CVB FINANCIAL CORP

Previous wording

Allowance for Credit Losses (“ACL”) — Our allowance for credit losses is based upon lifetime loss rate models developed from an estimation framework that uses historical lifetime loss experiences to derive loss rates at a collective pool level. We measure the expected credit losses on a collective (pooled) basis for those loans that share similar risk characteristics. We have three collective loan pools: Commercial Real Estate, Commercial and Industrial, and Consumer. Our ACL amounts are largely driven by portfolio characteristics, including loss history and various risk attributes, and the economic outlook for certain macroeconomic variables. Risk attributes for commercial real estate loans include original loan to value ratios, origination year, loan seasoning, and macroeconomic variables that include GDP growth, commercial real estate price index and unemployment rate. Risk attributes for commercial and industrial loans include internal risk ratings, borrower industry sector, loan credit spreads and macroeconomic variables that include unemployment rate and BBB spread. The macroeconomic variables for Consumer include unemployment rate and GDP. The Commercial Real Estate methodology is applied over commercial real estate loans, a portion of construction loans, and a portion of SBA loans. The Commercial and Industrial methodology is applied over a substantial portion of the Company’s commercial and industrial loans, all dairy & livestock and agribusiness loans, municipal lease receivables, as well as the remaining portion of SBA loans (excluding Paycheck Protection Program (“PPP”) loans). The Consumer methodology is applied to SFR mortgage loans, consumer loans, as well as the remaining construction loans. In addition to determining the quantitative life of loan loss rate to be applied against the amortized cost basis of the portfolio segments, management reviews current conditions and forecasts to determine whether adjustments are needed to ensure that the life of loan loss rates reflect both the current state of the portfolio, and expectations for macroeconomic changes. Our methodology for assessing the appropriateness of the allowance is reviewed on a regular basis and considers overall risks in the Bank’s loan portfolio.

Current wording

Allowance for Credit Losses (“ACL”) — Our allowance for credit losses is based upon lifetime loss rate models developed from an estimation framework that uses historical lifetime loss experiences to derive loss rates at a collective pool level. We measure the expected credit losses on a collective (pooled) basis for those loans that share similar risk characteristics. We have three collective loan pools: Commercial Real Estate, Commercial and Industrial, and Consumer. Our ACL amounts are largely driven by portfolio characteristics, including loss history and various risk attributes, and the economic outlook for certain macroeconomic variables. Risk attributes for commercial real estate loans include original loan to value ratios, origination year, loan seasoning, and macroeconomic variables that include GDP growth, commercial real estate price index and unemployment rate. Risk attributes for commercial and industrial loans include internal risk ratings, borrower industry sector, loan credit spreads and macroeconomic variables that include unemployment rate and BBB spread. The macroeconomic variables for Consumer include unemployment rate and GDP. The Commercial Real Estate methodology is applied over commercial real estate loans, a portion of construction loans, and a portion of SBA loans. The Commercial and Industrial methodology is applied over a substantial portion of the Company’s commercial and industrial loans, all dairy & livestock and agribusiness loans, municipal lease receivables, as well as the remaining portion of SBA loans. The Consumer methodology is applied to SFR mortgage loans, consumer loans, as well as the remaining construction loans. In addition to determining the quantitative life of loan loss rate to be applied against the amortized cost basis of the portfolio segments, management reviews current conditions and forecasts to determine whether adjustments are needed to ensure that the life of loan loss rates reflect both the current state of the portfolio, and expectations for macroeconomic changes. Our methodology for assessing the appropriateness of the allowance is reviewed on a regular basis and considers overall risks in the Bank’s loan portfolio.

Previous wording

Valuation and Recoverability of Goodwill — Goodwill represented $765.8 million of our $15.15 billion in total assets as of December 31, 2024. The Company has one reportable segment. Goodwill has an indefinite useful life and is not amortized, but is tested for impairment at least annually, or more frequently, if events and circumstances exist that indicate that a goodwill impairment test should be performed. Such events and circumstances may include among others, a significant adverse change in legal factors or in the general business climate, significant decline in our stock price and market capitalization, unanticipated competition, the testing for recoverability of a significant asset group within the reporting unit, and an adverse action or assessment by a regulating body. Any adverse change in these factors could have a significant impact on the recoverability of goodwill and could have a material impact on our consolidated financial statements.

Current wording

Valuation and Recoverability of Goodwill — Goodwill represented $765.8 million of our $15.63 billion in total assets as of December 31, 2025. The Company has one reportable segment. Goodwill has an indefinite useful life and is not amortized, but is tested for impairment at least annually, or more frequently, if events and circumstances exist that indicate that a goodwill impairment test should be performed. Such events and circumstances may include among others, a significant adverse change in legal factors or in the general business climate, significant decline in our stock price and market capitalization, unanticipated competition, the testing for recoverability of a significant asset group within the reporting unit, and an adverse action or assessment by a regulating body. Any adverse change in these factors could have a significant impact on the recoverability of goodwill and could have a material impact on our consolidated financial statements.

Previous wording

For the year ended December 31, 2024, we reported net earnings of $200.7 million, compared with $221.4 million for 2023, a $20.7 million, or 9.36%, decrease from the prior year. Diluted earnings per share of $1.44 for 2024, decreased by $0.15, or 9.43%, when compared to $1.59 for 2023. During 2023 market interest rates rapidly increased and stayed elevated through 2024. Net earnings were negatively impacted by a decrease in net interest income, as the cost of our interest-bearing liabilities increased faster than the rising yield on our interest-earning assets, primarily as a result of the higher short term market interest rates controlled by the Federal Reserve. The decline in net interest income was also negatively impacted by increased levels of higher-cost borrowings that were used to manage our liquidity during the uncertain times following the banking crisis in the spring of 2023 and resulting declines in our level of deposits. Net earnings of $200.7 million produced a return on average equity (“ROAE”) of 9.35%, a return on average tangible common equity (“ROATCE”) of 14.95% and a return on average assets (“ROAA”) of 1.24%. Our net interest margin, tax equivalent (“NIM”), was 3.09% for 2024, while our efficiency ratio was 46.6%.

Current wording

For the year ended December 31, 2025, we reported net earnings of $209.3 million, compared with $200.7 million for 2024, a $8.6 million, or 4.28%, increase from the prior year. Diluted earnings per share of $1.52 for 2025, increased by $0.08, or 5.61%, when compared to $1.44 for 2024. Market interest rates stayed elevated throughout the first eight months of 2024 until the Federal Reserve initiated a series of rate cuts in September 2024. This shift in the interest rate environment materially affected the Company's net interest income and overall earnings during 2025. Net earnings benefited from higher net interest income, driven primarily by the expansion in net interest margin. The improvement reflected a reduction in overall cost of funds, particularly on borrowings, as a result of the Company's balance sheet deleveraging efforts in late 2024. Net earnings of $209.3 million produced a return on average equity (“ROAE”) of 9.26%, a return on average tangible common equity (“ROATCE”) of 14.28% and a return on average assets (“ROAA”) of 1.36%. Our net interest margin, tax equivalent (“NIM”), was 3.36% for 2025, while our efficiency ratio was 46.0%.

Previous wording

Net interest income of $447.3 million for the year ended December 31, 2024, decreased $40.6 million, or 8.33%, compared to the same period of 2023. Interest income grew by $23.8 million, or 3.92%, in 2024, offset by a $64.4 million increase in interest expense year-over-year. Cost of funds for 2024 increased by 49 basis points over 2023, while the earning asset yield grew by 25 basis points. Average earning assets declined by $275.6 million year-over-year.

Current wording

Net interest income of $460.3 million for the year ended December 31, 2025, increased $12.9 million, or 2.89%, compared to the same period of 2024. Interest income decreased by $36.8 million, or 5.84%, in 2025, while interest expense decreased $49.8 million year-over-year. Cost of funds for 2025 decreased by 29 basis points over 2024, while the earning asset yield decreased by two basis points. Average earning assets declined by $798.3 million year-over-year.

Previous wording

Noninterest income of $54.5 million for the year ended December 31, 2024, decreased $4.8 million, or 8.18%, compared to the same period of 2023. Noninterest income in 2024 included a total pre-tax loss of $28.3 million from the sale of $467 million of AFS securities partially offset by a pre-tax gain of $25.9 million from the sale-leaseback of four buildings, while 2023 included a $2.6 million gain from an equity fund distribution. Trust and investment income for 2024 grew by $1.2 million, or 9.34%, from the prior year.

Current wording

Noninterest income of $55.2 million for the year ended December 31, 2025, increased by $0.7 million, or 1.28%, compared to the same period of 2024. Trust and investment income for 2025 grew by $1.3 million, or 9.50%, from the prior year. Noninterest income in 2025 included a $11.0 million in losses on the sale of AFS investment securities, a $6.0 million legal settlement, and a $2.3 million gain in OREO, while 2024 included a total pre-tax loss of $28.3 million from the sale of $467 million of AFS securities partially offset by a pre-tax gain of $25.9 million from the sale-leaseback of four buildings.

Previous wording

At December 31, 2024, total assets of $15.15 billion decreased by $867.3 million, or 5.41%, from total assets of $16.02 billion at December 31, 2023. Interest-earning assets of $13.53 billion at December 31, 2024 decreased by $934.2 million, or 6.46%, when compared with $14.46 billion at December 31, 2023. The decrease in interest-earning assets was primarily due to a $499.0 million decrease in investment securities, a $368.5 million decrease in total loans, and a decrease of $59.1 million in interest-earning balances due from the Federal Reserve.

Current wording

At December 31, 2025, total assets of $15.63 billion increased by $477.4 million, or 3.15%, from total assets of $15.15 billion at December 31, 2024. Interest-earning assets of $13.99 billion at December 31, 2025 increased by $463.0 million, or 3.42%, when compared with $13.53 billion at December 31, 2024. The increase in interest-earning assets was primarily due to a $218.1 million increase in interest-earning balances due from the Federal Reserve, a $162.8 million increase in total loans, and a $31.7 million increase in investment securities.

Previous wording

Total investment securities were $4.92 billion at December 31, 2024, a decrease of $499.0 million, or 9.20%, from $5.42 billion at December 31, 2023. The decrease was primarily due to principal repayments and maturities, as well as sales of securities exceeding purchases during the year. At December 31, 2024, investment securities held-to-maturity (“HTM”) totaled $2.38 billion. HTM securities decreased by $85.0 million, or 3.45% from $2.46 billion at December 31, 2023. At December 31, 2024, investment securities AFS totaled $2.54 billion, inclusive of a pre-tax net unrealized loss of $447.7 million. AFS securities decreased by $414.0 million, or 14.01%, from $2.96 billion at December 31, 2023, including the impact of the sale of $467 million of AFS securities in the third and fourth quarters. The sale of these securities resulted in a net pre-tax loss of $28.3 million. The securities sold had an average yield of less than three percent. The net cash proceeds from the sale of these securities was partially utilized to purchase $385 million of AFS securities in the fourth quarter of 2024, with yields that exceeded five percent. Our tax equivalent yield on our investment portfolio grew from 2.52% for 2023 to 2.65% for 2024. The 13 basis point increase in the yield on investment securities from the prior year was impacted by the positive spread generated from fair-value hedging of certain AFS securities, in which the Company receives daily SOFR and paid a weighted average fixed cost of approximately 3.8% during 2024.

Current wording

Total investment securities were $4.95 billion at December 31, 2025, an increase of $31.7 million, or 0.64%, from $4.92 billion at December 31, 2024. At December 31, 2025, investment securities HTM totaled $2.27 billion. HTM securities decreased by $109.3 million, or 4.59% from $2.38 billion at December 31, 2024. At December 31, 2025, investment securities AFS totaled $2.68 billion, inclusive of a pre-tax net unrealized loss of $299.2 million. AFS securities increased by $141.0 million, or 5.54%, from $2.54 billion at December 31, 2024, driven primarily by $482.5 million in purchases of AFS securities and an improvement of $128.9 million in AFS investment securities mark-to-market unrealized loss, partially offset by principal payments and maturities, as well as sales of securities of $92.9 million during the year, which resulted in a pre-tax loss of $11.0 million. The securities sold had an average yield of less than three percent. Our tax equivalent yield on our investment portfolio remained the same at 2.65% for 2024 and 2025.

Previous wording

In June 2023, fair value hedging transactions were executed in which $1 billion notional pay-fixed interest rate swaps were consummated with maturities ranging from four to five years, wherein the Company pays a weighted average fixed rate of approximately 3.8% and receives daily SOFR. In December 2024, we terminated one of these swaps which had a notional value of $300 million, a maturity date of June 2027 and a fixed rate of 3.95%. The remaining $700 million notional pay-fixed interest rate swaps had a fair value which totaled $7.2 million and was reflected as an asset at December 31, 2024. The fair value of these instruments totaled $6.9 million and were reflected as a liability at December 31, 2023. These instruments generated interest income of $14.4 million for the year ended December 31, 2024. Refer to Note 18 –Derivative Financial Instruments of the notes to the consolidated financial statements of this report for additional information.

Current wording

Fair value hedging transactions with $700 million notional pay-fixed interest rate swaps, had a fair value which totaled $8.7 million and was reflected as a liability at December 31, 2025. The fair value of these instruments totaled $7.2 million and were reflected as a asset at December 31, 2024. These instruments generated interest income of $4.3 million for 2025, a decrease of $10.1 million from interest income of $14.4 million for 2024. Refer to Note 18 –Derivative Financial Instruments of the notes to the consolidated financial statements of this report for additional information.

Previous wording

The allowance for credit losses totaled $80.1 million at December 31, 2024, compared to $86.8 million at December 31, 2023. At December 31, 2024, ACL as a percentage of total loans and leases outstanding was 0.94%. This compares to 0.98% at December 31, 2023. The changes in our allowance over the last few quarters have been primarily due to lower loan balances outstanding and changes in our economic forecast. Our economic forecast continues to be a blend of multiple forecasts produced by Moody’s. The resulting economic forecast reflects slower GDP growth of less than 2% for 2025 though 2027. Commercial Real Estate values are forecasted to continue their decline in 2025, with meaningful growth in values not occurring until 2027. Unemployment is forecasted to exceed 5% throughout the near term forecast periods, with a decrease below 5% in 2028.

Current wording

The allowance for credit losses totaled $77.2 million at December 31, 2025, compared to $80.1 million at December 31, 2024. At December 31, 2025, ACL as a percentage of total loans and leases outstanding was 0.89%. This compares to 0.94% at December 31, 2024. The decrease in the allowance was primarily the result of the successful resolution of certain nonperforming loans, with nonaccrual loans declining by $23.1 million and positive credit migration resulting in a $36.8 million decrease in classified loans. The allowance was not materially impacted by changes in our economic forecast as of December 31, 2025. Our economic forecast continues to be a blend of multiple forecasts produced by Moody’s. The resulting economic forecast reflects GDP growth of less than 2% for 2026 though 2028. Commercial Real Estate values are forecasted to continue their decline in 2026, with growth in values returning in 2027. Unemployment is forecasted to exceed 5% from early 2026 until the second half of 2028.

Previous wording

Noninterest-bearing deposits were $7.04 billion at December 31, 2024, a decrease of $169.1 million, or 2.35% when compared to $7.21 billion at December 31, 2023. At December 31, 2024, noninterest-bearing deposits were 58.90% of total deposits, compared to 63.03% at December 31, 2023.

Current wording

Noninterest-bearing deposits were $6.80 billion at December 31, 2025, a decrease of $236.4 million, or 3.36% when compared to $7.04 billion at December 31, 2024. At December 31, 2025, noninterest-bearing deposits were 56.33% of total deposits, compared to 58.90% at December 31, 2024.

Previous wording

Interest-bearing deposits were $4.91 billion at December 31, 2024, an increase of $683.8 million, or 16.18%, when compared to $4.23 billion at December 31, 2023. Customer repurchase agreements totaled $261.9 million at December 31, 2024, compared to $271.6 million at December 31, 2023. Our average cost of total deposits including customer repurchase agreements for 2024 was 0.90%, compared to 0.41% for 2023.

Current wording

Interest-bearing deposits were $5.27 billion at December 31, 2025, an increase of $360.0 million, or 7.33%, when compared to $4.91 billion at December 31, 2024. Customer repurchase agreements totaled $490.6 million at December 31, 2025, compared to $261.9 million at December 31, 2024. Our average cost of total deposits including customer repurchase agreements for 2025 was 0.88%, compared to 0.90% for 2024.

Previous wording

The Company’s total equity was $2.19 billion at December 31, 2024. This represented an overall increase of $108.3 million from total equity of $2.08 billion at December 31, 2023. Increases to equity included $200.7 million in net earnings and an $11.5 million increase in other comprehensive income, that were partially offset by $111.9 million in cash dividends. We did not repurchase any stock during 2024. In 2023, we repurchased 791,800 shares of common stock, at an average repurchase price of $23.43, totaling $18.5 million. Our tangible book value per share at December 31, 2024 was $10.10, compared to $9.31 at December 31, 2023.

Current wording

The Company’s total equity was $2.30 billion at December 31, 2025. This represented an overall increase of $108.9 million from total equity of $2.19 billion at December 31, 2024. Increases to equity included $209.3 million in net earnings and a $84.4 million increase in other comprehensive income, that were partially offset by $110.3 million in cash dividends. For the year ended December 31, 2025, we repurchased, under our stock repurchase plan, 4,321,777 shares at an average price of $18.60, totaling $80.4 million. We did not repurchase any stock during 2024. Our tangible book value per share at December 31, 2025 was $11.24, compared to $10.10 at December 31, 2024, an 11.29% increase.

Previous wording

Our capital ratios under the capital framework referred to as Basel III remain well above regulatory requirements. As of December 31, 2024, the Company’s Tier 1 leverage capital ratio totaled 11.46%, our common equity Tier 1 ratio totaled 16.24%, our Tier 1 risk-based capital ratio totaled 16.24%, and our total risk-based capital ratio totaled 17.06%. Refer to our Analysis of Financial Condition — Capital Resources.

Current wording

Our capital ratios under the capital framework referred to as Basel III remain well above regulatory requirements. As of December 31, 2025, the Company’s Tier 1 leverage capital ratio totaled 11.62%, our common equity Tier 1 ratio totaled 15.89%, our Tier 1 risk-based capital ratio totaled 15.89%, and our total risk-based capital ratio totaled 16.66%. Refer to our Analysis of Financial Condition — Capital Resources.

Previous wording

Suncrest had seven branch locations and two loan production offices in California’s Central Valley and the Sacramento area, which opened as Citizens Business Bank locations on January 10, 2022. The integration of Suncrest, including the conversion of core systems in the first quarter of 2022, was completed with the consolidation of two banking centers during the second quarter of 2022. For the year ended December 31, 2022, the Company incurred non-recurring merger related expenses associated with the Suncrest acquisition of $6.0 million.

Current wording

For the year ended December 31, 2025, the Company incurred non-recurring merger related expenses associated with the Heritage acquisition of $1.6 million.

Previous wording

Includes tax equivalent (TE) adjustments utilizing a federal statutory rate of 21% in effect for the years ended December 31, 2024, 2023 and 2022. The non-TE rates for total investment securities was 2.61%, 2.48% and 2.00% for the years ended December 31, 2024, 2023 and 2022, respectively.

Current wording

Includes tax equivalent (TE) adjustments utilizing a federal statutory rate of 21% in effect for the years ended December 31, 2025, 2024 and 2023. The non-TE rates for total investment securities was 2.61%, 2.61% and 2.48% for the years ended December 31, 2025, 2024 and 2023, respectively.

Previous wording

Includes loan fees of $2.9 million, $3.1 million and $8.1 million for the years ended December 31, 2024, 2023 and 2022, respectively. Prepayment penalty fees of $2.6 million, $2.5 million and $6.9 million are included in interest income for the years ended December 31, 2024, 2023 and 2022, respectively.

Current wording

Includes loan fees of $3.1 million, $2.9 million and $3.1 million for the years ended December 31, 2025, 2024 and 2023, respectively. Prepayment penalty fees of $3.9 million, $2.6 million and $2.5 million are included in interest income for the years ended December 31, 2025, 2024 and 2023, respectively.

Previous wording

Total interest income and fees on loans for 2023 of $448.3 million increased $59.1 million, or 15.19%, when compared to 2022. This increase in income was partly due to growth in average loans of $216.5 million, as well as higher loan yields. Loan yields were 5.04% for 2023, compared to 4.49% for 2022. Discount accretion on acquired loans decreased by $4.0 million and interest and fee income from PPP loans declined by $5.4 million compared to 2022. After excluding discount accretion and the impact from PPP loans, our loan yields grew by 63 basis points compared to 2022. Loan yields grew year-over-year, as rising interest rates contributed to an increase in yields on loans indexed to the Prime rate or other short-term indexes, as well as higher rates from newly originated loans.

Current wording

Total interest income and fees on loans for 2025 of $446.2 million decreased $9.6 million, or 2.11%, when compared to 2024. This decrease in income was due to a decrease in average loans of $242.5 million partially offset by a higher loan yield. Loan yields were 5.29% for 2025, compared to 5.26% for 2024. Loan yields grew year-over-year, due to higher rates from adjustable rate loans and newly originated loans, as well as an increase in interest paid on nonaccrual loans.

Previous wording

In general, we stop accruing interest on a loan after its principal or interest becomes 90 days or more past due. When a loan is placed on nonaccrual, all interest previously accrued but not collected is charged against earnings. There was no interest income that was accrued and not reversed on nonaccrual loans at December 31, 2023 and 2022. As of December 31, 2023 and 2022, we had $21.3 million and $4.9 million of nonaccrual loans, respectively.

Current wording

In general, we stop accruing interest on a loan after its principal or interest becomes 90 days or more past due. When a loan is placed on nonaccrual, all interest previously accrued but not collected is charged against earnings. There was no interest income that was accrued and not reversed on nonaccrual loans at December 31, 2025 and 2024. As of December 31, 2025 and 2024, we had $4.7 million and $27.8 million of nonaccrual loans, respectively.

Previous wording

We recorded recapture of provision for credit losses of $3.0 million in 2024, and experienced credit charge-offs of $4.4 million and recoveries of $0.7 million, resulting in net charge-offs of $3.7 million. The year-to-date recapture of provision for credit losses of $3.0 million was the result of a decrease in loan balances outstanding at December 31, 2024 as compared to the prior year-end and an overall decrease in projected loss rates from 0.98% at the end of 2023 to 0.94% at December 31, 2024. For 2023, we recorded $2.0 million in provision for credit losses, and experienced credit charge-offs of $405,000 and total recoveries of $130,000, resulting in net charge-offs of $275,000. The modest changes in projected loss rates continue to be driven primarily by economic forecast changes to various macroeconomic variables such as GDP growth, commercial real estate values and the rate of unemployment. Refer to the discussion of “Allowance for Credit Losses” in Item 7 –Management’s Discussion and Analysis of Financial Condition and Results of Operations contained herein for discussion concerning observed changes in the credit quality of various components of our loan portfolio as well as changes and refinements to our methodology.

Current wording

We recorded a recapture of credit losses of $3.5 million in 2025, and experienced credit charge-offs of $642,000 and recoveries of $1.2 million, resulting in net recoveries of $539,000. The year-to-date recapture of credit losses of $3.5 million was the result of continued improvement in credit quality and lower nonperforming loans at December 31, 2025 as compared to the prior year-end and an overall decrease in projected loss rates from 0.94% at the end of 2024 to 0.89% at December 31, 2025. For 2024, we recorded $3.0 million recapture of credit losses, and experienced credit charge-offs of $4.4 million and total recoveries of $688,000, resulting in net charge-offs of $3.7 million. Specific credit reserves for nonperforming loans declined by $5.9 million during 2024 and modest changes in projected loss rates on performing loans were driven by economic forecast changes to various macroeconomic variables such as GDP growth, commercial real estate values and the rate of unemployment. Refer to the discussion of “Allowance for Credit Losses” in Item 7 –Management’s Discussion and Analysis of Financial Condition and Results of Operations contained herein for discussion concerning observed changes in the credit quality of various components of our loan portfolio as well as changes and refinements to our methodology.

Previous wording

Noninterest income includes income derived from financial services offered to our customers, such as CitizensTrust, merchant processing and card services, international banking, and other business services. Also included in noninterest income are service charges and fees, primarily from deposit accounts, BOLI income, gains/losses from the disposition of investment securities, loans, other real estate owned, and fixed assets, and other revenues not included as interest on earning assets.

Current wording

Noninterest income includes income derived from financial services offered to our customers, such as CitizensTrust, merchant processing and card services, international banking, and other business services. Also included in noninterest income are service charges and fees, primarily from deposit accounts, bank owned life insurance (“BOLI”) income, gains/losses from the disposition of investment securities, loans, other real estate owned, and fixed assets, and other revenues not included as interest on earning assets.

Previous wording

Trust and Investment Services represents our CitizensTrust group. The CitizensTrust group is made up of wealth management and investment services. They provide a variety of services, which include asset management, financial planning, estate planning, retirement planning, private and corporate trustee services, and probate services. Investment Services provides self-directed brokerage, 401(k) plans, mutual funds, insurance and other non-insured investment products. At December 31, 2023, CitizensTrust had approximately $4.0 billion in assets under management and administration, including $2.81 billion in assets under management. CitizensTrust generated fees of $12.6 million for 2023, compared to $11.5 million for 2022. The increase in fees in 2023 included both the impact on market values of changes in equity and fixed income markets but also increased flows of funds from customers, including liquidity management of funds formerly on deposit with the Bank.

Current wording

Trust and Investment Services represents our CitizensTrust group. The CitizensTrust group is made up of wealth management and investment services. They provide a variety of services, which include asset management, financial planning, estate planning, retirement planning, private and corporate trustee services, and probate services. Investment Services provides self-directed brokerage, 401(k) plans, mutual funds, insurance and other non-insured investment products. At December 31, 2025, CitizensTrust had approximately $5.11 billion in assets under management and administration, including $3.75 billion in assets under management. CitizensTrust generated fees of $15.0 million for 2025, compared to $13.7 million for 2024. The increase in fees in 2025 included both the impact on market values of changes in equity and fixed income markets but also increased flows of funds from customers, including liquidity management of funds formerly on deposit with the Bank.

Previous wording

Trust and Investment Services represents our CitizensTrust group. The CitizensTrust group is made up of wealth management and investment services. They provide a variety of services, which include asset management, financial planning, estate planning, retirement planning, private and corporate trustee services, and probate services. Investment Services provides self-directed brokerage, 401(k) plans, mutual funds, insurance and other non-insured investment products. At December 31, 2024, CitizensTrust had approximately $4.6 billion in assets under management and administration, including $3.3 billion in assets under management. CitizensTrust generated fees of $13.7 million for 2024, compared to $12.6 million for 2023. The increase in fees in 2024 included both the impact on market values of changes in equity and fixed income markets but also increased flows of funds from customers, including liquidity management of funds formerly on deposit with the Bank.

Current wording

Trust and Investment Services represents our CitizensTrust group. The CitizensTrust group is madeup of wealth management and investment services. They provide a variety of services, which include asset management, financial planning, estate planning, retirement planning, private and corporate trustee services, and probate services. Investment Services provides self-directed brokerage, 401(k) plans, mutual funds, insurance and other non-insured investment products. At December 31, 2024, CitizensTrust had approximately $4.6 billion in assets under management and administration, including $3.3 billion in assets under management. CitizensTrust generated fees of $13.7 million for 2024, compared to $12.6 million for 2023. The increase in fees in 2024 included both the impact on market values of changes in equity and fixed income markets but also increased flows of funds from customers, including liquidity management of funds formerly on deposit with the Bank.

Previous wording

Our ability to control noninterest expenses in relation to asset growth can be measured in terms of total noninterest expenses as a percentage of average assets. Noninterest expense as a percentage of average assets was 1.45% for 2024, compared to 1.41% for 2023 and 1.28% for 2022, respectively. The increase in this ratio in 2024 as compared to 2023 was due primarily to normal inflationary increases in most expense categories, partially offset by a decrease in regulatory assessment expense as 2023 included the $9.2 million FDIC Special Assessment, and also due to a $207 million decrease in average assets in 2024 as compared to 2023. The increase in this ratio for 2023 compared with 2022 reflects the impact of inflationary pressures on staff related expenses and expense growth associated with Suncrest. This ratio was also negatively impacted in 2023 by a $9.2 million expense accrual for the FDIC Special Assessment. The ratio was negatively impacted in 2022 as a result of $6 million of acquisition expense associated with Suncrest.

Current wording

Our ability to control noninterest expenses in relation to asset growth can be measured in terms of total noninterest expenses as a percentage of average assets. Noninterest expense as a percentage of average assets was 1.54% for 2025, compared to 1.45% for 2024 and 1.41% for 2023, respectively. The increase in this ratio in 2025 as compared to 2024 was due to both a reduction in average assets of $207 million resulting from the deleveraging strategy executed in the later half of 2024, as well as normal inflationary increases in most expense categories, partially offset by a decrease in regulatory assessment expense as 2023 included the $9.2 million FDIC Special Assessment. The increase in this ratio for 2024 compared with 2023 reflects the impact of inflationary pressures on staff related expenses and expense growth associated with investments in technology, partially offset by the impact in 2023 for a $9.2 million expense accrual for the FDIC Special Assessment.

Previous wording

Our ability to control noninterest expenses in relation to the level of total revenue (net interest income before provision for credit losses plus noninterest income) can be measured by the efficiency ratio and indicates the percentage of net revenue that is used to cover expenses. The efficiency ratio was 46.55% for 2024, compared to 42.00% for 2023 and 38.98% for 2022. The increase in the efficiency ratio in 2024 was primarily due to the decrease in our net interest margin in 2024, as well as the 1.6% increase in noninterest expense. The increase in the efficiency ratio in 2023 compared to 2022 reflects the impact of inflationary pressures on staff related expenses and expense growth associated with Suncrest. This ratio was also negatively impacted in 2023 by a $9.2 million expense accrual for the FDIC Special Assessment. The ratio was negatively impacted in 2022 as a result of $6 million of acquisition expense associated with Suncrest.

Current wording

Our ability to control noninterest expenses in relation to the level of total revenue (net interest income before provision for credit losses plus noninterest income) can be measured by the efficiency ratio and indicates the percentage of net revenue that is used to cover expenses. The efficiency ratio was 46.03% for 2025, compared to 46.55% for 2024 and 42.00% for 2023. The decrease in the efficiency ratio in 2025 was due to the increase in our net interest margin in 2025, that resulted in a revenue growth rate that exceeded the 1.6% increase in noninterest expense. The increase in the efficiency ratio in 2024 compared to 2023 reflects the impact of a decline in the net interest margin in 2024.

Previous wording

Noninterest expense of $233.6 million for the year ended December 31, 2024 was $3.7 million, or 1.6% higher than 2023. Year-over-year increases included normal inflationary increases in most expense categories including $5.3 million in salaries and employee benefits, primarily due to inflationary pressures on salaries and benefits. As we continue to invest in new technology, software expense increased by $1.3 million, or 8.90%. The increase in technology costs demonstrates our commitment to improving efficiencies and providing an excellent customer experience. Professional expense increased by $1.4 million, or 15.42%, as legal expense increased by $1.3 million or 80.7%. These increases were partially offset by a $7.6 million decrease in regulatory assessment expense, as 2023 included $9.2 million for the FDIC Special Assessment.

Current wording

Noninterest expense of $233.6 million for the year ended December 31, 2024 was $3.7 million, or 1.6% higher than 2023. Year-over-year increases included normal inflationary increases in most expense categories including $5.3 million in salaries and employee benefits, primarily due to inflationary pressures on salaries and benefits. As we continue to invest in new technology, software expense increased by $1.3 million, or 8.90%. Professional expense increased by $1.4 million, or 15.42%, as legal expense increased by $1.3 million or 80.7%. These increase were partially offset by a $7.6 million decrease in regulatory assessment expense, as 2023 included $9.2 million for the FDIC Special Assessment.

Previous wording

The Company’s effective tax rate for the year ended December 31, 2024 was 26.00%, compared with 29.80% and 28.30% for the years ended December 31, 2023 and 2022, respectively. The decrease in the effective tax rate was a result of increased investments in tax credits during 2024 and the impact on taxes in 2023 from the surrender of certain BOLI policies. During the fourth quarter and full year of 2023, our effective tax rate was impacted by more than $6 million in combined income tax expense and penalties resulting from the surrender of various BOLI policies. Our estimated annual effective tax rate also varies depending upon the level of tax-advantaged income from municipal securities and BOLI as well as available tax credits. Refer to Note 9 —Income Taxes of the notes to consolidated financial statements for more information.

Current wording

The Company’s effective tax rate for the year ended December 31, 2025 was 25.70%, compared with 26.00% and 29.80% for the years ended December 31, 2024 and 2023, respectively. The decrease in the effective tax rate in 2025 and 2024 was a result of increased investments in tax credits and the impact on taxes in 2023 from the surrender of certain BOLI policies. During the fourth quarter and full year of 2023, our effective tax rate was impacted by more than $6 million in combined income tax expense and penalties resulting from the surrender of various BOLI policies. Our estimated annual effective tax rate also varies depending upon the level of tax-advantaged income from municipal securities and BOLI as well as available tax credits. Refer to Note 9 —Income Taxes of the notes to consolidated financial statements for more information.

Previous wording

Total assets of $15.15 billion at December 31, 2024 decreased by $867.3 million, or 5.41%, from total assets of $16.02 billion at December 31, 2023. Interest-earning assets of $13.53 billion at December 31, 2024, decreased by $934.2 million, or 6.46%, when compared with $14.46 billion at December 31, 2023. The decrease in interest-earning assets was primarily due to a $499.0 million decrease in investment securities, a $368.5 million decrease in total loans, and a decrease of $59.1 million in interest-earning balances due from the Federal Reserve.

Current wording

Total assets of $15.63 billion at December 31, 2025 increased $477.4 million, or 3.15%, from $15.15 billion at December 31, 2024. Interest-earning assets of $13.99 billion at December 31, 2025, increased by $463.0 million, or 3.42%, when compared with $13.53 billion at December 31, 2024. The increase in interest-earning assets was primarily due to a $218.1 million increase in interest-earning balances due from the Federal Reserve, a $162.8 million increase in total loans, a $37.9 million increase in FRB stock, and $31.7 million in investment securities.

Previous wording

During the third and fourth quarters of 2024, the Bank executed sale-leaseback transactions and sold four buildings for a cumulative sale price of $47.1 million, resulting in a net pre-tax gain of $25.9 million and cash proceeds of $44.76 million. The Bank simultaneously entered into lease agreements with the respective purchasers for initial terms of 15 and 18 years. Total ROU assets and corresponding operating lease liabilities recorded were $26.8 million.

Current wording

We engaged in no sale-leaseback transactions during 2025. During the third and fourth quarters of 2024, the Bank executed sale-leaseback transactions and sold four buildings for a cumulative sale price of $47.1 million, resulting in a net pre-tax gain of $25.9 million and cash proceeds of $44.76 million. The Bank simultaneously entered into lease agreements with the respective purchasers for initial terms of 15 and 18 years. Total ROU assets and corresponding operating lease liabilities recorded were $26.8 million.

Previous wording

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

Current wording

The Company maintains a portfolio of investment securities to provide interest income and to serve as a source of liquidity for its ongoing operations. At December 31, 2025, total investment securities were $4.95 billion, an increase of $31.7 million, or 0.64%, from $4.92 billion at December 31, 2024. The increase in investment securities was primarily due $483.6 million in purchases of AFS securities and an improvement of $128.9 million in AFS investment securities mark-to-market unrealized loss, partially offset by principal payments and maturities, as well as sales of securities of $92.9 million in fair value during the year, which resulted in a pre-tax loss of $11.0 million. At December 31, 2025, our AFS investment securities totaled $2.68 billion, inclusive of a pre-tax net unrealized loss of $299.2 million. The after-tax unrealized loss reported in AOCI on AFS investment securities was $218.3 million. This represented a decrease of $97.0 million from $315.4 million after-tax unrealized loss at December 31, 2024. The change in the net unrealized holding loss resulted primarily from fluctuations in market interest rates and from realized losses on sold securities. At December 31, 2025, total HTM investment securities of $2.27 billion declined by $109.3 million from December 31, 2024. For the years ended December 31, 2025 and 2024, sales/repayments/maturities of investment securities totaled $572.1 million and $901.5 million, respectively. The Company purchased additional investment securities totaling $489.8 million and $430.6 million for the years ended December 31, 2025 and 2024, respectively.

Previous wording

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

Current wording

The weighted average yield for the portfolio is not tax-equivalent. The tax equivalent yield at December 13, 2025 was 3.47%.

Previous wording

The weighted average yield for the portfolio is not tax-equivalent. The tax equivalent yield at December 31, 2024 was 2.77%.

Current wording

The weighted average yield for the portfolio is not tax-equivalent. The tax equivalent yield at December 31, 2025 was 2.78%.

Previous wording

The weighted-average yield on the total investment portfolio at December 31, 2024 was 2.36% with a weighted-average life of 7.2 years. This compares to a weighted-average yield of 2.16% at December 31, 2023 with a weighted-average life of 6.7 years. The weighted average life is the average number of years that each dollar of unpaid principal due remains outstanding. Average life is computed as the weighted-average time to the receipt of all future cash flows, using as the weights the dollar amounts of the principal pay-downs.

Current wording

The weighted-average yield on the total investment portfolio at December 31, 2025 was 2.49% with a weighted-average life of 6.4 years. This compares to a weighted-average yield of 2.36% at December 31, 2024 with a weighted-average life of 7.2 years. The weighted average life is the average number of years that each dollar of unpaid principal due remains outstanding. Average life is computed as the weighted-average time to the receipt of all future cash flows, using as the weights the dollar amounts of the principal pay-downs.

Previous wording

Approximately 90% of the securities in the total investment portfolio, at December 31, 2024, are issued by the U.S. government or U.S. government-sponsored enterprises, with the implied guarantee of payment of principal and interest. The remaining securities are predominately AA or better general-obligation municipal bonds. As of December 31, 2024, approximately $27.1 million in U.S. government agency bonds are callable. The Agency CMO/REMIC are backed by agency-pooled collateral. Municipal bonds, which represented approximately 10% of the total investment portfolio, are predominately AA or higher rated securities.

Current wording

Approximately 90% of the securities in the total investment portfolio, at December 31, 2025, are issued by the U.S. government or U.S. government-sponsored enterprises, with the implied guarantee of payment of principal and interest. The remaining securities are predominately AA or better general-obligation municipal bonds. As of December 31, 2025, approximately $22.3 million in U.S. government agency bonds are callable. The Agency CMO/REMIC are backed by agency-pooled collateral. Municipal bonds, which represented approximately 9% of the total investment portfolio, are predominately AA or higher rated securities.

Previous wording

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

Current wording

At December 31, 2025, the Company had $325.3 million of BOLI. The $9.1 million increase in the value of BOLI, when compared to December 31, 2024, was primarily due to increases in the cash surrender value of the policies owned.

Previous wording

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

Current wording

Total loans, at amortized cost, comprised 62.18% of our total earning assets as of December 31, 2025. The following table presents our loan portfolio by type as of the dates presented.

Previous wording

As of December 31, 2024, $449.8 million, or 6.91% of the total commercial real estate loans included loans secured by farmland, compared to $497.7 million, or 7.34%, at December 31, 2023. The loans secured by farmland included $109.1 million for loans secured by dairy & livestock land and $340.7 million for loans secured by agricultural land at December 31, 2024, compared to $122.4 million for loans secured by dairy & livestock land and $375.3 million for loans secured by agricultural land at December 31, 2023. As of December 31, 2024, dairy & livestock and agribusiness loans of $419.9 million were comprised of $385.3 million for dairy & livestock loans and $34.6 million for agribusiness loans, compared to $374.9 million of dairy & livestock loans and $38.0 million for agribusiness loans at December 31, 2023.

Current wording

As of December 31, 2025, $424.5 million, or 6.46% of the total commercial real estate loans included loans secured by farmland, compared to $449.8 million, or 6.91%, at December 31, 2024. The loans secured by farmland included $119.0 million for loans secured by dairy & livestock land and $305.5 million for loans secured by agricultural land at December 31, 2025, compared to $109.1 million for loans secured by dairy & livestock land and $340.7 million for loans secured by agricultural land at December 31, 2024. As of December 31, 2025, dairy & livestock and agribusiness loans of $431.6 million were comprised of $386.1 million for dairy & livestock loans and $45.5 million for agribusiness loans, compared to $419.9 million in dairy & livestock and agribusiness loans comprised of $385.3 million for dairy & livestock loans and $34.6 million for agribusiness loans at December 31, 2024.

Previous wording

As of December 31, 2024, the Company had $204.5 million of total SBA 504 loans. SBA 504 loans include term loans to finance capital expenditures and for the purchase of commercial real estate. Initially the Bank provides two separate loans to the borrower representing a first and second lien on the collateral. The loan with the first lien is typically at a 50% advance to the acquisition costs and the second lien loan provides the financing for 40% of the acquisition costs with the borrower’s down payment of 10% of the acquisition costs. The Bank retains the first lien loan for its term and sells the second lien loan to the SBA subordinated debenture program. A majority of the Bank’s 504 loans are granted for the purpose of commercial real estate acquisition. As of December 31, 2024, the Company had $68.5 million of total SBA 7(a) loans that include a guarantee of payment from the SBA (typically 75% of the loan amount, but up to 90% in certain cases) in the event of default. The SBA 7(a) loans include revolving lines of credit (SBA Express) and term loans of up to ten (10) years to finance long-term working capital requirements, capital expenditures, and/or for the purchase or refinance of commercial real estate.

Current wording

As of December 31, 2025, the Company had $228.8 million of SBA 504 loans, which include term loans to finance capital expenditures and for the purchase of commercial real estate. Initially the Bank provides two separate loans to the borrower representing a first and second lien on the collateral. The loan with the first lien is typically at a 50% advance to the acquisition costs and the second lien loan provides the financing for 40% of the acquisition costs with the borrower’s down payment of 10% of the acquisition costs. The Bank retains the first lien loan for its term and sells the second lien loan to the SBA subordinated debenture program. A majority of the Bank’s 504 loans are granted for the purpose of commercial real estate acquisition. As of December 31, 2025, the Company had $53.6 million of total SBA 7(a) loans that include a guarantee of payment from the SBA (typically 75% of the loan amount, but up to 90% in certain cases) in the event of default. The SBA 7(a) loans include revolving lines of credit (SBA Express) and term loans of up to ten (10) years to finance long-term working capital requirements, capital expenditures, and/or for the purchase or refinance of commercial real estate.

Previous wording

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

Current wording

As of December 31, 2025, the Company had $37.8 million in construction loans. This represented 0.40% of total held-for-investment loans at amortized cost. Our construction loans are located throughout our California market footprint and the majority consist of commercial land development and construction projects. There were no nonperforming construction loans at December 31, 2025.

Previous wording

The loans secured by farmland included $109.1 million for loans secured by dairy & livestock land and $340.6 million for loans secured by agricultural land at December 31, 2024.

Current wording

The loans secured by farmland included $119.0 million for loans secured by dairy & livestock land and $305.5 million for loans secured by agricultural land at December 31, 2025.

Previous wording

At December 31, 2024, commercial real estate loans on office properties totaled $1.04 billion, or approximately 16.0% of total commercial real estate loans. At origination, these loans on office properties were underwritten with loan-to-values averaging approximately 55%. Approximately 37% of these loans were originated prior to 2020. The average loan size for office loans was approximately $1.7 million and 87% of these loans have a balance of $10 million or less.

Current wording

At December 31, 2025, commercial real estate loans on office properties totaled $989.8 million, or approximately 15.1% of total commercial real estate loans. At origination, these loans on office properties were underwritten with loan-to-values averaging approximately 55%. Approximately 47% of these loans were originated prior to 2021. The average loan size for office loans was approximately $1.6 million and 88% of these loans have a balance of $10 million or less.