CVB FINANCIAL CORP

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. Interest-earning assets of $13.53 billion at December 31, 2024, decreased by $934.2 million, or 6.46%, when compared with $14.46 billion at December 31, 2023. The decrease in interest-earning assets was primarily due to a $499.0 million decrease in investment securities, a $368.5 million decrease in total loans, and a decrease of $59.1 million in interest-earning balances due from the Federal Reserve.

Total liabilities were $12.97 billion at December 31, 2024, a decrease of $975.7 million, or 7.00%, from total liabilities of $13.94 billion at December 31, 2023. The decrease was due to a $1.57 billion decrease in borrowings partially offset by a $514.7 million increase in deposits. Total deposits increased by $514.7 million, or 4.50%, from December 31, 2023. The increase in deposits includes $300 million of brokered deposits issued in association with cash flow hedging transactions entered into in 2024. Borrowings decreased by $1.57 billion from December 31, 2023, primarily due to the payoff of $1.91 billion of BTFP advances in 2024. As of December 31, 2024, total borrowings consisted of $500 million of Federal Home Loan Bank advances, at an average cost of approximately 4.6%.

Total equity increased $108.3 million to $2.19 billion at December 31, 2024, compared to total equity of $2.08 billion at December 31, 2023. Increases to equity included $200.7 million in net earnings and an $11.5 million increase in other comprehensive income, that were partially offset by $111.9 million in cash dividends. We did not repurchase any stock in 2024. In 2023, we repurchased 791,800 shares of common stock, at an average repurchase price of $23.43, totaling $18.5 million. The Company's 2024 10b5-1 stock repurchase plan was authorized in November 2024 and allows for the repurchase of up to 10,000,000 shares of CVB common stock.

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. 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. We continued to shrink our investment portfolio in 2024. At December 31, 2024, total investment securities were $4.92 billion. This represented a decrease of $499.0 million, or 9.20%, from total investment securities of $5.42 billion at December 31, 2023. The decrease in investment securities was primarily due to principal payments and maturities, as well as sales of securities exceeding purchases during the year. Concurrent with the sale-leaseback transactions in the third and fourth quarters of 2024, the Bank sold AFS securities with a book value of $467 million, resulting in a net pre-tax loss of $28.3 million. At December 31, 2024, our AFS investment securities totaled $2.54 billion, inclusive of a pre-tax net unrealized loss of $447.7 million. The after-tax unrealized loss reported in AOCI on AFS investment securities was $315.4 million. This represented a decrease of $1.4 million from $316.8 million after-tax unrealized loss at 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, 2024, total HTM investment securities of $2.38 billion declined by $84.9 million from December 31, 2023. For the years ended December 31, 2024 and 2023, sales/repayments/maturities of investment securities totaled $901.5 million and $450.3 million, respectively. The Company purchased additional investment securities totaling $430.6 million and $48.4 million for the years ended December 31, 2024 and 2023, respectively.

At December 31, 2024, the Company had $316.2 million of BOLI. The $7.5 million increase in the value of BOLI, when compared to December 31, 2023, was primarily due to increases in the cash surrender value of the policies owned.

The tables below set forth our investment securities AFS and HTM portfolio by type for the dates presented.

The distribution of the AFS and HTM portfolios by estimated average life consist of the following as of the date presented.

(1)

The weighted average yield for the portfolio is not tax-equivalent. The tax equivalent yield at December 13, 2024 was 3.18%.

(1)

The weighted average yield for the portfolio is not tax-equivalent. 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 final maturity of mortgage-backed securities and CMO/REMIC will differ from their contractual maturities because the underlying mortgages have the right to repay such obligations without penalty. The speed at which the underlying mortgages repay is influenced by many factors, one of which is interest rates. Mortgages tend to repay faster as interest rates fall and slower as interest rate rise. This will either shorten or extend the estimated average life. Also, the yield on mortgage-backed securities and CMO/REMIC are affected by the speed at which the underlying mortgages repay. 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 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. Average life is computed as the weighted-average time to the receipt of all future cash flows, using as the weights the dollar amounts of the principal pay-downs.

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. 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.

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 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.

Once it is determined that a credit loss has occurred, an allowance for credit losses is established on our available-for-sale and held-to-maturity securities. 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.

Loans

Total loans and leases, at amortized cost, of $8.54 billion at December 31, 2024, decreased by $368.5 million, or 4.14%, from $8.90 billion at December 31, 2023. Loan growth continues to be impacted by a slowdown in loan demand. The $368.5 million decrease included $277.1 million in commercial real estate loans, $50.7 million in construction loans and $44.7 million in commercial and industrial loans.

Total loans, at amortized cost, comprised 63.10% of our total earning assets as of December 31, 2024. The following table presents our loan portfolio by type as of the dates presented.

Distribution of Loan Portfolio by Type

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. The loans secured by farmland included $109.1 million for loans secured by dairy & livestock land and $340.7 million for loans secured by agricultural land at December 31, 2024, compared to $122.4 million for loans secured by dairy & livestock land and $375.3 million for loans secured by agricultural land at December 31, 2023. As of December 31, 2024, dairy & livestock and agribusiness loans of $419.9 million were comprised of $385.3 million for dairy & livestock loans and $34.6 million for agribusiness loans, compared to $374.9 million of dairy & livestock loans and $38.0 million for agribusiness loans at December 31, 2023.

Real estate loans are loans secured by conforming trust deeds on real property, including property under construction, land development, commercial property and single-family and multi-family residences. Our real estate loans are comprised of industrial, office, retail, medical, single family residences, multi-family residences, and farmland. Consumer loans include installment loans to consumers as well as home equity loans, auto and equipment leases and other loans secured by junior liens on real property. Municipal lease finance receivables are leases to municipalities. Dairy & livestock and agribusiness loans are loans to finance the operating needs of wholesale dairy farm operations, cattle feeders, livestock raisers and farmers.

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. The loan with the first lien is typically at a 50% advance to the acquisition costs and the second lien loan provides the financing for 40% of the acquisition costs with the borrower’s down payment of 10% of the acquisition costs. The Bank retains the first lien loan for its term and sells the second lien loan to the SBA subordinated debenture program. A majority of the Bank’s 504 loans are granted for the purpose of commercial real estate acquisition. 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. 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 an active participant in the SBA’s Paycheck Protection Program, we originated during 2020 approximately 4,100 PPP loans totaling $1.10 billion in round one and originated approximately 1,900 PPP loans totaling $420 million in round two. As of December 31, 2024, the remaining outstanding balance of PPP loans totaled $0.8 million.

As of December 31, 2024, the Company had $16.1 million in construction loans. This represented 0.19% of total held-for-investment loans at amortized cost. Our construction loans are located throughout our California market footprint and the majority consist of commercial land development and construction projects. There were no nonperforming construction loans at December 31, 2024.

Our loan portfolio is geographically disbursed throughout our marketplace. The following is the breakdown of our total held-for-investment commercial real estate loans, by region as of December 31, 2024.

The table below breaks down our commercial real estate portfolio by property type.

(1)

Represents percentage of reported owner-occupied at origination in each real estate loan category.

(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.

At December 31, 2024, commercial real estate loans on office properties totaled $1.04 billion, or approximately 16.0% of total commercial real estate loans. At origination, these loans on office properties were underwritten with loan-to-values averaging approximately 55%. Approximately 37% of these loans were originated prior to 2020. 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. At origination, these loans on retail properties were underwritten with loan-to-values averaging approximately 47%. Approximately 37% of these loans were originated prior to 2020.

The table below provides the maturity distribution for held-for-investment total gross loans as of December 31, 2024. The loan amounts are based on contractual maturities although the borrowers have the ability to prepay the loans. Amounts are also classified according to repricing opportunities or rate sensitivity.

Loan Maturities and Interest Rate Category

As a normal practice in extending credit for commercial and industrial purposes, we may accept trust deeds on real property as collateral. In some cases, when the primary source of repayment for the loan is anticipated to come from the cash flow from normal operations of the borrower, and real property has been taken as collateral, the real property is considered a secondary source of repayment for the loan. Since we lend primarily in Southern and Central California, our real estate loan collateral is concentrated in this region.

Nonperforming Assets

The following table provides information on nonperforming assets as of the dates presented.

The Company adopted Accounting Standards Update 2022-02, Financial Instruments - Credit Losses (Topic 326) Troubled Debt Restructurings and Vintage Disclosures (“ASU 2022-02”) effective January 1, 2023. The amendments in ASU 2022-02 eliminated the recognition and measurement of TDRs and enhanced disclosures for loan modifications to borrowers experiencing financial difficulty.

The table below reflects the loans by type made to borrowers experiencing financial difficulty that were modified in the years ended December 31, 2024 and December 31, 2023, and the cost basis of the loans as of December 31, 2024 and December 31, 2023.

The following table describes the financial effect of the loan modifications made to borrowers experiencing financial difficulty for the years ended December 31, 2024 and December 31, 2023.

As of December 31, 2024 and December 31, 2023, the Company did not have any loans made to borrowers experiencing financial difficulty that were modified on or after January 1, 2023, that subsequently defaulted. Payment default is defined as movement to nonaccrual (nonperforming) status, foreclosure or charge-off, whichever occurs first.

The following table presents as of December 31, 2024, the recorded investment in, and the aging of, past due loans at amortized cost (including nonaccrual loans), by type of loans, made to borrowers experiencing financial difficulty that were modified on or after January 1, 2023, the date we adopted ASU 2022-02.

At December 31, 2024 and December 31, 2023, there was no ACL allocated to modified loans to borrowers experiencing financial difficulty under the ASU 2022-02. Impairment amounts identified are typically charged off against the allowance at the time the loan is considered uncollectible. There were no charge-offs on modified loans to borrowers experiencing financial difficulty during the years ending December 31, 2024 and December 31, 2023.

Nonperforming Assets and Delinquencies

The table below provides trends in our nonperforming assets and delinquencies as of the dates presented.

Nonperforming loans, defined as nonaccrual loans, including modified loans on nonaccrual, and loans past due 90 days or more and still accruing interest, were $27.8 million at December 31, 2024, or 0.33% of total loans. This compares to nonperforming loans of $21.3 million, or 0.24% of total loans, at December 31, 2023. The $6.5 million increase in nonperforming loans was primarily due a $10.4 million increase in nonperforming commercial real estate loans, which was due to the addition of two new nonperforming loans, which was partially offset by a decrease of $4.2 million in nonperforming commercial and industrial loans. Classified loans are loans that are graded “substandard” or worse. Classified loans of $89.5 million decreased $35.1 million quarter-over-quarter, primarily due to a $24.6 million decrease in classified commercial real estate loans and a $10.8 million decrease in classified dairy & livestock and agribusiness loans. Classified loans as a percentage of total loans was 1.05% at December 31, 2024, compared to 1.45% at September 30, 2024 and 1.15% at December 31, 2023.

At December 31, 2024 we had four OREO properties totaling $19.3 million which were all additions to OREO in the year ended December 31, 2024, consisting of three commercial real estate properties and one single-family residential property. At December 31, 2023, we had no OREO properties.

Changes in economic and business conditions have had an impact on our market area and on our loan portfolio. We continually monitor these conditions in determining our estimates of needed reserves. However, we cannot predict the extent to which the deterioration in general economic conditions, real estate values, changes in general rates of interest and changes in the financial conditions or business of a borrower may adversely affect a specific borrower’s ability to pay or the value of our collateral. See “Risk Management – Credit Risk Management” included herein.

Allowance for Credit Losses

The allowance for credit losses totaled $80.1 million as of December 31, 2024, compared to $86.8 million as of December 31, 2023. Our allowance for credit losses at December 31, 2024 was 0.94% of total loans, compared to 0.98% at December 31, 2023. The ACL decreased by $6.7 million for 2024, including $3.0 million recapture of provision for credit losses. The ACL increased by $1.7 million for 2023, including $2.0 million in provision for credit losses. The ACL increased by $20.1 million for 2022 compared to December 31, 2021, including $8.6 million for the acquired Suncrest PCD loans and $10.6 million in provision for credit losses for 2022. Net charge-offs were $3.7 million for 2024, which compares with net charge-offs of $275,000 for 2023.

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. We have three collective loan pools: Commercial Real Estate, Commercial and Industrial, and Consumer. Our ACL amounts are largely driven by portfolio characteristics, including loss history and various risk attributes, and the economic outlook for certain macroeconomic variables. The allowance for credit loss is sensitive to both changes in these portfolio characteristics and the forecast of macroeconomic variables. 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 macroeconomic variables for Consumer include unemployment rate and GDP. The Commercial Real Estate methodology is applied over commercial real estate loans, a portion of construction loans, and a portion of Small Business Administration (“SBA”) 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 (excluding PPP loans). The Consumer methodology is applied to SFR mortgage loans, consumer loans, as well as the remaining construction loans. In addition to determining the quantitative life of loan loss rate to be applied against the portfolio segments, management reviews current conditions and forecasts to determine whether adjustments are needed to ensure that the life of loan loss rates reflect both the current state of the portfolio, and expectations for macroeconomic changes.

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. Commercial Real Estate values are forecasted to continue their decline in 2025, with appreciation starting in 2027. Unemployment is forecasted to rise above 5% in 2025 and remains over 5% until 2028.

The table below presents a summary of charge-offs and recoveries by type, the provision for credit losses on loans, and the resulting allowance for credit losses for the periods presented.

(1)

Net of deferred loan origination fees, costs and discounts (amortized cost).

The Bank’s ACL methodology also produced an allowance of $6.3 million for our off-balance sheet credit exposures as of December 31, 2024, compared to $7.5 million as of December 31, 2023.

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.

Changes in economic and business conditions could have an impact on our market area and on our loan portfolio. We continually monitor these conditions in determining our estimates of needed reserves. However, we cannot predict the extent to which the deterioration in general economic conditions, real estate values, changes in general rates of interest and changes in the financial conditions or business of a borrower may adversely affect a specific borrower’s ability to pay or the value of our collateral. See “Risk Management – Credit Risk Management” contained herein.

The following table provides a summary of the allocation of the allowance for credit losses by loan type at the dates indicated for total loans. The allocations presented should not be interpreted as an indication that loans charged to the allowance for credit losses will occur in these amounts or proportions.

Allowance for Credit Losses by Loan Type

The ACL/Total Loan Coverage Ratio as of December 31, 2024 decreased to 0.94%, compared to 0.98% as of December 31, 2023.

Deposits

The primary source of funds to support earning assets (loans and investments) is the generation of deposits.

Total deposits were $11.95 billion at December 31, 2024. This represented an increase of $514.7 million, or 4.50%, from total deposits of $11.43 billion at December 31, 2023. This increase was partially due to a $300 million increase in brokered deposits in 2024.

The average balance of deposits by category and the average effective interest rates paid on deposits is summarized for the periods presented in the table below.

The amount of noninterest-bearing deposits in relation to total deposits is an integral element in our strategy of seeking to achieve a low cost of funds. Average noninterest-bearing deposits were $7.14 billion for 2024, representing a decrease of $649.21 million, or 8.33%, from average noninterest-bearing deposits of $7.79 billion for 2023. Average noninterest-bearing deposits represented 59.92% of total average deposits for 2024, compared to 62.66% of total average deposits for 2023.

Average savings deposits, which include savings, interest-bearing demand, and money market accounts, were $4.14 billion for 2024, representing a decrease of $197 million, or 4.54%, from average savings deposits of $4.34 billion for 2023.

Average time deposits totaled $635.7 million for 2024, representing an increase of $331.7 million, or 109.08%, from total average time deposits of $304.1 million for 2023.

Our deposits are primarily relationship based core deposits and customer repurchase agreements ("repos"). We had $300 million of brokered deposits at the end of 2024 and none at the end of 2023, which accounted for the majority of the growth in time deposits. 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. As most of our business customers need to operate with more than $250,000 in their operating account, we have a significant percentage of deposits that are uninsured. As of December 31, 2024, 45% of our total deposits and customer repos were uncollateralized and uninsured.

Our customer deposit relationships represent long tenured customers representing a diverse set of industries. The industry classification with the largest concentration is construction, which represented approximately 8% of our deposits at December 31, 2024. Overall, there are 14 different industry classifications that represent 2% or more of our deposits as of December 31, 2024. Our depositors have typically banked with us for many years. As of December 31, 2024, 47% of our deposit relationships have banked with us more than 10 years and 77% of our deposit relationships have been with us for three or more years.

Total deposits and customer repos were $12.21 billion at December 31, 2024, a $505.0 million, or 4.31%, increase from December 31, 2023. The unprecedented increase in short-term interest rates impacted the mix of our deposits. Overall, we have experienced a decline in noninterest-bearing deposit levels and an increase in interest-bearing deposit levels due to the impact of higher interest rates that has led to deposits moving to higher yielding alternatives, such as our money market and time deposit products. 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.

Maturity Distribution of Large Denomination Time Deposits

Time deposits totaled $573.6 million at December 31, 2024, representing an increase of $177.2 million, or 44.70%, from total time deposits of $396.4 million at December 31, 2023.

Borrowings

The following table summarizes information about our term FHLB advances, repurchase agreements and other borrowings outstanding for the periods presented.

At December 31, 2024, our borrowings were $761.9 million and included $261.9 million of repurchase agreements and $500.0 million in FHLB advances, at an average cost of approximately 4.6%. At December 31, 2023, our borrowings were $2.34 billion and included $271.6 million in repurchase agreements, $2.07 billion in borrowings including $1.91 billion of one-year advances from the Federal Reserve's BTFP at an average cost of 4.78% and $160 million of short-term FHLB advances, at an average cost of approximately 5.70%. Refer to Note 11 —Borrowings of the notes to the consolidated financial statements for a more detailed discussion.

We offer a repurchase agreement product to our deposit customers. This product, known as Citizens Sweep Manager, sells our investment securities overnight to our customers under an agreement to repurchase them the next day at a price which reflects the market value of the use of funds by the Bank for the period concerned. These repurchase agreements are signed with customers who want to invest their excess deposits, above a pre-determined balance in a demand deposit account, in order to earn interest. 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.

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, 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. In addition, investment securities with carrying values of $1.63 billion were pledged for unused borrowing capacity.

Aggregate Contractual Obligations

The following table summarizes the aggregate contractual obligations as of December 31, 2024.

(1)

Amounts exclude accrued interest.

Deposits represent noninterest-bearing, money market, savings, NOW, certificates of deposits, brokered and all other deposits held by the Bank.

Customer repurchase agreements represent excess amounts swept from customer demand deposit accounts, which mature the following business day and are collateralized by investment securities. These amounts are due to customers.

Other borrowings represent amounts due for FHLB advances based on their contractual maturity dates.

Deferred compensation represents the amounts that are due to former employees based on salary continuation agreements as a result of acquisitions and amounts due to current and retired employees under our deferred compensation plans.

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.

Off-Balance Sheet Arrangements

The following table summarizes the off-balance sheet items at December 31, 2024.

(1)

Total commitments to extend credit to agribusiness were $15.6 million at December 31, 2024.

As of December 31, 2024, we had commitments to extend credit of approximately $1.72 billion, and obligations under letters of credit of $60.0 million. Commitments to extend credit are agreements to lend to customers, provided there is no violation of any material condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Commitments are generally variable rate, and many of these commitments are expected to expire without being drawn upon. 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. 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. 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. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. When deemed necessary, we hold appropriate collateral supporting those commitments.

Capital Resources

Our primary source of capital has been the retention of operating earnings and issuance of common stock in connection with periodic acquisitions. In order to ensure adequate levels of capital, we conduct an ongoing assessment of projected sources, needs and uses of capital in conjunction with projected increases in assets and the level of risk. As part of this ongoing assessment, the Board of Directors reviews the various components of our capital plan and capital stress testing.

Total equity increased $108.3 million, or 5.21%, to $2.19 billion at December 31, 2024, compared to total equity of $2.08 billion at December 31, 2023. Increases to equity included $200.7 million in net earnings and an $11.5 million increase in other comprehensive income, that were partially offset by $111.9 million in cash dividends. We did not repurchase any stock in 2024. In 2023, we repurchased 791,800 shares of common stock, at an average repurchase price of $23.43, totaling $18.5 million. Our tangible book value per share at December 31, 2024 was $10.10.

During 2024, the Board of Directors of CVB declared quarterly cash dividends totaling $0.80 per share. Dividends are payable at the discretion of the Board of Directors and there can be no assurance that the Board of Directors will continue to pay dividends at the same rate, or at all, in the future. CVB’s ability to pay cash dividends to its shareholders is subject to restrictions under federal and California law, including restrictions imposed by the Federal Reserve, and covenants set forth in various agreements we are a party to.

On November 20, 2024, our Board of Directors approved a program to repurchase up to 10,000,000 shares (the “Maximum Amount”) of CVB common stock including by means of one or more Rule 10b5-1 plans or other appropriate buy-back arrangements, including open market purchases and private transactions, at times and at prices considered appropriate by us, depending upon prevailing market conditions and other corporate and legal considerations (“2024 Repurchase Program”). 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. As of December 31, 2024, an aggregate of 10,000,000 shares remained available for repurchase under our 2024 Repurchase Program.

The Bank and the Company are required to meet risk-based capital standards under the revised capital framework referred to as Basel III set by their respective regulatory authorities. The risk-based capital standards require the achievement of a minimum total risk-based capital ratio of 8.0%, a Tier 1 risk-based capital ratio of 6.0% and a common equity Tier 1 (“CET1”) capital ratio of 4.5%. In addition, the regulatory authorities require the highest rated institutions to maintain a minimum leverage ratio of 4.0%. To be considered “well-capitalized” for bank regulatory purposes, the Bank and the Company are required to have a CET1 capital ratio equal to or greater than 6.5%, a Tier 1 risk-based capital ratio equal to or greater than 8.0%, a total risk-based capital ratio equal to or greater than 10.0% and a Tier 1 leverage ratio equal to or greater than 5.0%. 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. Business—Regulation and Supervision—Capital Adequacy Requirements”.

At December 31, 2024, the Bank and the Company exceeded the minimum risk-based capital ratios and leverage ratios, under the revised capital framework referred to as Basel III, required to be considered “well-capitalized” for regulatory purposes.

The table below presents the Company’s and the Bank’s risk-based and leverage capital ratios for the periods presented.