CVB FINANCIAL CORP
For the period ended Jun 30, 2026. Filed Aug 7, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2026 · Filed Aug 7, 2026
CVBF$22.74-0.5%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-03-31; filed 2026-05-08.
0001193125-26-214674
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCRITICAL ACCOUNTING POLICIESOVERVIEWANALYSIS OF THE RESULTS OF OPERATIONSANALYSIS OF FINANCIAL CONDITIONASSET/LIABILITY AND MARKET RISK MANAGEMENTCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-08-07.
0001193125-26-340248
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCRITICAL ACCOUNTING POLICIESOVERVIEWANALYSIS OF THE RESULTS OF OPERATIONSANALYSIS OF FINANCIAL CONDITIONASSET/LIABILITY AND MARKET RISK MANAGEMENTThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 176 previous paragraphs and 199 current paragraphs.
85 unchanged; 71 reworded; 37 added; 20 removed; 0 previous and 6 current paragraphs rearranged.
Tables are not compared: 22 previous and 29 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (37)
Current report
For additional information on the acquisition of Heritage, see Note 4 -Business Combination.
Current report
The Company's financial results for the three and six months ended June 30, 2026 reflect the impact of the acquisition of Heritage completed on April 17, 2026.
Current report
For the six months ended June 30, 2026, net earnings was $99.3 million, or diluted earnings per share of $0.65, compared with $101.7 million, or diluted earnings per share of $0.73 for the six months ended June 30, 2025. Net earnings for the six months ended June 30, 2026 produced an annualized ROAE of 7.47%, ROATCE of 11.99%, and ROAA of 1.13% compared with 9.18%, 14.29%, and 1.35%, respectively, for the same period last year. Our NIM, on a tax equivalent basis, was 3.60% for six months ended June 30, 2026, while our efficiency ratio was 56.15%, compared with a NIM of 3.31% and an efficiency ratio of 46.12% for the same period last year. Excluding acquisition expense and the provision for unfunded commitments, our adjusted efficiency ratio was 44.19% for the six months ended June 30, 2026, compared with 45.92% for the same period last year.
Current report
For the second quarter of 2026, net interest income was $162.4 million, an increase of $50.8 million, or 45.5%, from the second quarter of 2025. The increase was primarily attributable to a $57.9 million increase in interest income driven by a $4.01 billion increase in average interest-earning assets and a 34 basis point increase in the yield on earning assets. The increase in interest income was offset by a $7.1 million increase in interest expense attributable to a $2.83 billion increase in average interest-bearing deposits and customer repurchase agreements. For the six months ended June 30, 2026, net interest income was $280.3 million, an increase of $58.2 million, or 26.2%, compared with the same period last year.
Current report
Noninterest income for the second quarter of 2026 was $17.0 million, an increase of $2.3 million, or 15.4%, from $14.7 million for the second quarter of 2025, reflecting the impact of the Heritage acquisition. The increase included $468,000 in trust and investment services, $377,000 in service charges on deposit accounts, $264,000 in Bank-owned life insurance (“BOLI”) income, and $1.2 million in other income. For the six months ended June 30, 2026, noninterest income was $31.3 million, an increase of $316,000, or 1.0%, from $31.0 million from the same period last year.
Current report
Noninterest expense for the second quarter of 2026 was $114.4 million, an increase of $56.8 million, or 98.7%, from $57.6 million for the second quarter of 2025. The increase was primarily attributable to the Heritage acquisition and the related addition of operations, personnel, and banking centers. During the second quarter of 2026, the Company incurred $31.4 million of acquisition expenses and recorded an initial provision of $4.3 million for unfunded loan commitments acquired in the transaction. Excluding acquisition expense and the provision for unfunded loan commitments, the increase in noninterest expense compared with the second quarter of 2025 was $21.2 million. For the six months ended June 30, 2026, noninterest expense was $174.9 million, an increase of $58.2 million, or 49.9% from the same period last year.
Current report
At June 30, 2026, total assets were $21.18 billion, an increase of $5.55 billion, or 35.52%, from total assets of $15.63 billion at December 31, 2025. Interest-earning assets were $18.69 billion at June 30, 2026, an increase of $4.69 billion, or 33.56%, compared with $13.99 billion at December 31, 2025. The increase in interest-earning assets was primarily due to a $3.32 billion increase in total loans, a $728.0 million increase in cash and cash equivalents, and a $722.8 million increase in investment securities. The increase in total assets primarily reflected the impact of the Heritage acquisition completed on April 17, 2026, which added approximately $5.41 billion of assets, partially offset by balance sheet optimization activities during the quarter.
Current report
Total loans and leases, at amortized cost, of $12.02 billion at June 30, 2026, increased by $3.32 billion, or 38.1%, from December 31, 2025. The increase was primarily attributable to the Heritage acquisition, which added $3.10 billion of loans held for investment recorded at fair value as of the acquisition date, as well as organic loan growth. To further optimize the balance sheet, the Company sold SFR mortgage pools acquired from Heritage at their fair value of $327.5 million during the second quarter of 2026. The increase in total loans and leases included increases of $2.41 billion in commercial real estate loans, $505.3 million in commercial and industrial loans, $172.2 million in construction loans, $166.2 million in consumer loans, $159.2 million in SBA loans, and $59.6 million in SFR mortgage loans. Our average loan yields were 5.53% for the quarter ended June 30, 2026, compared with 5.22% for the second quarter of 2025.
Current report
The allowance for credit losses totaled $126.7 million at June 30, 2026, compared with $77.2 million at December 31, 2025. There was no provision for credit losses for either the second quarter of 2026 or 2025. The $49.5 million increase was primarily the result of the $46.9 million allowance for credit losses established for the loans acquired from Heritage and a $3 million provision for credit losses incurred in the first quarter of 2026.
Current report
Noninterest-bearing deposits were $8.61 billion at June 30, 2026, an increase of $1.81 billion, or 26.6%, compared with $6.80 billion at December 31, 2025. The increase was primarily the result of $1.2 billion of noninterest-bearing deposits assumed in the Heritage merger. At June 30, 2026, noninterest-bearing deposits were 52.8% of total deposits, compared with 56.33% at December 31, 2025. The decline in the proportion of noninterest-bearing deposits reflected the mix of deposits assumed in the Heritage acquisition.
Current report
Interest-bearing deposits were $7.68 billion at June 30, 2026, an increase of $2.41 billion, or 45.7%, when compared with $5.27 billion at December 31, 2025. The increase in interest-bearing deposits primarily reflected $3.5 billion of interest-bearing deposits assumed in connection with the Heritage acquisition, partially offset by the maturity of $300.0 million of brokered CDs that were not renewed during the second quarter of 2026. Customer repurchase agreements totaled $563.4 million at June 30, 2026, compared with $490.6 million at December 31, 2025.
Current report
At June 30, 2026, total borrowings were $539.0 million, consisting of $500.0 million of FHLB advances and $39.0 million of subordinated debt assumed in the Heritage acquisition, compared with $500.0 million of FHLB advances at December 31, 2025. At June 30, 2026, FHLB advances consisted of $300.0 million of three-month advances that replaced maturing brokered CDs and were designated in related pay-fixed, receive-floating interest rate swaps accounted for as cash flow hedges, under which the Company pays a fixed rate of 4.10% and receives SOFR and a $200.0 million advance bearing interest at 4.27% maturing in May 2027.
Current report
Adjusted Efficiency Ratio (Non-GAAP)
Current report
Adjusted efficiency ratio is a non-GAAP financial measure derived from GAAP-based amounts. This figure represents the ratio of noninterest expense, less acquisition-related expense and the provision for unfunded loan commitments, where applicable, to the sum of net interest income before provision for credit losses and total noninterest income. Management believes that the exclusion of such items from this financial measure provides useful information to gain an understanding of the operating results of our core business.
Current report
Net interest income, before provision for credit losses, of $162.4 million for the second quarter of 2026 increased by $50.8 million, or 45.5%, from the second quarter of 2025. The increase was driven by a $57.9 million increase in interest income, partially offset by a $7.1 million increase in interest expense. The year-over-year increase in net interest income largely reflected the impact of operating as a combined company for approximately two and a half months following the Heritage acquisition.
Current report
Total interest income and fees on loans for the second quarter of 2026 were $159.2 million, an increase of $50.4 million, or 46.3%, from the second quarter of 2025. This increase in income was due to the $3.19 billion increase in average loan balances and a 31 basis point increase in average loan yields from 5.22% for the second quarter of 2025 to 5.53% for the second quarter of 2026. In addition to the impact of originating new loans at higher yields than the existing loan portfolio, the increase in average loan yields reflected the Heritage acquisition and the addition of higher-yielding acquired assets, including factored receivables that averaged approximately $86.1 million during the second quarter of 2026. Through the Heritage acquisition, the Company acquired CSNK Working Capital Finance Corp., doing business as Bay View Funding, a wholly owned subsidiary of the Bank that provides working capital factoring financing to businesses throughout the United States. During the second quarter of 2026, the average yield on factored receivables was 18.04%.
Current report
Interest income from investment securities was $35.6 million for the second quarter of 2026, an increase of $4.4 million, or 14.0%, from the second quarter of 2025. A nine basis point increase in yields on investment securities was partially 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 0.50% in the second quarter of 2025 to negative 0.09% in the second quarter of 2026, resulting in a $1.4 million decrease in interest income. Excluding the impact of the pay-fixed swaps, the average yield on investment securities increased by 25 basis points, due to the higher yield on investment securities purchased and acquired during the first six months of 2026.
Current report
Net interest income, before provision for credit losses, was $280.3 million for the six months ended June 30, 2026, an increase of $58.2 million, or 26.21%, compared with $222.1 million for the same period last year. The increase was attributable to higher balance and yields on average interest-earning assets as well as lower cost of funds, partially offset by an increase in the balance of interest-bearing liabilities. The increases in average interest-earning assets and interest-bearing liabilities reflected the impact of interest-earning assets and interest-bearing liabilities acquired in connection with the Heritage acquisition, as well as organic growth.
Current report
Our net interest margin (TE) was 3.60% for the six months ended June 30, 2026, compared with 3.31% for the same period last year. The expansion in net interest margin was primarily due to a 22 basis point increase in the yield on average interest-earning assets, as well as a two basis point decrease in the cost of funds.
Current report
Total interest income was $351.2 million for the six months ended June 30, 2026, an increase of $64.0 million, or 22.29%, compared with the same period last year. This increase was primarily due to a $2.18 billion increase in average interest-earning assets and a 22 basis point increase in the yield on interest-earning assets. Average loan balances increased by $1.68 billion, average interest-earning deposits with other institutions increased by $230.3 million, and average investment securities increased by $219.1 million from the same period last year.
Current report
Interest expense was $71.0 million for the six months ended June 30, 2026, an increase of $5.8 million, or 8.94%, from the same period last year. Total cost of funds for the six months ended June 30, 2026, was 0.97%, compared with 1.03% for the same period last year. Although average noninterest-bearing deposits declined as a percentage of average total deposits to 54.68% from 59.37%, resulting in a less favorable deposit mix, the cost of total interest-bearing deposits decreased by 31 basis points, more than offsetting the impact of the lower proportion of noninterest-bearing deposits. However, the cost of customer repurchase agreements increased from 1.47% in the six months ended June 30, 2025 to 1.75% in the six months ended June 30, 2026.
Current report
The provision for credit losses on loans was zero for both the second quarter of 2026 and 2025. Net charge-offs for the second quarter of 2026 were $137,000, compared with net charge-offs of $249,000 for the second quarter of 2025.
Current report
Noninterest income for the second quarter of 2026 increased by $2.3 million, or 15.37%, compared with the second quarter of 2025, primarily reflecting the impact of the Heritage acquisition. The increase was driven by higher fee income across almost all categories and higher BOLI income associated with policies acquired in the merger. The increase was primarily attributable to $468,000 in trust and investment services fees, $377,000 in service charges on deposit accounts, $264,000 in BOLI income, and $1.2 million in other income. International and other banking service fees, which increased by approximately $350,000, are the most significant components of other noninterest income.
Current report
Noninterest income for the six months ended June 30, 2026 increased by $316,000, or 1.02%, compared with the same period last year. The increase was primarily driven by increases in service charges, trust revenue, and BOLI income, reflecting the combined operations following the acquisition of Heritage, partially offset by a $2.2 million gain on sale of OREO during the six months ended June 30, 2025. Trust and investment fees grew by $781,000 or 10.96% due primarily to increased assets under management. BOLI income increased by $572,000, or 9.44%, including changes in net asset value of policies related to deferred compensation arrangements.
Current report
Noninterest expense for the second quarter of 2026 was $114.4 million, an increase of $56.8 million, or 98.7%, from $57.6 million for the second quarter of 2025. The increase was primarily attributable to the Heritage acquisition and the related addition of operations, personnel, and banking centers. During the second quarter of 2026, the Company incurred $31.4 million of acquisition expenses. Excluding acquisition expense, noninterest expense increased $25.4 million compared with the second quarter of 2025. This increase was primarily driven by an $11.6 million increase in salaries and employee benefits, a $4.3 million increase in provision for unfunded loan commitments attributable to the Heritage acquisition, a $2.4 million increase in amortization of intangible assets related to the core deposit intangibles, a $2.2 million increase in occupancy and equipment and a $1.8 million increase in computer software expense. Excluding acquisition expense and the provision for unfunded loan commitments, the increase in noninterest expense compared to the second quarter of 2025 was $21.2 million. The remaining increases primarily reflect the addition of personnel, facilities, technology platforms, and other operating costs resulting from the Heritage acquisition.
Current report
For the six months ended June 30, 2026, noninterest expense was $174.9 million, an increase of $58.2 million, or 49.9% from the same period last year. The increase was primarily attributable to the Heritage acquisition and the related addition of operations, personnel, and banking centers. During the six months ended June 30, 2026, the Company incurred $32.5 million of acquisition expenses. Excluding acquisition expense, noninterest expense increased $25.7 million compared to the six months ended June 30, 2025. This increase was primarily driven by a $12.6 million increase in salaries and employee benefits, a $4.3 million increase in provision for unfunded loan commitment attributable to the Heritage acquisition, a $2.3 million increase in occupancy and equipment, and a $2.1 million increase in amortization of intangible assets, a $1.8 million increase in computer software expense, and a $1.5 million increase in professional services expense. Excluding acquisition expense and the provision for unfunded loan commitments, the increase in noninterest expense compared to the six months ended June 30, 2025 was $21.5 million. The remaining increases primarily reflect the addition of personnel, facilities, technology platforms, and other operating costs resulting from the Heritage acquisition.
Current report
Total stockholders' equity increased by $874.5 million to $3.17 billion at June 30, 2026, compared with total stockholder's equity of $2.30 billion at December 31, 2025. The increase was primarily attributable to $840.2 million of common shares issued and exchanged in connection with the Heritage acquisition and $99.3 million in net earnings, partially offset by $62.5 million in cash dividends declared and $5.1 million of common stock repurchases. During the first six months of 2026, the Company purchased 241,034 shares under the 2026 Repurchase Program, at an average price of $21.06 per share.
Current report
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 June 30, 2026, total investment securities were $5.68 billion, an increase of $722.8 million, or 14.6%, from $4.95 billion at December 31, 2025. The increase was primarily attributable to approximately $519.0 million of AFS investment securities acquired and retained in the Heritage acquisition, as well as approximately $511.5 million of purchases of AFS securities during the second quarter of 2026. As part of the Company's balance sheet strategy to improve portfolio yields and reduce asset duration, approximately $488.2 million of securities acquired from Heritage were sold upon completion of the merger and reinvested in lower duration securities at an average yield of approximately 4.70%. The repositioning enhanced the portfolio's expected yield while reducing duration risk.
Current report
At June 30, 2026, AFS investment securities totaled $3.46 billion, inclusive of a pre-tax net unrealized loss of $323.5 million, an increase of $774.7 million, or 28.87%, from $2.68 billion at December 31, 2025. The after-tax unrealized loss on our AFS investment securities reported in accumulated other comprehensive income (“AOCI”) was $229.5 million, compared with $218.3 million at December 31, 2025. The changes in the net unrealized holding loss resulted primarily from fluctuations in market interest rates. At June 30, 2026, HTM investment securities totaled $2.22 billion, a decrease of $51.9 million, or 2.3%, from $2.27 billion at December 31, 2025. Our average tax-equivalent yield on investments was 2.74% for the second quarter of 2026, compared with 2.62% for the second quarter of 2025.
Current report
The following table presents the composition of our loan portfolio as of the dates presented.
Current report
The loans secured by farmland included $124.4 million for loans secured by dairy & livestock land and $293.8 million for loans secured by agricultural land at June 30, 2026.
Current report
Classified loans are loans that are graded “substandard” or worse. Classified loans increased $57.0 million from December 31, 2025, largely driven by $29.1 million of classified loans acquired in the Heritage merger and changes in loan risk ratings, partially offset by loan payoffs and paydowns.
Current report
Despite the increase in nonperforming and classified loans following the Heritage acquisition, asset quality metrics remained favorable, with nonperforming loans representing 0.14% of total loans at June 30, 2026.
Current report
Total deposits were $16.29 billion at June 30, 2026, an increase of $4.22 billion, or 34.93%, compared with total deposits of $12.07 billion at December 31, 2025. The increases primarily reflected $1.2 billion of noninterest-bearing deposits and $3.5 billion of interest-bearing deposits assumed in connection with the Heritage acquisition completed during the second quarter of 2026.
Current report
In connection with the Heritage acquisition, the Company assumed Heritage's $40 million subordinated debt, which bears a fixed rate of 5.0% until May 15, 2027 and had a market value of $38.7 million at the acquisition date. The Company currently expects to redeem the subordinated notes, in whole or in part, on or after May 15, 2027. See Note 8 -Borrowings for additional information.
Current report
Total stockholders' equity increased $874.5 million to $3.17 billion at June 30, 2026, compared with total stockholders' equity of $2.30 billion at December 31, 2025. The increase was primarily due to $840.2 million of common shares issued and exchanged as a result of the Heritage acquisition and $99.3 million in net earnings, partially offset by $62.5 million in cash dividends declared and $5.1 million common stock repurchases.
Current report
The following table presents the Company’s projected net interest income sensitivity as of the dates indicated under various interest rate shock scenarios over the applicable measurement periods.
Removed paragraphs (20)
Previous report
Net interest income was $117.8 million for the first quarter of 2026, an increase of $7.4 million, or 6.70%, from the first quarter of 2025. The increase was primarily driven by a $6.1 million increase in interest income that resulted from $335.7 million in higher average interest-earning assets and a seven basis point increase in the yield on earning assets. In addition to the increase in interest income, interest expense declined from the first quarter of 2025 by $1.3 million, as a five basis point decrease in the cost of deposits and customer repurchase agreements offset the $288.2 million increase in average total deposits and customer repurchase agreements.
Previous report
Noninterest income was $14.3 million for the first quarter of 2026, a decrease of $2.0 million, or 12.0%, compared to $16.2 million for the first quarter of 2025. The decrease was primarily due to a $2.2 million gain on sale of other real estate owned (“OREO”) during the first quarter of 2025. Bank-owned life insurance (“BOLI”) income for the first quarter of 2026 increased by $308,000 compared to the first quarter of 2025. Trust and investment services income increased by $300,000, or 9.2%, from the first quarter of 2025.
Previous report
Noninterest expense for the first quarter of 2026 was $60.6 million, an increase of $1.4 million, or 2.41%, compared to $59.1 million for the first quarter of 2025. Acquisition related expenses for the acquisition of Heritage Commerce Corp, announced at the end of the fourth quarter of 2025, totaled $1.1 million in the first quarter of 2026. Excluding acquisition expense, the increase in noninterest expense compared to the first quarter of 2025 was $295,000.
Previous report
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 from the prior year end was primarily due to decreases of $114.0 million in dairy and livestock loans associated with the seasonal increase that occurs every calendar year end, offset in part by increases of $56.8 million in commercial real estate loans. Our loan yields were 5.32% for the quarter ended March 31, 2026, compared to 5.22% for the first quarter of 2025.
Previous report
The allowance for credit losses totaled $80.2 million at March 31, 2026, compared to $77.2 million at December 31, 2025. The increase was primarily due to a $3.0 million provision for credit losses in the first quarter of 2026.
Previous report
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 report
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 report
The Heritage Merger will be accounted for under ASC 805 as a business combination. Effective the closing date of April 17, 2026, Heritage’s financial results are included in the Company’s consolidated operations and will be reported in the Company’s second quarter 2026 results.
Previous report
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 report
Noninterest income in the first quarter of 2026 decreased by $2.0 million, or 12%, compared to the same period in 2025. The decrease was driven primarily by the $2.2 million gain on sale of OREO that occurred during the first quarter of 2025. A decrease of $334,000 in other income, partially offset a $313,000 increase in trust and investment services and a $308,000 increase in BOLI income.
Previous report
Noninterest expense was $60.6 million for the first quarter of 2026, an increase of $1.4 million, or 2.4%, compared to the first quarter of 2025. Excluding acquisition expense, noninterest expense decreased by $295,000. Acquisition related expenses for the Heritage merger, announced at the end of the fourth quarter of 2025, totaled $1.1 million in the first quarter of 2026. Salaries and employee benefits increased by $984,000 and professional services increased by $437,000. These increases in noninterest expense were offset by a $1.6 million reduction in regulatory assessment expense resulting from a reduction in the FDIC special assessment accrual.
Previous report
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 report
Total equity increased $26.1 million to $2.32 billion at March 31, 2026, compared to total equity of $2.30 billion at December 31, 2025. Increases to equity included $51.0 million in net earnings and a $2.6 million increase in other comprehensive income that were partially offset by $27.2 million in cash dividends. We engaged in no stock repurchases during the first quarter of 2026.
Previous report
The allowance for credit losses on investment securities is determined for both the AFS and HTM classifications of the investment portfolio in accordance with ASC 326. We review investment securities to determine whether unrealized losses are deemed credit related or due to other factors such as changes in interest rates and general market conditions, issuer rating changes and trends. Non-credit related unrealized losses on AFS investment securities, which may be attributed to changes in interest rates and other market-related factors, are not recorded through an ACL. Such declines are recorded as an adjustment to accumulated other comprehensive loss, net. In the event the Company is required to sell or has the intent to sell an AFS security that has experienced a decline in fair value below its amortized cost, the Company writes the amortized cost of the security down to fair value in the current period. Management determined that credit losses did not exist for securities in an unrealized loss position as of March 31, 2026 and December 31, 2025.
Previous report
Commercial and Industrial loans decreased by $21.4 million from prior year end, as line utilization decreased from 32% at the end of 2025 to 30% at March 31, 2026. Partially offsetting the decline in line usage from the end of 2025 was loan growth in commercial real estate loans of $56.8 million, construction loans of $21.5 million, and Small Business Administration (“SBA”) loans of $9.3 million.
Previous report
The following table presents our loan portfolio by type as of the dates presented.
Previous report
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 report
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 report
Total stockholders' equity increased $26.1 million to $2.32 billion at March 31, 2026, compared to total stockholders' equity of $2.30 billion at December 31, 2025. Increases to equity included $51.0 million in net earnings and a $2.7 million increase in other comprehensive income, partially offset by $27.2 million in cash dividends declared. During the first quarter of 2025, we repurchased 782,063 shares at an average price of $19.55, totaling $15.3 million. Our tangible book value per share at March 31, 2026 was $11.42, compared to $11.24 at December 31, 2025. Tangible book value per share is a non-GAAP financial measure. For additional details, refer to Item 2. MD&A — GAAP to Non-GAAP Reconciliation in this Form 10-Q.
Previous report
The following depicts the Company’s net interest income sensitivity analysis for the periods presented below, when rates are adjusted by ramping up 200 bps or ramping down 200 bps over a 12-month and 24-month time horizons.
Reworded paragraphs (71)
Previous wording
On April 17, 2026, the Company completed its previously announced acquisition of Heritage Commerce Corp (“Heritage”), including its banking subsidiary, Heritage Bank of Commerce, in an all-stock transaction in accordance with the terms and conditions of that certain Agreement and Plan of Reorganization and Merger, dated as of December 17, 2025, by and between CVB and Heritage (the “Merger Agreement”). On the Closing Date, Heritage merged with and into CVB, with CVB being the surviving entity (the “Heritage Merger”). Immediately thereafter, Heritage’s wholly-owned banking subsidiary, Heritage Bank of Commerce, merged with and into Citizens Business Bank, N.A. Under the terms of the Merger Agreement, Heritage shareholders received 0.65 shares of the Company’s common stock for each share of Heritage common stock they own. As a result of the merger, the Company issued approximately 41 million shares of common stock to former Heritage shareholders, representing approximately $845 million of consideration. At close, Heritage had loans with a book value of approximately $3.6 billion and approximately $4.8 billion of deposits.
Current wording
On April 17, 2026, the Company completed its previously announced acquisition of Heritage Commerce Corp and its wholly-owned banking subsidiary, Heritage Bank of Commerce (collectively, “Heritage”). The systems conversion was also completed during the second quarter of 2026. The acquisition was an all-stock transaction accounted for under the acquisition method of accounting as a business combination pursuant to the Agreement and Plan of Reorganization and Merger, dated December 17, 2025 (the “Merger Agreement”), by and between CVB and Heritage. Under the terms of the Merger Agreement, Heritage shareholders received 0.65 shares of the Company’s common stock for each share of Heritage common stock owned. Total merger consideration was $845.5 million. Upon closing, the Company acquired loans with a fair value of $3.4 billion and investment securities with a fair value of $1.0 billion, and assumed $1.2 billion of noninterest-bearing deposits, $3.5 billion of interest-bearing deposits, and $38.7 million of subordinated debt. The preliminary purchase price allocation resulted in $450.7 million of intangible assets, consisting of a core deposit intangible asset of $116.6 million and goodwill of $334.1 million.
Previous 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.
Current wording
For the second quarter of 2026, we reported net earnings of $48.3 million, or diluted earnings per share of $0.29, compared with $50.6 million, or diluted earnings per share of $0.37 for the second quarter of 2025. Net earnings for the second quarter of 2026 generated an annualized return on average equity (“ROAE”) of 6.41%, an annualized return on average tangible common equity (“ROATCE”) of 10.85%, and an annualized return on average assets (“ROAA”) of 0.97%, compared with 9.06%, 14.08%, and 1.34%, respectively, for the second quarter of 2025. Our net interest margin (“NIM”), on a tax equivalent basis, was 3.72% for the second quarter of 2026, while our efficiency ratio was 63.75%. Excluding acquisition expense and provision for unfunded commitments, our adjusted efficiency ratio was 43.88% for the second quarter of 2026, compared with 45.55% for the second quarter of 2025. ROATCE and the adjusted efficiency ratio are non-GAAP financial measures. 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 Reconciliations in this Form 10-Q.
Previous 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.
Current wording
Total investment securities were $5.68 billion at June 30, 2026, an increase of $722.8 million, or 14.6%, from $4.95 billion at December 31, 2025. The increase was primarily attributable to $1.02 billion of investment securities acquired in the Heritage acquisition, of which $519.0 million was retained and $488.2 million were sold upon completion of the merger as part of the Company's balance sheet optimization strategy, as well as approximately $511.5 million of purchases of AFS securities during the second quarter of 2026. At June 30, 2026, investment securities held-to-maturity (“HTM”) totaled $2.22 billion, a decrease of $51.9 million, or 2.3%, from $2.27 billion at December 31, 2025. At June 30, 2026, available-for-sale (“AFS”) investment securities totaled $3.46 billion, inclusive of a pre-tax net unrealized loss of $323.5 million. AFS securities increased by $774.7 million, or 28.87%, from $2.68 billion at December 31, 2025. The pre-tax unrealized loss increased by $15.7 million from December 31, 2025. Our average tax equivalent yield on investments was 2.74% for the second quarter of 2026, compared to 2.62% for the second quarter of 2025.
Previous wording
Fair value hedging transactions with $700 million notional pay-fixed interest rate swaps, had a fair value which totaled $3.9 million and was reflected as a liability at March 31, 2026. The fair value of these instruments totaled $8.6 million and were reflected as a liability at December 31, 2025. These instruments generated negative interest income of $96,000 for the first quarter of 2026, compared to interest income of $1.1 million for the first quarter of 2025, respectively. Refer to Note 9 –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 $3.8 million and was reflected as an asset at June 30, 2026. The fair value of these instruments totaled $8.6 million and were reflected as a liability at December 31, 2025. These instruments generated negative interest income of $100,000 for the second quarter of 2026, compared to interest income of $1.2 million for the second quarter of 2025. Refer to Note 11 –Derivative Financial Instruments of the notes to the consolidated financial statements of this report for additional information.
Previous 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.
Current wording
Total deposits and customer repurchase agreements totaled $16.85 billion at June 30, 2026, an increase from December 31, 2025 of $4.29 billion, including $4.75 billion of total deposits assumed in the Heritage acquisition. Our average cost of total deposits including customer repurchase agreements was 0.86% for the quarter ended June 30, 2026, compared to 0.87% for the quarter ended June 30, 2025.
Previous wording
The Company’s total stockholders' equity was $2.32 billion at March 31, 2026, an increase of $26.1 million compared $2.30 billion at December 31, 2025. The increase was primarily attributable to $51.0 million in net earnings and a $2.7 million increase in other comprehensive income, partially offset by $27.2 million in cash dividends declared. We engaged in no stock repurchases during the first quarter of 2026. Our tangible book value per share at March 31, 2026 was $11.42, which compares to $11.24 at December 31, 2025. Tangible book value per share is a non-GAAP financial measure. For additional details, refer to Item 2. –MD&A — GAAP to Non-GAAP Reconciliation.
Current wording
Total stockholders' equity was $3.17 billion at June 30, 2026, an increase of $874.5 million compared with $2.30 billion at December 31, 2025. The increase was primarily attributable to $840.2 million of common shares issued and exchanged as a result of the Heritage acquisition and $99.3 million in net earnings, partially offset by $62.5 million in cash dividends declared and $5.1 million of common stock repurchases. During the second quarter of 2026, the Company repurchased 241,034 shares under the 2026 Repurchase Program at an average price of $21.06 per share for an aggregate purchase price of $5.1 million. Our tangible book value per share at June 30, 2026 was $11.07, which compares to $11.24 at December 31, 2025. Tangible book value per share is a non-GAAP financial measure. For additional details, refer to Item 2. –MD&A — GAAP to Non-GAAP Reconciliation.
Previous 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.
Current wording
Our capital ratios under the revised capital framework referred to as Basel III remain well-above regulatory requirements. As of June 30, 2026, the Company’s Tier 1 leverage capital ratio was 11.7%, Common Equity Tier 1 (“CET1”) ratio was 14.7%, Tier 1 risk-based capital ratio was 14.7%, and total risk-based capital ratio was 15.6%. 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 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.
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 and six months ended June 30, 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 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.
Current wording
Includes TE adjustments utilizing federal statutory corporate rates of 21% in effect for the three months ended June 30, 2026 and June 30, 2025. The non-TE rates for total investment securities were 2.70% and 2.57% for the three months ended June 30, 2026 and June 30, 2025, respectively.
Previous 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.
Current wording
Includes loan fees of $1.2 million and $615,000 for the three months ended June 30, 2026 and 2025, respectively. Prepayment penalty fees of $527,000 and $680,000 are included in interest income for the three months ended June 30, 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 net change or the combined impact of volume and rate changes allocated proportionately to changes in volume and changes in interest rates.
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 resulting from the combined impact of volume and interest rates changes has been allocated proportionately between changes attributable to volume and changes attributable to rates.
Previous wording
Our tax equivalent net interest margin for the first quarter of 2026 increased by 13 basis points compared to the first quarter of 2025. The expansion of net interest margin was due to an increase in the yield on average interest-earning assets of seven basis points, as well as a seven basis points decrease in cost of funds.
Current wording
Our tax-equivalent net interest margin increased 41 basis points to 3.72% for the second quarter of 2026, compared with the second quarter of 2025. The expansion in net interest margin was primarily due to a 34 basis point increase in the yield on average interest-earning assets, as well as a seven basis point decrease in the cost of funds.
Previous 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.
Current wording
Total interest income of $202.1 million increased by $57.9 million, or 40.2%, compared with the second quarter of 2025. This increase was primarily due to a $4.00 billion increase in average interest-earning assets and a 34 basis point increase in the yield on interest-earning assets. Average loan balances increased by $3.19 billion, average interest-earning deposits with other institutions increased by $331.2 million, and the average balance of investment securities increased by $423.5 million from the second quarter of 2025.
Previous 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.
Current wording
Interest expense was $39.7 million for the second quarter of 2026, an increase of $7.1 million, compared with the second quarter of 2025. Total interest bearing deposits increased on average by $2.64 billion, while customer repurchase agreements and borrowings increased on average by $96.3 million. Cost of funds was 0.96% for the second quarter of 2026, which decreased from 1.03% for the second quarter of 2025. Although average noninterest-bearing deposits declined as a percentage of average total deposits to 52.3% from 59.7%, resulting in a less favorable deposit mix, the cost of total interest-bearing deposits decreased by 35 basis points, more than offsetting the impact of the lower proportion of noninterest-bearing deposits. The cost of customer repurchase agreements increased from 1.66% in the second quarter of 2025 to 1.79% in the second quarter of 2026, while the average cost of borrowings declined by 29 basis points.
Previous 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.
Current wording
Total interest income and fees on loans for the six months ended June 30, 2026 were $272.5 million, an increase of $54.6 million, or 25.04%, from the same period last year. This increase in income was due to the $1.68 billion increase in average loan balances and a 22 basis point increase in average loan yields from 5.22% for the six months ended June 30, 2025, to 5.44% for the six months ended June 30, 2026.
Previous 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.
Current wording
Interest income from investment securities was $67.4 million for the six months ended June 30, 2026, an increase of $4.5 million, or 7.0%, from the same period last year. A 12 basis point increase in yields on investment securities was partially 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 0.47% for the six months ended June 30, 2025 to a negative 0.07% for the six months ended June 30, 2026, resulting in a $2.6 million decrease in interest income.
Previous 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.
Current wording
For the six months ended June 30, 2026, the provision for credit losses was $3.0 million, compared with $2.0 million recapture of credit losses for the same period last year. Net charge-offs were $128,000 for the six months ended June 30, 2026, compared with net charge-offs of $119,000 for the same period last year. The provision for credit losses for the six months ended June 30, 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. 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.
Current wording
No assurance can be given that economic conditions affecting 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 for, or recapture of, credit losses. The process to estimate the allowance for credit losses requires considerable judgment and economic forecasts may continue to vary due to the uncertainty of the future impact from geopolitical events, trade barriers, including tariff policies, inflationary pressures, future interest rates, unemployment levels, and overall economic conditions, all of which may impact our customers. Refer to Item 2 –MD&A - Analysis of Financial Condition - Allowance for Credit Losses for a discussion of changes in the credit quality of our loan portfolio as well as refinements to the Company's ACL methodology.
Previous 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.
Current wording
Trust and investment services revenue is generated through the Company's CitizensTrust division, which provides wealth management, investment management, financial planning, estate planning, retirement planning, trustee, and probate services. Investment Services offers self-directed brokerage, 401(k) plans, mutual funds, insurance products, and other non-insured investment products. At June 30, 2026, CitizensTrust had approximately $5.18 billion in assets under management and administration, including $3.81 billion in assets under management. CitizensTrust generated fee income of $4.2 million for the second quarter of 2026, compared to $3.7 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 1.58% for the first quarter of 2026, compared to 1.58% for the first quarter of 2025.
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 2.31% for the second quarter of 2026, compared with 1.52% for the second quarter of 2025. Noninterest expense as a percentage of average assets was 1.99% for the six months ended June 30, 2026, compared with 1.55% for the same period last year. The ratio of noninterest expense to average assets was negatively impacted by acquisition-related expense and the provision for unfunded loan commitments.
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 45.84% for the first quarter of 2026, compared to 46.69% for the first quarter of 2025.
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 63.75% for the second quarter of 2026, compared with 45.55% for the second quarter of 2025. For the six months ended June 30, 2026, the efficiency ratio was 56.15%, compared with 46.12% for the same period last year. Our efficiency ratio adjusted for acquisition expense and the provision for unfunded loan commitments declined from 45.55% in the second quarter of 2025 to 43.88% in the second quarter of 2026. Adjusted efficiency ratio is a non-GAAP measure. For additional details, refer to Item 2.–MD&A—GAAP to Non-GAAP Reconciliation.
Previous 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.
Current wording
The Company’s effective tax rate for the three and six months ended June 30, 2026 was 25.81% and $25.7%, respectively, compared with 26.50% for both the three and six months ended June 30, 2025, respectively. 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. The decrease in the effective tax rate was primarily driven by increased investments in solar tax credits.
Previous 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.
Current wording
Total assets of $21.18 billion at June 30, 2026 increased by $5.55 billion, or 35.52%, from total assets of $15.63 billion at December 31, 2025. Interest-earning assets of $18.69 billion at June 30, 2026 increased by $4.69 billion, or 33.6%, when compared with $13.99 billion at December 31, 2025. The increase in interest-earning assets was primarily due to a $3.32 billion increase in total loans, a $728.0 million increase in cash and cash equivalents, and a $722.8 million increase in investment securities, partially offset by a decrease of $12.3 million in interest-earning balances due from other depository institutions. The increase in total assets from prior year end primarily reflects the impact of the Heritage acquisition completed on April 17, 2026, partially offset by balance sheet optimization activities during the quarter.
Previous 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%.
Current wording
Total liabilities were $18.01 billion at June 30, 2026, an increase of $4.68 billion, or 35.07%, from total liabilities of $13.34 billion at December 31, 2025. Total deposits increased by $4.22 billion, or 34.93%, with interest-bearing deposits increasing by $2.41 billion, or 45.73%. Noninterest-bearing deposits increased by $1.81 billion, or 26.56%. At June 30, 2026, total borrowings were $539.0 million, consisting of $500.0 million of FHLB advances and $39.0 million of subordinated debt assumed in the Heritage acquisition, compared with $500.0 million of FHLB advances at December 31, 2025.
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 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.
Current wording
There were no investment securities sold from the legacy securities portfolio during the six months ended June 30, 2026 and 2025. During the six months ended June 30, 2026 and 2025, the Company originated $1.1 million and $6.2 million, respectively, of Commercial Property Assessed Clean Energy (“C-PACE”) bonds, which are included in our HTM securities.
Previous wording
Includes TE adjustments. The non-TE weighted average yields for securities were 2.48% and 2.49% at March 31, 2026 and December 31, 2025.
Current wording
Includes TE adjustments. The non-TE weighted average yields for securities were 2.75% and 2.49% at June 30, 2026 and December 31, 2025.
Previous wording
The maturity of each security category is defined as the contractual maturity except for the categories of mortgage-backed securities and CMO/REMIC whose maturities are defined as the estimated average life. The final maturity of mortgage-backed securities and CMO/REMIC will differ from their contractual maturities because the underlying mortgages have the right to repay such obligations without penalty. The speed at which the underlying mortgages repay is influenced by many factors, one of which is interest rates. Mortgages tend to repay faster as interest rates fall and slower as interest rate rise. This will either shorten or extend the estimated average life. Also, the yield on mortgage-backed securities and CMO/REMIC are affected by the speed at which the underlying mortgages repay. This is caused by the change in the amount of amortization of premiums or accretion of discounts of each security as repayments increase or decrease. The Company obtains the estimated average life of each security from independent third parties.
Current wording
The maturity of each security category is defined as the contractual maturity except for the categories of mortgage-backed securities and CMO/REMIC whose maturities are defined as the estimated average life. The final maturity of mortgage-backed securities and CMO/REMIC will differ from their contractual maturities because the underlying mortgages have the right to repay such obligations without penalty. The speed at which the underlying mortgages repay is influenced by many factors, one of which is interest rates. Mortgages tend to repay faster as interest rates fall and slower as interest rates rise. This will either shorten or extend the estimated average life. Also, the yields on mortgage-backed securities and CMO/REMIC securities are affected by the speed at which the underlying mortgages repay. This is caused by the change in the amount of amortization of premiums or accretion of discounts of each security as repayments increase or decrease. The Company obtains the estimated average life of each security from independent third parties.
Previous wording
The weighted-average TE yield on the total investment portfolio at March 31, 2026 was 2.57% with a weighted-average life of 6.2 years. This compares to a weighted-average TE yield of 2.59% at December 31, 2025 with a weighted-average life of 6.4 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 tax-equivalent (“TE”) yield on the total investment portfolio at June 30, 2026 was 2.82% with a weighted-average life of 6.3 years. This compares to a weighted-average TE yield of 2.59% at December 31, 2025 with a weighted-average life of 6.4 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 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.
Current wording
Approximately 91% of the investment securities portfolio at June 30, 2026 consisted of securities issued or guaranteed by the U.S. government or U.S. government-sponsored enterprises. As of June 30, 2026, $19.9 million in U.S. government agency securities are callable. Agency CMO/REMIC securities are backed by agency-pooled collateral. Municipal bonds represented approximately 9% of the total investment portfolio and were predominately AA or higher.
Previous 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.
Current wording
Total loans and leases, at amortized cost, were $12.02 billion at June 30, 2026, an increase of $3.32 billion, or 38.14%, from December 31, 2025. The increase in total loans was primarily attributable to the Heritage acquisition, which added $3.10 billion of loans held for investment recorded at fair value as of the acquisition date as well as organic growth. The increase included increases of $2.41 billion in commercial real estate loans, $505.3 million in commercial and industrial loans, $172.2 million in construction loans, $166.7 million in consumer loans, $159.2 million in SBA loans, and $59.6 million in SFR mortgage loans. These increases were partially offset by decreases of $150.6 million in dairy & livestock and agribusiness loans, reflecting the seasonal reduction in line utilization following the year-end peak, and a $3.5 million decrease in municipal lease finance receivables. The decline in dairy & livestock loans primarily reflected the seasonal peak in line utilization at the end of every calendar year, demonstrated by a decline in utilization from 78% at December 31, 2025 to 63% at June 30, 2026.
Previous wording
Real estate loans are loans secured by conforming trust deeds on real property, including property under construction, land development, commercial property and single-family and multi-family residences. Our real estate loans are comprised of industrial, office, retail, medical, single family residences, multi-family residences, and farmland. Consumer loans include installment loans to consumers as well as home equity loans, auto and equipment leases and other loans secured by junior liens on real property. Municipal lease finance receivables are leases to municipalities. Dairy & livestock and agribusiness loans are loans to finance the operating needs of wholesale dairy farm operations, cattle feeders, livestock raisers and farmers.
Current wording
Real estate loans are loans secured by conforming trust deeds on real property, including property under construction, land development, commercial property and single-family and multi-family residences. Our real estate loans are comprised of industrial, office, retail, medical, single family residences, multi-family residences, and farmland. Consumer loans include installment loans to consumers as well as home equity loans, auto and equipment leases and other loans secured by junior liens on real property. Municipal lease finance receivables are leases to municipalities. Dairy & livestock and agribusiness loans are loans to finance the operating needs of wholesale dairy farm operations, cattle feeders, livestock raisers and farmers. Through the Heritage acquisition, the Company acquired CSNK Working Capital Finance Corp., doing business as Bay View Funding (“BVF”), a wholly owned subsidiary of the Bank that provides working capital factoring financing to businesses throughout the United States. The portfolio of factored receivables is included in the Company’s commercial loan portfolio. The average life of factored receivables was 34 days during the six months ended June 30, 2026.
Previous 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.
Current wording
As of June 30, 2026, $418.3 million, or 4.7% of the total commercial real estate loans included loans secured by farmland, compared with $424.5 million, or 6.46%, at December 31, 2025. The loans secured by farmland included $124.4 million for loans secured by dairy & livestock land and $293.8 million for loans secured by agricultural land at June 30, 2026, compared with $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 June 30, 2026, dairy & livestock and agribusiness loans of $281.0 million were comprised of $239.1 million of dairy & livestock loans and $41.9 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 at December 31, 2025.
Previous 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.
Current wording
As of June 30, 2026, the Company had $355.4 million of SBA 504 loans, an increase of $126.6 million from $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 June 30, 2026 and December 31, 2025, the Company had $79.2 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 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.
Current wording
As of June 30, 2026, the Company had $210.0 million in construction loans, representing 1.70% 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 June 30, 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 loans and commercial real estate loans by region as of March 31, 2026.
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 June 30, 2026 and December 31, 2025.
Previous wording
The table below breaks down our commercial real estate portfolio by collateral type.
Current wording
The tables below breaks down our commercial real estate portfolio by collateral type as of June 30, 2026 and December 31, 2025.
Previous wording
Nonperforming loans totaled $6.1 million at March 31, 2026, or 0.07% of total loans. This compares to nonperforming loans of $4.7 million, or 0.05% of total loans, at December 31, 2025. The $1.5 million increase in nonperforming loans was primarily due to the addition of one nonperforming commercial and industrial loan of $2.9 million, four nonperforming commercial real estate loans totaling $1.3 million, offset by the payoff of $4.1 million commercial real estate nonaccrual loan.
Current wording
Nonperforming loans totaled $16.6 million at June 30, 2026, or 0.14% of total loans. This compares to nonperforming loans of $4.7 million, or 0.05% of total loans, at December 31, 2025. The $11.9 million increase in nonperforming loans was primarily due to the addition of 13 nonperforming commercial and industrial loan totaling $9.1 million, seven nonperforming commercial real estate loans totaling $4.6 million, offset by the payoff of $5.6 million commercial real estate nonaccrual loans. Of the total nonperforming loans at June 30, 2026, $3.0 million were acquired from Heritage.
Previous wording
At March 31, 2026, the Company had two OREO properties totaling $206,000, compared to one OREO property valued at $163,000 at December 31, 2025.
Current wording
At June 30, 2026, the Company had two OREO properties with a carrying value of $206,000, compared with one OREO property valued at $163,000 at December 31, 2025.
Previous 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.
Current wording
There were four loans to borrowers experiencing financial difficulty that were modified during the six months ended June 30, 2026 with an amortized cost totaling $17.4 million at June 30, 2026, including one commercial and industrial loan of $9.7 million, two dairy & livestock and agribusiness loans totaling $6.0 million, and one commercial real estate loan of $1.7 million.
Previous 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.
Current wording
During the three and six months ended June 30, 2026 and 2025, the Company did not have any modified loans that subsequently defaulted within twelve months of the modification date.
Showing the first 40 of 71 pairs. Open the source sections for the rest.
Rearranged current paragraphs (6)
Current report — wording carried from elsewhere
Includes TE adjustments utilizing federal statutory corporate rates of 21% in effect for the six months ended June 30, 2026 and June 30, 2025. The non-TE rates for total investment securities were 2.65% and 2.59% for the three months ended June 30, 2026 and June 30, 2025, respectively.
Current report — wording carried from elsewhere
Includes loan fees of $2.4million and $1.3 million for the six months ended June 30, 2026 and 2025, respectively. Prepayment penalty fees of $1.0 million and $1.6 million were included in interest income for the six months ended June 30, 2026 and 2025, respectively. Average balances include nonperforming loans.
Current report — wording carried from elsewhere
Includes interest-bearing demand and money market accounts.
Current report — wording carried from elsewhere
Represents percentage of reported owner-occupied at origination in each real estate loan category.
Current report — wording carried from elsewhere
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.
Current report — wording carried from elsewhere
Other loans consist of a variety of loan types, none of which exceeded 2.0% of total commercial real estate loans at December 31, 2025.