CVB FINANCIAL CORP

Previous wording

The following discussion provides information about the results of operations, financial condition, liquidity and capital resources of CVB Financial Corp. (referred to herein on an unconsolidated basis as “CVB” and on a consolidated basis as “we,” “our” or the “Company”) and its wholly owned bank subsidiary, Citizens Business Bank (the “Bank” or “CBB”). This information is intended to facilitate the understanding and assessment of significant changes and trends related to our financial condition and the results of our operations. This discussion and analysis should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2024 and the unaudited condensed consolidated financial statements and accompanying notes presented elsewhere in this report.

Current wording

The following discussion provides information about the results of operations, financial condition, liquidity and capital resources of CVB Financial Corp. (referred to herein on an unconsolidated basis as “CVB” and on a consolidated basis as “we,” “our” or the “Company”) and its wholly owned bank subsidiary, Citizens Business Bank, National Association (the “Bank” or “CBB”). This information is intended to facilitate the understanding and assessment of significant changes and trends related to our financial condition and the results of our operations. This discussion and analysis should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Form 10-K”) and the unaudited condensed consolidated financial statements and accompanying notes presented elsewhere in this report.

Previous wording

Our significant accounting policies are described in greater detail in our 2024 Annual Report on Form 10-K in the “Critical Accounting Policies” section of Management’s Discussion and Analysis of Financial Condition and Results of Operations and in Note 3 – Summary of Significant Accounting Policies, included in our Annual Report on Form 10-K for the year ended December 31, 2024, which are essential to understanding Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Current wording

Our significant accounting policies are described in greater detail in our 2025 Form 10-K in the “Critical Accounting Policies” section of Management’s Discussion and Analysis of Financial Condition and Results of Operations and in Note 3 – Summary of Significant Accounting Policies included in the 2025 Form 10-K.

Previous wording

For the third quarter of 2025, we reported net earnings of $52.6 million, compared with $50.6 million for the second quarter of 2025 and $51.2 million for the third quarter of 2024. Diluted earnings per share were $0.38 for the third quarter, compared to $0.37 for the prior quarter and $0.37 for the same period last year. Net income for the third quarter of 2025 produced an annualized return on average equity (“ROAE”) of 9.19%, an annualized return on average tangible common equity (“ROATCE”) of 14.11%, and an annualized return on average assets (“ROAA”) of 1.35%. Our net interest margin, tax equivalent (“NIM”), was 3.33% for the third quarter of 2025, while our efficiency ratio was 45.56%. Year-to-date net earnings for 2025 were $154.3 million, a $4.4 million increase compared to the same period in 2024.

Current wording

For the first quarter of 2026, we reported net earnings of $51.0 million, or diluted earnings per share of $0.38, compared with $51.1 million, or diluted earnings per share of $0.36 for the first quarter of 2025. Net earnings for the first quarter of 2026 produced an annualized return on average equity (“ROAE”) of 8.86%, an annualized return on average tangible common equity (“ROATCE”) of 13.38%, and an annualized return on average assets (“ROAA”) of 1.33%. Our net interest margin (“NIM”), on a tax equivalent basis, was 3.44% for the first quarter of 2026, while our efficiency ratio was 45.84%. ROATCE is a non-GAAP financial measure. For additional details, refer to Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) — GAAP to Non-GAAP Reconciliation in this Form 10-Q.

Previous wording

At September 30, 2025, total assets were $15.67 billion, an increase $512.6 million, or 3.38%, from total assets of $15.15 billion at December 31, 2024. Interest-earning assets were $14.0 billion at September 30, 2025, an increase of $483.9 million, or 3.58%, when compared with $13.53 billion at December 31, 2024. The increase in interest-earning assets was primarily due to a $581.2 million increase in interest-earning balances due from the Federal Reserve, offset by a $65.5 million decrease in total loans, and a $44.5 million decrease in investment securities.

Current wording

At March 31, 2026, total assets were $15.51 billion, a decrease of $123.5 million, or 0.79%, from total assets of $15.63 billion at December 31, 2025. Interest-earning assets were $13.86 billion at March 31, 2026, a decrease of $135.4 million, or 0.97%, when compared with $13.99 billion at December 31, 2025. The decrease in interest-earning assets was primarily due to a $116.3 million decrease in investment securities, a $55.9 million decrease in total loans and a $8.1 million decrease in interest-earning balances due from depository institutions, partially offset by a $44.9 million increase in interest-earning balances due from the Federal Reserve.

Previous wording

Total investment securities were $4.88 billion at September 30, 2025, a decrease of $44.5 million, or 0.90%, from $4.92 billion at December 31, 2024. At September 30, 2025, investment securities held-to-maturity (“HTM”) totaled $2.30 billion, a $81.8 million, or 3.44%, decline from $2.38 billion at December 31, 2024. At September 30, 2025, investment securities available-for-sale (“AFS”) totaled $2.58 billion, inclusive of a pre-tax net unrealized loss of $333.8 million. AFS securities increased by $37.3 million, or 1.47%, from $2.54 billion at December 31, 2024. The pre-tax unrealized loss decreased by $113.9 million from December 31, 2024. Our tax equivalent yield on investments was 2.66% for the quarter ended September 30, 2025, compared to 2.62% for the second quarter of 2025 and 2.67% for the third quarter of 2024.

Current wording

Total investment securities were $4.84 billion at March 31, 2026, a decrease of $116.3 million, or 2.35%, from $4.95 billion at December 31, 2025. At March 31, 2026, investment securities held-to-maturity (“HTM”) totaled $2.25 billion, a $22.4 million, or 0.98%, decline from $2.27 billion at December 31, 2025. At March 31, 2026, available-for-sale (“AFS”) investment securities totaled $2.59 billion, inclusive of a pre-tax net unrealized loss of $310.4 million. AFS securities decreased by $94.00 million, or 3.50%, from $2.68 billion at December 31, 2025. The pre-tax unrealized loss increased by $2.6 million from December 31, 2025. Our tax equivalent yield on investments was 2.63% for the quarter ended March 31, 2026, compared to 2.63% for the first quarter of 2025.

Previous wording

Noninterest-bearing deposits were $7.24 billion at September 30, 2025, an increase of $207.9 million, or 2.95%, when compared to $7.04 billion at December 31, 2024. At September 30, 2025, noninterest-bearing deposits were 59.76% of total deposits, compared to 58.90% at December 31, 2024.

Current wording

Noninterest-bearing deposits were $7.10 billion at March 31, 2026, an increase of $299.8 million, or 4.41%, when compared to $6.80 billion at December 31, 2025. At March 31, 2026, noninterest-bearing deposits were 59.44% of total deposits, compared to 56.33% at December 31, 2025.

Previous wording

Interest-bearing deposits were $4.88 billion at September 30, 2025, a decrease of $32.0 million, or 0.65%, when compared to $4.91 billion at December 31, 2024. Customer repurchase agreements totaled $451.3 million at September 30, 2025, compared to $261.9 million at December 31, 2024. Our average cost of total deposits including customer repurchase agreements was 0.90% for the quarter ended September 30, 2025, compared to 0.87% for the quarter ended June 30, 2025, and 1.01% for the quarter ended September 30, 2024.

Current wording

Interest-bearing deposits were $4.84 billion at March 31, 2026, a decrease of $426.6 million, or 8.09%, when compared to $5.27 billion at December 31, 2025. Customer repurchase agreements totaled $494.3 million at March 31, 2026, compared to $490.6 million at December 31, 2025. Our average cost of total deposits including customer repurchase agreements was 0.82% for the quarter ended March 31, 2026, compared to 0.87% for the quarter ended March 31, 2025.

Previous wording

At September 30, 2025, total borrowings, consisted of $500.0 million of FHLB advances, at a weighted average cost of approximately 4.6%. The FHLB advances include maturities of $300 million in May 2026 and $200 million in May 2027.

Current wording

At March 31, 2026 and December 31, 2025, total borrowings consisted of $500.0 million of FHLB advances at a weighted average cost of approximately 4.6%. The Federal Home Loan Bank of San Francisco (“FHLB”) advances include maturities of $300.0 million in May 2026 and $200.0 million in May 2027.

Previous wording

Our capital ratios under the revised capital framework referred to as Basel III remain well-above regulatory requirements. As of September 30, 2025, the Company’s Tier 1 leverage capital ratio was 11.8%, common equity Tier 1 ratio was 16.3%, Tier 1 risk-based capital ratio was 16.3%, and total risk-based capital ratio was 17.1%. Refer to our Analysis of Financial Condition – Capital Resources.

Current wording

Our capital ratios under the revised capital framework referred to as Basel III remain well-above regulatory requirements. As of March 31, 2026, the Company’s Tier 1 leverage capital ratio was 11.9%, Common Equity Tier 1 (“CET1”) ratio was 16.3%, Tier 1 risk-based capital ratio was 16.3%, and total risk-based capital ratio was 17.1%. Refer to Item 2. –MD&A —Analysis of Financial Condition – Capital Resources.

Previous wording

The principal component of our earnings is net interest income, which is the difference between the interest and fees earned on loans and investments (interest-earning assets) and the interest paid on deposits and borrowed funds (interest-bearing liabilities). Net interest margin is net interest income as a percentage of average interest-earning assets for the period. The level of interest rates and the volume and mix of interest-earning assets and interest-bearing liabilities impact net interest income and net interest margin. The net interest spread is the yield on average interest-earning assets minus the cost of average interest-bearing liabilities. Net interest margin and net interest spread are included on a tax equivalent ("TE") basis by adjusting interest income utilizing the federal statutory corporate tax rates of 21% in effect for the three and nine months ended September 30, 2025 and 2024. Our net interest income, interest spread, and net interest margin are sensitive to general business and economic conditions. These conditions include short-term and long-term interest rates, inflation, monetary supply, and the strength of the international, national and state economies, in general, and more specifically, the local economies in which we conduct business. We manage interest rate risk within policy limits approved by the Board of Directors, which guides and limits the interest rate risk over short-term and long-term horizons. Sources of interest rate risk include differences in maturity and re-pricing characteristics of assets and liabilities, changes in the shape of the yield curve, and embedded options in assets or liabilities. The mix of interest-earning assets as well as the mix of noninterest bearing deposits and interest-bearing liabilities impacts our ability to manage net interest income during changing interest rate conditions. We also utilize certain derivative instruments to partially hedge interest rate risk. See Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations – Asset/Liability and Market Risk Management – Interest Rate Sensitivity Management included herein.

Current wording

The principal component of our earnings is net interest income, which is the difference between the interest and fees earned on loans and investments (interest-earning assets) and the interest paid on deposits and borrowed funds (interest-bearing liabilities). Net interest margin is net interest income as a percentage of average interest-earning assets for the period. The level of interest rates and the volume and mix of interest-earning assets and interest-bearing liabilities impact net interest income and net interest margin. The net interest spread is the yield on average interest-earning assets minus the cost of average interest-bearing liabilities. Net interest margin and net interest spread are included on a tax equivalent (“TE”) basis by adjusting interest income utilizing the federal statutory corporate tax rates of 21% in effect for the three months ended March 31, 2026 and 2025. Our net interest income, interest spread, and net interest margin are sensitive to general business and economic conditions. These conditions include short-term and long-term interest rates, inflation, monetary supply, and the strength of the international, national and state economies, in general, and more specifically, the local economies in which we conduct business. We manage interest rate risk within policy limits approved by the Board of Directors, which guides and limits the interest rate risk over short-term and long-term horizons. Sources of interest rate risk include differences in maturity and re-pricing characteristics of assets and liabilities, changes in the shape of the yield curve, and embedded options in assets or liabilities. The mix of interest-earning assets as well as the mix of noninterest bearing deposits and interest-bearing liabilities impacts our ability to manage net interest income during changing interest rate conditions. We also utilize certain derivative instruments to partially hedge interest rate risk. See Item 2 –MD&A – Asset/Liability and Market Risk Management – Interest Rate Sensitivity Management included herein.

Previous wording

Includes tax equivalent (TE) adjustments utilizing federal statutory corporate rates of 21% in effect for the three months ended September 30, 2025 and September 30, 2024. The non TE rates for total investment securities were 2.62% and 2.63% for the three months ended September 30, 2025 and September 30, 2024, respectively.

Current wording

Includes TE adjustments utilizing federal statutory corporate rates of 21% in effect for the three months ended March 31, 2026 and March 31, 2025. The non-TE rates for total investment securities were 2.59% and 2.59% for the three months ended March 31, 2026 and March 31, 2025, respectively.

Previous wording

Includes loan fees of $781,000 and $748,000 for the three months ended September 30, 2025 and September 30, 2024, respectively. Prepayment penalty fees of $643,000 and $830,000 are included in interest income for the three months ended September 30, 2025 and September 30, 2024, respectively.

Current wording

Includes loan fees of $1.2 million and $700,000 for the three months ended March 31, 2026 and 2025, respectively. Prepayment penalty fees of $521,000 and $931,000 are included in interest income for the three months ended March 31, 2026 and 2025, respectively. Average balances include nonperforming loans.

Previous wording

The following table presents a comparison of interest income and interest expense resulting from changes in the volumes and rates on average interest-earning assets and average interest-bearing liabilities for the periods indicated. Changes in interest income or expense attributable to volume changes are calculated by multiplying the change in volume by the initial average interest rate. The change in interest income or expense attributable to changes in interest rates is calculated by multiplying the change in interest rate by the initial volume. The changes attributable to interest rate and volume changes are calculated by multiplying the change in rate times the change in volume and reflect an adjustment for the number of days as appropriate.

Current wording

The following table presents a comparison of interest income and interest expense resulting from changes in the volumes and rates on average interest-earning assets and average interest-bearing liabilities for the periods indicated. Changes in interest income or expense attributable to volume changes are calculated by multiplying the change in volume by the initial average interest rate. The change in interest income or expense attributable to changes in interest rates is calculated by multiplying the change in interest rate by the initial volume. The net change or the combined impact of volume and rate changes allocated proportionately to changes in volume and changes in interest rates.

Previous wording

Net interest income, before provision for credit losses, of $115.6 million for the third quarter of 2025 increased by $2.0 million, or 1.72%, from the third quarter of 2024. The increase in net interest income in the third quarter of 2025 compared to the third quarter of 2024 was the net result of a $17.6 million decrease in interest expense that exceeded a $15.6 million decline in interest income. The decrease in interest expense was primarily due to a $14.9 million decrease in interest expense from a $1.2 billion decrease in average borrowings.

Current wording

Net interest income, before provision for credit losses, of $117.8 million for the first quarter of 2026 increased by $7.4 million, or 6.7%, from the first quarter of 2025. The increase in net interest income in the first quarter of 2026 compared to the first quarter of 2025 was the net result of a $6.1 million increase in interest income and a $1.3 million decrease in interest expense.

Previous wording

Total interest income of $150.1 million declined by $15.6 million, or 9.44%, when compared to the third quarter of 2024. This decrease was primarily due to a $1.06 billion decline in average interest-earning assets and an 11 basis point decrease of the yield on earning assets. Average loan balances declined by $232.9 million from the third quarter of 2024. Compared to the third quarter of 2024, the average balance of investment securities decreased by $244.1 million, while the average amount of funds held at the Federal Reserve decreased by $581.3 million.

Current wording

Total interest income of $149.1 million increased by $6.1 million, or 4.27%, when compared to the first quarter of 2025. This increase was primarily due to a $335.7 increase in average interest-earning assets and a seven basis point increase in the yield on earning assets. Average loan balances increased by $157.1 million, average interest-earning deposits with other institutions increased $128.1 million, and the average balance of investment securities increased by $12.5 million from the first quarter of 2025.

Previous wording

Total interest income and fees on loans for the third quarter of 2025 was $110.8 million, a decrease of $4.1 million, or 3.57%, from the third quarter of 2024. This decrease in income was due to both the decline in average loan balances and a decline in loan yields from 5.31% for the third quarter of 2024, to 5.25% for the third quarter of 2025. Loan yields decreased as declining short term interest rates, such as the Prime rate, lowered the yield on variable indexed loans.

Current wording

Total interest income and fees on loans for the first quarter of 2026 was $113.3 million, an increase of $4.2 million, or 3.85%, from the first quarter of 2025. This increase in income was due to the $157 million increase in average loan balances and the increase in average loan yields from 5.22% for the first quarter of 2025, to 5.32% for the first quarter of 2026.

Previous wording

Interest income from investment securities was $31.7 million, a decrease of $1.8 million, or 5.33%, from the third quarter of 2024. The decrease was driven primarily by a $3.0 million decrease in the positive carry on pay-fixed swaps that are available-for-sale investment fair value hedges. The spread between daily SOFR and fixed rate paid on these swaps decreased from 1.71% in the third quarter of 2024 to .74% in the third quarter of 2025. Excluding the impact of the fair value hedges, investment security yields increased by 22 basis points, partially offsetting the impact on interest income from the $244.1 million decrease in average investment balances.

Current wording

Interest income from investment securities was $31.9 million for the first quarter of 2026, an increase of $111,000, or 0.35%, from the first quarter of 2025. A ten basis point increase in yields on investment securities was offset by a decrease in the interest income derived from the pay-fixed swaps designated as fair value hedges on AFS securities. The spread between daily SOFR and the fixed rate paid on these swaps decreased from 0.61% in the first quarter of 2025 to a negative 0.06% in the first quarter of 2026, resulting in a $1.1 million decrease in interest income.

Previous wording

Interest expense was $34.5 million for the third quarter of 2025, a decrease of $17.6 million, compared to the third quarter of 2024. Total cost of funds of 1.05% for the third quarter of 2025 decreased from 1.47% for the year ago quarter. This 42 basis point decrease in cost of funds was primarily the result of a $1.2 billion decrease in average borrowings, as well as the 16 basis point decrease in average borrowing costs, when compared to the third quarter of 2024. The redemption of $1.3 billion of Federal Reserve Bank Term Funding Program borrowings in the third quarter of 2024 resulted in the year over year decline in the level of borrowings. A 29 basis point decrease in the cost of total interest-bearing deposits was primarily due to a 19 basis point decrease in the cost of non-maturing interest bearing deposits. Additionally, time deposits declined by $159.8 million and the cost of time deposits decreased by 68 basis points. The cost of customer repurchase agreements increased from 1.73% in the third quarter of 2024 to 2.00% in the third quarter of 2025. Average noninterest-bearing deposits were 59.3% of total average deposits for the third quarter of 2025, compared to 59.1% for the third quarter of 2024.

Current wording

Interest expense was $31.3 million for the first quarter of 2026, a decrease of $1.3 million, compared to the first quarter of 2025. Total cost of funds was 0.97% for the first quarter of 2026, which decreased from 1.03% for the year ago quarter. This six basis point decrease in cost of funds was primarily driven by an eight basis point reduction in cost of deposits. Cost of total interest-bearing deposits decreased by 26 basis points. However, the cost of customer repurchase agreements increased from 1.24% in the first quarter of 2025 to 1.71% in the first quarter of 2026. Average noninterest-bearing deposits were 57.8% of total average deposits for the first quarter of 2026, compared to 59.0% for the first quarter of 2025.

Previous wording

There was a $1.0 million provision for credit losses in the third quarter of 2025, compared to no provision in the third quarter of 2024. Net recoveries for the third quarter of 2025 were $333,000, compared to net recoveries of $156,000 in the third quarter of 2024. Projected loss rates were 0.94% at September 30, 2025, compared to 0.97% at September 30, 2024.

Current wording

There was a $3.0 million provision for credit losses in the first quarter of 2026, compared to a $2.0 million recapture of credit losses in the first quarter of 2025. Net recoveries for the first quarter of 2026 were $9,000, compared to net recoveries of $130,000 in the first quarter of 2025. Projected loss rates were 0.93% at March 31, 2026, compared to 0.94% at March 31, 2025. The provision for credit losses for the first quarter of 2026 was largely attributable to a $3.2 million increase in specific reserves, primarily related to one commercial and industrial credit relationship.

Previous wording

No assurance can be given that economic conditions which affect the Company’s service areas or other circumstances will or will not be reflected in future changes in the level of our allowance for credit losses and the resulting provision or recapture of provision for credit losses. The process to estimate the allowance for credit losses requires considerable judgment and our economic forecasts may continue to vary due to the uncertainty of the future impact from geopolitical events, trade barriers, including tariff policies, and global inflation will have on future interest rates, unemployment, the overall economy and resulting impact on our customers. See “Allowance for Credit Losses” under Analysis of Financial Condition herein.

Current wording

No assurance can be given that economic conditions which affect the Company’s service areas or other circumstances will or will not be reflected in future changes in the level of our allowance for credit losses and the resulting provision or recapture of provision for credit losses. The process to estimate the allowance for credit losses requires considerable judgment and our economic forecasts may continue to vary due to the uncertainty of the future impact from geopolitical events, trade barriers, including tariff policies, and global inflation will have on future interest rates, unemployment, the overall economy and resulting impact on our customers. Refer to Item 2 –MD&A - Analysis of Financial Condition - Allowance for Credit Losses 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

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 September 30, 2025, CitizensTrust had approximately $5.2 billion in assets under management and administration, including $3.7 billion in assets under management. CitizensTrust generated fees of $3.9 million for the third quarter of 2025, compared to $3.6 million for the same period of 2024.

Current wording

Trust and Investment Services represents our CitizensTrust group. The CitizensTrust group is made up of wealth management and investment services. CitizensTrust provides 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 March 31, 2026, CitizensTrust had approximately $5.06 billion in assets under management and administration, including $3.70 billion in assets under management. CitizensTrust generated fees of $3.7 million for the first quarter of 2026, compared to $3.4 million for the same period last year.

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 1.50% for the third quarter of 2025, compared to 1.42% for the third quarter of 2024.

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 1.58% for the first quarter of 2026, compared to 1.58% for the first quarter of 2025.

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 45.56% for the third quarter of 2025, compared to 46.53% for the third quarter of 2024.

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 45.84% for the first quarter of 2026, compared to 46.69% for the first quarter of 2025.

Previous wording

The Company’s effective tax rate for the three and nine months ended September 30, 2025 was 23.80% and 25.60% compared to 24.25% and 26.25%, for the three and nine months ended September 30, 2024, respectively. Our estimated annual effective tax rate also varies depending upon the level of tax-advantaged income from municipal securities and bank owned life insurance ("BOLI"), as well as available tax credits. The decrease in the effective tax rate was primarily driven by increased investments in solar tax credits.

Current wording

The Company’s effective tax rate for the three months ended March 31, 2026 was 25.60% compared to 26.50% for the three months ended March 31, 2025, respectively. Our estimated annual effective tax rate also varies depending upon the level of tax-advantaged income from municipal securities and bank owned life insurance (“BOLI”), as well as available tax credits. The decrease in the effective tax rate was primarily driven by increased investments in solar tax credits.

Previous wording

Total assets of $15.67 billion at September 30, 2025 increased by $512.6 million, or 3.38%, from total assets of $15.15 billion at December 31, 2024. Interest-earning assets of $14.01 billion at September 30, 2025 increased by $483.9 million, or 3.58%, when compared with $13.53 billion at December 31, 2024. The increase in interest-earning assets was primarily due to a $581.2 million increase in interest-earning balances due from the Federal Reserve, offset by a $65.5 million decrease in total loans, and a $44.5 million decrease in investment securities.

Current wording

Total assets of $15.51 billion at March 31, 2026 decreased by $123.5 million, or 0.79%, from total assets of $15.63 billion at December 31, 2025. Interest-earning assets of $13.86 billion at March 31, 2026 decreased by $135.4 million, or 0.97%, when compared with $13.99 billion at December 31, 2025. The decrease in interest-earning assets was primarily due to a $116.3 million decrease in investment securities and a $55.9 million decrease in total loans, offset by a $44.9 million in crease in interest-earnings balances due from the Federal Reserve.

Previous wording

Total liabilities were $13.38 billion at September 30, 2025, an increase of $416.8 million, or 3.21%, from total liabilities of $12.97 billion at December 31, 2024. Total deposits increased by $175.9 million, or 1.47%, with noninterest-bearing deposits increasing by $207.9 million, or 2.95%. Interest-bearing deposits declined by $32.0 million, or 0.65%. Borrowings remained the same balance as of December 31, 2024. At September 30, 2025, total borrowings consisted of $500 million of FHLB advances, at an average cost of approximately 4.6%.

Current wording

Total liabilities were $13.19 billion at March 31, 2026, a decrease of $149.5 million, or 1.12%, from total liabilities of $13.34 billion at December 31, 2025. Total deposits decreased by $126.8 million, or 1.05%, with interest-bearing deposits decreasing by $426.6 million, or 8.09%. Noninterest-bearing deposits increased by $299.8 million, or 4.41%. Borrowings remained the same balance as of December 31, 2025. At March 31, 2026, total borrowings consisted of $500 million of FHLB advances, at an average cost of approximately 4.6%.

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. At September 30, 2025, total investment securities were $4.88 billion. This represented a decrease of $44.5 million, or 0.90%, from $4.92 billion at December 31, 2024. The overall decrease in investment securities was primarily due to a $81.8 million decline in our HTM securities. At September 30, 2025, our AFS investment securities totaled $2.58 billion, inclusive of a pre-tax net unrealized loss of $333.8 million. The $113.9 million increase in fair value of our AFS securities since December 31, 2024 was partially offset by a $18.4 million decrease in the fair value of our derivatives that hedge the change in value of our AFS portfolio. The after-tax unrealized loss reported in AOCI on our AFS investment securities at September 30, 2025 was $236.8 million. The changes in the net unrealized holding loss resulted primarily from fluctuations in market interest rates. At September 30, 2025, investment securities HTM totaled $2.30 billion. For the nine months ended September 30, 2025 and 2024, repayments/maturities of investment securities totaled $339.4 million and $366.4 million, purchases totaled $250.2 million and $44.9 million, and sales totaled $65.5 million and $245.3 million, respectively. Total Commercial Property Assessed Clean Energy ("C-PACE") bonds which are included in our HTM securities portfolio at September 30, 2025 were $17.7 million, of which $6.2 million was originated in the first nine months of 2025.

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 March 31, 2026, total investment securities were $4.84 billion, a decrease of $116.3 million, or 2.35%, from $4.95 billion at December 31, 2025. The overall decrease in investment securities was primarily due to repayment and maturities At March 31, 2026, our AFS investment securities totaled $2.59 billion, inclusive of a pre-tax net unrealized loss of $310.4 million. The after-tax unrealized loss reported in accumulated other comprehensive income (“AOCI”) on our AFS investment securities at March 31, 2026 was $220.1 million, an increase of $1.8 million from $218.3 million after-tax unrealized loss at December 31, 2025. The changes in the net unrealized holding loss resulted primarily from fluctuations in market interest rates. At March 31, 2026, investment securities HTM totaled $2.25 billion, a decrease of $22.4 million from December 31, 2025. For the three months ended March 31, 2026 and 2025, repayments/maturities of investment securities totaled $111.1 million and $84.7 million, respectively. There were no investments sold during the first quarter of 2026 and 2025. During the first quarter of 2026 and 2025, the Company originated $1.1 million and $1.7 million, respectively, of Commercial Property Assessed Clean Energy (“C-PACE”) bonds, which are included in our HTM securities.

Previous wording

As of September 30, 2025, $21.8 million in U.S. government agency bonds are callable. The Agency CMO/REMIC securities are backed by agency-pooled collateral. Municipal bonds, which represented approximately 9% of the total investment portfolio, are predominately AA or higher rated securities.

Current wording

Approximately 89% of the total investment securities portfolio at March 31, 2026 represents securities 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 March 31, 2026, $20.9 million in U.S. government agency bonds are callable. The Agency CMO/REMIC securities are backed by agency-pooled collateral. Municipal bonds, which represented approximately 10% of the total investment portfolio, are predominately AA or higher rated securities.

Previous wording

Total loans and leases, at amortized cost, of $8.47 billion at September 30, 2025 decreased by $65.5 million, or 0.77%, from December 31, 2024. The decrease in total loans included decreases of $138.5 million in dairy & livestock loans, offset partially by increases of $14.0 million in commercial and industrial loans, $27.9 million in commercial real estate loans, $13.9 million in construction loans, $11.6 million in agribusiness loans, and $16.9 million in single family residential loans. The decline in dairy & livestock loans primarily relates to the seasonal peak in line utilization at the end of every calendar year, demonstrated by a decline in utilization from 81% at the end of 2024 to 64% at September 30, 2025. Excluding the decline in dairy & livestock loans, total gross loans would have increased by $73.0 million.

Current wording

Total loans and leases, at amortized cost, of $8.64 billion at March 31, 2026 decreased by $55.9 million, or 0.64%, from December 31, 2025. The decrease in total loans was largely attributable to the decrease of $116.7 million in dairy & livestock and agribusiness loans. The decline in dairy & livestock loans primarily relates to the seasonal peak in line utilization at the end of every calendar year, demonstrated by a decline in utilization from 78% at the end of 2025 to 69% at March 31, 2026. Excluding the decline in dairy & livestock loans, total gross loans would have increased by $58.0 million from the prior year end.

Previous wording

As of September 30, 2025, $411.4 million, or 6.30% 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 $102.0 million for loans secured by dairy & livestock land and $309.4 million for loans secured by agricultural land at September 30, 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 September 30, 2025, dairy & livestock and agribusiness loans of $293.0 million were comprised of $246.7 million of dairy & livestock loans and $46.2 million of agribusiness loans, compared to $419.9 million comprised of $385.3 million of dairy & livestock loans and $34.6 million of agribusiness loans December 31, 2024.

Current wording

As of March 31, 2026, $428.8 million, or 6.47% of the total commercial real estate loans included loans secured by farmland, compared to $424.5 million, or 6.46%, at December 31, 2025. The loans secured by farmland included $123.5 million for loans secured by dairy & livestock land and $305.3 million for loans secured by agricultural land at March 31, 2026, compared to $119.0 million for loans secured by dairy & livestock land and $305.5 million for loans secured by agricultural land at December 31, 2025. As of March 31, 2026, dairy & livestock and agribusiness loans of $314.8 million were comprised of $272.1 million of dairy & livestock loans and $42.7 million of agribusiness loans, compared to $431.6 million comprised of $386.1 million of dairy & livestock loans and $45.5 million of agribusiness loans December 31, 2025.

Previous wording

As of September 30, 2025, the Company had $211.2 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 September 30, 2025, the Company had $55.0 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 March 31, 2026, the Company had $241.6 million of SBA 504 loans, an increase of $12.8 million compared to $228.8 million of SBA 504 loans at December 31, 2025. 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 March 31, 2026 and December 31, 2025, the Company had $50.1 million and $53.6 million of total SBA 7(a) loans, respectively, 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 September 30, 2025, the Company had $30.0 million in construction loans. This represents 0.36% of total loans held-for-investment. There were no nonperforming construction loans at September 30, 2025.

Current wording

As of March 31, 2026, the Company had $59.3 million in construction loans, representing 0.70% of total loans. As of December 31, 2025, the Company had $37.8 million in construction loans, representing 0.40% of total loans. There were no nonperforming construction loans at March 31, 2026 and December 31, 2025.

Previous wording

Our loan portfolio is geographically disbursed throughout our marketplace. The following is the breakdown of our total held-for-investment commercial real estate loans, by region as of September 30, 2025.

Current wording

Our loan portfolio is geographically disbursed throughout our marketplace. The following is the breakdown of our total held-for-investment loans and commercial real estate loans by region as of March 31, 2026.

Previous wording

The table below breaks down our commercial real estate portfolio.

Current wording

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

Previous wording

The loans secured by farmland included $102.0 million for loans secured by dairy & livestock land and $309.4 million for loans secured by agricultural land at September 30, 2025.

Current wording

The loans secured by farmland included $123.5 million for loans secured by dairy & livestock land and $305.3 million for loans secured by agricultural land at March 31, 2026.

Previous wording

Classified loans are loans that are graded “substandard” or worse. Classified loans increased $4.8 million quarter-over-quarter, primarily due to a downgrade of a $2.9 million commercial and industrial loan.

Current wording

Classified loans are loans that are graded “substandard” or worse. Classified loans increased $30.4 million quarter-over-quarter, primarily due to the downgrade of four commercial and industrial loans totaling $18.1 million, three commercial real estate loans totaling $12.9 million, and two dairy & livestock loans totaling $4.4 million.These increases are partially offset by loan paydowns and payoffs during the quarter.

Previous wording

There were 16 loans to borrowers experiencing financial difficulty that were modified during the nine months ended September 30, 2025 with an amortized cost totaling $10.8 million at September 30, 2025, including seven commercial real estate loans totaling $8.4 million, eight commercial and industrial loans totaling $1.9 million and a dairy & livestock and agribusiness loan of $395,000.

Current wording

There were two loans to borrowers experiencing financial difficulty that were modified during the three months ended March 31, 2026 with an amortized cost totaling $15.1 million at March 31, 2026, including one commercial and industrial loan for $10.4 million and one dairy & livestock and agribusiness loan for $4.7 million.

Previous wording

During the three and nine months ended September 30, 2025, a commercial real estate loan defaulted within 12 months after the loan was modified with a term extension. The amortized cost of the loan was $244,300. Payment default is defined as movement to nonaccrual (nonperforming) status, foreclosure or charge-off, whichever occurs first.

Current wording

During the three months ended March 31, 2026 and 2025, the Company did not have any modified loans that subsequently defaulted within twelve months of the modification date. Payment default is defined as movement to nonaccrual (nonperforming) status, foreclosure or charge-off, whichever occurs first.

Previous wording

At September 30, 2025 and December 31, 2024, there was no ACL allocated to modified loans to borrowers experiencing financial difficulty. Impairment amounts identified are typically charged off against the allowance at the time the loan is considered uncollectible. There were no charge-offs on loans to borrowers experiencing financial difficulty for the nine months ended September 30, 2025 and 2024.

Current wording

At March 31, 2026 and December 31, 2025, there was no ACL allocated to modified loans to borrowers experiencing financial difficulty. Impairment amounts identified are typically charged off against the allowance at the time the loan is considered uncollectible. There were no charge-offs on loans to borrowers experiencing financial difficulty for the three months ended March 31, 2026 and 2025.

Previous wording

The allowance for credit losses totaled $79.3 million as of September 30, 2025, compared to $80.1 million as of December 31, 2024 and $82.9 million as of September 30, 2024. Our allowance for credit losses at September 30, 2025 was 0.94% of total loans. This compares to 0.94% at December 31, 2024 and 0.97% at September 30, 2024. The decrease in our allowance for credit losses from December 31, 2024 was due to a $1.0 million recapture of credit losses compared to no provision for credit losses recorded for the nine months ended September 30, 2024. Net recoveries were $214,000 for the nine months ended September 30, 2025, compared to net charge-offs of $3.9 million for the same period of 2024.

Current wording

The allowance for credit losses totaled $80.2 million as of March 31, 2026, compared to $77.2 million as of December 31, 2025. Our allowance for credit losses at March 31, 2026 was 0.93% of total loans, compared to 0.89% at December 31, 2025. The increase in our allowance for credit losses from December 31, 2025 was due to a $3.0 million provision for credit losses compared to a $2.0 million recapture of credit losses recorded for the quarter ended March 31, 2025. Net recoveries were $9,000 for the three months ended March 31, 2026, compared to net recoveries of $130,000 for the same period of 2025. The increase in the allowance for the period ending March 31, 2026, was primarily due to the addition of specific reserves totalling $3.2 million, including reserves for the additional nonperforming commercial and industrial loan of $2.9 million.