FFB Bancorp Announces Fourth Quarter 2025 Results:

"During the quarter we saw additional growth in the loan and deposit portfolios and continued to execute on our strategic plan, which includes technology, product, and process improvement. We are in a position of capital strength, which is why we have the confidence to redeem our subordinated debt during the first quarter of 2026. In addition, we feel that the best use of our excess capital is to buy back existing shares in the market."

"While a 1.50% annual ROAA is strong by most bank standards, we are not satisfied with our 2025 results. This year we have had the opportunity to bring in experienced leaders that we believe will enable the team to focus on key strategies for 2026 and set the foundation for future growth in 2027 and beyond. In addition to executing our organic growth strategy, the M&A dynamics in our core markets are also presenting opportunities for our frontline teams to capture."

FFB Bancorp Announces Redemption of Subordinated Debt:

The Company has authorized a plan to redeem in full the $28.3 million principal amount of subordinated debentures at par on February 15, 2026, or such later date as required by regulation, plus accrued and unpaid interest to the redemption date. This would represent approximately 15.3% of total shareholders' equity at December 31, 2025.

The Company's Board of Directors has reviewed pro forma consolidated capital and liquidity projections and determined that it is in the best interest of the Company and its shareholders to authorize the redemption of this subordinated debt.

FFB Bancorp Announces Stock Repurchase Program:

The Company has authorized a plan to utilize up to $15.0 million of capital to repurchase shares of the Company's common stock, which represents approximately 8.1% of total shareholders' equity at December 31, 2025, and will commence on or about January 30, 2026, provided that the Company is not then in possession of material non-public information.

Under the terms of the repurchase plan, the Company may repurchase shares of the Company's common stock from time to time, through December 31, 2026, in open market purchases or privately negotiated transactions. Open market repurchases generally will be made in accordance with Rule 10b-18 of the Securities Exchange Act of 1934, as amended (the "34 Act"), and may also be made pursuant to a trading plan under Rule 10b5-1 of the '34 Act, which would permit shares to be repurchased by the Company when the Company might otherwise be precluded from doing so because of self-imposed trading blackout periods or other regulatory restrictions. The timing, manner, price and exact amount of any repurchases by the Company will be determined at the Company's discretion and depend on various factors including the performance of the Company's stock price, general market and economic conditions, applicable legal and regulatory requirements, availability of funds and other relevant factors.

The Company's management believes the repurchase plan, depending upon market and business conditions, may, among other things, provide capital management opportunities for the Company. The Company is not obligated to repurchase any shares under the repurchase plan. Through December 31, 2026, the repurchase plan may be discontinued, suspended or restarted at any time.

Results of Operations

Quarter ended December 31, 2025:

Operating revenue, consisting of net interest income before the provision for credit losses and non-interest income, decreased 17% to $23.34 million for the fourth quarter of 2025, compared to $28.25 million for the fourth quarter a year ago, and decreased 1% from $23.49 million for the third quarter of 2025. The decrease in operating revenue was primarily the result of a decrease in non-interest income, primarily merchant services income.

Net interest income, before the provision for credit losses, decreased 4% to $18.08 million for the fourth quarter of 2025, compared to $18.81 million for the same quarter a year ago, and increased $28,000 from $18.05 million from last quarter. The Company's net interest margin ("NIM") decreased by 38 basis points to 4.86% for the fourth quarter of 2025, compared to 5.24% for the fourth quarter of 2024, and decreased 29 basis points from 5.15% for the preceding quarter. "Net interest income and NIM decreased from the prior quarter primarily driven by lower yield on earnings assets and increased funding costs. The decrease in the earning assets yield was primarily the result of the decrease in market rates and related impact on variable rate loans," said Bhavneet Gill, Chief Financial Officer.

The yield on earning assets was 6.02% for the fourth quarter of 2025, compared to 6.24% for the fourth quarter a year ago, and 6.29% for the previous quarter. The cost to fund earning assets increased to 1.17% for the fourth quarter of 2025 compared to 1.13% for the previous quarter, and 1.00% for the same quarter a year earlier. This increase is the result of an increased reliance on wholesale funds due to ISO deposit outflow that occurred during 2025. As deposits for Bank customers and ISO partners increase as we expect over the next few quarters, Management intends to reduce reliance on wholesale funding. "In 2026 we should have the opportunity to grow our existing ISO partners in all risk verticals, which should attract new deposit opportunities to replace what we exited in 2025. In addition, with increased bank merger and acquisition activity happening in our regions, we believe our teams have the opportunity to acquire new customers and talent through the typical market disruption this causes," said Miller, "We refer to this as organic growth M&A."

Total non-interest income was $5.25 million for the fourth quarter of 2025, compared to $9.44 million for the fourth quarter of 2024, and $5.44 million for the previous quarter. The decrease in non-interest income was driven by a decrease in merchant services revenue. Merchant services revenue decreased 65% to $2.65 million for the fourth quarter of 2025, compared to $7.56 million from the fourth quarter of 2024. The decrease over prior year was attributed to planned ISO partner exits during 2025 and lower gross volume and revenue related to FFB Payments. Merchant services revenue decreased 18% from $3.21 million when compared to the third quarter of 2025 as a result of reduction in ISO partner sponsorship volumes and reduction in FFB Payments revenue from repricing.

During the first and second quarters of 2025, ISO Partner Sponsorship volumes included $2.78 billion and $2.56 billion in volume, respectively, for the ISO partners that exited during 2025. Additionally, the first and second quarters of 2025 included ISO Partner Sponsorship revenues of $990,000 and $1.09 million, respectively, from the ISO partners that exited during 2025. "These ISO exits were driven by our efforts to comply with the Consent Order and designed to ensure best in class oversight. We continue to build relationships within FFB Payments and look to strengthen the commitments with our remaining ISO partners as we move forward," said Miller. "We continue to make progress on the obligations set forth within the Consent Order."

*ISO Partnership Sponsorship is recognized net of expense in Merchant Services Income. FFB Payments revenues are recognized on a gross basis in Merchant Services Income and Merchant Services expenses are recognized in Non-Interest Expense.

Total deposit fee income decreased 4% to $822,000 for the fourth quarter of 2025, compared to $856,000 for the fourth quarter of 2024, and increased 1% from $812,000 for the previous quarter. These changes are primarily the result of the relative change in the deposit portfolio and shifts within deposit concentrations.

There was a $1.16 million gain on the sale of loans during the fourth quarter of 2025, compared to a gain on the sale of loans of $929,000 during the fourth quarter 2024, and a gain on the sale of loans of $361,000 in the previous quarter. There was a $6,000 loss on the sale of investments recorded during the fourth quarter of 2025, compared to a $482,000 loss recorded during the fourth quarter of 2024. The gain on the sale of loans during the quarter was the result of $8.71 million in SBA loan sales and $23.44 million in multifamily loan sales that were completed during the quarter. These sales contributed $611,000 and $549,000 in gain respectively.

Non-interest expense increased 3% to $14.73 million for the fourth quarter of 2025, compared to $14.27 million from the previous quarter, and increased 11%, compared to the $13.27 million recorded for the fourth quarter 2024. The increase on a year-over-year comparison was driven by increases in salaries and employee benefits expense, and increases in other operating expense, primarily data and software related expenses and professional fees. Compared to the third quarter of 2025 the increase in non-interest expense was attributed to an increase in other operating expenses and professional fees, partially offset by a decrease in salaries and employee benefit expense. "The Board and I have a focused strategy on maximizing existing software tools while also implementing AI and similar efficiencies to avoid over hiring, and more importantly, to improve the quality of our staff's work by letting tech do the more remedial tasks," said Miller, "We are quickly seeing the impact of how new technology will help us eliminate or consolidate redundant systems. This will also enable key department functions to be automated in more efficient ways than before. My role will be to help shepherd our team to stay up to speed with these new technologies and ensure we are implementing appropriate change to help drive productivity."

Salaries and employee benefits increased 44% to $7.43 million for the fourth quarter of 2025, compared to $5.18 million for the fourth quarter 2024. The increase year-over-year was primarily the result of expense associated with the increase in full-time employees. Full-time employees increased to 189 at December 31, 2025, compared to 168 full-time employees a year earlier. Total salaries and employee benefits decreased 3% from $7.67 million in the previous quarter. These decreases were primarily the result of non-recurring reductions of $465,000 and $361,000 in performance bonus and ESOP accruals, respectively.

Occupancy and equipment expenses increased 15% from a year ago, representing 3% of non-interest expense, and increased 3% from the previous quarter. These increases are the result of increased rent expense from office expansion. Merchant operating expense totaled $1.60 million for the fourth quarter of 2025, compared to $3.15 million for the fourth quarter of 2024 and $1.58 million for the previous quarter. The decrease in merchant operating expense, compared to the fourth quarter of 2024, is attributed to fluctuations in volume and revenue for the FFB Payments lines of business. Merchant operating expenses include interchange fees, chargebacks, partnership fees, and other card brand fees.

Professional fees, which consist of legal, audit, and consulting expenses, increased 16% to $1.37 million for the fourth quarter of 2025, compared to $1.18 million for the fourth quarter 2024. Total professional fees increased 13% from $1.20 million in the previous quarter. "Fourth quarter professional fees included $321,000 in non-recurring consulting costs related to Consent Order remediation. These fees were tied to finalizing one of the heavier lifts in the required remediation," noted Gill.

Data and technology expenses increased 33% to $1.60 million for the fourth quarter of 2025, compared to $1.20 million for the fourth quarter 2024. Data and technology expenses increased 6% from $1.51 million in the previous quarter. The increase in data and technology expense and professional fees is primarily due to actions taken to enhance the Company's AML/CFT, compliance, and merchant services programs.

Other operating expense increased 5% or $108,000 to $2.26 million from a year earlier and increased $405,000 from the previous quarter. The quarterly increase was driven by increases in marketing expense, loan collection expense, and higher fraud related operational losses.

The efficiency ratio was 63.12% for the fourth quarter of 2025, compared to 46.19% for the same quarter a year ago, and 60.76% for the previous quarter, which is the result of increases in other operating expenses. This ratio can fluctuate period-over-period based on changes in merchant services' gross revenues and associated expenses. The Company also calculates an adjusted efficiency ratio where the merchant services' gross expense, which is included in non-interest expense, is netted against merchant services' revenue in non-interest income. The adjusted efficiency ratio was 60.40% for the fourth quarter of 2025, compared to 39.57% for the same quarter a year ago, and 57.93% for the previous quarter.

Year ended December 31, 2025:

For the year ended December 31, 2025, operating revenue increased 1% to $102.65 million, compared to $101.99 million for the same period in 2024. For the year ended December 31, 2025, net interest income before the provision for credit losses increased 4% to $73.14 million, compared to $70.04 million for the same period in 2024. The increase in net interest income is attributed to growth in the loan portfolio, partially offset by a decrease in investment interest income and increase in interest expense due to higher funding costs. For the year ended December 31, 2025, the yield on earning assets was 6.15% compared to 6.26% for the same period in 2024, while the cost to fund earning assets was 1.08% for the year ended December 31, 2025, compared to 1.04% for the same period in 2024.

For the year ended December 31, 2025, non-interest income decreased 8% to $29.51 million compared to $31.95 million for the same period in 2024. This decrease was attributed to a $4.94 million decrease in merchant services revenue, partially offset by a $702,000 increase in gain on sale of loans, $1.05 million decrease in the loss on sale of investments and higher loan servicing income. Deposit fee income remained consistent with the prior year at $3.34 million.

For the year ended December 31, 2025, operating expenses increased by 18% to $61.24 million from $51.99 million for the same period in 2024. Salaries and employee benefits expense increased 25% to $31.16 million as a result of the increase in FTE. There was a 13% decrease in merchant services operating expenses, to $9.24 million, which represents 15% of total operating expenses for year ended December 31, 2025. Other operating expenses increased 22% to $8.90 million due to a $1.40 million increase in technology related expenses, increases of $1.42 million in professional fees, $279,000 in marketing expense, and $522,000 in operational losses.

For the year ended December 31, 2025, the efficiency ratio was 59.51%, compared to 50.34% for the same period ended December 31, 2024. The adjusted efficiency ratio was 55.52%, compared to 44.62% for the same period ended December 31, 2024.

Balance Sheet Review

Total assets increased 5% to $1.58 billion at December 31, 2025, compared to $1.50 billion at December 31, 2024, and increased 5% compared to $1.50 billion at September 30, 2025.

The total loan portfolio increased 12%, or $125.35 million, to $1.20 billion, compared to $1.07 billion at December 31, 2024, and increased 7% from the $1.12 billion reported at September 30, 2025. "We're excited for the continued growth we've seen in the loan portfolio as this is attributed to the strong relationships we are able to build with new and existing clients. When you add back the $90.33 million in sold production from 2025, the team achieved 15% loan growth compared to the prior year," said Miller, "In the first half of 2026, we will be launching a new corporate card product and small business loan product which we believe can provide even more value to our customers."

Commercial real estate loans increased 11% year-over-year to $746.25 million, representing 62% of total loans at December 31, 2025. The CRE portfolio includes $80.25 million in short-term bridge loans for transitional projects of multi-family properties. The short-term bridge loans are conservatively underwritten with minimum DSCR and liquidity requirements.

The real estate construction and land development loan portfolio decreased 13% from a year ago to $23.12 million, representing 2% of total loans, while residential RE 1-4 family loans totaled $41.90 million, or 4% of loans, at December 31, 2025, compared to $16.85 million one year ago.

The commercial and industrial (C&I) portfolio increased 8% to $288.72 million, at December 31, 2025, compared to $267.95 million a year earlier, and increased 7% from $269.90 million at September 30, 2025. C&I loans represented 24% of total loans at December 31, 2025.

Agriculture loans of $96.13 million represented 8% of the loan portfolio at December 31, 2025. At December 31, 2025, the SBA, USDA, and other government agencies guaranteed loans totaled $59.15 million, or 5% of the loan portfolio.

Investment securities totaled $241.00 million at December 31, 2025, compared to $322.19 million a year earlier, and decreased $7.29 million from $248.28 million at September 30, 2025. At December 31, 2025, the Company had a net unrealized loss position on its investment securities portfolio of $17.71 million, compared to $25.89 million a year earlier, and $20.37 million at September 30, 2025. The Company's investment securities portfolio had an effective duration of 6.40 years at December 31, 2025, compared to 5.32 years at December 31, 2024, and 6.17 years at September 30, 2025.

Total deposits increased 5%, or $59.27 million, to $1.34 billion at December 31, 2025, compared to $1.28 billion from a year earlier, and increased $85.39 million from $1.26 billion at September 30, 2025. Non-interest bearing demand deposits decreased 5% to $786.25 million at December 31, 2025, compared to $828.51 million at December 31, 2024, and increased $28.01 million from $758.24 million at September 30, 2025. Non-interest bearing demand deposits represented 59% of total deposits at December 31, 2025. During the fourth quarter of 2025 non-interest bearing demand deposits were reduced by $16.12 million due to strategic ISO partner exits. Certificates of deposits increased 2%, or $3.87 million, during the quarter. Wholesale deposits, which primarily consist of brokered CDs and ICS one-way buy deposits, totaled $142.94 million at December 31, 2025, compared to $43.94 million from a year earlier, and $101.94 million at September 30, 2025. Management intends to reduce wholesale deposits as Bank customer and ISO partners increase deposits as expected.

Included in total non-interest bearing deposits at December 31, 2025 are $73.33 million from ISO partners for merchant reserves, $14.61 million from ISO partners for settlement, and $14.46 million in ISO partner operating accounts, totaling $102.41 million. These deposits represent 13% of non-interest bearing deposits and 8% of total deposits. At December 31, 2024 there was $82.66 million from ISO partners for merchant reserves, $134.37 million from ISO partners for settlement, and $8.32 million in ISO partner operating accounts, totaling $225.36 million or 27% of non-interest bearing deposits and 18% of total deposits. These decreases were the result of strategic partner exits completed during 2025.

Within the $102.41 million in ISO partner deposits retained as of December 31, 2025 are $8.49 million in deposits expected to exit with terminated ISO partners. The Bank plans to replace these non-interest bearing deposits with growth from new Bank customers in its markets and from the existing ISO partners it will continue to support.

The Company has expanded its leadership team under our new Chief Banking Officer role announced last quarter, to include regional heads that provide coverage across the State of California. These regions are represented by two regional heads in the Central Valley, one in Northern California, and two in Southern California. Loan and deposit totals across these regions had the following balances as of December 31, 2025:

There were no short-term borrowings at December 31, 2025, or December 31, 2024, compared to $7.00 million at September 30, 2025. The Company primarily utilizes FHLB advances and the Federal Reserve discount window for short-term borrowings. The following table summarizes the Company's primary and secondary sources of liquidity which were available at December 31, 2025:

The total primary and secondary liquidity of $711.51 million at December 31, 2025 represents an increase of $62.62 million in primary and secondary liquidity quarter-over-quarter.

Shareholders' equity increased 10% to $184.80 million at December 31, 2025, compared to $168.39 million from a year ago, and increased 3% from the $179.42 million reported at September 30, 2025. Book value per common share increased 16% to $61.64, at December 31, 2025, compared to $53.02 at December 31, 2024, and increased 3% from $59.84 at September 30, 2025. The tangible common equity ratio was 11.68% at December 31, 2025, compared to 11.20% a year earlier, and 11.97% at September 30, 2025. Book value improved as a result of quarterly net income and a reduction in shares outstanding through share repurchases.

At the Bank level, unrealized losses and gains reflected in AOCI are not included in regulatory capital. As a result, Tier-1 capital at the Bank for regulatory purposes was $233.18 million at quarter end excluding the unrealized loss. The regulatory leverage capital ratio was 15.04% for the current quarter, while the total risk-based capital ratio was 20.54%, exceeding regulatory minimums to be considered well-capitalized.

Asset Quality

Nonperforming assets, which consist of nonperforming loans and other real estate owned, decreased 0.61% to $27.76 million, or 1.76% of total assets, at December 31, 2025, compared to $27.93 million, or 1.86% of total assets, from the previous quarter. Of the $27.76 million in nonperforming loans, $9.71 million are covered by SBA guarantees, and 50.23% are secured by real estate. Total delinquent loans decreased to $4.69 million at December 31, 2025, compared to $7.53 million at September 30, 2025.

Past due accruing loans 30-60 days were $4.33 million at December 31, 2025, compared to $6.21 million at September 30, 2025, and $4.89 million at December 31, 2024. There were $314,000 in past due accruing loans from 60-90 days at December 31, 2025, compared to $355,000 at September 30, 2025, and $2.45 million in past due accruing loans from 60-90 days a year earlier. Past due accruing loans 90+ days at quarter end totaled $45,000 at December 31, 2025, compared to $966,000 at September 30, 2025, and $987,000 at December 31, 2024.

Of the $4.69 million in past due accruing loans at December 31, 2025, $719,000 were purchased government guaranteed loans, which are guaranteed by the SBA for the full payment of the principal plus interest.

There was a $3.93 million provision for credit losses in the fourth quarter of 2025, compared to $1.67 million provision for credit losses in the fourth quarter a year ago, and a $687,000 provision for credit losses recorded in the third quarter of 2025. The provision recorded during the fourth quarter of 2025 is the result of $1.65 million in net charge-offs, $634,000 increase in specific reserves on nonperforming loans, $399,000 increase in reserves for unfunded commitments, and reserves calculated for the $74.50 million increase in loan portfolio balances.

The ratio of allowance for credit losses to total loans was 1.44% at December 31, 2025, compared to 1.10% a year earlier and 1.36% at September 30, 2025. The Company individually evaluates non-accrual loans in the allowance for credit losses. The recent increase in non-accrual loans has resulted in carrying a higher level of reserve during the year. The ratio of allowance for credit losses to the total, non-guaranteed, loan portfolio was 1.51%, as of December 31, 2025, and the total non-guaranteed exposure of the SBA loan portfolio was $48.71 million, consisting of 239 loans.

"As we execute our strategic plan, which includes process improvement, we have centralized collections and special asset management into one unit to better manage under-performing assets," added Miller. "We incurred net charge-offs of $1,653,000 during the current quarter, compared to $1,287,000 in net charge-offs in the fourth quarter a year ago, and $571,000 in net charge-offs in the previous quarter. The charge-offs recognized in the quarter were primarily attributed to several unsecured small business loans and unguaranteed portions of SBA loans that had been previously fully reserved. We have consistently expressed our concerns about the SBA portfolio performance due to today's market conditions. In addition to adjusting the internal credit management process, we have also tailored underwriting based on postmortems from our SBA losses."

"The loan portfolio increased 12% from a year ago with commercial real estate ("CRE") loans representing 62% of the total loan portfolio. Within the CRE portfolio, there are $42.48 million in loans for CRE office which is represented in the table below," said Miller, "As the majority of the Company's CRE office exposure is concentrated in the Central Valley, we are experiencing less volatility than traditional city center CRE markets. Our credit metrics remain strong as we continue to maintain conservative underwriting standards."

About FFB Bancorp

FFB Bancorp, formerly Communities First Financial Corporation, a bank holding company established in 2014, is the parent company of FFB Bank, founded in 2005 in Fresno, California. As a leading SBA Lender in California's Central Valley and one of the few direct acquiring banks in the United States, FFB Bank offers clients a range of personal and business checking accounts, payment processes, and loan programs. Among the Bank's awards and accomplishments, it was ranked #1 on American Banker's list of the Top 20 Publicly Traded Banks under $2 Billion in Assets for 2024. The Bank was also ranked by S&P Global as the #34 best performing US community bank under $3 billion in assets. The Company has also received recognition as part of the OTCQX Best 50 Companies for 2019, 2023, and 2024. For additional information, you can visit the Company's website atwww.ffb.bankor by contacting a representative at 559-439-0200.

Forward Looking Statements

This earnings release may contain forward-looking statements. Forward-looking statements provide current expectations or forecasts of future events and are not guarantees of future performance, nor should they be relied upon as representing management's views as of any subsequent date. The forward-looking statements are based on managements' expectations and are subject to a number of risks and uncertainties. Although management believes that the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially from those expressed or implied in such statements. Risks and uncertainties that could cause actual results to differ materially include, without limitation, the Company's ability to effectively execute its business plans; the impact of the Consent Order on our financial condition and results of operations; changes in general economic and financial market conditions; changes in interest rates, and in particular, actions taken by the Federal Reserve to try and control inflation; changes in the competitive environment; continuing consolidation in the financial services industry; new litigation or changes in existing litigation; losses, customer bankruptcy, claims and assessments; changes in banking regulations or other regulatory or legislative requirements affecting the Company's business; international developments; the tariff strategy of the Trump administration, and its related effects on the agriculture industry and connected businesses in the Central Valley; and changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board or other regulatory agencies. The Company undertakes no obligation to release publicly the results of any revisions to the forward-looking statements included herein to reflect events or circumstances after today, or to reflect the occurrence of unanticipated events. The Company claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

Member FDIC