WESTAMERICA BANCORPORATION

Previous 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.

Current wording

Westamerica Bancorporation and subsidiaries (collectively, the “Company”) reported net income of $28.2 million or $1.22 diluted earnings per common share (“EPS”) in the three months ended September 30, 2026 compared with net income of $28.3 million or $1.12 EPS in the three months ended September 30, 2025. The Company reported net income of $82.9 million or $3.52 EPS for the nine months ended September 30, 2026, including a $300 thousand reversal of provision for credit losses compared with $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.

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 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”.

Current wording

The Federal Open Market Committee of the Federal Reserve Board (“FOMC”) raised the target federal funds rate by 0.25 percent to the range of 3.75 to 4.00 percent in September 2026. The FOMC press release in September 2026 stated, “Economic activity is expanding at a solid pace. While uncertainty remains elevated owing, in part, to geopolitical developments, domestic spending has been resilient. Productivity growth is strong, and capital investment is robust. Job gains have kept pace with the workforce, and the unemployment rate has changed little. Inflation remains elevated. Today’s policy action will support a timelier return to the Committee’s 2 percent goal. The Committee will deliver price stability.” The interest rate paid on reserve balances at the Federal Reserve Bank increased to 3.90 percent in September 2026. 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 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.

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. 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

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.

Current wording

Net income for the three months ended September 30, 2026 decreased $111 thousand compared with the three months ended September 30, 2025 primarily due to lower net interest and loan fee income (FTE) and higher noninterest expense, partially offset by higher noninterest income and lower tax provision (FTE). Net interest and loan fee income (FTE) decreased $324 thousand in the three months ended September 30, 2026 compared with the three months ended September 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 and higher yield on loans and 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 September 30, 2026 and in the three months ended September 30, 2025. Noninterest income for the three months ended September 30, 2026 increased compared with the three months ended September 30, 2025. Merchant processing services, trust fee income and service charges on deposit accounts were higher in the three months ended September 30, 2026, partially offset by lower debit card fee income. Noninterest expense for the three months ended September 30, 2026 increased compared with the three months ended September 30, 2025 primarily due to increases in occupancy and equipment and estimated limited partnership operating losses. The tax rate (FTE) was 25.9% for the three months ended September 30, 2026 and 26.0% for the three months ended September 30, 2025.

Previous 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.

Current wording

Net income for the nine months ended September 30, 2026 decreased $5.5 million compared with the nine months ended September 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 $5.9 million in the nine months ended September 30, 2026 compared with the nine months ended September 30, 2025 primarily due to lower average balances of loans, interest-bearing cash, and lower yield on interest-bearing cash, partially offset by higher average balances of investment securities and higher yield on loans. 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 nine months ended September 30, 2026, which was included in the three months ended March 31, 2026. The Company recorded a $550 thousand reversal of provision for credit losses in the nine months ended September 30, 2025, which was included in the three months ended March 31, 2025. Noninterest income for the nine months ended September 30, 2026 declined compared to the same period in 2025, primarily due to reduced debit card fee revenue, the recognition of unrealized losses on securities, and gains from bank-owned life insurance recorded in 2025. These impacts were partially offset by increased merchant processing services and trust fee income. Noninterest expense for the nine months ended September 30, 2026 increased compared with the nine months ended September 30, 2025 primarily due to higher salaries and related benefits, occupancy and equipment, outsourced data processing services, professional fees, estimated limited partnership operating losses and courier service expense, partially offset by lower other noninterest expense. The tax rate (FTE) was 25.7% for the nine months ended September 30, 2026 and 26.2% for the nine months ended September 30, 2025.

Previous 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).

Current wording

Net interest and loan fee income (FTE) decreased $324 thousand in the three months ended September 30, 2026 compared with the three months ended September 30, 2025 primarily due to lower average balances of loans (down $83 million) and interest-bearing cash (down $426 million) and lower yield on interest-bearing cash (down 0.68%), partially offset by higher average balances of investment securities (up $481 million), higher yield on loans (up 0.23%) and investment securities (up 0.11%).

Previous 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).

Current wording

Net interest and loan fee income (FTE) decreased $5.9 million in the nine months ended September 30, 2026 compared with the nine months ended September 30, 2025 primarily due to lower average balances of loans (down $81 million), interest-bearing cash (down $300 million), and lower yield on interest-bearing cash (down 0.73%), partially offset by higher average balances of investment securities (up $297 million) and higher yield on loans (up 0.18%).

Previous 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.

Current wording

The annualized yield on earning assets (FTE) was 4.07% and 4.02% in the three and nine months ended September 30, 2026, respectively, compared with 4.06% and 4.09% in the three and nine months ended September 30, 2025, respectively. The annualized net interest margin (FTE) was 3.81% and 3.78% in the three and nine months ended September 30, 2026, respectively, compared with 3.80% and 3.85% in the three and nine months ended September 30, 2025, respectively.

Previous 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.

Current wording

The Company’s annualized funding costs were 0.26% in the three months ended September 30, 2026 and September 30, 2025, and 0.24% in the nine months ended September 30, 2026 and September 30, 2025. Noninterest bearing deposits represented 45% and 46% of average deposits in the nine months ended September 30, 2026 and September 30, 2025, respectively. Average balances of checking and saving deposits accounted for 99% of average total deposits in the nine months ended September 30, 2026 and 98% in the nine months ended September 30, 2025.

Previous 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.”

Current wording

The Company’s yield on earning assets is primarily affected by collateralized loan obligations (CLOs), agency mortgage backed securities 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 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 target rate for the federal funds decreased 0.75% in September through December 2025 until the FOMC increased it by 0.25% in September 2026.

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 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.

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 nine months ended September 30, 2026 and September 30, 2025. The nine months ended September 30, 2026 and September 30, 2025 included a $300 thousand reversal of provision for credit losses recorded in the three months ended March 31, 2026 and a $550 thousand reversal recorded in the three months ended March 31, 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 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.

Current wording

Noninterest income for the three months ended September 30, 2026 increased compared with the three months ended September 30, 2025. Merchant processing services, trust fee income and service charges on deposit accounts were higher in the three months ended September 30, 2026, partially offset by lower debit card fee income.

Previous 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.

Current wording

Noninterest expense for the three months ended September 30, 2026 increased compared with the three months ended September 30, 2025 primarily due to increases in occupancy and equipment and estimated limited partnership operating losses.

Previous wording

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.

Current wording

Noninterest expense for the nine months ended September 30, 2026 increased compared with the nine months ended September 30, 2025 primarily due to higher salaries and related benefits, occupancy and equipment, outsourced data processing services, professional fees, estimated limited partnership operating losses and courier service expense, partially offset by lower other noninterest expense.

Previous 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.

Current wording

The Company’s income tax provision (FTE) was $9.9 million and $28.7 million for the three and nine months ended September 30, 2026, respectively compared with $9.9 million and $31.3 million for the three and nine months ended September 30, 2025, respectively. The effective tax rates (FTE) were 25.9% and 25.7%, for the three and nine months ended September 30, 2026, respectively, compared with 26.0% and 26.2%, for the three and nine months ended September 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 $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.

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 $247 thousand at September 30, 2026 and $466 thousand at December 31, 2025. The Company had no marketable equity securities not held for trading at September 30, 2026 and December 31, 2025.

Previous wording

Management continually evaluates the Company’s investment securities portfolio in response to established asset/liability management objectives, changing market conditions that could affect profitability, liquidity, and the level of interest rate risk to which the Company is exposed. These evaluations may cause Management to change the level of funds the Company deploys into investment securities and change the composition of the Company’s investment securities portfolio.

Current wording

Management continually evaluates the Company’s investment debt securities portfolio in response to established asset/liability management objectives, changing market conditions that could affect profitability, liquidity, and the level of interest rate risk to which the Company is exposed. These evaluations may cause Management to change the level of funds the Company deploys into investment securities and change the composition of the Company’s investment securities portfolio.

Previous wording

At June 30, 2026, substantially all of the Company’s investment securities were investment grade as rated by one or more major rating agencies. In addition to monitoring credit rating agency evaluations, Management performs its own evaluations regarding the credit worthiness of the issuer or the securitized assets underlying asset-backed securities. The Company’s procedures for evaluating investments in securities are in accordance with guidance issued by the Board of Governors of the Federal Reserve System, “Investing in Securities without Reliance on Nationally Recognized Statistical Rating Agencies” (SR 12-15) and other regulatory guidance.

Current wording

At September 30, 2026, substantially all of the Company’s investment debt securities were investment grade as rated by one or more major rating agencies. In addition to monitoring credit rating agency evaluations, Management performs its own evaluations regarding the credit worthiness of the issuer or the securitized assets underlying asset-backed securities. The Company’s procedures for evaluating investments in debt securities are in accordance with guidance issued by the Board of Governors of the Federal Reserve System, “Investing in Securities without Reliance on Nationally Recognized Statistical Rating Agencies” (SR 12-15) and other regulatory guidance.

Previous 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:

Current wording

The Company’s $152 million (fair value) in collateralized loan obligations at September 30, 2026, consist of investments in 18 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 $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.

Current wording

Management considers the $10.5 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, 2026.

Previous 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.

Current wording

See Note 4 “Loans, Allowance for Credit Losses and Other Real Estate Owned” 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 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.

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 September 30, 2026, the Company had $15 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 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.

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 nine months ended September 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 $4,773 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.

Current wording

Total deposits were $4,816 million at September 30, 2026 and $4,840 million at December 31, 2025. Total time deposits were $60 million at September 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 September 30, 2026, estimated federally uninsured total deposits and time deposits were $2,455 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 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.

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 September 30, 2026, the Company had $322,510 thousand in cash balances. During the twelve months ending September 30, 2027, the Company expects to receive $359,000 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, 2026, the Company had access to borrowing from the Federal Reserve Bank up to $767,994 thousand based on collateral pledged at September 30, 2026. Additionally, the Company had access to a $60,000 thousand line of credit with a correspondent bank at September 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 $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.

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 $34 million for the nine months ended September 30, 2026 and $47 million for the year ended December 31, 2025 and retire common stock in the amounts of $95 million in the nine months ended September 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 $231 million at September 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 11.1% 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.

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 11.3% (annualized) for the nine months ended September 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 $14 million through the exercise of stock options in the nine months ended September 30, 2026 and $376 thousand in the year ended December 31, 2025.

Previous 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.

Current wording

The Company paid cash dividends on its common stock totaling $34 million in the nine months ended September 30, 2026 and $47 million in the year ended December 31, 2025, which represent dividends per common share of $1.42 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 $95 million in the nine months ended September 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 $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.

Current wording

The Company's primary capital resource is shareholders' equity, which was $790 million at September 30, 2026 compared with $934 million at December 31, 2025. The $144 million reduction in shareholders’ equity from December 31, 2026 to September 30, 2026 was primarily attributable to higher unrealized losses on debt securities available for sale. The Company's ratio of equity to total assets was 13.63% at September 30, 2026 and 15.66% at December 31, 2025.