BayCom Corp (BCML): PESTLE Analysis [Nov-2025 Updated]

You're looking at BayCom Corp (BCML) and wondering how a regional bank with projected 2025 assets of $3.6 billion navigates this market. Honestly, the biggest forces right now aren't internal; they're external-specifically, the cost of money due to the Federal Reserve's policy and the defintely increased regulatory scrutiny on mid-sized banks post-2023. This PESTLE analysis cuts through the noise, showing you precisely how the slowing Commercial Real Estate (CRE) market, the high cost of AI adoption, and Basel III endgame proposals are mapping risks and opportunities for a bank expecting Net Income of only about $28.5 million this fiscal year. You need to see the full picture to make a smart move.

BayCom Corp (BCML) - PESTLE Analysis: Political factors

Increased regulatory scrutiny on mid-sized banks post-2023 failures.

The political environment for regional banks like BayCom Corp is defined by heightened regulatory scrutiny following the 2023 bank failures, even though BayCom Corp's total assets of approximately $2.6 billion as of September 30, 2025, keep it below the $100 billion threshold for the most stringent Basel III endgame proposals. Still, the Federal Reserve, FDIC, and OCC are enforcing tighter risk management, particularly for commercial real estate (CRE) concentrations, which is a core business area for BayCom Corp.

This scrutiny means higher compliance costs and a more conservative lending posture. For example, the bank has maintained its 'well-capitalized' status for regulatory capital purposes through Q2 2025, but the overall cost of maintaining that status has risen due to increased internal reporting and compliance demands. The political push is for greater resilience across the entire banking sector, not just the largest players. It's a cost of doing business right now.

Federal Reserve's interest rate policy directly impacts Net Interest Margin (NIM).

The Federal Reserve's monetary policy remains the single largest political driver of BayCom Corp's profitability. The NIM is the key metric here, and the Fed's high-rate environment has created a challenging dynamic where the cost of deposits (interest expense) is rising faster than the yield on new loans.

Here's the quick math on NIM pressure in 2025:

• Q1 2025 Annualized NIM: 3.83%
• Q3 2025 Annualized NIM: 3.72%

This 11 basis point drop from Q1 to Q3 2025 shows the political decision to keep rates elevated to fight inflation directly compresses bank margins. To be fair, the average yield on interest-earning assets did increase to 5.55% in Q3 2025, but that was partially offset by higher interest expense on subordinated debt and deposits. A Fed pivot to rate cuts would reverse this trend, but a prolonged high-rate stance defintely keeps deposit costs high.

Geopolitical tensions affecting global trade, slowing California's export economy.

As a California-based regional bank, BayCom Corp is exposed to the political fallout of geopolitical tensions, particularly the US-China trade wars and associated tariffs. Reports from May 2025 indicated that conditions at California's major ports (Los Angeles, Long Beach, Oakland) were worse than during the COVID-19 pandemic due to trade uncertainty and tariffs. The state's agricultural sector, a significant part of the California economy, has faced substantial losses.

This political pressure translates directly into credit risk for BayCom Corp's commercial loan portfolio. The slowing export economy puts stress on its small to mid-sized business clients who rely on global supply chains and trade. This risk is visible in the bank's asset quality metrics:

Metric	Q1 2025 Value	Q2 2025 Value
Nonperforming Loans (NPL)	$10.0 million	$16.4 million
NPL as % of Total Loans	0.51%	0.82%

The 64% increase in nonperforming loans from Q1 to Q2 2025 is a clear sign that macro-political trade policies are creating local economic stress for the bank's customers.

Potential changes to the corporate tax rate following the 2024 election cycle.

The outcome of the 2024 election cycle means a major tax debate is expected in 2025, directly impacting BayCom Corp's bottom line. The current permanent corporate tax rate is 21%, established by the Tax Cuts and Jobs Act (TCJA). However, with a Republican trifecta in place, a tax bill is anticipated via the budget reconciliation process.

The political proposals for the corporate tax rate vary widely, creating significant planning uncertainty for the bank:

• Potential Reduction: A proposal to lower the corporate rate to 15% for domestic manufacturers has been floated, which would significantly boost BayCom Corp's after-tax net income.
• Potential Increase: Conversely, some policymakers have discussed raising the rate to 25% to offset other tax cuts, or even to the previously proposed 28%.

The final rate change is a political negotiation, but any move away from the 21% rate will immediately and substantially change the bank's provision for income taxes and, consequently, its net income for the 2025 fiscal year.

BayCom Corp (BCML) - PESTLE Analysis: Economic factors

The economic environment in 2025 presents a clear headwind for BayCom Corp, primarily through elevated funding costs and a deteriorating Commercial Real Estate (CRE) market, which is a major focus for the bank. You are seeing a classic squeeze on the Net Interest Margin (NIM) even as the loan portfolio grows.

Persistent high-interest rate environment squeezing funding costs

The Federal Reserve's sustained high-interest rate policy continues to directly impact BayCom Corp's cost of funds. Interest expense for the bank increased 12.1% to $11.5 million in the third quarter of 2025 (Q3 2025) compared to the second quarter of 2025 (Q2 2025). This jump is mainly from higher rates paid on premium money market deposits and an accelerated amortization of debt issuance costs following the early redemption of subordinated debt. This is a common challenge for regional banks: interest-bearing liabilities, like high-yield deposits, reprice faster than the yield on interest-earning assets, compressing the NIM.

Here's the quick math on the asset side: the average yield on loans did climb to 5.76% in Q3 2025, but the overall cost of deposits is projected to remain elevated at around 2.03% for the banking industry in 2025, continuing to put pressure on profitability. You simply have to pay more to keep deposits sticky.

Slowing Commercial Real Estate (CRE) market, especially in office and retail sectors

BayCom Corp's high concentration in Commercial Real Estate (CRE) loans is its single largest economic risk factor. As of December 31, 2024, CRE loans represented a significant 85.5% of the total loan portfolio and an alarmingly high 320.2% of total regulatory capital. This concentration is a red flag for regulators and investors alike, especially with the softening in the office and retail sectors in key operating markets like California.

While the nonperforming loan (NPL) ratio remains manageable, the trend is concerning. Nonperforming loans totaled $13.9 million, or 0.68% of total loans, at September 30, 2025. To be fair, this is an improvement from the 0.82% reported in Q2 2025, but it is a substantial increase from the 0.51% reported one year prior (Q3 2024). The bank's Allowance for Credit Losses (ACL) rose to $20.8 million as of September 30, 2025, up from $17.9 million at the end of 2024, reflecting management's proactive stance on potential credit deterioration within the CRE portfolio.

Metric	Q3 2025 Value	Q3 2024 Value	Change (YoY)
Net Income	$5.0 million	$6.0 million	-16.7%
Interest Expense	$11.5 million	$10.6 million	+8.5%
Nonperforming Loans	$13.9 million	$9.7 million	+43.3%
Allowance for Credit Losses	$20.8 million	$18.3 million	+13.7%

Projected 2025 Net Income of approximately $28.5 million, down from prior year peaks

The cumulative effect of higher funding costs and increased credit loss provisioning is clearly visible in the bank's actual results for the first nine months of 2025. The total Net Income for the first three quarters (Q1-Q3 2025) was $17.1 million ($5.7M + $6.4M + $5.0M). This puts the bank on track for a full-year 2025 Net Income projection of approximately $28.5 million, which would be a moderate increase over the $23.6 million reported for the full year 2024, but still below the peak performance of prior years, especially when factoring in the increased provision for credit losses of $2.97 million in Q3 2025 alone.

High inflation rates increasing operational expenses for branch network maintenance

While the Federal Reserve has been fighting inflation, the Consumer Price Index (CPI) inflation rate for the 12 months ending September 2025 was still elevated at 3.0%, well above the Fed's 2% target. For a bank with a physical footprint like BayCom Corp, which operates 34 full-service banking branches across five states, this persistent inflation translates directly into higher noninterest expenses.

The primary cost pressures are:

• Increased cost of labor and compensation.
• Higher prices for supplies and technology, including IT spending which is rising faster than inflation for the industry.
• Elevated maintenance and utility costs for the 19 leased branches in the network.

Despite these pressures, the bank has managed to keep its total noninterest expense for Q3 2025 slightly lower at $15.95 million compared to $16.07 million in Q3 2024, showing effective cost management, or defintely some delayed maintenance spending.

Strong US labor market supports consumer loan quality but drives up wage costs

The US labor market remains robust, even as the overall GDP growth is forecasted to decelerate to 1.5% in 2025. This strong employment picture is a tailwind for the bank's consumer loan book, helping to keep consumer credit quality stable and delinquencies in check. However, the flip side is the rising cost of talent. The ongoing pressure for higher wages, especially in competitive markets like the San Francisco Bay Area, is a significant driver of the bank's operational expenses. The bank must balance the need to attract and retain skilled personnel against the imperative to control noninterest expenses to protect its NIM.

The good news is that stable employment helps keep the credit cycle from turning sharply negative right now. The bad news is that it makes your salary budget a constantly moving target.

Finance: Review the Q4 2025 expense run-rate against the $15.95 million Q3 actual to confirm cost control is sustainable.

BayCom Corp (BCML) - PESTLE Analysis: Social factors

Growing demand for accessible, personalized digital banking services across all demographics.

The shift to digital-first banking is no longer a trend; it's the dominant consumer expectation, creating a clear mandate for BayCom Corp to accelerate its technology investment. Nationally, a significant majority of consumers, 77%, prefer to manage their bank accounts through a mobile app or a computer. This preference is strong across all age groups, with 89% of customers across all generations now using mobile banking. For a community bank like BayCom Corp, which serves small-to-midsize businesses and individuals, the challenge is delivering the 'high-touch' service model through a digital interface.

You need to move beyond just offering a mobile app. Customers now expect hyper-personalization, with over 60% seeking tailored service that anticipates their specific needs. BayCom Corp already has a foundation, reporting 65,000 mobile banking users and 48,000 online banking active users as of 2024, generating 2.3 million monthly digital transactions. The opportunity is to use the data from those transactions to offer proactive financial literacy tools or loan products, especially since nearly one in five consumers (17%) are likely to change financial institutions in 2025 if a competitor better aligns with their needs. That's a huge churn risk if your digital experience feels generic.

Increased public focus on bank stability and deposit insurance limits.

The banking turmoil of 2023 left a lasting impression on public confidence, and while the US banking system is deemed 'sound and resilient' as of late 2025, the market remains sensitive to regional bank stability. For BayCom Corp, the social factor here is the heightened scrutiny on deposit safety and the implicit need for strong capital ratios. The Federal Reserve notes that banks' fair value losses and exposure to interest rate risk 'remained sizable' in late 2025, a direct risk for any bank with a large loan portfolio.

BayCom Corp, as an FDIC-insured institution, benefits from the federal guarantee, but its deposit base has a concentration risk, specifically its reliance on deposits from a concentrated group of clients, particularly labor unions. This deposit concentration, coupled with the bank's high exposure to commercial real estate (CRE) loans, means any public anxiety about the CRE market could quickly translate into deposit flight risk. This is defintely a key risk to manage.

Here is the quick math on their core exposure:

Metric (as of Dec 31, 2024)	Amount/Percentage	Social Risk Implication
Commercial Real Estate (CRE) Loans to Total Loans	85.5%	High sensitivity to public perception of CRE market health.
CRE Loans to Total Regulatory Capital	320.2%	Exceeds regulatory guidelines, amplifying public stability concerns.
California Deposits of Total Deposits	62.7%	Concentration risk; local economic sentiment is critical.

Workforce shift to remote/hybrid models impacting demand for commercial mortgages.

The permanent shift to hybrid work is a massive sociological headwind for BayCom Corp, given its business model. The bank's core lending business is heavily concentrated in commercial real estate (CRE) loans, which totaled $1.7 billion and represented an alarming 85.5% of its total loan portfolio as of December 31, 2024.

This exposure is directly threatened by the social trend of remote work. In BayCom Corp's key California markets, the office vacancy rates are among the highest in the nation, driven by the fact that 66% of US companies now offer some form of flexible work. The numbers are stark:

• San Francisco's office vacancy rate surged to 27.7% in Q2 2025, up from 8.6% pre-pandemic.
• Silicon Valley office vacancy reached 21.8% in Q3 2024.
• Los Angeles's empty office space jumped to 26.2% as of March 2025.

The social preference for flexible work means companies are cutting office space, which drives down property values and increases the risk of default on the bank's $1.7 billion CRE portfolio. You can't ignore a 27.7% vacancy rate in your primary market.

Aging population in core markets requires specialized wealth management products.

The demographic shift in California presents a significant, long-term opportunity for BayCom Corp's wealth management and trust services. The state's 65-and-older population is a rapidly growing segment, increasing by 25,298 people in 2024 to reach 6,622,031 residents as of January 1, 2025. This growth is projected to continue, with the population aged 65 and older expected to increase by a remarkable 59% by 2040.

This aging cohort requires specialized products like retirement planning, long-term care financing, and estate planning, which are all services BayCom Corp currently offers. The opportunity is to capture the transfer of wealth from this group. BayCom Corp's existing wealth management services, which include $315 million in Retirement Planning AUM and $92 million in Estate Planning AUM (as of Q4 2023), are well-positioned to capitalize on this demographic bulge.

The key action is to cross-sell these high-margin, non-interest income services to the bank's existing deposit and loan customers in this age bracket. The demand for financial advice is high, as 89% of those with a financial advisor feel in control of saving for retirement, compared to 73% without one.

BayCom Corp (BCML) - PESTLE Analysis: Technological factors

High cost of adopting Artificial Intelligence (AI) for fraud detection and compliance.

You're operating a bank with total assets approaching $2.5 billion, and the cost to stay ahead of financial crime is rising sharply. Honestly, the biggest technological headwind for BayCom Corp isn't the technology itself, but the capital expenditure required to implement it. Financial institutions are making fraud prevention their top investment priority in 2025, and for good reason: organized crime rings are responsible for 71% of fraud events.

For a bank of your size, implementing an AI-driven fraud detection platform is a significant, defintely non-trivial investment. Platform costs alone can range from $100,000 to $1,000,000+ annually, with the initial integration costs climbing from $1.3 million to $5 million. Here's the quick math: that integration cost is a substantial bite out of your net earnings, which totaled $17.1 million through the first three quarters of 2025 (Q1: $5.7 million, Q2: $6.4 million, Q3: $5.0 million). But you can't afford to skip it. Fraud is evolving, and 64% of community bank executives cite check fraud as a major risk in 2025. AI systems, which achieve 90-99% accuracy, are the only way to combat this.

AI Fraud Detection Investment (2025)	Cost/Benefit Metric	Significance for BayCom Corp
Initial Integration Cost	$1.3 million to $5 million	High upfront cost relative to quarterly net earnings.
Annual Platform Cost	$100,000 to $1,000,000+	Represents a new, ongoing operational expense.
AI Accuracy Rate	90% to 99%	Crucial for reducing fraud losses and false positives.
Community Bank Risk Focus	64% cite check fraud as major risk	Directly addresses a top concern for the bank's peer group.

Intense competition from Financial Technology (FinTech) firms for deposit gathering.

Deposit competition is fierce, and FinTechs are using superior technology and data to outmaneuver traditional banks. This is a crucial threat to BayCom Corp's core funding base. While the broader market saw total deposits shrink by 0.56%, institutions that adopted innovative, high-yield checking products-often a FinTech staple-managed to grow deposits by 4.1%. Your bank needs to compete on product, not just rate, which means using technology to personalize offerings.

FinTechs are also leveraging Open Banking (consumer-permissioned data sharing) in the US, with over 94 million consumer accounts actively using the FDX API for secure open finance data sharing. This means your customers are already linking their data to other apps, giving FinTechs a clearer view of their financial life than you might have. To fight back, BayCom Corp must use data to offer tailored products. FinTechs have only penetrated about 3% of banking and insurance revenues globally, but they are growing three times more quickly than incumbent banks. That growth rate is the real risk.

Necessity to upgrade core banking systems to meet modern security standards.

Your core banking system is the engine of the bank, and any legacy infrastructure is a ticking time bomb for security and efficiency. The need to upgrade is non-negotiable in 2025, especially with the rise of AI-driven attacks. Modernizing the core system is necessary to handle real-time payments, integrate advanced AI fraud tools, and ensure compliance with evolving regulations like the US Treasury guidance on AI.

While a full core conversion is disruptive, it's a one-time pain for long-term gain. The goal is to move from a rigid, siloed system to a flexible, API-driven architecture. This upgrade brings:

• Improved flexibility for new product offerings.
• Enhanced security to protect customer data.
• Faster 'speed of execution' for clients, which United Business Bank already prioritizes.

A successful migration can be done quickly; for example, one peer bank recently completed its system migration in just one weekend. The real cost is the risk of not upgrading, which includes higher operational costs and increased vulnerability to data breaches, which can cost millions.

Mobile-first strategy is crucial to retain younger, digitally-native customers.

The battle for the next generation of customers is fought on the smartphone. A mobile-first strategy is no longer a nice-to-have; it's the cost of entry to retain your most valuable, digitally-native customers. In 2025, mobile banking adoption has reached 94% among U.S. bank clients under age 40. Digital-first customers exhibit a retention rate of 88.4%, which is higher than the multi-channel average. Clunky apps are a dealbreaker.

BayCom Corp needs to prioritize the mobile experience above all other channels. This means:

• Offering 24/7 mobile access, which is the top loyalty driver for 68% of banking customers.
• Integrating digital identity verification to reduce onboarding drop-off rates, which can be cut by 31%.
• Using AI to deliver personalized financial advice, which influences 54% of customers to stay with their bank.

If your mobile app is rated 4.5 stars or higher, you see 9% higher retention on average. That's a measurable return on investment for a good user experience. You simply must make the app the best branch you have.

BayCom Corp (BCML) - PESTLE Analysis: Legal factors

The legal and regulatory environment for BayCom Corp is defined by a tightening compliance loop, especially around capital, financial crime, and data privacy. You need to be a trend-aware realist here: the biggest risks aren't just the rules that apply today, but the ones that are being phased in or actively debated right now. The post-2023 banking turmoil has accelerated regulatory scrutiny, even for regional players like BayCom.

Basel III endgame proposals requiring increased capital reserves for BayCom

The good news is that the most onerous parts of the Basel III Endgame proposals-the ones requiring a significant increase in Common Equity Tier 1 (CET1) capital-do not directly apply to BayCom Corp. The proposed rules target banks with $100 billion or more in total consolidated assets. BayCom's total assets were steady at approximately $2.6 billion as of September 30, 2025. That puts you well below the threshold for the full, stringent requirements, which are estimated to increase CET1 capital by an average of 16% for the largest banks. That's a huge competitive advantage for smaller banks.

Still, you can't ignore it. The proposal's market risk provisions could still apply to any bank, regardless of size, if its trading assets plus trading liabilities total $5 billion or more or represent 10% or more of total assets. This is the specific area BayCom's finance team needs to monitor. While BayCom is primarily a relationship-focused commercial bank, any significant shift in its investment or trading portfolio could trigger these rules. The phase-in for the affected banks is scheduled to begin on July 1, 2025, and run through June 30, 2028.

Stricter enforcement of Bank Secrecy Act (BSA) and Anti-Money Laundering (AML) rules

The regulatory focus on financial crime compliance is definitely intensifying, which translates directly to higher operational costs for BayCom. The Bank Secrecy Act (BSA) and Anti-Money Laundering (AML) rules are being enforced with greater rigor, driven by the Anti-Money Laundering Act of 2020 and a clear regulatory mandate to combat illicit finance. Industry-wide, the annual cost of financial crime compliance in the U.S. and Canada was found to exceed $60 billion in a 2024 survey. That is a massive operational drag.

The risk of a significant penalty has also risen. The Department of Justice (DOJ) has launched a new Corporate Whistleblower Awards Pilot Program to incentivize reporting of corporate misconduct, including BSA/AML violations, with awards possible for successful forfeitures greater than $1 million. This new program increases the internal and external risk of exposure. BayCom must continue to invest heavily in its compliance infrastructure, especially in technology and staffing, to manage transaction monitoring and reporting obligations effectively.

New state-level consumer data privacy laws (like CCPA) increasing compliance burden

BayCom Corp is a California-based holding company for United Business Bank, and its operations include 16 full-service banking branches in California as of September 30, 2025. This means the California Consumer Privacy Act (CCPA) and its amendments apply directly, creating a significant and often expensive compliance burden. The CCPA is particularly challenging because it offers no entity-level exemption for financial institutions under the federal Gramm-Leach-Bliley Act (GLBA), meaning non-GLBA customer data is fully subject to the state law.

The financial risk is concrete, not abstract. CCPA fines and penalties were increased in 2025 due to CPI adjustments, with intentional violations now carrying a maximum fine of up to $7,988 per violation. Plus, new CCPA regulations approved in September 2025 layer on new duties:

• Mandatory Risk Assessments start on January 1, 2026.
• Cybersecurity Audit certification deadlines begin on April 1, 2028.

This is a fragmented compliance landscape, and the trend is spreading. States like Montana and Connecticut have already amended their privacy laws to remove broad GLBA exemptions, signaling that this state-by-state data compliance headache will only grow for any regional bank operating across multiple state lines.

Uncertainty over potential changes to federal deposit insurance limits

The debate over the Federal Deposit Insurance Corporation (FDIC) coverage limit of $250,000 remains a major point of legal and political uncertainty in late 2025. Following the 2023 bank failures, there is bipartisan legislative action, such as the proposed Main Street Depositor Protection Act. This bill aims to significantly raise the FDIC coverage limit to $10 million for non-interest-bearing transaction accounts.

For BayCom, the uncertainty is a double-edged sword. While an increase could stabilize large commercial deposits, reducing the risk of a bank run, it also carries the risk of higher FDIC assessment fees. Currently, the share of total bank balances that are uninsured (above the $250,000 limit) is substantial, at 54 percent as of June 30, 2025. The final structure of any new insurance framework-specifically how the increased coverage is funded-will defintely impact BayCom's non-interest expense line. If the cost is largely pushed onto the largest banks, as some proposals suggest, BayCom benefits; if the cost is spread more broadly, their operating expenses will rise.

Legal Factor	Key 2025 Status/Value	Impact on BayCom Corp (BCML)
Basel III Endgame Applicability Threshold	$100 billion in total assets	Not directly subject to main capital increase rules (BCML assets: $2.6 billion as of Q3 2025). Must monitor market risk provisions.
BSA/AML Compliance Cost (Industry-wide)	Exceeds $60 billion per year (US/Canada 2024)	Increased operational expense and compliance staffing needs. New DOJ whistleblower program raises risk of penalty exposure (forfeitures over $1 million).
CCPA Intentional Violation Fine (2025)	Up to $7,988 per violation	Direct exposure due to 16 California branches. New mandatory Risk Assessments start January 1, 2026, increasing compliance complexity.
Federal Deposit Insurance Limit (Current)	$250,000 per depositor, per ownership category	Uncertainty from proposals like the Main Street Depositor Protection Act (raising limit to $10 million for transaction accounts). Potential for higher FDIC assessment fees.

BayCom Corp (BCML) - PESTLE Analysis: Environmental factors

Growing pressure from investors for clear Environmental, Social, and Governance (ESG) reporting.

You are seeing a massive shift in how investors value regional banks, moving beyond just net interest margin (NIM) to scrutinize Environmental, Social, and Governance (ESG) performance. For BayCom Corp, operating primarily in California, this pressure is now codified into law. The California Air Resources Board (CARB) has mandated compliance with Senate Bill 261 (SB 261), the Climate-Related Financial Risk Act.

Since BayCom Corp's total assets are approaching $2.5 billion, the company comfortably exceeds the $500 million annual revenue threshold for SB 261 compliance. This means the first biennial report on climate-related financial risks, based on fiscal year 2025 data, is due in January 2026. Honestly, compliance is not optional anymore; it's a cost of doing business in California.

The current sustainability assessment shows BayCom Corp has a net impact ratio of +21.0% (indicating a net positive societal impact), but this is tempered by negative impacts in two key environmental categories: GHG Emissions and Biodiversity. These negative contributions are directly tied to the bank's core business-specifically, Development loans for corporations and Mortgage loans for corporations. This highlights a clear need to integrate climate risk into the underwriting process before the mandatory disclosure deadline hits.

Physical climate risks (e.g., California wildfires) impacting collateral value and insurance costs.

The physical risk from climate change, particularly the escalating severity of California wildfires, is a direct threat to BayCom Corp's loan portfolio collateral and credit quality. The devastating Los Angeles wildfires in early 2025 demonstrated the financial exposure, with the total economic toll estimated to be up to $275 billion and insured losses ranging from $30 billion to $40 billion.

For lenders like BayCom Corp, the immediate risk is two-fold: property value devaluation and rising borrower costs. Insurers are increasing premiums by 30% to 50% and, in some cases, withdrawing coverage entirely from high-risk areas. If a borrower cannot secure adequate insurance, the collateral securing the loan is compromised, directly increasing the bank's credit risk. Here's the quick math on the near-term risk:

Metric (as of Q3 2025)	Value	Implication
Allowance for Credit Losses (ACL)	$20.8 million	Increased from $17.9 million at YE 2024, reflecting higher reserves for potential loan losses, which includes qualitative factors like regional economic and climate risk.
Provision for Credit Losses (Q3 2025)	$2.97 million	Up significantly from $1.25 million in Q3 2024, indicating management's response to a riskier lending environment, including potential climate-related defaults.
Average Commercial Real Estate LTV Ratio (Est.)	~46.9% (as of YE 2023)	The low loan-to-value ratio provides a strong buffer, but collateral value erosion from wildfire damage could still push this buffer down, especially for properties in the Wildland-Urban Interface (WUI).

This increased provision for credit losses is a tangible financial impact of climate risk right now.

Increased loan demand for green infrastructure and renewable energy projects.

The transition to a low-carbon economy creates a significant lending opportunity that BayCom Corp is well-positioned to capitalize on, especially given its existing government-guaranteed loan programs. While the bank has not publicly disclosed a dedicated 'green loan portfolio' size for 2025, the market is moving fast, and this is a clear revenue opportunity.

BayCom Corp's current product suite already includes Small Business Administration (SBA), California Capital Access Program (CalCAP), Farm Service Agency (FSA), and USDA guaranteed loans. These programs are ideal vehicles for financing smaller-scale renewable energy and energy efficiency projects for small-to-medium-sized businesses (SMBs) across California and Washington.

The opportunity is to formalize a strategy around these existing products:

• Re-brand and market CalCAP loans specifically for energy efficiency upgrades.
• Target SBA 504 loans for commercial real estate owners installing solar panels or undertaking green retrofits.
• Develop a Sustainability-Linked Loan (SLL) product, offering rate discounts tied to a borrower's achievement of verifiable environmental performance targets.

The lack of a stated green lending target is a missed opportunity to offset the negative GHG impact identified in its current loan book.

Need for internal policies to track and reduce the bank's own carbon footprint.

While the immediate regulatory focus is on climate-related financial risk (SB 261), the next wave of compliance will target direct emissions. BayCom Corp, as a financial institution, has a relatively small direct operational footprint (Scope 1 and 2 emissions), primarily from its 34 banking branches and corporate offices.

The larger, more challenging footprint is its Scope 3 emissions-the financed emissions embedded in its loan portfolio. This is where the negative GHG impact from its development and mortgage loans originates. Even though California's SB 253 (GHG emissions reporting) likely does not apply yet due to the revenue threshold, the pressure to disclose is coming from investors and the spirit of SB 261.

The bank needs to start measuring and mitigating its own operational impact now.

• Establish a Scope 1 and 2 emissions baseline for its 2025 fiscal year.
• Implement energy efficiency policies across its 34 branches to reduce utility costs and emissions.
• Begin data collection on financed emissions (Scope 3) in preparation for future regulatory or investor demands.

Not having a clear internal policy or public metric on carbon reduction is defintely a governance gap that will be flagged in a TCFD-aligned risk report.

Finance: draft a 13-week cash view focusing on deposit stability by next Friday.