CVB FINANCIAL CORP (CVBF)

CIK: 0000354647. SIC: 6022 State Commercial Banks. Latest 10-K as of: 2026-02-27.

SIC breadcrumb: Finance, Insurance, And Real Estate > Depository Institutions > SIC 6022 State Commercial Banks

SEC company page: https://www.sec.gov/edgar/browse/?CIK=354647. Latest filing source: 0001193125-26-083221.

Selected Fundamentals

Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-02-27. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0000354647.json. Derived margins are computed from the extracted annual SEC facts.

Flow metrics use full-year FY periods from 10-K/10-K/A filings; balance-sheet metrics use FY-end instants. Missing metrics are omitted rather than fabricated.

Financial Charts

Quarterly

Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-05-08. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0000354647.json.

Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived.

Quarterly Charts

Macro Cross-References

• CPIAUCSL - Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
• UNRATE - Unemployment Rate
• FEDFUNDS - Federal Funds Effective Rate
• CES0500000003 - Average Hourly Earnings of All Employees, Total Private
• DFEDTARU - Federal Funds Target Range - Upper Limit
• DFEDTARL - Federal Funds Target Range - Lower Limit
• DGS3MO - Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity
• DGS2 - Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity
• DGS10 - Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
• DGS30 - Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity
• T10Y2Y - 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity
• CPILFESL - Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
• CPIUFDSL - Consumer Price Index for All Urban Consumers: Food
• CPIENGSL - Consumer Price Index for All Urban Consumers: Energy
• CUSR0000SAH1 - Consumer Price Index for All Urban Consumers: Shelter
• PCEPI - Personal Consumption Expenditures: Chain-type Price Index
• PCEPILFE - Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index
• PPIACO - Producer Price Index by Commodity: All Commodities
• T10YIE - 10-Year Breakeven Inflation Rate
• U6RATE - Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons
• PAYEMS - All Employees, Total Nonfarm
• CIVPART - Labor Force Participation Rate
• EMRATIO - Employment-Population Ratio
• UNEMPLOY - Unemployed
• CE16OV - Employment Level
• ICSA - Initial Claims
• JTSJOL - Job Openings: Total Nonfarm
• JTSQUR - Quits: Total Nonfarm
• GDPC1 - Real Gross Domestic Product
• A191RL1Q225SBEA - Real Gross Domestic Product: Percent Change from Preceding Period
• INDPRO - Industrial Production: Total Index
• TCU - Capacity Utilization: Total Index
• HOUST - New Privately-Owned Housing Units Started: Total Units
• PERMIT - New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units
• RSAFS - Advance Retail Sales: Retail Trade
• PCE - Personal Consumption Expenditures
• DSPIC96 - Real Disposable Personal Income
• PSAVERT - Personal Saving Rate
• M2SL - M2
• BOPGSTB - U.S. International Trade in Goods and Services: Balance
• MSPUS - Median Sales Price of Houses Sold for the United States
• HSN1F - New One Family Houses Sold: United States
• RHORUSQ156N - Homeownership Rate in the United States
• TTLCONS - Total Construction Spending: Total Construction in the United States
• RRVRUSQ156N - Rental Vacancy Rate in the United States
• TOTALSL - Total Consumer Credit Owned and Securitized
• REVOLSL - Revolving Consumer Credit Owned and Securitized
• DRCCLACBS - Delinquency Rate on Credit Card Loans, All Commercial Banks
• GDP - Gross Domestic Product
• GPDI - Gross Private Domestic Investment
• GCE - Government Consumption Expenditures and Gross Investment
• PCEC - Personal Consumption Expenditures
• NETEXP - Net Exports of Goods and Services
• GFDEBTN - Federal Debt: Total Public Debt
• GFDEGDQ188S - Federal Debt: Total Public Debt as Percent of Gross Domestic Product
• FYFSD - Federal Surplus or Deficit
• FGRECPT - Federal Government Current Receipts
• FGEXPND - Federal Government: Current Expenditures
• MANEMP - All Employees, Manufacturing
• USCONS - All Employees, Construction
• USTRADE - All Employees, Retail Trade
• USFIRE - All Employees, Financial Activities
• USGOVT - All Employees, Government
• AWHAETP - Average Weekly Hours of All Employees, Total Private
• DGORDER - Manufacturers' New Orders: Durable Goods
• NEWORDER - Manufacturers' New Orders: Nondefense Capital Goods Excluding Aircraft
• BUSINV - Total Business Inventories
• EXPGS - Exports of Goods and Services
• IMPGS - Imports of Goods and Services
• IR - Import Price Index (End Use): All Commodities
• PPIFIS - Producer Price Index by Commodity: Final Demand

Latest quarter (10-Q)

Latest 10-Q source: 0001193125-26-214674.

Extracted between Part I Item 2 and the next Item 3/4 or Part II heading after HTML sanitization. Confidence: high. Filing date: 2026-05-08. Report date: 2026-03-31.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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.

CRITICAL ACCOUNTING POLICIES

The discussion and analysis of the Company’s unaudited condensed consolidated financial statements are based upon the Company’s unaudited condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these unaudited condensed consolidated financial statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities at the date of our financial statements. Actual results may differ from these estimates under different assumptions or conditions.

Critical accounting policies are defined as those that are reflective of significant judgments and uncertainties, and are essential to understanding Management’s Discussion and Analysis of Financial Condition and Results of Operations. The following is a summary of the more judgmental and complex accounting estimates and principles. In each area, we have identified the variables we believe are most important in our estimation process. We utilize information available to us to make the necessary estimates to value the related assets and liabilities. Actual performance that differs from our estimates and future changes in the key variables and information could change future valuations and impact the results of operations.

•
Allowance for Credit Losses (“ACL”)

•
Business Combinations

•
Valuation and Recoverability of Goodwill

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.

38

OVERVIEW

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.

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.

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.

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.

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.

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.

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.

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.

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.

39

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.

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.

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.

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.

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.

Acquisition of Heritage Commerce Corp.

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.

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.

40

ANALYSIS OF THE RESULTS OF OPERATIONS

Financial Performance

Three Months Ended

Variance

March 31,

December 31,

2026

2025

$

%

(Dollars in thousands, except per share amounts)

Net interest income

$

117,840

$

122,658

$

(4,818

)

-3.93

[Excerpt truncated for page length; source filing is linked above.]

Latest 10-K MD&A

Extracted between Item 7 and the next Item 7A/8 heading after HTML sanitization. Confidence: high. Filing date: 2026-02-27. Report date: 2025-12-31.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion provides information about the results of operations, financial condition, liquidity, and capital resources of CVB Financial Corp. and its wholly owned subsidiary. 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 this Annual Report on Form 10-K, and the audited consolidated financial statements and accompanying notes presented elsewhere in this report.

CRITICAL ACCOUNTING POLICIES

The preparation of these consolidated financial statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities at the date of our financial statements. Actual results may differ from these estimates under different assumptions or conditions.

Critical accounting policies are defined as those that are reflective of significant judgments and uncertainties, and are essential to understanding Management’s Discussion and Analysis of Financial Condition and Results of Operations. The following is a summary of the more judgmental and complex accounting estimates and principles. In each area, we have identified the variables most important in the estimation process. We have used the best information available to make the necessary estimates to value the related assets and liabilities. Actual performance that differs from our estimates and future changes in the key variables could change future valuations and impact the results of operations.

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

For a full discussion of our methodology of assessing the adequacy of the allowance for credit losses, see “Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operation — Risk Management” and Note 3 — Summary of Significant Accounting Policies and Note 5 — Loans and Lease Finance Receivables and Allowance for Credit Losses of our consolidated financial statements presented elsewhere in this report.

Business Combinations — The Company applies the acquisition method of accounting for business combinations. Under the acquisition method, the acquiring entity in a business combination recognizes the assets acquired and liabilities assumed at their acquisition date fair values. Management utilizes prevailing valuation techniques appropriate for the asset or liability being measured in determining these fair values. These fair values are estimates and are subject to adjustment for up to one year after the acquisition date or when additional information relative to the closing date fair values becomes available and such information is considered final, whichever is earlier. Any excess of the purchase price over amounts allocated to assets acquired, including identifiable intangible assets, and liabilities assumed is recorded as goodwill. Where amounts

44

allocated to assets acquired and liabilities assumed is greater than the purchase price, a bargain purchase gain would be recognized. Acquisition related costs are expensed as incurred.

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

Based on the results of our annual goodwill impairment test, we determined that no goodwill impairment charges were required as our single reportable segment’s estimated fair value exceeded its carrying amount. See Note 6 — Goodwill and Other Intangible Assets of our consolidated financial statements presented elsewhere in this report.

For a complete discussion and disclosure of other accounting policies see Note 3 — Summary of Significant Accounting Policies of the Company’s consolidated financial statements presented elsewhere in this report.

45

OVERVIEW

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

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

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

Noninterest expense increased from $233.6 million in 2024 to $237.3 million in 2025. The $3.7 million increase in noninterest expense was primarily driven by higher software related costs associated with the continued investments in technology and infrastructure. In addition, noninterest expense included $1.6 million of acquisition related costs to the announced merger with Heritage.

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

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

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

Total loans and leases, at amortized cost, were $8.70 billion at December 31, 2025, an increase of $162.8 million, or 1.91%, from $8.54 billion at December 31, 2024. The $162.8 million increase included $66.9 million in commercial real estate loans, $48.5 million in commercial and industrial loans, and $21.7 million in construction loans. Our loan yields were 5.29% for the year ended December 31, 2025, compared to 5.26% for 2024.

The allowance for credit losses totaled $77.2 million at December 31, 2025, compared to $80.1 million at December 31, 2024. At December 31, 2025, ACL as a percentage of total loans and leases outstanding was 0.89%. This compares to 0.94% at December 31, 2024. The decrease in the allowance was primarily the result of the successful resolution

46

of certain nonperforming loans, with nonaccrual loans declining by $23.1 million and positive credit migration resulting in a $36.8 million decrease in classified loans. The allowance was not materially impacted by changes in our economic forecast as of December 31, 2025. Our economic forecast continues to be a blend of multiple forecasts produced by Moody’s. The resulting economic forecast reflects GDP growth of less than 2% for 2026 though 2028. Commercial Real Estate values are forecasted to continue their decline in 2026, with growth in values returning in 2027. Unemployment is forecasted to exceed 5% from early 2026 until the second half of 2028.

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

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

At December 31, 2025, total borrowings of $500.0 million consisted of Federal Home Loan Bank (“FHLB”) advances, at an average cost of approximately 4.6%. Borrowings remained the same from $500.0 million at December 31, 2024. On average, borrowings decreased by more than $1.01 billion between 2024 and 2025, as the Company completed a deleveraging strategy during the later part of 2024. As a result of this deleveraging, cost of funds decreased by 29 basis points from 1.32% for 2024 to 1.03% for 2025 due to the decrease in the higher-cost short-term borrowings.

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

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

Acquisition Related

On December 17, 2025, the Company announced that it entered into a Merger Agreement with Heritage, headquartered in San Jose, California. pursuant to which the Company will acquire Heritage in an all-stock transaction.

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

47

ANALYSIS OF THE RESULTS OF OPERATIONS

Financial Performance

Variance

Year Ended December 31,

2025

2024

2025

2024

2023

$

%

$

%

(Dollars in thousands, except per share amounts)

Net interest income

$

460,287

$

447,347

$

487,990

$

12,940

2.89

%

$

(40,643

)

(8.33

)%

Recapture of (provision for) credit losses

3,500

3,000

(2,000

)

500

16.67

%

5,000

250.00

%

Noninterest income

55,171

54,474

59,330

697

1.28

%

(4,856

)

(8.18

)%

Noninterest expense

(237,265

)

(233,583

)

(229,886

)

(3,682

)

(1.58

)%

(3,697

)

(1.61

)%

Income taxes

(72,395

)

(70,522

)

(93,999

)

(1,873

)

(2.66

)%

23,477

24.98

%

Net earnings

$

209,298

$

200,716

$

221,435

$

8,582

4.28

%

$

(20,719

)

(9.36

)%

Earnings per common share:

Basic

$

1.52

$

1.44

$

1.59

$

0.08

$

(0.15

)

Diluted

$

1.52

$

1.44

$

1.59

$

0.08

$

(0.15

)

Return on average assets

1.36

%

1.24

%

1.35

%

0.12

%

(0.11

)%

Return on average shareholders’ equity

9.26

%

9.35

%

11.03

%

(0.09

)%

(1.68

)%

Efficiency ratio

46.03

%

46.55

%

42.00

%

(0.52

)%

4.55

%

Noninterest expense to average assets

1.54

%

1.45

%

1.41

%

0.09

%

0.04

%

Return on Average Tangible Common Equity Reconciliations (Non-GAAP)

The return on average tangible common equity is a non-GAAP disclosure. The Company uses certain non-GAAP financial measures commonly used by banking analysts and investors to provide supplemental information regarding the Company’s performance. The following is a reconciliation of net income, adjusted for tax-effected amortization of intangibles, to net income computed in accordance with GAAP; a reconciliation of average tangible common equity to the Company’s average stockholders’ equity computed in accordance with GAAP; as well as a calculation of return on average tangible common equity.

Year Ended December 31,

2025

2024

2023

(Dollars in thousands)

Net Income

$

209,298

$

200,716

$

221,435

Add: Amortization of intangible assets

4,193

5,324

6,452

Less: Tax effect of amortization of intangible assets (1)

(1,240

)

(1,574

)

(1,907

)

Tangible net income

$

212,251

$

204,466

$

225,980

Average stockholders’ equity

$

2,260,275

$

2,145,665

$

2,006,882

Less: Average goodwill

(765,822

)

(765,822

)

(765,822

)

Less: Average intangible assets

(7,748

)

(12,571

)

(18,434

)

Average tangible common equity

$

1,486,705

$

1,367,272

$

1,222,626

Return on average equity, annualized (2)

9.26

%

9.35

%

11.03

%

Return on average tangible common equity, annualized (2)

14.28

%

14.95

%

18.48

%

(1)
Tax effected at respective statutory rates.

(2)
Annualized where applicable.

48

Net Interest Income

The principal component of our earnings is net interest income, which is the difference between the interest and fees earned on loans, investments and interest earning cash (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 tax rates of 21% in effect for the years ended December 31, 2025, 2024 and 2023. 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 policy, and the strength of the global, national and state economies, in general, and more specifically, the local economies in which we conduct business. Our ability to manage net interest income during changing interest rate environments will have a significant impact on our overall performance. We manage net interest income through affecting changes in the mix of interest-earning assets as well as the mix of interest-bearing liabilities, changes in the level of interest-bearing liabilities in proportion to interest-earning assets, the growth and maturity of earning assets, and derivative financial instruments. See Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations — Asset/Liability and Market Risk Management — Interest Rate Sensitivity Management included herein.

49

The tables below present the interest rate spread, net interest margin and the composition of average interest-earning assets and average interest-bearing liabilities by category for the periods indicated, including the changes in average balance, composition, and average yield/rate between these respective periods.

Interest-Earning Assets and Interest-Bearing Liabilities

Year Ended December 31,

2025

2024

2023

Average

Balance

Interest

Yield/

Rate

Average

Balance

Interest

Yield/

Rate

Average

Balance

Interest

Yield/

Rate

(Dollars in thousands)

INTEREST-EARNING ASSETS

Investment securities (1)

Available-for-sale securities:

Taxable

$

2,536,679

$

75,382

2.97

%

$

2,691,963

$

80,226

2.99

%

$

3,040,968

$

82,889

2.73

%

Tax-advantaged

20,723

580

3.34

%

24,618

664

3.23

%

25,319

674

3.19

%

Held-to-maturity securities:

Taxable

1,965,466

42,031

2.14

%

2,055,597

43,574

2.12

%

2,132,360

44,990

2.11

%

Tax-advantaged

361,801

9,337

3.12

%

372,377

9,577

3.11

%

380,841

9,760

3.10

%

Investment in FHLB, FRB, and other stock

21,961

1,706

7.77

%

18,012

1,551

8.61

%

25,078

1,861

7.42

%

Interest-earning deposits with other institutions

420,504

18,109

4.31

%

720,428

38,765

5.38

%

331,156

17,861

5.39

%

Loans (2)

8,427,967

446,156

5.29

%

8,670,420

455,755

5.26

%

8,893,335

448,295

5.04

%

Total interest-earning assets

13,755,101

593,301

4.33

%

14,553,415

630,112

4.35

%

14,829,057

606,330

4.10

%

Total noninterest-earning assets

1,621,513

1,586,183

1,517,115

Total assets

$

15,376,614

$

16,139,598

$

16,346,172

INTEREST-BEARING LIABILITIES

Savings deposits (3)

$

4,326,859

85,429

1.97

%

$

4,143,453

85,539

2.06

%

$

4,340,529

49,019

1.13

%

Time deposits

574,494

15,865

2.76

%

635,728

19,944

3.14

%

304,053

2,516

0.83

%

Total interest-bearing deposits

4,901,353

101,294

2.07

%

4,779,181

105,483

2.21

%

4,644,582

51,535

1.11

%

FHLB advances, other borrowings, and customer repurchase agreements

916,886

30,317

3.27

%

1,870,157

76,709

4.10

%

1,773,211

66,805

3.77

%

Interest expense - Other interest-bearing liabilities

32,787

1,403

4.22

%

11,947

573

4.72

%

—

—

—

Interest-bearing liabilities

5,851,026

133,014

2.27

%

6,661,285

182,765

2.74

%

6,417,793

118,340

1.84

%

Noninterest-bearing deposits

7,045,960

7,144,129

7,793,336

Other liabilities

219,353

188,519

128,161

Stockholders’ equity

2,260,275

2,145,665

2,006,882

Total liabilities and stockholders’ equity

$

15,376,614

$

16,139,598

$

16,346,172

Net interest income

$

460,287

$

447,347

$

487,990

Net interest spread - tax equivalent

2.06

%

1.60

%

2.26

%

Net interest margin

3.35

%

3.08

%

3.29

%

Net interest margin - tax equivalent

3.36

%

3.09

%

3.31

%

(1)
Includes tax equivalent (TE) adjustments utilizing a federal statutory rate of 21% in effect for the years ended December 31, 2025, 2024 and 2023. The non-TE rates for total investment securities was 2.61%, 2.61% and 2.48% for the years ended December 31, 2025, 2024 and 2023, respectively.

(2)
Includes loan fees of $3.1 million, $2.9 million and $3.1 million for the years ended December 31, 2025, 2024 and 2023, respectively. Prepayment penalty fees of $3.9 million, $2.6 million and $2.5 million are included in interest income for the years ended December 31, 2025, 2024 and 2023, respectively.

(3)
Includes interest-bearing demand and money market accounts.

50

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.

Rate and Volume Analysis for Changes in Interest Income, Interest Expense and Net Interest Income

Comparison of Year Ended December 31,

2025 Compared to 2024

Increase (Decrease) Due to

2024 Compared to 2023

Increase (Decrease) Due to

Volume

Rate

Rate/

Volume

Total

Volume

Rate

Rate/

Volume

Total

(Dollars in thousands)

Interest income:

Available-for-sale securities:

Taxable investment

   securities

$

(4,338

)

$

(535

)

$

29

$

(4,844

)

$

(9,789

)

$

8,081

$

(955

)

$

(2,663

)

Tax-advantaged investment

   securities

(105

)

25

(4

)

(84

)

(19

)

9

—

(10

)

Held-to-maturity securities:

Taxable investment

   securities

(1,911

)

384

(16

)

(1,543

)

(1,620

)

211

(7

)

(1,416

)

Tax-advantaged investment

   securities

(272

)

33

(1

)

(240

)

(217

)

35

(1

)

(183

)

Investment in FHLB, FRB, and other stock

340

(151

)

(33

)

156

(524

)

297

(84

)

(311

)

Interest-earning deposits with

   other institutions

(16,138

)

(7,740

)

3,222

(20,656

)

20,996

(42

)

(50

)

20,904

Loans

(12,744

)

3,235

(91

)

(9,600

)

(11,237

)

19,178

(480

)

7,461

Total interest income

(35,168

)

(4,749

)

3,106

(36,811

)

(2,410

)

27,769

(1,577

)

23,782

Interest expense:

Savings deposits

3,786

(3,731

)

(165

)

(110

)

(2,226

)

40,589

(1,843

)

36,520

Time deposits

(1,921

)

(2,388

)

230

(4,079

)

2,745

7,023

7,660

17,428

FHLB advances, other

   borrowings, and customer

   repurchase agreements

(39,101

)

(15,525

)

8,233

(46,393

)

3,652

5,928

324

9,904

Interest expense - Other interest-bearing liabilities

983

(59

)

(93

)

831

—

—

573

573

Total interest expense

(36,253

)

(21,703

)

8,205

(49,751

)

4,171

53,540

6,714

64,425

Net interest income

$

1,085

$

16,954

$

(5,099

)

$

12,940

$

(6,581

)

$

(25,771

)

$

(8,291

)

$

(40,643

)

2025 Compared to 2024

Net interest income before provision for credit losses of $460.3 million for 2025 increased $12.9 million, or 2.89%, compared to $447.3 million for 2024. Interest income decreased by $36.8 million, or 5.84% in 2025, while interest expense decreased by $49.8, or 27.22% year-over-year. Cost of funds for 2025 decreased by 29 basis points over 2024, while the earning asset yield decreased by two basis points. Interest-earning assets decreased on average by $798.3 million, or 5.49%, from $14.55 billion for 2024 to $13.76 billion for 2025. Our net interest margin (TE) was 3.36% for 2025, compared to 3.09% for 2024.

Total interest income for 2025 of $593.3 million decreased by $36.8 million, or 5.84%, when compared to 2024. Compared to 2024, average interest-earning assets decreased $798.3 million and the yield on interest-earning assets decreased by two basis point from 4.35% for 2024 to 4.33% for 2025. The $798.3 million year-over-year decrease in average earning assets resulted from a $298.1 million decrease in average earning balances due from the Federal Reserve, a $259.9 million decrease in investment securities and a decrease of $242.5 million in average loans. The decrease in the overall earning asset yield was primarily impacted by the 107 basis point decrease in the yield on balances held at the Federal Reserve and the decrease in average earning balances due from the Federal Reserve as a percentage of earning assets from approximately 5% in 2024 to 3% in 2025. Balances due from the Federal Reserve earned 5.38% on average in 2024 compared to 4.31% in 2025. The decrease in the earning asset yield was also impacted by a $10.1 million decrease in the

51

interest income derived from the positive carry on fair value hedges. A three basis point increase in loan yields, from 5.26% for 2024 to 5.29% for 2025 and 19 basis point increase in the yield on investment securities, from 2.37% for 2024 to 2.56% for 2025, partially offset the decline in earnings from the fair value hedges and funds held at the Federal Reserve.

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

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

Interest income from investment securities was $127.3 million for 2025, a $6.7 million, or 5.01%, decrease from $134.0 million for 2024, including a $4.9 million decrease for AFS securities. This decrease was driven by a decline in the average balance of investment securities of $259.9 million, or 5.05%. The $4.9 million decrease in interest income on AFS securities was the net result of the decrease in interest income from the positive carry on fair value hedges and the 19 basis point increase in the yield on AFS securities. The positive carry on these fair value hedges resulted in approximately $4.3 million of interest income in 2025 compared to $14.4 million of interest income in 2024. The yield on investment securities was impacted positively by the sale of $467 million and $104 million of lower-yielding investment securities combined with the purchase of $418.5 million and $482 million of higher-yielding securities in 2024 and 2025 respectively.

Interest expense of $133.0 million for 2025 decreased $49.8 million, compared to $182.8 million for 2024. Total cost of funds for 2025 was 1.03%, compared with 1.32% for 2024. This 29 basis point decrease in cost of funds was primarily the result of the decrease in the average balance of higher cost borrowing of $1.01 billion, offset by a higher average balance and cost of customer repurchase agreements in 2025. The average rate paid on total deposits decreased by three basis points, to 0.85% for 2025 from 0.88% for 2024. Noninterest bearing deposits continued to be a significant portion of total deposits in 2025. Average noninterest-bearing deposits were 58.98% of our total deposits for 2025, compared to 59.92% for 2024.

2024 Compared to 2023

Net interest income before provision for credit losses of $447.3 million for 2024 decreased $40.6 million, or 8.33%, compared to $488.0 million for 2023. Interest income increased by $23.8 million, or 3.92% in 2024, offset by a $64.4 million increase in interest expense year-over-year. Cost of funds for 2024 increased by 49 basis points over 2023, while the earning asset yield increased by 25 basis points. Interest-earning assets decreased on average by $275.6 million, or 1.86%, from $14.83 billion for 2023 to $14.55 billion for 2024. Our net interest margin (TE) was 3.09% for 2024, compared to 3.31% for 2023.

Total interest income for 2024 of $630.1 million grew by $23.8 million, or 3.92%, when compared to 2023. Compared to 2023, average interest-earning assets decreased $275.6 million and the yield on interest-earning assets increased by 25 basis point from 4.10% for 2023 to 4.35% for 2024. The $275.6 million year-over-year decrease in average earning assets resulted from a $434.9 million decrease in average investment securities and a decline of $222.9 million in average loans, offset by $386.4 million of growth in average earning balances due from the Federal Reserve. The 25 basis point increase in the earning asset yield over 2023 resulted primarily from a 22 basis point increase in loan yields, from 5.04% for 2023 to 5.26% for 2024, and from a 13 basis point increase in the yield on investment securities, from 2.52% for 2023 to 2.65% for 2024. The increase in the overall earning asset yield was also impacted by the increase in average earning balances due from the Federal Reserve as a percentage of earning assets, from 2.2% in 2023 to 5.0% in 2024. Balances due from the Federal Reserve earned 5.38% on average in 2024.

Total interest income and fees on loans for 2024 of $455.8 million increased $7.5 million, or 1.66%, when compared to 2023. This increase in income was due to a higher loan yield partially offset by a decrease in average loans of $222.9 million. Loan yields were 5.26% for 2024, compared to 5.04% for 2023. Loan yields grew year-over-year, as rising interest rates contributed to an increase in yields on loans indexed to the Prime rate or other short-term indexes, as well as higher rates from adjustable rate loans and newly originated loans.

In general, we stop accruing interest on a loan after its principal or interest becomes 90 days or more past due. When a loan is placed on nonaccrual, all interest previously accrued but not collected is charged against earnings. There was no interest income that was accrued and not reversed on nonaccrual loans at December 31, 2024 and 2023. As of December 31, 2024 and 2023, we had $27.8 million and $21.3 million of nonaccrual loans, respectively.

52

Interest income from investment securities was $134.0 million for 2024, a $4.3 million, or 3.09%, decrease from $138.3 million for 2023. This decrease was driven by a decline in the average balance of investment securities of $434.9 million, or 7.80%, partially offset by a 13 basis point increase in the yield on securities, compared to 2023. This 13 basis point increase in the yield on investment securities from the prior year period was impacted by the positive spread generated from the pay-fixed swaps we entered into at the end of the second quarter of 2023. The positive carry on these fair value hedges resulted in approximately $14.4 million of interest income in 2024. The yield on investment securities was also impacted positively by the sale of $467 million of lower-yielding investment securities combined with the purchase of $418.5 million of higher-yielding securities in 2024.

Interest expense of $182.8 million for 2024 increased $64.4 million, compared to $118.3 million for 2023. Total cost of funds for 2024 was 1.32%, compared with 0.83% for 2023. This 49 basis point increase in cost of funds was primarily the result of the increase in the cost of deposits. The average rate paid on deposits increased by 47 basis points, to 0.88% for 2024 from 0.41% for 2023. The increase in interest expense was also driven by a $134.6 million increase in average interest-bearing deposits in 2024 as compared to 2023. Noninterest bearing deposits continued to be a significant portion of total deposits in 2024. Average noninterest-bearing deposits were 59.92% of our total deposits for 2024, compared to 62.66% for 2023.

Provision for (Recapture of) Credit Losses

The provision for (recapture of) credit losses is a charge to earnings to maintain the allowance for credit losses at a level consistent with management’s assessment of expected lifetime losses in the loan portfolio as of the balance sheet date.

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

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 changes in rates by the Federal Reserve, geopolitical events in Europe and the Middle East, and impacts of changes in global trade and 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.

Noninterest Income

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

53

The following table sets forth the various components of noninterest income for the periods presented.

Variance

Year Ended December 31,

2025

2024

2025

2024

2023

$

%

$

%

(Dollars in thousands)

Noninterest income:

Service charges on deposit accounts

$

19,460

$

20,370

$

20,219

$

(910

)

(4.47

)%

$

151

0.75

%

Trust and investment services

15,033

13,729

12,556

1,304

9.50

%

1,173

9.34

%

Bankcard services

2,707

1,652

1,627

1,055

63.86

%

25

1.54

%

BOLI income

11,467

12,420

12,751

(953

)

(7.67

)%

(331

)

(2.60

)%

Swap fee income

—

211

632

(211

)

(100.00

)%

(421

)

(66.61

)%

Loss on sale of AFS investment securities

(10,970

)

(28,317

)

—

17,347

(61.26

)%

(28,317

)

—

Gain on sale leaseback transactions

—

25,900

—

(25,900

)

(100.00

)%

25,900

—

Gain on OREO, net

2,296

—

—

2,296

—

—

—

Gain on sale of other investments

—

—

2,575

—

—

(2,575

)

(100.00

)%

Other

15,178

8,509

8,970

6,669

78.38

%

(461

)

(5.14

)%

Total noninterest income

$

55,171

$

54,474

$

59,330

$

697

1.28

%

$

(4,856

)

(8.18

)%

2025 Compared to 2024

The $0.7 million increase in noninterest income in 2025 was impacted by $11.0 million in losses on the sale of AFS securities, a $6.0 million legal settlement, and a $2.3 million gain on OREO, while 2024 included $28.3 million in losses from the sale of AFS securities that were partially offset by gains of $25.9 million from the sale and leaseback of four properties in 2024. Trust and investment management fees increased by $1.3 million, or 9.50% compared to 2024. Service charges on deposit accounts decreased by $910,000, or 4.47% from the year ended December 31, 2024. BOLI income decreased by $953,000, or 7.67% from the prior year, as additional income from death benefits decreased by $855,000.

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

The Bank’s investment in BOLI includes life insurance policies generally acquired through acquisitions or the purchase of life insurance by the Bank on a select group of employees to fund deferred compensation plans. The Bank is the owner and beneficiary of these policies. BOLI is recorded as an asset at its cash surrender value. Increases in the cash value of these policies, as well as insurance proceeds received, are recorded in noninterest income and are not subject to income tax, as long as they are held for the life of the covered parties. Income from our BOLI policies declined by $953,000 for 2025 as compared to 2024, as 2024 included death benefits that exceeded cash surrender values of $1.4 million.

2024 Compared to 2023

The $4.9 million decrease in noninterest income included $28.3 million in losses from the sale of AFS securities partially offset by gains of $25.9 million from the sale and leaseback of four properties in 2024, while 2023 included a $2.6 million gain from an equity fund distribution related to a CRA investment. Service charges on deposit accounts increased by $0.2 million, or 0.75% from the year ended December 31, 2023. Trust management fees increased by $1.2 million, or 9.34% compared to 2023. Income from Bank-Owned Life Insurance (“BOLI”) decreased by $0.3 million, or 2.60% from the prior year.

54

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

The Bank’s investment in BOLI includes life insurance policies generally acquired through acquisitions or the purchase of life insurance by the Bank on a select group of employees to fund deferred compensation plans. The Bank is the owner and beneficiary of these policies. BOLI is recorded as an asset at its cash surrender value. Increases in the cash value of these policies, as well as insurance proceeds received, are recorded in noninterest income and are not subject to income tax, as long as they are held for the life of the covered parties. Income from our BOLI policies declined by $0.3 million for 2024 as compared to 2023, which consisted of lower cash surrender value income partially offset by higher gains and death benefits that exceeded cash surrender values.

The Bank has entered into interest rate swap agreements with our customers to manage our interest rate risk and enters into identical offsetting swaps with a counterparty. The changes in the fair value of these non-hedged swaps primarily offset each other resulting in swap fee income. Generally speaking, our volume of back-to-back interest rate swaps is impacted by the level and shape of the yield curve and the Bank's management of interest rate risk. Swap fee income was $0.4 million lower than 2023, primarily due to LIBOR indexed swaps that were converted to term SOFR in 2023 generating fee income of approximately $620,000. Refer to Note 18 — Derivative Financial Instruments of the notes to the consolidated financial statements of this report for additional information.

Noninterest Expense

The following table summarizes the various components of noninterest expense for the periods presented.

Variance

Year Ended December 31,

2025

2024

2025

2024

2023

$

%

$

%

(Dollars in thousands)

Noninterest expense:

Salaries and employee benefits

$

144,457

$

144,472

$

139,191

$

(15

)

(0.01

)%

$

5,281

3.79

%

Occupancy

18,954

18,976

18,492

(22

)

(0.12

)%

484

2.62

%

Equipment

4,865

4,431

3,617

434

9.79

%

814

22.50

%

Professional services

9,248

10,482

9,082

(1,234

)

(11.77

)%

1,400

15.42

%

Computer software expense

17,148

15,301

14,051

1,847

12.07

%

1,250

8.90

%

Marketing and promotion

6,882

7,307

6,756

(425

)

(5.82

)%

551

8.16

%

Amortization of intangible assets

4,193

5,324

6,452

(1,131

)

(21.24

)%

(1,128

)

(17.48

)%

Telecommunications expense

2,109

1,972

2,010

137

6.95

%

(38

)

(1.89

)%

Regulatory assessments

8,580

10,091

17,710

(1,511

)

(14.97

)%

(7,619

)

(43.02

)%

Insurance

1,939

2,022

2,025

(83

)

(4.10

)%

(3

)

(0.15

)%

Provision for (recapture of) unfunded loan commitments

2,000

(1,250

)

(500

)

3,250

(260.00

)%

(750

)

(150.00

)%

Directors’ expenses

1,252

1,266

1,202

(14

)

(1.11

)%

64

5.32

%

Acquisition related expenses

1,556

—

—

1,556

—

—

—

Other

14,082

13,189

9,798

893

6.77

%

3,391

34.61

%

Total noninterest expense

$

237,265

$

233,583

$

229,886

$

3,682

1.58

%

$

3,697

1.61

%

Noninterest expense to average assets

1.54

%

1.45

%

1.41

%

Efficiency ratio (1)

46.03

%

46.55

%

42.00

%

(1)
Noninterest expense divided by net interest income before provision for credit losses plus noninterest income.

55

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

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

2025 Compared to 2024

Noninterest expense of $237.3 million for the year ended December 31, 2025 was $3.7 million, or 1.6% higher than 2024. The year-over-year increase included software expense increasing by $1.8 million, or 12.07%, due to continued investment in new technology. The increase in technology costs demonstrates our commitment to improving efficiencies and providing an excellent customer experience. The provision or recapture of unfunded loan commitments also increased by $3.3 million in 2025. Furthermore, the increase included acquisition related expenses of $1.6 million associated with the pending merger with Heritage announced in 2025.

2024 Compared to 2023

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

Income Taxes

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

The effective tax rates are below the nominal combined Federal and State tax rate as a result of tax-advantaged income from certain municipal security investments, municipal loans and leases and BOLI, as well as available tax credits for each period.

56

ANALYSIS OF FINANCIAL CONDITION

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

Total liabilities were $13.34 billion at December 31, 2025, an increase of $368.5 million, or 2.84%, from total liabilities of $12.97 billion at December 31, 2024. The increase was due to a $228.7 million increase in customer repurchase agreements and a $123.6 million increase in total deposits. As of December 31, 2025 and 2024, total borrowings consisted of $500 million of FHLB advances, at an average cost of approximately 4.55%.

Total equity was $2.3 million at December 31, 2025 increased $108.9 million, or 4.98%, to $2.30 billion from $2.19 billion at December 31, 2024. Increases to equity included $209.3 million in net earnings and an $84.4 million in other comprehensive income, partially offset by $110.3 million in cash dividends and $81.1 million in common stock repurchase. For the year ended 2025, we repurchased, under our stock repurchase plan, 4,321,777 shares of common stock, at an average repurchase price of $18.60, totaling $80.4 million. We engaged in no stock repurchases during 2024.

Sale-Leaseback Transactions

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

Investment Securities

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

The tables below set forth our investment securities AFS and HTM portfolio by type for the dates presented.

December 31,

2025

2024

Fair Value

Percent

Fair Value

Percent

(Dollars in thousands)

Investment securities available-for-sale

Government agency/GSE

$

35,284

1.32

%

$

34,255

1.35

%

Mortgage-backed securities

1,887,654

70.35

%

2,134,534

83.97

%

CMO/REMIC

695,150

25.91

%

351,522

13.82

%

Municipal bonds

21,290

0.79

%

20,377

0.80

%

Collateralized loan obligations

42,000

1.57

%

—

—

Other securities

1,692

0.06

%

1,427

0.06

%

Total available-for-sale securities

$

2,683,070

100.00

%

$

2,542,115

100.00

%

57

December 31,

2025

2024

Amortized

Cost

Percent

Amortized

Cost

Percent

(Dollars in thousands)

Investment securities held-to-maturity

Government agency/GSE

$

498,513

21.96

%

$

514,572

21.62

%

Mortgage-backed securities

557,860

24.57

%

614,383

25.82

%

CMO/REMIC

751,639

33.11

%

784,059

32.95

%

Municipal bonds

444,694

19.58

%

455,199

19.13

%

Other securities

17,685

0.78

%

11,455

0.48

%

Total held-to-maturity securities

$

2,270,391

100.00

%

$

2,379,668

100.00

%

Fair Value

$

1,925,492

$

1,954,345

The distribution of the AFS and HTM portfolios by estimated average life consist of the following as of the date presented.

December 31, 2025

One Year or

Less

After One

Year

Through

Five Years

After

Five Years

Through

Ten Years

After Ten

Years

Total

Percent to

Total

(Dollars in thousands)

Investment securities available-for-sale:

Government agency/GSE

$

35,284

$

—

$

—

$

—

$

35,284

1.32

%

Mortgage-backed securities

1,985

122,885

1,430,454

332,330

1,887,654

70.35

%

CMO/REMIC

232

287

1,335

693,296

695,150

25.91

%

Municipal bonds (1)

380

9,719

9,394

1,797

21,290

0.79

%

Collateralized loan obligations

—

—

—

42,000

42,000

1.57

%

Other securities

1,692

—

—

—

1,692

0.06

%

Total

$

39,573

$

132,891

$

1,441,183

$

1,069,423

$

2,683,070

100.00

%

Weighted average yield:

Government agency/GSE

3.62

%

—

—

—

3.62

%

Mortgage-backed securities

3.12

%

1.83

%

2.13

%

4.80

%

2.58

%

CMO/REMIC

3.00

%

2.59

%

3.13

%

3.08

%

3.08

%

Municipal bonds (1)

2.00

%

2.79

%

2.61

%

2.61

%

2.68

%

Collateralized loan obligations

—

—

—

4.72

%

4.72

%

Other securities

2.33

%

—

—

—

2.33

%

Total

3.52

%

1.90

%

2.13

%

3.68

%

2.76

%

(1)
The weighted average yield for the portfolio is not tax-equivalent. The tax equivalent yield at December 13, 2025 was 3.47%.

December 31, 2025

One Year or

Less

After One

Year

Through

Five Years

After

Five Years

Through

Ten Years

After Ten

Years

Total

Percent to

Total

(Dollars in thousands)

Investment securities held-to-maturity:

Government agency/GSE

$

—

$

29,372

$

141,650

$

327,491

$

498,513

21.96

%

Mortgage-backed securities

1,283

10,121

30,853

515,603

557,860

24.57

%

CMO/REMIC

—

—

—

751,639

751,639

33.11

%

Municipal bonds (1)

6,652

49,620

112,295

276,127

444,694

19.59

%

Other securities

—

—

—

17,685

17,685

0.78

%

Total

$

7,935

$

89,113

$

284,798

$

1,888,545

$

2,270,391

100.00

%

Weighted average yield:

Government agency/GSE

—

1.25

%

1.61

%

1.93

%

1.80

%

Mortgage-backed securities

2.52

%

2.46

%

2.90

%

2.40

%

2.43

%

CMO/REMIC

—

—

—

1.86

%

1.86

%

Municipal bonds (1)

2.77

%

2.56

%

2.43

%

2.77

%

2.66

%

Other securities

—

—

—

8.52

%

8.52

%

Total

2.73

%

2.12

%

2.08

%

2.22

%

2.20

%

(1)
The weighted average yield for the portfolio is not tax-equivalent. The tax equivalent yield at December 31, 2025 was 2.78%.

58

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.

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

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

Municipal securities held by the Company are issued by various states and their various local municipalities. The following tables present municipal securities by the top holdings by state as of the dates presented.

December 31, 2025

Amortized

Cost

Percent of

Total

Fair Value

Percent of

Total

(Dollars in thousands)

Municipal Securities available-for-sale:

Minnesota

$

7,815

36.0

%

$

7,566

35.5

%

Connecticut

5,597

25.7

%

5,553

26.1

%

Massachusetts

3,690

16.9

%

3,570

16.8

%

Maine

1,486

6.8

%

1,422

6.7

%

Wisconsin

1,165

5.3

%

1,161

5.5

%

Iowa

1,115

5.1

%

1,073

5.0

%

California

919

4.2

%

945

4.4

%

Total

$

21,787

100.0

%

$

21,290

100.0

%

Municipal Securities held-to-maturity:

Texas

$

73,592

16.5

%

$

69,743

16.6

%

California

46,015

10.3

%

42,910

10.2

%

Minnesota

39,383

8.9

%

38,046

9.1

%

Washington

28,048

6.3

%

25,431

6.1

%

Ohio

27,856

6.3

%

26,357

6.3

%

Massachusetts

24,915

5.6

%

23,940

5.7

%

All other states (27 states)

204,885

46.1

%

193,013

46.0

%

Total

$

444,694

100.0

%

$

419,440

100.0

%

59

December 31, 2024

Amortized

Cost

Percent of

Total

Fair Value

Percent of

Total

(Dollars in thousands)

Municipal Securities available-for-sale:

Minnesota

$

7,816

35.9

%

$

7,234

35.6

%

Connecticut

5,602

25.8

%

5,369

26.3

%

Massachusetts

3,694

17.0

%

3,385

16.6

%

Maine

1,490

6.8

%

1,350

6.6

%

Wisconsin

1,166

5.4

%

1,114

5.5

%

Iowa

1,115

5.1

%

1,025

5.0

%

California

872

4.0

%

900

4.4

%

Total

$

21,755

100.0

%

$

20,377

100.0

%

Municipal Securities held-to-maturity:

Texas

$

78,018

17.1

%

$

72,099

17.3

%

California

46,209

10.2

%

41,813

10.0

%

Minnesota

41,069

9.0

%

38,359

9.2

%

Massachusetts

25,565

5.6

%

23,837

5.7

%

Wisconsin

13,423

2.9

%

12,861

3.1

%

Connecticut

7,380

1.6

%

6,635

1.6

%

All other states (27 states)

243,535

53.6

%

220,728

53.1

%

Total

$

455,199

100.0

%

$

416,332

100.0

%

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 December 31, 2025 and 2024.

Refer to Note 4 – Investment Securities of the notes to the consolidated financial statements of this report for additional information on our investment securities portfolio.

Bank owned life insurance

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

Loans

Total loans and leases, at amortized cost, of $8.70 billion at December 31, 2025, increased by $162.8 million, or 1.91%, from $8.54 billion at December 31, 2024. The $162.8 million increase primarily consists of $66.9 million in commercial real estate loans, $48.5 million in commercial and industrial loans, $21.7 million in construction loans, $12.6 million in SFR mortgage and $10.8 million in agribusiness loans.

60

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

Distribution of Loan Portfolio by Type

December 31,

2025

2024

2023

2022

2021

(Dollars in thousands)

Commercial real estate

$

6,574,395

$

6,507,452

$

6,784,505

$

6,884,948

$

5,789,730

Construction

37,812

16,082

66,734

88,271

62,264

SBA

282,371

273,013

270,619

290,908

288,600

SBA - PPP

30

774

2,736

9,087

186,585

Commercial and industrial

973,631

925,178

969,895

948,683

813,063

Dairy & livestock and agribusiness

431,577

419,904

412,891

433,564

386,219

Municipal lease finance receivables

59,542

66,114

73,590

81,126

45,933

SFR mortgage

281,766

269,172

269,868

266,024

240,654

Consumer and other loans

58,069

58,743

54,072

76,781

74,665

Total loans, at amortized cost

8,699,193

8,536,432

8,904,910

9,079,392

7,887,713

Less: Allowance for credit losses

(77,161

)

(80,122

)

(86,842

)

(85,117

)

(65,019

)

Total loans and lease finance receivables, net

$

8,622,032

$

8,456,310

$

8,818,068

$

8,994,275

$

7,822,694

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

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.

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

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

61

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 December 31, 2025.

December 31, 2025

Total Loans

Commercial Real Estate

Loans

(Dollars in thousands)

Los Angeles County

$

3,078,557

35.4

%

$

2,258,787

34.4

%

Central Valley and Sacramento

2,039,693

23.4

%

1,511,983

23.0

%

Orange County

1,292,970

14.9

%

771,320

11.7

%

Inland Empire

1,013,602

11.7

%

878,132

13.4

%

Central Coast

433,147

5.0

%

375,770

5.7

%

San Diego

343,058

3.9

%

325,167

4.9

%

Other California

146,207

1.7

%

105,166

1.6

%

Out of State

351,959

4.0

%

348,070

5.3

%

$

8,699,193

100.0

%

$

6,574,395

100.0

%

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

December 31, 2025

Loan Balance

Percent

Percent

Owner-

Occupied (1)

Average

Loan Balance

Commercial real estate:

(Dollars in thousands)

Industrial

$

2,269,433

34.5

%

47.3

%

$

1,691

Office

989,752

15.1

%

28.6

%

1,644

Retail

908,087

13.8

%

11.1

%

1,710

Multi-family

829,752

12.6

%

0.1

%

1,542

Secured by farmland (2)

424,531

6.5

%

99.5

%

1,490

Medical

327,958

5.0

%

33.1

%

1,491

Other (3)

824,882

12.5

%

41.8

%

1,845

Total commercial real estate

$

6,574,395

100.0

%

35.5

%

$

1,658

(1)
Represents percentage of reported owner-occupied at origination in each real estate loan category.

(2)
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.

(3)
Other loans consist of a variety of loan types, none of which exceeds 2.0% of total commercial real estate loans.

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

At December 31, 2025, commercial real estate loans on retail properties totaled $908.1 million, or approximately 13.8% of total commercial real estate loans. At origination, these loans on retail properties were underwritten with loan-to-values averaging approximately 47%. Approximately 42% of these loans were originated prior to 2021.

62

The table below presents the contractual loan maturities of loan portfolio by type and the contractual distribution of loans by the rate sensitivity to changes in interest rates as of December 31, 2025.

Loan Maturities and Interest Rate Category

Within

One Year

After One

But Within

Five Years

After Five But Within Fifteen Years

After 15 Years

Total

(Dollars in thousands)

Loan Portfolio by Type:

Commercial real estate

$

401,525

$

2,641,759

$

3,141,128

$

389,983

$

6,574,395

Construction

24,724

7,365

5,723

—

37,812

SBA

18,179

35,749

180,954

47,489

282,371

SBA - PPP

30

—

—

—

30

Commercial and industrial

371,668

419,366

171,271

11,326

973,631

Dairy & livestock and agribusiness

247,546

183,849

182

—

431,577

Municipal lease finance receivables

314

9,275

30,413

19,540

59,542

SFR mortgage

—

3,699

30,290

247,777

281,766

Consumer and other loans

13,780

4,773

3,161

36,355

58,069

Total gross loans

$

1,077,766

$

3,305,835

$

3,563,122

$

752,470

$

8,699,193

Amount of Loans based upon:

Fixed Rates

$

361,953

$

2,293,417

$

2,688,729

$

61,899

$

5,405,998

Floating or adjustable rates

715,813

1,012,418

874,393

690,571

3,293,195

Total loans, at amortized cost

$

1,077,766

$

3,305,835

$

3,563,122

$

752,470

$

8,699,193

As a normal practice in extending credit for commercial and industrial purposes, we may accept trust deeds on real property as collateral. In some cases, when the primary source of repayment for the loan is anticipated to come from the cash flow from normal operations of the borrower, and real property has been taken as collateral, the real property is considered a secondary source of repayment for the loan. Since we lend primarily in Southern and Central California, our real estate loan collateral is concentrated in this region.

Nonperforming Assets

The following table provides information on nonperforming assets as of the dates presented.

December 31,

2025

2024

2023

2022

2021

(Dollars in thousands)

Nonaccrual loans

$

4,685

$

27,795

$

21,302

$

4,930

$

6,893

Total nonperforming loans

4,685

27,795

21,302

4,930

6,893

OREO, net

163

19,303

—

—

—

Total nonperforming assets

$

4,848

$

47,098

$

21,302

$

4,930

$

6,893

Performing modified loans

$

16,859

$

6,467

$

9,460

$

7,817

$

5,293

Total nonperforming loans and performing modified loans

$

21,544

$

34,262

$

30,762

$

12,747

$

12,186

Percentage of nonperforming loans and performing modified loans to total loans, at amortized cost

0.25

%

0.40

%

0.35

%

0.14

%

0.15

%

Percentage of nonperforming assets to total loans and OREO

0.06

%

0.55

%

0.24

%

0.05

%

0.09

%

Percentage of nonperforming assets to total assets

0.03

%

0.31

%

0.13

%

0.03

%

0.04

%

63

Nonperforming Assets and Delinquencies

The table below provides trends in our nonperforming assets and delinquencies as of the dates presented.

December 31,

2025

September 30,

2025

June 30,

2025

March 31,

2025

December 31,

2024

(Dollars in thousands)

Nonperforming loans:

Commercial real estate

$

4,186

$

23,707

$

24,379

$

24,379

$

25,866

SBA

21

3,952

1,265

1,024

1,529

Commercial and industrial

478

145

265

173

340

Dairy & livestock and agribusiness

—

—

60

60

60

Total

$

4,685

$

27,804

$

25,969

$

25,636

$

27,795

% of Total loans

0.05

%

0.33

%

0.31

%

0.31

%

0.33

%

Past due 30-89 days (accruing):

Commercial real estate

$

2,887

$

43

$

—

$

—

$

—

Construction

—

42

—

—

—

SBA

30

—

3,419

718

88

Commercial and industrial

261

—

—

—

399

Total

$

3,178

$

85

$

3,419

$

718

$

487

% of Total loans

0.04

%

0.00

%

0.04

%

0.01

%

0.01

%

OREO:

Commercial real estate

$

163

$

661

$

661

$

495

$

18,656

SFR mortgage

—

—

—

—

647

Total

$

163

$

661

$

661

$

495

$

19,303

Total nonperforming, past due, and

   OREO

$

8,026

$

28,550

$

30,049

$

26,849

$

47,585

% of Total loans

0.09

%

0.34

%

0.36

%

0.32

%

0.25

%

Classified Loans

$

52,701

$

78,180

$

73,422

$

94,169

$

89,549

Nonperforming loans, defined as nonaccrual loans, including modified loans on nonaccrual, and loans past due 90 days or more and still accruing interest, were $4.7 million at December 31, 2025, or 0.05% of total loans. This compares to nonperforming loans of $27.8 million, or 0.33% of total loans, at December 31, 2024. The $23.1 million decrease in nonperforming loans was primarily due a $19.6 million commercial real estate loan payoff and a $3.4 million SBA loan payoff.

Classified loans are loans that are graded “substandard” or worse. Classified loans of $52.7 million at December 31, 2025 decreased from $89.5 million at December 31, 2024. The $36.8 million decrease was primarily due to the payoffs of three commercial real estate loans totaling $25.6 million as well as changes in loan risk ratings. Classified loans as a percentage of total loans was 0.61% at December 31, 2025, compared to 1.05% at December 31, 2024.

At December 31, 2025 we had one OREO property totaling $163,000. At December 31, 2024, we had four OREO properties totaling $19.3 million, consisting of three commercial real estate properties and one single-family residential property. In the first quarter of 2025, we sold four properties with a total book value of $19.3 million. These sales resulted in gains on sale of approximately $2.0 million.

Modifications of Loans to Borrowers Experiencing Financial Difficulty

The Company adopted Accounting Standards Update (“ASU”) 2022-02, Financial Instruments - Credit Losses (Topic 326) Troubled Debt Restructurings and Vintage Disclosures effective January 1, 2023. The amendments in ASU 2022-02 eliminated the recognition and measurement of TDRs and enhanced disclosures for loan modifications to borrowers experiencing financial difficulty.

At December 31, 2025, there were $16.9 million of loans, or 0.19% of total gross loans portfolio, modified due to borrowers experiencing financial difficulties, as compared to $6.5 million, or 0.08% at December 31, 2024.

64

During the year ended December 31, 2025, a commercial real estate loan of $43,000 experienced a subsequent default within twelve months of the modification date. During the years ended December 31, 2024 and 2023, 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.

At December 31, 2025 and 2024, there was no ACL allocated to modified loans to borrowers experiencing financial difficulty under the ASU 2022-02. Impairment amounts identified are typically charged off against the allowance at the time the loan is considered uncollectible. There were no charge-offs on modified loans to borrowers experiencing financial difficulty during the years ending December 31, 2025, 2024 and 2023.

See Note 3 — Summary of Significant Accounting Policies — Modification of Loans to Borrowers Experiencing Financial Difficulty and Note 5 – Loans and Lease Finance Receivables and Allowance for Credit Losses of the notes to our audited consolidated financial statements for additional information on loan modifications to borrowers experiencing financial difficulty.

Allowance for Credit Losses

The allowance for credit losses totaled $77.2 million as of December 31, 2025, compared to $80.1 million as of December 31, 2024. Our allowance for credit losses at December 31, 2025 was 0.89% of total loans, compared to 0.94% at December 31, 2024. The ACL decreased by $2.9 million for 2025, including $3.5 million recapture of provision for credit losses. The ACL decreased by $6.7 million for 2024, including $3.0 million recapture of credit losses. Net recoveries were $539,000 for 2025, which compares with net charge-offs of $3.7 million for 2024.

The allowance for credit losses as of December 31, 2025 is based upon lifetime loss rate models developed from an estimation framework that uses historical lifetime loss experiences to derive loss rates at a collective pool level. We measure the expected credit losses on a collective (pooled) basis for those loans that share similar risk characteristics. We have three collective loan pools: Commercial Real Estate, Commercial and Industrial, and Consumer. Our ACL amounts are largely driven by portfolio characteristics, including loss history and various risk attributes, and the economic outlook for certain macroeconomic variables. The allowance for credit loss is sensitive to both changes in these portfolio characteristics and the forecast of macroeconomic variables. Risk attributes for commercial real estate loans include original loan to value ratios, origination year, loan seasoning, and macroeconomic variables that include GDP growth, commercial real estate price index and unemployment rate. Risk attributes for commercial and industrial loans include internal risk ratings, borrower industry sector, loan credit spreads and macroeconomic variables that include unemployment rate and BBB spread. The macroeconomic variables for Consumer include unemployment rate and GDP. The Commercial Real Estate methodology is applied over commercial real estate loans, a portion of construction loans, and a portion of Small Business Administration (“SBA”) loans. The Commercial and Industrial methodology is applied over a substantial portion of the Company’s commercial and industrial loans, all dairy & livestock and agribusiness loans, municipal lease receivables, as well as the remaining portion of SBA loans (excluding PPP loans). The Consumer methodology is applied to SFR mortgage loans, consumer loans, as well as the remaining construction loans. In addition to determining the quantitative life of loan loss rate to be applied against the portfolio segments, management reviews current conditions and forecasts to determine whether adjustments are needed to ensure that the life of loan loss rates reflect both the current state of the portfolio, and expectations for macroeconomic changes.

Our economic forecast continues to be a blend of multiple forecasts produced by Moody’s. The baseline forecast continues to represent the largest weighting in our multi-weighted forecast scenario, with both upside and downside risks weighted among multiple forecasts. The resulting economic forecast reflects slower GDP growth of less than 2% for 2026 though 2028. Commercial Real Estate values are forecasted to continue their decline in 2026, with a return to growth in values occurring in 2027. Unemployment is forecasted to exceed 5% from mid 2026 until 2028.

65

The table below presents a summary of charge-offs and recoveries by type, the provision for credit losses on loans, and the resulting allowance for credit losses for the periods presented.

Year Ended December 31,

2025

2024

2023

2022

2021

(Dollars in thousands)

Allowance for credit losses at beginning of period

$

80,122

$

86,842

$

85,117

$

65,019

$

93,692

Charge-offs:

Commercial real estate

—

(2,258

)

—

—

—

SBA

(118

)

(165

)

(288

)

(127

)

(223

)

Commercial and industrial

(519

)

(1,981

)

(109

)

(66

)

(3,019

)

Dairy & livestock and agribusiness

—

—

—

—

(118

)

Consumer and other loans

(5

)

(4

)

(8

)

(4

)

(11

)

Total charge-offs

(642

)

(4,408

)

(405

)

(197

)

(3,371

)

Recoveries:

Commercial real estate

—

68

—

—

—

Construction

171

67

12

12

58

SBA

66

128

73

107

23

Commercial and industrial

944

424

14

503

12

Dairy & livestock and agribusiness

—

—

31

468

—

SFR mortgage

—

—

—

—

79

Consumer and other loans

—

1

—

—

26

Total recoveries

1,181

688

130

1,090

198

Net recoveries (charged-offs)

539

(3,720

)

(275

)

893

(3,173

)

Initial ACL for PCD loans at acquisition

—

—

—

8,605

—

Provision recorded at acquisition

—

—

—

4,932

—

(Recapture of) provision for credit losses

(3,500

)

(3,000

)

2,000

5,668

(25,500

)

Allowance for credit losses at end of period

$

77,161

$

80,122

$

86,842

$

85,117

$

65,019

Summary of reserve for unfunded loan commitments:

Reserve for unfunded loan commitments at beginning of period

$

6,250

$

7,500

$

8,000

$

8,000

$

9,000

(Recapture of) provision for unfunded loan commitments

2,000

(1,250

)

(500

)

—

(1,000

)

Reserve for unfunded loan commitments at end of period

$

8,250

$

6,250

$

7,500

$

8,000

$

8,000

Reserve for unfunded loan commitments to total unfunded loan commitments

0.42

%

0.35

%

0.43

%

0.46

%

0.49

%

Amount of total loans at end of period (1)

$

8,699,193

$

8,536,432

$

8,904,910

$

9,079,392

$

7,887,713

Average total loans outstanding (1)

$

8,427,967

$

8,670,420

$

8,893,335

$

8,676,820

$

8,065,877

Net recoveries (charge-offs) to average total loans

0.01

%

(0.04

)%

(0.00

)%

0.01

%

(0.04

)%

Net recoveries (charge-offs) to total loans at end of period

0.01

%

(0.04

)%

(0.00

)%

0.01

%

(0.04

)%

Allowance for credit losses to average total loans

0.92

%

0.92

%

0.98

%

0.98

%

0.81

%

Allowance for credit losses to total loans at end of period

0.89

%

0.94

%

0.98

%

0.94

%

0.82

%

Allowance for credit losses to nonaccrual loans

1646.98

%

288.26

%

407.67

%

1726.51

%

943.26

%

Net recoveries (charge-offs) to allowance for credit losses

0.70

%

(4.64

)%

(0.32

)%

1.05

%

(4.88

)%

Net (charge-offs) recoveries to (recapture of) provision for credit losses

(15.40

)%

124.00

%

(13.75

)%

8.42

%

12.44

%

(1)
Net of deferred loan origination fees, costs and discounts (amortized cost).

The Bank’s ACL methodology also produced an allowance of $8.3 million for our off-balance sheet credit exposures as of December 31, 2025, compared to $6.3 million as of December 31, 2024. The increase from the prior year end was primarily driven by higher unfunded commitment balances in commercial real estate as well as commercial and industrial loans.

While we believe that the allowance at December 31, 2025 was appropriate to absorb losses from known or inherent risks in the portfolio, no assurance can be given that future economic conditions, interest rate fluctuations, conditions of our borrowers (including fraudulent activity), or natural disasters, which adversely affect our service areas or other circumstances or conditions, including those defined above, will not result in increased provisions for credit losses in the future.

66

Changes in economic and business conditions could have an impact on our market area and on our loan portfolio. We continually monitor these conditions in determining our estimates of needed reserves. However, we cannot predict the extent to which the deterioration in general economic conditions, real estate values, changes in general rates of interest and changes in the financial conditions or business of a borrower may adversely affect a specific borrower’s ability to pay or the value of our collateral. See “Risk Management – Credit Risk Management” contained herein.

The following table provides a summary of the allocation of the allowance for credit losses by loan type at the dates indicated for total loans. The allocations presented should not be interpreted as an indication that loans charged to the allowance for credit losses will occur in these amounts or proportions.

Allowance for Credit Losses by Loan Type

December 31,

2025

2024

2023

2022

2021

Allowance

Amount

Loans

as % of

Total

Loans

Allowance

Amount

Loans

as % of

Total

Loans

Allowance

Amount

Loans

as % of

Total

Loans

Allowance

Amount

Loans

as % of

Total

Loans

Allowance

Amount

Loans

as % of

Total

Loans

(Dollars in thousands)

Commercial real estate

$

61,661

75.6

%

$

66,237

76.2

%

$

69,466

76.2

%

$

64,806

75.8

%

$

50,950

73.4

%

Construction

593

0.4

%

312

0.2

%

1,277

0.8

%

1,702

1.0

%

765

0.8

%

SBA

2,720

3.2

%

2,629

3.2

%

2,679

3.0

%

2,809

3.2

%

2,668

3.6

%

SBA - PPP

—

—

—

—

—

—

—

0.1

%

—

2.4

%

Commercial and industrial

8,438

11.2

%

6,093

10.8

%

9,116

10.9

%

10,206

10.5

%

6,669

10.3

%

Dairy & livestock and

   agribusiness

2,486

5.0

%

3,610

4.9

%

3,098

4.7

%

4,400

4.8

%

3,066

4.9

%

Municipal lease finance

   receivables

251

0.7

%

205

0.8

%

210

0.8

%

296

0.9

%

100

0.6

%

SFR mortgage

442

3.2

%

424

3.2

%

535

3.0

%

366

2.9

%

188

3.1

%

Consumer and other loans

570

0.7

%

612

0.7

%

461

0.6

%

532

0.8

%

613

0.9

%

Total

$

77,161

100.0

%

$

80,122

100.0

%

$

86,842

100.0

%

$

85,117

100.0

%

$

65,019

100.0

%

The ACL to total loan coverage ratio as of December 31, 2025 decreased to 0.89%, compared to 0.94% as of December 31, 2024.

Deposits

The primary source of funds to support earning assets (loans and investments) is the generation of deposits.

At December 31, 2025, total deposits were $12.07 billion, an increase of $123.6 million, or 1.03%, from total deposits of $11.95 billion at December 31, 2024. The increase in deposits was primarily driven the increase $428.6 million in money market account balances, partially offset by decreases of $236.4 million in noninterest-bearing deposits, $42.0 million in investment checking, and $29.8 million in savings.

The average balance of deposits by category and the average effective interest rates paid on deposits is summarized for the periods presented in the table below.

Year Ended December 31,

2025

2024

2023

Average

Balance

Rate

Balance

Rate

Balance

Rate

(Dollars in thousands)

Noninterest-bearing deposits

$

7,045,960

—

$

7,144,129

—

$

7,793,336

—

Interest-bearing deposits

Investment checking

513,432

0.18

%

527,922

0.22

%

623,850

0.19

%

Money market

3,406,324

2.47

%

3,172,463

2.65

%

3,202,417

1.49

%

Savings

407,103

0.08

%

443,068

0.06

%

514,262

0.05

%

Time deposits

574,494

2.76

%

635,728

3.14

%

304,053

0.83

%

Total deposits

$

11,947,313

$

11,923,310

$

12,437,918

The amount of noninterest-bearing deposits in relation to total deposits is an integral element in our strategy of seeking to achieve a low cost of funds. Average noninterest-bearing deposits were $7.05 billion for 2025, a decrease of $98.2 million, or 1.37%, from average noninterest-bearing deposits of $7.14 billion for 2024. Average noninterest-bearing deposits represented 58.98% of total average deposits for 2025, compared to 59.92% of total average deposits for 2024.

67

Average savings deposits, which include interest-bearing demand checking, money market accounts and savings, were $4.33 billion for 2025, increased $183.4 million, or 4.43%, from average savings deposits of $4.14 billion for 2024.

Average time deposits totaled $574.5 million for 2025, decreased $61.2 million, or 9.63%, from total average time deposits of $635.7 million for 2024.

Our deposits are primarily relationship based core deposits and customer repurchase agreements (“repos”). We had $300.0 million of brokered deposits at the end of 2025 and 2024 which accounted for the majority of our time deposits. Our core customer deposits consist of 78% of business deposits and 22% consisting of consumer deposits, primarily the owners and employees of our business customers. The largest percentage of our deposits, 43%, are non-analyzed business accounts, which represent customer operating accounts that generally utilize a wide array of treasury management products. As most of our business customers need to operate with more than $250,000 in their operating account, we have a significant percentage of deposits that are uninsured. Our estimated uninsured deposits were $6.56 billion and $7.72 billion at December 31, 2025 and December 31, 2024, respectively. As of December 31, 2025, 45% of our total deposits and customer repos were uncollateralized and uninsured.

Our customer deposit relationships represent long tenured customers representing a diverse set of industries. The industry classification with the largest concentration is finance and insurance, which represented approximately 13% of our deposits at December 31, 2025. Overall, there are 15 different industry classifications that represent 2% or more of our deposits as of December 31, 2025. Our depositors have typically banked with us for many years. As of December 31, 2025, 47% of our deposit relationships have banked with us more than 10 years and approximately 75% of our deposit relationships have been with us for three or more years.

Total deposits and customer repos were $12.56 billion at December 31, 2025, a $352.3 million, or 2.89%, increase from December 31, 2024. The unprecedented increase in short-term interest rates impacted the mix of our deposits. Overall, we have experienced a decline in noninterest-bearing deposit levels and an increase in interest-bearing deposit levels due to the impact of higher interest rates that has led to deposits moving to higher yielding alternatives, such as our money market and time deposit products. We also experienced noninterest-bearing deposits being transferred from the Bank’s balance sheet by customers to be invested by CitizensTrust in higher yielding instruments such as U.S. treasury notes or bonds.

The following table provides the remaining maturities of large denomination ($250,000 or more) time deposits, including public funds, at December 31, 2025.

Maturity Distribution of Large Denomination Time Deposits

December 31, 2025

(Dollars in thousands)

3 months or less

$

92,996

Over 3 months through 6 months

7,201

Over 6 months through 12 months

21,550

Over 12 months

1,079

Total

$

122,826

Time deposits totaled $576.8 million at December 31, 2025, representing an increase of $3.2 million, or 0.55%, from total time deposits of $573.6 million at December 31, 2024.

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Borrowings

The following table summarizes information about our term FHLB advances, customer repurchase agreements and other borrowings outstanding for the periods presented.

Repurchase

Agreements

FHLB Advances

Other Borrowings

Total

(Dollars in thousands)

At December 31, 2025

Amount outstanding

$

490,601

$

500,000

$

—

$

990,601

Weighted-average interest rate

1.72

%

4.55

%

—

3.15

%

Year ended December 31, 2025

Highest amount at month-end

$

490,601

$

500,000

$

—

$

990,601

Daily-average amount outstanding

$

411,625

$

500,000

$

5,261

$

916,886

Weighted-average interest rate

1.71

%

4.55

%

4.52

%

3.27

%

At December 31, 2024

Amount outstanding

$

261,887

$

500,000

$

—

$

761,887

Weighted-average interest rate

0.72

%

4.55

%

—

3.23

%

Year ended December 31, 2024

Highest amount at month-end

$

461,761

$

500,000

$

1,995,000

$

2,956,761

Daily-average amount outstanding

$

354,432

$

326,503

$

1,187,856

$

1,868,791

Weighted-average interest rate

1.33

%

4.62

%

4.79

%

4.10

%

At December 31, 2025, our total borrowings were $990.6 million and included $490.6 million of repurchase agreements and $500.0 million in FHLB advances, at an average cost of approximately 4.6%. At December 31, 2024, our borrowings were $761.9 million and included $261.9 million in repurchase agreements and $500 million in FHLB advances at an average cost of approximately 4.6%. Refer to Note 11 — Borrowings of the notes to the consolidated financial statements for a more detailed discussion.

We offer a repurchase agreement product to our deposit customers. This product, known as Citizens Sweep Manager, sells our investment securities overnight to our customers under an agreement to repurchase them the next day at a price which reflects the market value of the use of funds by the Bank for the period concerned. These repurchase agreements are signed with customers who want to invest their excess deposits, above a pre-determined balance in a demand deposit account, in order to earn interest. As of December 31, 2025, total funds borrowed under these agreements were $490.6 million with a weighted average interest rate of 1.71%, compared to $261.9 million with a weighted average interest rate of 0.72% as of December 31, 2024.

At December 31, 2025, loans with a carrying value of $6.47 billion were pledged to secure available lines of credit from the FHLB and the Federal Reserve Bank. As of December 31, 2025, the Bank had unused borrowing capacity at the FHLB of $4.08 billion.

At December 31, 2025, investment securities with carrying values of $2.74 billion were pledged to secure various types of deposits, including $942.0 million of public funds, $548.6 million for repurchase agreements, and $57.0 million for other purposes as required or permitted by law. In addition, investment securities with carrying values of $1.35 billion were pledged for unused borrowing capacity.

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Aggregate Contractual Obligations

The following table summarizes the aggregate contractual obligations as of December 31, 2025.

Maturity by Period

Total

Less Than

One

Year

One Year

Through

Three Years

Four Years

Through

Five Years

Over

Five

Years

(Dollars in thousands)

Deposits (1)

$

12,071,982

$

12,065,213

$

5,395

$

1,268

$

106

Customer repurchase agreements (1)

490,601

490,601

—

—

—

Other borrowings

500,000

300,000

200,000

—

—

Deferred compensation

22,318

577

1,150

1,150

19,441

Operating leases

64,573

9,858

15,551

9,508

29,656

Equity investments

77,499

42,894

31,386

1,215

2,004

Total

$

13,226,973

$

12,909,143

$

253,482

$

13,141

$

51,207

(1)
Amounts exclude accrued interest.

Deposits represent noninterest-bearing, money market, savings, NOW, certificates of deposits, brokered and all other deposits held by the Bank.

Customer repurchase agreements represent excess amounts swept from customer demand deposit accounts, which mature the following business day and are collateralized by investment securities. These amounts are due to customers.

Other borrowings represent amounts due for FHLB advances based on their contractual maturity dates.

Deferred compensation represents the amounts that are due to former employees based on salary continuation agreements as a result of acquisitions and amounts due to current and retired employees under our deferred compensation plans.

Operating leases represent the total minimum lease payments due under non-cancelable operating leases. Refer to Note 21 — Leases of the notes to the consolidated financial statements for a more detailed discussion about leases.

Equity investments represent commitments to contribute capital to low-income housing tax credit (“LIHTC”), solar tax funds and other CRA-related investment partnerships.

Off-Balance Sheet Arrangements

The following table summarizes the off-balance sheet items at December 31, 2025.

Maturity by Period

Total

Less Than

One

Year

One Year

to Three

Years

Four Years

to Five

Years

After

Five

Years

(Dollars in thousands)

Commitment to extend credit:

Commercial real estate

$

409,476

$

62,898

$

162,066

$

157,754

$

26,758

Construction

163,475

50,797

108,418

—

4,260

SBA

3,190

2,864

—

—

326

Commercial and industrial

976,499

704,328

230,852

6,634

34,685

Dairy & livestock and agribusiness (1)

203,542

87,281

116,011

250

—

SFR Mortgage

748

—

—

—

748

Consumer and other loans

118,025

15,016

12,446

1,737

88,826

  Total commitment to extend credit

1,874,955

923,184

629,793

166,375

155,603

  Obligations under letters of credit

95,224

60,369

29,850

4,987

18

    Total

$

1,970,179

$

983,553

$

659,643

$

171,362

$

155,621

(1)
Total commitments to extend credit to agribusiness were $19.4 million at December 31, 2025.

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As of December 31, 2025, we had commitments to extend credit of approximately $1.87 billion, and obligations under letters of credit of $95.2 million. Commitments to extend credit are agreements to lend to customers, provided there is no violation of any material condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Commitments are generally variable rate, and many of these commitments are expected to expire without being drawn upon. As such, the total commitment amounts do not necessarily represent future cash requirements. We use the same credit underwriting policies in granting or accepting such commitments or contingent obligations as we do for on-balance sheet instruments, which consist of evaluating customers’ creditworthiness individually. As of December 31, 2025 and 2024, the balance in the reserve for unfunded loan commitments was $8.3 million and $6.3 million, respectively, and was included in other liabilities. There was $2.0 million of provision for unfunded loan commitments for the year ended December 31, 2025. There was $1.25 million recapture of unfunded loan commitments for the year ended December 31, 2024.

Standby letters of credit are conditional commitments issued by the Bank to guarantee the financial performance of a customer to a third party. Those guarantees are primarily issued to support private borrowing or purchase arrangements. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. When deemed necessary, we hold appropriate collateral supporting those commitments.

Capital Resources

Our primary source of capital has been the retention of operating earnings and issuance of common stock in connection with periodic acquisitions. In order to ensure adequate levels of capital, we conduct an ongoing assessment of projected sources, needs and uses of capital in conjunction with projected increases in assets and the level of risk. As part of this ongoing assessment, the Board of Directors reviews the various components of our capital plan and capital stress testing.

Total equity increased $108.9 million, or 4.98%, to $2.30 billion at December 31, 2025, compared to total equity of $2.19 billion at December 31, 2024. Increases to equity included $209.3 million in net earnings and a $84.4 million increase in other comprehensive income, that were partially offset by $110.3 million in cash dividends and $81.1 million in common stock repurchase. For the year ended 2025, we repurchased, under our stock repurchase plan, 4,321,777 shares of common stock, at an average price of $18.60. We did not repurchase any stock in 2024. Our tangible book value per share at December 31, 2025 was $11.24.

During 2025, the Board of Directors of CVB declared quarterly cash dividends totaling $0.80 per share. Dividends are payable at the discretion of the Board of Directors and there can be no assurance that the Board of Directors will continue to pay dividends at the same rate, or at all, in the future. CVB’s ability to pay cash dividends to its shareholders is subject to restrictions under federal and California law, including restrictions imposed by the Federal Reserve, and covenants set forth in various agreements we are a party to.

On November 20, 2024, our Board of Directors approved a program to repurchase up to 10,000,000 shares (the “Maximum Amount”) of CVB common stock including by means of one or more Rule 10b5-1 plans or other appropriate buy-back arrangements, including open market purchases and private transactions, at times and at prices considered appropriate by us, depending upon prevailing market conditions and other corporate and legal considerations (“2024 Repurchase Program”). This 2024 Repurchase Program replaces in its entirety the Company's previous 2022 share repurchase program under which 4,300,059 shares remained available for repurchase and which has now been terminated. The 2024 Repurchase Program terminates on the earlier of the repurchase of the Maximum Amount or five years from the date of authorization.

The Bank and the Company are required to meet risk-based capital standards under the revised capital framework referred to as Basel III set by their respective regulatory authorities. The risk-based capital standards require the achievement of a minimum total risk-based capital ratio of 8.0%, a Tier 1 risk-based capital ratio of 6.0% and a common equity Tier 1 (“CET1”) capital ratio of 4.5%. In addition, the regulatory authorities require the highest rated institutions to maintain a minimum leverage ratio of 4.0%. To be considered “well-capitalized” for bank regulatory purposes, the Bank and the Company are required to have a CET1 capital ratio equal to or greater than 6.5%, a Tier 1 risk-based capital ratio equal to or greater than 8.0%, a total risk-based capital ratio equal to or greater than 10.0% and a Tier 1 leverage ratio equal to or greater than 5.0%. At December 31, 2025, the Bank and the Company exceeded the minimum risk-based capital ratios and leverage ratios required to be considered “well-capitalized” for regulatory purposes. For further information about capital requirements and our capital ratios, see “Item 1. Business—Regulation and Supervision—Capital Adequacy Requirements”.

At December 31, 2025, the Bank and the Company exceeded the minimum risk-based capital ratios and leverage ratios, under the revised capital framework referred to as Basel III, required to be considered “well-capitalized” for regulatory purposes.

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The table below presents the Company’s and the Bank’s risk-based and leverage capital ratios for the periods presented.

December 31, 2025

December 31, 2024

Capital Ratios

Adequately

Capitalized

Ratios

Minimum

Required

Plus Capital

Conservation

Buffer

Well

Capitalized

Ratios

CVB Financial

Corp.

Consolidated

Citizens

Business

Bank

CVB Financial

Corp.

Consolidated

Citizens

Business

Bank

Tier 1 leverage capital ratio

4.00%

4.00%

5.00%

11.62%

11.46%

11.46%

11.30%

Common equity Tier 1 capital ratio

4.50%

7.00%

6.50%

15.89%

15.66%

16.24%

16.01%

Tier 1 risk-based capital ratio

6.00%

8.50%

8.00%

15.89%

15.66%

16.24%

16.01%

Total risk-based capital ratio

8.00%

10.50%

10.00%

16.66%

16.44%

17.06%

16.82%

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RISK MANAGEMENT

All financial institutions must manage and control a variety of business risks that can significantly affect their financial performance. Our Board of Directors (“Board”) and executive management team have overall and ultimate responsibility for management of these risks, which they carry out through committees with specific and well-defined risk management functions. The Risk Management Program that we have adopted seeks to implement the proper control and management of key risk factors inherent in the operation of the Company and the Bank. Some of the key risks that we must manage are credit risks, interest rate risk, liquidity risk, market risks, transaction risk, compliance risk, strategic risk (including reputation risk), legal risk, and cybersecurity risk. These specific risk factors are not mutually exclusive. It is recognized that any product or service offered by us may expose the Bank to one or more of these risks. Our Risk Management Committee and Risk Management Division monitor these risks to minimize exposure to the Company. The Board and its committees work closely with management in overseeing risk. Each Board committee receives reports and information regarding risk issues directly from management.

Credit Risk Management

Loans represent the largest component of assets on our balance sheet and their related credit risk is among the most significant risks we manage. We define credit risk as the risk of loss associated with a borrower or counterparty default (failure to meet obligations in accordance with agreed upon terms). Credit risk is found in all activities where success depends on a counter party, issuer, or borrower performance. Credit risk arises through the extension of loans and leases, certain securities, and letters of credit.

Natural disasters, such as storms, earthquakes, drought and other weather conditions, effects of pandemics, and problems related to possible climate changes, social unrest or protest, may from time-to-time cause or create the risk of damage to facilities, buildings, property or other assets of Bank customers, borrowers or municipal debt issuers. This could in turn affect their financial condition or results of operations and as a consequence their ability or capacity to repay debt or fulfill other obligations to the Bank.

Credit risk in the investment portfolio and correspondent bank accounts is in part addressed through defined limits in the Company’s policy statements. In addition, certain securities carry insurance to enhance the credit quality of the bond. Limitations on industry concentration, aggregate customer borrowings, geographic boundaries and standards on loan quality also are designed to reduce loan credit risk. Senior Management, Directors’ Committees, and the Board are provided with information to appropriately identify, measure, control and monitor the credit risk of the Company.

The Bank’s loan policy is updated annually and approved by the Board. It prescribes underwriting guidelines and procedures for all loan categories in which the Bank participates to establish risk tolerance and parameters that are communicated throughout the Bank to ensure consistent and uniform lending practices. The underwriting guidelines include, among other things, approval limitation and hierarchy, documentation standards, loan-to-value limits, debt coverage ratio, overall credit-worthiness of the borrower, guarantor support, etc. All loan requests considered by the Bank should be for a clearly defined legitimate purpose with a determinable primary source, as well as alternate sources of repayment. All loans should be supported by appropriate documentation including, current financial statements, credit reports, collateral information, guarantor asset verification, tax returns, title reports, appraisals (where appropriate), and other documents of quality that will support the credit.

The major lending categories are owner-occupied and non owner-occupied commercial real estate loans, commercial and industrial loans, dairy & livestock and agribusiness loans, SBA loans, construction loans, residential real estate loans, and various consumer loan products. Loans underwritten to borrowers within these diverse categories require underwriting and documentation suited to the unique characteristics and inherent risks involved.

Commercial and industrial loans require credit structures that are tailored to the specific purpose of the business loan, involving a thorough analysis of the borrower’s business, cash flow, collateral, industry risks, economic risks, credit, character, and guarantor support. Owner-occupied real estate loans are primarily based upon the capacity and stability of the cash flow generated by the occupying business and the market value of the collateral, among other things. Non owner-occupied real estate is typically underwritten to the income produced by the subject property and many considerations unique to the various types of property (i.e. office, retail, warehouse, shopping center, medical, etc.), as well as, the financial support provided by sponsors in recourse transactions. Construction loans will often depend on the specific characteristics of the project, the market for the specific development, real estate values, and the equity and financial strength of the sponsors. Dairy & livestock and agribusiness loans are largely predicated on the revenue cycles and demand for milk and crops, commodity prices, collateral values of herd, feed, and income-producing dairies or croplands, and the financial support of the

73

guarantors. Underwriting of residential real estate and consumer loans are generally driven by personal income and debt service capacity, credit history and scores, and collateral values.

SBA loans require credit structures that conform to the various requirements of the SBA programs specific to the type of loan request and the Bank’s loan policy as it relates to these loans. The SBA 7(a) loans are similar to the commercial and industrial loans that are tailored to the specific purpose of the business loan. Once granted, the SBA 7(a) loans require the Bank to follow SBA servicing guidelines to maintain the SBA guaranty which typically ranges from 75% to 90% depending on the type of 7(a) loan. SBA 504 loans are similar to the Bank’s Owner-occupied real estate loans. When the Bank funds an SBA 504 transaction, which includes the 50% - 65% first trust deed loan and the 25% - 40% second trust deed loan, the initial risk is centered in completing the SBA’s requirements to provide for the payoff of the second trust deed loan from the subordinated debenture. Once the 504 second is paid off, the remaining first trust deed loan is then managed under the same requirements applied to the Bank’s owner-occupied commercial real estate loans. It should be noted that both the SBA 7(a) and 504 programs provide loans for commercial real estate acquisition. Additionally, the interest rates for the 7(a) program are typically variable and can adjust as often as monthly with quarterly adjustment the most typical. SBA 504 loan interest rates for the first trust deed loan are at the Bank’s discretion and subject to competitive pressures from other banks.

Implicit in lending activities is the risk that losses will occur and that the amount of such losses will vary over time. Consequently, we maintain an Allowance for Credit Losses (“ACL”) by charging a provision for credit losses to earnings. Loans determined to be losses are charged against the allowance for credit losses. In this regard, it is important to note that the Bank’s practice with regard to these loans, including modified loans to borrowers experiencing financial difficulty, is to generally charge off any loss amount against the ACL upon evaluating the loan at the time a probable loss becomes recognized. As such, the Bank’s specific allowance for loans, including modified loans to borrowers experiencing financial difficulty, is relatively low since any known loss amount will generally have been charged off.

Central to our credit risk management is its loan risk rating system. The originating credit officer assigns borrowers an initial risk rating, which is reviewed and possibly changed by credit management. The risk rating is based primarily on an analysis of each borrower’s financial capacity in conjunction with industry and economic trends. Credit approvals are made based upon our evaluation of the inherent credit risk specific to the transaction and are reviewed for appropriateness by senior line and credit management personnel. Credits are monitored by line and credit management personnel for deterioration in a borrower’s financial condition, which would impact the ability of the borrower to perform under the contract. Risk ratings may be adjusted as necessary.

Loans are risk rated into the following categories: Pass, Special Mention, Substandard, Doubtful, and Loss. Each of these groups is assessed and appropriate amounts used in determining the adequacy of our ACL. Nonperforming and Doubtful loans are analyzed on an individual basis for allowance amounts. The other categories have formulae used to determine the needed allowance amount.

The Company obtains a semi-annual independent credit review by engaging an outside party to review a sample of our loans and leases. The primary purpose of this review is to evaluate our existing loan ratings.

Refer to additional discussion concerning loans, nonperforming assets, allowance for credit losses and related tables under the Analysis of Financial Condition contained herein.

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Transaction Risk

Transaction risk is the risk to earnings or capital arising from problems in service, activity or product delivery. This risk is significant within any bank and is interconnected with other risk categories in most activities throughout the Company. Transaction risk is a function of internal controls, information systems, associate integrity, and operating processes. Transaction risk is also referred to as operating or operational risk. It arises daily throughout the Company as transactions are processed. It pervades all divisions, departments and centers and is inherent in all products and services we offer.

Operational risk is the risk to earnings or capital arising from inadequate or failed internal processes or systems, human errors or misconduct, or adverse external events. Operational losses result from internal or external fraud, employment practices and workplace safety, failure to meet professional obligations involving customers, products, and business practices, damage to physical assets, business disruption and systems failures, and failures in execution, delivery, and process management.

In general, transaction risk is defined as high, medium or low by the Company. The audit plan ensures that high risk areas are reviewed annually. We utilize internal auditors and independent audit firms to test key controls of operational processes and to audit information systems, compliance management programs, loan credit reviews and trust services.

The key to monitoring transaction risk is in the design, documentation and implementation of well-defined procedures. Any system of controls, however well designed and operated, is based in part on certain assumptions and can provide only reasonable, but not absolute, assurances of the effectiveness of these systems and controls, and that the objectives of these controls have been met.

Compliance Risk Management

Compliance risk (also known as Regulatory risk) is the risk to earnings or capital arising from violations of, or non-conformance with, laws, rules, regulations, prescribed practices, or ethical standards. Compliance risk also arises in situations where the laws or rules governing certain products or activities of the Bank’s customers, vendors or business partners may be ambiguous or untested. Compliance risk exposes us to fines, civil money penalties, payment of damages, and the voiding of contracts. Compliance risk can also lead to a diminished reputation, reduced business value, limited business opportunities, lessened expansion potential, and lack of contract enforceability. The Company utilizes independent compliance audits as a means of assessing the effectiveness and identifying weaknesses in the compliance program.

There is no single or primary source of compliance risk. It is inherent in every activity. Frequently, it blends into operational risk and transaction risk. A portion of this risk is sometimes referred to as legal risk. This is not limited solely to risk from failure to comply with consumer protection laws; it encompasses all laws, as well as prudent ethical standards and contractual obligations. It also includes the exposure to litigation from all aspects of banking, traditional and non-traditional.

Our Risk Management Policy and Program and the Code of Ethical Conduct are cornerstones for controlling compliance risk. An integral part of controlling this risk is the proper training of associates. The Chief Risk Officer is responsible for developing and executing a comprehensive compliance training program. The Chief Risk Officer, in consultation with our internal and external legal counsel, seeks to provide our associates with adequate training commensurate to their job functions to ensure compliance with banking laws and regulations.

Our Risk Management Policy and Program includes a risk-based audit program aimed at identifying internal control deficiencies and weaknesses. The Compliance Management Program includes a monitoring process to address external and internal risks, including regulatory change management, the evolving products and services, and strategies of the front-line units and control functions. Additionally, in-depth audits are performed by our internal audit department under the direction of our Chief Audit Executive and supplemented by independent external firms. Annually, an Audit Plan for the Company is developed and presented for approval to the Audit Committee of the Board.

The Risk Management Division conducts periodic monitoring of our compliance efforts with a special focus on business and control functions, assessing the inherent compliance risk of activities and the effectiveness of controls, and identifying control weaknesses that are to be strengthened or enhanced. Any material exceptions identified are brought forward to the appropriate department head, and appropriate management and board committees. This reporting provides an independent view of compliance risk across the company, and supports transparent communication and management awareness of compliance risk.

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We recognize that customer complaints can often identify weaknesses in our compliance program which could expose us to risk. Therefore, we attempt to ensure that all complaints are given prompt attention. Our Compliance Management Policy and Program include provisions on how customer complaints are to be addressed. The Chief Risk Officer reviews formal complaints to determine if a significant compliance risk exists and communicates those findings to the Compliance Management and Risk Management Committees.

Strategic Risk

Strategic risk is the risk to earnings or capital arising from adverse decisions or improper implementation of strategic decisions. This risk is a function of the compatibility between an organization’s goals, the resources deployed against those goals and the quality of implementation.

Strategic risks are identified as part of the strategic planning process. Strategic planning sessions, with members of the Board of Directors, Executive Leadership, and Senior Leadership are held annually. The strategic review consists of results of strategic initiatives, an assessment of the economic outlook, competitive analysis, and an industry outlook, including a legislative and regulatory review.

Reputation risk is the risk to capital and earnings arising from negative public opinion. This affects the Bank’s ability to establish new relationships or services or continue servicing existing relationships. It can expose the Bank to litigation and, in some instances, financial loss. Reputation risk is inherent in all banking activities and requires management to exercise an abundance of caution in dealing with customers, counterparties, correspondence, investors, and the community. In addition, threats to the Bank’s reputation may result from negative publicity regarding matters such as unethical or deceptive business practices, violations of laws or regulations, regulatory enforcement actions, high profile litigation, or poor financial performance.

Cybersecurity Risk

Cybersecurity and fraud risk refers to the risk of failures, interruptions of services, or breaches of security with respect to the Company’s or the Bank’s communication, information, operations, devices, financial control, customer internet banking, customer information, email, data processing systems, or other bank or third party applications. The ability of the Company’s customers to bank remotely, including online and through mobile devices, requires secure transmission of confidential information and increases the risk of data security breaches. In addition, the Company and the Bank rely primarily on third party providers to develop, manage, maintain and protect our systems and applications. Any such failures, interruptions or fraud or security breaches, depending on the scope, duration, affected system(s) or customers(s), could expose the Company and/or the Bank to financial loss, reputation damage, litigation, or regulatory action. We continue to invest in technologies and training to protect our associates, our customers and our assets. While we have implemented various detective and preventative measures which seek to protect our Company, our customers’ information and the Bank from the risk of fraud, data security breaches or service interruptions, there can be no assurance that these measures will be effective in preventing potential breaches or losses for us or our customers.

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ASSET/LIABILITY AND MARKET RISK MANAGEMENT

Liquidity and Cash Flow

The objective of liquidity management is to ensure that funds are available in a timely manner to meet our financial obligations when they come due without incurring unnecessary cost or risk, or causing a disruption to our normal operating activities. This includes the ability to manage unplanned decreases or changes in funding sources, accommodating loan demand and growth, funding investments, repurchasing securities, paying creditors as necessary, and other operating or capital needs.

We regularly assess the amount and likelihood of projected funding requirements through a review of factors such as historical deposit volatility and funding patterns, present and forecasted market and economic conditions, individual customer funding needs, as well as current and planned business activities. Management has an Asset/Liability Committee that meets monthly. This committee analyzes the cash flows from loans, investments, deposits and borrowings, as well as the input assumptions and results from various models. In addition, the Company has a Balance Sheet Management Committee of the Board of Directors that meets at least quarterly to review the Company’s balance sheet and liquidity position. This committee provides oversight to the balance sheet and liquidity management process and recommends policy guidelines for the approval of our Board of Directors, and courses of action to address our actual and projected liquidity needs.

In general, our liquidity is managed daily by controlling the level of liquid assets as well as the use of funds provided by the cash flow from the investment portfolio, loan demand, deposit fluctuations, and borrowings. Our definition of liquid assets includes cash and cash equivalents in excess of minimum levels needed to fulfill normal business operations, short-term investment securities, and other anticipated near term cash flows from investments. In addition to on balance sheet liquidity, we have significant off-balance sheet sources of liquidity. To meet unexpected demands, lines of credit are maintained with correspondent banks, the Federal Home Loan Bank and the Federal Reserve, although availability under these lines of credit are subject to certain conditions. In addition to having more than $376 million of cash and cash equivalents on the balance sheet at December 31, 2025, we had substantial sources of off-balance sheet liquidity. These sources of available liquidity include $4.1 billion of secured and unused capacity with the Federal Home Loan Bank, $1.2 billion of secured unused borrowing capacity at the Fed’s discount window, more than $239 million of unpledged AFS securities that could be pledged at the discount window and $305 million of unsecured lines of credit. In addition to these borrowing sources, the Bank has capacity to utilize additional brokered deposits as of December 31, 2025. We can also obtain additional liquidity from deposit growth by utilizing state and national wholesale markets.

Our primary sources and uses of funds for the Company are deposits, customer repurchase agreements and loans. Total deposits and customer repos of $12.56 billion at December 31, 2025 increased $352.3 million, or 2.89%, over total deposits and customer repos of $12.21 billion at December 31, 2024. As of December 31, 2025, total borrowings, consisted of $500 million of Federal Home Loan Bank advances, at an average cost of approximately 4.6%. Our deposit levels and cost of deposits may fluctuate from period-to-period due to a variety of factors, including the stability of our deposit base, prevailing interest rates, and market conditions. As most of our business customers need to operate with more than $250,000 in their operating account, we have a significant percentage of deposits that are uninsured. At December 31, 2025, our deposits and customer repurchase agreements that are neither collateralized nor insured were approximately $5.3 billion, or 42% of our total deposits and customer repos.

CVB is a holding company separate and apart from the Bank that must provide for its own liquidity and must service its own obligations. Substantially all of CVB’s revenues are obtained from dividends declared and paid by the Bank to CVB. There are statutory and regulatory provisions that could limit the ability of the Bank to pay dividends to CVB. In addition, our regulators could limit the ability of the Bank or CVB to pay dividends or make other distributions.

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Below is a summary of our average cash position and statement of cash flows for the years ended December 31, 2025 and 2024. For further details, see our “Consolidated Statements of Cash Flows” under Part IV consolidated financial statements of this report.

Consolidated Summary of Cash Flows

Year Ended December 31,

2025

2024

(Dollars in thousands)

Average cash and cash equivalents

$

563,139

$

870,326

Percentage of total average assets

3.66

%

5.39

%

Net cash provided by operating activities

$

221,411

$

249,765

Net cash (used in) provided by investing activities

(210,311

)

852,746

Net cash provided by (used in) financing activities

160,591

(1,179,098

)

Net increase (decrease) in cash and cash equivalents

$

171,691

$

(76,587

)

Average cash and cash equivalents decreased by $307.2 million, or 35.30%, to $563.1 million for the year ended December 31, 2025, compared to $870.3 million for 2024.

At December 31, 2025, cash and cash equivalents totaled $376.4 million. This represented a increase of $171.7 million, or 83.88%, from $204.7 million at December 31, 2024.

Market Risk

In the normal course of its business activities, we are exposed to market risks, including price and liquidity risk. Market risk is the potential for loss from adverse changes in market rates and prices, such as interest rates (interest rate risk). Liquidity risk arises from the possibility that we may not be able to satisfy current or future commitments or that we may be more reliant on alternative funding sources such as long-term debt. Financial products that expose us to market risk include securities, loans, deposits, debt, and derivative financial instruments.

The table below provides the actual balances as of December 31, 2025 of interest-earning assets and interest-bearing liabilities, including the average rate earned or incurred for 2025, the projected contractual maturities over the next five years, and the estimated fair value of each category determined using available market information and appropriate valuation methodologies.

Maturing

December 31,

2025

Average

Rate

One Year

Two Years

Three Years

Four Years

Five Years

and Beyond

Estimated Fair

Value

(Dollars in thousands)

Interest-earning assets:

Investment securities available-for-sale (1)

$

2,683,070

2.97

%

$

39,573

$

28,630

$

4,611

$

4,996

$

2,605,260

$

2,683,070

Investment securities held-to-maturity (1)

2,270,391

2.29

%

25,619

5,088

18,249

21,799

2,199,636

1,925,492

Investment in FHLB, FRB, and other stock

55,948

7.77

%

—

—

—

—

55,948

55,948

Interest-earning deposits due from Federal Reserve and with other institutions

281,942

4.31

%

281,942

—

—

—

—

281,942

Loans and lease finance receivables (2)

8,699,193

5.29

%

1,077,766

886,240

675,885

608,680

5,450,622

8,591,911

Total interest-earning assets

$

13,990,544

$

1,424,900

$

919,958

$

698,745

$

635,475

$

10,311,466

$

13,538,363

Interest-bearing liabilities:

Interest-bearing deposits

$

5,271,291

2.07

%

$

5,264,522

$

4,134

$

1,262

$

741

$

632

$

5,268,983

Borrowings

990,601

3.31

%

790,601

200,000

—

—

—

941,735

Total interest-bearing liabilities

$

6,261,892

$

6,055,123

$

204,134

$

1,262

$

741

$

632

$

6,210,718

(1)
These include mortgage-backed securities which generally prepay before maturity. Includes TE adjustments utilizing a federal statutory rate of 21%.

(2)
Gross loans, at amortized cost.

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Interest Rate Sensitivity Management

During periods of changing interest rates, the ability to re-price interest-earning assets and interest-bearing liabilities can influence net interest income, the net interest margin, and consequently, our earnings. Interest rate risk is managed by attempting to control the spread between rates earned on interest-earning assets and the rates paid on interest-bearing liabilities within the constraints imposed by market competition in our service area. The primary goal of interest rate risk management is to control exposure to interest rate risk, within policy limits approved by the Board of Directors. These limits and guidelines reflect our risk appetite for interest rate risk over both short-term and long-term horizons. We measure these risks and their impact by identifying and quantifying exposures through the use of sophisticated simulation and valuation models, which, as described in additional detail below, are employed by management to understand net interest income (“NII”) at risk and economic value of equity (“EVE”) at risk. NII at risk sensitivity captures asset and liability repricing mismatches and is considered a shorter term measure, while EVE sensitivity captures mismatches within the period end balance sheets through the financial instruments’ respective maturities or estimated durations and is considered a longer term measure.

One of the primary methods that we use to quantify and manage interest rate risk is simulation analysis, which we use to model NII from the Company’s balance sheet under various interest rate scenarios. We use simulation analysis to project rate sensitive income under many scenarios. The analyses may include rapid and gradual ramping of interest rates, rate shocks, basis risk analysis, and yield curve scenarios. Specific balance sheet management strategies are also analyzed to determine their impact on NII and EVE. Key assumptions in the simulation analysis relate to the behavior of interest rates and pricing spreads, the changes in product balances, and the behavior of loan and deposit clients in different rate environments. This analysis incorporates several assumptions, the most material of which relate to the re-pricing characteristics and balance fluctuations of deposits with indeterminate or non-contractual maturities, and prepayment of loans and securities.

Our interest rate risk policy measures the sensitivity of our net interest income over both a one-year and two-year cumulative time horizon.

The simulation model estimates the impact of changing interest rates on interest income from all interest-earning assets and interest expense paid on all interest-bearing liabilities reflected on our balance sheet. This sensitivity analysis is compared to policy limits, which specify a maximum tolerance level for net interest income exposure over a one and two year horizon assuming no balance sheet growth, given a 200 basis point upward and a 200 basis point downward shift in interest rates. The simulation model uses a parallel yield curve shift that ramps rates up or down on a pro rata basis over 12-months and measures the resulting net interest income sensitivity over both the 12-month and 24-month time horizons.

The following depicts the Company’s net interest income sensitivity analysis for the periods presented below, when rates are ramped up 200bps or ramped down 200bps over a 12-month time horizon.

Estimated Net Interest Income Sensitivity (1)

December 31, 2025

December 31, 2024

Interest Rate Scenario

12-month Period

24-month Period

(Cumulative)

Interest Rate Scenario

12-month Period

24-month Period

(Cumulative)

+ 200 basis points

3.85%

5.71%

+ 200 basis points

4.66%

6.26%

- 200 basis points

-2.66%

-6.19%

- 200 basis points

-3.63%

-6.36%

(1)
Percentage change from base scenario.

Based on our current simulation models, we believe that the interest rate risk profile of the balance sheet is modestly asset sensitive over both a one-year and a two-year horizon. The estimated sensitivity does not necessarily represent a forecast and the results may not be indicative of actual changes to our net interest income. These estimates are based upon a number of assumptions including: the nature and timing of interest rate levels including yield curve shape, re-pricing characteristics and balance fluctuations of deposits with indeterminate or non-contractual maturities, prepayments on loans and securities, pricing strategies on loans and deposits, and replacement of asset and liability cash flows. While the assumptions used are based on current economic and local market conditions, there is no assurance as to the predictive nature of these conditions including how customer preferences or competitor influences might change.

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We also perform valuation analysis, which incorporates all cash flows over the estimated remaining life of all material balance sheet and derivative positions. The valuation of the balance sheet, at a point in time, is defined as the discounted present value of all asset cash flows and derivative cash flows minus the discounted present value of all liability cash flows, the net of which is referred to as EVE. The sensitivity of EVE to changes in the level of interest rates is a measure of the longer-term re-pricing risk and options risk embedded in the balance sheet. EVE uses instantaneous changes in rates, as shown in the table below. The EVE Ratio represents economic value of equity as a percentage of the discounted present value of all asset cash flows and derivative cash flows. Assumptions about the timing and variability of balance sheet cash flows are critical in the EVE analysis. Particularly important are the assumptions driving prepayments and the expected duration and pricing of the indeterminate deposit portfolios. EVE sensitivity is reported in both upward and downward rate shocks. At December 31, 2025, the EVE profile indicates a decline in the EVE Ratio value due to instantaneous downward and upward changes in rates of 300 or 400 basis points, with either modest decreases or increases in the EVE Ratio under upward and downward rate shocks of 100 and 200 basis points. Compared to December 31, 2024, our EVE sensitivity to rising rates was modestly lower. Overall, our sensitivity of EVE to changes in interest rates is generally modest, with the exception of more meaningful decreases in the EVE Ratio if rates were to immediately decline by 300 or 400 basis points.

Economic Value of Equity Sensitivity

December 31,

2025

2024

400 bp decrease in interest rates

15.9%

15.7%

300 bp decrease in interest rates

16.6%

17.1%

200 bp decrease in interest rates

17.8%

17.9%

100 bp decrease in interest rates

18.6%

18.4%

Base

19.1%

19.0%

100 bp increase in interest rates

19.3%

19.2%

200 bp increase in interest rates

19.2%

19.6%

300 bp increase in interest rates

18.6%

19.8%

400 bp increase in interest rates

18.2%

20.0%

As EVE measures the discounted present value of cash flows over the estimated lives of instruments, the change in EVE does not directly correlate to the degree that earnings would be impacted over a shorter time horizon (i.e., the current year). Further, EVE does not take into account factors such as future balance sheet growth, changes in asset and liability mix, changes in yield curve relationships, and changing product spreads that could mitigate the adverse impact of changes in interest rates.

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Counterparty Risk

Recent developments in the financial markets have placed an increased awareness of Counterparty Risks. These risks occur when a financial institution has an indebtedness or potential for indebtedness to another financial institution. We have assessed our Counterparty Risk with the following results:

•
We do not have any investments in the preferred stock of any other company;

•
Most of our investment securities are either municipal securities or securities either issued or guaranteed by government, agencies, including FNMA, FHLMC, GNMA, SBA or FHLB;

•
All of our commercial line insurance policies are with companies with the highest AM Best ratings of A or above;

•
We have no significant exposure to our Cash Surrender Value of Life Insurance since the Cash Surrender Value balance is predominately supported by insurance companies that carry an AM Best rating of A or greater;

•
We have no significant Counterparty exposure related to our derivatives not designated as hedging instruments such as interest rate swaps. Our Counterparty is a major financial institution and our agreement requires the Counterparty to post cash collateral for mark-to-market balances due to us;

•

•
We believe our risk of loss associated with our counterparty borrowers related to interest rate swaps not designated as hedging instruments is generally mitigated as the loans with swaps are underwritten to take into account potential additional exposure;

•
To manage interest rate risk on our AFS securities portfolio, we have entered into pay-fixed, receive-floating interest rate swap contracts to hedge against exposure to changes in the fair value of such securities resulting from changes in interest rates. These interest rate swap contracts are designated as fair value hedges. Reforms mandated by the Dodd-Frank Act require certain types of derivatives (e.g., interest rate swaps, credit default swaps) to be processed through designated electronic trading platforms and cleared through registered clearing houses. Centrally-cleared derivatives are negotiated between the counterparties but contain standardized terms and are traded through a central clearing house. Because the derivative counterparties are required to post collateral to satisfy the mandatory margin requirements, the counterparties are not subject to counterparty credit risk;

•
As of December 31, 2025, we had $305.0 million in Fed Funds lines of credit with other major U.S. banks. These lines of credit are available for overnight borrowings; and

•
At December 31, 2025, we had $500 million in borrowings with the FHLB. Our secured borrowing capacity with the FHLB and FRB totaled $6.08 billion, of which $5.58 billion was available as of December 31, 2025.

Price and Foreign Exchange Risk

Price risk arises from changes in market factors that affect the value of traded instruments. Foreign exchange risk is the risk to earnings or capital arising from movements in foreign exchange rates.

Our current exposure to price risk is nominal. We do not have trading accounts. Consequently, the level of price risk within the investment portfolio is limited to the need to sell securities for reasons other than trading.

We maintain limited deposit accounts with various foreign banks. Our Interbank Liability Policy seeks to limit the balance in any of these accounts to an amount that does not in our judgment present a significant risk to our earnings from changes in the value of foreign currencies.

Our asset liability model seeks to calculate the market value of the Bank’s equity. In addition, management prepares, on a monthly basis, a capital volatility report that compares changes in the market value of the investment portfolio. We have as our target to always be well-capitalized by regulatory standards.

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