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What changed in CVB FINANCIAL CORP's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of CVB FINANCIAL CORP's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+504 added−482 removedSource: 10-K (2026-02-27) vs 10-K (2025-02-28)

Top changes in CVB FINANCIAL CORP's 2025 10-K

504 paragraphs added · 482 removed · 373 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

77 edited+30 added−17 removed136 unchanged
Biggest changeDeposit Insurance The FDIC is an independent federal agency that insures deposits, up to prescribed statutory limits, of federally insured banks and savings institutions and safeguards the safety and soundness of the banking and savings industries. The FDIC insures our customer deposits through the DIF up to prescribed limits for each depositor.
Biggest changeThis type of analysis may involve a more robust review of the competitive landscape (i.e., the impact of credit unions and other non-bank competitors), and a closer analysis of interest rates, types of mortgages and other loans offered, quality of service and convenience at branch locations, the types of customers served, and the unique needs in a particular bank market for bespoke financing. 12 Deposit Insurance The FDIC is an independent federal agency that insures deposits, up to prescribed statutory limits, of federally insured banks and savings institutions and safeguards the safety and soundness of the banking and savings industries.
Nicholson served as Executive Vice President and Chief Financial Officer of Pacific Premier Bank and its holding company, Pacific Premier Bancorp Inc. from June of 2015 to May of 2016, and from 2008 to 2014, Mr. Nicholson was Chief Financial Officer of 1st Enterprise Bank. From 2005 to 2008, he was the Chief Financial Officer of Mellon First Business Bank.
Nicholson served as Executive Vice President and Chief Financial Officer of Pacific Premier Bank and its holding company, Pacific Premier Bancorp Inc. from June of 2015 to May of 2016. From 2008 to 2014, Mr. Nicholson was Chief Financial Officer of 1st Enterprise Bank and from 2005 to 2008, he was the Chief Financial Officer of Mellon First Business Bank.
Among other things, the rules adopted by the CFPB require covered persons including banks making residential mortgage loans to: (i) develop and implement procedures to ensure compliance with an “ability-to-repay” test and identify whether a loan meets a new definition for a “qualified 14 mortgage”, in which case a rebuttable presumption exists that the creditor extending the loan has satisfied the ability-to-repay test; (ii) implement new or revised disclosures, policies and procedures for originating and servicing mortgages including, but not limited to, pre-loan counseling, early intervention with delinquent borrowers and specific loss mitigation procedures for loans secured by a borrower’s principal residence; (iii) comply with additional restrictions on mortgage loan originator hiring and compensation; (iv) comply with new disclosure requirements and standards for appraisals and certain financial products; and (v) maintain escrow accounts for higher-priced mortgage loans for a longer period of time.
Among other things, the rules adopted by the CFPB require covered persons including banks making residential mortgage loans to: (i) develop and implement procedures to ensure compliance with an “ability-to-repay” test and identify whether a loan meets a new definition for a “qualified mortgage”, in which case a rebuttable presumption exists that the creditor extending the loan has satisfied the ability-to-repay test; (ii) implement new or revised disclosures, policies and procedures for originating and servicing mortgages including, but not limited to, pre-loan counseling, early intervention with delinquent borrowers and specific loss mitigation procedures for loans secured by a borrower’s principal residence; (iii) comply with additional restrictions on mortgage loan originator hiring and compensation; (iv) comply with new disclosure requirements and standards for appraisals and certain financial products; and (v) maintain escrow accounts for higher-priced mortgage loans for a longer period of time.
If, as a result of an examination, the DFPI or the FDIC should determine that the financial condition, capital resources, asset quality, earnings prospects, management, liquidity, or other aspects of the Bank’s operations are unsatisfactory or that the Bank or its management is violating or has violated any law or regulation, the DFPI and the FDIC, and separately the FDIC as insurer of the Bank’s deposits, have residual authority to: • Require prompt affirmative action to correct any conditions resulting from any violation or practice; • Direct an increase in capital and the maintenance of higher specific minimum capital ratios, which could preclude the Bank from being deemed well-capitalized and restrict its ability to accept certain brokered deposits; • Restrict the Bank’s growth geographically, by products and services, or by mergers and acquisitions, including bidding in FDIC receiverships for failed banks; • Enter into or issue informal or formal enforcement actions, including required Board resolutions, matters requiring board attention, written agreements and consent or cease and desist orders or prompt corrective action orders to take corrective action and cease unsafe and unsound practices; • Require prior approval of senior executive officer or director changes; remove officers and directors and assess civil monetary penalties; and • Terminate FDIC insurance, revoke the Bank’s charter and/or take possession of and close and liquidate the Bank or appoint the FDIC as receiver.
If, as a result of an examination, the OCC or the FDIC should determine that the financial condition, capital resources, asset quality, earnings prospects, management, liquidity, or other aspects of the Bank’s operations are unsatisfactory or that the Bank or its management is violating or has violated any law or regulation, the OCC and the FDIC, and separately the FDIC as insurer of the Bank’s deposits, have residual authority to: • Require prompt affirmative action to correct any conditions resulting from any violation or practice; • Direct an increase in capital and the maintenance of higher specific minimum capital ratios, which could preclude the Bank from being deemed well-capitalized and restrict its ability to accept certain brokered deposits; • Restrict the Bank’s growth geographically, by products and services, or by mergers and acquisitions, including bidding in FDIC receiverships for failed banks; • Enter into or issue informal or formal enforcement actions, including required Board resolutions, matters requiring board attention, written agreements and consent or cease and desist orders or prompt corrective action orders to take corrective action and cease unsafe and unsound practices; • Require prior approval of senior executive officer or director changes; remove officers and directors and assess civil monetary penalties; and • Terminate FDIC insurance, revoke the Bank’s charter and/or take possession of and close and liquidate the Bank or appoint the FDIC as receiver.
Operations and Consumer Compliance Laws The Bank must comply with numerous federal and state anti-money laundering and consumer protection statutes and implementing regulations, including the USA PATRIOT Act of 2001, the Bank Secrecy Act, the Foreign Account Tax Compliance Act, the CRA, the California Consumer Privacy Act, the California Privacy Rights Act, the Fair Debt Collection Practices Act, the Fair Credit Reporting Act, the Equal Credit Opportunity Act, the Truth in Lending Act, the Fair Housing Act, the Home Mortgage Disclosure Act, the Real Estate Settlement Procedures Act, the National Flood Insurance Act, the California Homeowner Bill of Rights and various federal and state privacy protection laws, including the Telephone 13 Consumer Protection Act and the CAN-SPAM Act.
Operations and Consumer Compliance Laws The Bank must comply with numerous federal and state anti-money laundering and consumer protection statutes and implementing regulations, including the USA PATRIOT Act of 2001, the Bank Secrecy Act, the Foreign Account Tax Compliance Act, the CRA, the California Consumer Privacy Act, the California Privacy Rights Act, the Fair Debt Collection Practices Act, the Fair Credit Reporting Act, the Equal Credit Opportunity Act, the Truth in Lending Act, the Fair Housing Act, the Home Mortgage Disclosure Act, the Real Estate Settlement Procedures Act, the National Flood Insurance Act, the California Homeowner Bill of Rights and various federal and state privacy protection laws, including the Telephone Consumer Protection Act and the CAN-SPAM Act.
We make available investment products offered by other providers to our 3 customers, including mutual funds, a full array of fixed income vehicles and a program to diversify our customers’ funds in federally insured time certificates of deposit of other institutions. In addition, we offer a wide range of financial services and trust services through our CitizensTrust division.
We make available investment products offered by other providers to our customers, including mutual funds, a full array of fixed income vehicles and a program to diversify our customers’ funds in federally insured time certificates of deposit of other institutions. In addition, we offer a wide range of financial services and trust services through our CitizensTrust division.
The applicable regulations also provide for certain other “rebuttable” presumptions of control. 9 In April 2020, the Federal Reserve adopted a final rule to revise its regulations related to determinations of whether a company has the ability to exercise a controlling influence over another company for purposes of the BHCA.
The applicable regulations also provide for certain other “rebuttable” presumptions of control. In April 2020, the Federal Reserve adopted a final rule to revise its regulations related to determinations of whether a company has the ability to exercise a controlling influence over another company for purposes of the BHCA.
Bank holding 6 companies are also required to act as a source of financial strength to their subsidiary banks. Under this policy, the Company must commit resources to support the Bank even when the Company may not be in a financial position to provide it.
Bank holding companies are also required to act as a source of financial strength to their subsidiary banks. Under this policy, the Company must commit resources to support the Bank even when the Company may not be in a financial position to provide it.
These risk-weighted assets are used to calculate the following minimum capital ratios for the Company and the Bank: • Tier 1 Leverage Ratio , equal to the ratio of Tier 1 capital to quarterly average assets (net of goodwill, certain other intangible assets and certain other deductions). • CET1 Risk-Based Capital Ratio, equal to the ratio of CET1 capital to risk-weighted assets.
These risk-weighted assets are used to calculate the following minimum capital ratios for the Company and the Bank: • Tier 1 Leverage Ratio , equal to the ratio of Tier 1 capital to quarterly average assets (net of goodwill, certain other intangible assets and certain other deductions). 7 • CET1 Risk-Based Capital Ratio, equal to the ratio of CET1 capital to risk-weighted assets.
The FDIC may terminate a depository institution’s deposit insurance upon a finding that the institution’s financial condition is unsafe or unsound or that the institution has engaged in unsafe or unsound practices that pose a risk to the DIF or that may prejudice the interest of the 11 bank’s depositors.
The FDIC may terminate a depository institution’s deposit insurance upon a finding that the institution’s financial condition is unsafe or unsound or that the institution has engaged in unsafe or unsound practices that pose a risk to the DIF or that may prejudice the interest of the bank’s depositors.
The Council is led by our Director of Human Resources and the Associate 4 Engagement Manager, as well as an additional member of our Senior Leadership team. Members of the Council represent a cross section of our associates across numerous departments.
The Council is led by our Director of Human Resources and the Associate Engagement Manager, as well as an additional member of our Senior Leadership team. Members of the Council represent a cross section of our associates across numerous departments.
If we fail to observe the regulatory guidance, we could be subject to various regulatory sanctions, including financial penalties. State regulators have also been increasingly active in implementing privacy and cybersecurity standards and regulations.
If we fail to observe the regulatory guidance, we could be subject to various regulatory sanctions, including financial penalties. 14 State regulators have also been increasingly active in implementing privacy and cybersecurity standards and regulations.
Substantially all of CVB’s funds to pay dividends or to pay principal and interest on our debt obligations are derived from dividends paid by the Bank to CVB; • • Require a bank holding company to terminate an activity or terminate control of or liquidate or divest certain subsidiaries, affiliates or investments if the Federal Reserve believes the activity or the control of the subsidiary or affiliate constitutes a significant risk to the financial safety, soundness or stability of any bank subsidiary; • Require the prior approval of senior executive officer or director changes and prohibit golden parachute payments, including change in control agreements, or new employment agreements with such payment terms, which are contingent upon termination if an institution is in “troubled condition”; • Regulate provisions of certain bank holding company debt, including the authority to impose interest ceilings and reserve requirements on such debt and require prior approval to purchase or redeem securities in certain situations; • Require prior approval for the acquisition of 5% or more of the voting stock of a bank or bank holding company by bank holding companies or other acquisitions and mergers with banks and consider certain competitive, management, financial, anti-money-laundering compliance, potential impact on U.S. financial stability or other factors in granting these approvals, in addition to similar California or other state banking agency approvals which may also be required; and • Require prior notice and/or prior approval of the acquisition of control of a bank or a bank holding company by a shareholder or individuals acting in concert with ownership or control of certain percentage thresholds of the voting stock being a presumption of control.
Substantially all of CVB’s funds to pay dividends or to pay principal and interest on our debt obligations are derived from dividends paid by the Bank to CVB which are also subject to regulatory restrictions primarily from the OCC; • • Require a bank holding company to terminate an activity or terminate control of or liquidate or divest certain subsidiaries, affiliates or investments if the Federal Reserve believes the activity or the control of the subsidiary or affiliate constitutes a significant risk to the financial safety, soundness or stability of any bank subsidiary; • Require the prior approval of senior executive officer or director changes and prohibit golden parachute payments, including change in control agreements, or new employment agreements with such payment terms, which are contingent upon termination if an institution is in “troubled condition”; • Regulate provisions of certain bank holding company debt, including the authority to impose interest ceilings and reserve requirements on such debt and require prior approval to purchase or redeem securities in certain situations; • Require prior approval for the acquisition of 5% or more of the voting stock of a bank or bank holding company by bank holding companies or other acquisitions and mergers with banks and consider certain competitive, management, financial, anti-money-laundering compliance, potential impact on U.S. financial stability or other factors in granting these approvals, in addition to similar California or other state banking agency approvals which may also be required; and • Require prior notice and/or prior approval of the acquisition of control of a bank or a bank holding company by a shareholder or individuals acting in concert with ownership or control of certain percentage thresholds of the voting stock being a presumption of control.
Monitoring methods and processes used by a banking organization should be commensurate with the size and complexity of the 12 organization and its use of incentive compensation.
Monitoring methods and processes used by a banking organization should be commensurate with the size and complexity of the organization and its use of incentive compensation.
Institutions that are less than well capitalized cannot accept, renew or roll over any brokered deposit unless they have applied for and been granted a waiver by the FDIC. As of December 31, 2024, the Bank had $300 million of deposit liabilities categorized as brokered deposits.
Institutions that are less than well capitalized cannot accept, renew or roll over any brokered deposit unless they have applied for and been granted a waiver by the FDIC. As of December 31, 2025, the Bank had $300 million of deposit liabilities categorized as brokered deposits.
The termination of deposit insurance for a bank would also result in the revocation of the bank’s charter by the DFPI. We are generally unable to control the amount of premiums that we are required to pay for FDIC insurance, which can be affected by the cost of bank failures to the FDIC, among other factors.
The termination of deposit insurance for a bank would also result in the revocation of the bank’s charter by the OCC. We are generally unable to control the amount of premiums that we are required to pay for FDIC insurance, which can be affected by the cost of bank failures to the FDIC, among other factors.
The address of the site is http://www.sec.gov. The Company also maintains an Internet 16 website at http://www.cbbank.com.
The address of the site is http://www.sec.gov. The Company also maintains an Internet website at http://www.cbbank.com.
In 2024, the combined Company 401(k) contribution was 5% of associate’s eligible salary. 92% of our associates made individual participant contributions to the 401(k) plan during 2024. Recruiting, training and development, and retention of key associates is vital to the Company’s strategy and success.
In 2025, the combined Company 401(k) contribution was 5% of associate’s eligible salary and 92% of our associates made individual participant contributions to the 401(k) plan during 2025. Recruiting, training and development, and retention of key associates is vital to the Company’s strategy and success.
None of the information contained in or hyperlinked from our website is incorporated into this Form 10-K. Executive Officers of the Company The following sets forth certain information regarding our executive officers, their positions and their ages. Executive Officers: Name Position Age David A. Brager President and Chief Executive Officer of the Company and the Bank 57 E.
None of the information contained in or hyperlinked from our website is incorporated into this Form 10-K. 18 Executive Officers of the Company The following sets forth certain information regarding our executive officers, their positions and their ages. Executive Officers: Name Position Age David A. Brager President and Chief Executive Officer of the Company and the Bank 58 E.
Our 2024 annual awards ceremony recognized 40 associates, who stood out for their commitment to our high standards of performance. The Company is committed to supporting the physical and financial wellness of our associates and their families. We offer a comprehensive set of health insurance and retirement benefits, as well as wellness programs and resources.
Our 2025 annual awards ceremony recognized 38 associates, who stood out for their commitment to our high standards of performance. The Company is committed to supporting the physical and financial wellness of our associates and their families. We offer a comprehensive set of health insurance and retirement benefits, as well as wellness programs and resources.
From 2006 to 2008, she served as Executive Vice President and Service Division Manager for the Bank. From 1995 to 2005, she served as Senior Vice President and Division Service Manager for the Bank. 17
From 2006 to 2008, she served as Executive Vice President and Service Division Manager for the Bank. From 1995 to 2005, she served as Senior Vice President and Division Service Manager for the Bank. 19
As of December 31, 2024, the Bank’s CRE loan concentration based on total outstanding loans is 237% of risk-based capital. Office of Foreign Assets Control Regulation The U.S.
As of December 31, 2025, the Bank’s CRE loan concentration based on total outstanding loans is 237% of risk-based capital. 17 Office of Foreign Assets Control Regulation The U.S.
California banks are also subject to statutes and regulations including Federal Reserve Regulation O and Federal Reserve Act Sections 23A and 23B and Regulation W, which restrict or limit loans or extensions of credit to “insiders”, including officers, directors, and principal shareholders, and loans or extension of credit by banks to affiliates or purchases of assets from affiliates, including parent bank holding companies, except pursuant to certain exceptions and only on terms and conditions at least as favorable to those prevailing for comparable transactions with unaffiliated parties.
The Bank is subject to Federal Reserve Regulation O and Federal Reserve Act Sections 23A and 23B and Regulation W, which restrict or limit loans or extensions of credit to “insiders”, including officers, directors, and principal shareholders, and loans or extension of credit by banks to affiliates or purchases of assets from affiliates, including parent bank holding companies, except pursuant to certain exceptions and only on terms and conditions at least as favorable to those prevailing for comparable transactions with unaffiliated parties.
Wohl Executive Vice President and General Counsel 66 Yamynn DeAngelis Executive Vice President and Chief Risk Officer 68 Mr. Brager was appointed Chief Executive Officer of the Company and the Bank on March 16, 2020. Effective November 19, 2021, Mr. Brager was also named President of the Company and the Bank. Mr.
Wohl Executive Vice President and General Counsel of the Company and the Bank 67 Yamynn DeAngelis Executive Vice President and Chief Risk Officer 69 Mr. Brager was appointed Chief Executive Officer of the Company and the Bank on March 16, 2020. Effective November 19, 2021, Mr. Brager was also named President of the Company and the Bank. Mr.
These quantitative calculations are minimums, and the Federal Reserve, FDIC or DFPI may determine that a banking organization (like the Company or the Bank), based on its size, complexity or risk profile, must maintain a higher level of capital in order to operate in a safe and sound manner.
These quantitative calculations are minimums, and the Federal Reserve, OCC or FDIC may determine that a banking organization, based on its size, complexity or risk profile, must maintain a higher level of capital in order to operate in a safe and sound manner.
All of our associates are eligible for incentive compensation awards. In 2024, 92% of our associates earned an incentive bonus, which compares to 93% in 2023. Competition The banking and financial services business is highly competitive.
All of our associates are eligible for incentive compensation awards. In 2025, 95% of our associates earned an incentive bonus, which compares to 92% in 2024. Competition The banking and financial services business is highly competitive.
Oversight is provided by the Company’s Engagement Committee, which is guided by our Five Core Values and various policies that support a framework which we use to create and strengthen our associate engagement and the Company's overall diversity, including our organizational commitment to associate engagement and well-being, as well as sound procurement and business practices.
Oversight is provided by the Company’s Engagement Committee, which is guided by our Five Core Values and various policies that support a framework which we use to create and strengthen our associate engagement and well-being, as well as sound procurement and business practices.
The proposal would adopt an approach for future adjustments to the interchange fee cap, which would occur every other year based on issuer cost data gathered by the Federal Reserve from large debit card issuers. The comment period for this proposal ended in May 2024.
The proposal would adopt an approach for future adjustments to the interchange fee cap, which would occur every other year based on issuer cost data gathered by the Federal Reserve from large debit card issuers. The comment period for this proposal ended in May 2024. The proposed rule has yet to be finalized.
As of December 2024, 68% of our associates were enrolled in our medical insurance plans and 78% of our associates participated in at least one wellness activity during 2024. In addition, the Company makes an annual 401(k) retirement contribution to all eligible associates, which includes a profit sharing component.
As of December 2025, 72% of our associates were enrolled in our medical insurance plans and 81% of our associates participated in at least one wellness activity during 2025. In addition, the Company makes an annual 401(k) retirement contribution to all eligible associates, which includes a profit sharing component.
The following represents the Company’s diversity at December 31, 2024: In addition, 38% of our Board of Directors are female or ethnically diverse. The Board of Directors oversees executive compensation, as well as the Company’s compensation and benefit plans, through the Board’s Compensation Committee.
The following represents the Company’s diversity at December 31, 2025: In addition, 33% of our Board of Directors are female or ethnically diverse. 5 The Board of Directors oversees executive compensation, as well as the Company’s compensation and benefit plans, through the Board’s Compensation Committee.
The Company promotes leadership and associate development through various programs, including succession planning, top talent program, and leadership essentials training. At December 31, 2024, we had 138 positions within the Company designated as “leadership” positions. This represents approximately 13% of our total associates.
The Company promotes leadership and associate development through various programs, including succession planning, top talent program, and leadership essentials training. At December 31, 2025, we had 129 positions within the Company designated as “leadership” positions. This represents approximately 12% of our total associates.
The average tenure at the Company among our leadership group at the end of 2024 was greater than 10 years. In 2024, turnover among our leadership group was 5.8% and during the year we promoted 3 associates and hired 4 new associates into our leadership group.
The average tenure at the Company among our leadership group at the end of 2025 was greater than 10 years. In 2025, turnover among our leadership group was 10% and during the year we promoted 3 associates and hired 3 new associates into our leadership group.
Allen Nicholson Chief Financial Officer of the Company and Executive Vice President and Chief Financial Officer of the Bank 57 David F. Farnsworth Executive Vice President and Chief Credit Officer of the Bank 68 David C. Harvey Executive Vice President and Chief Operating Officer of the Bank 57 Richard H.
Allen Nicholson Chief Financial Officer of the Company and Executive Vice President and Chief Financial Officer of the Bank 58 David F. Farnsworth Executive Vice President and Chief Credit Officer of the Bank 69 David C. Harvey Executive Vice President and Chief Operating Officer of the Bank 58 Richard H.
The administration of President Trump is anticipated to significantly limit the enforcement and rule-making authority of the CFPB, though the exact scope of such limitation cannot yet be fully determined. The CFPB previously finalized a number of significant rules which impact nearly every aspect of the lifecycle of a residential mortgage loan.
The administration of President Trump has significantly limit the enforcement and rule-making authority of the CFPB, though the exact ongoing scope of such limitations cannot yet be fully determined. The CFPB previously finalized a number of significant rules which impact nearly every aspect of the lifecycle of a residential mortgage loan.
Failure to be well-capitalized or to meet minimum capital requirements could also result in restrictions on the Company’s or the Bank’s ability to pay dividends or otherwise distribute capital or to receive regulatory approval of applications.
Failure to be well-capitalized or to meet minimum capital requirements could also result in restrictions on the Company’s or the Bank’s ability to pay dividends or otherwise distribute capital or obtain regulatory approvals.
CVB’s principal business is to serve as a holding company for the Bank and for other banking or banking related subsidiaries, which the Company may establish or acquire. CVB has not engaged in any other material activities to date.
The Bank is our principal asset. The Company has one inactive subsidiary, Chino Valley Bancorp. CVB’s principal business is to serve as a holding company for the Bank and for other banking or banking related subsidiaries, which the Company may establish or acquire. CVB has not engaged in any other material activities to date.
Business — Regulation and Supervision — Dividends .” As of December 31, 2024, the Company had $15.15 billion in total consolidated assets, $8.46 billion in net loans, $11.95 billion in deposits, and $2.19 billion in shareholders’ equity. The principal executive offices of CVB and the Bank are located at 701 North Haven Avenue, Suite 350, Ontario, California.
Business — Regulation and Supervision — Dividends .” As of December 31, 2025, the Company had $15.63 billion in total consolidated assets, $8.62 billion in net loans, $12.07 billion in deposits, and $2.30 billion in shareholders’ equity. The principal executive offices of CVB and the Bank are located at 701 North Haven Avenue, Suite 350, Ontario, California.
The Dodd-Frank Act revised the FDIC’s DIF management authority by setting requirements for the Designated Reserve Ratio (the “DRR”, calculated as the DIF balance divided by estimated insured deposits) and redefining the assessment base, which is used to calculate banks’ quarterly assessments.
The FDIC insures our customer deposits through the DIF up to prescribed limits for each depositor. The Dodd-Frank Act revised the FDIC’s DIF management authority by setting requirements for the Designated Reserve Ratio (the “DRR”, calculated as the DIF balance divided by estimated insured deposits) and redefining the assessment base, which is used to calculate banks’ quarterly assessments.
These regulations affect how consumer information is transmitted through diversified financial companies and conveyed to outside vendors. In addition, consumers may also prevent disclosure of certain information among affiliated companies that is assembled or used to determine eligibility for a product or service, such as that shown on consumer credit reports and asset and income information from applications.
In addition, consumers may also prevent disclosure of certain information among affiliated companies that is assembled or used to determine eligibility for a product or service, such as that shown on consumer credit reports and asset and income information from applications.
A wide range of requirements and restrictions are contained in both federal and state banking laws, which together with implementing regulatory authority: • Require periodic reports and such additional reports of information as the Federal Reserve may specify; • Require bank holding companies to meet or exceed increased levels of capital (See “Capital Adequacy Requirements”); • Require that bank holding companies serve as a source of financial and managerial strength to subsidiary banks and commit resources as necessary to support each subsidiary bank; • Limit dividends payable to shareholders and restrict the ability of bank holding companies to obtain dividends or other distributions from their subsidiary banks.
Bank Holding Company Regulation Bank holding companies and their subsidiaries are subject to significant regulation and restrictions by Federal and State laws and regulatory agencies, which may affect the cost of doing business, and may limit permissible activities and expansion or impact the competitive balance between banks and other financial services providers. 9 A wide range of requirements and restrictions are contained in both federal and state banking laws, which together with implementing regulatory authority: • Require periodic reports and such additional reports of information as the Federal Reserve may specify; • Require bank holding companies to meet or exceed increased levels of capital (See “Capital Adequacy Requirements”); • Require that bank holding companies serve as a source of financial and managerial strength to subsidiary banks and commit resources as necessary to support each subsidiary bank; • Limit dividends (or other distributions) payable to shareholders and restrict the ability of bank holding companies to obtain dividends or other distributions from their subsidiary banks.
We provide a full complement of lending products, including commercial, agribusiness, consumer, SBA, real estate, and construction loans, as well as equipment and vehicle leasing. Commercial products include lines of credit and other working capital financing, accounts receivable lending and letters of credit.
We also serve as a federal tax depository for our business customers. 3 We provide a full complement of lending products, including commercial, agribusiness, consumer, SBA, real estate, and construction loans, as well as equipment and vehicle leasing. Commercial products include lines of credit and other working capital financing, accounts receivable lending and letters of credit.
Regulatory Capital and Risk-weighted Assets The Federal Reserve monitors our capital adequacy on a consolidated basis, and the FDIC and the California Department of Financial Protection and Innovation (“DFPI”) monitor the capital adequacy of our Bank. These rules implement the Basel III international regulatory capital standards in the United States, as well as certain provisions of the Dodd-Frank Act.
The Federal Reserve monitors our capital adequacy on a consolidated basis, and the OCC primarily monitors the capital adequacy of our Bank. Regulatory Capital and Risk-weighted Assets The capital adequacy rules implement the Basel III international regulatory capital standards in the United States, as well as certain provisions of the Dodd-Frank Act.
Dividends It is the Federal Reserve’s policy that bank holding companies should generally pay dividends on common stock only out of income available over the past year, and only if prospective earnings retention is consistent with the organization’s expected future needs and financial condition.
Dividends and Stock Repurchases It is the Federal Reserve’s policy that bank holding companies should generally pay dividends on common stock only out of net income available over prior four quarters (net of dividends previously paid during such period), and only if prospective earnings retention is consistent with the organization’s expected future capital needs and financial condition.
This was a 1.6% decrease from 1,107 associates at December 31, 2023. Our Code of Personal and Business Conduct and Ethics (“Code”) addresses both business and social relationships that may present legal and ethical concerns and also sets forth a code of conduct to guide the members of the Board of Directors and associates.
Our Code of Personal and Business Conduct and Ethics (“Code”) addresses both business and social relationships that may present legal and ethical concerns and also sets forth a code of conduct to guide the members of the Board of Directors and associates.
These offices serve as sales offices for the Bank’s wealth management, trust and investment products. The Bank's goal is to be the premier financial services company operating throughout the state of California, servicing the comprehensive financial needs of successful small-and medium-sized businesses and their owners.
The Bank's goal is to be the premier financial services company operating throughout the state of California, servicing the comprehensive financial needs of successful small-and medium-sized businesses and their owners.
In July, 2023, the FRB, Office of the Comptroller of the Currency (“OCC”) and FDIC proposed significant changes to the Basel III capital rules which replaces the advanced approaches risk-weighted assets framework with a new enhanced risk-based framework and requires banking organizations with generally more than $100 billion in assets to calculate their regulatory capital using more enhanced requirements applicable to even larger organizations.
Under the current U.S. capital rules, operational risk capital requirements and a capital floor apply only to advanced approaches institutions, and not to the Company and the Bank. 8 In July, 2023, the FRB, OCC and FDIC proposed significant changes to the Basel III capital rules which replaces the advanced approaches risk-weighted assets framework with a new enhanced risk-based framework and requires banking organizations with generally more than $100 billion in assets to calculate their regulatory capital using more enhanced requirements applicable to even larger organizations.
The Company commenced business on December 30, 1981 when, pursuant to a reorganization, it acquired all of the voting stock of Chino Valley Bank. On March 29, 1996, Chino Valley Bank changed its name to Citizens Business Bank (“CBB” or the “Bank”). The Bank is our principal asset. The Company has one inactive subsidiary, Chino Valley Bancorp.
The Company commenced business on December 30, 1981 when, pursuant to a reorganization, it acquired all of the voting stock of Chino Valley Bank. On March 29, 1996, Chino Valley Bank changed its name to Citizens Business Bank, and on December 15, 2025, Citizens Business Bank changed its name to Citizens Business Bank, National Association (“CBB” or the “Bank”).
The table below summarizes the capital requirements that the Company and the Bank must satisfy to avoid limitations on capital distributions and certain discretionary bonus payments (i.e., the required minimum capital ratios plus the Capital Conservation Buffer): 7 Minimum Basel III Regulatory Capital Ratio Plus Capital Conservation Buffer Effective January 1, 2019 CET1 risk-based capital ratio 7.0 % Tier 1 risk-based capital ratio 8.5 % Total risk-based capital ratio 10.5 % As of December 31, 2024 the Company and the Bank are well-capitalized for regulatory purposes.
The table below summarizes the capital requirements that the Company and the Bank must satisfy to avoid limitations on capital distributions and certain discretionary bonus payments (i.e., the required minimum capital ratios plus the Capital Conservation Buffer): Minimum Basel III Regulatory Capital Ratio Plus Capital Conservation Buffer Effective January 1, 2019 CET1 risk-based capital ratio 7.0 % Tier 1 risk-based capital ratio 8.5 % Total risk-based capital ratio 10.5 % As permitted by Basel III, the Company and the Bank have elected to opt-out of the requirement to include accumulated other comprehensive income in 2015.
These include checking, savings, money market and time certificates of deposit for both business and personal accounts, municipalities and districts, and specialized deposit products for title and escrow. We also serve as a federal tax depository for our business customers.
These include checking, savings, money market and certificates of time deposit for both business and personal accounts, municipalities and districts, and specialized deposit products for title and escrow.
Other Restrictions on the Company’s Activities Subject to prior notice or Federal Reserve approval, bank holding companies may generally engage in, or acquire shares of companies engaged in activities determined by the Federal Reserve to be so closely related to banking or managing or controlling banks as to be a proper incident thereto.
The Federal Reserve’s final rule applies to questions of control under the BHCA, but it does not extend to CIBCA or other applicable provisions of state or federal law. 10 Other Restrictions on the Company’s Activities Subject to prior notice or Federal Reserve approval, bank holding companies may generally engage in, or acquire shares of companies engaged in activities determined by the Federal Reserve to be so closely related to banking or managing or controlling banks as to be a proper incident thereto.
Conversely, this legislation also enacted limitations on certain deductions, including the deduction of FDIC deposit insurance premiums, which partially offset the expected increase in net earnings from the lower tax rate. On August 16, 2022, the Inflation Reduction Act of 2022 (the “IRA”) was enacted into law.
Conversely, this legislation also enacted limitations on certain deductions, including the deduction of FDIC deposit insurance premiums, which partially offset the expected increase in net earnings from the lower tax rate. The One Big Beautiful Bill Act (“OBBBA”) was signed and enacted into law on July 4, 2025.
The CFPB also has the authority to obtain cease and desist orders providing for affirmative relief or monetary penalties. The Dodd-Frank Act does not prevent states from adopting stricter consumer protection standards. CFPB and state regulation of financial products and potential enforcement actions could adversely affect the Bank’s business, financial condition or results of operations.
The CFPB also has the authority to obtain cease and desist orders providing for affirmative relief or monetary penalties. The Dodd-Frank Act does not prevent states from adopting stricter consumer protection standards.
The IRA imposes a non-deductible 1% excise tax on the aggregate fair market value of stock repurchased by certain public companies, including CVB Financial Corp., occurring after December 31, 2022.
On August 16, 2022, the Inflation Reduction Act of 2022 (the “IRA”) was enacted into law. The IRA imposes a non-deductible 1% excise tax on the aggregate fair market value of stock repurchased by certain public companies, including the Company, occurring after December 31, 2022.
Government fiscal and budgetary policies, including deficit spending, can also have a significant impact on the capital markets and interest rates. The nature and impact of any future changes in monetary and fiscal policies on us cannot be predicted.
Government fiscal and budgetary policies, including deficit spending, can also have a significant impact on the capital markets and interest rates.
FDIC and DFPI Enforcement Authority The federal and California regulatory structure gives the bank regulatory agencies extensive discretion in connection with their supervisory and enforcement activities and examination policies, including policies with respect to the classification of assets and the establishment of appropriate loan loss reserves for regulatory purposes.
The Bank currently has no financial subsidiaries. 11 FDIC and OCC Enforcement Authority The federal banking regulatory framework grants the FDIC and OCC broad discretion in connection with their supervisory and enforcement activities and examination policies, including policies with respect to the classification of assets and the establishment of appropriate loan loss reserves for regulatory purposes.
The Company promotes Five Core Values that we believe provides a continuing commitment and direction to our business activities and our underlying culture. These core values are fundamental to the Company’s performance and strategy. Our Five Core Values are: 1) Financial Strength; 2) Superior People; 3) Customer Focus; 4) Cost-Effective Operation; and 5) Having Fun.
The Company promotes Five Core Values that we believe provides a continuing commitment and direction to our business activities and our underlying culture. These core values are fundamental to the Company’s performance and strategy.
The Company 8 held small investment positions in three financial technology private equity funds at December 31, 2024, with aggregate potential commitments in such funds of approximately $5 million, which were subject to the final rule.
The amendments in the final rule, which became effective on October 1, 2020, clarify and expand permissible banking activities and relationships under the Volcker Rule. The Company held small investment positions in three financial technology private equity funds at December 31, 2025, with aggregate potential commitments in such funds of approximately $5 million, which were subject to the final rule.
These rates are highly sensitive to many factors that are beyond our control, such as inflation, recession and unemployment, government fiscal and monetary and other policies, and the impact which future changes in domestic and foreign economic conditions might have on us cannot be predicted. 5 Opportunity for banks to earn fees and other noninterest income have also been limited by restrictions imposed by the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) and other government regulations.
These rates are highly sensitive to many factors that are beyond our control, such as inflation, recession and unemployment, government fiscal and monetary and other policies, and the impact which future changes in domestic and foreign economic conditions might have on us cannot be predicted.
Securities Exchange Act of 1934 CVB’s common stock is publicly held and listed on the NASDAQ Stock Market (“NASDAQ”), and CVB is subject to the periodic reporting, information, proxy solicitation, insider trading, corporate governance and other requirements and restrictions of the Securities Exchange Act of 1934 and the regulations of the Securities and Exchange Commission (“SEC”) promulgated thereunder as well as listing requirements of NASDAQ.
CVB has not elected financial holding company status and neither CVB nor the Bank has engaged in any activities determined by the Federal Reserve to be “financial in nature” or incidental or complementary to activities that are “financial in nature.” Securities Exchange Act of 1934 CVB’s common stock is publicly held and listed on the NASDAQ Stock Market (“NASDAQ”), and CVB is subject to the periodic reporting, information, proxy solicitation, insider trading, corporate governance and other requirements and restrictions of the Securities Exchange Act of 1934 and the regulations of the Securities and Exchange Commission (“SEC”) promulgated thereunder as well as listing requirements of NASDAQ.
The final CRA rule was intended to take effect on April 1, 2024 with staggered compliance dates, including compliance with the new tests, data collection requirements, with the requirement to define retail lending assessment areas, all of which become applicable on January 1, 2026 and revised data reporting requirements taking effect January 1, 2027.
The final CRA rule was intended to take effect on April 1, 2024 with staggered compliance dates, including compliance with the new tests, data collection requirements, and with the requirement to define retail lending assessment areas. The final CRA rule is currently subject to a preliminary injunction that stays its effective and implementation dates.
For a tabular presentation of the Company’s and Bank’s capital ratios as of December 31, 2024, see Note 16 — Regulatory Matters of the notes to the consolidated financial statements. In December 2017, the Basel Committee published standards that it described as the finalization of the Basel III post-crisis regulatory reforms (the standards are commonly referred to as “Basel IV”).
In December 2017, the Basel Committee published standards that it described as the finalization of the Basel III post-crisis regulatory reforms (the standards are commonly referred to as “Basel IV”).
Among other things, it codifies a risk-based approach to anti-money laundering compliance for financial institutions; requires the development of standards for evaluating technology and internal processes for BSA compliance; expands enforcement and investigation-related authority, including increasing available sanctions for certain BSA violations and instituting BSA whistleblower incentives and protections.
Among other things, it codifies a risk-based approach to anti-money laundering compliance for financial institutions; requires the development of standards for evaluating technology and internal processes for BSA compliance; expands enforcement and investigation-related authority, including increasing available sanctions for certain BSA violations and instituting BSA whistleblower incentives and protections. 15 The CRA specifically directs the federal bank regulatory agencies, in examining insured depository institutions, to assess their record of helping to meet the credit needs of the entire communities in which the financial institution operates, including low and moderate income communities, consistent with safe and sound banking practices.
We also cannot predict whether or when regulatory requirements may be reduced or eliminated and the overall affect such reduction or elimination may have on the Company and the Bank.
We also cannot predict whether or when regulatory requirements may be reduced or eliminated and the overall affect such reduction or elimination may have on the Company and the Bank. Legislation and Regulatory Developments Federal banking agencies have authority to issue regulations and guidelines to ensure safety and soundness of banks and the stability of the U.S. banking system.
The Federal Reserve also has rules governing routing and exclusivity that require issuers to offer two unaffiliated networks for routing transactions on each debit or prepaid product. 15 Commercial Real Estate Concentration Limits In December 2006, the federal banking regulators issued guidance entitled “Concentrations in Commercial Real Estate Lending, Sound Risk Management Practices” to address increased concentrations in commercial real estate, or “CRE”, loans.
Commercial Real Estate Concentration Limits In December 2006, the federal banking regulators issued guidance entitled “Concentrations in Commercial Real Estate Lending, Sound Risk Management Practices” to address increased concentrations in commercial real estate, or “CRE”, loans.
Under the Basel framework, as amended, these standards were effective on January 1, 2023, with an aggregate output floor phasing in through January 1, 2028. Under the current U.S. capital rules, operational risk capital requirements and a capital floor apply only to advanced approaches institutions, and not to the Company and the Bank.
Under the Basel framework, as amended, these standards were effective on January 1, 2023, with an aggregate output floor phasing in through January 1, 2028.
The Federal Reserve also maintains a policy that redemptions of instruments included in regulatory capital and repurchases of common stock from investors be consistent with an organization’s current and prospective capital needs. We consult with the Federal Reserve regarding our plans for common stock repurchases. The Bank is a legal entity that is separate and distinct from its holding company.
There can be no assurance regarding the payment and the amount of dividends that the Company will pay to its shareholders in the future or that the Company will continue to pay dividends to its shareholders at all. 13 The Federal Reserve also maintains a policy that redemptions of instruments included in regulatory capital and repurchases of common stock from investors be consistent with an organization’s current and prospective capital needs.
The following discussion of statutes and regulations is a summary and does not purport to be complete nor does it address all applicable statutes and regulations. This discussion is qualified in its entirety by reference to the statutes and regulations referred to in this discussion.
This discussion is qualified in its entirety by reference to the statutes and regulations referred to in this discussion.
Current capital rules may restrict dividends by the Bank if the additional capital conservation buffer is not achieved. See “Capital Adequacy Requirements”.
Current capital rules may restrict dividends by the Bank if the additional capital conservation buffer is not achieved. See “Capital Adequacy Requirements”. A national bank may not declare any cash dividend in an amount greater than the sum of current period net income and retained earnings.
The Company’s Citizens Experience Service Awards and Recognition Program resulted in 983 nominations of associates who were recognized for exemplifying our Five Core Values in 2024, representing a 39% increase over 2023. Of those nominations, 143 received service awards. In addition, the Company has a long held tradition of an annual awards program that recognizes outstanding job performance.
Our Five Core Values are: 1) Financial Strength; 2) Superior People; 3) Customer Focus; 4) Cost-Effective Operation; and 5) Having Fun. 4 The Company’s Citizens Experience Service Awards and Recognition Program recognizes associates who exemplifying our Five Core Values. In addition, the Company has a long held tradition of an annual awards program that recognizes outstanding job performance.
These services include fiduciary services, mutual funds, annuities, 401(k) plans and individual investment accounts. Business Segments We are a community bank with one reportable operating segment. See Note 3 — Summary of Significant Accounting Policies — Business Segments of the notes to the consolidated financial statements. Human Capital We employed 1,089 associates as of December 31, 2024.
See Note 3 — Summary of Significant Accounting Policies — Business Segments of the notes to the consolidated financial statements. Human Capital We employed 1,079 associates as of December 31, 2025. This was a 1.0% decrease from 1,089 associates at December 31, 2024.
Regulation and Supervision General The Company and the Bank are subject to significant regulation and restrictions under applicable federal and state laws and by various regulatory agencies. These regulations and restrictions are intended primarily for the protection of depositors and the Federal Deposit Insurance Corporation (“FDIC”) Deposit Insurance Fund (“DIF”) and secondarily for the stability of the U.S. banking system.
These regulations and restrictions are intended primarily for the protection of depositors and the Federal Deposit Insurance Corporation (“FDIC”) Deposit Insurance Fund (“DIF”) and secondarily for the stability of the U.S. banking system. The following discussion of statutes and regulations is a summary and does not purport to be complete nor does it address all applicable statutes and regulations.
The scope of such changes, however, cannot yet be fully determined. Capital Adequacy Requirements Bank holding companies and banks are subject to similar regulatory capital requirements administered by state and federal banking agencies.
Changes in administration can influence regulatory priorities, including rulemaking, supervision, examination and enforcement. While future changes may occur, the scope and impact of such changes cannot currently be determined. Capital Adequacy Requirements Bank holding companies and banks are subject to similar regulatory capital requirements administered by the Federal Reserve and, in the case of national banks, the OCC.
Further, California banks may conduct certain “financial” activities permitted under GLBA in a “financial subsidiary” to the same extent as may a national bank, provided the bank is and remains “well-capitalized,” “well-managed” and in satisfactory compliance with the CRA. The Bank currently has no financial subsidiaries.
The Bank may form subsidiaries to engage in the many so-called “closely related to banking” or “nonbanking” activities in operating subsidiaries or in subsidiaries of bank holding companies and may conduct certain “financial” activities in a “financial subsidiary” as a national bank, provided the bank is and remains “well-capitalized,” “well-managed” and in satisfactory compliance with the CRA, and otherwise complies with the rules and regulations of the OCC.
At December 31, 2024, the Bank had $15.16 billion in assets, $8.46 billion in net loans, $12.00 billion in deposits, and $2.16 billion in total equity. As of December 31, 2024, the Bank had 62 Banking Centers (“Centers”) located throughout California. We also have three trust offices located in Ontario, Newport Beach, and Pasadena.
As of December 31, 2025, the Bank had 62 Banking Centers (“Centers”) and one loan production office located throughout California. We also have three trust offices located in Ontario, Newport Beach, and Pasadena. These offices serve as sales offices for the Bank’s wealth management, trust and investment products.
Bank Regulation As a California commercial bank whose deposits are insured by the FDIC, the Bank is subject to regulation, supervision, and regular examination by the DFPI and by the FDIC, as the Bank’s primary federal regulator, and must additionally comply with certain applicable regulations of the Federal Reserve.
Bank Regulation On December 15, 2025 the Bank converted from a California state-chartered bank to a national bank association, chartered under the laws of the United States and thereby is subject to the supervision, periodic examination, and regulation by the OCC and must additionally comply with certain applicable regulations of the FDIC and Federal Reserve.
Our phone number is (909) 980-4030. Citizens Business Bank The Bank commenced operations as a California state-chartered bank on August 9, 1974. The Bank’s deposit accounts are insured under the Federal Deposit Insurance Act up to applicable limits. The Bank is not a member of the Federal Reserve System.
Our phone number is (909) 980-4030. Citizens Business Bank, National Association The Bank commenced operations on August 9, 1974. Effective December 15, 2025, the Bank converted from a California-chartered bank to a national banking association chartered under the laws of the United States.
The federal bank regulators have adopted rules limiting the ability of banks and other financial institutions to disclose non-public information about consumers to unaffiliated third parties. These limitations require disclosure of privacy policies to consumers and, in some circumstances, allow consumers to prevent disclosure of certain personal information to a nonaffiliated third party.
These limitations require disclosure of privacy policies to consumers and, in some circumstances, allow consumers to prevent disclosure of certain personal information to a nonaffiliated third party. These regulations affect how consumer information is transmitted through diversified financial companies and conveyed to outside vendors.
Removed
Legislation and Regulatory Developments The federal banking agencies continue to promulgate regulations and guidelines intended to ensure the financial strength and safety and soundness of banks and the stability of the U.S. banking system.
Added
The Bank is a member of the Federal Reserve System and of the Federal Home Loan Bank of San Francisco ( “ FHLB ” ), which is a member bank of the Federal Home Loan Bank System. The Bank’s deposit accounts are insured under the Federal Deposit Insurance Act up to maximum amount currently allowable under federal law.
Removed
While the federal banking agencies may continue to promulgate regulations and guidelines intended to ensure the financial strength and safety and soundness of banks and the stability of the U.S. banking system, we believe that President Trump will seek to implement a regulatory reform agenda that is different than that of the Biden administration, impacting the rulemaking, supervision, examination and enforcement priorities of the federal banking agencies.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

64 edited+66 added−8 removed154 unchanged
Biggest changeThe capital conservation buffer requirement, which is measured in addition to the minimum Common Equity Tier 1 capital of 4.5%, is now 2.5%. Additionally, under the capital standards, if our Common Equity Tier 1 Capital does not include the “capital conservation buffer,” we will also be prohibited from paying discretionary bonuses to our executive employees.
Biggest changeUnder the current capital standards, if our Common Equity Tier 1 Capital does not include the required “capital conservation buffer,” we will be prohibited from paying dividends to our shareholders. The capital conservation buffer requirement, which is measured in addition to the minimum Common Equity Tier 1 capital of 4.5%, is now 2.5%.
Accordingly, changes in levels of market interest rates could materially and adversely affect our net interest spread, asset quality, levels of deposits, as well as loan origination and prepayment volume.
Accordingly, changes in levels of market interest rates could materially and adversely affect our net interest spread, asset quality, levels of deposits, as well as our loan origination and prepayment volume.
Treasury yield curve is inverted could cause net interest margins to compress, as the majority of our funding sources are impacted by short-term rates, while much of our earning assets are impacted by longer term interest rates; • The value of the portfolio of investment securities that we hold may be adversely affected by increasing interest rates and defaults by debtors; and 25 • Further disruptions in the capital markets or other events, including actions by rating agencies and deteriorating investor expectations, may result in changes in applicable rates of interest, difficulty in accessing capital or an inability to borrow on favorable terms or at all from other financial institutions.
Treasury yield curve is inverted could cause net interest margins to compress, as the majority of our funding sources are impacted by short-term rates, while much of our earning assets are impacted by longer term interest rates; • The value of the portfolio of investment securities that we hold may be adversely affected by increasing interest rates and defaults by debtors; and • Further disruptions in the capital markets or other events, including actions by rating agencies and deteriorating investor expectations, may result in changes in applicable rates of interest, difficulty in accessing capital or an inability to borrow on favorable terms or at all from other financial institutions.
Current and future federal and state legal and regulatory requirements, restrictions and regulations, including those imposed under Dodd-Frank, those relating to climate-related disclosure, corporate governance, and those adopted to facilitate 27 data privacy or consumer protection, may adversely impact our profitability and may have a material and adverse effect on our business, financial condition, and results of operations, may require us to invest significant management attention and resources to evaluate and make any changes required by the legislation and accompanying rules, and may make it more difficult for us to attract and retain qualified executive officers and employees.
Current and future federal and state legal and regulatory requirements, restrictions and regulations, including those imposed under Dodd-Frank, those relating to climate-related disclosure, corporate governance, and those adopted to facilitate data privacy or consumer protection, may adversely impact our profitability and may have a material and adverse effect on our business, financial condition, and results of operations, may require us to invest significant management attention and resources to evaluate and make any changes required by the legislation and accompanying rules, and may make it more difficult for us to attract and retain qualified executive officers and employees.
These events include, but are not limited to: our success in integrating the operations, retaining key employees and customers, achieving anticipated synergies, meeting expectations and otherwise realizing the anticipated benefits of the acquisition; litigation resulting from circumstances occurring at the acquired entity prior to the date of acquisition or in connection with the acquisition itself; loan downgrades and credit loss provisions resulting from underwriting of certain acquired loans determined not to meet our credit standards; personnel changes that cause instability within a department; delays in implementing new policies or procedures or the failure to apply new policies or procedures; and other events relating to the performance of our business.
These events include, but are not limited to: our success in integrating the operations, retaining key employees and customers, achieving anticipated synergies, meeting expectations and otherwise realizing the anticipated benefits of the acquisition; litigation resulting from circumstances occurring at the acquired entity prior to the date of acquisition or in connection with the acquisition itself; loan downgrades and credit loss provisions resulting from underwriting of certain acquired loans determined not to meet our credit 26 standards; personnel changes that cause instability within a department; delays in implementing new policies or procedures or the failure to apply new policies or procedures; and other events relating to the performance of our business.
The level of uncertainty concerning economic conditions may adversely affect the accuracy of our estimates which may, in turn, impact the reliability of the estimation process; • The Company’s commercial, residential and consumer borrowers may be unable to make timely repayments of their loans, or the decrease in value of real estate collateral securing the payment of such loans could result in significant credit losses, increasing delinquencies, foreclosures and customer bankruptcies, any of which could have a material adverse effect on the Company’s operating results; • A sustained environment in which the U.S.
The level of uncertainty concerning economic conditions may adversely affect the accuracy of our estimates which may, in turn, impact the reliability of the estimation process; • The Company’s commercial, residential and consumer borrowers may be unable to make timely repayments of their loans, or the decrease in value of real estate collateral securing the payment of such loans could result in significant credit losses, increasing delinquencies, foreclosures and customer bankruptcies, any of which could have a material adverse effect on the Company’s operating results; 32 • A sustained environment in which the U.S.
Many external factors can impact our agricultural borrowers’ ability to repay their loans, including the effects of inflation, adverse weather conditions, water issues, commodity price volatility (i.e. milk prices), diseases (including bird flu), land values, production costs, changing government regulations and subsidy programs, changing tax treatment, technological changes, labor market shortages/increased wages, and changes in consumers’ preferences, over which our borrowers may have no control.
Many external factors can impact our dairy and agricultural borrowers’ ability to repay their loans, including the effects of inflation, adverse weather conditions, water issues, commodity price volatility (i.e. milk prices), diseases (including bird flu), land values, production costs, changing government regulations and subsidy programs, changing tax treatment, technological changes, labor market shortages/increased wages, and changes in consumers’ preferences, over which our borrowers may have no control.
The U.S. government has warned financial institutions of the potential increase in the frequency and severity of malicious cyber-attacks and other activities involving critical infrastructure, specifically including the 22 financial sector, and has encouraged the banking sector to enhance cyber-defenses, and these risks have increased in connection with the current conflicts involving Ukraine and Russia in Europe and Israel, Hamas and Iran in the Middle East.
The U.S. government has warned financial institutions of the potential increase in the frequency and severity of malicious cyber-attacks and other activities involving critical infrastructure, specifically including the financial sector, and has encouraged the banking sector to enhance cyber-defenses, and these risks have increased in connection with the current conflicts involving Ukraine and Russia in Europe and Israel, Hamas and Iran in the Middle East.
Federal and state banking regulators are examining commercial real estate lending activity with heightened scrutiny and may require banks with higher levels of commercial real estate loans to implement more stringent underwriting, internal controls, risk management policies and portfolio stress testing, as well as possibly higher levels of allowances for losses and capital levels as a result of commercial real estate lending growth and exposures.
Federal banking regulators are examining commercial real estate lending activity with heightened scrutiny and may require banks with higher levels of commercial real estate loans to implement more stringent underwriting, internal controls, risk management policies and portfolio stress testing, as well as possibly higher levels of allowances for losses and capital levels as a result of commercial real estate lending growth and exposures.
A decline in the economy may cause renewed declines in real estate values and increases in unemployment, which may result in higher than expected loan delinquencies or problem assets, a decline in demand for our products and services, or a lack of growth or decrease in deposits, which may cause us to incur losses, adversely affect our capital or hurt our business.
A decline in the economy may cause declines in real estate values and increases in unemployment, which may result in higher than expected loan delinquencies or problem assets, a decline in demand for our products and services, or a lack of growth or decrease in deposits, which may cause us to incur losses, adversely affect our capital or hurt our business.
In a rising interest rate environment, we may need to accelerate the pace of rate increases on our deposit accounts as compared to the pace of future increases in short-term market rates and our customers could move their deposits with us to money market funds or institutions that pay higher interest rates on deposits accounts.
In a rising interest rate environment, we may need to accelerate the pace of 24 rate increases on our deposit accounts as compared to the pace of future increases in short-term market rates and our customers could move their deposits with us to money market funds or institutions that pay higher interest rates on deposits accounts.
Any such failure in our analytical or forecasting models could have a material adverse effect on our business, financial condition and results of operations. Our decisions regarding the fair value of assets acquired could be different than initially estimated, which could materially and adversely affect our business, financial condition, results of operations, and future prospects.
Any such failure in our analytical or forecasting models could have a material adverse effect on our business, financial condition and results of operations. 31 Our decisions regarding the fair value of assets acquired could be different than initially estimated, which could materially and adversely affect our business, financial condition, results of operations, and future prospects.
In addition, we may face the following risks in connection with any downward turn in the economy or sustained period of higher or lower interest rates or higher inflation rates: • Higher interest rates will not only impact the interest we receive on loans and investment securities and the amount of interest we pay our depositors, but also could also impact our ability to compete for and grow loans and deposits; • Rising interest rates, higher commodity prices, and an overall slowdown in economic growth could also impact the fair value of our assets and adversely impact our asset quality; • The process we use to estimate losses inherent in our credit exposure requires difficult, subjective and complex judgments, including forecasts of economic conditions and how these economic conditions might impair the ability of our borrowers to repay their loans.
In addition, we may face the following risks in connection with any downward turn in the economy or sustained period of higher or lower interest rates or higher inflation rates: • Interest rate volatility will not only impact the interest we receive on loans and investment securities and the amount of interest we pay our depositors, but also could also impact our ability to compete for and grow loans and deposits; • Rising interest rates, higher commodity prices, and an overall slowdown in economic growth could also impact the fair value of our assets and adversely impact our asset quality; • The process we use to estimate losses inherent in our credit exposure requires difficult, subjective and complex judgments, including forecasts of economic conditions and how these economic conditions might impair the ability of our borrowers to repay their loans.
The federal Financial Crimes Enforcement Network is authorized to impose significant civil money penalties for violations of those requirements and has recently engaged in coordinated enforcement efforts with the individual federal banking regulators, as well as the U.S. Department of Justice, Drug Enforcement Administration, and Internal Revenue Service.
The federal Financial Crimes Enforcement Network is authorized to impose 35 significant civil money penalties for violations of those requirements and has recently engaged in coordinated enforcement efforts with the individual federal banking regulators, as well as the U.S. Department of Justice, Drug Enforcement Administration, and Internal Revenue Service.
Any failure by such vendors or service providers to properly design, manage or secure these technology systems and applications, or the occurrence of external events affecting the functionality of such technology systems and applications, could in turn result in significant disruptions and exposure to potential losses in connection with our operations and to us and our customers.
Any failure by such vendors or service providers to properly design, manage or secure these technology 25 systems and applications, or the occurrence of external events affecting the functionality of such technology systems and applications, could in turn result in significant disruptions and exposure to potential losses in connection with our operations and to us and our customers.
The fluctuations in national, regional and local economic conditions, including those related to local residential, commercial real estate and construction markets, may increase the level of charge-offs or the allowance for credit losses in the loan portfolio that we acquire and correspondingly reduce our net 24 income.
The fluctuations in national, regional and local economic conditions, including those related to local residential, commercial real estate and construction markets, may increase the level of charge-offs or the allowance for credit losses in the loan portfolio that we acquire and correspondingly reduce our net income.
We also may rely on customer representations and certifications, or other audit or accountants’ reports, with respect to the business and financial condition of our commercial clients. Our financial condition, results of operations, financial reporting and reputation could be materially adversely affected if we rely on materially misleading, false, inaccurate or fraudulent information.
We also may rely on customer representations and certifications, or other audit or accountants’ reports, with respect to the business and financial condition of our commercial clients. Our financial condition, 36 results of operations, financial reporting and reputation could be materially adversely affected if we rely on materially misleading, false, inaccurate or fraudulent information.
In addition, we are heavily dependent on the strength and capability of our technology systems, which we use both to 21 interface with our customers and to manage our internal financial records and other systems. Any shortcomings in our technology systems subjects us to risk of misconduct by our employees that may go undetected.
In addition, we are heavily dependent on the strength and capability of our technology systems, which we use both to interface with our customers and to manage our internal financial records and other systems. Any shortcomings in our technology systems subjects us to risk of misconduct by our employees that may go undetected.
Our ability to grow and compete, including to develop and deliver new products that meet the needs of our existing customers and attract new ones, is dependent on our ability to build or acquire the necessary operational and technological infrastructure and to manage the cost of that infrastructure as we expand.
Our ability to grow and compete, including to develop and deliver new products that meet the needs of our existing customers and attract new ones, is dependent on our ability to build or acquire the necessary operational and technological infrastructure and to manage the cost of that infrastructure as we expand or contract.
These factors, as well as recent volatility in certain commodity prices, including milk prices, could adversely impact the ability of those to whom we have made dairy & livestock and agribusiness loans to perform under the terms of their borrowing arrangements with us, which in turn could result in credit losses and adversely affect our business, financial condition and results of operations. 18 Our loan portfolio is predominantly secured by real estate in California and thus we have a higher degree of credit risk from a downturn in our real estate markets.
These factors, as well as recent volatility in certain commodity prices, including milk prices, could adversely impact the ability of those to whom we have made dairy & livestock and agribusiness loans to perform under the terms of their borrowing arrangements with us, which in turn could result in credit losses and adversely affect our business, financial condition and results of operations. 22 Our loan portfolio is predominantly secured by real estate in California and thus we have a higher degree of credit risk from a downturn in our real estate markets.
Furthermore, because of the inherent limitations of any system of internal control over financial reporting, including the possibility of human error, the circumvention or overriding of controls and fraud, even effective internal controls may not prevent or detect all misstatements.
Furthermore, because of the inherent limitations of any system of internal control over financial reporting, including the possibility of human error, the 30 circumvention or overriding of controls and fraud, even effective internal controls may not prevent or detect all misstatements.
Accordingly, fluctuations in interest rates could adversely affect our interest rate spread and, in turn, our profitability. Loan origination volumes may be affected by changes in market interest rates. In addition, in rising interest rate environments, loan repayment rates may decline and in falling interest rate environments, loan repayment rates may increase.
Accordingly, fluctuations in interest rates could adversely affect our interest rate spread and, in turn, our profitability. Loan origination volumes may also be affected by changes in market interest rates. In addition, in rising interest rate environments, loan repayment rates may decline and in falling interest rate environments, loan repayment rates may increase.
Additionally, holders of common stock are subject to the prior 30 liquidation rights of the holders of any outstanding debt we have now or may issue in the future and may be subject to the prior dividend and liquidation rights of any series of preferred stock we may issue in the future.
Additionally, holders of common stock are subject to the prior liquidation rights of the holders of any outstanding debt we have now or may issue in the future and may be subject to the prior dividend and liquidation rights of any series of preferred stock we may issue in the future.
Any failure or 23 interruption of these services or systems or breaches in the security of these systems could result in failures or interruptions to serve our customers, including deposit, servicing and/or loan origination systems.
Any failure or interruption of these services or systems or breaches in the security of these systems could result in failures or interruptions to serve our customers, including deposit, servicing and/or loan origination systems.
The Bank Holding Company Act of 1956, as amended, and the Change in Bank Control Act of 1978, as amended, together with federal regulations, require that, depending on the particular circumstances, regulatory approval and/or appropriate regulatory filings may be required from either or all the Federal Reserve, the FDIC, the DFPI prior to any person or entity acquiring “control” (as defined in the applicable regulations) of a state non-member bank, such as the Bank.
The Bank Holding Company Act of 1956, as amended, and the Change in Bank Control Act of 1978, as amended, together with federal regulations, require that, depending on the particular circumstances, regulatory approval and/or appropriate regulatory filings may be required from either or all the Federal Reserve, the FDIC, the OCC prior to any person or entity acquiring “control” (as defined in the applicable regulations) of a state non-member bank, such as the Bank.
Because our business is highly regulated, the laws, rules, regulations and supervisory guidance and policies applicable to us are subject to regular modification and change.
Because our business is highly regulated, the laws, rules, regulations and supervisory 34 guidance and policies applicable to us are subject to regular modification and change.
From time to time, we detail other risks with respect to our business and/or financial results in our filings with the SEC. For further discussion on additional areas of risk, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations .” 31 ITEM 1B. UNRESO LVED STAFF COMMENTS None
From time to time, we detail other risks with respect to our business and/or financial results in our filings with the SEC. For further discussion on additional areas of risk, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations .” 38 ITEM 1B. UNRESO LVED STAFF COMMENTS None
Rising interest rates may also cause a decline in principal payments, while a decline in interest rates may accelerate principal payments for a significant portion of 20 our investment securities.
Rising interest rates may also cause a decline in principal payments, while a decline in interest rates may accelerate principal payments for a significant portion of our investment securities.
Our ability to recover on defaulted loans by foreclosing and selling the real estate collateral would then be diminished and we would be more likely to suffer losses on defaulted loans. Commercial real estate loans typically involve large balances to single borrowers or a group of related borrowers.
Our ability to recover on defaulted loans by foreclosing and selling the real estate collateral would then be diminished and we would be more likely to suffer losses on any such defaulted loans. Commercial real estate loans typically involve large balances to single borrowers or a group of related borrowers.
Repayment of dairy & livestock and agribusiness loans depends primarily on the successful raising and feeding of livestock or planting and harvest of crops and marketing the harvested commodity (including milk production). Collateral securing these loans may be illiquid.
Repayment of dairy & livestock and agribusiness loans depends primarily on the successful raising and feeding of livestock or planting and harvesting of crops and marketing the harvested commodity (including milk production). Collateral securing these loans may be illiquid.
The actions and commercial soundness of other financial institutions could affect our ability to engage in routine funding transactions. Financial service institutions are interrelated as a result of trading, clearing, counterparty or other relationships.
The actions and commercial soundness of other financial institutions could affect our ability to engage in routine funding transactions. Financial service institutions are interconnected as a result of trading, clearing, counterparty or other relationships.
Our ability 19 to acquire deposits or borrow could also be impaired by factors that are not specific to us, such as the effects of inflation, rising interest rates, a severe disruption of the financial markets or negative views and expectations about the prospects for the banking or financial services industry as a whole.
Our ability to acquire deposits or borrow could also be impaired by factors that are not specific to us, such as the effects of inflation, 23 rising or falling interest rates, a severe disruption of the financial markets or negative views and expectations about the prospects for the banking or financial services industry as a whole.
Our operations are subject to extensive regulation by federal, state and local governmental authorities, including the FDIC, FRB, DFPI and CFPB, and we are subject to various laws and judicial and administrative decisions imposing requirements and restrictions on part or all of our operations. Similarly, the lending, credit and deposit products we offer are subject to broad oversight and regulation.
Our operations are subject to extensive regulation by federal, state and local governmental authorities, including the OCC, FRB and CFPB, and we are subject to various laws and judicial and administrative decisions imposing requirements and restrictions on part or all of our operations. Similarly, the lending, credit and deposit products we offer are subject to broad oversight and regulation.
The process of recruiting personnel with the combination of skills and attributes required to carry out our strategies is often lengthy. In addition, legislation and regulations which impose restrictions on executive compensation may make it more difficult for us to retain and recruit key personnel.
The process of recruiting personnel with the combination of skills and attributes required to carry out our strategies is often lengthy. In addition, legislation and regulations which impose restrictions and “claw-back” requirements on executive compensation may make it more difficult for us to retain and recruit key personnel.
Our dairy & livestock and agribusiness lending presents unique credit risks. As of December 31, 2024, approximately 5.0% of our total gross loan portfolio was comprised of dairy & livestock and agribusiness loans.
Our dairy & livestock and agribusiness lending presents unique credit risks. As of December 31, 2025, approximately 5.0% of our total gross loan portfolio was comprised of dairy & livestock and agribusiness loans.
We have established processes and procedures intended to identify, measure, monitor, report and analyze the types of risk to which we are subject, including credit, liquidity, operational, regulatory, compliance, legal and reputational risks.
We have established processes and procedures intended to identify, measure, monitor, report and analyze the types of risk to which we are subject, including credit, liquidity, interest rate sensitivity, operational, regulatory, compliance, legal and reputational risks.
At December 31, 2024, our balance sheet was positioned with an asset sensitive bias over both a one and two-year horizon, assuming no balance sheet growth, and as a result, our net interest margin tends to expand in a rising interest rate environment and decrease in a declining interest rate environment.
At December 31, 2025, our balance sheet was positioned with a modest asset sensitive bias over both a one and two-year horizon, assuming no balance sheet growth, and as a result, our net interest margin tends to expand in a rising interest rate environment and to decrease in a declining interest rate environment.
New legislation, regulatory reform or policy changes, including financial services regulatory reform, enforcement priorities, antitrust and merger review policies, and increased infrastructure spending, could adversely impact our business.
New legislation, regulatory reform or policy changes, including financial services regulatory reform, enforcement priorities, antitrust and merger review policies, trade and tariff policies, and increased infrastructure spending, could adversely impact our business and our customers.
Among the factors that could affect our stock price are: • actual or unanticipated fluctuations in our operating results and financial condition; • changes in liquidity, revenue or earnings estimates or publication of research reports and recommendations by financial analysts; • credit events or losses; • failure to meet analysts’ revenue or earnings estimates; • speculation in the press or investment community; • strategic actions by us or our competitors, such as acquisitions or restructurings; • actions or trades by institutional shareholders or other large shareholders; • our capital position; • fluctuations in the stock price and operating results of our competitors; • actions by hedge funds, short term investors, activist shareholders or shareholder representative organizations; • general market conditions and, in particular, developments relating to the financial services industry and interest rates; • proposed or adopted regulatory changes or developments; • unanticipated or pending investigations, proceedings or litigation that involve or affect the Company and/or the Bank; • fraud losses or data or privacy breaches; or • domestic and international economic factors, whether related or unrelated to the Company’s performance.
Among the factors that could affect our stock price are: • actual or unanticipated fluctuations in our operating results and financial condition; • changes in liquidity, revenue or earnings estimates or publication of research reports and recommendations by financial analysts; • credit events or losses; • failure to meet analysts’ revenue or earnings estimates; • speculation in the press or investment community; • strategic actions by us or our competitors, such as acquisitions or restructurings, including in particular our proposed acquisition of Heritage; • actions or trades by institutional shareholders or other large shareholders; • our capital position; • fluctuations in the stock price and operating results of our competitors; • actions by hedge funds, short term investors, activist shareholders or shareholder representative organizations; • general market conditions and, in particular, developments relating to the financial services industry and interest rates; • proposed or adopted regulatory changes or developments; • unanticipated or pending investigations, proceedings or litigation that involve or affect the Company and/or the Bank; • fraud losses or data or privacy breaches; or • domestic and international economic factors, whether related or unrelated to the Company’s performance. 37 The market price of our common stock and the trading volume in our common stock may fluctuate and cause significant price variations to occur.
ITEM 1A. RISK F ACTORS In the course of conducting our business operations, we are exposed to a variety of risks. Some of these risks are inherent in the financial services industry and others are more specific to our own business.
ITEM 1A. RISK FACT ORS In the course of conducting our business operations, we are exposed to a variety of risks. Some of these risks are inherent in the financial services industry and others are more specific to our own business.
We may be required to make additional provisions for credit losses and charge-off additional loans in the future, which could adversely affect our results of operations. For the year ended December 31, 2024, we recorded a $3.0 million recapture of provision for credit losses.
We may be required to make additional provisions for credit losses and charge-off additional loans in the future, which could adversely affect our results of operations. For the year ended December 31, 2025, we recorded a $3.5 million recapture of credit losses.
As a result of inflationary pressures that resulted in rapid increases in interest rates initiated by the Federal Reserve during 2022-2023, the fair values of previously purchased fixed income securities have declined significantly. At December 31, 2024, the total carrying value of our securities portfolio was $4.92 billion, of which $2.54 billion was available-for-sale and $2.38 billion was held-to-maturity.
As a result of inflationary pressures that resulted in rapid increases in interest rates initiated by the Federal Reserve during 2022-2023, the fair values of previously purchased fixed income securities have declined significantly. At December 31, 2025, the total carrying value of our securities portfolio was $4.95 billion, of which $2.68 billion was available-for-sale and $2.27 billion was held-to-maturity.
These current capital rules may adversely affect our ability to pay dividends, or require us to reduce business levels or raise capital, including in ways that may adversely affect our business, liquidity, financial condition and results of operations.
These current capital rules may adversely affect our ability to pay dividends, or require us to reduce business levels or raise capital, including in ways that may adversely affect our business, liquidity, financial condition and results of operations. Any future regulatory capital requirements may similarly adversely affect us.
We expect the new Trump administration will seek to implement a regulatory reform agenda that is significantly different than that of the Biden administration, thereby impacting the rulemaking, supervision, examination and enforcement priorities of the federal banking agencies, although the effects of any such changes on our business, operations, financial position or results of operations cannot be quantified at this time.
The Trump administration has already commenced to implement a regulatory reform agenda that is significantly different than that of the Biden administration, thereby impacting the rulemaking, supervision, examination and enforcement priorities of the federal banking agencies, although the effects of any such changes on our business, operations, financial position or results of operations cannot be quantified at this time.
In addition, responding to requests for information in connection with discovery demanded by a government agency or private plaintiffs in any of these lawsuits may be costly and divert internal resources away from managing our business.
In addition, responding to requests for information in connection with discovery demanded by a government agency or private plaintiffs in any of these lawsuits may be costly and divert internal resources away from managing our business. See Item 3 — Legal Proceedings below.
The trading price of the shares of our common stock and the value of our other securities will depend on many factors, which may change from time to time, including, without limitation, our financial condition, performance, creditworthiness and prospects, future sales of our equity or equity related securities, and other factors identified above in “Cautionary Note Regarding Forward-Looking Statements”.
The trading price of the shares of our common stock and the value of our other securities will depend on many factors, which may change from time to time, including, without limitation, our financial condition, performance, creditworthiness and prospects, future sales of our equity or equity related securities, potential dilution due to share issuance in connection with acquisitions, and other factors identified above in “Cautionary Note Regarding Forward-Looking Statements”.
The risks identified below are not intended to be a comprehensive list of all risks we face, and additional risks that we may currently view as not material may also impair our business operations, financial condition and operating results. Credit Risks Our allowance for credit losses may not be sufficient to cover actual losses.
The risks identified below are not intended to be a comprehensive list of all risks we face, and additional risks that we may currently view as not material may also impair our business operations, financial condition and operating results.
See Item 3 — Legal Proceedings below. 29 We may be subject to customer claims and government or legal actions pertaining to our ability to safeguard our customers’ information and the performance of our fiduciary responsibilities.
We may be subject to customer claims and government or legal actions pertaining to our ability to safeguard our customers’ information and the performance of our fiduciary responsibilities.
As of December 31, 2024, we had $6.51 billion in commercial real estate loans, $269.2 million in single-family residential mortgages, and $16.1 million in construction loans. Low interest rates through the pandemic caused real estate values in general to increase materially due to low cost of funding with inflationary upward pressures on cash flow.
As of December 31, 2025, we had $6.57 billion in commercial real estate loans, $281.8 million in single-family residential mortgages, and $37.8 million in construction loans. Low interest rates through the pandemic caused real estate values in general to increase materially due to low cost of funding with inflationary upward pressures on cash flow.
During 2024, we experienced charge-offs of $4.4 million and recoveries of $0.7 million, resulting in net charge-offs of $3.7 million. We have a significant amount of real estate loans, therefore, decreases in real estate values could adversely affect the value of property used as collateral for our loans.
During 2025, we experienced charge-offs of $0.6 million and recoveries of $1.2 million, resulting in net recoveries of $0.5 million. We have a significant amount of real estate loans, therefore, decreases in real estate values could adversely affect the value of property used as collateral for our loans.
Increasing scrutiny and evolving expectations from regulators, customers, investors, and other stakeholders with respect to our environmental, social and governance practices may impose additional costs on us or expose us to new or additional risks. Many companies are facing increasing scrutiny from regulators, customers, investors, and other stakeholders related to their environmental, social and governance (“ESG”) practices and disclosures.
Increasing scrutiny and evolving expectations from regulators, customers, investors, and other stakeholders with respect to our environmental, social and governance practices may impose additional costs on us or expose us to new or additional risks.
The underwriting and credit monitoring policies and procedures that we have adopted to address this risk may not prevent unexpected losses that could have a material adverse effect on our business, financial condition, results of operations and cash flows.
The underwriting and credit monitoring policies and procedures that we have adopted to address this risk may not prevent unexpected losses that could have a material adverse effect on our business, financial condition, results of operations and cash flows. We maintain an allowance for credit losses to provide for loan and lease defaults and non-performance.
Furthermore, failure to realize the expected revenue increases, cost savings, increases in geographic or product presence, and/or other projected benefits from an acquisition could have a material adverse effect on our business, financial condition and results of operations.
Furthermore, failure to realize the expected revenue increases, cost savings, increases in geographic or product presence, and/or other projected benefits from an acquisition could have a material adverse effect on our business, financial condition and results of operations. As of the date of this report, our proposed merger with Heritage is pending completion.
As a financial institution, we are susceptible to fraudulent activity, information security breaches and other cybersecurity-related incidents and attacks that may be committed against us, our customers or key vendors and business partners, which in turn may result in financial losses or increased costs to us, our customers, or our key vendors and business partners, disclosure or misuse of our information or our customer information, theft or misappropriation of assets (including bank or customer funds), privacy breaches against us or our customers, litigation, regulatory enforcement actions, and damage to our reputation.
The occurrence of fraudulent activity, breaches or failures of our information security controls or cybersecurity-related incidents to either our information systems or information systems provided by third party vendors could have a material adverse effect on our business, financial condition and results of operations. 29 As a financial institution, we are susceptible to fraudulent activity, information security breaches and other cybersecurity-related incidents and attacks that may be committed against us, our customers or key vendors and business partners, which in turn may result in financial losses or increased costs to us, our customers, or our key vendors and business partners, disclosure or misuse of our information or our customer information, theft or misappropriation of assets (including bank or customer funds), privacy breaches against us or our customers, litigation, regulatory enforcement actions, and damage to our reputation.
A significant source of risk arises from the possibility that we could sustain losses because borrowers, guarantors, and related parties may fail to perform in accordance with the terms of their loans and leases.
Other Risks • We may face other risks. Credit Risks Our allowance for credit losses may not be sufficient to cover actual losses. A significant source of risk arises from the possibility that we could sustain losses because borrowers, guarantors, and related parties may fail to perform in accordance with the terms of their loans and leases.
The implementation of certain final Dodd-Frank rules is delayed or phased in over several years; therefore, as yet we cannot definitively assess what may be the short or longer term specific or aggregate effect of the full implementation of Dodd-Frank on us.
The implementation of certain final Dodd-Frank rules is delayed or phased in over several years; therefore, as yet we cannot definitively assess what may be the short or longer term specific or aggregate effect of the full implementation of Dodd-Frank on us. On December 15, 2025 the Bank converted from a California state-chartered bank to a national banking association.
Potential downgrades of U.S. government securities or the securities of U.S. government-sponsored entities by one or more of the credit ratings agencies could have a material adverse effect on our operations, earnings, and financial condition. 26 Any possible future downgrade of the sovereign credit ratings of the U.S. government and a decline in the perceived creditworthiness of U.S. government-related obligations could impact our ability to obtain funding that is collateralized by affected instruments, as well as affect the pricing of that funding when it is available.
Any possible future downgrade of the sovereign credit ratings of the U.S. government and a decline in the perceived creditworthiness of U.S. government-related obligations could impact our ability to obtain funding that is collateralized by affected instruments, as well as affect the pricing of that funding when it is available.
Additionally, changes in longer term commercial real estate usage and occupancy patterns, particularly in the office and retail segments, have negatively impacted the valuations of affected properties, depending on geographic location and other factors.
Capitalization Rates used to determine commercial real estate values have increased due to overall cost of capital causing some downward pressure on real estate values. Additionally, changes in longer term commercial real estate usage and occupancy patterns, particularly in the office and retail segments, have negatively impacted the valuations of affected properties, depending on geographic location and other factors.
The loss of these revenue streams and a lower level of low-cost deposits as a source of funds could have a material adverse effect on our financial condition and results of operations.
The loss of these revenue streams and a lower level of low-cost deposits as a source of funds could have a material adverse effect on our financial condition and results of operations. 33 Potential downgrades of U.S. government securities or the securities of U.S. government-sponsored entities by one or more of the credit ratings agencies could have a material adverse effect on our operations, earnings, and financial condition.
As of December 31, 2024, we had $419.9 million in dairy & livestock and agribusiness loans, including $385.3 million in dairy & livestock loans and $34.6 million in agribusiness loans.
As of December 31, 2025, we had $431.6 million in dairy & livestock and agribusiness loans, including $386.1 million in dairy & livestock loans and $45.5 million in agribusiness loans.
The aggregate pre-tax net unrealized loss in our AFS securities was $447.7 million at December 31, 2024. Based on estimated fair values, the aggregate pre-tax net unrealized loss in our HTM securities was approximately $425.3 million at December 31, 2024.
The aggregate pre-tax net unrealized loss in our available-for-sale (“AFS”) securities was $307.8 million at December 31, 2025. Based on estimated fair values, the aggregate pre-tax net unrealized loss in our held-to-maturity (“HTM”) securities was approximately $344.9 million at December 31, 2025.
Failure to manage our growth may adversely affect our performance. Our financial performance and profitability depend on our ability to manage past and possible future growth.
These evolving laws and regulations could require changes in our implementation of AI technology and increase our compliance costs and the risk of non-compliance. Failure to manage our growth may adversely affect our performance. Our financial performance and profitability depend on our ability to manage past and possible future growth.
This may affect our ability to attract or retain employees, or could alter the nature of the compensation arrangements that we may enter into with them.
Additionally, under the capital standards, if our Common Equity Tier 1 Capital does not include the “capital conservation buffer,” we will also be prohibited from paying discretionary bonuses to our executive employees. This may affect our ability to attract or retain employees, or could alter the nature of the compensation arrangements that we may enter into with them.
Ongoing legislative or regulatory uncertainties and changes regarding climate risk management and practices may result in higher regulatory, compliance, credit, and reputational risks and costs, particularly in our home state of California. Public Health Risks We face a wide variety of risks related to public health crises, epidemics, pandemics or similar events.
Public Health Risks We face a wide variety of risks related to public health crises, epidemics, pandemics or similar events.
Removed
We maintain an allowance for credit losses to provide for loan and lease defaults and non-performance, which also includes increases for new loan growth.
Added
Risk Factors Summary Credit Risks • Our allowance for credit losses may not be sufficient to cover actual losses. • We may be required to make additional provisions for credit losses and charge-off additional loans in the future, which could adversely affect our results of operations. • Our dairy & livestock and agribusiness lending presents unique credit risks. • Our loan portfolio is predominantly secured by real estate in California and thus we have a higher degree of credit risk from a downturn in our real estate markets. • Our commercial real estate loan portfolio exposes us to risks that may be greater than the risks related to our other loans. • We are exposed to risk of environmental liabilities with respect to properties to which we take title.
Removed
There is no assurance that recent rental rate increases across any segment of the real estate property classes are sustainable with reasonable possibility of moderate decline to stabilization. Capitalization Rates used to determine value have increased due to overall cost of capital causing some downward pressure on real estate values.
Added
Liquidity and Interest Rate Risks • Liquidity risk could impair our ability to fund operations and jeopardize our financial condition. • Negative developments affecting the banking industry could adversely impact our liquidity. • The actions and commercial soundness of other financial institutions could affect our ability to engage in routine funding transactions. • We may not be able to maintain a strong core deposit base or other low-cost funding sources. • Our business is subject to interest rate risk and variations in interest rates may negatively affect our financial performance. • Elevated interest rates have decreased the market value of the Company’s available for sale and held-to-maturity securities and loan portfolios, and the Company would realize losses if it were required to sell such securities or loans to meet liquidity needs. • Hedging against interest rate exposure may adversely affect our earnings.
Removed
The occurrence of fraudulent activity, breaches or failures of our information security controls or cybersecurity-related incidents to either our information systems or information systems provided by third party vendors could have a material adverse effect on our business, financial condition and results of operations.
Added
Operational Risks • We face risks related to our operational, technological and organizational infrastructure. • The development and use of AI presents risks and challenges that may adversely impact our business. • Failure to manage our growth may adversely affect our performance. • Risks Relating to our Pending Merger with Heritage • Failure to complete the proposed merger with Heritage • Combining with Heritage may be more difficult, costly or time-consuming than expected, and the Company may fail to realize the anticipated benefits of the merger. • The combined company may be unable to retain the Company’s and/or Heritage’s personnel successfully after the merger is completed. • The Company will be subject to business uncertainties and contractual restrictions while the merger with Heritage is pending. • The Company has incurred and is expected to incur substantial costs related to the merger and integration. • The merger agreement between the Company and Heritage may be terminated in accordance with its terms and the merger may not be completed. • Regulatory approvals may not be received, may take longer than expected or may impose conditions that are not presently anticipated or that could have an adverse effect on the Company following the merger. • Our assumptions regarding the fair value of assets acquired could be inaccurate, which could materially and adversely affect our business, financial condition, results of operations, and future prospects. • The future results of the Company following the completion of the mergers may suffer if the Company does not effectively manage its expanded business and operations. 20 • Issuance of shares of the Company’s common stock in connection with the merger may adversely affect the market price of such common stock. • The occurrence of fraudulent activity, breaches or failures of our information security controls or cybersecurity-related incidents to either our information systems or information systems provided by third party vendors could have a material adverse effect on our business, financial condition and results of operations. • Our business is exposed to the risk of changes in technology. • Our controls and procedures could fail or be circumvented. • Failure to maintain effective internal control over financial reporting or disclosure controls and procedures could adversely affect our ability to report our financial condition and results of operations accurately and on a timely basis. • We rely on communications, information, operating and financial control systems technology from third-party service providers, and we may suffer an interruption in those systems. • We are dependent on key personnel and the loss of one or more of those key personnel may materially and adversely affect our prospects. • If our enterprise risk management framework is not effective at mitigating risk and loss to us, we could suffer unexpected losses and our results of operations could be materially adversely affected. • Changes in stock market prices could reduce fee income from our brokerage, asset management and investment advisory businesses. • Our accounting estimates and risk management processes rely on analytical and forecasting models. • Our decisions regarding the fair value of assets acquired could be different than initially estimated, which could materially and adversely affect our business, financial condition, results of operations, and future prospects. • If the goodwill that we recorded in connection with business acquisitions becomes impaired, it could require charges to earnings, which would have a negative impact on our financial condition and results of operations.
Removed
We are presently subject to macroeconomic and interest rate risk due to domestic and global economic instability that has resulted in higher inflation than the United States has experienced in more than 40 years and resulted in overall increases to prevailing interest rates.
Added
Strategic and External Risks • Changes in economic, market and political conditions can adversely affect our liquidity, results of operations and financial condition. • Our earnings are significantly affected by the fiscal and monetary policies of the federal government and its agencies. • Future legislation, regulatory reform or policy changes could have a material effect on our business and results of operations. • We face strong competition from financial services companies and other companies that offer banking services. • Consumers may decide not to use banks to complete their financial transactions. • Potential downgrades of U.S. government securities or the securities of U.S. government-sponsored entities by one or more of the credit ratings agencies could have a material adverse effect on our operations, earnings, and financial condition. • Climate change and climate change regulation could have a material adverse effect on us and our customers. • Public Health Risks Legal, Regulatory, Compliance and Reputational Risks • We are subject to extensive government regulation that could limit or restrict our activities, which, in turn, may hamper our ability to increase our assets and earnings. • Any enhanced regulatory examination scrutiny or new regulatory requirements arising from recent events in the banking industry could increase the Company’s expenses and affect the Company’s operations and acquisition opportunities. • We face a risk of noncompliance and enforcement action with the Bank Secrecy Act and other anti-money laundering statutes and regulations. • The impact of current capital rules may materially affect our operations. • Increasing scrutiny and evolving expectations from regulators, customers, investors, and other stakeholders with respect to our environmental, social and governance practices may impose additional costs on us or expose us to new or additional risks. • Managing reputational risk is important to attracting and maintaining customers, investors and employees. • We depend on the accuracy and completeness of information provided by customers and counterparties. • We are subject to legal and litigation risk which could adversely affect us.
Removed
The Federal Reserve’s Open Market Committee raised the target range for the federal funds rate to 5.25% to 5.50% in 2023, and then subsequently lowered it to a range of 4.25% to 4.50% in the last few months of 2024, resulting in a cumulative increase of 4.25% from March of 2022.
Added
Risks Associated with our Common Stock • The price of our common stock may be volatile or may decline. 21 • An investment in our common stock is not an insured deposit. • Our common stock is subordinate to our existing and future indebtedness and preferred stock. • Anti-takeover provisions and federal law may limit the ability of another party to acquire us, which could cause our stock price to decline. • We could reduce or discontinue the payment of dividends on our common stock.
Removed
These recent increases in prevailing interest rates and the expectation that interest rates may stay elevated are likely to impact both our customers and many aspects of our business.
Added
The development and use of AI presents risks and challenges that may adversely impact our business.
Removed
Any future regulatory capital requirements may similarly adversely affect us. 28 Under the current capital standards, if our Common Equity Tier 1 Capital does not include the required “capital conservation buffer,” we will be prohibited from paying dividends to our shareholders.
Added
We, or our third party vendors, clients or counterparties may develop or incorporate Artificial Intelligence (AI) technology in certain business processes, services, or products including deploying AI in the areas of fraud detection and prevention, cybersecurity, credit risk and underwriting, regulatory compliance, process automation, data analysis, and customer marketing and product customization.
Removed
The market price of our common stock and the trading volume in our common stock may fluctuate and cause significant price variations to occur.
Added
We have adopted an AI Policy that establishes a governance framework for developing, deploying, and managing AI and Generative AI (GenAI) solutions and initiatives, including those involving vendors. We may rely on AI models developed by third parties, and, to that extent, would be dependent in part on the manner in which those third parties develop and train their models.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe Security Committee also considers and makes recommendations on cybersecurity policies and procedures, service requirements, and risk mitigation strategies. 33 Our CISO has more than 27 years of Information Technology and 21 years of Information Security experience in financial services including two other regional banks. He holds an undergraduate and master’s degree in Cybersecurity and Information Assurance.
Biggest changeThe Security Committee also considers and makes recommendations on cybersecurity policies and procedures, service requirements, and risk mitigation strategies. 40 Our CISO has more tha n 29 years of Information Technology and 23 years of Information Security experience in financial services including similar roles at two other regional banks.
Specifically, the Audit Committee receives regular updates from our CISO on cybersecurity risk resulting from risk assessments, progress of risk reduction initiatives, external auditor feedback, and any relevant internal and industry cybersecurity incidents. Management’s Responsibility The Bank's cybersecurity program is managed by our CISO , who reports to the Audit Committee.
Specifically, the Audit Committee receives regular updates from our CISO on cybersecurity risk resulting from risk assessments, progress of risk reduction initiatives, internal and external auditor feedback, and any relevant internal and industry cybersecurity incidents. Management’s Responsibility The Bank's cybersecurity program is managed by our CISO , who reports to the Audit Committee.
These assessments include a variety of activities including information security maturity assessments, audits and independent reviews of our information security control environment and operating effectiveness. These assessments are reported to senior management and our Board through its Audit Committee. Cybersecurity processes are adjusted based on the information provided from these assessments.
These assessments include a variety of activities including information security maturity assessments, audits and independent reviews of our information security control environment and control effectiveness. These assessments are reported to senior management and our Board through its Audit Committee. Cybersecurity processes are adjusted based on the information provided from these assessments.
Governance Board Oversight Our Board, through its Audit Committee, oversees the management of our cybersecurity program led by our CISO. The Audit Committee receives regular reports from management about the prevention, detection, mitigation, and remediation of cybersecurity threats and incidents, including material security risks and information security vulnerabilities.
Governance Board Oversight Our Board, through its Audit Committee, oversees the management of our cybersecurity program led by our CISO. The Audit Committee receives reports from management about the prevention, detection, mitigation, and remediation of cybersecurity threats and incidents, including material security risks and information security vulnerabilities.
ITEM 1C. CYBERSECURITY Cyber criminals are becoming more sophisticated and effective every day, and they are increasingly targeting financial institutions. All companies utilizing technology are subject to threats and potential breaches of their cybersecurity programs.
ITEM 1C. CYBERSECURITY Cyber criminals are becoming more sophisticated and effective every day, and they are increasingly targeting financial institutions and their customers. All companies utilizing technology are subject to threats and potential breaches of their cybersecurity programs.
As described in more detail below, we have established policies, standards, processes and practices for assessing, identifying, and managing material risks from cybersecurity threats.
As described in more detail below, we have established policies, standards, processes, practices and training for assessing, identifying, and managing material risks from cybersecurity threats.
There can be no guarantee that our policies, standards, processes, and procedures, and cyber security safeguards will be sufficient to protect against all possible threats and properly followed in every instance, or that those policies and procedures will be effective.
There can be no guarantee that our policies, standards, processes, and procedures, and cybersecurity safeguards will be sufficient to protect against all possible threats and properly followed in every instance, or that those policies and procedures will be effective.
We maintain controls and procedures that are designed to follow state and federal regulations to ensure prompt escalation of certain cybersecurity incidents so that decisions regarding public disclosure and reporting of such incidents can be made by management and our Board in a timely manner.
We maintain controls and procedures that are designed to comply with applicable state and federal regulations to ensure prompt escalation of certain cybersecurity incidents so that decisions regarding public disclosure and reporting of such incidents can be made by management and our Board in a timely manner.
Such safeguards are regularly evaluated and improved based on vulnerability assessments, cybersecurity threat intelligence and incident response experience. 32 Incident Response, Recovery Planning and Disclosure Our Bank is subject to the Interagency Guidelines, as noted above, and our Company is subject to the SEC’s Rules on Cybersecurity Risk Management, Strategy, Governance, and Incident Disclosure by Public Companies adopted in July 2023.
Such safeguards are regularly evaluated and improvements are made based on vulnerability assessments, cybersecurity threat intelligence and incident response experience. 39 Incident Response, Recovery Planning and Disclosure Our Bank is subject to the Interagency Guidelines, as noted above, and our Company is subject to the SEC’s Rules on Cybersecurity Risk Management, Strategy, Governance, and Incident Disclosure by Public Companies adopted in July 2023.
Third-Party Risk Management We have implemented controls designed to identify and mitigate cybersecurity threats associated with our use of third-party service providers , in the manner and to the extent required by our bank regulators and applicable regulations. Such third-party providers are subject to security risk assessments at the time of onboarding, and contract renewal.
Third-Party Risk Management We have implemented controls designed to identify and mitigate cybersecurity threats associated with our use of third-party service providers , in the manner and to the extent required by our bank regulators and applicable regulations. Such third-party providers are subject to security risk assessments at the time of onboarding, and periodically reviewed as needed.
We use a variety of inputs in such risk assessments, including information supplied by such third-party providers and other industry sources. In addition, we require our third-party providers to meet appropriate security requirements, controls and responsibilities and to investigate and report on security incidents that have impacted their operations, as appropriate.
We use a variety of inputs in such risk assessments, including information supplied by such third-party providers and other industry sources. In addition, we review our third-party providers security standards, controls and responsibilities to report on security incidents that have impacted their operations, as appropriate.
Our COO is a seasoned bank operations executive with over 35 years of banking experience in Operations, Vendor Management, IT, Security, Treasury Management and Payment Operations.
Our COO is a seasoned bank operations executive with over 37 years of banking experience in Operations, Vendor Management, IT, Security, Treasury Management and Payment Ope rations.
Our CIO has 25 years of information technology experience and 18 years of experience in the financial services industry. Our CRO has more than 33 years of experience in Banking and over 15 years of experience in risk management, compliance, and BSA.
He holds an undergraduate and master’s degree in Cybersecurity and Information Assurance. Our CIO has 27 years of information technology experience and 20 years of experience in the financial services industry. Our CRO has more than 35 years of experience in Banking and over 17 years of experience in risk management, compliance, and BSA.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe own 10 of these locations and the remaining properties are leased under various agreements with expiration dates ranging from 2025 through 2042. All properties are located in Southern and Central California.
Biggest changeWe own 10 of these locations and the remaining properties are leased under various agreements with expiration dates ranging from 2025 through 2042. All properties are located in California. For additional information concerning properties, see Note 7 — Premises and Equipment and Note 21 — Leases of the Notes to the consolidated financial statements included in this report.
ITEM 2. P ROPERTIES The principal executive offices of the Company and the Bank are located in Ontario, California, and are owned by the Company.
ITEM 2. P ROPERTIES The principal executive offices of the Company and the Bank are located in Ontario, California, and are owned by the Bank.
As of December 31, 2024, the Bank occupied a total of 65 premises consisting of (i) 62 Banking Centers (“Centers”) of which one Center is located at our Corporate Headquarters in Ontario California, and (ii) three operation and technology centers.
As of December 31, 2025, the Bank occupied a total of 66 premises consisting of (i) 62 Banking Centers (“Centers”) of which one Center is located at our Corporate Headquarters in Ontario California, one loan production office in Temecula California and (ii) three operation and technology centers.
Removed
For additional information concerning properties, see Note 7 — Premises and Equipment and Note 21 — Leases of the Notes to the consolidated financial statements included in this report. See “Item 8 — Financial Statements and Supplemental Data .”
Added
See “Item 8 — Financial Statements and Supplemental Data .”

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeIf we determine that an exposure to loss exists in excess of an amount previously accrued or disclosed, we assess whether there is at least a reasonable possibility that a loss, or additional loss, may have been incurred, and we adjust our accruals and disclosures accordingly.
Biggest changeIf we determine that an exposure to loss exists in excess of an amount previously accrued or disclosed, we assess whether there is at least a reasonable possibility that a loss, or additional loss, may have been incurred, and we adjust our accruals and disclosures accordingly. 41 We do not presently believe that the ultimate resolution of any lawsuits or claims currently pending against the Company will have a material adverse effect on the Company’s results of operations, financial condition, or cash flows.
The outcome of litigation and other legal and regulatory matters is inherently uncertain, however, and it is possible that one or more of the legal matters currently pending or threatened against the Company could have a material adverse effect on our results of operations, financial condition or cash flows. 34 ITEM 4. MINE SAFETY DISCLOSURES Not applicable. PART II
The outcome of litigation and other legal and regulatory matters is inherently uncertain, however, and it is possible that one or more of the legal matters currently pending or threatened against the Company could have a material adverse effect on our results of operations, financial condition or cash flows. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. PART II
For lawsuits or threatened lawsuits where a claim has been asserted or the Company has determined that it is probable that a claim will be asserted, and there is a reasonable possibility that the outcome will be unfavorable, the Company will disclose the existence of the loss contingency, even if the Company is not able to make an estimate of the possible loss or range of possible loss with respect to the action or potential action in question, unless the Company believes that the nature, potential magnitude or potential timing (if known) of the loss contingency is not reasonably likely to be material to the Company’s liquidity, consolidated financial position, and/or results of operations.
For lawsuits, or threatened lawsuits or other situations where a claim has been asserted or the Company has determined that it is probable that a claim will be asserted, and there is a reasonable possibility that the outcome will be unfavorable, the Company will disclose the existence of the loss contingency, even if the Company is not able to make an estimate of the possible loss or range of possible loss with respect to the action or potential action in question, unless the Company believes that the nature, potential magnitude or potential timing (if known) of the loss contingency is not reasonably likely to be material to the Company’s liquidity, consolidated financial position, and/or results of operations.
ITEM 3. LEGA L PROCEEDINGS The Company and its subsidiaries are parties to various lawsuits and threatened lawsuits in the course of business.
ITEM 3. LEGA L PROCEEDINGS The Company and its subsidiaries are parties to various lawsuits, threatened lawsuits and investigations in the course of business.
For lawsuits where the Company has determined that a loss is both probable and reasonably estimable, a liability representing the best estimate of the Company’s financial exposure based on known facts has been recorded in accordance with FASB guidance over loss contingencies (ASC 450).
For lawsuits or claims where the Company has determined that a loss is both probable and reasonably estimable, a liability representing the best estimate of the Company’s financial exposure based on known facts has been recorded in accordance with FASB guidance over loss contingencies (ASC 450).
Some of these lawsuits may be similar in nature to other lawsuits pending against the Company’s competitors. For additional information concerning legal proceedings, see Note 12 — Commitments and Contingencies of the Notes to the consolidated financial statements included in this report.
Some of these lawsuits or investigations may be similar in nature to other lawsuits or investigations pending against the Company’s competitors. For additional information concerning legal proceedings, see Note 12 — Commitments and Contingencies of the Notes to the consolidated financial statements included in this report.
However, as a result of inherent uncertainties in judicial interpretation and application of a myriad of laws and regulations applicable to the Company’s business, and the unique, complex factual issues presented in any given lawsuit, the Company often cannot determine the probability of loss or estimate the amount of damages which a plaintiff might successfully prove if the Company were found to be liable.
However, as a result of inherent uncertainties in judicial or administrative interpretation and application of a myriad of laws and regulations applicable to the Company’s business, and the unique, complex factual issues presented in any given lawsuit or claim, the Company often cannot determine the probability of loss or estimate the amount of damages which a plaintiff or claimant might successfully prove if the Company were found to be liable.
From time to time, such lawsuits and threatened lawsuits may include, but are not limited to, actions involving securities litigation, employment matters, wage-hour and labor law claims, consumer claims, regulatory compliance claims, data privacy claims, lender liability claims, bankruptcy-related claims, and fraud and negligence claims, some of which may be styled as “class action” or representative cases.
From time to time, such lawsuits, threatened lawsuits and investigations may include, but are not limited to, actions involving securities law compliance and litigation, employment matters, wage-hour and labor law claims, consumer claims, regulatory compliance claims, government loan program compliance, data privacy claims, lender liability claims, bankruptcy-related claims, and fraud and negligence claims, some of which may be styled as “class action” or representative cases.
Removed
We do not presently believe that the ultimate resolution of any lawsuits currently pending against the Company will have a material adverse effect on the Company’s results of operations, financial condition, or cash flows.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changePeriod Total Number of Shares Purchased (1) Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number of Shares Available for Repurchase Under the Plans or Programs October 1 - 31, 2024 915 $ 19.46 — 4,300,059 November 1 - 30, 2024 459 $ 21.04 — 10,000,000 December 1 - 31, 2024 — $ - — 10,000,000 Total 1,374 $ 19.99 — 10,000,000 (1) Shares repurchased pursuant to net settlement by employees in satisfaction of income tax withholding obligations incurred through the vesting of Company stock awards. 35 The following Performance Graph and related information shall not be deemed “soliciting material” or be “filed” with the Securities and Exchange Commission, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933 or Securities Exchange Act of 1934, each as amended, except to the extent that the Company specifically incorporates it by reference into such filing.
Biggest changePeriod Total Number of Shares Purchased (1) Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Average Price Paid Per Share Maximum Number of Shares Available for Repurchase Under the Plans or Programs October 1 - 31, 2025 913 $ 18.74 480,104 $ 18.66 7,159,826 November 1 - 30, 2025 461 $ 18.27 1,481,603 $ 18.84 5,678,223 December 1 - 31, 2025 126 $ 19.92 — $ - 5,678,223 Total 1,500 $ 18.70 1,961,707 $ 18.80 5,678,223 (1) Shares repurchased pursuant to net settlement by employees in satisfaction of income tax withholding obligations incurred through the vesting of Company stock awards. 42 The following Performance Graph and related information shall not be deemed “soliciting material” or be “filed” with the Securities and Exchange Commission, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933 or Securities Exchange Act of 1934, each as amended, except to the extent that the Company specifically incorporates it by reference into such filing.
The graph assumes an initial investment of $100 on December 31, 2019, and reinvestment of dividends through December 31, 2024. Points on the graph represent the performance as of the last business day of each of the years indicated. The graph is not necessarily indicative of future price performance.
The graph assumes an initial investment of $100 on December 31, 2020, and reinvestment of dividends through December 31, 2025. Points on the graph represent the performance as of the last business day of each of the years indicated. The graph is not necessarily indicative of future price performance.
ITEM 5. MARKET FOR THE REGISTRANT’S CO MMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES CVB’s common stock is traded on the NASDAQ Global Select National Market under the symbol “CVBF.” CVB had approximately 139,617,917 shares of common stock outstanding with 1,831 registered stockholders of record as of February 24, 2025.
ITEM 5. MARKET FOR THE REGISTRANT’S CO MMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES CVB’s common stock is traded on the NASDAQ Global Select National Market under the symbol “CVBF.” CVB had approximately 135,800,301 shares of common stock outstanding with 1,763 registered stockholders of record as of February 20, 2026.
This 2024 Repurchase Program replaces in its entirety the Company's previous 2022 share repurchase program under which 4,300,059 shares remained available for repurchase and which has now been terminated. The 2024 Repurchase Program terminates on the earlier of the repurchase of the Maximum Amount or five years from the date of authorization.
This 2024 Repurchase Program replaces in its entirety the Company's previous 2022 share repurchase. At the time of its termination, the 2022 program had shares remaining to be repurchased of 4,300,059 shares. The 2024 Repurchase Program terminates on the earlier of the repurchase of the Maximum Amount or five years from the date of authorization.
ASSUMES $100 INVESTED ON DECEMBER 31, 2019 ASSUMES DIVIDEND REINVESTED FISCAL YEAR ENDING DECEMBER 31, 2024 Company/Market/Peer Group 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 CVB Financial Corp. 100.00 94.77 107.64 133.50 108.92 121.86 NASDAQ Composite 100.00 144.92 177.06 119.45 172.77 223.87 KBW Nasdaq Regional Banking Index 100.00 91.29 124.74 116.10 115.63 130.90 Source: Research Data Group, Inc., www.researchdatagroup.com 36 ITEM 6.
ASSUMES $100 INVESTED ON DECEMBER 31, 2020 ASSUMES DIVIDEND REINVESTED FISCAL YEAR ENDING DECEMBER 31, 2025 Company/Market/Peer Group 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 12/31/2025 CVB Financial Corp. 100.00 113.58 140.86 114.93 128.58 116.42 NASDAQ Composite 100.00 122.18 82.43 119.22 154.48 187.14 KBW Nasdaq Regional Banking Index 100.00 136.64 127.17 126.66 143.38 152.71 Source: Research Data Group, Inc., www.researchdatagroup.com 43 ITEM 6.
Removed
As of December 31, 2024, an aggregate of 10,000,000 shares remained available for repurchase under our 2024 Repurchase Program. The only shares repurchased during the fourth quarter of 2024 were shares repurchased pursuant to net settlement by employees in satisfaction of income tax withholding obligations incurred through the vesting of Company stock awards.
Added
In the fourth quarter of 2025, we repurchased 1,961,707 shares of common stock under this program, at an average price of $18.80, totaling $36.9 million. For the year ended December 31, 2025, total shares repurchased was 4,321,777 shares at an average price of $18.60, totaling $80.4 million.
Added
As of December 31, 2025, an aggregate of 5,678,223 shares remained available for repurchase under our 2024 Repurchase Program.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest changeITEM 6. RESERVED 37 ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 37 CRITICAL ACCOUNTING POLICIES 37 OVERVIEW 39 ANALYSIS OF THE RESULTS OF OPERATIONS 41 ANALYSIS OF FINANCIAL CONDITION 51 RISK MANAGEMENT 70 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 79 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 80
Biggest changeITEM 6. RESERVED 44 ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 44 CRITICAL ACCOUNTING POLICIES 44 OVERVIEW 46 ANALYSIS OF THE RESULTS OF OPERATIONS 48 ANALYSIS OF FINANCIAL CONDITION 57 RISK MANAGEMENT 73 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 82 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 83

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeDecember 31, 2024 Amortized Cost Percent of Total Fair Value Percent of Total (Dollars in thousands) Municipal Securities available-for-sale: Minnesota $ 7,816 35.9 % $ 7,234 35.6 % Connecticut 5,602 25.8 % 5,369 26.3 % Massachusetts 3,694 17.0 % 3,385 16.6 % Maine 1,490 6.8 % 1,350 6.6 % Wisconsin 1,166 5.4 % 1,114 5.5 % Iowa 1,115 5.1 % 1,025 5.0 % California 872 4.0 % 900 4.4 % Total $ 21,755 100.0 % $ 20,377 100.0 % Municipal Securities held-to-maturity: Minnesota $ 41,069 9.0 % $ 38,359 9.2 % Massachusetts 25,565 5.6 % 23,837 5.7 % Texas 78,018 17.1 % 72,099 17.3 % California 46,209 10.2 % 41,813 10.0 % Connecticut 7,380 1.6 % 6,635 1.6 % Wisconsin 13,423 2.9 % 12,861 3.1 % All other states (27 states) 243,535 53.6 % 220,728 53.1 % Total $ 455,199 100.0 % $ 416,332 100.0 % December 31, 2023 Amortized Cost Percent of Total Fair Value Percent of Total (Dollars in thousands) Municipal Securities available-for-sale: Minnesota $ 11,018 41.6 % $ 10,526 41.1 % Connecticut 5,611 21.2 % 5,587 21.8 % Massachusetts 4,137 15.6 % 3,993 15.6 % Maine 1,494 5.6 % 1,424 5.6 % Wisconsin 1,168 4.4 % 1,136 4.4 % Iowa 1,115 4.2 % 1,079 4.2 % All other states (2 states) 1,933 7.4 % 1,889 7.3 % Total $ 26,476 100.0 % $ 25,634 100.0 % Municipal Securities held-to-maturity: Texas $ 78,445 16.8 % $ 74,002 16.9 % California 46,401 9.9 % 42,630 9.7 % Minnesota 45,168 9.7 % 43,784 10.0 % Ohio 29,820 6.4 % 27,498 6.3 % Washington 28,619 6.1 % 25,306 5.8 % Massachusetts 26,364 5.6 % 25,463 5.8 % All other states (27 states) 213,154 45.5 % 199,122 45.5 % Total $ 467,971 100.0 % $ 437,805 100.0 % 54 The following tables present the Company’s available-for-sale investment securities, by investment category, in an unrealized loss position for which an allowance for credit losses has not been recorded as of December 31, 2024 and December 31, 2023.
Biggest changeDecember 31, 2025 Amortized Cost Percent of Total Fair Value Percent of Total (Dollars in thousands) Municipal Securities available-for-sale: Minnesota $ 7,815 36.0 % $ 7,566 35.5 % Connecticut 5,597 25.7 % 5,553 26.1 % Massachusetts 3,690 16.9 % 3,570 16.8 % Maine 1,486 6.8 % 1,422 6.7 % Wisconsin 1,165 5.3 % 1,161 5.5 % Iowa 1,115 5.1 % 1,073 5.0 % California 919 4.2 % 945 4.4 % Total $ 21,787 100.0 % $ 21,290 100.0 % Municipal Securities held-to-maturity: Texas $ 73,592 16.5 % $ 69,743 16.6 % California 46,015 10.3 % 42,910 10.2 % Minnesota 39,383 8.9 % 38,046 9.1 % Washington 28,048 6.3 % 25,431 6.1 % Ohio 27,856 6.3 % 26,357 6.3 % Massachusetts 24,915 5.6 % 23,940 5.7 % All other states (27 states) 204,885 46.1 % 193,013 46.0 % Total $ 444,694 100.0 % $ 419,440 100.0 % 59 December 31, 2024 Amortized Cost Percent of Total Fair Value Percent of Total (Dollars in thousands) Municipal Securities available-for-sale: Minnesota $ 7,816 35.9 % $ 7,234 35.6 % Connecticut 5,602 25.8 % 5,369 26.3 % Massachusetts 3,694 17.0 % 3,385 16.6 % Maine 1,490 6.8 % 1,350 6.6 % Wisconsin 1,166 5.4 % 1,114 5.5 % Iowa 1,115 5.1 % 1,025 5.0 % California 872 4.0 % 900 4.4 % Total $ 21,755 100.0 % $ 20,377 100.0 % Municipal Securities held-to-maturity: Texas $ 78,018 17.1 % $ 72,099 17.3 % California 46,209 10.2 % 41,813 10.0 % Minnesota 41,069 9.0 % 38,359 9.2 % Massachusetts 25,565 5.6 % 23,837 5.7 % Wisconsin 13,423 2.9 % 12,861 3.1 % Connecticut 7,380 1.6 % 6,635 1.6 % All other states (27 states) 243,535 53.6 % 220,728 53.1 % Total $ 455,199 100.0 % $ 416,332 100.0 % The allowance for credit losses on investment securities is determined for both the AFS and HTM classifications of the investment portfolio in accordance with ASC 326 .
The Bank’s investment in BOLI includes life insurance policies generally acquired through acquisitions or the purchase of life insurance by the Bank on a select group of employees to fund deferred compensation plans. The Bank is the owner and beneficiary of these policies. BOLI is recorded as an asset at its cash surrender value.
The Bank’s investment in BOLI includes life insurance policies generally acquired through acquisitions or the purchase of life insurance by the Bank on a select group of employees to fund deferred compensation plans. The Bank is the owner and beneficiary of these policies. BOLI is recorded as an asset at its cash surrender value.
Increases in the cash value of these policies, as well as insurance proceeds received, are recorded in noninterest income and are not subject to income tax, as long as they are held for the life of the covered parties.
Increases in the cash value of these policies, as well as insurance proceeds received, are recorded in noninterest income and are not subject to income tax, as long as they are held for the life of the covered parties.
Risk attributes for commercial real estate loans include original loan to value ratios, origination year, loan seasoning, and macroeconomic variables that include GDP growth, commercial real estate price index and unemployment rate. Risk attributes for commercial and industrial loans include internal risk ratings, borrower industry sector, loan credit spreads and macroeconomic variables that include unemployment rate and BBB spread.
Risk attributes for commercial real estate loans include original loan to value ratios, origination year, loan seasoning, and macroeconomic variables that include GDP growth, commercial real estate price index and unemployment rate. Risk attributes for commercial and industrial loans include internal risk ratings, borrower industry sector, loan credit spreads and macroeconomic variables that include unemployment rate and BBB spread.
The major lending categories are commercial and industrial loans, SBA loans, owner-occupied and non owner-occupied commercial real estate loans, construction loans, dairy & livestock and agribusiness loans, residential real estate loans, and various consumer loan products. Loans underwritten to borrowers within these diverse categories require underwriting and documentation suited to the unique characteristics and inherent risks involved.
The major lending categories are owner-occupied and non owner-occupied commercial real estate loans, commercial and industrial loans, dairy & livestock and agribusiness loans, SBA loans, construction loans, residential real estate loans, and various consumer loan products. Loans underwritten to borrowers within these diverse categories require underwriting and documentation suited to the unique characteristics and inherent risks involved.
While the assumptions used are based on current economic and local market conditions, there is no assurance as to the predictive nature of these conditions including how customer preferences or competitor influences might change. We also perform valuation analysis, which incorporates all cash flows over the estimated remaining life of all material balance sheet and derivative positions.
While the assumptions used are based on current economic and local market conditions, there is no assurance as to the predictive nature of these conditions including how customer preferences or competitor influences might change. 79 We also perform valuation analysis, which incorporates all cash flows over the estimated remaining life of all material balance sheet and derivative positions.
Any material exceptions identified are brought forward to the appropriate department head, and appropriate management and board committees. This reporting provides an independent view of compliance risk across the company, and supports transparent communication and management awareness of compliance risk. We recognize that customer complaints can often identify weaknesses in our compliance program which could expose us to risk.
Any material exceptions identified are brought forward to the appropriate department head, and appropriate management and board committees. This reporting provides an independent view of compliance risk across the company, and supports transparent communication and management awareness of compliance risk. 75 We recognize that customer complaints can often identify weaknesses in our compliance program which could expose us to risk.
The Bank simultaneously entered into lease agreements with the respective purchasers for initial terms of 15 and 18 years. Total ROU assets and corresponding operating lease liabilities recorded were $26.8 million. Investment Securities and BOLI The Company maintains a portfolio of investment securities to provide interest income and to serve as a source of liquidity for its ongoing operations.
The Bank simultaneously entered into lease agreements with the respective purchasers for initial terms of 15 and 18 years. Total ROU assets and corresponding operating lease liabilities recorded were $26.8 million. Investment Securities The Company maintains a portfolio of investment securities to provide interest income and to serve as a source of liquidity for its ongoing operations.
Service charges on deposit accounts increased by $0.2 million, or 0.75% from the year ended December 31, 2023. Trust management fees increased by $1.2 million, or 9.34% compared to 2023. Income from Bank-Owned Life Insurance (“BOLI”) decreased by $0.3 million, or 2.60% from the prior year. Trust and Investment Services represents our CitizensTrust group.
Service charges on deposit accounts increased by $0.2 million, or 0.75% from the year ended December 31, 2023. Trust management fees increased by $1.2 million, or 9.34% compared to 2023. Income from Bank-Owned Life Insurance (“BOLI”) decreased by $0.3 million, or 2.60% from the prior year. 54 Trust and Investment Services represents our CitizensTrust group.
Includes TE adjustments utilizing a federal statutory rate of 21%. (2) Gross loans, at amortized cost. Interest Rate Sensitivity Management During periods of changing interest rates, the ability to re-price interest-earning assets and interest-bearing liabilities can influence net interest income, the net interest margin, and consequently, our earnings.
Includes TE adjustments utilizing a federal statutory rate of 21%. (2) Gross loans, at amortized cost. 78 Interest Rate Sensitivity Management During periods of changing interest rates, the ability to re-price interest-earning assets and interest-bearing liabilities can influence net interest income, the net interest margin, and consequently, our earnings.
Therefore, we attempt to ensure that all complaints are given prompt attention. Our Compliance 72 Management Policy and Program include provisions on how customer complaints are to be addressed. The Chief Risk Officer reviews formal complaints to determine if a significant compliance risk exists and communicates those findings to the Compliance Management and Risk Management Committees.
Therefore, we attempt to ensure that all complaints are given prompt attention. Our Compliance Management Policy and Program include provisions on how customer complaints are to be addressed. The Chief Risk Officer reviews formal complaints to determine if a significant compliance risk exists and communicates those findings to the Compliance Management and Risk Management Committees.
While we have implemented various detective and preventative measures which seek to protect our Company, our customers’ information and the Bank from the risk of fraud, data security breaches or service interruptions, there can be no assurance that these measures will be effective in preventing potential breaches or losses for us or our customers. 73 ASSET/LIABILITY AND MARKET RISK MANAGEMENT Liquidity and Cash Flow The objective of liquidity management is to ensure that funds are available in a timely manner to meet our financial obligations when they come due without incurring unnecessary cost or risk, or causing a disruption to our normal operating activities.
While we have implemented various detective and preventative measures which seek to protect our Company, our customers’ information and the Bank from the risk of fraud, data security breaches or service interruptions, there can be no assurance that these measures will be effective in preventing potential breaches or losses for us or our customers. 76 ASSET/LIABILITY AND MARKET RISK MANAGEMENT Liquidity and Cash Flow The objective of liquidity management is to ensure that funds are available in a timely manner to meet our financial obligations when they come due without incurring unnecessary cost or risk, or causing a disruption to our normal operating activities.
(2) Annualized where applicable. Net Interest Income The principal component of our earnings is net interest income, which is the difference between the interest and fees earned on loans, investments and interest earning cash (interest-earning assets) and the interest paid on deposits and borrowed funds (interest-bearing liabilities).
(2) Annualized where applicable. 48 Net Interest Income The principal component of our earnings is net interest income, which is the difference between the interest and fees earned on loans, investments and interest earning cash (interest-earning assets) and the interest paid on deposits and borrowed funds (interest-bearing liabilities).
Compared to 2023, average interest-earning assets decreased $275.6 million and the yield on interest-earning assets increased 44 by 25 basis point from 4.10% for 2023 to 4.35% for 2024.
Compared to 2023, average interest-earning assets decreased $275.6 million and the yield on interest-earning assets increased by 25 basis point from 4.10% for 2023 to 4.35% for 2024.
Refer to Note 18 — Derivative Financial Instruments of the notes to the consolidated financial statements of this report for additional information. 48 Noninterest Expense The following table summarizes the various components of noninterest expense for the periods presented.
Refer to Note 18 — Derivative Financial Instruments of the notes to the consolidated financial statements of this report for additional information. Noninterest Expense The following table summarizes the various components of noninterest expense for the periods presented.
See Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations — Asset/Liability and Market Risk Management — Interest Rate Sensitivity Management included herein. 42 The tables below present the interest rate spread, net interest margin and the composition of average interest-earning assets and average interest-bearing liabilities by category for the periods indicated, including the changes in average balance, composition, and average yield/rate between these respective periods.
See Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations — Asset/Liability and Market Risk Management — Interest Rate Sensitivity Management included herein. 49 The tables below present the interest rate spread, net interest margin and the composition of average interest-earning assets and average interest-bearing liabilities by category for the periods indicated, including the changes in average balance, composition, and average yield/rate between these respective periods.
Further, EVE does not take into account factors such as future balance sheet growth, changes in asset and liability mix, changes in yield curve relationships, and changing product spreads that could mitigate the adverse impact of changes in interest rates. 77 Counterparty Risk Recent developments in the financial markets have placed an increased awareness of Counterparty Risks.
Further, EVE does not take into account factors such as future balance sheet growth, changes in asset and liability mix, changes in yield curve relationships, and changing product spreads that could mitigate the adverse impact of changes in interest rates. 80 Counterparty Risk Recent developments in the financial markets have placed an increased awareness of Counterparty Risks.
The allowance for credit losses as of December 31, 2024 is based upon lifetime loss rate models developed from an estimation framework that uses historical lifetime loss experiences to derive loss rates at a collective pool level. We measure the expected credit losses on a collective (pooled) basis for those loans that share similar risk characteristics.
The allowance for credit losses as of December 31, 2025 is based upon lifetime loss rate models developed from an estimation framework that uses historical lifetime loss experiences to derive loss rates at a collective pool level. We measure the expected credit losses on a collective (pooled) basis for those loans that share similar risk characteristics.
The table below provides the actual balances as of December 31, 2024 of interest-earning assets and interest-bearing liabilities, including the average rate earned or incurred for 2024, the projected contractual maturities over the next five years, and the estimated fair value of each category determined using available market information and appropriate valuation methodologies.
The table below provides the actual balances as of December 31, 2025 of interest-earning assets and interest-bearing liabilities, including the average rate earned or incurred for 2025, the projected contractual maturities over the next five years, and the estimated fair value of each category determined using available market information and appropriate valuation methodologies.
Net interest margin and net interest spread are included on a tax equivalent (“TE”) basis by adjusting interest income utilizing the federal statutory tax rates of 21% in effect for the years ended December 31, 2024, 2023 and 2022. Our net interest income, interest spread, and net interest margin are sensitive to general business and economic conditions.
Net interest margin and net interest spread are included on a tax equivalent (“TE”) basis by adjusting interest income utilizing the federal statutory tax rates of 21% in effect for the years ended December 31, 2025, 2024 and 2023. Our net interest income, interest spread, and net interest margin are sensitive to general business and economic conditions.
These sources of available liquidity include $4.2 billion of secured and unused capacity with the Federal Home Loan Bank, $1.1 billion of secured unused borrowing capacity at the Fed’s discount window, more than $183 million of unpledged AFS securities that could be pledged at the discount window and $305 million of unsecured lines of credit.
These sources of available liquidity include $4.1 billion of secured and unused capacity with the Federal Home Loan Bank, $1.2 billion of secured unused borrowing capacity at the Fed’s discount window, more than $239 million of unpledged AFS securities that could be pledged at the discount window and $305 million of unsecured lines of credit.
Management determined that credit losses did not exist for securities in an unrealized loss position as of December 31, 2024 and 2023. Refer to Note 4 – Investment Securities of the notes to the consolidated financial statements of this report for additional information on our investment securities portfolio.
Management determined that credit losses did not exist for securities in an unrealized loss position as of December 31, 2025 and 2024. Refer to Note 4 – Investment Securities of the notes to the consolidated financial statements of this report for additional information on our investment securities portfolio.
Any excess of the purchase price over amounts allocated to assets acquired, including identifiable intangible assets, and liabilities assumed is recorded as goodwill. Where amounts 37 allocated to assets acquired and liabilities assumed is greater than the purchase price, a bargain purchase gain would be recognized. Acquisition related costs are expensed as incurred.
Any excess of the purchase price over amounts allocated to assets acquired, including identifiable intangible assets, and liabilities assumed is recorded as goodwill. Where amounts 44 allocated to assets acquired and liabilities assumed is greater than the purchase price, a bargain purchase gain would be recognized. Acquisition related costs are expensed as incurred.
Refer to additional discussion concerning loans, nonperforming assets, allowance for credit losses and related tables under the Analysis of Financial Condition contained herein. 71 Transaction Risk Transaction risk is the risk to earnings or capital arising from problems in service, activity or product delivery.
Refer to additional discussion concerning loans, nonperforming assets, allowance for credit losses and related tables under the Analysis of Financial Condition contained herein. 74 Transaction Risk Transaction risk is the risk to earnings or capital arising from problems in service, activity or product delivery.
Because the derivative counterparties are required to post collateral to satisfy the mandatory margin requirements, the counterparties are not subject to counterparty credit risk; • As of December 31, 2024, we had $305.0 million in Fed Funds lines of credit with other major U.S. banks.
Because the derivative counterparties are required to post collateral to satisfy the mandatory margin requirements, the counterparties are not subject to counterparty credit risk; • As of December 31, 2025, we had $305.0 million in Fed Funds lines of credit with other major U.S. banks.
Economic Value of Equity Sensitivity December 31, 2024 2023 400 bp decrease in interest rates 15.7 % 14.7 % 300 bp decrease in interest rates 17.1 % 15.5 % 200 bp decrease in interest rates 17.9 % 16.3 % 100 bp decrease in interest rates 18.4 % 16.8 % Base 19.0 % 17.1 % 100 bp increase in interest rates 19.2 % 17.0 % 200 bp increase in interest rates 19.6 % 17.1 % 300 bp increase in interest rates 19.8 % 16.9 % 400 bp increase in interest rates 20.0 % 16.7 % As EVE measures the discounted present value of cash flows over the estimated lives of instruments, the change in EVE does not directly correlate to the degree that earnings would be impacted over a shorter time horizon (i.e., the current year).
Economic Value of Equity Sensitivity December 31, 2025 2024 400 bp decrease in interest rates 15.9% 15.7% 300 bp decrease in interest rates 16.6% 17.1% 200 bp decrease in interest rates 17.8% 17.9% 100 bp decrease in interest rates 18.6% 18.4% Base 19.1% 19.0% 100 bp increase in interest rates 19.3% 19.2% 200 bp increase in interest rates 19.2% 19.6% 300 bp increase in interest rates 18.6% 19.8% 400 bp increase in interest rates 18.2% 20.0% As EVE measures the discounted present value of cash flows over the estimated lives of instruments, the change in EVE does not directly correlate to the degree that earnings would be impacted over a shorter time horizon (i.e., the current year).
In addition, management prepares, on a monthly basis, a capital volatility report that compares changes in the market value of the investment portfolio. We have as our target to always be well-capitalized by regulatory standards. 78
In addition, management prepares, on a monthly basis, a capital volatility report that compares changes in the market value of the investment portfolio. We have as our target to always be well-capitalized by regulatory standards. 81
The increase in fees in 2023 included both the impact on market values of changes in equity and fixed income markets but also increased flows of funds from customers, including liquidity management of funds formerly on deposit with the Bank.
The increase in fees in 2025 included both the impact on market values of changes in equity and fixed income markets but also increased flows of funds from customers, including liquidity management of funds formerly on deposit with the Bank.
Dairy & livestock and agribusiness loans are largely predicated on the revenue cycles and demand for milk and crops, commodity prices, collateral values of herd, feed, and income-producing dairies or croplands, and the financial support of the 70 guarantors.
Dairy & livestock and agribusiness loans are largely predicated on the revenue cycles and demand for milk and crops, commodity prices, collateral values of herd, feed, and income-producing dairies or croplands, and the financial support of the 73 guarantors.
The Agency CMO/REMIC are backed by agency-pooled collateral. Municipal bonds, which represented approximately 10% of the total investment portfolio, are predominately AA or higher rated securities. 53 Municipal securities held by the Company are issued by various states and their various local municipalities. The following tables present municipal securities by the top holdings by state as of the dates presented.
The Agency CMO/REMIC are backed by agency-pooled collateral. Municipal bonds, which represented approximately 9% of the total investment portfolio, are predominately AA or higher rated securities. Municipal securities held by the Company are issued by various states and their various local municipalities. The following tables present municipal securities by the top holdings by state as of the dates presented.
The CitizensTrust group is made up of wealth management and investment services. They provide a variety of services, which include asset management, financial planning, estate planning, retirement planning, private and corporate trustee services, and probate services. Investment Services provides self-directed brokerage, 401(k) plans, mutual funds, insurance and other non-insured investment products.
The CitizensTrust group is madeup of wealth management and investment services. They provide a variety of services, which include asset management, financial planning, estate planning, retirement planning, private and corporate trustee services, and probate services. Investment Services provides self-directed brokerage, 401(k) plans, mutual funds, insurance and other non-insured investment products.
The decrease in the effective tax rate was a result of increased investments in tax credits during 2024 and the impact on taxes in 2023 from the surrender of certain BOLI policies.
The decrease in the effective tax rate in 2025 and 2024 was a result of increased investments in tax credits and the impact on taxes in 2023 from the surrender of certain BOLI policies.
While we believe that the allowance at December 31, 2024 was appropriate to absorb losses from known or inherent risks in the portfolio, no assurance can be given that future economic conditions, interest rate fluctuations, conditions of our borrowers (including fraudulent activity), or natural disasters, which adversely affect our service areas or other circumstances or conditions, including those defined above, will not be reflected in increased provisions for credit losses in the future. 63 Changes in economic and business conditions could have an impact on our market area and on our loan portfolio.
While we believe that the allowance at December 31, 2025 was appropriate to absorb losses from known or inherent risks in the portfolio, no assurance can be given that future economic conditions, interest rate fluctuations, conditions of our borrowers (including fraudulent activity), or natural disasters, which adversely affect our service areas or other circumstances or conditions, including those defined above, will not result in increased provisions for credit losses in the future. 66 Changes in economic and business conditions could have an impact on our market area and on our loan portfolio.
In addition, our regulators could limit the ability of the Bank or CVB to pay dividends or make other distributions. 74 Below is a summary of our average cash position and statement of cash flows for the years ended December 31, 2024 and 2023.
In addition, our regulators could limit the ability of the Bank or CVB to pay dividends or make other distributions. 77 Below is a summary of our average cash position and statement of cash flows for the years ended December 31, 2025 and 2024.
Valuation and Recoverability of Goodwill — Goodwill represented $765.8 million of our $15.15 billion in total assets as of December 31, 2024. The Company has one reportable segment.
Valuation and Recoverability of Goodwill — Goodwill represented $765.8 million of our $15.63 billion in total assets as of December 31, 2025. The Company has one reportable segment.
We also experienced noninterest-bearing deposits being transferred from the Bank’s balance sheet by customers to be invested by CitizensTrust in higher yielding instruments such as United States treasury notes or bonds. The following table provides the remaining maturities of large denomination ($250,000 or more) time deposits, including public funds, at December 31, 2024.
We also experienced noninterest-bearing deposits being transferred from the Bank’s balance sheet by customers to be invested by CitizensTrust in higher yielding instruments such as U.S. treasury notes or bonds. The following table provides the remaining maturities of large denomination ($250,000 or more) time deposits, including public funds, at December 31, 2025.
The non-TE rates for total investment securities was 2.61%, 2.48% and 2.00% for the years ended December 31, 2024, 2023 and 2022, respectively. (2) Includes loan fees of $2.9 million, $3.1 million and $8.1 million for the years ended December 31, 2024, 2023 and 2022, respectively.
The non-TE rates for total investment securities was 2.61%, 2.61% and 2.48% for the years ended December 31, 2025, 2024 and 2023, respectively. (2) Includes loan fees of $3.1 million, $2.9 million and $3.1 million for the years ended December 31, 2025, 2024 and 2023, respectively.
Approximately 90% of the securities in the total investment portfolio, at December 31, 2024, are issued by the U.S. government or U.S. government-sponsored enterprises, with the implied guarantee of payment of principal and interest. The remaining securities are predominately AA or better general-obligation municipal bonds. As of December 31, 2024, approximately $27.1 million in U.S. government agency bonds are callable.
Approximately 90% of the securities in the total investment portfolio, at December 31, 2025, are issued by the U.S. government or U.S. government-sponsored enterprises, with the implied guarantee of payment of principal and interest. The remaining securities are predominately AA or better general-obligation municipal bonds. As of December 31, 2025, approximately $22.3 million in U.S. government agency bonds are callable.
The tax equivalent yield at December 31, 2024 was 2.77%. The maturity of each security category is defined as the contractual maturity except for the categories of mortgage-backed securities and CMO/REMIC whose maturities are defined as the estimated average life.
The tax equivalent yield at December 31, 2025 was 2.78%. 58 The maturity of each security category is defined as the contractual maturity except for the categories of mortgage-backed securities and CMO/REMIC whose maturities are defined as the estimated average life.
This sensitivity analysis is compared to policy limits, which specify a maximum tolerance level for net interest income exposure over a one and two year horizon assuming no balance sheet growth, given a 200 basis point upward and a 200 basis point downward shift in interest rates depending on the level of current market rates.
This sensitivity analysis is compared to policy limits, which specify a maximum tolerance level for net interest income exposure over a one and two year horizon assuming no balance sheet growth, given a 200 basis point upward and a 200 basis point downward shift in interest rates.
When a loan is placed on nonaccrual, all interest previously accrued but not collected is charged against earnings. There was no interest income that was accrued and not reversed on nonaccrual loans at December 31, 2024 and 2023. As of December 31, 2024 and 2023, we had $27.8 million and $21.3 million of nonaccrual loans, respectively.
When a loan is placed on nonaccrual, all interest previously accrued but not collected is charged against earnings. There was no interest income that was accrued and not reversed on nonaccrual loans at December 31, 2025 and 2024. As of December 31, 2025 and 2024, we had $4.7 million and $27.8 million of nonaccrual loans, respectively.
Also included in noninterest income are service charges and fees, primarily from deposit accounts, BOLI income, gains/losses from the disposition of investment securities, loans, other real estate owned, and fixed assets, and other revenues not included as interest on earning assets. 46 The following table sets forth the various components of noninterest income for the periods presented.
Also included in noninterest income are service charges and fees, primarily from deposit accounts, bank owned life insurance (“BOLI”) income, gains/losses from the disposition of investment securities, loans, other real estate owned, and fixed assets, and other revenues not included as interest on earning assets. 53 The following table sets forth the various components of noninterest income for the periods presented.
This is caused by the change in the amount of amortization of premiums or accretion of discounts of each security as repayments increase or decrease. The Company obtains the estimated average life of each security from independent third parties. The weighted-average yield on the total investment portfolio at December 31, 2024 was 2.36% with a weighted-average life of 7.2 years.
This is caused by the change in the amount of amortization of premiums or accretion of discounts of each security as repayments increase or decrease. The Company obtains the estimated average life of each security from independent third parties. The weighted-average yield on the total investment portfolio at December 31, 2025 was 2.49% with a weighted-average life of 6.4 years.
Off-Balance Sheet Arrangements The following table summarizes the off-balance sheet items at December 31, 2024.
Off-Balance Sheet Arrangements The following table summarizes the off-balance sheet items at December 31, 2025.
Sale-Leaseback Transactions During the third and fourth quarters of 2024, the Bank executed sale-leaseback transactions and sold four buildings for a cumulative sale price of $47.1 million, resulting in a net pre-tax gain of $25.9 million and cash proceeds of $44.76 million.
We engaged in no stock repurchases during 2024. Sale-Leaseback Transactions We engaged in no sale-leaseback transactions during 2025. During the third and fourth quarters of 2024, the Bank executed sale-leaseback transactions and sold four buildings for a cumulative sale price of $47.1 million, resulting in a net pre-tax gain of $25.9 million and cash proceeds of $44.76 million.
There was $0.50 million of recapture of provision for unfunded loan commitments for the year ended December 31, 2023. Standby letters of credit are conditional commitments issued by the Bank to guarantee the financial performance of a customer to a third party. Those guarantees are primarily issued to support private borrowing or purchase arrangements.
There was $1.25 million recapture of unfunded loan commitments for the year ended December 31, 2024. Standby letters of credit are conditional commitments issued by the Bank to guarantee the financial performance of a customer to a third party. Those guarantees are primarily issued to support private borrowing or purchase arrangements.
This compares to a weighted-average yield of 2.16% at December 31, 2023 with a weighted-average life of 6.7 years. The weighted average life is the average number of years that each dollar of unpaid principal due remains outstanding.
This compares to a weighted-average yield of 2.36% at December 31, 2024 with a weighted-average life of 7.2 years. The weighted average life is the average number of years that each dollar of unpaid principal due remains outstanding.
We recorded recapture of provision for credit losses of $3.0 million in 2024, and experienced credit charge-offs of $4.4 million and recoveries of $0.7 million, resulting in net charge-offs of $3.7 million.
For 2024, we recorded $3.0 million recapture of credit losses, and experienced credit charge-offs of $4.4 million and total recoveries of $688,000, resulting in net charge-offs of $3.7 million.
As of December 31, 2024, the Company had $68.5 million of total SBA 7(a) loans that include a guarantee of payment from the SBA (typically 75% of the loan amount, but up to 90% in certain cases) in the event of default.
As of December 31, 2025, the Company had $53.6 million of total SBA 7(a) loans that include a guarantee of payment from the SBA (typically 75% of the loan amount, but up to 90% in certain cases) in the event of default.
Consolidated Citizens Business Bank Tier 1 leverage capital ratio 4.00% 4.00% 5.00% 11.46% 11.30% 10.27% 10.17% Common equity Tier 1 capital ratio 4.50% 7.00% 6.50% 16.24% 16.01% 14.65% 14.49% Tier 1 risk-based capital ratio 6.00% 8.50% 8.00% 16.24% 16.01% 14.65% 14.49% Total risk-based capital ratio 8.00% 10.50% 10.00% 17.06% 16.82% 15.50% 15.34% 69 RISK MANA GEMENT All financial institutions must manage and control a variety of business risks that can significantly affect their financial performance.
Consolidated Citizens Business Bank Tier 1 leverage capital ratio 4.00% 4.00% 5.00% 11.62% 11.46% 11.46% 11.30% Common equity Tier 1 capital ratio 4.50% 7.00% 6.50% 15.89% 15.66% 16.24% 16.01% Tier 1 risk-based capital ratio 6.00% 8.50% 8.00% 15.89% 15.66% 16.24% 16.01% Total risk-based capital ratio 8.00% 10.50% 10.00% 16.66% 16.44% 17.06% 16.82% 72 RISK MANA GEMENT All financial institutions must manage and control a variety of business risks that can significantly affect their financial performance.
Our core customer deposits consist of 72% of business deposits and 28% consisting of consumer deposits, primarily the owners and employees of our business customers. The largest percentage of our deposits, 39%, are analyzed business accounts, which represent customer operating accounts that generally utilize a wide array of treasury management products.
Our core customer deposits consist of 78% of business deposits and 22% consisting of consumer deposits, primarily the owners and employees of our business customers. The largest percentage of our deposits, 43%, are non-analyzed business accounts, which represent customer operating accounts that generally utilize a wide array of treasury management products.
As of December 31, 2024, the Company had $204.5 million of total SBA 504 loans. SBA 504 loans include term loans to finance capital expenditures and for the purchase of commercial real estate. Initially the Bank provides two separate loans to the borrower representing a first and second lien on the collateral.
As of December 31, 2025, the Company had $228.8 million of SBA 504 loans, which include term loans to finance capital expenditures and for the purchase of commercial real estate. Initially the Bank provides two separate loans to the borrower representing a first and second lien on the collateral.
At December 31, 2024, the Bank and the Company exceeded the minimum risk-based capital ratios and leverage ratios required to be considered “well-capitalized” for regulatory purposes. For further information about capital requirements and our capital ratios, see “Item 1.
At December 31, 2025, the Bank and the Company exceeded the minimum risk-based capital ratios and leverage ratios required to be considered “well-capitalized” for regulatory purposes. For further information about capital requirements and our capital ratios, see “Item 1. Business—Regulation and Supervision—Capital Adequacy Requirements ”.
In addition, investment securities with carrying values of $1.63 billion were pledged for unused borrowing capacity. 66 Aggregate Contractual Obligations The following table summarizes the aggregate contractual obligations as of December 31, 2024.
In addition, investment securities with carrying values of $1.35 billion were pledged for unused borrowing capacity. 69 Aggregate Contractual Obligations The following table summarizes the aggregate contractual obligations as of December 31, 2025.
At December 31, 2024, loans with a carrying value of $4.44 billion were pledged to secure available lines of credit from the FHLB and the Federal Reserve Bank. As of December 31, 2024, the Bank had unused borrowing capacity at the FHLB of $4.17 billion.
At December 31, 2025, loans with a carrying value of $6.47 billion were pledged to secure available lines of credit from the FHLB and the Federal Reserve Bank. As of December 31, 2025, the Bank had unused borrowing capacity at the FHLB of $4.08 billion.
Operating leases represent the total minimum lease payments due under non-cancelable operating leases. Refer to Note 21 — Leases of the notes to the consolidated financial statements for a more detailed discussion about leases. Equity investments represent commitments to contribute capital to LIHTC and other CRA-related investment partnerships.
Operating leases represent the total minimum lease payments due under non-cancelable operating leases. Refer to Note 21 — Leases of the notes to the consolidated financial statements for a more detailed discussion about leases. Equity investments represent commitments to contribute capital to low-income housing tax credit (“LIHTC”), solar tax funds and other CRA-related investment partnerships.
The change in the net unrealized holding loss resulted primarily from fluctuations in market interest rates and from realized losses on sold securities. At December 31, 2024, total HTM investment securities of $2.38 billion declined by $84.9 million from December 31, 2023.
The change in the net unrealized holding loss resulted primarily from fluctuations in market interest rates and from realized losses on sold securities. At December 31, 2025, total HTM investment securities of $2.27 billion declined by $109.3 million from December 31, 2024.
Allowance for Credit Losses by Loan Type December 31, 2024 2023 2022 2021 2020 Allowance Amount Loans as % of Total Loans Allowance Amount Loans as % of Total Loans Allowance Amount Loans as % of Total Loans Allowance Amount Loans as % of Total Loans Allowance Amount Loans as % of Total Loans (Dollars in thousands) Commercial real estate $ 66,237 76.2 % $ 69,466 76.2 % $ 64,806 75.8 % $ 50,950 73.4 % $ 75,439 65.9 % Construction 312 0.2 % 1,277 0.8 % 1,702 1.0 % 765 0.8 % 1,934 1.0 % SBA 2,629 3.2 % 2,679 3.0 % 2,809 3.2 % 2,668 3.6 % 2,992 3.6 % SBA - PPP — — — — — 0.1 % — 2.4 % — 10.6 % Commercial and industrial 6,093 10.8 % 9,116 10.9 % 10,206 10.5 % 6,669 10.3 % 7,142 9.7 % Dairy & livestock and agribusiness 3,610 4.9 % 3,098 4.7 % 4,400 4.8 % 3,066 4.9 % 3,949 4.4 % Municipal lease finance receivables 205 0.8 % 210 0.8 % 296 0.9 % 100 0.6 % 74 0.5 % SFR mortgage 424 3.2 % 535 3.0 % 366 2.9 % 188 3.1 % 367 3.2 % Consumer and other loans 612 0.7 % 461 0.6 % 532 0.8 % 613 0.9 % 1,795 1.1 % Total $ 80,122 100.0 % $ 86,842 100.0 % $ 85,117 100.0 % $ 65,019 100.0 % $ 93,692 100.0 % The ACL/Total Loan Coverage Ratio as of December 31, 2024 decreased to 0.94%, compared to 0.98% as of December 31, 2023.
Allowance for Credit Losses by Loan Type December 31, 2025 2024 2023 2022 2021 Allowance Amount Loans as % of Total Loans Allowance Amount Loans as % of Total Loans Allowance Amount Loans as % of Total Loans Allowance Amount Loans as % of Total Loans Allowance Amount Loans as % of Total Loans (Dollars in thousands) Commercial real estate $ 61,661 75.6 % $ 66,237 76.2 % $ 69,466 76.2 % $ 64,806 75.8 % $ 50,950 73.4 % Construction 593 0.4 % 312 0.2 % 1,277 0.8 % 1,702 1.0 % 765 0.8 % SBA 2,720 3.2 % 2,629 3.2 % 2,679 3.0 % 2,809 3.2 % 2,668 3.6 % SBA - PPP — — — — — — — 0.1 % — 2.4 % Commercial and industrial 8,438 11.2 % 6,093 10.8 % 9,116 10.9 % 10,206 10.5 % 6,669 10.3 % Dairy & livestock and agribusiness 2,486 5.0 % 3,610 4.9 % 3,098 4.7 % 4,400 4.8 % 3,066 4.9 % Municipal lease finance receivables 251 0.7 % 205 0.8 % 210 0.8 % 296 0.9 % 100 0.6 % SFR mortgage 442 3.2 % 424 3.2 % 535 3.0 % 366 2.9 % 188 3.1 % Consumer and other loans 570 0.7 % 612 0.7 % 461 0.6 % 532 0.8 % 613 0.9 % Total $ 77,161 100.0 % $ 80,122 100.0 % $ 86,842 100.0 % $ 85,117 100.0 % $ 65,019 100.0 % The ACL to total loan coverage ratio as of December 31, 2025 decreased to 0.89%, compared to 0.94% as of December 31, 2024.
The change in interest income or expense attributable to changes in interest rates is calculated by multiplying the change in interest rate by the initial volume. The changes attributable to interest rate and volume changes are calculated by multiplying the change in rate times the change in volume and reflect an adjustment for the number of days as appropriate.
The changes attributable to interest rate and volume changes are calculated by multiplying the change in rate times the change in volume and reflect an adjustment for the number of days as appropriate.
The increase in interest expense was also driven by a $134.6 million increase in average interest-bearing deposits in 2024 as compared to 2023. Noninterest bearing deposits continued to be a significant portion of total deposits in 2024.
The increase in interest expense was also driven by a $134.6 million increase in average interest-bearing deposits in 2024 as compared to 2023. Noninterest bearing deposits continued to be a significant portion of total deposits in 2024. Average noninterest-bearing deposits were 59.92% of our total deposits for 2024, compared to 62.66% for 2023.
Overall, our sensitivity of EVE to changes in interest rates is generally modest, with the exception of more meaningful decreases in the EVE Ratio if rates were to immediately decline by 300 or 400 basis points.
Compared to December 31, 2024, our EVE sensitivity to rising rates was modestly lower. Overall, our sensitivity of EVE to changes in interest rates is generally modest, with the exception of more meaningful decreases in the EVE Ratio if rates were to immediately decline by 300 or 400 basis points.
As of December 31, 2024, total funds borrowed under these agreements were $261.9 million with a weighted average interest rate of 0.72%, compared to $271.6 million with a weighted average interest rate of 0.29% as of December 31, 2023.
As of December 31, 2025, total funds borrowed under these agreements were $490.6 million with a weighted average interest rate of 1.71%, compared to $261.9 million with a weighted average interest rate of 0.72% as of December 31, 2024.
(2) The loans secured by farmland included $109.1 million for loans secured by dairy & livestock land and $340.6 million for loans secured by agricultural land at December 31, 2024. (3) Other loans consist of a variety of loan types, none of which exceeds 2.0% of total commercial real estate loans.
(2) The loans secured by farmland included $119.0 million for loans secured by dairy & livestock land and $305.5 million for loans secured by agricultural land at December 31, 2025. (3) Other loans consist of a variety of loan types, none of which exceeds 2.0% of total commercial real estate loans.
The average loan size for office loans was approximately $1.7 million and 87% of these loans have a balance of $10 million or less. At December 31, 2024, commercial real estate loans on retail properties totaled $887.5 million, or approximately 13.6% of total commercial real estate loans.
The average loan size for office loans was approximately $1.6 million and 88% of these loans have a balance of $10 million or less. At December 31, 2025, commercial real estate loans on retail properties totaled $908.1 million, or approximately 13.8% of total commercial real estate loans.
Year Ended December 31, 2024 2023 2022 2021 2020 (Dollars in thousands) Allowance for credit losses at beginning of period $ 86,842 $ 85,117 $ 65,019 $ 93,692 $ 68,660 Impact of adopting ASU 2016-13 — — — — 1,840 Charge-offs: Commercial real estate (2,258 ) — — — — Construction — — — — — SBA (165 ) (288 ) (127 ) (223 ) (362 ) Commercial and industrial (1,981 ) (109 ) (66 ) (3,019 ) (195 ) Dairy & livestock and agribusiness — — — (118 ) — SFR mortgage — — — — — Consumer and other loans (4 ) (8 ) (4 ) (11 ) (109 ) Total charge-offs (4,408 ) (405 ) (197 ) (3,371 ) (666 ) Recoveries: Commercial real estate 68 — — — — Construction 67 12 12 58 11 SBA 128 73 107 23 72 Commercial and industrial 424 14 503 12 10 Dairy & livestock and agribusiness — 31 468 — — SFR mortgage — — — 79 206 Consumer and other loans 1 — — 26 59 Total recoveries 688 130 1,090 198 358 Net (charged-offs) recoveries (3,720 ) (275 ) 893 (3,173 ) (308 ) Initial ACL for PCD loans at acquisition — — 8,605 — — Provision recorded at acquisition — — 4,932 — — (Recapture of) provision for credit losses (3,000 ) 2,000 5,668 (25,500 ) 23,500 Allowance for credit losses at end of period $ 80,122 $ 86,842 $ 85,117 $ 65,019 $ 93,692 Summary of reserve for unfunded loan commitments: Reserve for unfunded loan commitments at beginning of period $ 7,500 $ 8,000 $ 8,000 $ 9,000 $ 8,959 Impact of adopting ASU 2016-13 — — — — 41 (Recapture of) provision for unfunded loan commitments (1,250 ) (500 ) — (1,000 ) — Reserve for unfunded loan commitments at end of period $ 6,250 $ 7,500 $ 8,000 $ 8,000 $ 9,000 Reserve for unfunded loan commitments to total unfunded loan commitments 0.35 % 0.43 % 0.46 % 0.49 % 0.54 % Amount of total loans at end of period (1) $ 8,536,432 $ 8,904,910 $ 9,079,392 $ 7,887,713 $ 8,348,808 Average total loans outstanding (1) $ 8,670,420 $ 8,893,335 $ 8,676,820 $ 8,065,877 $ 8,066,483 Net (charge-offs) recoveries to average total loans (0.04 )% (0.00 )% 0.01 % (0.04 )% (0.00 )% Net (charge-offs) recoveries to total loans at end of period (0.04 )% (0.00 )% 0.01 % (0.04 )% (0.00 )% Allowance for credit losses to average total loans 0.92 % 0.98 % 0.98 % 0.81 % 1.16 % Allowance for credit losses to total loans at end of period 0.94 % 0.98 % 0.94 % 0.82 % 1.12 % Net (charge-offs) recoveries to allowance for credit losses (4.64 )% (0.32 )% 1.05 % (4.88 )% (0.33 )% Net (charge-offs) recoveries to (recapture of) provision for credit losses 124.00 % (13.75 )% 8.42 % 12.44 % (1.31 )% (1) Net of deferred loan origination fees, costs and discounts (amortized cost).
Year Ended December 31, 2025 2024 2023 2022 2021 (Dollars in thousands) Allowance for credit losses at beginning of period $ 80,122 $ 86,842 $ 85,117 $ 65,019 $ 93,692 Charge-offs: Commercial real estate — (2,258 ) — — — SBA (118 ) (165 ) (288 ) (127 ) (223 ) Commercial and industrial (519 ) (1,981 ) (109 ) (66 ) (3,019 ) Dairy & livestock and agribusiness — — — — (118 ) Consumer and other loans (5 ) (4 ) (8 ) (4 ) (11 ) Total charge-offs (642 ) (4,408 ) (405 ) (197 ) (3,371 ) Recoveries: Commercial real estate — 68 — — — Construction 171 67 12 12 58 SBA 66 128 73 107 23 Commercial and industrial 944 424 14 503 12 Dairy & livestock and agribusiness — — 31 468 — SFR mortgage — — — — 79 Consumer and other loans — 1 — — 26 Total recoveries 1,181 688 130 1,090 198 Net recoveries (charged-offs) 539 (3,720 ) (275 ) 893 (3,173 ) Initial ACL for PCD loans at acquisition — — — 8,605 — Provision recorded at acquisition — — — 4,932 — (Recapture of) provision for credit losses (3,500 ) (3,000 ) 2,000 5,668 (25,500 ) Allowance for credit losses at end of period $ 77,161 $ 80,122 $ 86,842 $ 85,117 $ 65,019 Summary of reserve for unfunded loan commitments: Reserve for unfunded loan commitments at beginning of period $ 6,250 $ 7,500 $ 8,000 $ 8,000 $ 9,000 (Recapture of) provision for unfunded loan commitments 2,000 (1,250 ) (500 ) — (1,000 ) Reserve for unfunded loan commitments at end of period $ 8,250 $ 6,250 $ 7,500 $ 8,000 $ 8,000 Reserve for unfunded loan commitments to total unfunded loan commitments 0.42 % 0.35 % 0.43 % 0.46 % 0.49 % Amount of total loans at end of period (1) $ 8,699,193 $ 8,536,432 $ 8,904,910 $ 9,079,392 $ 7,887,713 Average total loans outstanding (1) $ 8,427,967 $ 8,670,420 $ 8,893,335 $ 8,676,820 $ 8,065,877 Net recoveries (charge-offs) to average total loans 0.01 % (0.04 )% (0.00 )% 0.01 % (0.04 )% Net recoveries (charge-offs) to total loans at end of period 0.01 % (0.04 )% (0.00 )% 0.01 % (0.04 )% Allowance for credit losses to average total loans 0.92 % 0.92 % 0.98 % 0.98 % 0.81 % Allowance for credit losses to total loans at end of period 0.89 % 0.94 % 0.98 % 0.94 % 0.82 % Allowance for credit losses to nonaccrual loans 1646.98 % 288.26 % 407.67 % 1726.51 % 943.26 % Net recoveries (charge-offs) to allowance for credit losses 0.70 % (4.64 )% (0.32 )% 1.05 % (4.88 )% Net (charge-offs) recoveries to (recapture of) provision for credit losses (15.40 )% 124.00 % (13.75 )% 8.42 % 12.44 % (1) Net of deferred loan origination fees, costs and discounts (amortized cost).
Distribution of Loan Portfolio by Type December 31, 2024 2023 2022 2021 2020 (Dollars in thousands) Commercial real estate $ 6,507,452 $ 6,784,505 $ 6,884,948 $ 5,789,730 $ 5,501,509 Construction 16,082 66,734 88,271 62,264 85,145 SBA 273,013 270,619 290,908 288,600 303,896 SBA - PPP 774 2,736 9,087 186,585 882,986 Commercial and industrial 925,178 969,895 948,683 813,063 812,062 Dairy & livestock and agribusiness 419,904 412,891 433,564 386,219 361,146 Municipal lease finance receivables 66,114 73,590 81,126 45,933 45,547 SFR mortgage 269,172 269,868 266,024 240,654 270,511 Consumer and other loans 58,743 54,072 76,781 74,665 86,006 Total loans, at amortized cost 8,536,432 8,904,910 9,079,392 7,887,713 8,348,808 Less: Allowance for credit losses (80,122 ) (86,842 ) (85,117 ) (65,019 ) (93,692 ) Total loans and lease finance receivables, net $ 8,456,310 $ 8,818,068 $ 8,994,275 $ 7,822,694 $ 8,255,116 As of December 31, 2024, $449.8 million, or 6.91% of the total commercial real estate loans included loans secured by farmland, compared to $497.7 million, or 7.34%, at December 31, 2023.
Distribution of Loan Portfolio by Type December 31, 2025 2024 2023 2022 2021 (Dollars in thousands) Commercial real estate $ 6,574,395 $ 6,507,452 $ 6,784,505 $ 6,884,948 $ 5,789,730 Construction 37,812 16,082 66,734 88,271 62,264 SBA 282,371 273,013 270,619 290,908 288,600 SBA - PPP 30 774 2,736 9,087 186,585 Commercial and industrial 973,631 925,178 969,895 948,683 813,063 Dairy & livestock and agribusiness 431,577 419,904 412,891 433,564 386,219 Municipal lease finance receivables 59,542 66,114 73,590 81,126 45,933 SFR mortgage 281,766 269,172 269,868 266,024 240,654 Consumer and other loans 58,069 58,743 54,072 76,781 74,665 Total loans, at amortized cost 8,699,193 8,536,432 8,904,910 9,079,392 7,887,713 Less: Allowance for credit losses (77,161 ) (80,122 ) (86,842 ) (85,117 ) (65,019 ) Total loans and lease finance receivables, net $ 8,622,032 $ 8,456,310 $ 8,818,068 $ 8,994,275 $ 7,822,694 As of December 31, 2025, $424.5 million, or 6.46% of the total commercial real estate loans included loans secured by farmland, compared to $449.8 million, or 6.91%, at December 31, 2024.
We use the same credit underwriting policies in granting or accepting such commitments or contingent obligations as we do for on-balance sheet instruments, which consist of evaluating customers’ creditworthiness individually.
As such, the total commitment amounts do not necessarily represent future cash requirements. We use the same credit underwriting policies in granting or accepting such commitments or contingent obligations as we do for on-balance sheet instruments, which consist of evaluating customers’ creditworthiness individually.
The effective tax rates are below the nominal combined Federal and State tax rate as a result of tax-advantaged income from certain municipal security investments, municipal loans and leases and BOLI, as well as available tax credits for each period. 50 ANALYSIS OF FI NANCIAL CONDITION Total assets of $15.15 billion at December 31, 2024 decreased by $867.3 million, or 5.41%, from total assets of $16.02 billion at December 31, 2023.
The effective tax rates are below the nominal combined Federal and State tax rate as a result of tax-advantaged income from certain municipal security investments, municipal loans and leases and BOLI, as well as available tax credits for each period. 56 ANALYSIS OF FI NANCIAL CONDITION Total assets of $15.63 billion at December 31, 2025 increased $477.4 million, or 3.15%, from $15.15 billion at December 31, 2024.
Prepayment penalty fees of $2.6 million, $2.5 million and $6.9 million are included in interest income for the years ended December 31, 2024, 2023 and 2022, respectively. (3) Includes interest-bearing demand and money market accounts.
Prepayment penalty fees of $3.9 million, $2.6 million and $2.5 million are included in interest income for the years ended December 31, 2025, 2024 and 2023, respectively.
Estimated Net Interest Income Sensitivity (1) December 31, 2024 December 31, 2023 Interest Rate Scenario 12-month Period 24-month Period (Cumulative) Interest Rate Scenario 12-month Period 24-month Period (Cumulative) + 200 basis points 4.66 % 6.26 % + 200 basis points 3.96 % 4.56 % - 200 basis points -3.63 % -6.36 % - 200 basis points -3.97 % -5.21 % (1) Percentage change from base scenario.
Estimated Net Interest Income Sensitivity (1) December 31, 2025 December 31, 2024 Interest Rate Scenario 12-month Period 24-month Period (Cumulative) Interest Rate Scenario 12-month Period 24-month Period (Cumulative) + 200 basis points 3.85% 5.71% + 200 basis points 4.66% 6.26% - 200 basis points -2.66% -6.19% - 200 basis points -3.63% -6.36% (1) Percentage change from base scenario.
Our economic forecast continues to be a blend of multiple forecasts produced by Moody’s. The baseline forecast continues to represent the largest weighting in our multi-weighted forecast scenario, with both upside and downside risks weighted among multiple forecasts. The resulting economic forecast reflects GDP growing at slower rate than 2024, with GDP growth forecasted below 2% for 2025 through 2027.
Our economic forecast continues to be a blend of multiple forecasts produced by Moody’s. The baseline forecast continues to represent the largest weighting in our multi-weighted forecast scenario, with both upside and downside risks weighted among multiple forecasts. The resulting economic forecast reflects slower GDP growth of less than 2% for 2026 though 2028.
At December 31, 2024, investment securities with carrying values of $2.79 billion were pledged to secure various types of deposits, including $1.18 billion of public funds, $315 million for repurchase agreements, and for other purposes as required or permitted by law.
At December 31, 2025, investment securities with carrying values of $2.74 billion were pledged to secure various types of deposits, including $942.0 million of public funds, $548.6 million for repurchase agreements, and $57.0 million for other purposes as required or permitted by law.
Interest income from investment securities was $134.0 million for 2024, a $4.3 million, or 3.09%, decrease from $138.3 million for 2023. This decrease was driven by a decline in the average balance of investment securities of $434.9 million, or 7.80%, partially offset by a 13 basis point increase in the yield on securities, compared to 2023.
This decrease was driven by a decline in the average balance of investment securities of $434.9 million, or 7.80%, partially offset by a 13 basis point increase in the yield on securities, compared to 2023.
The increase in this ratio for 2023 compared with 2022 reflects the impact of inflationary pressures on staff related expenses and expense growth associated with Suncrest. This ratio was also negatively impacted in 2023 by a $9.2 million expense accrual for the FDIC Special Assessment.
The increase in this ratio for 2024 compared with 2023 reflects the impact of inflationary pressures on staff related expenses and expense growth associated with investments in technology, partially offset by the impact in 2023 for a $9.2 million expense accrual for the FDIC Special Assessment.
The SBA 7(a) loans include revolving lines of credit (SBA Express) and term loans of up to ten (10) years to finance long-term working capital requirements, capital expenditures, and/or for the purchase or refinance of commercial real estate.
The SBA 7(a) loans include revolving lines of credit (SBA Express) and term loans of up to ten (10) years to finance long-term working capital requirements, capital expenditures, and/or for the purchase or refinance of commercial real estate. As of December 31, 2025, the Company had $37.8 million in construction loans.
Interest rate risk is managed by 75 attempting to control the spread between rates earned on interest-earning assets and the rates paid on interest-bearing liabilities within the constraints imposed by market competition in our service area.
Interest rate risk is managed by attempting to control the spread between rates earned on interest-earning assets and the rates paid on interest-bearing liabilities within the constraints imposed by market competition in our service area. The primary goal of interest rate risk management is to control exposure to interest rate risk, within policy limits approved by the Board of Directors.
These lines of credit are available for overnight borrowings; and • At December 31, 2024, we had $0.50 billion in borrowings with the FHLB. Our secured borrowing capacity with the FHLB and FRB totaled $5.73 billion, of which $5.23 billion was available as of December 31, 2024.
These lines of credit are available for overnight borrowings; and • At December 31, 2025, we had $500 million in borrowings with the FHLB. Our secured borrowing capacity with the FHLB and FRB totaled $6.08 billion, of which $5.58 billion was available as of December 31, 2025.
The EVE Ratio represents economic value of equity as a percentage of the discounted present value of all asset cash flows and derivative cash flows. Assumptions about the timing and variability of balance sheet cash 76 flows are critical in the EVE analysis.
The EVE Ratio represents economic value of equity as a percentage of the discounted present value of all asset cash flows and derivative cash flows. Assumptions about the timing and variability of balance sheet cash flows are critical in the EVE analysis. Particularly important are the assumptions driving prepayments and the expected duration and pricing of the indeterminate deposit portfolios.
As of December 31, 2024 and December 31, 2023, the balance in the reserve for unfunded loan commitments was $6.3 million and $7.5 million, respectively, and was included in other liabilities. There was $1.25 million of recapture of provision for unfunded loan commitments for the year ended December 31, 2024.
As of December 31, 2025 and 2024, the balance in the reserve for unfunded loan commitments was $8.3 million and $6.3 million, respectively, and was included in other liabilities. There was $2.0 million of provision for unfunded loan commitments for the year ended December 31, 2025.
The Commercial and Industrial methodology is applied over a substantial portion of the Company’s commercial and industrial loans, all dairy & livestock and agribusiness loans, municipal lease receivables, as well as the remaining portion of SBA loans (excluding Paycheck Protection Program (“PPP”) loans).
The Commercial and Industrial methodology is applied over a substantial portion of the Company’s commercial and industrial loans, all dairy & livestock and agribusiness loans, municipal lease receivables, as well as the remaining portion of SBA loans. The Consumer methodology is applied to SFR mortgage loans, consumer loans, as well as the remaining construction loans.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeFor further quantitative and qualitative disclosures about market risks in our portfolio, see “Asset/Liability Management and Interest Rate Sensitivity Management” included in Item 7 — Management’s Discussion and Analysis of Financial Condition and the Results of Operations presented elsewhere in this report.
Biggest changeFor further quantitative and qualitative disclosures about market risks in our portfolio, see “Asset/Liability and Market Risk- Interest Rate Sensitivity Management” included in Item 7 — Management’s Discussion and Analysis of Financial Condition and the Results of Operations presented elsewhere in this report.
Our analysis of market risk and market-sensitive financial information contain forward looking statements and is subject to the disclosure at the beginning of Part I regarding such forward-looking information. 79
Our analysis of market risk and market-sensitive financial information contain forward-looking statements and is subject to the disclosure at the beginning of Part I regarding such forward-looking information. 82

Other CVBF 10-K year-over-year comparisons