WESTAMERICA BANCORPORATION

Previous wording

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 wording

Westamerica Bancorporation and subsidiaries (collectively, the “Company”) reported net income of $27.4 million or $1.17 diluted earnings per common share (“EPS”) in the three months ended, June 30, 2026 compared with net income of $29.1 million or $1.12 EPS in the three months ended June 30, 2025. The Company reported net income of $54.7 million or $2.30 EPS for the six months ended June 30, 2026. The Company reported net income of $60.1 million or $2.29 EPS for the six months ended June 30, 2025.

Previous 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”.

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 June 2026 after a 0.25 percent cut in December 2025. The FOMC press release in June 2026 stated, “Economic activity is expanding at a solid pace despite elevated uncertainty that owes, in part, to the conflict in the Middle East. Productivity growth and capital investment are strong. Job gains have kept pace with the workforce, and the unemployment rate has changed little. Inflation remains elevated relative to the Committee’s 2 percent goal, in part reflecting supply shocks that have driven price increases in certain sectors, including energy. The Committee will deliver price stability.” 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

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.

Current wording

Net income for the three months ended June 30, 2026 decreased $1.7 million compared with the three months ended June 30, 2025 primarily due to lower net interest and loan fee income (FTE) and higher noninterest expense, partially offset by lower tax provision (FTE). Net interest and loan fee income (FTE) decreased $1.9 million in the three months ended June 30, 2026 compared with the three months ended June 30, 2025 primarily 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 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 June 30, 2026 and in the three months ended June 30, 2025. Noninterest income for the three months ended June 30, 2026 was relatively equal compared with the three months ended June 30, 2025. Merchant processing services and trust fee income was higher in the three months ended June 30, 2026, partially offset by lower debit card fee income and the three months ended June 30, 2025 included bank owned life insurance gains. Noninterest expense for the three months ended June 30, 2026 increased compared with the three months ended June 30, 2025 primarily due to increases in salaries and related benefits, professional fees and estimated limited partnership operating losses. The tax rate (FTE) was 25.8% for the three months ended June 30, 2026 and 26.1% for the three months ended June 30, 2025.

Previous wording

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 wording

Net income for the six months ended June 30, 2026 decreased $5.4 million compared with the six months ended June 30, 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 $5.6 million in the six months ended June 30, 2026 compared with the six months ended June 30, 2025 primarily due to lower average balances of loans, interest-bearing cash, and lower yield on investment securities and 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 six months ended June 30, 2026, which was included in the first quarter of 2026. The Company recorded a $550 thousand reversal of provision for credit losses in the six months ended June 30, 2025, which was included in the first quarter of 2025. Noninterest income for the six months ended June 30, 2026 decreased compared with the six months ended June 30, 2025 primarily due to lower debit card fees, recognition of unrealized securities losses and the six months ended June 30, 2025 included bank owned life insurance gains, partially offset by higher merchant processing services and trust fee income. The decrease in noninterest income in the six months ended June 30, 2026 compared with the six months ended June 30, 2025 was partially offset by increases in merchant processing services and trust fees. Noninterest expense for the six months ended June 30, 2026 increased compared with the six months ended June 30, 2025 primarily due to higher salaries and related benefits, occupancy and equipment, outsourced data processing services, professional fees and estimated limited partnership operating losses, partially offset by lower courier service expense. The tax rate (FTE) was 25.6% for the six months ended June 30, 2026 and 26.2% for the six months ended June 30, 2025.

Previous 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).

Current wording

Net interest and loan fee income (FTE) decreased $1.9 million in the three months ended June 30, 2026 compared with the three months ended June 30, 2025 primarily due to lower average balances of loans (down $79 million) and interest-bearing cash (down $329 million) and lower yield on interest-bearing cash (down 0.75%), partially offset by higher average balances of investment securities (up $333 million).

Previous wording

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 wording

Net interest and loan fee income (FTE) decreased $5.6 million in the six months ended June 30, 2026 compared with the six months ended June 30, 2025 primarily due to lower average balances of loans (down $80 million) and interest-bearing cash (down $236 million) and lower yield on investment securities (down 0.04%) and interest-bearing cash (down 0.75%), partially offset by higher average balances of investment securities (up $204 million).

Previous wording

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 wording

The annualized yield on earning assets (FTE) was 4.01% in the three months ended June 30, 2026 and 3.99% in the six months ended June 30, 2026 compared with 4.07% in the three months ended June 30, 2025 and 4.11% in the six months ended June 30, 2025. The annualized net interest margin (FTE) was 3.77% in the three months ended June 30, 2026 and 3.75% in the six months ended June 30, 2026 compared with 3.85% in the three months ended June 30, 2025 and 3.87% in the six months ended June 30, 2025.

Previous 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.

Current wording

The Company’s annualized funding costs were 0.24% in the three and six months ended June 30, 2026 compared with 0.22% and 0.24% in the three and six months ended June 30, 2025, respectively. Noninterest bearing deposits represented 46% of average deposits in the six months ended June 30, 2026 and June 30, 2025. Average balances of checking and saving deposits accounted for 99% of average total deposits in the six months ended June 30, 2026 and 98% in the six months ended June 30, 2025.

Previous 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.”

Current wording

The Company’s yield on earning assets during the three and six months ended June 30, 2026 decreased compared with the three and six months ended June 30, 2025. The Company’s yield on earning assets has been primarily affected by collateralized loan obligations (CLOs), held in the debt securities available for sale portfolio, and interest-bearing cash. 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 balance and yield of CLOs for the three and six months ended June 30, 2026 was $247 million yielding 5.61% and $298 million yielding 5.63%, respectively. The average balance and yield of CLOs for the three and six months ended June 30, 2025 was $793 million yielding 6.19% and $854 million yielding 6.25%, respectively. The average balance and yield of agency mortgage backed securities for the three and six months ended June 30, 2026 was $1,280 million yielding 4.74% and $1,171 million yielding 4.70%, respectively. The average balance and yield of agency mortgage backed securities for the three and six months ended June 30, 2025 was $325 million yielding 3.25% and $318 million yielding 3.15%, 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 of interest-bearing cash for the three and six months ended June 30, 2026 was $325 million yielding 3.65% and $395 million yielding 3.65%, respectively. The average balance and yield of interest-bearing cash for the three and six months ended June 30, 2025 was $654 million yielding 4.40% and $632 million yielding 4.40%, 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 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.

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 provided no provision for credit losses in the three and six months ended June 30, 2026 and June 30, 2025. The six months ended June 30, 2026 and June 30, 2025 included a $300 thousand reversal of provision for credit losses recorded in the three months ended June 30, 2026 and a $550 thousand reversal recorded in the three months ended June 30, 2025, respectively. 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 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 wording

Noninterest expense for the three months ended June 30, 2026 increased compared with the three months ended June 30, 2025 primarily due to increases in salaries and related benefits, professional fees and estimated limited partnership operating losses.

Previous wording

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 wording

The Company’s income tax provision (FTE) was $9.5 million for the three months ended June 30, 2026 and $18.9 million for the six months ended June 30, 2026 compared with $10.3 million for the three months ended June 30, 2025 and $21.4 million for the six months ended June 30, 2025. The effective tax rates (FTE) were 25.8% and 25.6%, for the three and six months ended June 30, 2026, respectively, compared with 26.1% and 26.2%, for the three and six months ended June 30, 2025, respectively.

Previous 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.

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 $255 thousand at June 30, 2026 and $466 thousand at December 31, 2025. The Company had no marketable equity securities not held for trading at June 30, 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 $4.4 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.

Current wording

Management manages the investment debt 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 debt securities portfolio was $4.4 billion at June 30, 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 June 30, 2026 and December 31, 2025. Debt securities available for sale are listed at fair value.

Previous 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:

Current wording

The Company’s $208 million (fair value) in collateralized loan obligations at June 30, 2026, consist of investments in 24 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

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.

Current wording

Management considers the $10.8 million allowance for credit losses on loans to be adequate as a reserve against current expected credit losses in the loan portfolio as of June 30, 2026.

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 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.

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 June 30, 2026, the Company had $13 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 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.

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 six months ended June 30, 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 $4,784 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.

Current wording

Total deposits were $4,773 million at June 30, 2026 and $4,840 million at December 31, 2025. Total time deposits were $62 million at June 30, 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 June 30, 2026, estimated federally uninsured total deposits and time deposits were $2,368 million and $3 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 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.

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 June 30, 2026, the Company had $301,934 thousand in cash balances. During the twelve months ending June 30, 2027, the Company expects to receive $386,000 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 June 30, 2026, the Company had access to borrowing from the Federal Reserve Bank up to $761,326 thousand based on collateral pledged at June 30, 2026. Additionally, the Company had access to a $60,000 thousand line of credit with a correspondent bank at June 30, 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 $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.

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 $23 million for the six months ended June 30, 2026 and $47 million for the year ended December 31, 2025 and retire common stock in the amounts of $93 million in the six months ended June 30, 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 $210 million at June 30, 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 11.0% 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.

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 11.1% for the six months ended June 30, 2026 and 11.2% for the year ended December 31, 2025. The Company also raises capital as employees exercise stock options. The Company raised $6 million through the exercise of stock options in the six months ended June 30, 2026 and $376 thousand in the year ended December 31, 2025.

Previous 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.

Current wording

The Company paid cash dividends on its common stock totaling $23 million in the six months ended June 30, 2026 and $47 million in the year ended December 31, 2025, which represent dividends per common share of $0.94 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 2 million shares valued at $93 million in the six months ended June 30, 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 $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.

Current wording

The Company's primary capital resource is shareholders' equity, which was $853 million at June 30, 2026 compared with $934 million at December 31, 2025. The Company's ratio of equity to total assets was 14.70% at June 30, 2026 and 15.66% at December 31, 2025.