# CVB Financial Corp: Form 10-Q for the period ended Mar 31, 2025

- Company: [CVB Financial Corp](/companies/cvbf.md) (CIK 354647)
- Form: 10-Q
- Filed: 2025-05-09
- Accepted by EDGAR: May 9, 2025, 18:57 ET
- Period: 2025-03-31
- Accession: 0000950170-25-067879
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/354647/000095017025067879/cvbf-20250331.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/354647/000095017025067879/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2025-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Income tax | 3 months, 2025-01-01 to 2025-03-31 | $18.4m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2025-01-01 to 2025-03-31 | $51.1m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2025-01-01 to 2025-03-31 | $0.36 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2025-01-01 to 2025-03-31 | $0.37 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2025-01-01 to 2025-03-31 | 139,294,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2025-01-01 to 2025-03-31 | $41.9m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months, 2025-01-01 to 2025-03-31 | $679.0k | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 3 months, 2025-01-01 to 2025-03-31 | $27.9m | us-gaap:PaymentsOfDividendsCommonStock |
| Share repurchases | 3 months, 2025-01-01 to 2025-03-31 | $18.7m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2025-03-31 | $529.1m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Total assets | at 2025-03-31 | $15.26bn | us-gaap:Assets |
| Total liabilities | at 2025-03-31 | $13.03bn | us-gaap:Liabilities |
| Shareholders' equity | at 2025-03-31 | $2.23bn | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 98,981 characters.

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

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

### Recently Issued Accounting Pronouncements but Not Adopted as of March 31, 2025

| Standard | Description | Adoption Timing | Impact on Financial Statements |
| --- | --- | --- | --- |
| ASU 2023-09 Income Taxes (Topic 740): Improvements to Income Tax Disclosures Issued December 2023 | On December 14, 2023, the FASB issued ASU 2023-09 Income Taxes (Topic 740) - Improvements to Income Tax Disclosures. This ASU enhances annual income tax disclosures to address investor requests for more detailed information about tax risks and improved transparency of income tax disclosures. The two primary enhancements disaggregate existing income tax disclosures related to the effective tax rate reconciliation and information on income taxes paid disaggregated by jurisdiction. This ASU is effective for annual reporting periods beginning after December 15, 2024 and are to be applied on a prospective basis; early adoption is permitted. | December 31, 2025 | The adoption of this ASU is not expected to have a material impact on our consolidated financial statements. |
| ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses Issued November 2024 | On November 4, 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40 Disaggregation of Income Statement Expenses. This ASU requires disaggregated disclosure of income statement expenses for public business entities. This ASU does not change the expense captions an entity presents on the face of the income statement; rather, it requires disaggregation of certain expense captions into specified categories in disclosures in tabular format within the footnotes to the financial statements. The prescribed categories include employee compensation, depreciation, and intangible asset amortization. This ASU is effective for annual reporting periods beginning after December 15, 2026, and interim periods within fiscal years beginning in 2028. This ASU is to be applied on a prospective basis, though early adoption and retrospective application are permitted. | December 31, 2027 | The adoption of this ASU is not expected to have a material impact on our consolidated financial statements. |
| ASU 2025-01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date Issued January 2025 | On January 06, 2025, the FASB issued ASU 2025-01, which amends the effective date of ASU 2024-03 to clarify that all public business entities are required to adopt the guidance in annual periods after December 15, 2026, and interim periods in fiscal years beginning after December 15, 2027. | See ASU 2024-03 |  |

44

### OVERVIEW

For the first quarter of 2025, we reported net earnings of $51.1 million, compared with $50.9 million for the fourth quarter of 2024 and $48.6 million for the first quarter of 2024. Diluted earnings per share were $0.36 for the first quarter, and prior quarter and $0.35 for the same period last year. Net income of $51.1 million for the first quarter of 2025 produced an annualized return on average equity (“ROAE”) of 9.31%, an annualized return on average tangible common equity (“ROATCE”) of 14.51%, and an annualized return on average assets (“ROAA”) of 1.37%. Our net interest margin, tax equivalent (“NIM”), was 3.31% for the first quarter of 2025, while our efficiency ratio was 46.69%.

Net interest income was $110.4 million for the first quarter of 2025 consistent with the fourth quarter of 2024, and a $2.0 million, or 1.79%, decrease from the first quarter of 2024. Our net interest margin increased by 21 basis points compared to the first quarter of 2024, primarily driven by lower cost of funds as a result of balance sheet deleveraging that occurred in the second half of 2024. This balance sheet deleveraging impacted average earning assets, which declined from the first quarter of 2024 by $1.1 billion. Interest expense from borrowings decreased by approximately $17.1 million compared to the first quarter of 2024, as average borrowings declined by $1.5 billion.

Noninterest income was $16.2 million for the first quarter of 2025, compared with $13.1 million for the fourth quarter of 2024 and $14.1 million for the first quarter of 2024. During the first quarter of 2025, the Bank sold four OREO properties resulting in a net gain of $2.2 million.

Noninterest expense for the first quarter of 2025 was $59.1 million, compared to $58.5 million for the fourth quarter of 2024 and $59.8 million for the first quarter of 2024. The quarter-over-quarter increase includes a $500 thousand provision for unfunded commitments in the first quarter of 2025. The decrease of $627,000 compared to first quarter of 2024 is inclusive of lower regulatory assessment expense, as the first quarter of 2024 included an additional accrual of $2.3 million for the FDIC special assessment associated with the bank failures in 2023.

At March 31, 2025, total assets of $15.26 billion increased by $102.9 million, or 0.68%, from total assets of $15.15 billion at December 31, 2024. Interest-earning assets of $13.62 billion at March 31, 2025, increased by $92.9 million, or 0.69%, when compared with $13.53 billion at December 31, 2024. The increase in interest-earning assets was primarily due to a $290.3 million increase in interest-earning balances due from the Federal Reserve, offset by a $27.6 million decrease in investment securities, and a $172.8 million decrease in total loans.

Total investment securities were $4.9 billion at March 31, 2025, a decrease of $27.6 million, or 0.56%, from $4.92 billion at December 31, 2024. At March 31, 2025, investment securities held-to-maturity (“HTM”) totaled $2.36 billion, a decrease of $20.5 million, or 0.86%, from December 31, 2024. At March 31, 2025, investment securities available-for-sale (“AFS”) totaled $2.54 billion, inclusive of a pre-tax net unrealized loss of $338.4 million. AFS securities decreased by $7.0 million, or 0.28%, from $2.54 billion at December 31, 2024. Pre-tax unrealized loss decreased by $58.9 million from December 31, 2024. Our tax equivalent yield on investments was 2.63% for the quarter ended March 31, 2025, compared to 2.58% for the fourth quarter of 2024 and 2.64% for the first quarter of 2024.

Total loans and leases, at amortized cost, of $8.36 billion at March 31, 2025, decreased by $172.8 million, or 2.02%, from December 31, 2024. The quarter-over-quarter decline in loans included decreases of $16.8 million in commercial real estate loans, $167.8 million in dairy & livestock loans, offset by an increase of $17.1 million in commercial and industrial loans. The decline in dairy and livestock loans primarily relates to the seasonal peak in line utilization at the end of every calendar year, demonstrated by a decline in utilization from 81% at the end of 2024 to 64% at March 31, 2025. Our yield on loans was 5.22% for the quarter ended March 31, 2025, compared to 5.15% for the fourth quarter of 2024 and 5.30% for the first quarter of 2024.

The allowance for credit losses totaled $78.3 million at March 31, 2025, compared to $80.1 million at December 31, 2024. There was $2.0 million recapture of credit losses in the first quarter of 2025. The decline in the allowance was due primarily to improved credit ratings for dairy and livestock loans. The allowance for credit losses as a percentage of total loans was .94% at both March 31, 2025 and December 31, 2024.

Noninterest-bearing deposits were $7.18 billion at March 31, 2025, an increase of $147.1 million, or 2.09%, when compared to $7.04 billion at December 31, 2024 . At March 31, 2025, noninterest-bearing deposits were 59.92% of total deposits, compared to 58.90% at December 31, 2024.

Interest-bearing deposits were $4.81 billion at March 31, 2025, a decrease of $105.6 million, or 2.15%, when compared to $4.91 billion at December 31, 2024. Customer repurchase agreements totaled $276.2 million at March 31, 2025, compared to $261.9 million at December 31, 2024. Our average cost of total deposits including customer repurchase agreements was 0.87% for the first quarter of 2025, compared to 0.97% for the fourth quarter of 2024 and 0.73% for the first quarter of 2024.

At March 31, 2025, total borrowings, consisted of $500.0 million of FHLB advances, at a weighted average cost of approximately 4.6%. The FHLB advances include maturities of $300 million in May 2026 and $200 million in May 2027.

The Company’s total equity was $2.23 billion at March 31, 2025. This represented an overall increase of $42.1 million from total equity of $2.19 billion at December 31, 2024. Increases to equity included $51.1 million in net earnings and a $34.8 million increase in other comprehensive income, that were partially offset by $27.9 million in cash dividends. During the first quarter of 2025, we repurchased 782,063 shares at an average price of $19.55, totaling $15.3 million. We engaged in no stock repurchases during the first quarter of 2024 other than the shares repurchased pursuant to net settlement by employees in satisfaction of income tax withholding obligations incurred through the vesting of Company stock awards. Our tangible book value per share at March 31, 2025 was $10.45.

Our capital ratios under the revised capital framework referred to as Basel III remain well-above regulatory requirements. As of March 31, 2025, the Company’s Tier 1 leverage capital ratio was 11.81%, common equity Tier 1 ratio was 16.52%, Tier 1 risk-based capital ratio was 16.52%, and total risk-based capital ratio was 17.33%. Refer to our *Analysis of Financial Condition – Capital Resources.*

### ANALYSIS OF THE RESULTS OF OPERATIONS

### Financial Performance

*(Dollars in thousands, except per share amounts)*

|  | Three Months Ended March 31, 2025 | 2024 | Variance $% |  |
| --- | ---: | ---: | ---: | ---: |
| Net interest income | $110,444 | $112,461 | $(2,017) | -1.79% |
| Recapture of (provision for) credit losses | 2,000 | — | 2,000 | 100.00% |
| Noninterest income | 16,229 | 14,113 | 2,116 | 14.99% |
| Noninterest expense | (59,144) | (59,771) | 627 | 1.05% |
| Income taxes | (18,425) | (18,204) | (221) | -1.21% |
| Net earnings | $51,104 | $48,599 | $2,505 | 5.15% |
| Earnings per common share: |  |  |  |  |
| Basic | $0.37 | $0.35 | $0.02 |  |
| Diluted | $0.36 | $0.35 | $0.01 |  |
| Return on average assets | 1.37% | 1.21% | 0.16% |  |
| Return on average shareholders' equity | 9.31% | 9.31% | 0.00% |  |
| Efficiency ratio | 46.69% | 47.22% | -0.53% |  |
| Noninterest expense to average assets | 1.58% | 1.48% | 0.10% |  |

*(Dollars in thousands, except per share amounts)*

|  | Three Months Ended March 31, 2025 | December 31, 2024 | Variance $% |  |
| --- | ---: | ---: | ---: | ---: |
| Net interest income | $110,444 | $110,418 | $26 | 0.02% |
| Recapture of (provision for) credit losses | 2,000 | 3,000 | (1,000) | -33.33% |
| Noninterest income | 16,229 | 13,103 | 3,126 | 23.86% |
| Noninterest expense | (59,144) | (58,480) | (664) | -1.14% |
| Income taxes | (18,425) | (17,183) | (1,242) | -7.23% |
| Net earnings | $51,104 | $50,858 | $246 | 0.48% |
| Earnings per common share: |  |  |  |  |
| Basic | $0.37 | $0.36 | $0.01 |  |
| Diluted | $0.36 | $0.36 | $— |  |
| Return on average assets | 1.37% | 1.30% | 0.07% |  |
| Return on average shareholders' equity | 9.31% | 9.14% | 0.17% |  |
| Efficiency ratio | 46.69% | 47.34% | -0.65% |  |
| Noninterest expense to average assets | 1.58% | 1.49% | 0.09% |  |

47

### Return on Average Tangible Common Equity Reconciliation (Non-GAAP)

The return on average tangible common equity is a non-GAAP disclosure. The Company uses certain non-GAAP financial measures 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.

*(Dollars in thousands)*

|  | Three Months Ended March 31, 2025 | December 31, 2024 | March 31, 2024 |
| --- | ---: | ---: | ---: |
| Net Income | $51,104 | $50,858 | $48,599 |
| Add: Amortization of intangible assets | 1,155 | 1,163 | 1,438 |
| Less: Tax effect of amortization of intangible assets (1) | (341) | (344) | (425) |
| Tangible net income | $51,918 | $51,677 | $49,612 |
| Average stockholders' equity | $2,226,948 | $2,213,556 | $2,098,868 |
| Less: Average goodwill | (765,822) | (765,822) | (765,822) |
| Less: Average intangible assets | (9,518) | (10,650) | (14,585) |
| Average tangible common equity | $1,451,608 | $1,437,084 | $1,318,461 |
| Return on average equity, annualized (2) | 9.31% | 9.14% | 9.31% |
| Return on average tangible common equity, annualized (2) | 14.51% | 14.31% | 15.13% |

(1) Tax effected at respective statutory rates.

(2) Annualized where applicable.

### 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 and investments (interest-earning assets) and the interest paid on deposits and borrowed funds (interest-bearing liabilities). Net interest margin is net interest income as a percentage of average interest-earning assets for the period. The level of interest rates and the volume and mix of interest-earning assets and interest-bearing liabilities impact net interest income and net interest margin. The net interest spread is the yield on average interest-earning assets minus the cost of average interest-bearing liabilities. Net interest margin and net interest spread are included on a tax equivalent (TE) basis by adjusting interest income utilizing the federal statutory tax rates of 21% in effect for the three months ended March 31, 2025 and 2024. Our net interest income, interest spread, and net interest margin are sensitive to general business and economic conditions. These conditions include short-term and long-term interest rates, inflation, monetary supply, and the strength of the international, national and state economies, in general, and more specifically, the local economies in which we conduct business. 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, and in the growth and maturity of earning assets. See Item 2 – *Management’s Discussion and Analysis of Financial Condition and Results of Operations – Asset/Liability and Market Risk Management – Interest Rate Sensitivity Management* included herein.

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.

*(Dollars in thousands)*

| INTEREST-EARNING ASSETS Investment securities (1) Available-for-sale securities: | Three Months Ended March 31, 2025 Average Balance | Interest | Yield/ Rate | 2024 Average Balance | Interest | Yield/ Rate |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Taxable | $2,518,657 | $18,590 | 2.96% | $2,874,642 | $21,280 | 2.96% |
| Tax-advantaged | 20,554 | 144 | 3.35% | 25,455 | 166 | 3.13% |
| Held-to-maturity securities: |  |  |  |  |  |  |
| Taxable | 2,003,206 | 10,659 | 2.13% | 2,080,985 | 10,984 | 2.11% |
| Tax-advantaged | 366,301 | 2,362 | 3.12% | 376,626 | 2,418 | 3.11% |
| Investment in FHLB stock | 18,012 | 379 | 8.53% | 18,012 | 419 | 9.36% |
| Interest-earning deposits with other institutions | 162,389 | 1,797 | 4.49% | 444,101 | 6,073 | 5.50% |
| Loans (2) | 8,467,465 | 109,071 | 5.22% | 8,824,579 | 116,349 | 5.30% |
| Total interest-earning assets | 13,556,584 | 143,002 | 4.28% | 14,644,400 | 157,689 | 4.34% |
| Total noninterest-earning assets | 1,612,722 |  |  | 1,561,013 |  |  |
| Total assets | $15,169,306 |  |  | $16,205,413 |  |  |
| INTEREST-BEARING LIABILITIES |  |  |  |  |  |  |
| Savings deposits (3) | $4,303,105 | $21,375 | 2.01% | $4,007,124 | $18,529 | 1.86% |
| Time deposits | 563,213 | 3,947 | 2.84% | 447,011 | 2,837 | 2.55% |
| Total interest-bearing deposits | 4,866,318 | 25,322 | 2.11% | 4,454,135 | 21,366 | 1.93% |
| FHLB advances, other borrowings, and customer repurchase agreements | 830,400 | 6,800 | 3.32% | 2,301,250 | 23,862 | 4.17% |
| Interest expense - Other interest-bearing liabilities | 40,284 | 436 | 4.33% | — | — | 0.00% |
| Interest-bearing liabilities | 5,737,002 | 32,558 | 2.30% | 6,755,385 | 45,228 | 2.69% |
| Noninterest-bearing deposits | 7,006,357 |  |  | 7,182,718 |  |  |
| Other liabilities | 198,999 |  |  | 168,442 |  |  |
| Stockholders' equity | 2,226,948 |  |  | 2,098,868 |  |  |
| Total liabilities and stockholders' equity | $15,169,306 |  |  | $16,205,413 |  |  |
| Net interest income |  | $110,444 |  |  | $112,461 |  |
| Net interest spread - tax equivalent |  |  | 1.98% |  |  | 1.65% |
| Net interest margin |  |  | 3.29% |  |  | 3.08% |
| Net interest margin - tax equivalent |  |  | 3.31% |  |  | 3.10% |

(1) Includes tax equivalent (TE) adjustments utilizing federal statutory rates of 21% in effect for the three months ended March 31, 2025 and March 31, 2024. The non TE rates for total investment securities were 2.59% and 2.60% for the three months ended March 31, 2025 and March 31, 2024, respectively.

(2) Includes loan fees of $700,000 and $706,000 for the three months ended March 31, 2025 and March 31, 2024, respectively. Prepayment penalty fees of $931,000 and $630,000 are included in interest income for the three months ended March 31, 2025 and March 31, 2024, respectively.

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

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

*(Dollars in thousands)*

| Interest income: Available-for-sale securities: | Comparison of Three Months Ended March 31, 2025 Compared to 2024 Increase (Decrease) Due to Volume | Rate | Rate/ Volume | Total |
| --- | ---: | ---: | ---: | ---: |
| Taxable investment securities | $(2,602) | $(61) | $(27) | $(2,690) |
| Tax-advantaged investment securities | (32) | 12 | (2) | (22) |
| Held-to-maturity securities: |  |  |  |  |
| Taxable investment securities | (405) | 88 | (8) | (325) |
| Tax-advantaged investment securities | (65) | 10 | (1) | (56) |
| Investment in FHLB stock | — | (37) | (3) | (40) |
| Interest-earning deposits with other institutions | (3,820) | (1,108) | 652 | (4,276) |
| Loans | (4,669) | (1,741) | (868) | (7,278) |
| Total interest income | (11,593) | (2,837) | (257) | (14,687) |
| Interest expense: |  |  |  |  |
| Savings deposits | 1,357 | 1,529 | (40) | 2,846 |
| Time deposits | 731 | 319 | 60 | 1,110 |
| FHLB advances, other borrowings, and customer repurchase agreements | (15,125) | (4,820) | 2,883 | (17,062) |
| Interest expense - Other interest-bearing liabilities | — | — | 436 | 436 |
| Total interest expense | (13,037) | (2,972) | 3,339 | (12,670) |
| Net interest income | $1,444 | $135 | $(3,596) | $(2,017) |

#### First Quarter of 2025 Compared to the First Quarter of 2024

Net interest income, before provision for credit losses, of $110.4 million for the first quarter of 2025 decreased by $2.02 million, or 1.79%, from the first quarter of 2024. The decline in net interest income compared to the first quarter of 2024 was the net result of a $1.09 billion decline in earning assets and a 21 basis point increase in net interest margin. The expansion of the net interest margin was the result of an 27 basis point decrease in funding costs, which offset a 6 basis point decrease in the earning asset yield. The decrease in funding costs includes interest expense from borrowings, which decreased by approximately $17.1 million compared to the first quarter of 2024, as average borrowings declined by approximately $1.5 billion.

Total interest income of $143.0 million decreased by $14.7 million, or 9.31%, when compared to the first quarter of 2024. This decrease was primarily due to a $1.09 billion decline in earning assets. Average loan balances declined by $357.1 million, while total investment securities declined by an average of $449 million and funds held at the Federal Reserve declined by $272.0 million on average. Earning asset yields decreased from 4.34% in the first quarter of 2024 to 4.28% in the first quarter of 2025. Loan yields declined from 5.30% for the first quarter of 2024 to 5.22% for the first quarter of 2025, as the Federal Reserve decreased the federal funds rate by 100 basis points during the second half of 2024. The yield on investment securities increased by 17 basis points from the prior year quarter, as certain low yielding AFS securities were sold during the second half of 2024 and new higher yielding investments were purchased during the fourth quarter of 2024.

Total interest income and fees on loans for the first quarter of 2025 was $109.1 million, a decrease of $7.3 million, or 6.26%, from the first quarter of 2024. This decrease in income was primarily due to $357.1 million decrease in average loans outstanding, as well as an 8 basis point decline in loan yields. Loan yields decreased from 5.30% in the first quarter of 2024 to 5.22% in the first quarter of 2025, as declining short term interest rates, such as the Prime rate impacted variable indexed loans.

Interest income from investment securities was $31.8 million, a decrease of $3.1 million, or 8.88%, from the first quarter of 2024. The decrease includes a $2.6 million decrease in the positive carry from pay-fixed swaps that are fair value hedges of our AFS investment portfolio. This decrease was due to both a reduction in the positive carry between the fixed rate on the swaps and daily SOFR and a decrease in the notional value of the swaps from $1 billion during the first quarter of 2024 to $700 million in the first quarter of 2025, after a $300 million swap was terminated at the end of 2024. Excluding the fair value hedges, the yield on investment securities increased by 17 basis points when compared to the first quarter of 2024. The increase in the investment yields was offset by a $449 million year over year decline in average investments.

Interest expense of $32.6 million for the first quarter of 2025, decreased $12.7 million, compared to the first quarter of 2024. Total cost of funds of 1.04% for the first quarter of 2025 decreased from 1.31% for the year ago quarter. This 27 basis point decrease in cost of funds was the result of a $1.5 billion decline in average borrowings that had a cost of 4.76% on average in the first quarter of 2024 and an average cost of 4.61% in the first quarter of 2025. The cost of total deposit and customer repurchase agreements increased from .73% in the first quarter of 2024 to .87% in the first quarter of 2025. Average noninterest-bearing deposits were 59.01% of total deposits for the first quarter of 2025, compared to 61.72% for the first quarter of 2024.

### 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.

There was $2.0 million recapture of credit losses in the first quarter of 2025, compared to no provision in the first quarter of 2024. Projected loss rates were 0.94% at March 31, 2025, compared to 0.94% at March 31, 2024. Refer to the discussion of “Allowance for Credit Losses” in Item 2 – *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 the recent rise in interest rates, geopolitical events in Europe, and global inflation will have on future interest rates, unemployment, the overall economy and resulting impact on our customers. See “Allowance for Credit Losses” under *Analysis of Financial Condition* herein.

### 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, gains (net of 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.

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

*(Dollars in thousands)*

| Noninterest income: | Three Months Ended March 31, 2025 | 2024 | Variance $% |  |
| --- | ---: | ---: | ---: | ---: |
| Service charges on deposit accounts | $4,908 | $5,036 | $(128) | -2.54% |
| Trust and investment services | 3,411 | 3,224 | 187 | 5.80% |
| Bankcard services | 630 | 385 | 245 | 63.64% |
| BOLI income | 2,831 | 3,593 | (762) | -21.21% |
| Gain on OREO, net | 2,183 | — | 2,183 | — |
| Other | 2,266 | 1,875 | 391 | 20.85% |
| Total noninterest income | $16,229 | $14,113 | $2,116 | 14.99% |

#### First Quarter of 2025 Compared to the First Quarter of 2024

The $2.1 million increase in noninterest income included a $2.2 million gain on sale of OREO. CRA investment income increased by approximately $450,000, due to changes in the net asset value of certain equity investments.

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 March 31, 2025, CitizensTrust had approximately $4.7 billion in assets under management and administration, including $3.38 billion in assets under management. CitizensTrust generated fees of $3.4 million for the first quarter of 2025, compared to $3.2 million for the first quarter of 2024.

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. The $762,000 decrease in BOLI income was primarily due to receiving in the first quarter of 2024 $531,000 in death benefits that exceeded the asset value on certain policies.

### Noninterest Expense

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

*(Dollars in thousands)*

| Noninterest expense: | Three Months Ended March 31, 2025 | 2024 | Variance $% |  |
| --- | ---: | ---: | ---: | ---: |
| Salaries and employee benefits | $36,477 | $36,401 | $76 | 0.21% |
| Occupancy | 4,763 | 4,570 | 193 | 4.22% |
| Equipment | 1,235 | 995 | 240 | 24.12% |
| Professional services | 2,081 | 2,255 | (174) | -7.72% |
| Computer software expense | 4,221 | 3,525 | 696 | 19.74% |
| Marketing and promotion | 1,988 | 1,630 | 358 | 21.96% |
| Amortization of intangible assets | 1,155 | 1,438 | (283) | -19.68% |
| Telecommunications expense | 514 | 493 | 21 | 4.26% |
| Regulatory assessments | 2,017 | 4,445 | (2,428) | -54.62% |
| Insurance | 482 | 507 | (25) | -4.93% |
| Provision for unfunded loan commitments | 500 | — | 500 | — |
| Directors' expenses | 302 | 328 | (26) | -7.93% |
| Other | 3,409 | 3,184 | 225 | 7.07% |
| Total noninterest expense | $59,144 | $59,771 | $(627) | -1.05% |
| Noninterest expense to average assets | 1.58% | 1.48% |  |  |
| Efficiency ratio (1) | 46.69% | 47.22% |  |  |

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

Our ability to control noninterest expenses in relation to asset growth can be measured in terms of total noninterest expenses as a percentage of average assets. Noninterest expense as a percentage of average assets was 1.58% for the first quarter of 2025, compared to 1.48% for the first quarter of 2024. This ratio was impacted by the deleveraging strategy that culminated at the end of 2024 and resulted in a $1.04 billion decrease in average assets between the first quarter of 2024 and the first quarter of 2025.

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 for the first quarter of 2025 was 46.69%, compared to 47.22% for the first quarter of 2024.

#### First Quarter of 2025 Compared to the First Quarter of 2024

Noninterest expense of $59.1 million for the first quarter of 2025 was $627,000, or 1.05%, lower than the first quarter of 2024. Noninterest expense in the first quarter of 2024 included an additional accrual of $2.3 million for the FDIC special assessment resulting from a 25% increase in the FDIC's initial loss estimate, which was $9.2 million as reflected in the fourth quarter of 2023. Year-over-year expense growth included a $500,000 provision for unfunded loan commitments in the first quarter of 2025, in addition to approximately $700,000 higher software expense and a $433,000 increase in occupancy and equipment expense. There was no provision for unfunded loan commitments in the first quarter of 2024. The increase in occupancy expense included the higher rent expense for the four buildings that were sold and leased back during the second half of 2024.

### Income Taxes

The Company’s effective tax rate for the three months ended March 31, 2025 was 26.50%, compared to 27.25% for the three months ended March 31, 2024, respectively. The decrease in the effective tax rate was a result of increased investments in tax credits during 2024 and 2025. Our estimated annual effective tax rate also varies depending upon the level of tax-advantaged income from municipal securities and BOLI, as well as available tax credits.

The Company’s effective tax rates are below the nominal combined Federal and State tax rate primarily 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.

### ANALYSIS OF FINANCIAL CONDITION

Total assets of $15.26 billion at March 31, 2025 increased by $102.9 million, or 0.68%, from total assets of $15.15 billion at December 31, 2024. Interest-earning assets of $13.6 billion at March 31, 2025, increased by $92.9 million, or 0.69%, when compared with $13.53 billion at December 31, 2024. The increase in interest-earning assets was primarily due to a $290.3 million increase in interest-earning balances due from the Federal Reserve, offset by a $27.6 million decrease in investment securities, and a $170.9 million decrease in net loans.

Total liabilities were $13.03 billion at March 31, 2025, an increase of $60.8 million, or 0.47%, from total liabilities of $12.97 billion at December 31, 2024. Total deposits increased by $41.5 million, or 0.35%, with noninterest-bearing deposits increasing by $147.2 million, or 2.09%. Interest-bearing deposits declined by $105.6 million, or 2.15%. Borrowings remained the same balance as of December 31, 2024. At March 31, 2025, total borrowings consisted of $500 million of FHLB advances, at an average cost of approximately 4.6%.

Total equity increased $42.1 million to $2.23 billion at March 31, 2025, compared to total equity of $2.19 billion at December 31, 2024. Increases to equity included $51.1 million in net earnings and a $34.8 million increase in other comprehensive income that were partially offset by $27.9 million in cash dividends. In the first quarter of 2025, we repurchased, under our stock repurchase plan, 782,063 shares of common stock, at an average repurchase price of $19.55, totaling $15.3 million. We engaged in no stock repurchases during the first quarter of 2024.

### 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. We continued to shrink our investment portfolio. At March 31, 2025, total investment securities were $4.89 billion. This represented a decrease of $27.6 million, or 0.56%, from $4.92 billion at December 31, 2024. The overall decrease in investment securities was primarily due to a $20.5 million decline in our HTM securities. At March 31, 2025, investment securities HTM totaled $2.36 billion. At March 31, 2025, our AFS investment securities totaled $2.54 billion, inclusive of a pre-tax net unrealized loss of $388.4 million, compared to $447.7 million at December 31, 2024. The $59.3 million increase in fair value of our AFS securities was partially offset by an $8.3 million decrease in the fair value of our derivatives that hedge the change in value of our AFS portfolio. The after-tax unrealized loss reported in AOCI on our AFS investment securities and fair-value hedges at March 31, 2025 was $272.8 million. The changes in the net unrealized holding loss resulted primarily from fluctuations in market interest rates. For the three months ended March 31, 2025 and 2024, repayments/maturities of investment securities totaled $84.7 million and $115.5 million, respectively. The Company purchased $1.7 million and $11.5 million of HTM securities during the first quarter of 2025 and 2024 respectively. There were no investment securities sold during the first quarter of 2025 and 2024.

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

*(Dollars in thousands)*

| Investment securities available-for-sale: | March 31, 2025 Amortized Cost | Gross Unrealized Holding Gain | Gross Unrealized Holding Loss | Fair Value | Total Percent |
| --- | ---: | ---: | ---: | ---: | ---: |
| Government agency/GSE | $34,757 | $46 | $— | $34,803 | 1.37% |
| Mortgage-backed securities | 2,398,291 | 1,058 | (274,693) | 2,124,656 | 83.81% |
| CMO/REMIC | 467,263 | — | (113,401) | 353,862 | 13.96% |
| Municipal bonds | 21,762 | 27 | (1,470) | 20,319 | 0.80% |
| Other securities | 1,426 | — | — | 1,426 | 0.06% |
| Unallocated portfolio layer fair value basis adjustments (1) | (1,095) | 1,095 | — | — | 0.00% |
| Total available-for-sale securities | $2,922,404 | $2,226 | $(389,564) | $2,535,066 | 100.00% |
| Investment securities held-to-maturity: |  |  |  |  |  |
| Government agency/GSE | $510,593 | $— | $(93,645) | $416,948 | 21.64% |
| Mortgage-backed securities | 603,927 | — | (99,271) | 504,656 | 25.60% |
| CMO/REMIC | 777,391 | — | (159,636) | 617,755 | 32.95% |
| Municipal bonds | 454,075 | 482 | (41,983) | 412,574 | 19.25% |
| Other securities (2) | 13,155 | — | — | 13,155 | 0.56% |
| Total held-to-maturity securities | $2,359,141 | $482 | $(394,535) | $1,965,088 | 100.00% |

(1) Represents the amount of portfolio layer method basis adjustments related to AFS MBS securities hedged in a closed portfolio. Under the U.S. GAAP, portfolio layer method basis adjustments are not allocated to individual securities, however the amounts impact the unrealized gains or losses for the individual securities being hedged. Refer to Note 3 and Note 9 for additional information.

(2) Represents Commercial Property Assessed Clean Energy ("C-PACE") bonds.

*(Dollars in thousands)*

| Investment securities available-for-sale: | December 31, 2024 Amortized Cost | Gross Unrealized Holding Gain | Gross Unrealized Holding Loss | Fair Value | Total Percent |
| --- | ---: | ---: | ---: | ---: | ---: |
| Government agency/GSE | $34,149 | $106 | $— | $34,255 | 1.35% |
| Mortgage-backed securities | 2,460,573 | 337 | (326,376) | 2,134,534 | 83.97% |
| CMO/REMIC | 471,921 | — | (120,399) | 351,522 | 13.82% |
| Municipal bonds | 21,755 | 28 | (1,406) | 20,377 | 0.80% |
| Other securities | 1,427 | — | — | 1,427 | 0.06% |
| Unallocated portfolio layer fair value basis adjustments (1) | 7,222 | — | (7,222) | — | 0.00% |
| Total available-for-sale securities | $2,997,047 | $471 | $(455,403) | $2,542,115 | 100.00% |
| Investment securities held-to-maturity: |  |  |  |  |  |
| Government agency/GSE | $514,572 | $— | $(106,315) | $408,257 | 21.62% |
| Mortgage-backed securities | 614,383 | — | (110,020) | 504,363 | 25.82% |
| CMO/REMIC | 784,059 | — | (170,121) | 613,938 | 32.95% |
| Municipal bonds | 455,199 | 1,158 | (40,025) | 416,332 | 19.13% |
| Other securities (2) | 11,455 | — | — | 11,455 | 0.48% |
| Total held-to-maturity securities | $2,379,668 | $1,158 | $(426,481) | $1,954,345 | 100.00% |

55

(1) Represents the amount of portfolio layer method basis adjustments related to AFS MBS securities hedged in a closed portfolio. Under the U.S. GAAP, portfolio layer method basis adjustments are not allocated to individual securities, however the amounts impact the unrealized gains or losses for the individual securities being hedged. Refer to Note 3 and Note 9 for additional information.

(2) Represents Commercial Property Assessed Clean Energy ("C-PACE") bonds.

As of March 31, 2025, approximately $25.5 million in U.S. government agency bonds are callable. The Agency CMO/REMIC securities are backed by agency-pooled collateral. Municipal bonds, which represented approximately 10% of the total investment portfolio, are predominately AA or higher rated securities.

The following table presents the Company’s available-for-sale and held-to-maturity investment securities, by investment category, in an unrealized loss position for which an allowance for credit losses has not been recorded as of March 31, 2025 and December 31, 2024.

*(Dollars in thousands)*

| Investment securities available-for-sale: | March 31, 2025 Less Than 12 Months Fair Value | Gross Unrealized Holding Losses | 12 Months or Longer Fair Value | Gross Unrealized Holding Losses | Total Fair Value | Gross Unrealized Holding Losses |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Mortgage-backed securities | $85,194 | $(159) | $1,756,443 | $(274,534) | $1,841,637 | $(274,693) |
| CMO/REMIC | — | — | 353,861 | (113,401) | 353,861 | (113,401) |
| Municipal bonds | — | — | 19,409 | (1,470) | 19,409 | (1,470) |
| Total available-for-sale securities | $85,194 | $(159) | $2,129,713 | $(389,405) | $2,214,907 | $(389,564) |
| Investment securities held-to-maturity: |  |  |  |  |  |  |
| Government agency/GSE | $— | $— | $416,948 | $(93,645) | $416,948 | $(93,645) |
| Mortgage-backed securities | 2,016 | (17) | 502,640 | (99,254) | 504,656 | (99,271) |
| CMO/REMIC | — | — | 617,755 | (159,636) | 617,755 | (159,636) |
| Municipal bonds | 75,606 | (2,413) | 298,020 | (39,569) | 373,626 | (41,983) |
| Total held-to-maturity securities | $77,622 | $(2,430) | $1,835,363 | $(392,105) | $1,912,984 | $(394,535) |

*(Dollars in thousands)*

| Investment securities available-for-sale: | December 31, 2024 Less Than 12 Months Fair Value | Gross Unrealized Holding Losses | 12 Months or Longer Fair Value | Gross Unrealized Holding Losses | Total Fair Value | Gross Unrealized Holding Losses |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Mortgage-backed securities | $204,428 | $(700) | $1,757,066 | $(325,677) | $1,961,494 | $(326,377) |
| CMO/REMIC | 1 | — | 351,521 | (120,399) | 351,522 | (120,399) |
| Municipal bonds | 3,215 | (155) | 16,262 | (1,250) | 19,477 | (1,405) |
| Total available-for-sale securities | $207,644 | $(855) | $2,124,849 | $(447,326) | $2,332,493 | $(448,181) |
| Investment securities held-to-maturity: |  |  |  |  |  |  |
| Government agency/GSE | $— | $— | $408,257 | $(106,315) | $408,257 | $(106,315) |
| Mortgage-backed securities | 2,072 | (42) | 502,292 | (109,978) | 504,364 | (110,020) |
| CMO/REMIC | — | — | 613,937 | (170,121) | 613,937 | (170,121) |
| Municipal bonds | 63,668 | (1,067) | 286,868 | (38,958) | 350,536 | (40,025) |
| Total held-to-maturity securities | $65,740 | $(1,109) | $1,811,354 | $(425,372) | $1,877,094 | $(426,481) |

Once it is determined that a credit loss has occurred, an allowance for credit losses is established on our available-for-sale and held-to-maturity securities. Management determined that credit losses did not exist for securities in an unrealized loss position as of March 31, 2025 and December 31, 2024.

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

### Loans

Total loans and leases, at amortized cost, of $8.36 billion at March 31, 2025 decreased by $172.8 million, or 2.02%, from December 31, 2024. The decrease in total loans quarter-over-quarter included decreases of $16.8 million in commercial real estate loans and $167.4 million in dairy & livestock and agribusiness loans, offset by an increase of $17.1 million in commercial and industrial loans. The decline in dairy and livestock loans primarily relates to the seasonal peak in line utilization at the end of every calendar year, demonstrated by a decline in the utilization rate from 81% at the end of 2024 to 64% at March 31, 2025.

The following table presents our loan portfolio by type as of the dates presented.

### Distribution of Loan Portfolio by Type

*(Dollars in thousands)*

|  | March 31, 2025 | December 31, 2024 |
| --- | ---: | ---: |
| Commercial real estate | $6,490,604 | $6,507,452 |
| Construction | 15,706 | 16,082 |
| SBA | 271,844 | 273,013 |
| SBA - Paycheck Protection Program (PPP) | 179 | 774 |
| Commercial and industrial | 942,301 | 925,178 |
| Dairy & livestock and agribusiness | 252,532 | 419,904 |
| Municipal lease finance receivables | 65,203 | 66,114 |
| SFR mortgage | 269,493 | 269,172 |
| Consumer and other loans | 55,770 | 58,743 |
| Total loans, at amortized cost | 8,363,632 | 8,536,432 |
| Less: Allowance for credit losses | (78,252) | (80,122) |
| Total loans and lease finance receivables, net | $8,285,380 | $8,456,310 |

As of March 31, 2025, $437.3 million, or 6.70% 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 $103.6 million for loans secured by dairy & livestock land and $333.7 million secured by agricultural land at March 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 March 31, 2025, dairy & livestock and agribusiness loans of $252.5 million were comprised of $217.4 million for dairy & livestock loans and $35.1 million for agribusiness loans, compared to $419.9 million were 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 March 31, 2025, the Company had $207.2 million of total SBA 504 loans. SBA 504 loans include term loans to finance capital expenditures and for the purchase of commercial real estate. Initially the Bank provides two separate loans to the borrower representing a first and second lien on the collateral. The loan with the first lien is typically at a 50% advance to the acquisition costs and the second lien loan provides the financing for 40% of the acquisition costs with the borrower’s down payment of 10% of the acquisition costs. The Bank retains the first lien loan for its term and sells the second lien loan to the SBA subordinated debenture program. A majority of the Bank’s 504 loans are granted for the purpose of commercial real estate acquisition. As of March 31, 2025, the Company had $64.6 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 March 31, 2025, the Company had $15.7 million in construction loans. This represents 0.19% of total gross loans held-for-investment. Although our construction loans are located throughout our market footprint, the majority of construction loans consist of commercial land development and construction projects throughout California. There were no nonperforming construction loans at March 31, 2025.

Our loan portfolio is geographically disbursed throughout our marketplace. The following is the breakdown of our total held-for-investment and commercial real estate loans, by region as of March 31, 2025.

*(Dollars in thousands)*

|  | March 31, 2025 Total Loans |  | Commercial Real Estate Loans |  |
| --- | ---: | ---: | ---: | ---: |
| Los Angeles County | $3,073,314 | 36.7% | $2,219,262 | 34.2% |
| Central Valley and Sacramento | 1,912,918 | 22.9% | 1,541,963 | 23.8% |
| Orange County | 1,167,750 | 14.0% | 718,216 | 11.1% |
| Inland Empire | 997,739 | 11.9% | 884,975 | 13.6% |
| Central Coast | 441,117 | 5.3% | 377,555 | 5.8% |
| San Diego | 314,550 | 3.7% | 315,939 | 4.9% |
| Other California | 148,875 | 1.8% | 91,943 | 1.4% |
| Out of State | 307,369 | 3.7% | 340,751 | 5.2% |
|  | $8,363,632 | 100.0% | $6,490,604 | 100.0% |

The table below breaks down our commercial real estate portfolio.

*(Dollars in thousands)*

| Commercial real estate: | March 31, 2025 Loan Balance | Percent | Percent Owner- Occupied (1) | Average Loan Balance |
| --- | ---: | ---: | ---: | ---: |
| Industrial | $2,216,922 | 34.2% | 47.8% | $1,631 |
| Office | 1,021,513 | 15.7% | 26.7% | 1,664 |
| Retail | 899,386 | 13.9% | 11.3% | 1,726 |
| Multi-family | 813,032 | 12.5% | 0.5% | 1,549 |
| Secured by farmland (2) | 437,295 | 6.7% | 98.8% | 1,438 |
| Medical | 293,287 | 4.5% | 30.7% | 1,424 |
| Other (3) | 809,169 | 12.5% | 43.1% | 1,790 |
| Total commercial real estate | $6,490,604 | 100.0% | 35.6% | $1,630 |

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

(2) The loans secured by farmland included $103.6 million for loans secured by dairy & livestock land and $333.7 million for loans secured by agricultural land at March 31, 2025.

(3) Other loans consist of a variety of loan types, none of which exceeded 2.0% of total commercial real estate loans at March 31, 2025.

### Nonperforming Assets

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

*(Dollars in thousands)*

|  | March 31, 2025 | December 31, 2024 |
| --- | ---: | ---: |
| Nonaccrual loans | $25,636 | $27,795 |
| Loans past due 90 days or more and still accruing interest | — | — |
| Nonperforming modified loans to borrowers experiencing financial difficulty | — | — |
| **Total nonperforming loans** | 25,636 | 27,795 |
| OREO, net | 495 | 19,303 |
| **Total nonperforming assets** | $26,131 | $47,098 |
| **Modified loans to borrowers experiencing financial difficulty** | $11,949 | $6,467 |
| Total nonperforming loans and performing modified loans to borrowers experiencing financial difficulty | $37,585 | $34,262 |
| Percentage of nonperforming loans and performing modified loans to borrowers experiencing financial difficulty to total loans, at amortized cost | 0.45% | 0.40% |
| Percentage of nonperforming assets to total loans, at amortized cost, and OREO | 0.31% | 0.55% |
| Percentage of nonperforming assets to total assets | 0.17% | 0.31% |

### Modifications of Loans to Borrowers Experiencing Financial Difficulty

There were three loans to borrowers experiencing financial difficulty that were modified during the three months ended March 31, 2025 with an amortized cost totaling $6.2 million as of March 31, 2025, including two commercial real estate loans totaling $6.0 million and one dairy & livestock and agribusiness loan of $225,000.

The table below reflects the amortized cost of loans by type made to borrowers experiencing financial difficulty that were modified as of three months ended March 31, 2025 and March 31, 2024, and the financial effect of those modifications.

| March 31, 2025 Term Extension | Amortized Cost Basis | % of Total Class of Financing Receivables | Financial Effect |
| --- | ---: | ---: | --- |
| Commercial real estate loans | $7,516 | 0.09% | Added a weighted-average 1.2 years to the life of loans, which reduced monthly payment amounts for the borrowers. |
| Commercial and industrial | 2,728 | 0.03% | Added a weighted-average 1.2 years to the life of loans, which reduced monthly payment amounts for the borrowers. |
| Dairy & livestock and agribusiness | 1,025 | 0.01% | Added a weighted-average 1.6 years to the life of loans, which reduced monthly payment amounts for the borrowers. |
| **Total** | $11,269 |  |  |
| **Term Extension and Interest Rate Reduction** |  |  |  |
| Commercial real estate loans | 680 | 0.01% | Added a weighted-average 1.4 years to the life of loans, which reduced monthly payment amounts for the borrowers; reduced weighted-average contractual interest rate from 10.00% to 7.25%. |
| **Total** | 680 |  |  |
| **Total Modified** | $11,949 |  |  |

59

| March 31, 2024 Term Extension | Amortized Cost Basis | % of Total Class of Financing Receivables | Financial Effect |
| --- | ---: | ---: | --- |
| Commercial real estate loans | $2,466 | 0.03% | Added a weighted-average 1.3 years to the life of loans, which reduced monthly payment amounts for the borrowers. |
| Commercial and industrial | 1,644 | 0.02% | Added a weighted-average 0.7 years to the life of loans, which reduced monthly payment amounts for the borrowers. |
| Dairy & livestock and agribusiness | 5,727 | 0.07% | Added a weighted-average 0.6 years to the life of loans, which reduced monthly payment amounts for the borrowers. |
| **Total** | $9,837 |  |  |
| **Term Extension and Interest Rate Reduction** |  |  |  |
| Commercial real estate loans | $686 | 0.01% | Added a weighted-average 7.6 years to the life of loans, which reduced monthly payment amounts for the borrowers; reduced weighted-average contractual interest rate from 10% to 7.25%. |
| Commercial and industrial | 242 | 0.00% | Added a weighted-average 2.0 years to the life of loans, which reduced monthly payment amounts for the borrowers; reduced weighted-average contractual interest rate from 8.75% to 7.75%. |
| **Total** | 928 |  |  |
| **Total Modified** | $10,765 |  |  |

As of March 31, 2025 and March 31, 2024, the Company did not have any loans made to borrowers experiencing financial difficulty that were modified during the first quarter of 2025 and 2024 that subsequently defaulted. Payment default is defined as movement to nonaccrual (nonperforming) status, foreclosure or charge-off, whichever occurs first.

The following table presents the recorded investment in, and the aging of, past due loans at amortized cost (including nonaccrual loans), by type of loans, made to borrowers experiencing financial difficulty as of March 31, 2024.

*(Dollars in thousands)*

|  | Payment Status (amortized cost basis) Current | 30-89 Days Past Due | 90+ Days Past Due |
| --- | ---: | ---: | ---: |
| Commercial real estate loans | $8,196 | $— | $— |
| Commercial and industrial | 2,728 | — | — |
| Dairy & livestock and agribusiness | 1,025 | — | — |
| **Total** | $11,949 | $— | $— |

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

### Nonperforming Assets and Delinquencies

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

*(Dollars in thousands)*

| Nonperforming loans: | March 31, 2025 | December 31, 2024 | September 30, 2024 | June 30, 2024 | March 31, 2024 |
| --- | ---: | ---: | ---: | ---: | ---: |
| Commercial real estate | $24,379 | $25,866 | $18,794 | $21,908 | $10,661 |
| Construction | — | — | — | — | — |
| SBA | 1,024 | 1,529 | 151 | 337 | 54 |
| Commercial and industrial | 173 | 340 | 2,825 | 2,712 | 2,727 |
| Dairy & livestock and agribusiness | 60 | 60 | 143 | — | 60 |
| SFR mortgage | — | — | — | — | 308 |
| Consumer and other loans | — | — | — | — | — |
| **Total** | **$25,636** | **$27,795** | **$21,913** | **$24,957** | **$13,810** |
| **% of Total loans** | **0.31%** | **0.33%** | **0.26%** | **0.29%** | **0.16%** |
| **Past due 30-89 days (accruing):** |  |  |  |  |  |
| Commercial real estate | $— | $— | $30,701 | $43 | $19,781 |
| Construction | — | — | — | — | — |
| SBA | 718 | 88 | — | — | 408 |
| Commercial and industrial | — | 399 | 64 | 103 | 6 |
| Dairy & livestock and agribusiness | — | — | — | — | — |
| SFR mortgage | — | — | — | — | — |
| Consumer and other loans | — | — | — | — | — |
| **Total** | **$718** | **$487** | **$30,765** | **$146** | **$20,195** |
| **% of Total loans** | **0.01%** | **0.01%** | **0.36%** | **0.00%** | **0.23%** |
| **OREO:** |  |  |  |  |  |
| Commercial real estate | $495 | $18,656 | $— | $— | $— |
| SBA | — | — | — | — | — |
| SFR mortgage | — | 647 | 647 | 647 | 647 |
| **Total** | **$495** | **$19,303** | **$647** | **$647** | **$647** |
| **Total nonperforming, past due, and OREO** | **$26,849** | **$47,585** | **$53,325** | **$25,750** | **$34,652** |
| **% of Total loans** | **0.32%** | **0.25%** | **0.62%** | **0.30%** | **0.40%** |
| **Classified Loans** | **$94,169** | **$89,549** | **$124,606** | **$124,728** | **$103,080** |

Nonperforming loans, defined as nonaccrual loans, including modified loans on nonaccrual, and loans past due 90 days or more and still accruing interest, were $25.6 million at March 31, 2025, or 0.31% of total loans. This compares to nonperforming loans of $27.8 million, or 0.33% of total loans, at December 31, 2024 and $13.8 million, or 0.16% of total loans, at March 31, 2024. The $2.2 million decrease in nonperforming loans from December 31, 2024 was primarily due to the payoff of two nonperforming commercial real estate loans totaling $764 thousand, and various paydowns.

Classified loans are loans that are graded “substandard” or worse. Classified loans increased $4.6 million quarter-over-quarter, primarily due to increases of $6.5 million in classified dairy and livestock loans, offset with a $1.3 million decline in commercial real estate loans.

At March 31, 2025, we had one OREO property totaling $495,000. At December 31, 2024 we had four OREO properties totaling $19.3 million. 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.

### Allowance for Credit Losses

The allowance for credit losses totaled $78.3 million as of March 31, 2025, compared to $80.1 million as of December 31, 2024 and $82.8 million as of March 31, 2024. Our allowance for credit losses at March 31, 2025 was 0.94% of total loans. This compares to 0.94% and 0.94% at December 31, 2024 and March 31, 2024, respectively. The decrease in our allowance for credit losses from December 31, 2024 was due to a $2 million recapture of credit losses primarily due to lower amounts of criticized dairy and livestock loans at March 31, 2025.

The allowance for credit losses as of March 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 ("OLTV"), origination year, loan seasoning, and macroeconomic variables that include Real 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 Small Business Administration (SBA) loans (excluding Paycheck Protection Program 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 downside risks weighted among multiple forecasts. As of March 31, 2025, the resulting weighted forecast resulted in Real GDP growth increase at a slower rate. Real GDP forecasted to be below 2% for the remainder of 2025 until reaching a growth in the second half of 2026. Commercial real estate values are forecasted to continue their decline through the first half of 2026. Unemployment is forecasted to rise in 2025 and reach 5% by the beginning of 2026 and stay elevated through 2028.

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.

*(Dollars in thousands)*

|  | As of and For the Three Months Ended March 31, 2025 | 2024 |
| --- | ---: | ---: |
| Allowance for credit losses at beginning of period | $80,122 | $86,842 |
| Charge-offs: |  |  |
| Commercial real estate | — | (2,258) |
| Construction | — | — |
| SBA | (19) | (90) |
| Commercial and industrial | (21) | (1,917) |
| Dairy & livestock and agribusiness | — | — |
| SFR mortgage | — | — |
| Consumer and other loans | — | (2) |
| Total charge-offs | (40) | (4,267) |
| Recoveries: |  |  |
| Commercial real estate | — | — |
| Construction | 6 | 3 |
| SBA | 22 | 63 |
| Commercial and industrial | 142 | 176 |
| Dairy & livestock and agribusiness | — | — |
| SFR mortgage | — | — |
| Consumer and other loans | — | — |
| Total recoveries | 170 | 242 |
| Net recoveries (charge-offs) | 130 | (4,025) |
| (Recapture of) provision for credit losses | (2,000) | — |
| Allowance for credit losses at end of period | $78,252 | $82,817 |
| Summary of reserve for unfunded loan commitments: |  |  |
| Reserve for unfunded loan commitments at beginning of period | $6,250 | $7,500 |
| Provision for unfunded loan commitments | 500 | — |
| Reserve for unfunded loan commitments at end of period | $6,750 | $7,500 |
| Reserve for unfunded loan commitments to total unfunded loan commitments | 0.34% | 0.40% |
| Amount of total loans at end of period (1) | $8,363,632 | $8,770,713 |
| Average total loans outstanding (1) | $8,467,465 | $8,824,579 |
| Net charge-offs to average total loans | 0.00% | -0.05% |
| Net charge-offs to total loans at end of period | 0.00% | -0.05% |
| Allowance for credit losses to average total loans | 0.92% | 0.94% |
| Allowance for credit losses to total loans at end of period | 0.94% | 0.94% |
| Net recoveries (charge-offs) to allowance for credit losses | 0.17% | -4.86% |
| Net (charge-offs) recoveries to provision for credit losses | -6.50% | 0.00% |

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

The Bank’s ACL methodology also produced an allowance of $6.8 million for our off-balance sheet credit exposures as of March 31, 2025, compared with $6.3 million and $7.5 million as of December 31, 2024 and March 31, 2024, respectively. The increase from December 31, 2024 was due to a $500,000 provision for unfunded loan commitments for the first quarter of 2025.

While we believe that the allowance at March 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 be reflected in increased provisions for credit losses in the future.

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 in our Annual Report on Form 10-K for the year ended December 31, 2024.

### Deposits

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

Total deposits were $11.99 billion at March 31, 2025. This represented an increase of $41.5 million, or 0.35%, from total deposits of $11.95 billion at December 31, 2024.

The composition of deposits is summarized as of the dates presented in the table below.

*(Dollars in thousands)*

|  | March 31, 2025 Balance | Percent | December 31, 2024 Balance | Percent |
| --- | ---: | ---: | ---: | ---: |
| Noninterest-bearing deposits | $7,184,267 | 59.92% | $7,037,096 | 58.90% |
| Interest-bearing deposits |  |  |  |  |
| Investment checking | 533,220 | 4.45% | 551,305 | 4.61% |
| Money market | 3,289,121 | 27.43% | 3,363,804 | 28.15% |
| Savings | 421,491 | 3.52% | 422,583 | 3.54% |
| Time deposits | 561,822 | 4.68% | 573,593 | 4.80% |
| Total Deposits | $11,989,921 | 100.00% | $11,948,381 | 100.00% |

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. Noninterest-bearing deposits totaled $7.18 billion at March 31, 2025, an increase of $147.2 million, or 2.09%, from noninterest-bearing deposits of $7.04 billion at December 31, 2024. Noninterest-bearing deposits were 59.92% of total deposits at the end of the first quarter of 2025, compared to 58.90% at December 31, 2024.

Interest-bearing non-maturity deposits, which include savings, interest-bearing demand, and money market accounts, totaled $4.24 billion at March 31, 2025, representing a decrease of $93.9 million, or 2.16%, from $4.34 billion at December 31, 2024.

Time deposits totaled $561.8 million at March 31, 2025, representing a decrease of $11.8 million, or 2.05%, from total time deposits of $573.6 million at December 31, 2024.

During the first quarter of 2024, $300 million of brokered deposits were issued and cash flow hedging transactions were simultaneously executed in which $300 million notional pay-fixed interest rate swaps were consummated with maturities of three years, wherein the Company pays a weighted average fixed rate of approximately 4.2% and receives daily SOFR. We entered into these interest rate derivative contracts that are designated as qualifying cash flow hedges to hedge the exposure to variability in expected future cash flows attributable to changes in a contractually specified interest rate. The fair value of these instruments totaled $2.26 million and were reflected as a liability at March 31, 2025.

Our deposits are primarily relationship based and include deposits and customer repurchase agreements ("repos"). For the first quarter of 2025, 72% of our deposits consist of business deposits and 28% consist of consumer deposits, primarily the owners and employees of our business customers. The largest percentage of our deposits, 39%, are 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. As of March 31, 2025, 46% of our total deposits and customer repos were uncollateralized and uninsured.

Our customer deposit relationships represent a diverse set of industries. The industry classification with the largest concentration is construction, which represents 8% of our deposits. Overall, there are 14 different industry classifications that represent 2% or more of our deposits as of March 31, 2025. Our depositors have typically banked with us for many years. As of March 31, 2025, 46% of our deposit relationships have banked with us more than 10 years and 75% of our deposit relationships have been with us for three or more years.

Average total deposits for the first quarter decreased by approximately $242 million compared to the fourth quarter of 2024, as we typically experience a seasonally low level of deposits in the first quarter of each calendar. Our average noninterest-bearing deposits continued to be greater than 59% of our average total deposits for the first quarter of 2025.

Our cost of deposits was 86 basis points on average for the first quarter of 2025, which compares to 93 basis points for the fourth quarter of 2024 and 74 basis points for the first quarter of 2024. From the first quarter of 2022 through the first quarter of 2025, our cost of deposits has increased by 83 basis points. During the Federal Reserve's interest rates tightening cycle from the first quarter of 2022 through the third quarter of 2024, our deposit costs rose by 95 basis points, representing a deposit beta of 18%, when compared to the 525 basis point increase in the Fed Funds rate during the rising rate period.

### Borrowings

At March 31, 2025, our borrowings were $776.2 million and included $276.2 million of repurchase agreements and $500.0 million of 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 of repurchase agreements and $500.0 million of FHLB advances, at an average cost of approximately 4.6%. Refer to Note 6 - *Borrowings* of the notes to the consolidated financial statements for a more detailed discussion.

We offer a repurchase agreement product to our 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 that reflects the market value of the use of these 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 March 31, 2025 and December 31, 2024, total funds borrowed under these agreements were $276.2 million and $261.9 million, respectively, with a weighted average interest rate of 1.24% for the first quarter of 2025, compared to 2.16% for the fourth quarter of 2024 and 0.39% for the first quarter of 2024.

At March 31, 2025, loans with a carrying value of $4.4 billion were pledged to secure available lines of credit from the FHLB and Federal Reserve Bank. At March 31, 2025, the Bank had unused borrowing capacity at the FHLB of $4.09 billion and unused borrowing capacity at the FRB of $1.06 billion.

At March 31, 2025 investment securities with carrying values of $2.71 billion were pledged to secure various types of deposits, including $1.14 billion of public funds, $310 million for repurchase agreements, and for other purposes as required or permitted by law. In addition, investment securities with carrying values of $1.62 billion were pledged for unused borrowing capacity.

### Aggregate Contractual Obligations

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

*(Dollars in thousands)*

|  | Total | Maturity by Period Less Than One Year | One Year Through Three Years | Four Years Through Five Years | Over Five Years |
| --- | ---: | ---: | ---: | ---: | ---: |
| Deposits (1) | $11,989,921 | $11,982,108 | $6,205 | $1,336 | $272 |
| Customer repurchase agreements (1) | 276,163 | 276,163 | — | — | — |
| Other borrowings | 500,000 | — | 500,000 | — | — |
| Deferred compensation | 23,054 | 577 | 1,150 | 1,150 | 20,177 |
| Operating leases | 67,172 | 10,048 | 16,074 | 9,262 | 31,788 |
| Equity investments | 71,797 | 63,280 | 6,791 | 686 | 1,040 |
| Total | $12,928,107 | $12,332,176 | $530,220 | $12,434 | $53,277 |

(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 12 – *Leases* of the notes to the Company’s unaudited condensed consolidated financial statements for a more detailed discussion about leases.

Equity investments represent commitments to contribute capital to LIHTC and other CRA-related investment partnerships.

### Off-Balance Sheet Arrangements

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

*(Dollars in thousands)*

| Commitment to extend credit: | Total | Maturity by Period Less Than One Year | One Year Through Three Years | Four Years Through Five Years | After Five Years |
| --- | ---: | ---: | ---: | ---: | ---: |
| Commercial real estate | $390,157 | $79,187 | $189,534 | $96,976 | $24,460 |
| Construction | 48,059 | 38,059 | — | — | 10,000 |
| SBA | — | — | — | — | — |
| Commercial and industrial | 1,044,282 | 857,882 | 144,050 | 5,084 | 37,266 |
| Dairy & livestock and agribusiness (1) | 301,393 | 231,615 | 69,778 | — | — |
| Municipal lease finance receivables | — | — | — | — | — |
| SFR Mortgage | 1,162 | — | — | — | 1,162 |
| Consumer and other loans | 137,681 | 11,504 | 23,031 | 1,887 | 101,259 |
| Total commitment to extend credit | 1,922,734 | 1,218,247 | 426,393 | 103,947 | 174,147 |
| Obligations under letters of credit | 69,933 | 52,129 | 12,599 | 5,187 | 18 |
| Total | $1,992,667 | $1,270,376 | $438,992 | $109,134 | $174,165 |

(1) Total commitments to extend credit to agribusiness were $16.2 million at March 31, 2025.

As of March 31, 2025, we had commitments to extend credit of approximately $1.92 billion, and obligations under letters of credit of $69.9 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 March 31, 2025 and December 31, 2024, the balance in this reserve was $6.8 million and $6.3 million, respectively, and was included in other liabilities. There was no provision or recapture of provision for unfunded commitments for the first quarter of 2025 or 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 $42.1 million, or 1.93%, to $2.23 billion at March 31, 2025, compared to total equity of $2.19 billion at December 31, 2024. Increases to equity included $51.1 million in net earnings and a $37.8 million increase in other comprehensive income that were partially offset by $27.9 million in cash dividends. During the first quarter of 2025, we repurchased 782,063 shares at an average price of $19.55, totaling $15.3 million. We engaged in no stock repurchases during the first quarter of 2024 other than the shares repurchased pursuant to net settlement by employees in satisfaction of income tax withholding obligations incurred through the vesting of Company stock awards. Our tangible book value per share at March 31, 2025 was $10.45.

During the first quarter of 2025, the Board of Directors of CVB declared quarterly cash dividends totaling $0.20 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 replaced 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. During the first quarter of 2025, we repurchased 782,063 shares at an average price of $19.55, totaling $15.3 million. We engaged in no stock repurchases during the first quarter of 2024 other than the shares repurchased pursuant to net settlement by employees in satisfaction of income tax withholding obligations incurred through the vesting of Company stock awards.

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 March 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 – Capital Adequacy Requirements”* as described in our Annual Report on Form 10-K for the year ended December 31, 2024.

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

| Capital Ratios | Adequately Capitalized Ratios | Minimum Required Plus Capital Conservation Buffer | Well Capitalized Ratios | March 31, 2025 CVB Financial Corp. Consolidated | Citizens Business Bank | December 31, 2024 CVB Financial Corp. Consolidated | Citizens Business Bank |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Tier 1 leverage capital ratio | 4.00% | 4.00% | 5.00% | 11.81% | 11.70% | 11.46% | 11.30% |
| Common equity Tier 1 capital ratio | 4.50% | 7.00% | 6.50% | 16.52% | 16.36% | 16.24% | 16.01% |
| Tier 1 risk-based capital ratio | 6.00% | 8.50% | 8.00% | 16.52% | 16.36% | 16.24% | 16.01% |
| Total risk-based capital ratio | 8.00% | 10.50% | 10.00% | 17.33% | 17.17% | 17.06% | 16.82% |

68

### 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 $500 million of cash on the balance sheet at March 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, $1.1 billion of secured unused borrowing capacity at the Fed’s discount window, more than $188 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 March 31, 2025, as the Bank only had $300 million of brokered deposits at March 31, 2025, or approximately 2.5% of total deposits. We can also obtain additional liquidity from deposit growth by utilizing state and national wholesale markets.

Our primary sources of funds for the Company are deposits, customer repurchase agreements and borrowings. Total deposits and customer repos of $12.27 billion at March 31, 2025 increased $55.8 million, or 0.46%, over total deposits and customer repos of $12.21 billion at December 31, 2024. As of March 31, 2025, total borrowings, consisted of $500 million of FHLB 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. At March 31, 2025, our deposits and customer repurchase agreements that are neither collateralized nor insured were approximately $5.7 billion, or 46% of our total deposits and customer repos.

Additional sources of liquidity include cash on deposit at the Federal Reserve, which exceeded $300 million at March 31, 2025, and principal and interest payments from our investment portfolio. We shrank our investment portfolio by not reinvesting the cashflows generated by our investments during the first quarter of 2025. Our total investment portfolio declined by $27.6 million from December 31, 2024 to $4.89 billion as of March 31, 2025. The decrease was primarily due to a $20.5 million decline in HTM securities. AFS securities totaled $2.54 billion at March 31, 2025, inclusive of a pre-tax net unrealized loss of $388.4 million. Pre-tax unrealized loss decline by $59.3 million from December 31, 2024. Market risk, is partly managed by $700 million notional pay fixed swaps hedging the fair value of the AFS portfolio. The $41.7 million increase in fair value of our AFS securities was partially offset by an $5.9 million decrease in the fair value of our derivatives that hedge the change in value of our AFS portfolio.

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.

Below is a summary of our average cash position and statement of cash flows for the three months ended March 31, 2025 and 2024. For further details see our “*Condensed Consolidated Statements of Cash Flows* (Unaudited)” under Part I, Item 1 of this report.

#### Consolidated Summary of Cash Flows

*(Dollars in thousands)*

|  | Three Months Ended March 31, 2025 | 2024 |
| --- | ---: | ---: |
| Average cash and cash equivalents | $315,760 | $595,470 |
| Percentage of total average assets | 2.08% | 3.67% |
| Net cash provided by operating activities | $41,878 | $77,474 |
| Net cash provided by investing activities | 273,070 | 231,033 |
| Net cash provided by financing activities | 9,443 | 359,797 |
| Net increase in cash and cash equivalents | $324,391 | $668,304 |

Average cash and cash equivalents decreased by $279.7 million, or 46.97%, to $315.8 million for the three months ended March 31, 2025, compared to $595.5 million for the same period of 2024.

At March 31, 2025, cash and cash equivalents totaled $529.1 million. This represented an increase of $324.4 million, or 158.47%, from $204.7 million at December 31, 2024. Our cash on deposit at the Federal Reserve grew by more than $290 million when compared to December 31, 2024.

### 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. Net interest income 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 depending on the level of current market 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.

| Interest Rate Scenario | Estimated Net Interest Income Sensitivity (1) March 31, 2025 12-month Period | 24-month Period (Cumulative) | Interest Rate Scenario | December 31, 2024 12-month Period | 24-month Period (Cumulative) |
| --- | ---: | ---: | --- | ---: | ---: |
| + 200 basis points | 5.25% | 7.30% | + 200 basis points | 4.66% | 6.26% |
| - 200 basis points | -4.26% | -7.68% | - 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.

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. 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 March 31, 2025 and December 31, 2024, the EVE profile indicates a decline in net balance sheet value due to instantaneous downward changes in rates. For both December 31, 2024 to March 31, 2025, our EVE sensitivity to rising rates reflects a modest gain in value. Our overall sensitivity of EVE to changes in interest rates is modest, with the exception of more meaningful reductions in value if rates were to immediately decline by 300 or 400 basis points.

### Economic Value of Equity Sensitivity

|  | March 31, 2025 | December 31, 2024 |
| --- | ---: | ---: |
| 400 bp decrease in interest rates | 16.0% | 15.7% |
| 300 bp decrease in interest rates | 16.3% | 17.1% |
| 200 bp decrease in interest rates | 17.1% | 17.9% |
| 100 bp decrease in interest rates | 17.7% | 18.4% |
| Base | 18.2% | 19.0% |
| 100 bp increase in interest rates | 18.6% | 19.2% |
| 200 bp increase in interest rates | 18.9% | 19.6% |
| 300 bp increase in interest rates | 19.1% | 19.8% |
| 400 bp increase in interest rates | 19.3% | 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.

## Market risk

As filed, 1,086 characters.

Market risk is the risk of loss from adverse changes in the market prices and interest rates. Our market risk arises primarily from interest rate risk inherent in our lending and deposit taking activities. We do not currently have futures, forwards, or option contracts. As a result of the phase out of LIBOR, our interest rate swap derivatives and the associated loans that were indexed to LIBOR, have been replaced with one month CME Term SOFR. For further quantitative and qualitative disclosures about market risks in our portfolio, see “*Asset/Liability Management and Interest Rate Sensitivity Management”* included in Item 2 “*Management’s Discussion and Analysis of Financial Condition and Results of Operations”* presented elsewhere in this report. This analysis should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2024. Our analysis of market risk and market-sensitive financial information contains forward-looking statements and is subject to the disclosure at the beginning of Part I regarding such forward-looking information.

## Controls and procedures

As filed, 774 characters.

As of the end of the period covered by this report, we carried out an evaluation of the effectiveness of the Company’s disclosure controls and procedures under the supervision and with the participation of the Chief Executive Officer, the Chief Financial Officer and other senior management of the Company. Based on the foregoing, the Company’s Chief Executive Officer and the Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of the end of the period covered by this report.

During the quarter ended March 31, 2025, there have been no changes in our internal controls over financial reporting that have materially affected or are reasonably likely to materially affect our internal controls over financial reporting.

## Risk factors

As filed, 638 characters.

There have been no material changes to the risk factors as previously disclosed in Item 1A. to Part I of our Annual Report on Form 10-K for the year ended December 31, 2024. The materiality of any risks and uncertainties identified in our Forward Looking Statements contained in this report together with those previously disclosed in the Form 10-K or those that are presently unforeseen could result in significant adverse effects on our financial condition, results of operations and cash flows. See Item 2. “*Management’s Discussion and Analysis of Financial Condition and Results of Operations”* in this Quarterly Report on Form 10-Q.

Filed May 9, 2025.
Source: SEC EDGAR, the filing index for accession 0000950170-25-067879. Last ingested by Listed: Oct 24, 2026, 14:56 ET. No prices; not investment advice.