the date of terurination. (b) [n the event the Bank elects to terminate this Agreement and Executive's employment pursuant to the provisions of Paragraph F.4, or in the event Executive elects to terminate this Agreement for Good Cause, in addition to the items in Subparagraph F.5(a), Executive shall be entitled to: (i) severance compensation equal to twelve (12) months' then current base salary, payable in equal installments of a twelve (12) month period in conformity with the Bank's normal payroll periods; and (ii) continuation of Executive's group medical insurance benefits or payment of COBRA continuation benefits for twelve (12) months after which she will be entitled to self-pay COBRA continuation benefits for as long as legally available; provided, however, in the event the Bank or its successor elects to terminate Executive's employment pursuant to the provisions hereof and there has been a Change in Control within the prior twelve (12) months, or in the event Executive elects to terminate her employment for Good Cause within twelve (12) months after a Change in Control, Executive shall be entitled to: (i) severance compensation equal to twenty-four (24) months' then current base salary, payable in a lump sum; and (ii) continuation of group medical insurance benefits or payment of COBRA continuation benefits for twenty-four (24) months after which she will be entitled to self-pay COBRA continuation benefits for as long as legally available. 6{7057/00 I /0 r 768874.DOCXi

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(c) For purposes of this Agreement, a "Change in Control" shall be deemed to have occurred: (i) in the event of a merger or consolidation where the Parent and/or the Bank is not the suryiving corporation, except where the Parent's or the Bank's shareholders, as applicable, exchange their interests in the Parent or the Bank, as applicable, for more than fifty percent (50.0%) control of the surviving corporation; (ii) in the event of the Parent's sale, transfer or other disposition of more than forty percent (40%) control of the Bank; (iii) in the event of a transfer of at least forty percent (40%) of the assets of the Parent or the Bank to a transferee that does not control, is not controlled by, or is not under common control with, the Parent or the Bank; (iv) in the event of any other corporate reorganization of the Parent or the Bank where there is a change in ownership of more than fifty percent (50.0%o), except as may result from a transfer of shares to another corporation in exohange lor more than fifty percent (50.0%) control of that corporation, and except as may result from a transfer of shares of the Bank to another corporation controlling, controlled by, or under common control with the Parent; (v) in the event a majority of the members of the Bank's or the Parent's Board of Directors is replaced during any twelve (12) month period by directors whose appointment or election is not endorsed by a rnajority of the members of the Board of Directors prior to the date of their appointment or election; or (vi) in the event there shall have occurred a transaction or series of transactions of a nature such that disclosure would be required in response to Item 6(e) of Schedule l4A of Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended. (d) For prrrposes of this Agreement, the following shall constitute "Good Cause": (i) subsequent to a Change in Control of the Parent or the Bank, and without Executive's express written consent, the assignment to Executive of any duties substantially inconsistent with Executive's positions, duties, responsibilities and status with the Bank immediately prior to the Change in Control, or a substantial change in Executive's reporting responsibilities, titles or offices as in effect immediately prior to thc Changc in Control, or any removal of Executive from or an)/ failure to re-elect Executive to any of such pocitions, oxoept in oonnootion with the termination of Executive's employment pursuant to Paragraphs F.l or F.2, or as a result of Executive's retirement, or by Executive other than for "Good Cause"; (ii) subsequent to a Change in Control of the Parent or the Bank, a five percent(5.0%) or greater reduction by the Bank in Executive's base salary and benefits as in effect on the Effective Date or as the same may be increased from time to time; (iii) subsequent to a Change in Control of the Parent or the Bank and without Executive's express written consent, the Bank's requiring Executive to be based anywhere other than within ten (10) miles of the Bank's present main office location, exclusive of required travel on the Bank's business; or (iv) subsequent to a Change in Control of the Parent or the Bank, the failure by the Bank to obtain the assumption of the agreement to perform this Agreement by any successor as contemplated in Paragraph G.4 hereof. (e) Section 2800 Exccss Parachute Payr-n.eQls. (i) If any payment or benefit received or to be received by Executive, whether payable pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Bank or Parent (the "Total Payments"), constitutes an "excess parachute payment" within the rneaning of Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"), that would be subject to the excise tax imposed by Section 4999 of the 7{70s7100r/0t 768874.DOCX}

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Code or any similar federal or state law (an 'oExcise Tax"), the Bank will reduce such Total Payments to Executive until such Total Payments are no longer subject to any tax under Section 4999 of the Code. (ii) All calculations under this Subparagraph are to be made initially by the Bank and the Bank's tax advisor and the Bank will provide prompt written notice thereof to Executive. Upon request of Executive, the Bank will provide Executive with sufficient tax and compensation data to enable Executive or her tax advisor to independently make the calculations described in Subparagraph F.5(e)(i) above, and the Bank will reimburse Executive for reasonable fees and expenses incurred for any such verification. (iii) If Executive provides written notice to the Bank of any objection to the results of the Bank's calculations within sixty (60) days after Executive's receipt of written notice thereof, the Bank will refer that dispute for determination to tax counsel selected by the independent auditors of the Bank, and the Bank witl pay all fees and expenses of that tax counsel. (0 llequlatory Prohibition. Notwithstanding anything to the contrary contained herein, Executive shall not be entitled to the payment of any severance benefit to the extent that such payment shall be deemed a "golden parachute payment" as defined in Section 359.I(D of the Federal Deposit Insurance Corporation's Rules and Regulations. (g) M.itjqatioU. The Executive shall not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise. The Bank shall not be entitled to set off against the amounts payable to Executive under this Agreement with the Bank any amounts earned by Executive in other employment after tormination of hcr cmploymcnt with thc Bank, or any amounts which might havc bccn carncd by Emplol,es in other emplol,rngnt had he sought such other employment. 6. ReFtiction on 'l'iming ofl Distributions. In the event that Code Section 409A applies to any compensation with respect to a separation from service, payment of that compensation shall be delayed if Executive is a "specified employee" as defined in Section a09A(a)(2)(B)(i), and such delayed payment is required by Section 409A. Such delay shall last six (6) months from the date of separation from service (or as otherwise required by Section 409,4). On the day following the end of such six (6)- month period, the Bank shall make a catch-up payment to Executive equal to the total amount of such payments that would have been made during the six (6)-month period but for this Paragraph F.6. 7 . Release of All Claims. As a condition for receiving any severance pay hereunder, Executive hereby agrees to execute a full and complete release of any and all claims against the Parent and the Bank and their respective officers, agents, directors, attorneys, insurers, employees and successors in interest arising from or in any way related to Executive's employment with the Bank or the termination thereof which release shall include reasonable protection from improper use of confidential information, as provided in Paragraph G.l . 80 as1 I 00 t l0 t7 688 74. DOCX)

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![](saundersamendmenttoemplo012.jpg)

G. General Provisions l. liade Secr-ets. Executive agrees that, during tlre Term, Executive will have access to, and become acquainted with, confidential, trade secret, and proprietary information concerning the Parent and the Bank, including any subsidiaries, successors and assigns, which may include, without limitation, information on their operations and financial condition and financial needs, information concerning customer lists, products, procedures, operations, investments, financing, costs, employees, accounting, marketing, salaries, pricing, profits and plans for future development, the identity, requirements, preferences, practices and methods of doing business of specific parties with whorn the Bank or Parent transact business, and all other information which is related to any product, service or business of the Bank, other than information which is generally known in the industry in which the Bank transacts business or is acquired from public sources, and information regarding the Bank's customers, including knowledge of their financial condition and financial needs, as well as such customers'methods of doing business, all of which information is valuable propeity of the Bank ("Trade Secrets"). Executive shall not, without the prior written consent of the Board of Directors in each instance, disclose or use in any way, during the term of her employment by the Bank and for one (l) year thereafter (or longer required by law), except as required in the course of such employment, any such Trade Secrets acquired in the course of such employment, whether or not patentable, copyrightable or otherwise protected by law, and whether or not conceived of or prepared by her; provided, however, that, following termination of employment, Employee shall be entitled to retain a copy of any rnlodex or other compilation maintained by her of the names of husiness contacts with their addresses, telephone numbers and similar information. 2.' Return of Documents. Executive expressly agrees that all manuals, documents, files, reports, studies, instruments or other materials used and/or developed by Executive during Exccutivc's cmployment with thc Dank, arc solcly the propcrty of thc Parcnt or thc Bank, as applicablo, that Executive has no right, title or intorost theroin, and that Exeoutive shall not remove such documents, whether in physical or electronic form, from the premises of the Bank, except as required in the course of employment by the Bank, without the prior written oonsent of the Board of Directors in each instance. Upon termination of Executive's employment or upon demand by the Bank, Executive or Executive's representative shall promptly deliver possession of all of said property to the Bank in good condition. 3. Notices. Any notice, request, demand or other communication required or permitted hereunder shall be deemed to be properly given when personally served in writing or by facsimile, one (l) week after having been deposited in the United States mail, registered or certified, postage prepaid, or when communicated to a public telegraph company for transmittal and the appropriate answerback confirmation is received. Either party may change its address by written notice in the manner set forth herein. 4. Bencfit of Aqreement. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective executors, administrators, successors and assigns. Notwithstanding the foregoing, neither this Agreement nor any rights hereunder shall be assigned, pledged, hypothecated or otherwise transferred by Executive without the prior written consent of the Board of Directors in each instance. Nothing in the Agreement, expressed or 9{7057/00 r /0 l 768874.DOCX}

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![](saundersamendmenttoemplo013.jpg)

implied, is intended to confer upon any person other than the Bank, Parent or the Executive any rights or remedies under or by reason of this Agreement. 5. Applicable Law: Venue. This Agreement is to be governed by and construed under the laws of the State of California applicable to contracts made and to be performed with that state. Subject to Paragraph G.8, each party hereto, to the fullest extent it may effectively do so under applicable law, irrevocably (i) submits to the exclusive jurisdiction of any court of the State of California or the United States of America sitting in the City of Fresno over any suit, action or proceeding arising out of or relating to this Agreement and (ii) waives and agrees not to assert, by way of motion, as a defense or otherwise, any claim that it is not subject to the jurisdiction of any such court, any objection that it may now or hereafter have to the establishment of the venue of any such suit, action or proceeding brought in any such court md any clairn that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum 6. Caption and Palagraph l-leadings. Captions and paragraph headings used herein are for convenience only and are not a part of this Agreement and shall not be used in construing it. 7. Invalid Provisions. Should any provisions of this Agreement for any reason be declared invalid, void, or unenforceable by a court of competent jurisdiction, the validity and binding effect of any remaining portions shall not he affected, and the remaining portions of this Agreement shall remain in full force and effect as if this Agreement had been executed with said provision eliminated. 8. Arbitration. Any dispute, controversy or claim arising out of or relating to this Agreement (or its validity, interprotation or enforcoment), the employment relotionship or the srrhject mafter hereof shall, at the request of either pafi1r, be settled by binding arbitration in Fresno County, California, in accordance with the Commercial Arbitration Rules of the American Arbitration Association and judgment upon the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof. The arbitration of such issues, including the determination of any amounts of damages suffered, shall be final and binding upon the parties to the maximum extent permitted by law. The parties shall have rights to discovery as provided in Section 1283.05 of the California Code of Civil Procedure, including without limitation Section 1283.1thereof. Except as otherwise required by law, each party shall bear its own attorneys' fees, costs and expenses; provided, however, the Bank shall bear the costs of the arbitrator(s). The provisions of this Paragraph G.8 shall not affect or limit the rights and remedies available to the patties under the laws of the State of California relating to injunctive or other equitable relief to enforce the covenants contained herein or the agreements made pursuant hereto or in furtherance hereof. Neither party shall institute a proceeding hereunder until that party has furnished to the other party at least thirty (30) days' prior written notice of its intent to do so. 9. lnjunctive Rglief. Executive hereby acknowledges and agrees that it would be difficult to fully compensate the Bank for damages resulting from the breach or threatened breach of certain provisions of this Agreement, including but not limited to Paragraphs G.l and {7 0s7 100 t l0 t7 68874. DOCX} l0

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![](saundersamendmenttoemplo014.jpg)

G.2, and that, accordingly, the Bank shall be entitled to seek temporary and injunctive relief, including temporary restraining orders, preliminary injunctions and permanent injunctions, to enforce such provisions without the necessity of proving actual damages and without the necessity of posting any bond or other undertaking in connection therewith. This provision with respect to injunctive relief shall not, however, diminish the Bank's right to claim and recover damages. 10. Attornevs' Fee.q. In the event either parly takes legal action to enforce any of the terms of this Agreement, the unsuccessful patty to such action shall pay the successful party's expenses, including attorneys' fees, incurred in such action. I 1. Dntire Agleemcnt. Except for stock option agreements and participation in other compensation , bonus, salary continuation or severance plans and agreements which may be entered into by and between the Bank and Executive, this Agreement contains the entire agreement of the parties and supersedes any and all other agreements, either oral or in writing, between the parties hereto with respect to the employment of Executive by the Bank. Each party to this Agreement acknowledges that no representations, inducements, promises, or agreements, oral or otherwise, have been made by any party, or anyone acting on behalf of any party, which are not embodied herein, and that no other agreement, statement, or promise not contained in this Agreement, or in any stock option agreement or other compensation, bonus, salary continuation or severance agreement , shall be valid or binding. 12. Amendments and Waivers. This Agreement may not be modified or amended by oral agreement, but only by an agreement in writing signed by the Bank and Executive. Any waiver of any provision of this Agreement shall be effective only if in writing and signed by the patties hereto. Any waiver of a breach of any provision hereof shall not operate as or be construed as a lvoiver of ony subsequcnt brcoch of thc samc provision or any othcr provision hereof. 13. lnterpretation. If any claim is made by any party hereto relating to any conflict, omission or ambiguity of this Agreement, no presumption or burden of proof or persuasion shall be implied by reason of the fact that this Agreement was prepared by or at the request of any particular party hereto or such party's counsel. Each party hereto acknowledges that no party was in a superior bargaining position regarding the substantive terms of this Agreement. 14. Ernployee Acknowledglncnt. Executive acknowledges that she has had the opportunity to consult legal counsel in regard to this Agreement, that she has read and understands this Agreement, that she is fully aware of its legal effect, and that he has entered into it freely and voluntarily and based on her own judgment and not on any representations or promises other than those contained in this Agreement. 15, Counterpafts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument. {70s7100 ti0l768874.DOCX} ll

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![](saundersamendmenttoemplo015.jpg)

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. SECURITY \ By: Its: Dennis President & CEO oods TJNITED SECURITY By: Its: President & CEO R. {7057 100 \| totT 68874, DOCX} t2

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## Exhibit 21.1

**Exhibit 21.1**

**Subsidiaries of the Company (United Security Bancshares)** 

1) United Security Bank – incorporated in the State of California

## Exhibit 23.1

**Exhibit 23.1**

**Consent of Independent Registered Public Accounting Firm**

We consent to the incorporation by reference in the Registration Statements on Form S-8 (No. 333-203397 and No. 333-288086) of United Security Bancshares (the "Company"), of our report dated March 25, 2026, relating to the consolidated financial statements of the Company, appearing in this Annual Report on Form 10-K of the Company for the year ended December 31, 2025.

/s/ Baker Tilly US, LLP

San Francisco, California

March 25, 2026

## Exhibit 31.1

**EXHIBIT 31.1**

CERTIFICATION UNDER SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

I, Dennis R. Woods, certify that:

1. I have reviewed this report on Form 10-K of United Security Bancshares;<br>

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;<br>

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;<br>

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13(a) - 15(e) and 15d - 15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;&nbsp;&nbsp;&nbsp;&nbsp;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and&nbsp;&nbsp;&nbsp;&nbsp;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent quarter (the registrant's fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):&nbsp;&nbsp;&nbsp;&nbsp;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and&nbsp;&nbsp;&nbsp;&nbsp;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.<br>

---

| |
|:---|
| Date: March 25, 2026 |
| /S/ Dennis R. Woods |
| Dennis R. Woods |
| President and Chief Executive Officer |

---

A signed original of this written statement required by Section 302 of the Sarbanes-Oxley Act of 2002 has been provided to United Security Bancshares and will be retained by United Security Bancshares and furnished to the SEC or its staff upon request.

## Exhibit 31.2

**EXHIBIT 31.2**

CERTIFICATION UNDER SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

I, David Kinross, certify that:

1. I have reviewed this report on Form 10-K of United Security Bancshares;<br>

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;<br>

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;<br>

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13(a) - 15(e) and 15d - 15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;&nbsp;&nbsp;&nbsp;&nbsp;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and&nbsp;&nbsp;&nbsp;&nbsp;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent quarter (the registrant's fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):&nbsp;&nbsp;&nbsp;&nbsp;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and&nbsp;&nbsp;&nbsp;&nbsp;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

---

| |
|:---|
| Date: March 25, 2026 |
| /S/ David A. Kinross |
| David A. Kinross |
| Senior Vice President and Chief Financial Officer |

---

A signed original of this written statement required by Section 302 of the Sarbanes-Oxley Act of 2002 has been provided to United Security Bancshares and will be retained by United Security Bancshares and furnished to the SEC or its staff upon request.

## Exhibit 32.1

**EXHIBIT 32.1**

**SECTION 906 CERTIFICATION**

The certification set forth below is being submitted to the Securities and Exchange Commission solely for the purpose of complying with Section 1350 of Chapter 63 of Title 18 of the United States Code.

Date: March 25, 2026

Dennis R. Woods, the Chief Executive Officer of United Security Bancshares certifies:

1. that this annual report on Form 10-K for the year ended December 31, 2025, fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. that information contained in this annual report on Form 10-K for the year ended December 31, 2025, fairly presents, in all material respects, the financial condition and results of operations of United Security Bancshares.

---

| |
|:---|
| /s/ Dennis R. Woods |
| Dennis R. Woods |
| President and Chief Executive Officer |

---

## Exhibit 32.2

**EXHIBIT 32.2**

**SECTION 906 CERTIFICATION**

The certification set forth below is being submitted to the Securities and Exchange Commission solely for the purpose of complying with Section 1350 of Chapter 63 of Title 18 of the United States Code.

Date: March 25, 2026

David Kinross, the Chief Financial Officer of United Security Bancshares certifies:

1. that this annual report on Form 10-K for the year ended December 31, 2025, fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. that information contained in this annual report on Form 10-K for the year ended December 31, 2025, fairly presents, in all material respects, the financial condition and results of operations of United Security Bancshares.

---

| |
|:---|
| /s/ David A. Kinross |
| David A. Kinross |
| Senior Vice President and Chief Financial Officer |

---

<br>