CVBF 10-Q Quarter ended Sept. 30, 2024

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q

(Mark One)

 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024

or

 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to _____

Commission File Number: 000-10140

CVB FINANCIAL CORP.

(Exact name of registrant as specified in its charter)

California		95-3629339
(State or other jurisdiction of Incorporation or organization)		(I.R.S. Employer Identification No.)
701 North Haven Ave. , Suite 350
Ontario , California		91764
(Address of principal executive offices)		(Zip Code)
	( 909 ) 980-4030
	(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, No Par Value	CVBF	The Nasdaq Stock Market, LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  No 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  No 

Indicate by check mark whether the registrant is a large accelerated filer, accelerated filer, non-accelerated filer or smaller reporting company, or emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer				Accelerated filer	
Non-accelerated filer				Smaller reporting company	
Emerging growth company	

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes  No 

Number of shares of common stock of the registrant: 139,677,614 outstanding as of October 30, 2024.

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TABLE OF CONTENTS

PART I –	FINANCIAL INFORMATION (UNAUDITED)	3
ITEM 1.	CONDENSED CONSOLIDATED FINANCIAL STATEMENTS	4
	NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS	9
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	40
	CRITICAL ACCOUNTING POLICIES	40
	OVERVIEW	41
	ANALYSIS OF THE RESULTS OF OPERATIONS	43
	ANALYSIS OF FINANCIAL CONDITION	53
	ASSET/LIABILITY AND MARKET RISK MANAGEMENT	69
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	72
ITEM 4.	CONTROLS AND PROCEDURES	72
PART II –	OTHER INFORMATION	73
ITEM 1.	LEGAL PROCEEDINGS	73
ITEM 1A.	RISK FACTORS	73
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	73
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	74
ITEM 4.	MINE SAFETY DISCLOSURES	74
ITEM 5.	OTHER INFORMATION	74
ITEM 6.	EXHIBITS	75
SIGNATURES		76

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PART I – FINANCIAL INFORMATION (UNAUDITED)

GENERAL

Cautionary Note Regarding Forward-Looking Statements

Certain statements set forth herein constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “will likely result”, “aims”, “anticipates”, “believes”, “could”, “estimates”, “expects”, “hopes”, “intends”, “may”, “plans”, “projects”, “seeks”, “should”, “will,” “strategy”, “possibility”, and variations of these words and similar expressions help to identify these forward-looking statements, which involve risks and uncertainties that could cause actual results or performance to differ materially from those projected. These forward-looking statements are based on management’s current expectations and beliefs concerning future developments and their potential effects on the Company, including, without limitation, plans, strategies, goals and statements about the Company’s outlook regarding revenue and asset growth, financial performance and profitability, capital and liquidity levels, loan and deposit growth and retention, yields and returns, loan diversification and credit management, stockholder value creation, tax rates, the impact of economic developments, and the impact of acquisitions we have made or may make. Such statements involve inherent risks and uncertainties, many of which are difficult to predict and are generally beyond the control of the Company, and there can be no assurance that future developments affecting the Company will be the same as those anticipated by management. The Company cautions readers that a number of important factors in addition to those set forth below could cause actual results to differ materially from those expressed in, or implied or projected by, such forward-looking statements.

General risks and uncertainties include, but are not limited to, the following: the strength of the United States economy in general and the strength of the local economies in which we conduct business; the effects of, and changes in, trade, monetary, and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System; inflation/deflation, interest rate, market, and monetary fluctuations; the effect of acquisitions we have made or may make, including, without limitation, the failure to obtain the necessary regulatory approvals, the failure to achieve the expected revenue growth and/or expense savings from such acquisitions, and/or the failure to effectively integrate an acquisition target, key personnel and customers into our operations; the timely development of competitive new products and services, and the acceptance of these products and services by new and existing customers; the impact of changes in financial services policies, laws, and regulations, including those concerning taxes, banking, securities, and insurance, and the application thereof by regulatory bodies; the effectiveness of our risk management framework and quantitative models; changes in the levels of our nonperforming assets and charge-offs; the effect of changes in accounting policies and practices or accounting standards, as may be adopted from time-to-time by bank regulatory agencies, the U.S. Securities and Exchange Commission (“SEC”), the Public Company Accounting Oversight Board, the Financial Accounting Standards Board or other accounting standards setters; possible credit related impairments or declines in the fair value of loans and securities held by us; possible impairment charges to goodwill, including any impairment that may result from increased volatility in our stock price; changes in consumer spending, borrowing, and savings habits; the effects of our lack of a diversified loan portfolio, including the risks of geographic and industry concentrations; periodic fluctuations in commercial or residential real estate prices or values; our ability to attract and retain deposits (including low cost deposits) or to access government or private lending facilities and other sources of liquidity; the possibility that we may reduce or discontinue the payments of dividends on our common stock; changes in the financial performance and/or condition of our borrowers; changes in the competitive environment among financial and bank holding companies and other financial service providers; technological changes in banking and financial services; systemic or non-systemic bank failures or crises; geopolitical conditions, including acts or threats of terrorism, actions taken by the United States or other governments in response to acts or threats of terrorism, and/or military conflicts, which could impact business and economic conditions in the United States and abroad; catastrophic events or natural disasters, including earthquakes, drought, climate change or extreme weather events that may affect our assets, communications or computer services, customers, employees or third party vendors; public health crises and pandemics, and their effects on our asset credit quality, business operations, and employees, as well as the impact on general economic and financial market conditions; cybersecurity threats and fraud and the cost of defending against them, including the costs of compliance with legislation or regulations to combat cybersecurity threats and fraud; our ability to recruit and retain key executives, board members and other employees, and our compliance with federal, state and local employment laws and regulations; ongoing or unanticipated regulatory or legal proceedings or outcomes; and our ability to manage the risks involved in the foregoing.

Additional factors that could cause actual results to differ materially from those expressed in the forward-looking statements are discussed in the Company's 2023 Annual Report on Form 10-K filed with the SEC and available at the SEC’s Internet site (http://www.sec.gov).

The Company does not undertake, and specifically disclaims any obligation, to update any forward-looking statements to reflect occurrences or unanticipated events or circumstances after the date of such statements, except as required by law. Any statements about future operating results, such as those concerning accretion and dilution to the Company’s earnings or shareholders, are for illustrative purposes only, are not forecasts, and actual results may differ.

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ITEM 1. CONDENSED CONSOLI DATED FINANCIAL STATEMENTS

CVB FINANCIAL CORP. AND SUBSIDIARIES

CONDENSED CONSOLI DATED BALANCE SHEETS

(Dollars in thousands, except share amounts)

(Unaudited)

		September 30,				December 31,
		2024				2023
Assets
Cash and due from banks		$	200,651			$	171,396
Interest-earning balances due from Federal Reserve			252,809				109,889
Total cash and cash equivalents			453,460				281,285
Interest-earning balances due from depository institutions			24,338				8,216
Investment securities available-for-sale, at fair value (with amortized cost of $ 2,818,313 at September 30, 2024, and $ 3,398,942 at December 31, 2023)			2,465,585				2,956,125
Investment securities held-to-maturity (with fair value of $ 2,063,694 at September 30, 2024, and $ 2,082,881 at December 31, 2023)			2,405,254				2,464,610
Total investment securities			4,870,839				5,420,735
Investment in stock of Federal Home Loan Bank (FHLB)			18,012				18,012
Loans and lease finance receivables			8,572,565				8,904,910
Allowance for credit losses			( 82,942	)			( 86,842	)
Net loans and lease finance receivables			8,489,623				8,818,068
Premises and equipment, net			36,275				44,709
Bank owned life insurance (BOLI)			316,553				308,706
Accrued interest receivable			45,450				48,994
Intangibles			11,130				15,291
Goodwill			765,822				765,822
Income taxes			155,478				163,968
Other assets			216,236				127,187
Total assets		$	15,403,216			$	16,020,993
Liabilities and Stockholders' Equity
Liabilities:
Deposits:
Noninterest-bearing		$	7,136,824			$	7,206,175
Interest-bearing			4,935,665				4,227,467
Total deposits			12,072,489				11,433,642
Customer repurchase agreements			394,515				271,642
Other borrowings			500,000				2,070,000
Deferred compensation			22,633				22,335
Accrued interest payable			6,675				23,268
Other liabilities			209,073				122,134
Total liabilities			13,205,385				13,943,021
Commitments and Contingencies
Stockholders' Equity
Common stock, authorized, 225,000,000 shares without par; issued and outstanding 139,678,314 at September 30, 2024, and 139,344,981 at December 31, 2023			1,294,041				1,288,899
Retained earnings			1,178,619				1,112,642
Accumulated other comprehensive loss, net of tax			( 274,829	)			( 323,569	)
Total stockholders' equity			2,197,831				2,077,972
Total liabilities and stockholders' equity		$	15,403,216			$	16,020,993

See accompanying notes to the unaudited condensed consolidated financial statements.

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CVB FINANCIAL CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME

(Dollars in thousands, except per share amounts)

(Unaudited)

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2024				2023				2024				2023
Interest income:
Loans and leases, including fees		$	114,929			$	113,190			$	345,478			$	332,574
Investment securities:
Investment securities available-for-sale			20,178				22,441				62,849				61,393
Investment securities held-to-maturity			13,284				13,576				40,131				41,272
Total investment income			33,462				36,017				102,980				102,665
Dividends from FHLB stock			375				598				1,171				1,430
Interest-earning deposits with other institutions			16,986				6,422				32,884				11,583
Total interest income			165,752				156,227				482,513				448,252
Interest expense:
Deposits			29,821				16,517				77,166				32,647
Borrowings and customer repurchase agreements			22,312				16,339				68,418				46,971
Total interest expense			52,133				32,856				145,584				79,618
Net interest income before provision for credit losses			113,619				123,371				336,929				368,634
Provision for credit losses			—				2,000				—				4,000
Net interest income after provision for credit losses			113,619				121,371				336,929				364,634
Noninterest income:
Service charges on deposit accounts			5,120				5,062				15,273				15,244
Trust and investment services			3,565				3,246				10,217				9,475
Bankcard services			355				354				1,110				1,221
BOLI income			3,499				1,548				10,034				4,834
Loss on sale of investment securities			( 11,582	)			—				( 11,582	)			—
Gain on sale leaseback transactions			9,106				—				9,106				—
Other			2,771				4,099				7,213				9,393
Total noninterest income			12,834				14,309				41,371				40,167
Noninterest expense:
Salaries and employee benefits			36,647				34,744				108,474				103,539
Occupancy and equipment			6,204				5,618				17,541				16,585
Professional services			2,855				2,117				7,836				6,375
Computer software expense			3,906				3,648				11,380				10,372
Marketing and promotion			1,964				1,628				5,550				4,664
(Recapture of) provision for unfunded loan commitments			( 750	)			( 900	)			( 1,250	)			—
Amortization of intangible assets			1,286				1,567				4,161				5,006
Other			6,723				6,636				21,411				17,415
Total noninterest expense			58,835				55,058				175,103				163,956
Earnings before income taxes			67,618				80,622				203,197				240,845
Income taxes			16,394				22,735				53,339				67,918
Net earnings		$	51,224			$	57,887			$	149,858			$	172,927
Other comprehensive income (loss):
Unrealized gain (loss) on securities arising during the period, before tax		$	84,789			$	( 120,125	)		$	69,229			$	( 102,758	)
Less: Income tax (expense) benefit related to items of other comprehensive income			( 25,290	)			37,863				( 20,489	)			30,416
Other comprehensive income (loss), net of tax			59,499				( 82,262	)			48,740				( 72,342	)
Comprehensive income (loss)		$	110,723			$	( 24,375	)		$	198,598			$	100,585
Basic earnings per common share		$	0.37			$	0.42			$	1.07			$	1.24
Diluted earnings per common share		$	0.37			$	0.42			$	1.07			$	1.24

See accompanying notes to the unaudited condensed consolidated financial statements.

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CVB FINANCIAL CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STAT EMENTS OF STOCKHOLDERS’ EQUITY

(Dollars and shares in thousands)

(Unaudited)

Three Months Ended September 30, 2024 and 2023

	Common Shares Outstanding				Common Stock				Retained Earnings				Accumulated Other Comprehensive Income (Loss)				Total
Balance, July 1, 2024		139,677			$	1,291,383			$	1,155,372			$	( 334,328	)		$	2,112,427
Repurchase of common stock		( 2	)			( 30	)			—				—				( 30	)
Exercise of stock options		4				86				—				—				86
Shares issued pursuant to stock-based compensation plan		( 1	)			2,602				—				—				2,602
Cash dividends declared on common stock ($ 0.20 per share)		—				—				( 27,977	)			—				( 27,977	)
Net earnings		—				—				51,224				—				51,224
Other comprehensive income		—				—				—				59,499				59,499
Balance, September 30, 2024		139,678			$	1,294,041			$	1,178,619			$	( 274,829	)		$	2,197,831
Balance, July 1, 2023		139,343			$	1,284,150			$	1,062,093			$	( 344,876	)		$	2,001,367
Repurchase of common stock		( 8	)			( 135	)			—				—				( 135	)
Exercise of stock options		3				52				—				—				52
Shares issued pursuant to stock-based compensation plan		—				2,393				—				—				2,393
Cash dividends declared on common stock ($ 0.20 per share)		—				—				( 27,901	)			—				( 27,901	)
Net earnings		—				—				57,887				—				57,887
Other comprehensive loss		—				—				—				( 82,262	)			( 82,262	)
Balance, September 30, 2023		139,338			$	1,286,460			$	1,092,079			$	( 427,138	)		$	1,951,401

Nine Months Ended September 30, 2024 and 2023

	Common Shares Outstanding				Common Stock				Retained Earnings				Accumulated Other Comprehensive Income (Loss)				Total
Balance, January 1, 2024		139,345			$	1,288,899			$	1,112,642			$	( 323,569	)		$	2,077,972
Repurchase of common stock		( 149	)			( 2,624	)			—				—				( 2,624	)
Exercise of stock options		7				129				—				—				129
Shares issued pursuant to stock-based compensation plan		475				7,637				—				—				7,637
Cash dividends declared on common stock ($ 0.60 per share)		—				—				( 83,881	)			—				( 83,881	)
Net earnings		—				—				149,858				—				149,858
Other comprehensive income		—				—				—				48,740				48,740
Balance, September 30, 2024		139,678			$	1,294,041			$	1,178,619			$	( 274,829	)		$	2,197,831
Balance, January 1, 2023		139,819			$	1,300,466			$	1,002,847			$	( 354,796	)		$	1,948,517
Repurchase of common stock		( 927	)			( 21,186	)			—				—				( 21,186	)
Exercise of stock options		7				125				—				—				125
Shares issued pursuant to stock-based compensation plan		439				7,055				—				—				7,055
Cash dividends declared on common stock ($ 0.60 per share)		—				—				( 83,695	)			—				( 83,695	)
Net earnings		—				—				172,927				—				172,927
Other comprehensive loss		—				—				—				( 72,342	)			( 72,342	)
Balance, September 30, 2023		139,338			$	1,286,460			$	1,092,079			$	( 427,138	)		$	1,951,401

See accompanying notes to the unaudited condensed consolidated financial statements.

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CVB FINANCIAL CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)

	Nine Months Ended
	September 30,
	2024				2023
Cash Flows from Operating Activities
Interest and dividends received	$	493,875			$	458,084
Service charges and other fees received		33,272				35,761
Interest paid		( 162,177	)			( 65,233	)
Net cash paid to vendors, employees and others		( 142,862	)			( 181,661	)
Income taxes		( 47,094	)			—
Net cash provided by operating activities		175,014				246,951
Cash Flows from Investing Activities
Proceeds of FHLB stock, net		—				9,615
Net change in interest-earning balances from depository institutions		( 16,122	)			5,445
Proceeds from repayment of investment securities available-for-sale		256,100				282,663
Proceeds from maturity of investment securities available-for-sale		48,617				4
Proceeds from sales of AFS securities		245,284				—
Purchases of investment securities available-for-sale		( 33,435	)			( 33,737	)
Proceeds from repayment and maturity of investment securities held-to-maturity		61,663				75,913
Purchases of investment securities held-to-maturity		( 11,455	)			( 2,026	)
Net increase in equity investments		( 8,928	)			( 60	)
Net decrease in loan and lease finance receivables		334,109				206,059
Purchase of premises and equipment		( 3,160	)			( 2,880	)
Proceeds from sale-leaseback transactions		16,175				—
Proceeds from BOLI death benefit		2,983				2,505
Net cash provided by investing activities		891,830				543,501
Cash Flows from Financing Activities
Net increase (decrease) in other deposits		349,312				( 488,560	)
Net increase in time deposits		289,535				11,101
Net (decrease) increase in other borrowings		( 1,570,000	)			125,000
Net increase (decrease) in customer repurchase agreements		122,873				( 295,879	)
Cash dividends on common stock		( 83,894	)			( 83,819	)
Repurchase of common stock		( 2,624	)			( 21,186	)
Proceeds from exercise of stock options		129				125
Net cash used in financing activities		( 894,669	)			( 753,218	)
Net increase in cash and cash equivalents		172,175				37,234
Cash and cash equivalents, beginning of period		281,285				203,461
Cash and cash equivalents, end of period	$	453,460			$	240,695

See accompanying notes to the unaudited condensed consolidated financial statements.

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CVB FINANCIAL CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(Dollars in thousands)

(Unaudited)

	Nine Months Ended
	September 30,
	2024				2023
Reconciliation of Net Earnings to Net Cash Provided by Operating Activities
Net earnings	$	149,858			$	172,927
Adjustments to reconcile net earnings to net cash provided by operating activities:
Increase in BOLI		( 10,034	)			( 4,834	)
Net amortization of premiums and discounts on investment securities		12,647				13,807
Loss on sale of AFS securities		11,582				—
Accretion of discount for acquired loans, net		( 2,654	)			( 2,892	)
Provision for credit losses		—				4,000
(Recapture of) provision for unfunded loan commitments		( 1,250	)			—
Valuation allowance on other real estate owned		28				—
Gain on sale leaseback transactions		( 9,106	)			—
Stock-based compensation		7,637				7,055
Depreciation and amortization, net		10,902				13,985
Change in other assets and liabilities		5,404				42,903
Total adjustments		25,156				74,024
Net cash provided by operating activities	$	175,014			$	246,951
Supplemental Disclosure of Non-cash Investing Activities
Securities sold and not settled	$	55,960			$	—
Transfer of loans to other real estate owned	$	675			$	—
Lease liabilities arising from obtaining right-of-use assets	$	11,175			$	—

See accompanying notes to the unaudited condensed consolidated financial statements.

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CVB FINANCIAL CORP. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONS OLIDATED FINANCIAL STATEMENTS

(Unaudited)

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At September 30, 2024 investment securities with carrying values of $ 1.88 billion were pledged to secure $ 469 million for repurchase agreements, $ 1.35 billion for unused borrowing capacity and approximately $ 58 million for other purposes as required or permitted by law.

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8 . FAIR VALUE INFORMATION

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

The following discussion provides information about the results of operations, financial condition, liquidity and capital resources of CVB Financial Corp. (referred to herein on an unconsolidated basis as “CVB” and on a consolidated basis as “we,” “our” or the “Company”) and its wholly owned bank subsidiary, Citizens Business Bank (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, 2023 and the unaudited condensed consolidated financial statements and accompanying notes presented elsewhere in this report.

CRITICAL ACCO UNTING 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.

Our significant accounting policies are described in greater detail in our 2023 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, 2023, 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 September 30, 2024

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.		1st Quarter 2025		The adoption of this ASU is not expected to have a material impact on our consolidated financial statements.

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OVER VIEW

For the third quarter of 2024, we reported net earnings of $51.2 million, compared with $50.0 million for the second quarter of 2024 and $57.9 million for the third quarter of 2023. Diluted earnings per share were $0.37 for the third quarter, compared to $0.36 for the prior quarter and $0.42 for the same period last year. Net income of $51.2 million for the third quarter of 2024 produced an annualized return on average equity (“ROAE”) of 9.40%, an annualized return on average tangible common equity (“ROATCE”) of 14.93%, and an annualized return on average assets (“ROAA”) of 1.23%. Our net interest margin, tax equivalent (“NIM”), was 3.05% for the third quarter of 2024, while our efficiency ratio was 46.53%.

Net interest income was $113.6 million for the third quarter of 2024. This represented a $2.8 million, or 2.50%, increase from the second quarter of 2024, and a $9.8 million, or 7.90%, decrease from the third quarter of 2023. The quarter-over-quarter increase in net interest income was primarily due to a $7.0 million increase in interest income resulting from a $513 million average increase in our interest-earning balances due from the Federal Reserve, partially offset by a $3.8 million increase in interest on deposits. The decline in net interest income compared to the third quarter of 2023 was primarily due to a 26 basis point decline in net interest margin.

Noninterest income was $12.8 million for the third quarter of 2024, compared with $14.4 million for the second quarter of 2024 and $14.3 million for the third quarter of 2023. During the third quarter of 2024, the Bank executed sale-leaseback transactions with the sale of two buildings, which operate as Banking Centers, and were simultaneously leased back, resulting in a pre-tax net gain of $9.1 million. The gains on selling the buildings were offset by realizing a pre-tax net loss of $11.6 million on the sale of $312 million of AFS securities. Third quarter income from Bank Owned Life Insurance (“BOLI”) increased by $557,000 from the second quarter of 2024 and increased by $2 million compared to the third quarter of 2023. We recognized $320,000 in death benefits that exceeded the asset value on certain policies in the third quarter of 2024, compared to no death benefits in the second quarter of 2024 and no death benefits in the third quarter of 2023. The year-over-year increase of $2 million in BOLI income was primarily due to the restructuring and enhancements in BOLI policies during the fourth quarter of 2023.

Noninterest expense for the third quarter of 2024 was $58.8 million, compared to $56.5 million for the second quarter of 2024 and $55.0 million for the third quarter of 2023. The $2.3 million quarter-over-quarter increase included a $1.2 million increase in staff related expense, as annual salary increases took effect in July. The $690,000 quarter-over-quarter increase in regulatory assessments was due to the $700,000 accrual adjustment in the second quarter of 2024 related the FDIC special assessment. There was a $750,000 recapture of provision for unfunded loan commitments in the third quarter of 2024, compared to a $500,000 recapture of provision in the second quarter of 2024 and $900,000 recaptured in the third quarter of 2023. The $3.8 million increase in noninterest expense for the third quarter of 2024 compared to the third quarter of 2023 included increased staff related expenses of $1.9 million, or 5.48%. Compared to the third quarter of 2023, professional services increased $738,000, including a $627,000 increase in legal expense, and occupancy and equipment expense increased by $586,000.

At September 30, 2024, total assets of $15.40 billion decreased by $617.8 million, or 3.86%, from total assets of $16.02 billion at December 31, 2023. Interest-earning assets of $13.74 billion at September 30, 2024 decreased by $723.2 million, or 5.0%, when compared with $14.46 billion at December 31, 2023. The decrease in interest-earning assets was primarily due to a $549.9 million decrease in investment securities, and a $328.4 million decrease in net loans, partially offset by a $142.9 million increase in interest-earning balances due from the Federal Reserve.

During the third quarter of 2024, the Bank executed sale-leaseback transactions with the sale of two buildings, that are utilized as Banking Centers, for an aggregate sale price of $17 million. The Bank simultaneously entered into lease agreements with the respective purchasers for initial terms of 15 and 18 years. These sale-leaseback transactions resulted in a pre-tax net gain of $9.1 million for the third quarter of 2024. The Bank also recorded Right of Use (“ROU”) assets and corresponding operating lease liabilities each totaling $11.2 million.

Total investment securities were $4.87 billion at September 30, 2024, a decrease of $549.9 million, or 10.14%, from $5.42 billion at December 31, 2023. At September 30, 2024, investment securities held-to-maturity (“HTM”) totaled $2.41 billion, a $59.4 million, or 2.41%, decline from December 31, 2023. At September 30, 2024, investment securities available-for-sale (“AFS”) totaled $2.47 billion, inclusive of a pre-tax net unrealized loss of $367.7 million. AFS securities decreased by $490.5 million, or 16.59%, from $2.96 billion at December 31, 2023, including the impact of the sale of $312 million of AFS securities, during the third quarter of 2024. The sale of these securities resulted in a net pre-tax loss of $11.6 million. The pre-tax unrealized loss declined by $82.1 million from December 31, 2023. Fair value hedges in which $1 billion notional pay-fixed interest rate swaps with maturities ranging from 2027 to 2028, wherein the Company pays a weighted average fixed rate of approximately 3.8% and receives daily SOFR, had a fair value totaling

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$15.0 million and were reflected as a liability at September 30, 2024. The fair value of these pay fixed interest rate swaps decreased by $8.0 million from December 31, 2023. Our tax equivalent yield on investments was 2.67% for the quarter ended September 30, 2024, compared to 2.71% for the second quarter of 2024 and 2.64% for the third quarter of 2023.

Total loans and leases, at amortized cost, of $8.57 billion at September 30, 2024, decreased by $332.3 million, or 3.73%, from December 31, 2023. The decrease in total loans included decreases of $165.9 million in commercial real estate loans, $70.5 million in dairy & livestock and agribusiness loans, $52.0 million in construction loans, and $33.4 million in commercial and industrial loans. The decline in dairy & livestock loans primarily relates to the seasonal peak in line utilization at the end of every calendar year, demonstrated by a decline in utilization from 80% at December 31, 2023 to 71% at September 30, 2024. Our yield on loans was 5.31% for the quarter ended September 30, 2024, compared to 5.26% for the quarter ended June 30, 2024 and 5.07% for the third quarter of 2023.

The allowance for credit losses totaled $82.9 million at September 30, 2024, compared to $86.8 million at December 31, 2023. There was no provision for credit losses in the first three quarters of 2024. The decline in the allowance was due to $4 million of net charge-offs in the first quarter of 2024, primarily due to two borrowers in which specific loan loss reserves were previously established in 2023.

Noninterest-bearing deposits were $7.14 billion at September 30, 2024, a decrease of $69.4 million, or 0.96%, when compared to $7.21 billion at December 31, 2023. At September 30, 2024, noninterest-bearing deposits were 59.12% of total deposits, compared to 63.03% at December 31, 2023.

Interest-bearing deposits were $4.94 billion at September 30, 2024, an increase of $708.2 million, or 16.75%, when compared to $4.23 billion at December 31, 2023. The increase in interest-bearing deposits included $400 million in new brokered time deposits issued during the first quarter of 2024. These brokered time deposits mature every 90 days. $300 million of these time deposits were combined with $300 million in cash flow hedges during the first quarter of 2024, resulting in a fixed rate of approximately 4.2%. Customer repurchase agreements totaled $394.5 million at September 30, 2024, compared to $271.6 million at December 31, 2023. Our average cost of total deposits including customer repurchase agreements was 1.01% for the quarter ended September 30, 2024, compared to 0.87% for the quarter ended June 30, 2024 and 0.51% for the third quarter of 2023.

At September 30, 2024, total borrowings consisted of $500 million of FHLB advances. The FHLB advances include maturities of $300 million, at an average cost of approximately 4.73%, maturing in May of 2026, and $200 million, at a cost of 4.27% maturing in May of 2027. During the third quarter of 2024, we repaid $1.3 billion of borrowings from the Federal Reserve’s Bank Term Funding Program, with a cost of 4.76%, that were scheduled to mature in January of 2025.

The Company’s total equity was $2.20 billion at September 30, 2024. This represented an overall increase of $119.9 million from total equity of $2.08 billion at December 31, 2023. Increases to equity included $149.9 million in net earnings and a $48.7 million increase in other comprehensive income from the tax effected impact of the net increase in market value of available-for-sale securities, that were partially offset by $83.9 million in cash dividends. We engaged in no stock repurchases during the first nine months of 2024. Our tangible book value per share at September 30, 2024 was $10.17.

Our capital ratios under the revised capital framework referred to as Basel III remain well-above regulatory requirements. As of September 30, 2024, the Company’s Tier 1 leverage capital ratio was 10.60%, common equity Tier 1 ratio was 15.77%, Tier 1 risk-based capital ratio was 15.77%, and total risk-based capital ratio was 16.59%. Refer to our Analysis of Financial Condition – Capital Resources .

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ANALYSIS OF THE R ESULTS OF OPERATIONS

Financial Performance

	Three Months Ended								Variance
	September 30,				June 30,
	2024				2024				$				%
	(Dollars in thousands, except per share amounts)
Net interest income	$	113,619			$	110,849			$	2,770				2.50	%
Provision for credit losses		—				—				—				—
Noninterest income		12,834				14,424				(1,590	)			-11.02	%
Noninterest expense		(58,835	)			(56,497	)			(2,338	)			-4.14	%
Income taxes		(16,394	)			(18,741	)			2,347				12.52	%
Net earnings	$	51,224			$	50,035			$	1,189				2.38	%
Earnings per common share:
Basic	$	0.37			$	0.36			$	0.01
Diluted	$	0.37			$	0.36			$	0.01
Return on average assets		1.23	%			1.24	%			-0.01	%
Return on average shareholders' equity		9.40	%			9.57	%			-0.17	%
Efficiency ratio		46.53	%			45.10	%			1.43	%
Noninterest expense to average assets		1.42	%			1.40	%			0.02	%

	Three Months Ended
	September 30,								Variance
	2024				2023				$				%
	(Dollars in thousands, except per share amounts)
Net interest income	$	113,619			$	123,371			$	(9,752	)			-7.90	%
Provision for credit losses		—				(2,000	)			2,000				100.00	%
Noninterest income		12,834				14,309				(1,475	)			-10.31	%
Noninterest expense		(58,835	)			(55,058	)			(3,777	)			-6.86	%
Income taxes		(16,394	)			(22,735	)			6,341				27.89	%
Net earnings	$	51,224			$	57,887			$	(6,663	)			-11.51	%
Earnings per common share:
Basic	$	0.37			$	0.42			$	(0.05	)
Diluted	$	0.37			$	0.42			$	(0.05	)
Return on average assets		1.23	%			1.40	%			-0.17	%
Return on average shareholders' equity		9.40	%			11.33	%			-1.93	%
Efficiency ratio		46.53	%			39.99	%			6.54	%
Noninterest expense to average assets		1.42	%			1.33	%			0.09	%

	Nine Months Ended
	September 30,								Variance
	2024				2023				$				%
	(Dollars in thousands, except per share amounts)
Net interest income	$	336,929			$	368,634			$	(31,705	)			-8.60	%
Provision for credit losses		—				(4,000	)			4,000				-100.00	%
Noninterest income		41,371				40,167				1,204				3.00	%
Noninterest expense		(175,103	)			(163,956	)			(11,147	)			-6.80	%
Income taxes		(53,339	)			(67,918	)			14,579				21.47	%
Net earnings	$	149,858			$	172,927			$	(23,069	)			-13.34	%
Earnings per common share:
Basic	$	1.07			$	1.24			$	(0.17	)
Diluted	$	1.07			$	1.24			$	(0.17	)
Return on average assets		1.23	%			1.41	%			-0.18	%
Return on average shareholders' equity		9.43	%			11.50	%			-2.07	%
Efficiency ratio		46.29	%			40.11	%			6.18	%
Noninterest expense to average assets		1.43	%			1.34	%			0.09	%

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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.

		Three Months Ended												Nine Months Ended
		September 30,				June 30,				September 30,				September 30,				September 30,
		2024				2024				2023				2024				2023
		(Dollars in thousands)
Net Income		$	51,224			$	50,035			$	57,887			$	149,858			$	172,927
Add: Amortization of intangible assets			1,286				1,437				1,567				4,161				5,006
Less: Tax effect of amortization of intangible assets [1]			(380	)			(425	)			(463	)			(1,230	)			(1,480	)
Tangible net income		$	52,130			$	51,047			$	58,991			$	152,789			$	176,453
Average stockholders' equity		$	2,166,793			$	2,102,466			$	2,027,030			$	2,122,870			$	2,011,172
Less: Average goodwill			(765,822	)			(765,822	)			(765,822	)			(765,822	)			(765,822	)
Less: Average intangible assets			(11,819	)			(13,258	)			(17,526	)			(13,216	)			(19,256	)
Average tangible common equity		$	1,389,152			$	1,323,386			$	1,243,682			$	1,343,832			$	1,226,094
Return on average equity, annualized [2]			9.40	%			9.57	%			11.33	%			9.43	%			11.50	%
Return on average tangible common equity, annualized [2]			14.93	%			15.51	%			18.82	%			15.19	%			19.24	%

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 and nine months ended September 30, 2024 and 2023. Our net interest income, interest spread, and net interest margin are sensitive to general business and economic conditions. These conditions include short-term and long-term interest rates, inflation, monetary 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.

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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.

	Three Months Ended September 30,
	2024												2023
	Average								Yield/				Average								Yield/
	Balance				Interest				Rate				Balance				Interest				Rate
	(Dollars in thousands)
INTEREST-EARNING ASSETS
Investment securities (1)
Available-for-sale securities:
Taxable	$	2,637,216			$	20,010				3.03	%		$	3,015,614			$	22,272				2.95	%
Tax-advantaged		24,774				168				3.25	%			25,351				169				3.19	%
Held-to-maturity securities:
Taxable		2,046,987				10,896				2.13	%			2,121,571				11,139				2.10	%
Tax-advantaged		371,056				2,388				3.11	%			380,054				2,437				3.10	%
Investment in FHLB stock		18,012				375				8.28	%			21,560				598				11.00	%
Interest-earning deposits with other institutions		1,232,551				16,986				5.48	%			473,391				6,422				5.38	%
Loans (2)		8,605,270				114,929				5.31	%			8,862,462				113,190				5.07	%
Total interest-earning assets		14,935,866				165,752				4.43	%			14,900,003				156,227				4.18	%
Total noninterest-earning assets		1,577,295												1,533,575
Total assets	$	16,513,161											$	16,433,578
INTEREST-BEARING LIABILITIES
Savings deposits (3)	$	4,189,345			$	23,427				2.22	%		$	4,459,967			$	15,670				1.39	%
Time deposits		741,875				6,394				3.43	%			309,930				847				1.08	%
Total interest-bearing deposits		4,931,220				29,821				2.41	%			4,769,897				16,517				1.37	%
FHLB advances, other borrowings, and customer repurchase agreements		2,093,364				22,312				4.24	%			1,658,907				16,339				3.91	%
Interest-bearing liabilities		7,024,584				52,133				2.95	%			6,428,804				32,856				2.03	%
Noninterest-bearing deposits		7,124,952												7,813,120
Other liabilities		196,832												164,624
Stockholders' equity		2,166,793												2,027,030
Total liabilities and stockholders' equity	$	16,513,161											$	16,433,578
Net interest income					$	113,619											$	123,371
Net interest spread - tax equivalent										1.48	%											2.15	%
Net interest margin										3.03	%											3.29	%
Net interest margin - tax equivalent										3.05	%											3.31	%

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	Nine Months Ended September 30,
	2024												2023
	Average								Yield/				Average								Yield/
	Balance				Interest				Rate				Balance				Interest				Rate
	(Dollars in thousands)
INTEREST-EARNING ASSETS
Investment securities (1)
Available-for-sale securities:
Taxable	$	2,750,063			$	62,347				3.02	%		$	3,113,643			$	60,887				2.61	%
Tax-advantaged		24,918				502				3.22	%			25,726				506				3.14	%
Held-to-maturity securities:
Taxable		2,065,950				32,930				2.13	%			2,143,195				33,939				2.11	%
Tax-advantaged		373,477				7,201				3.11	%			381,604				7,333				3.10	%
Investment in FHLB stock		18,012				1,171				8.68	%			27,460				1,430				6.96	%
Interest-earning deposits with other institutions		799,443				32,884				5.49	%			293,203				11,583				5.28	%
Loans (2)		8,720,058				345,478				5.29	%			8,905,697				332,574				4.99	%
Total interest-earning assets		14,751,921				482,513				4.38	%			14,890,528				448,252				4.04	%
Total noninterest-earning assets		15,814,501												1,522,286
Total assets	$	16,333,372											$	16,412,814
INTEREST-BEARING LIABILITIES
Savings deposits (3)	$	4,064,625			$	61,844				2.03	%		$	4,327,906			$	31,268				0.97	%
Time deposits		640,941				15,322				3.19	%			296,942				1,379				0.62	%
Total interest-bearing deposits		4,705,566				77,166				2.19	%			4,624,848				32,647				0.94	%
FHLB advances, other borrowings, and customer repurchase agreements		2,177,051				68,418				4.20	%			1,734,999				46,971				3.62	%
Interest-bearing liabilities		6,882,617				145,584				2.83	%			6,359,847				79,618				1.67	%
Noninterest-bearing deposits		7,153,557												7,908,749
Other liabilities		174,328												133,046
Stockholders' equity		2,122,870												2,011,172
Total liabilities and stockholders' equity	$	16,333,372											$	16,412,814
Net interest income					$	336,929											$	368,634
Net interest spread - tax equivalent										1.56	%											2.36	%
Net interest margin										3.05	%											3.31	%
Net interest margin - tax equivalent										3.06	%											3.32	%

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.

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

	Comparison of Three Months Ended September 30,
	2024 Compared to 2023
	Increase (Decrease) Due to
									Rate/
	Volume				Rate				Volume				Total
	(Dollars in thousands)
Interest income:
Available-for-sale securities:
Taxable investment securities	$	(2,806	)		$	618			$	(74	)		$	(2,262	)
Tax-advantaged investment securities		(4	)			3				—				(1	)
Held-to-maturity securities:
Taxable investment securities		(394	)			155				(4	)			(243	)
Tax-advantaged investment securities		(58	)			9				—				(49	)
Investment in FHLB stock		(98	)			(147	)			22				(223	)
Interest-earning deposits with other institutions		10,271				119				174				10,564
Loans		(3,276	)			5,478				(463	)			1,739
Total interest income		3,635				6,235				(345	)			9,525
Interest expense:
Savings deposits		(948	)			9,313				(608	)			7,757
Time deposits		1,177				1,827				2,543				5,547
FHLB advances, other borrowings, and customer repurchase agreements		4,267				1,387				319				5,973
Total interest expense		4,496				12,527				2,254				19,277
Net interest income	$	(861	)		$	(6,292	)		$	(2,599	)		$	(9,752	)

	Comparison of Nine Months Ended September 30,
	2024 Compared to 2023
	Increase (Decrease) Due to
									Rate/
	Volume				Rate				Volume				Total
	(Dollars in thousands)
Interest income:
Available-for-sale securities:
Taxable investment securities	$	(9,490	)		$	12,968			$	(2,018	)		$	1,460
Tax-advantaged investment securities		(21	)			16				1				(4	)
Held-to-maturity securities:
Taxable investment securities		(1,631	)			296				326				(1,009	)
Tax-advantaged investment securities		(208	)			33				43				(132	)
Investment in FHLB stock		(658	)			473				(74	)			(259	)
Interest-earning deposits with other institutions		26,739				624				(6,062	)			21,301
Loans		(9,268	)			26,658				(4,486	)			12,904
Total interest income		5,463				41,068				(12,270	)			34,261
Interest expense:
Savings deposits		(2,543	)			46,155				(13,036	)			30,576
Time deposits		2,136				7,638				4,169				13,943
FHLB advances, other borrowings, and customer repurchase agreements		16,001				10,034				(4,588	)			21,447
Total interest expense		15,594				63,827				(13,455	)			65,966
Net interest income	$	(10,131	)		$	(22,759	)		$	1,185			$	(31,705	)

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Third Quarter of 2024 Compared to the Third Quarter of 2023

Net interest income, before provision for credit losses, of $113.6 million for the third quarter of 2024 decreased by $9.8 million, or 7.90%, from the third quarter of 2023. The decline in net interest income compared to the third quarter of 2023 was primarily due to a 26 basis point decline in net interest margin. The decline in net interest margin was the result of a 55 basis point increase in funding costs, which was partially offset by a 25 basis point increase in the average earning asset yield. The increase in earning asset yield was positively impacted by a 24 basis point increase in loan yields and a modest change in the mix of assets, with higher yielding balances at the Federal Reserve increasing and the lower yielding investment portfolio declining. Compared to the third quarter of 2023, the average balance of investment securities decreased by $462.6 million, declining from 37% to 34% of total earning assets. Conversely, the average amount of funds held at the Federal Reserve increased by $748.8 million, growing from 3.1% of total earning assets in the third quarter of 2023 to 8.2% for the third quarter of 2024.

Total interest income of $165.8 million grew by $9.5 million, or 6.10%, when compared to the third quarter of 2023. This increase was primarily due to a 25 basis point expansion of the yield on earning assets. Average loan balances declined by $257.2 million. Loan yields grew from 5.07% for the third quarter of 2023 to 5.31% for the third quarter of 2024. Likewise, the yield on investment securities increased by 3 basis points from the prior year, including the $496,000 increase in interest income associated with fair value hedges executed in June of 2023.

Total interest income and fees on loans for the third quarter of 2024 was $114.9 million, an increase of $1.7 million, or 1.54%, from the third quarter of 2023. This increase in income was primarily due to higher loan yields, which grew from 5.07% in the third quarter of 2023 to 5.31% in the second quarter of 2024. Loan yields grew year-over-year, as rising interest rates contributed to an increase in yields on loans indexed to the Prime rate or other short-term indexes, as well as higher rates from newly originated loans.

Interest income from investment securities was $33.5 million, a decrease of $2.6 million, or 7.09%, from the third quarter of 2023. The decrease was driven by a $462.6 million decline in the average balance of investment on securities, including the impact from the sale of $312 million of AFS securities during the third quarter of 2024. The three basis point increase in yield includes the positive carry on the fair value hedges executed in late June of 2023, which resulted in $4.3 million of interest income in the third quarter of 2024, compared to $3.8 million in the third quarter of 2023. Excluding the impact of these swaps, interest income on investment securities would have declined by $3.1 million.

Interest expense of $52.1 million for the third quarter of 2024, increased $19.3 million, compared to the third quarter of 2023. Total cost of funds of 1.47% for the third quarter of 2024 increased from 0.92% for the year ago quarter. This 55 basis point increase in cost of funds was primarily the result of a 104 basis point increase in the cost of total interest-bearing deposits. Interest expense on time deposits grew by $5.5 million, as total time deposits grew by $431.9 million on average over the prior year quarter, including the impact from adding $400 million of brokered time deposits during the first quarter of 2024. Interest expense for non-maturity interest-bearing deposits, increased by $7.8 million over the third quarter of 2023, as a $270.6 million decline in the average balance of these deposits was offset by an increase in the cost of these interest-bearing deposits from 1.39% in the prior year quarter to 2.22% for the third quarter of 2024. Average noninterest-bearing deposits were 59.10% of total deposits for the third quarter of 2024, compared to 62.09% for the third quarter of 2023. Interest expense on borrowings increased by $4.6 million, compared to the third quarter of 2023, due to an increase in average borrowings of $411.3 million, which had an average borrowing cost of 4.77% in the third quarter of 2024, compared to 4.84% in the prior year quarter.

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Nine Months of 2024 Compared to Nine Months of 2023

Net interest income, before provision for credit losses, was $336.9 million for the nine months ended September 30, 2024, a decrease of $31.7 million, or 8.6%, compared to $368.6 million for the same period of 2023. Interest-earning assets decreased on average by $138.6 million, or 0.93%, from $14.89 billion for the nine months ended September 30, 2023 to $14.75 billion for the same period in the current year. Our net interest margin (TE) was 3.06% for the first nine months of 2024, compared to 3.32% for the same period of 2023.

Total interest income of $482.5 million for the nine months ended September 30, 2024, was $34.3 million, or 7.64%, higher than the same period of 2023. This increase was primarily due to a 34 basis point expansion of the yield on earning assets, which offset a $138.6 million decline in average earning assets. The $138.6 million year-over-year decrease in average earning assets resulted from a decline of $449.8 million in average investment securities and a $185.6 million decrease in our average loan balances, offset by a $500.7 million increase the average amount of funds held at the Federal Reserve. The 34 basis point increase in the average earning asset yield compared to the first nine months of 2023 resulted from both a 30 basis point increase in loan yields and a $7.8 million increase in interest income from the fair value hedges that were initiated in June of 2023. The fair value hedges impacted the yield on investment securities, resulting in an increase from 2.42% for the first nine months of 2023 to 2.63% for the nine months ended September 30, 2024. Interest income from funds deposited at the Federal Reserve increased by $12.9 million, primary due to a $500.7 million increase in average balances at the Federal Reserve.

Total interest income and fees on loans for the nine months ended September 30, 2024, was $345.5 million, an increase of $12.9 million, or 3.88%, when compared to the same period of 2023. This increase in income was due to higher loan yields, which grew year-over-year, as rising interest rates contributed to an increase in yields from 4.99% for the first nine months of 2023 to 5.29% for the same period of 2024.

Interest income from investment securities of $103.0 million for the nine months ended September 30, 2024, increased $315,000 from $102.7 million for the first nine months of 2023. This increase was driven by a 22 basis point increase in the yield on securities, compared to the first nine months of 2023. The increase in yield includes the positive carry on the fair value hedges executed in late June of 2023. Excluding the impact of these swaps, interest income on investment securities would have declined by $7.5 million, as average investment securities decreased by $449.8 million when compared with the third quarter of 2023.

Interest expense of $145.6 million for the nine months ended September 30, 2024, increased by $66.0 million from the same period of 2023. Total cost of funds for the first nine months of 2024 was 1.39%, compared with 0.75% for the same period of 2023. Noninterest-bearing deposits for the nine months ending September 30, 2024, declined on average by $755.2 million, compared to the first nine months of 2023, but continued to represent more than 60% of total average deposits for the nine month period. Average noninterest-bearing deposits represented 60.32% of our total deposits for the nine months ended September 30, 2024, compared to 63.10% for the same period of 2023. The rate on interest-bearing deposits for the first nine months of 2024 increased by 125 basis points from the same period in 2023. Time deposits increased on average between the two periods by $344.0 million, with the cost of time deposits increasing from 0.62% in the prior year period to 3.19% for the first nine months of 2024. The $13.9 million increase in interest expense on time deposits was driven by the addition of $400 million in brokered time deposits during the first quarter of 2024. Non-maturity interest-bearing deposits declined on average from the prior year period by $263.3 million, while the cost of these deposits increased by 1.06%, resulting in a $30.6 million increase in interest expense. Average borrowings for the first nine months of 2024 were $1.86 billion at a cost of 4.76%, compared with 4.86% on $1.27 billion of borrowings for the same period of 2023, resulting in a $19.9 million increase in interest expense.

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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 no provision for credit losses in the third quarter of 2024, compared to $2.0 million in provision in the third quarter of 2023. Net recoveries for the third quarter of 2024 were $156,000, compared to $28,000 in the third quarter of 2023. Allowance for credit losses represented 0.97% of total loans at September 30, 2024, compared to 0.98% at December 31, 2024 and 1.00% at September 30, 2023.

There was no provision for credit losses for the nine months ended September 30, 2024, compared to $4.0 million in provision for credit losses for the same period of 2023. We experienced credit charge-offs of $4.3 million and total recoveries of $444,000, resulting in net charge-offs of $3.9 million for 2024 year-to-date. For the nine months ended September 30, 2023, we experienced credit charge-offs of $224,000 and total recoveries of $102,000, resulting in net charge-offs of $122,000. 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, and the continued inflationary pressures 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.

	Three Months Ended																Nine Months Ended
	September 30,								Variance								September 30,								Variance
	2024				2023				$				%				2024				2023				$				%
	(Dollars in thousands)
Noninterest income:
Service charges on deposit accounts	$	5,120			$	5,062			$	58				1.15	%		$	15,273			$	15,244			$	29				0.19	%
Trust and investment services		3,565				3,246				319				9.83	%			10,217				9,475				742				7.83	%
Bankcard services		355				354				1				0.28	%			1,110				1,221				(111	)			-9.09	%
BOLI income		3,499				1,548				1,951				126.03	%			10,034				4,834				5,200				107.57	%
Swap fee income		—				—				—				—				—				632				(632	)			-100.00	%
Loss on sale of AFS investment securities		(11,582	)			—				(11,582	)			—				(11,582	)			—				(11,582	)			—
Gain on sale leaseback transactions		9,106				—				9,106				—				9,106				—				9,106				—
Gain/(loss) on sale of other investments		—				2,575				(2,575	)			-100.00	%			—				2,575				(2,575	)			-100.00	%
Other		2,771				1,524				1,247				81.82	%			7,213				6,186				1,027				16.60	%
Total noninterest income	$	12,834			$	14,309			$	(1,475	)			-10.31	%		$	41,371			$	40,167			$	1,204				3.00	%

Third Quarter of 2024 Compared to the Third Quarter of 2023

During the third quarter of 2024, the Bank executed sale-leaseback transactions with the sale of two buildings, which operate as Banking Centers, and were simultaneously leased back, resulting in a pre-tax net gain of $9.1 million. The gains on selling the buildings were offset by realizing a pre-tax net loss of $11.6 million on the sale of $312 million of AFS securities. Third quarter income from BOLI increased $2 million, primarily due to the restructuring and enhancements in our BOLI policies completed in the fourth quarter of 2023. Third quarter 2024 noninterest income was

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approximately $2.6 million lower than the prior year period due to income from an equity fund distribution, related to a CRA investment, that occurred in the third quarter of 2023 .Other income in the third quarter of 2024 included an increase of approximately $1.0 million related to changes in the net asset value of certain CRA 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 September 30, 2024, CitizensTrust had approximately $4.7 billion in assets under management and administration, including $3.3 billion in assets under management. CitizensTrust generated fees of $3.6 million for the third quarter of 2024, compared to $3.2 million for the same period of 2023.

The increase in BOLI income was primarily due to the restructuring and enhancements in our BOLI policies in the fourth quarter of 2023. We recognized $320,000 in death benefits that exceeded the asset value on certain policies in the third quarter of 2024, compared with no death benefits in the third quarter of 2023. As a result of the restructuring and enhancements in BOLI policies during the fourth quarter of 2023, the income derived from increases in the cash-surrender value of the policies was $1.5 million higher in the third quarter of 2024, when compared to the third quarter of 2023.

Nine Months of 2024 Compared to Nine Months of 2023

The $5.2 million year-over-year increase in BOLI income was primarily due to the restructuring and enhancements in our BOLI policies in the fourth quarter of 2023. Trust and investment fees grew by $742,000 or 7.83% due to increased assets under management. The swap related fees reflected in 2023 resulted from the conversion to SOFR of all of our previously originated interest rate swaps indexed to LIBOR, resulting in a $600,000 period-over-period decline in these fees.

Noninterest Expense

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

	Three Months Ended																Nine Months Ended
	September 30,								Variance								September 30,								Variance
	2024				2023				$				%				2024				2023				$				%
	(Dollars in thousands)
Noninterest expense:
Salaries and employee benefits	$	36,647			$	34,744			$	1,903				5.48	%		$	108,474			$	103,539			$	4,935				4.77	%
Occupancy		4,997				4,730				267				5.64	%			14,232				13,915				317				2.28	%
Equipment		1,207				888				319				35.92	%			3,309				2,670				639				23.93	%
Professional services		2,855				2,117				738				34.86	%			7,836				6,375				1,461				22.92	%
Computer software expense		3,906				3,648				258				7.07	%			11,380				10,372				1,008				9.72	%
Marketing and promotion		1,964				1,628				336				20.64	%			5,550				4,664				886				19.00	%
Amortization of intangible assets		1,286				1,567				(281	)			-17.93	%			4,161				5,006				(845	)			-16.88	%
Telecommunications expense		479				496				(17	)			-3.43	%			1,461				1,518				(57	)			-3.75	%
Regulatory assessments		2,104				2,181				(77	)			-3.53	%			7,963				6,417				1,546				24.09	%
Insurance		507				504				3				0.60	%			1,523				1,515				8				0.53	%
Loan expense		72				364				(292	)			-80.22	%			537				845				(308	)			-36.45	%
OREO expense		3				—				3				—				97				—				97				—
(Recapture of) provision for unfunded loan commitments		(750	)			(900	)			150				16.67	%			(1,250	)			—				(1,250	)			—
Directors' expenses		306				361				(55	)			-15.24	%			961				870				91				10.46	%
Stationery and supplies		248				280				(32	)			-11.43	%			717				773				(56	)			-7.24	%
Other		3,004				2,450				554				22.61	%			8,152				5,477				2,675				48.84	%
Total noninterest expense	$	58,835			$	55,058			$	3,777				6.86	%		$	175,103			$	163,956			$	11,147				6.80	%
Noninterest expense to average assets		1.42	%			1.33	%											1.43	%			1.34	%
Efficiency ratio (1)		46.53	%			39.99	%											46.29	%			40.11	%

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 1.42% for the third quarter of 2024, compared to 1.33% for the third quarter of 2023.

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Our ability to control noninterest expenses in relation to the level of total revenue (net interest income before provision for credit losses plus noninterest income) can be measured by the efficiency ratio and indicates the percentage of net revenue that is used to cover expenses. The efficiency ratio was 46.53% for the third quarter of 2024, compared to 39.99% for the third quarter of 2023.

Third Quarter of 2024 Compared to the Third Quarter of 2023

Noninterest expense of $58.8 million for the third quarter of 2024, was $3.8 million, or 6.86% higher than the third quarter of 2023. The $3.8 million increase in noninterest expense year-over-year included increased staff related expenses of $1.9 million, or 5.48%. Professional services increased $738,000, including a $627,000 increase in legal expense year-over-year. Occupancy and equipment expense increased by $586,000, or 10.43%, and software expense increased $258,000, or 7.07%, year-over-year. Occupancy expense grew by $267,000, or 5.64%, when compared with the prior year quarter, including the impact of the higher occupancy costs for the two Banking Centers involved in the sale leaseback transactions.

Nine Months of 2024 Compared to Nine Months of 2023

Noninterest expense of $175.1 million for the first nine months of 2024 was $11.1 million higher than the prior year period. Year-over-year increases included a $4.9 million increase in salaries and employee benefits primarily due to inflationary pressures on salary and benefits. The $1.5 million net increase in the FDIC accrual year-over-year was the result of the FDIC increasing its initial estimate of losses from last year’s bank failures. Marketing and promotion expense increased by $886,000 primarily due to $600,000 in higher donations in the first nine months of 2024. Year-over-year expense increases included $1.0 million in higher data processing costs from new technology investments, a $614,000 increase in deferred compensation expense, and a $1.4 million increase in legal expense. The first nine month of 2024 included a $1.3 million in recapture of provision for unfunded loan commitments, compared to no provision for the same period of 2023. As a percentage of average assets, noninterest expense was 1.43% for the nine months ended September 30, 2024, compared to 1.34% for the same period of 2023. For the nine months ended September 30, 2024, the efficiency ratio was 46.29%, compared to 40.11% for the same period of 2023.

Income Taxes

The Company’s effective tax rate for the three and nine months ended September 30, 2024 was 24.25% and 26.25%, respectively, compared to 28.20% for both the three and nine months ended September 30, 2023. 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. Investments in tax credits and higher BOLI income were the primary drivers of the lower effective tax rate in 2024.

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.

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ANALYSIS OF F INANCIAL CONDITION

Total assets of $15.40 billion at September 30, 2024 decreased by $617.8 million, or 3.86%, from total assets of $16.02 billion at December 31, 2023. Interest-earning assets of $13.74 billion at September 30, 2024 decreased by $723.2 million, or 5.0%, when compared with $14.46 billion at December 31, 2023. The decrease in interest-earning assets was primarily due to a $549.9 million decrease in investment securities and a $332.3 million decrease in total loans, partially offset by a $142.9 million increase in interest-earning balances due from the Federal Reserve.

Total liabilities were $13.21 billion at September 30, 2024, a decrease of $737.6 million, or 5.29%, from total liabilities of $13.94 billion at December 31, 2023. The $638.8 million increase in total deposits at September 30, 2024 included the addition of $400 million in brokered time deposits. These brokered time deposits mature every 90 days, including $300 million of these deposits that were issued in connection with cash flow hedges during the first quarter of 2024. The result of these hedged time deposits is a weighted average fixed rate of approximately 4.2%. Borrowings decreased by $1.57 billion from December 31, 2023, as $2.1 billion of borrowings from the Federal Reserve’s Bank Term Funding Program were paid-off and $500 million of FHLB advances were issued. At September 30, 2024, total borrowings consisted of $500 million of FHLB advances. The FHLB advances include maturities of $300 million, at an average cost of approximately 4.73%, maturing in May of 2026, and $200 million, at a cost of 4.27% maturing in May of 2027. During the third quarter of 2024, we repaid $1.3 billion of borrowings from the Federal Reserve’s Bank Term Funding Program, with a cost of 4.76%, that were scheduled to mature in January of 2025.

Total equity increased $119.9 million to $2.20 billion at September 30, 2024, compared to total equity of $2.08 billion at December 31, 2023. Increases to equity included $149.9 million in net earnings and a $48.7 million increase in other comprehensive income, that were partially offset by $83.9 million in cash dividends. We engaged in no stock repurchases during the first nine months of 2024. Our tangible book value per share at September 30, 2024 was $10.17.

Sale-Leaseback Transactions

During the third quarter of 2024, the Bank executed sale-leaseback transactions with the sale of two buildings, that are utilized as Banking Centers, for an aggregate sale price of $17 million. The Bank simultaneously entered into lease agreements with the respective purchasers for initial terms of 15 and 18 years. These sale-leaseback transactions resulted in a pre-tax net gain of $9.1 million for the third quarter of 2024. The Bank also recorded ROU assets and corresponding operating lease liabilities each totaling $11.2 million.

Investment Securities

The Company maintains a portfolio of investment securities to provide interest income and to serve as a source of liquidity for its ongoing operations. At September 30, 2024, total investment securities were $4.87 billion. This represented a decrease of $549.9 million, or 10.14%, from $5.42 billion at December 31, 2023. The overall decrease in investment securities was primarily due to a $490.5 million decline in our AFS securities. Concurrent with the sale-leaseback transactions during the third quarter of 2024, the Bank sold AFS securities with a book value of $312 million, resulting in a net pre-tax loss of $11.6 million.

At September 30, 2024, our AFS investment securities totaled $2.47 billion, inclusive of a pre-tax net unrealized loss of $367.7 million. The $82.1 million increase in fair value of our AFS securities was partially offset by an $8.0 million decrease in the fair value of our derivatives that hedge the change in value of our AFS portfolio. The after-tax unrealized loss reported in AOCI on our AFS investment securities at September 30, 2024 was $271.1 million. The changes in the net unrealized holding loss resulted from the sale of AFS securities and fluctuations in market interest rates. At September 30, 2024, investment securities HTM totaled $2.41 billion. For the nine months ended September 30, 2024 and 2023, repayments/maturities of investment securities totaled $366.4 million and $358.6 million, respectively. The Company purchased $33 million of short-term treasury notes in the second quarter of 2024 for pledging purposes. We also originated $11.5 million of Commercial Property Assessed Clean Energy ("C-PACE") bonds in the first nine months of 2024, which are included in our HTM securities portfolio. There were no purchases of investment securities during the nine months ended September 30, 2023 as cashflows generated from the portfolio were not reinvested during the year. There were no investment securities sold during the nine months ended September 30, 2023.

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

	September 30, 2024
	Amortized Cost				Gross Unrealized Holding Gain				Gross Unrealized Holding Loss				Fair Value				Total Percent
	(Dollars in thousands)
Investment securities available-for-sale:
Government agency/GSE	$	33,921			$	208			$	—			$	34,129				1.38	%
Mortgage-backed securities		2,295,381				43				(261,825	)			2,033,599				82.48	%
CMO/REMIC		476,051				—				(105,044	)			371,007				15.05	%
Municipal bonds		26,489				46				(1,115	)			25,420				1.03	%
Other securities		1,430				—				—				1,430				0.06	%
Unallocated portfolio layer fair value basis adjustments (1)		(14,959	)			14,959				—				—				0.00	%
Total available-for-sale securities	$	2,818,313			$	15,256			$	(367,984	)		$	2,465,585				100.00	%
Investment securities held-to-maturity:
Government agency/GSE	$	518,446			$	—			$	(84,898	)		$	433,548				21.55	%
Mortgage-backed securities		626,474				5				(85,320	)			541,159				26.05	%
CMO/REMIC		788,622				—				(144,801	)			643,821				32.79	%
Municipal bonds		460,257				2,994				(29,540	)			433,711				19.14	%
Other securities (2)		11,455				—				—				11,455				0.47	%
Total held-to-maturity securities	$	2,405,254			$	2,999			$	(344,559	)		$	2,063,694				100.00	%

	December 31, 2023
	Amortized Cost				Gross Unrealized Holding Gain				Gross Unrealized Holding Loss				Fair Value				Total Percent
	(Dollars in thousands)
Investment securities available-for-sale:
Government agency/GSE	$	32,229			$	24			$	—			$	32,253				1.09	%
Mortgage-backed securities		2,843,744				42				(336,107	)			2,507,679				84.83	%
CMO/REMIC		502,234				—				(112,872	)			389,362				13.17	%
Municipal bonds		26,477				46				(888	)			25,635				0.87	%
Other securities		1,196				—				—				1,196				0.04	%
Unallocated portfolio layer fair value basis adjustments (1)		(6,938	)			6,938				—				—				0.00	%
Total available-for-sale securities	$	3,398,942			$	7,050			$	(449,867	)		$	2,956,125				100.00	%
Investment securities held-to-maturity:
Government agency/GSE	$	530,656			$	—			$	(97,972	)		$	432,684				21.53	%
Mortgage-backed securities		663,090				—				(97,436	)			565,654				26.90	%
CMO/REMIC		802,892				—				(156,155	)			646,737				32.58	%
Municipal bonds		467,972				3,438				(33,604	)			437,806				18.99	%
Total held-to-maturity securities	$	2,464,610			$	3,438			$	(385,167	)		$	2,082,881				100.00	%

As of September 30, 2024, approximately $27.6 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.

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The following table presents the Company’s AFS investment securities and HTM investment securities, by investment category, in an unrealized loss position for which an allowance for credit losses has not been recorded as of September 30, 2024 and December 31, 2023.

	September 30, 2024
	Less Than 12 Months								12 Months or Longer								Total
	Fair Value				Gross Unrealized Holding Losses				Fair Value				Gross Unrealized Holding Losses				Fair Value				Gross Unrealized Holding Losses
	(Dollars in thousands)
Investment securities available-for-sale:
Government agency/GSE	$	—			$	—			$	—			$	—			$	—			$	—
Mortgage-backed securities		9				—				2,032,214				(261,824	)			2,032,223				(261,825	)
CMO/REMIC		—				—				371,006				(105,044	)			371,006				(105,044	)
Municipal bonds		3,323				(48	)			21,190				(1,068	)			24,513				(1,115	)
Total available-for-sale securities	$	3,332			$	(48	)		$	2,424,410			$	(367,936	)		$	2,427,742			$	(367,984	)
Investment securities held-to-maturity:
Government agency/GSE	$	—			$	—			$	433,548			$	(84,898	)		$	433,548			$	(84,898	)
Mortgage-backed securities		—				—				538,947				(85,320	)			538,947				(85,320	)
CMO/REMIC		—				—				643,821				(144,801	)			643,821				(144,801	)
Municipal bonds		12,760				(101	)			301,057				(29,439	)			313,817				(29,539	)
Total held-to-maturity securities	$	12,760			$	(101	)		$	1,917,373			$	(344,458	)		$	1,930,134			$	(344,558	)

	December 31, 2023
	Less Than 12 Months								12 Months or Longer								Total
	Fair Value				Gross Unrealized Holding Losses				Fair Value				Gross Unrealized Holding Losses				Fair Value				Gross Unrealized Holding Losses
	(Dollars in thousands)
Investment securities available-for-sale:
Government agency/GSE	$	—			$	—			$	—			$	—			$	—			$	—
Mortgage-backed securities		48				—				2,506,162				(336,107	)			2,506,210				(336,107	)
CMO/REMIC		—				—				389,359				(112,872	)			389,359				(112,872	)
Municipal bonds		3,286				(17	)			18,105				(871	)			21,391				(888	)
Total available-for-sale securities	$	3,334			$	(17	)		$	2,913,626			$	(449,850	)		$	2,916,960			$	(449,867	)
Investment securities held-to-maturity:
Government agency/GSE	$	—			$	—			$	432,684			$	(97,972	)		$	432,684			$	(97,972	)
Mortgage-backed securities		—				—				565,655				(97,436	)			565,655				(97,436	)
CMO/REMIC		—				—				646,737				(156,155	)			646,737				(156,155	)
Municipal bonds		20,609				(200	)			293,467				(33,404	)			314,076				(33,604	)
Total held-to-maturity securities	$	20,609			$	(200	)		$	1,938,543			$	(384,967	)		$	1,959,152			$	(385,167	)

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 September 30, 2024 and December 31, 2023.

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.

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Loans

Total loans and leases, at amortized cost, of $8.57 billion at September 30, 2024 decreased by $332.3 million, or 3.73%, from December 31, 2023. The decrease in total loans included decreases of $165.9 million in commercial real estate loans, $70.5 million in dairy & livestock and agribusiness loans, $52.0 million in construction loans, and $33.4 million in commercial and industrial loans. The decline in dairy & livestock loans primarily relates to the seasonal peak in line utilization at the end of every calendar year, demonstrated by a decline in utilization from 80% at the end of 2023 to 71% at September 30, 2024.

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

Distribution of Loan Portfolio by Type

	September 30, 2024				December 31, 2023
	(Dollars in thousands)
Commercial real estate	$	6,618,637			$	6,784,505
Construction		14,755				66,734
SBA		272,001				270,619
SBA - Paycheck Protection Program (PPP)		1,255				2,736
Commercial and industrial		936,489				969,895
Dairy & livestock and agribusiness		342,445				412,891
Municipal lease finance receivables		67,585				73,590
SFR mortgage		267,181				269,868
Consumer and other loans		52,217				54,072
Total loans, at amortized cost		8,572,565				8,904,910
Less: Allowance for credit losses		(82,942	)			(86,842	)
Total loans and lease finance receivables, net	$	8,489,623			$	8,818,068

As of September 30, 2024, $460.7 million, or 6.96% of the total commercial real estate loans included loans secured by farmland, compared to $497.7 million, or 7.34%, at December 31, 2023. The loans secured by farmland included $121.9 million for loans secured by dairy & livestock land and $338.8 million for loans secured by agricultural land at September 30, 2024, compared to $122.4 million for loans secured by dairy & livestock land and $375.3 million for loans secured by agricultural land at December 31, 2023. As of September 30, 2024, dairy & livestock and agribusiness loans of $342.4 million were comprised of $298.3 million for dairy & livestock loans and $44.1 million for agribusiness loans, compared to $412.9 million comprised of $374.9 million of dairy & livestock loans and $38.0 million of agribusiness loans December 31, 2023.

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.

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As of September 30, 2024, the Company had $202.6 million of total SBA 504 loans. SBA 504 loans include term loans to finance capital expenditures and for the purchase of commercial real estate. Initially the Bank provides two separate loans to the borrower representing a first and second lien on the collateral. The loan with the first lien is typically at a 50% advance to the acquisition costs and the second lien loan provides the financing for 40% of the acquisition costs with the borrower’s down payment of 10% of the acquisition costs. The Bank retains the first lien loan for its term and sells the second lien loan to the SBA subordinated debenture program. A majority of the Bank’s 504 loans are granted for the purpose of commercial real estate acquisition. As of September 30, 2024, the Company had $69.4 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 September 30, 2024, the Company had $14.8 million in construction loans. This represents 0.17% of total 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 September 30, 2024.

Our loan portfolio is geographically disbursed throughout our marketplace. The following is the breakdown of our total held-for-investment commercial real estate loans, by region as of September 30, 2024.

	September 30, 2024
	Total Loans								Commercial Real Estate Loans
	(Dollars in thousands)
Los Angeles County	$	3,090,804				36.1	%		$	2,263,690				34.2	%
Central Valley and Sacramento		2,043,515				23.8	%			1,607,888				24.3	%
Orange County		1,170,127				13.7	%			706,681				10.7	%
Inland Empire		977,409				11.4	%			885,469				13.4	%
Central Coast		464,180				5.4	%			393,793				5.9	%
San Diego		318,109				3.7	%			324,087				4.9	%
Other California		153,115				1.8	%			103,619				1.6	%
Out of State		355,306				4.1	%			333,410				5.0	%
	$	8,572,565				100.0	%		$	6,618,637				100.0	%

The table below breaks down our commercial real estate portfolio.

	September 30, 2024
	Loan Balance				Percent				Percent Owner- Occupied (1)				Average Loan Balance
	(Dollars in thousands)
Commercial real estate:
Industrial	$	2,237,917				33.8	%			48.3	%		$	1,619
Office		1,057,927				16.0	%			25.9	%			1,679
Retail		910,557				13.8	%			11.3	%			1,712
Multi-family		827,866				12.5	%			0.6	%			1,583
Secured by farmland (2)		460,710				7.0	%			98.6	%			1,477
Medical		309,023				4.6	%			32.9	%			1,472
Other (3)		814,637				12.3	%			42.5	%			1,715
Total commercial real estate	$	6,618,637				100.0	%			35.7	%		$	1,629

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Nonperforming Assets

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

	September 30, 2024				December 31, 2023
	(Dollars in thousands)
Nonaccrual loans	$	21,913			$	21,302
Loans past due 90 days or more and still accruing interest		—				—
Nonperforming modified loans to borrowers experiencing financial difficulty		—				—
Total nonperforming loans		21,913				21,302
OREO, net		647				—
Total nonperforming assets	$	22,560			$	21,302
Modified loans to borrowers experiencing financial difficulty	$	15,769			$	9,460
Total nonperforming loans and performing modified loans to borrowers experiencing financial difficulty	$	37,682			$	30,762
Percentage of nonperforming loans and performing modified loans to borrowers experiencing financial difficulty to total loans, at amortized cost		0.44	%			0.35	%
Percentage of nonperforming assets to total loans, at amortized cost, and OREO		0.26	%			0.24	%
Percentage of nonperforming assets to total assets		0.15	%			0.13	%

Modifications of Loans to Borrowers Experiencing Financial Difficulty

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

There were 10 loans to borrowers experiencing financial difficulty that were modified during the nine months ended September 30, 2024 with an amortized cost totaling $8.0 million as of September 30, 2024, including two dairy & livestock and agribusiness loans of $5.2 million, and eight commercial and industrial loans totaling $2.8 million.

The table below reflects the amortized cost of loans by type made to borrowers experiencing financial difficulty that were modified as of September 30, 2024 and September 30, 2023.

		Term Extension								Combination-Term Extension and Interest Rate Reduction
		Amortized Cost Basis				% of Total Class of Financing Receivables				Amortized Cost Basis				% of Total Class of Financing Receivables				Total
September 30, 2024
Commercial real estate loans		$	1,780				0.02	%		$	685				0.01	%		$	2,465
Commercial and industrial			2,785				0.03	%			169				0.00	%			2,954
Dairy & livestock and agribusiness			10,350				0.12	%			—				0.00	%			10,350
Total		$	14,916							$	853							$	15,769
September 30, 2023
Commercial real estate loans		$	1,815				0.02	%			690				0.01	%		$	2,505
Commercial and industrial			—				0.00	%			—				0.00	%			—
Dairy & livestock and agribusiness			4,799				0.05	%			—				0.00	%			4,799
Total		$	6,614							$	690							$	7,304

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The following table describes the financial effect of the loan modifications made to borrowers experiencing financial difficulty during the three months ended September 30, 2024 and September 30, 2023.

Loan Type		Financial Effect
		Term Extension		Combination-Term Extension and Interest Rate Reduction
September 30, 2024
Commercial real estate loans		Added a weighted-average 1.9 years to the life of loans, which reduced monthly payment amounts for the borrowers.		—
Commercial and industrial		Added a weighted-average 1.1 years to the life of loans, which reduced monthly payment amounts for the borrowers.		—
Dairy & livestock and agribusiness		Added a weighted-average 1.3 years to the life of loans, which reduced monthly payment amounts for the borrowers.		—
Commercial real estate loans		—		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		—		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%.
September 30, 2023
Commercial real estate loans		Added a weighted-average 1.0 years to the life of loans, which reduced monthly payment amounts for the borrowers.		—
Dairy & livestock and agribusiness		Added a weighted-average 0.5 years to the life of loans, which reduced monthly payment amounts for the borrowers.		—
Commercial real estate loans		—		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%.

As of September 30, 2024 and September 30, 2023, the Company did not have any loans made to borrowers experiencing financial difficulty that were modified during the third quarter of 2024 and 2023 that subsequently defaulted. Payment default is defined as movement to nonaccrual (nonperforming) status, foreclosure or charge-off, whichever occurs first.

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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 September 30, 2024.

			Payment Status (amortized cost basis)
			Current				30-89 Days Past Due				90+ Days Past Due
			(Dollars in thousands)
	Commercial real estate loans		$	2,465			$	—			$	—
	Commercial and industrial			2,954				—				—
	Dairy & livestock and agribusiness			10,350				—				—
	Total		$	15,769			$	—			$	—

At September 30, 2024 and December 31, 2023, there was no ACL allocated to modified loans to borrowers experiencing financial difficulty. Impairment amounts identified are typically charged off against the allowance at the time the loan is considered uncollectible. There were no charge-offs on loans to borrowers experiencing financial difficulty for the nine months ended September 30, 2024 and 2023.

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Nonperforming Assets and Delinquencies

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

		September 30,				June 30,				March 31,				December 31,				September 30,
		2024				2024				2024				2023				2023
		(Dollars in thousands)
Nonperforming loans:
Commercial real estate		$	18,794			$	21,908			$	10,661			$	15,440			$	3,655
Construction			—				—				—				—				—
SBA			151				337				54				969				1,050
Commercial and industrial			2,825				2,712				2,727				4,509				4,672
Dairy & livestock and agribusiness			143				—				60				60				243
SFR mortgage			—				—				308				324				339
Consumer and other loans			—				—				—				—				4
Total		$	21,913			$	24,957			$	13,810			$	21,302			$	9,963		[1]
% of Total loans			0.26	%			0.29	%			0.16	%			0.24	%			0.11	%
Past due 30-89 days (accruing):
Commercial real estate		$	30,701			$	43			$	19,781			$	300			$	136
Construction			—				—				—				—				—
SBA			—				—				408				108				—
Commercial and industrial			64				103				6				12				—
Dairy & livestock and agribusiness			—				—				—				—				—
SFR mortgage			—				—				—				201				—
Consumer and other loans			—				—				—				18				—
Total		$	30,765			$	146			$	20,195			$	639			$	136
% of Total loans			0.36	%			0.00	%			0.23	%			0.01	%			0.00	%
OREO:
Commercial real estate			—			$	—			$	—			$	—			$	—
SBA			—				—				—				—				—
Commercial and industrial			—				—				—				—				—
SFR mortgage			647				647				647				—				—
Total		$	647			$	647			$	647			$	—			$	—
Total nonperforming, past due, and OREO		$	53,325			$	25,750			$	34,652			$	21,941			$	10,099
% of Total loans			0.62	%			0.30	%			0.40	%			0.25	%			0.11	%
Classified Loans		$	124,606			$	124,728			$	103,080			$	102,197			$	92,246

Nonperforming loans, defined as nonaccrual loans, nonperforming modified/TDR loans and loans past due 90 days or more and still accruing interest, were $21.9 million at September 30, 2024, or 0.26% of total loans. This compares to nonperforming loans of $21.3 million, or 0.24% of total loans, at December 31, 2023 and $10.0 million, or 0.11% of total loans, at September 30, 2023. The $3.0 million decrease in nonperforming loans from June 30, 2024 was primarily due to the payoff of one nonperforming commercial real estate loans totaling $2.3 million and $1.4 million in paydowns of nonperforming commercial real estate loans associated with two relationships.

Classified loans are loans that are graded “substandard” or worse. Classified loans of $124.6 million decreased $122,000 quarter-over-quarter, primarily due to a $668,000 net decrease in classified commercial real estate loans, which included the payoff of 4 loans totaling $11.5 million that were partially offset by the addition of six classified commercial real estate loans in the third quarter of 2024. Classified dairy & livestock and agribusiness loans declined by $3.5 million due to paydowns and classified commercial and industrial loans increased $3.5 million primarily due to the addition of one classified commercial and industrial loan.

At September 30, 2024, we had one OREO property totaling $647,000. At December 31, 2023 and September 30, 2023, we had no OREO properties.

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Allowance for Credit Losses

The allowance for credit losses totaled $82.9 million as of September 30, 2024, compared to $86.8 million as of December 31, 2023 and $89.0 million as of September 30, 2023. Our allowance for credit losses at September 30, 2024 was 0.97% of total loans. This compares to 0.98% at December 31, 2023 and 1.00% September 30, 2023. The decrease in our allowance for credit losses from December 31, 2023 was due to net charge-offs of $4.0 million reflected in the first quarter of 2024, primarily due to two borrowers in which we previously established specific loan loss reserves in 2023. Our ACL at December 31, 2023 included $5.9 million of reserves for specifically identified nonperforming loans. Our reserves for specific loans have been essentially zero since the end of the first quarter of 2024. There was no provision for credit losses recorded for the nine months ended September 30, 2024, compared to $4.0 million in provision for the same period of 2023. Net charge-offs were $3.9 million for the nine months ended September 30, 2024, compared to $122,000 for the same period of 2023.

The allowance for credit losses as of September 30, 2024 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 September 30, 2024, the resulting weighted forecast resulted in Real GDP declining slightly in the fourth quarter of 2024 and continuing to be negative in the first quarter of 2025. GDP growth is forecasted to be less than 1% for all of 2025, before increasing to 1.4% in 2026, and then growth of 1.9% in 2027. Unemployment is forecasted to increase, with unemployment averaging 5.5% for all of 2025. The unemployment rate is forecasted to stay higher than 5.5% until late 2027.

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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.

	As of and For the
	Nine Months Ended
	September 30,
	2024				2023
	(Dollars in thousands)
Allowance for credit losses at beginning of period	$	86,842			$	85,117
Charge-offs:
Commercial real estate		(2,258	)			—
Construction		—				—
SBA		(165	)			(207	)
Commercial and industrial		(1,917	)			(16	)
Dairy & livestock and agribusiness		—				—
SFR mortgage		—				—
Consumer and other loans		(4	)			(1	)
Total charge-offs		(4,344	)			(224	)
Recoveries:
Commercial real estate		—				—
Construction		61				9
SBA		94				69
Commercial and industrial		289				14
Dairy & livestock and agribusiness		—				10
SFR mortgage		—				—
Consumer and other loans		—				—
Total recoveries		444				102
Net (charge-offs) recoveries		(3,900	)			(122	)
Provision for credit losses		—				4,000
Allowance for credit losses at end of period	$	82,942			$	88,995
Summary of reserve for unfunded loan commitments:
Reserve for unfunded loan commitments at beginning of period	$	7,500			$	8,000
(Recapture of) provision for unfunded loan commitments		(1,250	)			—
Reserve for unfunded loan commitments at end of period	$	6,250			$	8,000
Reserve for unfunded loan commitments to total unfunded loan commitments		0.33	%			0.43	%
Amount of total loans at end of period (1)	$	8,572,565			$	8,877,632
Average total loans outstanding (1)	$	8,720,058			$	8,905,697
Net (charge-offs) recoveries to average total loans		-0.04	%			-0.001	%
Net (charge-offs) recoveries to total loans at end of period		-0.05	%			-0.001	%
Allowance for credit losses to average total loans		0.95	%			1.00	%
Allowance for credit losses to total loans at end of period		0.97	%			1.00	%
Net (charge-offs) recoveries to allowance for credit losses		-4.70	%			-0.14	%
Net (charge-offs) recoveries to provision for credit losses	-0.00%					-3.05	%

The Bank’s ACL methodology also produced an allowance of $6.3 million for our off-balance sheet credit exposures as of September 30, 2024, compared to $7.5 million and $8.0 million as of December 31, 2023 and September 30, 2023, respectively.

While we believe that the allowance at September 30, 2024 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

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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, 2023.

Deposits

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

Total deposits were $12.07 billion at September 30, 2024. This represented an increase of $638.8 million, or 5.59%, when compared with total deposits of $11.43 billion at December 31, 2023. The composition of deposits is summarized as of the dates presented in the table below.

	September 30, 2024								December 31, 2023
	Balance				Percent				Balance				Percent
	(Dollars in thousands)
Noninterest-bearing deposits	$	7,136,824				59.12	%		$	7,206,175				63.03	%
Interest-bearing deposits
Investment checking		504,028				4.17	%			552,408				4.83	%
Money market		3,307,733				27.40	%			2,821,344				24.67	%
Savings		437,974				3.63	%			457,320				4.00	%
Time deposits		685,930				5.68	%			396,395				3.47	%
Total Deposits	$	12,072,489				100.00	%		$	11,433,642				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 declined from the end of 2023 by $69.4 million and represented 59.1% of total deposits at the end of the third quarter of 2024, compared to 63% at the end of 2023. Average noninterest-bearing deposits totaled $7.12 billion for the third quarter of 2024, a decrease of $28.4 million, or 0.41%, from average noninterest-bearing deposits of $7.15 billion for the second quarter of 2024. Average noninterest-bearing deposits were 59.10% of total average deposits for the third quarter of 2024, compared to 60.20% for the second quarter of 2024.

Interest-bearing non-maturity deposits, which include savings, interest-bearing demand, and money market accounts, totaled $4.25 billion at September 30, 2024, representing an increase of $418.7 million, or 10.93%, from savings deposits of $3.83 billion at December 31, 2023.

Time deposits totaled $685.9 million at September 30, 2024, representing an increase of $289.5 million, or 73.04%, from total time deposits of $396.4 million for December 31, 2023. This increase included $400 million in brokered time deposits.

During the first nine months of 2024, $400 million of brokered time deposits were issued, including $300 million that were associated with cash flow hedging transactions simultaneously executed in which $300 million of 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 $5.3 million and were reflected as a liability at September 30, 2024.

Our deposits are primarily relationship based and include deposits and customer repurchase agreements ("repos"). For the third quarter of 2024, 73% of our deposits consisted of business deposits and 27% consist of consumer deposits, primarily the owners and employees of our business customers. The largest percentage of our deposits, 38%, 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

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account, we have a significant percentage of deposits that are uninsured. As of September 30, 2024, 43% of our total deposits and customer repos were uncollateralized and uninsured.

Our customer deposit relationships represent a diverse set of industries. Overall, there are approximately 15 different industry classifications that represent 2% or more of our deposits as of September 30, 2024. Industry classifications with the largest concentrations, include construction representing 7% of our deposits. Manufacturing and finance & insurance deposits, each of which represents 8% of our deposits. Property management, public administration, and other real estate rental & leasing, each of which represents 6% of our deposits. Our depositors have typically banked with us for many years. As of September 30, 2024, 44% of our deposit relationships have banked with us more than 10 years and 74% of our deposit relationships have been with us for three or more years.

Our cost of deposits was 98 basis points on average for the third quarter of 2024, which compares to 88 basis points for the second quarter of 2024 and 52 basis points for the third quarter of 2023. From the first quarter of 2022 through the third quarter of 2024, our cost of deposits has increased by 95 basis points, representing a deposit beta of 18%, compared to the 525 basis point increase in the Fed Funds rate during the Federal Reserve’s tightening cycle.

Borrowings

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 September 30, 2024 and December 31, 2023, total funds borrowed under these agreements were $394.5 million and $271.6 million, respectively, with a weighted average interest rate of 1.73% for the third quarter of 2024, compared to 0.47% for the second quarter of 2024 and 0.29% for the third quarter of 2023.

At September 30, 2024, total borrowings consisted of $500 million of FHLB advances. The FHLB advances include maturities of $300 million, at an average cost of approximately 4.73%, maturing in May of 2026, and $200 million, at a cost of 4.27% maturing in May of 2027. During the third quarter of 2024, we repaid the $1.3 billion of borrowings from the Federal Reserve’s Bank Term Funding Program, with a cost of 4.76%, that were scheduled to mature in January of 2025.

At September 30, 2024, loans with a carrying value of $4.32 billion were pledged to secure available lines of credit from the FHLB and the Federal Reserve Bank.

At September 30, 2024, investment securities, with the following carrying values of $1.88 billion were pledged to secure $469 million for repurchase agreements, $1.35 billion for unused borrowing capacity and approximately $58 million for other purposes as required or permitted by law.

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Aggregate Contractual Obligations

The following table summarizes the aggregate contractual obligations as of September 30, 2024.

					Maturity by Period
	Total				Less Than One Year				One Year Through Three Years				Four Years Through Five Years				Over Five Years
	(Dollars in thousands)
Deposits (1)	$	12,072,489			$	12,060,120			$	10,335			$	1,751			$	283
Customer repurchase agreements (1)		394,515				394,515				—				—				—
Other borrowings		500,000				—				500,000				—				—
Deferred compensation		22,633				575				1,152				1,150				19,756
Operating leases		45,197				8,466				14,201				7,467				15,063
Equity investments		39,893				26,289				12,264				350				990
Total	$	13,074,727			$	12,489,965			$	537,952			$	10,718			$	36,092

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.

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.

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Off-Balance Sheet Arrangements

The following table summarizes the off-balance sheet items at September 30, 2024.

					Maturity by Period
	Total				Less Than One Year				One Year Through Three Years				Four Years Through Five Years				After Five Years
	(Dollars in thousands)
Commitment to extend credit:
Commercial real estate		408,700				83,826				194,974				103,063				26,837
Construction		13,142				7,320				5,822				—				—
SBA		731				—				—				—				731
Commercial and industrial		1,018,764				739,513				247,247				1,703				30,301
Dairy & livestock and agribusiness (1)		242,117				199,067				43,050				—				—
Municipal lease finance receivables		1,109				—				—				—				1,109
SFR Mortgage		1,515				—				—				—				1,515
Consumer and other loans		125,235				9,946				8,332				3,477				103,480
Total commitment to extend credit		1,811,313				1,039,672				499,425				108,243				163,973
Obligations under letters of credit		61,025				41,360				19,447				200				18
Total	$	1,872,338			$	1,081,032			$	518,872			$	108,443			$	163,991

As of September 30, 2024, we had commitments to extend credit of approximately $1.81 billion, and obligations under letters of credit of $61.0 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 September 30, 2024 and 2023, the balance in this reserve was $6.3 million and $8.0 million, respectively, and was included in other liabilities. The year-over-year decrease included $1.3 million in recapture of provision for unfunded loan commitments for the nine months ended September 30, 2024, compared to no recapture or provision for the same period of 2023.

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.

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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 $119.9 million to $2.20 billion at September 30, 2024, compared to total equity of $2.08 billion at December 31, 2023. Increases to equity included $149.9 million in net earnings and a $48.7 million increase in other comprehensive income, that were partially offset by $83.9 million in cash dividends. We engaged in no stock repurchases during the first nine months of 2024. Our tangible book value per share at September 30, 2024 was $10.17.

During the third quarter of 2024, 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 February 1, 2022, we announced that our Board of Directors authorized a share repurchase plan to repurchase up to 10,000,000 shares of the Company’s common stock ("2022 Repurchase Program"). During the first quarter of 2023, we repurchased 791,800 shares at an average price of $23.43. There were no stock repurchases during the third quarter of 2024 nor during the first nine months of 2024.

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 September 30, 2024, 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, 2023.

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

								September 30, 2024				December 31, 2023
Capital Ratios		Adequately Capitalized Ratios		Minimum Required Plus Capital Conservation Buffer		Well Capitalized Ratios		CVB Financial Corp. Consolidated		Citizens Business Bank		CVB Financial Corp. Consolidated		Citizens Business Bank
Tier 1 leverage capital ratio		4.00%		4.00%		5.00%		10.60%		10.49%		10.27%		10.17%
Common equity Tier 1 capital ratio		4.50%		7.00%		6.50%		15.77%		15.60%		14.65%		14.49%
Tier 1 risk-based capital ratio		6.00%		8.50%		8.00%		15.77%		15.60%		14.65%		14.49%
Total risk-based capital ratio		8.00%		10.50%		10.00%		16.59%		16.42%		15.50%		15.34%

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ASSET/LIABILITY AND M ARKET 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 $450 million of cash on the balance sheet at September 30, 2024, we had substantial sources of off-balance sheet liquidity. These sources of available liquidity include $3.9 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 $235.9 million of unpledged AFS securities that could be pledged at the discount window and $300 million of unsecured lines of credit. In addition to these borrowing sources, the Bank has capacity to utilize additional brokered deposits. As of September 30, 2024, we had brokered deposits totaling $400 million or less than 3% of total assets. 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 $12.47 billion at September 30, 2024 increased $761.7 million, or 6.51%, over total deposits and customer repos of $11.71 billion at December 31, 2023. As of September 30, 2024, total borrowings, consisted of $500 million of FHLB advances. The FHLB advances include maturities of $300 million, at an average cost of approximately 4.73%, maturing in May of 2026, and $200 million, at a cost of 4.27% maturing in May of 2027. During the third quarter of 2024, we repaid the $1.3 billion of borrowings from the Federal Reserve’s Bank Term Funding Program, with a cost of 4.76%, that were scheduled to mature in January of 2025. 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 September 30, 2024, our deposits and customer repurchase agreements that are neither collateralized nor insured were approximately $5.4 billion, or approximately 43% of our total deposits and customer repos.

Additional sources of liquidity include cash on deposit at the Federal Reserve, which exceeded $250 million at September 30, 2024, and principal and interest payments from our investment portfolio. Our total investment portfolio declined by $549.9 million from December 31, 2023 to $4.87 billion as of September 30, 2024. The decrease was primarily due to a $490.5 million decline in AFS securities. During the first nine months of 2024, we generated liquidity from our investment portfolio by selling $312 million of AFS securities and by not reinvesting the cashflows generated by our investments. AFS securities totaled $2.47 billion at September 30, 2024, inclusive of a pre-tax net unrealized loss of $367.7 million. Pre-tax unrealized loss declined by $82.1 million from December 31, 2023. Market risk is partly managed by $1 billion notional pay fixed swaps hedging the fair value of the 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.

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Below is a summary of our average cash position and statement of cash flows for the nine months ended September 30, 2024 and 2023. 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

	Nine Months Ended September 30,
	2024				2023
	(Dollars in thousands)
Average cash and cash equivalents	$	948,667			$	462,132
Percentage of total average assets		5.81	%			2.82	%
Net cash provided by operating activities	$	175,014			$	246,951
Net cash provided by investing activities		891,830				543,501
Net cash used in financing activities		(894,669	)			(753,218	)
Net increase in cash and cash equivalents	$	172,175			$	37,234

Average cash and cash equivalents increased by $486.5 million, or 105.28%, to $948.7 million for the nine months ended September 30, 2024, compared to $462.1 million for the same period of 2023.

At September 30, 2024, cash and cash equivalents totaled $453.5 million. This represented an increase of $212.8 million, or 88.40%, from $240.7 million at September 30, 2023.Our cash on deposit at the Federal Reserve grew by more than $280 million when compared to June 30, 2023.

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

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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.

		Estimated Net Interest Income Sensitivity (1)
		September 30, 2024						December 31, 2023
Interest Rate Scenario		12-month Period		24-month Period (Cumulative)		Interest Rate Scenario		12-month Period		24-month Period (Cumulative)
+ 200 basis points		5.21%		7.00%		+ 200 basis points		3.96%		4.56%
- 200 basis points		-5.36%		-8.66%		- 200 basis points		-3.97%		-5.21%

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. The EVE Ratio represents economic value of equity as a percentage of the discounted present value of all asset cash flows and derivative cash flows. Assumptions about the timing and variability of balance sheet cash flows are critical in the EVE analysis. Particularly important are the assumptions driving prepayments and the expected duration and pricing of the indeterminate deposit portfolios. EVE sensitivity is reported in both upward and downward rate shocks. At September 30, 2024, the EVE profile indicates a decline in the EVE Ratio due to instantaneous downward changes in rates and a modest increase in the EVE ratio under upward rate shocks. Compared to December 31, 2023, our EVE sensitivity to rising rates was modestly higher, as the EVE Ratio declined minimally at the end of 2023, while the decline in the EVE ratio under declining rates was consistent across the two periods. Overall, our sensitivity of EVE to changes in interest rates is generally modest, with the exception of more meaningful decreases in the EVE Ratio if rates were to immediately decline by 300 or 400 basis points.

Economic Value of Equity Sensitivity

		September 30, 2024		December 31, 2023
400 bp decrease in interest rates		14.9%		14.7%
300 bp decrease in interest rates		15.2%		15.5%
200 bp decrease in interest rates		16.2%		16.3%
100 bp decrease in interest rates		16.9%		16.8%
Base		17.5%		17.1%
100 bp increase in interest rates		17.6%		17.0%
200 bp increase in interest rates		17.8%		17.1%
300 bp increase in interest rates		18.0%		16.9%
400 bp increase in interest rates		18.1%		16.7%

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

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mix, changes in yield curve relationships, and changing product spreads that could mitigate the adverse impact of changes in interest rates.

ITEM 3. QUANTITATIVE AND QUALITATI VE DISCLOSURES ABOUT MARKET RISK

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. In addition, we have cashflow hedges associated with wholesale funds, as well as our portfolio of investment securities and associated fair value hedges. 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, 2023. 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.

ITEM 4. CONTROLS A ND PROCEDURES

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 September 30, 2024, 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.

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PART II – OTH ER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company and its subsidiaries are parties to various lawsuits and threatened lawsuits in the course of business. From time to time, such lawsuits and threatened lawsuits may include, but are not limited to, actions involving securities litigation, wage-hour and employment law claims, consumer claims, regulatory compliance claims and investigations, data privacy and cyber security claims, lender liability claims, fraud loss claims, bankruptcy-related claims and negligence claims, some of which may be styled as “class action” or representative cases. Some of these lawsuits may be similar in nature to other lawsuits pending against the Company’s competitors.

For lawsuits where the Company has determined that a loss is both probable and reasonably estimable, a liability representing the best estimate of the Company’s financial exposure based on known facts has been recorded in accordance with FASB guidance over loss contingencies (ASC 450). However, as a result of inherent uncertainties in judicial interpretation and application of a myriad of laws and regulations applicable to the Company’s business, and the unique, complex factual issues presented in any given lawsuit, the Company often cannot determine the probability of loss or estimate the amount of damages which a plaintiff might successfully prove if the Company were found to be liable. For lawsuits or threatened lawsuits where a claim has been asserted or the Company has determined that it is probable that a claim will be asserted, and there is a reasonable possibility that the outcome will be unfavorable, the Company will disclose the existence of the loss contingency, even if the Company is not able to make an estimate of the possible loss or range of possible loss with respect to the action or potential action in question, unless the Company believes that the nature, potential magnitude or potential timing (if known) of the loss contingency is not reasonably likely to be material to the Company’s results of operations, financial condition or cash flows.

Our accruals and disclosures for loss contingencies are reviewed quarterly and adjusted as additional information becomes available. We disclose a loss contingency and/or the amount accrued if we believe it is reasonably likely to be material or if we believe such disclosure is necessary for our financial statements to not be misleading. If we determine that an exposure to loss exists in excess of an amount previously accrued or disclosed, we assess whether there is at least a reasonable possibility that a loss, or additional loss, may have been incurred, and we adjust our accruals and disclosures accordingly.

We do not presently believe that the ultimate resolution of any lawsuits currently pending against the Company will have a material adverse effect on the Company’s results of operations, financial condition, or cash flows. The outcome of litigation and other legal and regulatory matters is inherently uncertain, however, and it is possible that one or more of the legal matters currently pending or threatened against the Company could have a material adverse effect on our results of operations, financial condition or cash flows.

ITEM 1A. RISK FACTORS

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, 2023. 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.

ITEM 2. UNREGISTERED SA LES OF EQUITY SECURITIES AND USE OF PROCEEDS

On February 1, 2022, we announced that our Board of Directors authorized a share repurchase plan to repurchase up to 10,000,000 shares of the Company’s common stock ("2022 Repurchase Program"). We did not repurchase any shares of our common stock during the quarter ended September 30, 2024. As of September 30, 2024, an aggregate of 4,300,059 shares remained available for repurchase under our 2022 Repurchase Program. The only shares repurchased during the third quarter of 2024 were shares repurchased pursuant to net settlement by employees in satisfaction of income tax withholding obligations incurred through the vesting of Company stock awards.

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Period		Total Number of Shares Purchased (1)				Average Price Paid Per Share				Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs				Maximum Number of Shares Available for Repurchase Under the Plans or Programs
July 1 - 31, 2024			737			$	18.65				—				4,300,059
August 1 - 31, 2024			656			$	17.83				—				4,300,059
September 1 - 30, 2024			263			$	17.47				—				4,300,059
Total			1,656			$	18.14				—				4,300,059

ITEM 3. DEFAULTS U PON SENIOR SECURITIES

Not Applicable

ITEM 4. MINE SAFE TY DISCLOSURES

Not Applicable

ITEM 5. OTHER IN FORMATION

None

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ITEM 6. EXH IBITS

Exhibit No.		Description of Exhibits
10.7		Second Amended and Restated Employment Agreement by and among CVB Financial Corp. and Citizens Business Bank, on the one hand, and David A. Brager, on the other hand, dated July 1, 2024. † (1)
10.11		Form of Employment Agreement by and among CVB Financial Corp. and Citizens Business Bank, on the one hand, and each of E. Allen Nicholson, David F. Farnsworth, David C. Harvey, and Richard H. Wohl, respectively, on the other hand, effective July 2, 2024 † (2)
31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 *
31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 *
32.1		Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 **
32.2		Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 **
101.INS		Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH		XBRL Taxonomy Extension Schema Document
104		The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2024, has been formatted in Inline XBRL.

*		Filed herewith
**		Furnished herewith
†		Indicates a management contract or compensation plan

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SIGNA TURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

CVB FINANCIAL CORP.

(Registrant)

Date: November 7, 2024

/s/ E. Allen Nicholson

E. Allen Nicholson

Executive Vice President and Chief Financial Officer

(Principal Financial Officer)

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