WESTAMERICA BANCORPORATION
For the period ended Mar 31, 2026. Filed May 8, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2026 · Filed May 8, 2026
WABC$59.84+0.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-09-30; filed 2025-11-07.
0001171843-25-007134
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-03-31; filed 2026-05-08.
0001171843-26-003210
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 117 previous paragraphs and 122 current paragraphs.
77 unchanged; 26 reworded; 17 added; 13 removed; 1 previous and 2 current paragraphs rearranged.
Tables are not compared: 48 previous and 32 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (17)
Current report
WESTAMERICA BANCORPORATION
Current report
FINANCIAL SUMMARY
Current report
(2) The efficiency ratio is defined as noninterest expense divided by total revenue (net interest income on an FTE basis and noninterest income).
Current report
Westamerica Bancorporation and subsidiaries (collectively, the “Company”) reported net income of $27.4 million or $1.13 diluted earnings per common share (“EPS”) in the three months ended March 31, 2026. The results in the three months ended March 31, 2026 included a $300 thousand reversal of provision for credit losses, which increased EPS $0.01. The results in the three months ended March 31, 2026 compare with net income of $31.0 million or $1.16 EPS in the three months ended March 31, 2025 and $27.8 million or $1.12 EPS in the three months ended December 31, 2025. The results in the three months ended March 31, 2025 included a $550 thousand reversal of provision for credit losses, which increased EPS $0.01. The results in the three months ended December 31, 2025 included a $628 thousand increase to the book tax provision to reconcile the 2024 income tax provision to the filed 2024 tax returns, which reduced EPS $0.02.
Current report
Net income for the three months ended March 31, 2026 decreased $452 thousand compared with the three months ended December 31, 2025 primarily due to lower net interest and loan fee income (FTE), lower noninterest income and higher noninterest expense, partially offset by lower tax provision (FTE). Net interest and loan fee income (FTE) decreased $859 thousand in the three months ended March 31, 2026 compared with the three months ended December 31, 2025 due to lower average balances of loans and interest-bearing cash and lower yield on interest-bearing cash, partially offset by higher average balances of investment securities. Based on the results of its CECL model and Management’s estimate of credit losses over the remaining life of its loans, the Company recorded a $300 thousand reversal of provision for credit losses in the three months ended March 31, 2026 and provided no provision for credit losses in the three months ended December 31, 2025. Noninterest income for the three months ended March 31, 2026 decreased compared with the three months ended December 31, 2025 due to lower debit card fees and recognition of unrealized securities losses of $247 thousand in the three months ended March 31, 2026. Noninterest expense for the three months ended March 31, 2026 increased compared with the three months ended December 31, 2025 due to higher salaries and benefits expense and estimated operating losses from limited partnership investments. The tax rate (FTE) was 25.4% for the three months ended March 31, 2026 and 27.0% for the three months ended December 31, 2025. The results in the three months ended December 31, 2025 included a $628 thousand increase to the book tax provision to reconcile the 2024 income tax provision to the filed 2024 tax returns.
Current report
The Company's primary source of revenue is net interest income, or the difference between interest income earned on loans and investment securities and interest expense paid on interest-bearing deposits and other borrowings.
Current report
Net interest and loan fee income (FTE) decreased $859 thousand in the three months ended March 31, 2026 compared with the three months ended December 31, 2025 due to lower average balances of loans (down $19 million) and interest-bearing cash (down $130 million) and lower yield on interest-bearing cash (down 0.28%), partially offset by higher average balances of investment securities (up $126 million).
Current report
The net interest margin (FTE) was 3.74% in the three months ended March 31, 2026, 3.90% in the three months ended March 31, 2025, and 3.76% in the three months ended December 31, 2025. The yield on earning assets (FTE) was 3.98% in the three months ended March 31, 2026, 4.14% in the three months ended March 31, 2025, and 4.00% in the three months ended December 31, 2025.
Current report
(3) Net interest margin is computed by calculating the difference between interest income and expense, divided by the average balance of interest-earning assets. The net interest margin is greater than the net interest spread due to the benefit of noninterest-bearing demand deposits.
Current report
(3) Net interest margin is computed by calculating the difference between interest income and expense, divided by the average balance of interest-earning assets. The net interest margin is greater than the net interest spread due to the benefit of noninterest-bearing demand deposits.
Current report
(3) Net interest margin is computed by calculating the difference between interest income and expense, divided by the average balance of interest-earning assets. The net interest margin is greater than the net interest spread due to the benefit of noninterest-bearing demand deposits.
Current report
Noninterest income for the three months ended March 31, 2026 decreased $396 thousand compared with the three months ended December 31, 2025. Debit card fees declined $174 thousand from the three months ended December 31, 2025 to the three months ended March 31, 2026. The Company recognized unrealized securities losses of $247 thousand in the three months ended March 31, 2026.
Current report
Noninterest expense for the three months ended March 31, 2026 increased $784 thousand compared with the three months ended March 31, 2025 primarily due to increases in salaries and benefits expense, occupancy and equipment expense and estimated operating losses from limited partnership investments.
Current report
Noninterest expense for the three months ended March 31, 2026 increased $445 thousand compared with the three months ended December 31, 2025. Salaries and benefits expense increased in the three months ended March 31, 2026 due to seasonally higher payroll taxes and higher benefit costs. Estimated operating losses from limited partnership investments increased from the three months ended December 31, 2025 to the three months ended March 31, 2026.
Current report
The Company’s income tax provision (FTE) was $9.3 million for the three months ended March 31, 2026 compared with $11.1 million for the three months ended March 31, 2025 and $10.3 million for the three months ended December 31, 2025, representing effective tax rates (FTE) of 25.4%, 26.3% and 27.0%, respectively. The effective tax rates (FTE) for the three months ended December 31, 2025 was higher than the three months ended March 31, 2026 and the three months ended March 31, 2025 primarily due to a $628 thousand increase in book tax provision to reconcile the 2024 income tax provision to the filed 2024 tax returns.
Current report
Selected financial data: (At the dates indicated)
Current report
**Item 3. Quantitative and Qualitative Disclosures about Market Risk
Removed paragraphs (13)
Previous report
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Previous report
Westamerica Bancorporation and subsidiaries (collectively, the “Company”) reported net income of $28.3 million or $1.12 diluted earnings per common share (“EPS”) in the three months ended, September 30, 2025 compared with net income of $35.1 million or $1.31 EPS for the third quarter 2024. The third quarter 2024 results included a $202 thousand bank owned life insurance gain and a $1.4 million gain on sale of other assets equivalent to $0.04 EPS. The Company reported net income of $88.4 million or $3.40 EPS for the nine months ended September 30, 2025, including a $550 thousand reversal of provision for credit losses and a $208 thousand bank owned life insurance gain, which increased EPS $0.02. The Company reported net income of $106.9 million or $4.01 EPS for the nine months ended September 30, 2024. Results for the nine months ended September 30, 2024 included a $202 thousand life insurance gain and a $1.4 million gain on sale of other assets equivalent to $0.04 EPS.
Previous report
FASB ASU 2023-07,Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, was issued November 27, 2023. The ASU requires disclosure of certain significant segment expenses and other items, the title and position of the chief operating decision maker and information about how the reported measures of segment profit or loss are used in assessing segment performance. The ASU became effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements.
Previous report
Net income for the nine months ended September 30, 2025 decreased $18.6 million compared with nine months ended September 30, 2024 primarily due to decreases in net interest and loan fee income (FTE) and noninterest income, partially offset by lower noninterest expense and tax provision (FTE). Net interest and loan fee income (FTE) decreased $27.9 million in the nine months ended September 30, 2025 compared with the nine months ended September 30, 2024 due to lower average balances of investment securities and loans, lower yield on investment securities and interest-bearing cash, and higher rate on interest-bearing deposits, partially offset by higher average balances of interest-bearing cash and lower average balances of bank term funding program borrowings. During the nine months ended September 30, 2025, the Company recorded a $550 thousand reversal of provision for credit losses, which was included in the first quarter of 2025, based on the results of its CECL model and Management’s estimate of credit losses over the remaining life of its loans and debt securities held to maturity. During the nine months ended September 30, 2024, the Company provided $300 thousand for credit losses, which was recorded in the first quarter of 2024, based on the results of the CECL model and Management’s estimate of credit losses over the remaining life of its loans and debt securities held to maturity. Noninterest income in the nine months ended September 30, 2025 decreased $1.7 million compared with the nine months ended September 30, 2024 primarily because the nine months ended September 30, 2024 results included a $1.4 million gain on sale of other assets. Noninterest expense in the nine months ended September 30, 2025 decreased $2.1 million compared with the nine months ended September 30, 2024 primarily due to lower salaries and benefits and lower estimated operating losses from limited partnership investments, partially offset by higher outsourced data processing services expense and professional fees. The tax rate (FTE) was 26.2% for the nine months ended September 30, 2025 and 26.9% for the nine months ended September 30, 2024.
Previous report
Net interest and loan fee income (FTE) decreased $8.6 million in the three months ended September 30, 2025 compared with the three months ended September 30, 2024 due to lower average balances of investment securities (down $561 million) and loans (down $87 million), lower yield on investment securities (down 0.42%) and interest-bearing cash (down 0.98%), and higher rate on interest-bearing deposits (up 0.07%), partially offset by higher average balances of interest-bearing cash (up $208 million) and lower average balances of bank term funding program borrowings (down $167 million).
Previous report
The annualized net interest margin (FTE) was 3.80% in the three months ended September 30, 2025 and 3.85% in the nine months ended September 30, 2025 compared with 4.08% in the three months ended September 30, 2024 and 4.18% in the nine months ended September 30, 2024.
Previous report
(1) Amounts calculated on an FTE basis using the current statutory federal tax rate.
Previous report
(1) Amounts calculated on an FTE basis using the current statutory federal tax rate.
Previous report
Noninterest income for the nine months ended September 30, 2025 decreased $1.7 million compared with the nine months ended September 30, 2024 primarily due to lower income from service charges on deposit accounts and ATM processing fees and because the nine months ended September 30, 2024 results included a $1.4 million gain on sale of other assets. The decrease in noninterest income was partially offset by higher income from merchant processing services and trust fees for the nine months ended September 30, 2025 compared with the nine months ended September 30, 2024.
Previous report
Noninterest expense for the three months ended September 30, 2025 decreased $509 thousand compared with the three months ended September 30, 2024 primarily due to lower salaries and benefits and lower estimated operating losses from limited partnership investments, partially offset by an increase in professional fees.
Previous report
Noninterest expense for the nine months ended September 30, 2025 decreased $2.1 million compared with the nine months ended September 30, 2024 primarily due to lower salaries and benefits and lower estimated operating losses from limited partnership investments, partially offset by higher outsourced data processing services expense and professional fees.
Previous report
The Company’s income tax provision (FTE) was $9.9 million and $31.3 million for the three and nine months ended September 30, 2025, respectively, compared with $13.0 million and $39.4 million for the three and nine months ended September 30, 2024, respectively. The effective tax rates (FTE) were 26.0% and 26.2%, for the three and nine months ended September 30, 2025, respectively, compared with 27.1% and 26.9% for the three and nine months ended September 30, 2024, respectively.
Previous report
The following summarizes activity in the allowance for credit losses:
Reworded paragraphs (26)
Previous wording
The Federal Open Market Committee of the Federal Reserve Board (“FOMC”) reduced the target federal funds rate by 0.25 percent to the range of 3.75 to 4.00 percent in October 2025. The FOMC press release in October stated, “Available indicators suggest that growth of economic activity has been expanding at a moderate pace. Job gains have slowed, and the unemployment rate has edged up but remains low through August… Inflation has moved up since earlier in the year and remains somewhat elevated. The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the long run. Uncertainty about the economic outlook remains elevated. The Committee is attentive to the risks to both sides of its dual mandate and judges that downside risks to employment rose in recent months” The interest rate paid on reserve balances at the Federal Reserve Bank was reduced to 3.90% effective October 30, 2025 from 4.15% effective September 18, 2025. The Bank maintains reserve balances at the Federal Reserve Bank; the amount that earns interest is identified as “interest-bearing cash”.
Current wording
The Federal Open Market Committee of the Federal Reserve Board (“FOMC”) maintained the target federal funds rate range of 3.50 to 3.75 percent in March 2026 after a 0.25 percent cut in December 2025. The FOMC press release in March 2026 stated, “Available indicators suggest that economic activity has been expanding at a solid pace. Job gains have remained low, and the unemployment rate has been little changed in recent months. Inflation remains somewhat elevated. The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the long run. Uncertainty about the economic outlook remains elevated. The implications of developments in the Middle East for the U.S. economy are uncertain. The Committee is attentive to the risks to both sides of its dual mandate.” The interest rate paid on reserve balances at the Federal Reserve Bank remained at 3.65 percent after a 0.25 percent cut in December 2025. The Bank maintains reserve balances at the Federal Reserve Bank; the amount that earns interest is identified as “interest-bearing cash”.
Previous wording
Management continues to evaluate the impacts of inflation, the Federal Reserve’s monetary policy, the impacts of tariffs, international trade tensions, the on-going government shutdown and climate changes on the Company’s business. The banking industry could experience significant volatility as it did with several regional bank failures in 2023. Industrywide concerns could develop related to liquidity, deposit outflows and unrealized losses on investment debt securities. These events and concerns could adversely affect the Company’s ability to effectively fund its operations. Any one or a combination of such risk factors, or other factors, could materially adversely affect the Company's business, financial condition, results of operations and prospects. The extent of the impact on the Company’s results of operations, cash flow, liquidity, and financial performance, as well as the Company’s ability to execute near- and long-term business strategies and initiatives, will depend on numerous evolving factors and future developments, which are highly uncertain and cannot be reasonably predicted.
Current wording
Management continues to evaluate the impacts of inflation, the Federal Reserve’s monetary policy, the impacts of the war in the Middle East, tariffs, international trade tensions, and climate changes on the Company’s business. The banking industry could experience significant volatility as it did with several regional bank failures in 2023. Industrywide concerns could develop related to liquidity, deposit outflows and unrealized losses on investment debt securities. These events and concerns could adversely affect the Company’s ability to effectively fund its operations. Any one or a combination of such risk factors, or other factors, could materially adversely affect the Company's business, financial condition, results of operations and prospects. The extent of the impact on the Company’s results of operations, cash flow, liquidity, and financial performance, as well as the Company’s ability to execute near- and long-term business strategies and initiatives, will depend on numerous evolving factors and future developments, which are highly uncertain and cannot be reasonably predicted.
Previous wording
The Company’s significant accounting policies (see Note 1, “Summary of Significant Accounting Policies,” to Financial Statements in the Company’s 2024 Form 10-K and Note 2 “Accounting Policies” in this Form 10-Q) are fundamental to understanding the Company’s results of operations and financial condition. The Company adopted the following new accounting guidance:
Current wording
The Company’s significant accounting policies (see Note 1 “Summary of Significant Accounting Policies” to the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 and Note 2 “Accounting Policies” to the unaudited consolidated financial statements in this Form 10-Q) are fundamental to understanding the Company’s results of operations and financial condition.
Previous wording
Net income for the three months ended September 30, 2025 decreased $6.8 million compared with the three months ended September 30, 2024 primarily due to decreases in net interest and loan fee income (FTE) and noninterest income, partially offset by lower noninterest expense and tax provision (FTE). Net interest and loan fee income (FTE) decreased $8.6 million in the three months ended September 30, 2025 compared with the three months ended September 30, 2024 due to lower average balances of investment securities and loans, lower yield on investment securities and interest-bearing cash, and higher rate on interest-bearing deposits, partially offset by higher average balances of interest-bearing cash and lower average balances of bank term funding program borrowings. Based on the results of its current expected credit losses (“CECL”) model and Management’s estimate of credit losses over the remaining life of its loans, the Company provided no provision for credit losses in the three months ended September 30, 2025 and September 30, 2024. Noninterest income in the three months ended September 30, 2025 decreased $1.8 million compared with the three months ended September 30, 2024 primarily because the three months ended September 30, 2024 results included a $1.4 million gain on sale of other assets. Noninterest expense in the three months ended September 30, 2025 decreased $509 thousand compared with the three months ended September 30, 2024 primarily due to lower salaries and benefits and lower estimated operating losses from limited partnership investments, partially offset by an increase in professional fees. The tax rate (FTE) was 26.0% for the three months ended September 30, 2025 and 27.1% for the three months ended September 30, 2024.
Current wording
Net income for the three months ended March 31, 2026 decreased $3.7 million compared with the three months ended March 31, 2025 primarily due to lower net interest and loan fee income (FTE), lower noninterest income and higher noninterest expense, partially offset by lower tax provision (FTE). Net interest and loan fee income (FTE) decreased $3.7 million in the three months ended March 31, 2026 compared with the three months ended March 31, 2025 due to lower average balances of loans and interest-bearing cash, lower yield on investment securities and interest-bearing cash, partially offset by higher average balances of investment securities. Based on the results of its current expected credit losses (“CECL”) model and Management’s estimate of credit losses over the remaining life of its loans, the Company recorded a $300 thousand reversal of provision for credit losses in the three months ended March 31, 2026 and a $550 thousand reversal of provision for credit losses in the three months ended March 31, 2025. Noninterest income for the three months ended March 31, 2026 decreased compared with the three months ended March 31, 2025 due to lower debit card fees and recognition of unrealized securities losses of $247 thousand in the three months ended March 31, 2026. Noninterest expense for the three months ended March 31, 2026 increased compared with the three months ended March 31, 2025 primarily due to increases in salaries and benefits expense, occupancy and equipment expense and estimated operating losses from limited partnership investments. The tax rate (FTE) was 25.4% for the three months ended March 31, 2026 and 26.3% for the three months ended March 31, 2025.
Previous wording
The following summarizes the components of the Company's net interest margin (FTE) for the periods indicated (percentages are annualized.)
Current wording
The following summarizes the components of the Company's net interest margin (FTE) for the periods indicated.
Previous wording
Net interest and loan fee income (FTE) decreased $27.9 million in the nine months ended September 30, 2025 compared with the nine months ended September 30, 2024 due to lower average balances of investment securities (down $657 million) and loans (down $76 million), lower yield on investment securities (down 0.47%) and interest-bearing cash (down 0.98%), and higher rate on interest-bearing deposits (up 0.13%), partially offset by higher average balances of interest-bearing cash (up $313 million) and lower average balances of bank term funding program borrowings (down $143 million).
Current wording
Net interest and loan fee income (FTE) decreased $3.7 million in the three months ended March 31, 2026 compared with the three months ended March 31, 2025 due to lower average balances of loans (down $81 million) and interest-bearing cash (down $143 million), lower yield on investment securities (down 0.11%) and interest-bearing cash (down 0.75%), partially offset by higher average balances of investment securities (up $74 million).
Previous wording
The Company’s funding costs were 0.26% in the three months ended September 30, 2025 and 0.24% in the nine months ended September 30, 2025 compared with 0.37% in the three months ended September 30, 2024 and 0.30% in the nine months ended September 30, 2024. Noninterest bearing deposits represented 46% of average deposits in the nine months ended September 30, 2025 and 48% in the nine months ended September 30, 2024. Average balances of checking and saving deposits accounted for 98% of average total deposits in the nine months ended September 30, 2025 and September 30, 2024.
Current wording
The Company’s funding costs were 0.24% in the three months ended March 31, 2026, March 31, 2025 and December 31, 2025. Noninterest bearing deposits represented 46% of average deposits in the three months ended March 31, 2026, March 31, 2025 and December 31, 2025. Average balances of checking and saving deposits accounted for 98.6% of average total deposits in the three months ended March 31, 2026, 98.4% in the three months ended March 31, 2025 and 98.6% in the three months ended December 31, 2025.
Previous wording
The Company’s yield on earning assets during the three months and nine months ended September 30, 2025 decreased compared with the three months and nine months ended September 30, 2024. The Company’s yield on earning assets has been primarily affected by collateralized loan obligations (CLOs), held in debt securities available for sale portfolio, and interest-bearing cash. The CLOs have interest coupons that change once every three months by the amount of change in the three-month SOFR base rate. The average balances and yields of CLOs for the three months ended September 30, 2025 was $659 million yielding 6.24% and $788 million yielding 6.25% for the nine months ended September 30, 2025. The average balances and yields of CLOs for the three and nine months ended September 30, 2024 were $1,166 million yielding 7.20% and $1,324 million yielding 7.22%, respectively. The interest-bearing cash yield changes by the amount of change in the overnight federal funds rate on the effective date declared by the FOMC. The average balance and yields of interest-bearing cash for the three months and nine months ended September 30, 2025 were $703 million yielding 4.37% and $656 million yielding 4.39%, respectively. The average balances and yields of interest-bearing cash for the three and nine months ended September 30, 2024 were $495 million yielding 5.35% and $342 million yielding 5.37%, respectively. The Company has other earning assets with variable yields such as commercial loans and lines of credit, consumer lines of credit and adjustable rate residential real estate loans, which are included in “other taxable loans” in the following “Summary of Average Balances, Yields/Rates and Interest Differential.”
Current wording
The Company’s net interest margin during the three months ended March 31, 2026 decreased compared with the three months ended March 31, 2025 and December 31, 2025 primarily affected by lower yield on earning assets due to declining market interest rates. The yield on investment securities decreased in the three months ended March 31, 2026 compared with the three months ended March 31, 2025, and stabilized compared with the three months ended December 31, 2025. The volume of higher-yielding CLOs declined due to calls and principal paydowns. Newly purchased investment securities have lower yields compared with CLOs. The CLOs have interest coupons that change once every three months by the amount of change in the three-month SOFR base rate. The average balances and yields of CLOs for the three months ended March 31, 2026 and March 31, 2025 were $349 million yielding 5.64% and $916 million yielding 6.30%, respectively. The average balances and yields of agency mortgage backed securities for the three months ended March 31, 2026 and March 31, 2025 were $1,061 million yielding 4.67% and $310 million yielding 3.05%, respectively. The interest-bearing cash yield changes by the amount of change in the overnight federal funds rate on the effective date declared by the FOMC. The average balances and yields of interest-bearing cash decreased for the three months ended March 31, 2026, March 31, 2025 and December 31, 2025, which were $466 million yielding 3.65%, $609 million yielding 4.40%, and $596 million yielding 3.93%, respectively. The Company has other earning assets with variable yields such as commercial loans and lines of credit, consumer lines of credit and adjustable rate residential real estate loans, which are included in “other taxable loans” in the following “Summary of Average Balances, Yields/Rates and Interest Differential.”
Previous wording
Based on Management’s estimate of credit losses over the remaining life of its loans and debt securities held to maturity, the Company provided no provision for credit losses in the three months ended September 30, 2025 and during the nine months ended September 30, 2025, the Company recorded a $550 thousand reversal of provision for credit losses, which was recored in the first quarter of 2025. The Company provided no provision for credit losses in the third quarter of 2024 based on Management’s estimate of credit losses over the remaining life of its loans and debt securities held to maturity. During the nine months ended September 30, 2024, the Company provided $300 thousand for credit losses, which was recorded in the first quarter of 2024. For further information regarding credit risk, net credit losses, and the allowance for credit losses, see the “Loan Portfolio Credit Risk” and “Allowance for Credit Losses” sections of this Report.
Current wording
Based on Management’s estimate of credit losses over the remaining life of its loans and debt securities held to maturity, the Company recorded a $300 thousand reversal of provision for credit losses in the three months ended March 31, 2026, and a $550 thousand reversal of provision for credit losses in the three months ended March 31, 2025. For further information regarding credit risk, net credit losses, and the allowance for credit losses, see the “Loan Portfolio Credit Risk” and “Allowance for Credit Losses” sections of this Report.
Previous wording
Noninterest income for the three months ended September 30, 2025 decreased $1.8 million compared with the three months ended September 30, 2024 primarily due to lower income from service charges on deposits accounts and because the three months ended September 30, 2024 results included a $1.4 million gain on sale of other assets and a $202 thousand gain on bank owned life insurance. Higher income from merchant processing services partially offset the decrease in noninterest income for the three months ended September 30, 2025 compared with the three months ended September 30, 2024.
Current wording
Noninterest income for the three months ended March 31, 2026 decreased $714 thousand compared with the three months ended March 31, 2025. Debit card fees declined $257 thousand from the three months ended March 31, 2025 to the three months ended March 31, 2026. The Company recognized unrealized securities losses of $247 thousand in the three months ended March 31, 2026. The same period in 2025 included a $102 thousand gain on bank owned life insurance.
Previous wording
The Company maintains an investment securities portfolio consisting of securities issued by U.S. Treasury, U.S. Government sponsored entities, state and political subdivisions, corporations and banks. The Company had marketable equity securities held for trading at fair value of $436 thousand at September 30, 2025. The Company had no marketable equity securities not held for trading at September 30, 2025 and December 31, 2024.
Current wording
The Company maintains an investment securities portfolio consisting of securities issued by U.S. Government sponsored entities, state and political subdivisions, corporations and banks. The Company had marketable equity securities held for trading at fair value of $219 thousand at March 31, 2026 and $466 thousand at December 31, 2025. The Company had no marketable equity securities not held for trading at March 31, 2026 and December 31, 2025.
Previous wording
Management manages the investment securities portfolio in response to anticipated changes in interest rates, and changes in deposit and loan volumes. The carrying value of the Company’s investment securities portfolio was $4.1 billion at September 30, 2025 and $4.2 billion at December 31, 2024. The following table lists debt securities in the Company’s portfolio by type as of the dates indicated. Debt securities held to maturity are listed at amortized cost before related reserve for expected credit losses of $1 thousand at September 30, 2025 and December 31, 2024. Debt securities available for sale are listed at fair value.
Current wording
Management manages the investment securities portfolio in response to anticipated changes in interest rates, and changes in deposit and loan volumes. The carrying value of the Company’s investment securities portfolio was $4.4 billion at March 31, 2026 and $4.3 billion at December 31, 2025. The following table lists debt securities in the Company’s portfolio by type as of the dates indicated. Debt securities held to maturity are listed at amortized cost before related reserve for expected credit losses of $1 thousand at March 31, 2026 and December 31, 2025. Debt securities available for sale are listed at fair value.
Previous wording
The Company’s $561 million (fair value) in collateralized loan obligations at September 30, 2025, consist of investments in 53 issues that are within the senior tranches of their respective fund securitization structures. The following table summarizes total collateralized loan obligations by credit rating:
Current wording
The Company’s $294 million (fair value) in collateralized loan obligations at March 31, 2026, consist of investments in 31 issues that are within the senior tranches of their respective fund securitization structures. The following table summarizes total collateralized loan obligations by credit rating:
Previous wording
The Company’s $983 million (fair value) in collateralized loan obligations at December 31, 2024, consist of investments in 96 issues that are within the senior tranches of their respective fund securitization structures. The following table summarizes total collateralized loan obligations by credit rating:
Current wording
The Company’s $425 million (fair value) in collateralized loan obligations at December 31, 2025, consist of investments in 41 issues that are within the senior tranches of their respective fund securitization structures. The following table summarizes total collateralized loan obligations by credit rating:
Previous wording
See Note 3 to the unaudited consolidated financial statements for additional information related to the investment securities.
Current wording
See Note 3 “Debt Securities Available for Sale and Held to Maturity” to the unaudited consolidated financial statements in this Form 10-Q for additional information related to the investment securities.
Previous wording
The Company's allowance for credit losses on loans is maintained at a level considered adequate to provide for expected losses based on historical loss rates adjusted for current and expected conditions over a forecast period. These include conditions unique to individual borrowers, as well as overall loan loss experience, the amount of past due, nonperforming and classified loans, recommendations of regulatory authorities, prevailing and forecasted economic conditions, or credit protection agreements and other factors. Loans that share common risk characteristics are segregated into pools based on common characteristics, which are primarily determined by loan, borrower, or collateral type. Historical loss rates are determined for each pool. Loans that do not share risk characteristics with other loans in the pools are evaluated individually. See Note 2 “Accounting Policies” to the unaudited consolidated financial statements for additional information.
Current wording
The Company's allowance for credit losses on loans is maintained at a level considered adequate to provide for expected losses based on historical loss rates adjusted for current and expected conditions over a forecast period. These include conditions unique to individual borrowers, as well as overall loan loss experience, the amount of past due, nonperforming and classified loans, recommendations of regulatory authorities, prevailing and forecasted economic conditions, or credit protection agreements and other factors. Loans that share common risk characteristics are segregated into pools based on common characteristics, which are primarily determined by loan, borrower, or collateral type. Historical loss rates are determined for each pool. Loans that do not share risk characteristics with other loans in the pools are evaluated individually. See Note 2 “Accounting Policies” to the unaudited consolidated financial statements in this Form 10-Q for additional information.
Previous wording
Management considers the $11.9 million allowance for credit losses on loans to be adequate as a reserve against current expected credit losses in the loan portfolio as of September 30, 2025.
Current wording
Management considers the $11.2 million allowance for credit losses on loans to be adequate as a reserve against current expected credit losses in the loan portfolio as of March 31, 2026.
Previous wording
See Note 4 to the unaudited consolidated financial statements for additional information related to the loan portfolio, loan portfolio credit risk, allowance for credit losses on loans, and other real estate owned.
Current wording
See Note 4 “Loans and Allowance for Credit Losses” to the unaudited consolidated financial statements in this Form 10-Q for additional information related to the loan portfolio, loan portfolio credit risk and allowance for credit losses on loans.
Previous wording
The Company monitors the climate risks of its loan customers. Borrowers with real estate loan collateral located in flood zones must carry flood insurance under the loans’ terms. At September 30, 2025, the Company had $16 million in loans to agricultural borrowers; Management continuously monitors these customers’ access to adequate water sources as well as their ability to sustain low crop yields and volatile commodity prices without encountering financial hardship. The Company makes automobile loans; changes in consumer demand, or governmental laws or policies, regarding gasoline, electric and hybrid vehicles are not considered to be material risks to the Company’s automobile lending practices. The Company considers climate risk in its underwriting of corporate bonds, and avoids purchasing bonds of issuers, which, in Management’s judgement, have elevated climate risk.
Current wording
The Company monitors the climate risks of its loan customers. Borrowers with real estate loan collateral located in flood zones must carry flood insurance under the loans’ terms. At March 31, 2026, the Company had $14 million in loans to agricultural borrowers; Management continuously monitors these customers’ access to adequate water sources as well as their ability to sustain low crop yields and volatile commodity prices without encountering financial hardship. The Company makes automobile loans; changes in consumer demand, or governmental laws or policies, regarding gasoline, electric and hybrid vehicles are not considered to be material risks to the Company’s automobile lending practices. The Company considers climate risk in its underwriting of corporate bonds, and avoids purchasing bonds of issuers, which, in Management’s judgement, have elevated climate risk.
Previous wording
In recent years, the Bank's deposit base has provided the majority of the Bank's funding requirements. This low-cost source of funds, along with shareholders' equity, provided 97% of funding for average total assets for the nine months ended September 30, 2025 and 96% for the year ended December 31, 2024. The Bank’s funding from customer deposits is in part reliant on the confidence clients have in the Bank. The Bank places a very high priority in maintaining this confidence through conservative credit risk and capital management practices and by maintaining an appropriate level of liquidity.
Current wording
In recent years, the Bank's deposit base has provided the majority of the Bank's funding requirements. This low-cost source of funds, along with shareholders' equity, provided 97% of funding for average total assets for the three months ended March 31, 2026 and the year ended December 31, 2025. The Bank’s funding from customer deposits is in part reliant on the confidence clients have in the Bank. The Bank places a very high priority in maintaining this confidence through conservative credit risk and capital management practices and by maintaining an appropriate level of liquidity.
Previous wording
Total deposits were $4,793 million at September 30, 2025 and $5,012 million at December 31, 2024. Total time deposits were $71 million at September 30, 2025 and $82 million at December 31, 2024. The Company has no foreign time deposits. FDIC deposit insurance is $250,000 per depositor, for each account ownership category. At September 30, 2025, estimated federally uninsured total deposits and time deposits were $2,364 million and $4 million, respectively.
Current wording
Total deposits were $4,784 million at March 31, 2026 and $4,840 million at December 31, 2025. Total time deposits were $65 million at March 31, 2026 and $67 million at December 31, 2025. The Company has no foreign time deposits. FDIC deposit insurance is $250,000 per depositor, for each account ownership category. At March 31, 2026, estimated federally uninsured total deposits and time deposits were $2,363 million and $4 million, respectively.
Previous wording
Liquidity is further provided by assets such as balances held at the Federal Reserve Bank, and principal and interest payments from debt securities and loans. At September 30, 2025, the Company had $659,268 thousand in cash balances. During the twelve months ending September 30, 2026, the Company expects to receive $338,000 thousand in principal payments from its debt securities. If additional operational liquidity is required, the Company can pledge debt securities as collateral for borrowing purposes; at September 30, 2025, the Company’s debt securities which qualify as collateral for borrowing totaled $3,752,853 thousand. In the ordinary course of business, the Company pledges debt securities as collateral for certain depository customers; at September 30, 2025, the Company had pledged $713,200 thousand in debt securities for depository customers. In the ordinary course of business, the Company pledges debt securities as collateral for borrowing from the Federal Reserve Bank; at September 30, 2025, the Company had pledged $647,776 thousand in debt securities at the Federal Reserve Bank. During the nine months ended September 30, 2025, the Company’s average borrowings from the Federal Reserve Bank and other correspondent banks were $-0- thousand, respectively, and at September 30, 2025, the Company had no borrowings from the Federal Reserve Bank or other correspondent banks. At September 30, 2025, the Company had access to borrowing from the Federal Reserve Bank up to $647,776 thousand based on collateral pledged at September 30, 2025. At September 30, 2025, the Company’s estimated unpledged collateral qualifying debt securities totaled $1,970,022 thousand. Debt securities eligible as collateral are shown at market value unless noted otherwise:
Current wording
Liquidity is further provided by assets such as balances held at the Federal Reserve Bank, and principal and interest payments from debt securities and loans. At March 31, 2026, the Company had $397,284 thousand in cash balances. During the twelve months ending March 31, 2027, the Company expects to receive $402,000 thousand in principal payments from its debt securities. If additional operational liquidity is required, the Company can pledge debt securities as collateral for borrowing purposes. At March 31, 2026, the Company had access to borrowing from the Federal Reserve Bank up to $765,854 thousand based on collateral pledged at March 31, 2026. Additionally, the Company had access to a $60,000 thousand line of credit with a correspondent bank at March 31, 2026.
Previous wording
The Bank’s dividends paid to the Parent Company and Parent Company cash balances provided adequate cash for the Parent Company to pay shareholder dividends of $35 million in the nine months ended September 30, 2025 and $47 million in the year ended December 31, 2024 and retire common stock in the amounts of $80 million in the nine months ended September 30, 2025 and $210 thousand in the year ended December 31, 2024. Payment of dividends to the Parent Company by the Bank is limited under California and Federal laws. The Company believes these regulatory dividend restrictions will not impact Parent Company's ability to meet its ongoing cash obligations. The Parent Company’s cash balance was $265 million at September 30, 2025 and $263 million at December 31, 2024.
Current wording
The Bank’s dividends paid to the Parent Company and Parent Company cash balances provided adequate cash for the Parent Company to pay shareholder dividends of $11 million for the three months ended March 31, 2026 and $47 million for the year ended December 31, 2025 and retire common stock in the amounts of $51 million in the three months ended March 31, 2026 and $104 million in the year ended December 31, 2025. Payment of dividends to the Parent Company by the Bank is limited under California and Federal laws. The Company believes these regulatory dividend restrictions will not impact the Parent Company's ability to meet its ongoing cash obligations. The Parent Company’s cash balance was $233 million at March 31, 2026 and $268 million at December 31, 2025.
Previous wording
The Company has historically generated high levels of earnings, which provide a means of accumulating capital. The Company's net income as a percentage of average shareholders' equity (“return on equity” or “ROE”) was 11.4% (annualized) for the nine months ended September 30, 2025 and 13.8% for the year ended December 31, 2024. The Company also raises capital as employees exercise stock options. The Company raised $376 thousand through the exercise of stock options in the nine months ended September 30, 2025 while $1.5 million was raised through the exercise of stock options in the year ended December 31, 2024.
Current wording
The Company has historically generated high levels of earnings, which provide a means of accumulating capital. The Company's net income as a percentage of average shareholders' equity (“return on equity” or “ROE”) was 11.0% for the three months ended March 31, 2026 and 11.2% for the year ended December 31, 2025. The Company also raises capital as employees exercise stock options. There were no stock option exercises during the three months ended March 31, 2026. The Company raised $376 thousand through the exercise of stock options in the year ended December 31, 2025.
Previous wording
The Company paid cash dividends on its common stock totaling $35 million in the nine months ended September 30, 2025 and $47 million in the year ended December 31, 2024, which represent dividends per common share of $1.36 and $1.76, respectively. The Company's earnings have historically exceeded dividends paid to shareholders. The amount of earnings in excess of dividends provides the Company resources to finance growth and maintain appropriate levels of shareholders' equity. In the absence of profitable growth opportunities, the Company has at times repurchased and retired its common stock as another means to return capital to shareholders. The Company retired 1.6 million shares valued at $80 million in the nine months ended September 30, 2025 and 4 thousand shares valued at $210 thousand in the year ended December 31, 2024.
Current wording
The Company paid cash dividends on its common stock totaling $11 million in the three months ended March 31, 2026 and $47 million in the year ended December 31, 2025, which represent dividends per common share of $0.46 and $1.82, respectively. The Company's earnings have historically exceeded dividends paid to shareholders. The amount of earnings in excess of dividends provides the Company resources to finance growth and maintain appropriate levels of shareholders' equity. In the absence of profitable growth opportunities, the Company has at times repurchased and retired its common stock as another means to return capital to shareholders. The Company retired approximately 1 million shares valued at $51 million in the three months ended March 31, 2026 and 2 million shares valued at $104 million in the year ended December 31, 2025.
Previous wording
The Company's primary capital resource is shareholders' equity, which was $932 million at September 30, 2025 compared with $890 million at December 31, 2024. The Company's ratio of equity to total assets was 15.75% at September 30, 2025 and 14.65% at December 31, 2024.
Current wording
The Company's primary capital resource is shareholders' equity, which was $883 million at March 31, 2026 compared with $934 million at December 31, 2025. The Company's ratio of equity to total assets was 15.05% at March 31, 2026 and 15.66% at December 31, 2025.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
(1) Yields on securities and certain loans have been adjusted upward to an FTE basis in order to reflect the effect of income which is exempt from federal income taxation at the current statutory tax rate.
Current report — wording carried from elsewhere
The following summarizes the components of the Company's net interest margin (FTE) for the periods indicated.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Following is a summary of the components of net interest and loan fee income (FTE) for the periods indicated: