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Citizens Business Bank

CVB Financial Corp. Reports Earnings for the Fourth Quarter and the Year Ended 2023

 
Fourth Quarter 2023

  • Net Earnings of $48.5 million, or $0.35 per share
  • FDIC Special Assessment of $9.2 million ($0.04 decrease in EPS)

 
Full Year 2023

  • Net Earnings of $221.4 million, or $1.59 per share
  • Efficiency Ratio of 42.0%
  • Return on Average Assets of 1.35%
  • Return on Average Tangible Common Equity of 18.48%

 

Ontario, Calif., January 24, 2024-CVB Financial Corp. (NASDAQ:CVBF) and its subsidiary, Citizens Business Bank (the “Company”), announced earnings for the quarter and the year ended December 31, 2023.

CVB Financial Corp. reported net income of $48.5 million for the quarter ended December 31, 2023, compared with $57.9 million for the third quarter of 2023 and $66.2 million for the fourth quarter of 2022. Diluted earnings per share were $0.35 for the fourth quarter, compared to $0.42 for the prior quarter and $0.47 for the same period last year. Fourth quarter net income was negatively impacted by a $9.2 million expense accrual for the FDIC’s final rule that implements a special assessment that will be collected over eight quarters starting in 2024. Net income of $48.5 million for the fourth quarter of 2023 produced an annualized return on average equity (“ROAE”) of 9.65%, an annualized return on average tangible common equity (“ROATCE”) of 16.21%, and an annualized return on average assets (“ROAA”) of 1.19%.

For the year ended December 31, 2023, the Company reported net income of $221.4 million, compared with $235.4 million for the year ended December 31, 2022. Diluted earnings per share were $1.59 for the year ended December 31, 2023, compared to $1.67 for the same period last year. For the year ended December 31, 2023, ROAA was 1.35% and ROATCE was 18.48%, which compares to a 1.39% ROAA and 18.85% ROATCE for 2022.

David Brager, President and Chief Executive Officer of Citizens Business Bank, commented, “During the course of 2023, Citizens Business Bank not only remained safe and sound but also produced earnings that were the second highest in the Company’s history, despite the difficult operating environment. We remain committed to our strategy of banking the best small to medium sized businesses and their owners. We work hard to earn and maintain the trust of our customers and business partners, and we wish to thank our customers and associates for their loyalty and dedication over the past year.”

Highlights for the Fourth Quarter of 2023

  • Pretax Pre-Provision income was $72.6 million, down $10 million or 12%, predominately driven by the $9.2 million FDIC special assessment expense
  • Net interest margin of 3.26%, declined by 5 basis points compared to prior quarter
  • $2 million recapture of provision for credit losses
  • Investment securities declined by $214 million on average compared to prior quarter
  • BOLI restructuring resulted in $49 million increase in value from the prior quarter
  • Noninterest-bearing deposits were 61% of total deposits, on average, for the quarter
  • Total deposits decreased by $429 million on average compared to prior quarter
  • Total borrowings increased by $267 million, on average, from the prior quarter
  • TCE Ratio = 8.5% & CET1 = 14.6%

 

Highlights for the Full Year 2023

  • Pretax Pre-Provision income was $317.4 million, down from $338.9 million in 2022, primarily driven by the FDIC special assessment
  • Net interest margin of 3.31%, compared to 3.30% for 2022
  • Efficiency Ratio of 42%, compared with 39% for 2022
  • Investments declined by approximately $400 million from year end 2022 to December 31, 2023
  • Loans declined by approximately $174 million from year end 2022 to December 31, 2023
  • Total deposits declined by approximately $1.4 billion from year end 2022 to December 31, 2023
  • Noninterest-bearing deposits were 63% of total deposits at December 31, 2023
  • Total borrowings increased by approximately $1.1 billion from year end 2022 to December 31, 2023

 
INCOME STATEMENT HIGHLIGHTS

Chart 1
 
Net Interest Income

Net interest income was $119.4 million for the fourth quarter of 2023. This represented a $4.0 million, or 3.25%, decline from the third quarter of 2023, and an $18.0 million, or 13.13%, decrease from the fourth quarter of 2022. The quarter-over-quarter decrease in net interest income was primarily due to a $253.4 million decrease in average earning assets and a five basis point decline in net interest margin. The decline in net interest income compared to the fourth quarter of 2022 was due to a 43 basis point decrease in net interest margin and a $216.5 million decline in average earning assets.

Net interest income of $488.0 million for the year ended December 31, 2023, decreased $17.5 million, or 3.47%, compared to the same period of 2022. Interest income grew by $91.7 million, or 17.81% in 2023, offset by a $109.2 million increase in interest expense year-over-year. Cost of funds for 2023 increased by 77 basis points over 2022, while the earning asset yield grew by 74 basis points. Average earning assets declined by $610.4 million year-over-year.

Net Interest Margin

Our tax equivalent net interest margin was 3.26% for the fourth quarter of 2023, compared to 3.31% for the third quarter of 2023 and 3.69% for the fourth quarter of 2022. The five basis point decrease in our net interest margin compared to the third quarter of 2023, was the result of a 17 basis point increase in our cost of funds, offset by a 12 basis point increase in our interest-earning asset yield. The 12 basis point increase in our interest-earning asset yield was due to an 11 basis point increase in loan yields, a seven basis point increase in security yields, and a quarter-over-quarter change in the composition of average earning assets, with investment securities decreasing from approximately 37% of average earnings assets to 36%. Cost of funds increased in the fourth quarter, as cost of deposits and customer repurchases increased by 10 basis points to 0.61%. Average borrowings for the fourth quarter of 2023 of $1.59 billion had an average cost of 4.91%. On average, borrowings increased $267.2 million during the fourth quarter. The decrease in net interest margin of 43 basis points, compared to the fourth quarter of 2022, was primarily the result of a 96 basis point increase in cost of funds. Total cost of funds of 1.09% for the fourth quarter of 2023 increased from 0.13% for the year ago quarter. This 96 basis point increase in cost of funds was the result of a 1.37% increase in the cost of interest-bearing deposits and an increase in average borrowings of $1.42 billion. Borrowings had an average cost of 4.91% for the fourth quarter of 2023, compared to an average cost of 4.49% for the prior year quarter. A 49 basis point increase in earning asset yields over the prior year quarter partially offset the increase in funding costs. Included in the higher earning asset yields, were higher loan yields, which grew from 4.78% for the fourth quarter of 2022 to 5.18% for the fourth quarter of 2023. Additionally, the yield on investment securities increased by 35 basis points from the prior year quarter, primarily due to the positive spread generated from the pay-fixed swaps, in which the Company receives daily SOFR and pays a weighted average fixed cost of approximately 3.8%.

Earning Assets and Deposits

On average, earning assets declined by $253.4 million, compared to the third quarter of 2023 and declined by $216.5 million when compared to the fourth quarter of 2022. The $253.4 million quarter-over-quarter decrease in earning assets resulted from a $214.4 million decline in average investment securities and a $30.3 million decrease in average earning balances due from the Federal Reserve. Compared to the fourth quarter of 2022, the average balance of investment securities decreased by $514.1 million, while the average amount of funds held at the Federal Reserve increased by $312.2 million. Noninterest-bearing deposits declined on average by $362.3 million, or 4.64%, from the third quarter of 2023 and interest-bearing deposits and customer repurchase agreements declined on average by $106.2 million. Compared to the fourth quarter of 2022, total deposits and customer repurchase agreements declined on average by $1.75 billion, or 12.33%, including a decline of $1.25 billion in noninterest-bearing deposits. On average, noninterest-bearing deposits were 61.30% of total deposits during the most recent quarter, compared to 62.09% for the third quarter of 2023 and 63.58% for the fourth quarter of 2022.

Chart 2
 
Provision for Credit Losses

The fourth quarter of 2023 included a $2.0 million recapture of provision for credit losses, compared to $2.0 million in provision for credit losses in the third quarter of 2023 and $2.5 million of provision in the fourth quarter of 2022. The year-to-date provision for credit losses of $2.0 million was the result of an overall increase in projected loss rates from 0.94% at the end of 2022 to 0.98% at December 31, 2023. The modest changes in projected loss rates continue to be driven primarily by economic forecast changes to various macroeconomic variables such as GDP growth, commercial real estate values and the rate of unemployment.

For the year ended December 31, 2022, we recorded $10.6 million in provision for credit losses, due to both core loan growth of approximately $600 million and a deteriorating economic forecast of key macroeconomic variables.

Noninterest Income

Noninterest income was $19.2 million for the fourth quarter of 2023, compared with $14.3 million for the third quarter of 2023 and $12.5 million for the fourth quarter of 2022. Fourth quarter income from Bank Owned Life Insurance (“BOLI”) increased by $6.4 million from the third quarter of 2023 and by $6.5 million compared to the fourth quarter of 2022. At the end of the fourth quarter of 2023, the Company restructured its BOLI assets by surrendering various policies valued at approximately $68 million, resulting in a write-down of asset values of approximately $4.5 million and additional income tax expense and penalties of approximately $6.5 million. This combined restructuring charge of $10.9 million, was offset by increases to the cash surrender value of new policies purchased during the quarter, resulting in an increase to noninterest income of $6.5 million. The fourth quarter of 2023 included a $1.1 million increase in CRA investment income due to underlying asset valuation increases, while the third quarter of 2023 included approximately $2.6 million in gain from an equity fund distribution related to a CRA investment. Service charges on deposits decreased by $87,000, or 1.72% over the third quarter of 2023 and declined by $782,000, or 13.58% in comparison to the fourth quarter of 2022. Trust and investment service fees declined by $165,000 or 5.1% from the prior quarter, but increased by $214,000, or 7.5% compared to the year-ago quarter.

For the year ended December 31, 2023, noninterest income was $59.3 million, compared to $50.0 million for 2022. 2023 included the $2.6 million gain from the equity fund distribution, while 2022 included a $2.4 million net gain on the sale of one of our properties. Service charges on deposit accounts decreased by $1.2 million, or 5.44% from the year ended December 31, 2022. Trust management fees increased by $1.0 million, or 12.1% compared to 2022. Income from BOLI increased by $7.4 million from the prior year, primarily due to the $6.5 million increase in cash surrender value resulting from the surrender and redeployment of the BOLI policies at the end 2023.

Noninterest Expense

Noninterest expense for the fourth quarter of 2023 was $65.9 million, compared to $55.0 million for the third quarter of 2023 and $54.4 million for the fourth quarter of 2022. The $10.9 million quarter-over-quarter increase was primarily due to the expense from accruing the estimated FDIC special assessment. On November 16, 2023, the FDIC Board of Directors approved a final rule to implement a special assessment to recover the loss to the Deposit Insurance Fund (DIF) associated with protecting uninsured depositors following the closures of Silicon Valley Bank and Signature Bank. As a result, the Company recorded noninterest expense of $9.2 million associated with the FDIC special assessment in the fourth quarter of 2023. The fourth quarter of 2023 included $500,000 in recapture of provision for unfunded loan commitments, compared to $900,000 in recapture for the third quarter of 2023 and no provision for the fourth quarter of 2022. Salaries and employee benefit costs increased $908,000, marketing and promotion expense increased $464,000, due to increased donations, professional services increased $300,000, and legal expense increased $290,000 quarter-over-quarter. The $908,000 quarter-over-quarter increase in staff related expenses included $250,000 in higher employee benefit costs associated with the year-end holidays. The $11.5 million increase in noninterest expense year-over-year was impacted by the $9.2 million FDIC special assessment. Year-over-year expense growth included increased staff related expenses of $1.5 million, or 4.4%. This increase included a $550,000 decline in contra expense for deferred origination costs, resulting from a decline in loan originations in the fourth quarter of 2023, when compared to the prior year. Marketing and promotion expense increased by $380,000, and computer software expense increased by $317,000, or 9.4%, when compared to the fourth quarter of 2022. As a percentage of average assets, noninterest expense was 1.62% for the fourth quarter of 2023, compared to 1.33% for the third quarter of 2023 and 1.32% for the fourth quarter of 2022. Excluding the impact of the FDIC special assessment, the noninterest expense ratio for the fourth quarter of 2023 was 1.39%. The efficiency ratio for the fourth quarter of 2023 was 47.60%, or 40.98% excluding the FDIC special assessment, compared to 39.99% for the third quarter of 2023 and 36.31% for the fourth quarter of 2022.

Noninterest expense of $229.9 million for the year ended December 31, 2023 was $13.3 million higher than the prior year. The year-over-year increase included a $12.2 million increase in regulatory assessments, including the $9.2 million FDIC special assessment, and a $7.6 million increase in salaries and employee benefits, primarily due to inflationary pressures on salaries and benefits and a $2.9 million decline in the contra expense for deferred origination costs due to fewer loan originations. These increases were partially offset by a $6.0 million decrease in acquisition expense. As a percentage of average assets, noninterest expense was 1.41% for 2023, compared to 1.28% for 2022. The efficiency ratio was 42.00% for the year ended 2023, compared to 38.98% for the same period of 2022.

Income Taxes

Our effective tax rate for the fourth quarter of 2023 was 34.97% and was 29.80% for the year ended December 31, 2023, compared with 28.81% for the fourth quarter and 28.30% for year-to-date 2022. During the fourth quarter and full year of 2023, our effective tax rate was impacted by approximately $6.5 million in income tax expense and penalties resulting from the surrender of certain BOLI policies. Our estimated annual effective tax rate can vary depending upon the level of tax-advantaged income from municipal securities and BOLI, as well as available tax credits.

BALANCE SHEET HIGHLIGHTS

Assets

The Company reported total assets of $16.02 billion at December 31, 2023. This represented an increase of $118.0 million, or 0.74%, from total assets of $15.90 billion at September 30, 2023. The increase in assets includes a $58.1 million increase in investment securities, a $45.7 million increase in interest-earning balances due from the Federal Reserve, a $49.2 million increase in BOLI and a $29.4 million increase in net loans.

Total assets at December 31, 2023 decreased by $455.5 million, or 2.76%, from total assets of $16.48 billion at December 31, 2022. The decrease in assets was primarily due to a $388.8 million decrease in investment securities and a $176.2 million decrease in net loans, partially offset by an increase of $64.7 million in interest- earning balances due from the Federal Reserve and a $53.2 million increase in the cash surrender value of BOLI.

Investment Securities and BOLI

Total investment securities were $5.42 billion at December 31, 2023, an increase of $58.1 million, or 1.08% from September 30, 2023, and a decrease of $388.8 million, or 6.69%, from $5.81 billion at December 31, 2022.

At December 31, 2023, investment securities held-to-maturity (“HTM”) totaled $2.46 billion, a decrease of $24.8 million, or 1.00% from September 30, 2023, and a decrease of $89.7 million, or 3.51%, from December 31, 2022.

At December 31, 2023, investment securities available-for-sale (“AFS”) totaled $2.96 billion, inclusive of a pre-tax net unrealized loss of $449.8 million. AFS securities increased by $83.0 million, or 2.89% from September 30, 2023 and decreased by $299.1 million, or 9.19%, from $3.26 billion at December 31, 2022. Pre-tax unrealized loss declined by $178.7 million from September 30, 2023 and decreased by $50.3 million from December 31, 2022.

Combined, the AFS and HTM investments in mortgage backed securities (“MBS”) and collateralized mortgage obligations (“CMO”) totaled $4.36 billion or approximately 80% of the total investment securities at December 31, 2023. Virtually all of our MBS and CMO are issued or guaranteed by government or government sponsored enterprises, which have the implied guarantee of the U.S. Government. In addition, at December 31, 2023, we had $562.9 million of Government Agency securities, that represent approximately 10.4% of the total investment securities.

Our combined AFS and HTM municipal securities totaled $493.6 million as of December 31, 2023, or 9.1% of our total investment portfolio. These securities are located in 35 states. Our largest concentrations of holdings by state, as a percentage of total municipal bonds, are located in Texas at 15.89%, Minnesota at 11.28%, California at 9.58%, Ohio at 6.25%, Massachusetts at 6.15%, and Washington at 5.80%.

At December 31, 2023, the Company had $308.7 million of Bank Owned Life insurance (“BOLI”). The $49.2 million increase in value of BOLI, when compared to September 30, 2023, was primarily due to a restructuring of the Company’s life insurance policies, including a $4.5 million write-down in value on surrender policies that was offset by a $10.9 million enhancement to cash surrender values, as well as additional policy purchases totaling $41 million. This restructuring is expected to increase future returns on our BOLI policies resulting in additional non-taxable noninterest income in future years.

Loans

Total loans and leases, at amortized cost, of $8.90 billion at December 31, 2023 increased by $27.3 million, or 0.31%, from September 30, 2023. The quarter-over quarter increase in loans included increases of $61.4 million in dairy & livestock and agribusiness loans, $31.8 million in commercial and industrial loans, and $3.7 million in construction loans, partially offset by decreases of $58.6 million in commercial real estate loans and$12.5 million in SBA loans.

Total loans and leases, at amortized cost, decreased by $174.5 million, or 1.92%, from December 31, 2022. After adjusting for PPP loans, which declined by $6.4 million, our core loans decreased by $168.1 million, or 1.85% from December 31, 2022. The $168.1 million decreases included $100.4 million in commercial real estate loans, $21.5 million in construction loans, $20.7 million in dairy & livestock and agribusiness loans, $20.3 million in SBA loans, $7.5 million in municipal lease financings, and $22.7 million in consumer and other loans, partially offset by an increase of $21.2 million in commercial and industrial loans.

Asset Quality

During the fourth quarter of 2023, we experienced credit charge-offs of $181,000 and total recoveries of $28,000, resulting in net charge-offs of $153,000. The allowance for credit losses (“ACL”) totaled $86.8 million at December 31, 2023, compared to $89.0 million at September 30, 2023 and $85.1 million at December 31, 2022. The ACL was increased by $1.7 million in 2023, including a $2.0 million provision for credit losses. At December 31, 2023, ACL as a percentage of total loans and leases outstanding was 0.98%. This compares to 1.00% and 0.94% at September 30, 2023 and December 31, 2022, respectively.

Nonperforming loans, defined as nonaccrual loans, including modified loans on nonaccrual, plus loans 90 days past due and accruing interest, and nonperforming assets, defined as nonperforming plus OREO, are highlighted below.

Chart 3
 

The $11.3 million increase in nonperforming loans from September 30,2023 was primarily due to one nonperforming commercial real estate loan. Classified loans are loans that are graded “substandard” or worse. Classified loans increased $10 million quarter-over-quarter, primarily due to a $9.8 million increase in classified commercial real estate loans.

Deposits & Customer Repurchase Agreements

Deposits of $11.43 billion and customer repurchase agreements of $271.6 million totaled $11.71 billion at December 31, 2023. This represented a net decrease of $923.1 million compared to September 30, 2023. Deposits and customer repurchases decreased on average from the prior quarter by $468.5 million, or 3.63%.

Total deposits and customer repurchase agreements decreased $1.7 billion, or 12.66% when compared to $13.4 billion at December 31, 2022.

Noninterest-bearing deposits were $7.21 billion at December 31, 2023, a decrease of $380.5 million, or 5.02%, when compared to $7.59 billion at September 30, 2023. Noninterest-bearing deposits decreased by $958.2 million, or 11.74% when compared to $8.16 billion at December 31, 2022. At December 31, 2023, noninterest- bearing deposits were 63.03% of total deposits, compared to 61.39% at September 30, 2023 and 63.60% at December 31, 2022.

Borrowings

DAs of December 31, 2023, total borrowings, consisted of $1.91 billion of one-year advances from the Federal Reserve’s Bank Term Funding Program, at an average cost of 4.8% and $160 million of overnight Federal Home Loan Bank advances, at an average cost of approximately 5.7%. The Bank Term Funding Program advances include maturities of approximately $700,000 in May and $1.2 million in December of 2024.

Capital

The Company’s total equity was $2.08 billion at December 31, 2023. This represented an overall increase of $129.5 million from total equity of $1.95 billion at December 31, 2022. Increases to equity included $221.4 million in net earnings and a $31.2 million increase in other comprehensive income, that were partially offset by $111.6 million in cash dividends. We engaged in no stock repurchases during the second, third and fourth quarters of 2023. In the first quarter of 2023, we repurchased, under our 10b5-1 stock repurchase plan, 791,800 shares of common stock, at an average repurchase price of $23.43, totaling $18.5 million. This 10b5-1 plan expired on March 2, 2023. Our tangible book value per share at December 31, 2023 was $9.31.

Our capital ratios under the revised capital framework referred to as Basel III remain well-above regulatory standards.

Chart 4

CitizensTrust

As of December 31, 2023 CitizensTrust had approximately $4.0 billion in assets under management and administration, including $2.81 billion in assets under management. Revenues were $3.1 million for the fourth quarter of 2023 and $12.6 million for the year ended December 31, 2023, compared to $2.9 million and $11.5 million, respectively, for the same periods of 2022. CitizensTrust provides trust, investment and brokerage related services, as well as financial, estate and business succession planning.

Corporate Overview

CVB Financial Corp. (“CVBF”) is the holding company for Citizens Business Bank. CVBF is one of the 10 largest bank holding companies headquartered in California with approximately $16 billion in total assets. Citizens Business Bank is consistently recognized as one of the top performing banks in the nation and offers a wide array of banking, lending and investing services with more than 60 banking centers and three trust office locations serving California.

Shares of CVB Financial Corp. common stock are listed on the NASDAQ under the ticker symbol “CVBF”. For investor information on CVB Financial Corp., visit our Citizens Business Bank website at www.cbbank.com and click on the “Investors” tab.

Conference Call
Management will hold a conference call at 7:30 a.m. PST/10:30 a.m. EST on Thursday, January 25, 2024 to discuss the Company’s fourth quarter and year-ended 2023 financial results. The conference call can be accessed live by registering at:https://register.vevent.com/register/BIcc59d6a452a8423c98659899447afe0e

The conference call will also be simultaneously webcast over the Internet; please visit our Citizens Business Bank website at www.cbbank.com and click on the “Investors” tab to access the call from the site. Please access the website 15 minutes prior to the call to download any necessary audio software. This webcast will be recorded and available for replay on the Company’s website approximately two hours after the conclusion of the conference call, and will be available on the website for approximately 12 months.

Safe Harbor

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 levels, 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 and key personnel into our operations; the timely development of competitive 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 banking, taxes, securities, and insurance, and the application thereof by regulatory agencies; the effectiveness of our risk management framework and quantitative models; changes in the level of our nonperforming assets and charge-offs; the transition away from USD LIBOR and uncertainties regarding potential alternative reference rates, including SOFR; 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 on our balance sheet; changes in customer 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 or retain deposits or to access government or private lending facilities and other sources of liquidity; the possibility that we may reduce or discontinue the payment 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; 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 the economic and business environments in which we operate, including on our asset credit quality, business operations, and employees, as well as the impact on general economic and financial market conditions; cybersecurity threats and the costs of defending against them, including the costs of compliance with legislation or regulations to combat cybersecurity threats; our ability to recruit and retain key executives, board members and other employees, and our ability to comply with federal and state in 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 2022 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.

Non-GAAP Financial Measures— Certain financial information provided in this earnings release has not been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and is presented on a non-GAAP basis. Investors and analysts should refer to the reconciliations included in this earnings release and should consider the Company’s non- GAAP measures in addition to, not as a substitute for or as superior to, measures prepared in accordance with GAAP. These measures may or may not be comparable to similarly titled measures used by other companies.

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