News & Media
CVB Financial Corp. Reports Earnings for the Second Quarter of 2021
Ontario, CA, July 21, 2021
- Net Earnings of $51.2 million for the second quarter of 2021, or $0.38 per share
- Return on Average Tangible Common Equity of 15.60% for the second quarter of 2021
- Return on Average Assets of 1.35% for the second quarter of 2021
CVB Financial Corp. (NASDAQ:CVBF) and its subsidiary, Citizens Business Bank (the “Company”), announced earnings for the quarter ended June 30, 2021.
CVB Financial Corp. reported net income of $51.2 million for the quarter ended June 30, 2021, compared with $63.9 million for the quarter ended March 31, 2021 and $41.6 million for the quarter ended June 30, 2020. Diluted earnings per share were $0.38 for the second quarter, compared to $0.47 for the prior quarter and $0.31 for the same period last year. The second quarter of 2021 included $2.0 million in recapture of provision for credit losses, as a result of a modest improvement in our economic forecast. In comparison, the first quarter of 2021 included a $19.5 million recapture of provision. The Company’s allowance for credit losses at June 30, 2021 of $69.3 million, compares to the pre-pandemic allowance of $68.7 million at December 31, 2019.
David Brager, Chief Executive Officer of Citizens Business Bank, commented, “Despite the on-going impact of the COVID-19 pandemic and the continuing low interest rate environment, our pre-tax, pre-provision earnings remain strong. However, the significant liquidity within the economy continues to impact our balance sheet and weigh on our loan growth, with lower than normal utilization rates on lines of credit. Nevertheless, we are seeing positive signs with increased new loan pipelines, and we remain committed to our customer acquisition strategy of seeking to bank the top businesses in our local markets.”
Net income of $51.2 million for the second quarter of 2021 produced an annualized return on average equity (“ROAE”) of 10.02% and an annualized return on average tangible common equity (“ROATCE”) of 15.60%. ROAE and ROATCE for the first quarter of 2021 were 12.75% and 19.85%, respectively, and 8.51% and 13.80%, respectively, for the second quarter of 2020. Annualized return on average assets (“ROAA”) was 1.35% for the second quarter, compared to 1.79% for the first quarter of 2021 and 1.33% for the second quarter of 2020. The efficiency ratio for the second quarter of 2021 was 40.05%, compared to 40.26% for the first quarter of 2021 and 39.75% for the second quarter of 2020.
Net income totaled $115.1 million for the six months ended June 30, 2021. This represented a $35.5 million, or 44.54%, increase from the prior year, as we recaptured $21.5 million of provision for credit losses for the first six months of 2021 compared to a $23.5 million provision for credit losses for the same period of 2020. Diluted earnings per share were $0.85 for the six months ended June 30, 2021, compared to $0.58 for the same period of 2020. Net income for the six months ended June 30, 2021 produced an annualized ROAE of 11.37%, an ROATCE of 17.70% and an ROAA of 1.56%. This compares to ROAE of 8.06%, an ROATCE of 13.03% and an ROAA of 1.33% for the first six months of 2020. The efficiency ratio for the six months ended June 30, 2021 was 40.15%, compared to 41.20% for the first six months of 2020.
Net interest income before recapture of provision for credit losses was $105.4 million for the second quarter of 2021. This represented a $1.9 million, or 1.86%, increase from the first quarter of 2021, and an $819,000, or 0.78%, increase from the second quarter of 2020. Total interest income was $107.0 million for the second quarter of 2021, which was $1.5 million, or 1.43%, higher than the first quarter of 2021 and $930,000, or 0.86%, lower than the same period last year. Total interest income and fees on loans for the second quarter of 2021 of $91.7 million decreased $69,000 from the first quarter of 2021, and decreased $3.6 million, or 3.80%, from the second quarter of 2020. Total investment income of $14.5 million increased $1.4 million, or 11.0%, from the first quarter of 2021 and increased $2.4 million, or 20.08%, from the second quarter of 2020. Interest expense decreased $416,000, or 20.23%, from the prior quarter and decreased $1.7 million, or 51.61%, compared to the second quarter of 2020.
During the second quarter of 2021 we recaptured $2.0 million of provision for credit losses. This is in addition to a $19.5 million recapture of provision for credit losses in the first quarter of 2021. The recapture during the quarter reflects continued improvement in our economic forecast of certain macroeconomic variables, which were negatively impacted during 2020 by the pandemic. In comparison, the second quarter of 2020 included an $11.5 million provision for credit losses due to the severe economic forecast at that time that was created by the pandemic.
Noninterest income was $10.8 million for the second quarter of 2021, compared with $13.7 million for the first quarter of 2021 and $12.2 million for the second quarter of 2020. Second quarter income from Bank Owned Life Insurance (“BOLI”) decreased by $3.4 million from the first quarter of 2021 and $443,000 from the second quarter of 2020. The first quarter of 2021 included $3.5 million in death benefits that exceeded the asset value of certain BOLI policies, while the second quarter of 2020 included $450,000 in death benefits. Swap fee income decreased $215,000 quarter-over-quarter and decreased $2.2 million from the second quarter of 2020. Trust and investment services income grew by $556,000 or 21.29%, compared to the first quarter of 2021 and grew by $690,000 or 27.86% year over year.
Noninterest expense for the second quarter of 2021 was $46.5 million, compared to $47.2 million for the first quarter of 2021 and $46.4 million for the second quarter of 2020. The $618,000 quarter-over-quarter decrease included a $1.0 million recapture of provision for unfunded loan commitments and an $870,000 decrease in salaries and employee benefit costs that was impacted by the higher payroll taxes typically incurred in the first quarter of each year. The year-over-year increase of $147,000 included a $972,000 increase in regulatory assessment expense in the second quarter of 2021 compared to the prior year quarter, resulting from the final application of assessment credits provided by the FDIC at the end of the second quarter of 2020. The increase in assessment expense was offset by the $1.0 million recapture of provision for unfunded loan commitments in the second quarter of 2021. The recapture was the result of our improving economic forecast and the resulting impact from the macroeconomic variables on lower expected losses from unfunded commitments. As a percentage of average assets, noninterest expense was 1.23% for the second quarter of 2021, compared to 1.32% for the first quarter of 2021 and 1.48% for the second quarter of 2020.
Net Interest Margin and Earning Assets
Our net interest margin (tax equivalent) was 3.06% for the second quarter of 2021, compared to 3.18% for the first quarter of 2021 and 3.70% for the second quarter of 2020. Total average earning asset yields (tax equivalent) were 3.11% for the second quarter of 2021, compared to 3.24% for the first quarter of 2021 and 3.82% for the second quarter of 2020. The decrease in earning asset yield from the prior quarter was due to a combination of a 4 basis point decline in loan yields, a 10 basis point decrease in investment yields and a change in asset mix with loan balances declining to 59.22% of earning assets on average for the second quarter of 2021, compared to 62.25% for the first quarter of 2021. Interest and fee income from Paycheck Protection Program (“PPP”) loans was approximately $8.1 million in the second quarter of 2021, compared to $10.4 million in the first quarter of 2021. The decrease in earning asset yield compared to the second quarter of 2020 was primarily due to a 31 basis point decrease in loan yields from 4.77% in the year ago quarter to 4.46% for the second quarter of 2021. The decline in interest rates since the start of the pandemic has had a negative impact on loan yields, which after excluding discount accretion, nonaccrual interest income, and the impact from PPP loans, declined by 14 basis points compared to the second quarter of 2020. The significant decline in interest rates also impacted the tax equivalent yield on investments, which decreased by 67 basis points from the second quarter of 2020. Earning asset yields were further impacted by a change in asset mix resulting from a $662.4 million increase in average balances at the Federal Reserve compared to the second quarter of 2020. Average earning assets increased from the first quarter of 2021 by $645.6 million to $13.93 billion for the second quarter of 2021. Of that increase in earning assets, $591.8 million represented an increase in average investment securities and average loans declined by $20.8 million. Average earning assets increased by $2.54 billion from the second quarter of 2020. Loans on average grew by $202.4 million from the second quarter of 2020. Investments increased by $1.68 billion, while balances at the Federal Reserve grew on average by $662.4 million compared to the second quarter of 2020.
Total cost of funds declined to 0.05% for the second quarter of 2021 from 0.07% for the first quarter of 2021 and 0.13% in the year ago quarter. On average, noninterest bearing deposits were 62.43% of total deposits during the current quarter. Noninterest bearing deposits grew on average by $458.1 million, or 6.33%, from the first quarter of 2021, while interest-bearing deposits and customer repurchase agreements grew on average by $223.4 million. The cost of interest-bearing deposits and customer repurchase agreements declined from 0.16% for the prior quarter to 0.12% for the second quarter of 2021. In comparison to the second quarter of 2020, our overall cost of funds decreased by 8 basis points, as average noninterest bearing deposits grew by $1.49 billion, compared to $789.1 million in growth in interest-bearing deposits, and the cost of deposits declined to 5 basis points in the current quarter.
Income Taxes
Our effective tax rate for the quarter and six months ended June 30, 2021 was 28.60%, compared with 29.23% and 29.00% for the quarter and six months ended June 30, 2020, respectively. Our estimated annual effective tax rate can vary depending upon the level of tax-advantaged income as well as available tax credits.
Assets
The Company reported total assets of $15.54 billion at June 30, 2021. This represented an increase of $698.9 million, or 4.71%, from total assets of $14.84 billion at March 31, 2021. Interest-earning assets of $14.26 billion at June 30, 2021 increased $639.2 million, or 4.69%, when compared with $13.62 billion at March 31, 2021. The increase in interest-earning assets was primarily due to a $792.8 million increase in interest-earning balances due from the Federal Reserve and a $69.6 million increase in investment securities, partially offset by a $221.7 million decrease in total loans which included PPP loan forgiveness of approximately $300 million for the current quarter.
The Company reported total assets of $15.54 billion at June 30, 2021. This represented an increase of $1.12 billion, or 7.77%, from total assets of $14.42 billion at December 31, 2020. Interest-earning assets of $14.26 billion at June 30, 2021 increased $1.04 billion, or 7.86%, when compared with $13.22 billion at December 31, 2020. The increase in interest-earning assets was primarily due to a $991.4 million increase in investment securities and a $342.5 million increase in interest-earning balances due from the Federal Reserve, partially offset by a $277.5 million decrease in total loans which included PPP loan forgiveness of approximately $600 million for the six months ended June 30, 2021.
Total assets of $15.54 billion at June 30, 2021 increased by $1.79 billion, or 13.00%, from total assets of $13.75 billion at June 30, 2020. Interest-earning assets increased $1.75 billion, or 13.95%, when compared with $12.52 billion at June 30, 2020. The increase in interest-earning assets includes a $1.68 billion increase in investment securities and a $409.5 million increase in interest-earning balances due from the Federal Reserve, partially offset by a $331.2 million decrease in total loans which included PPP loan forgiveness of approximately $900 million. Total loans include the remaining outstanding balance in PPP loans, totaling $657.8 million as of June 30, 2021, compared to $897.7 million as of March 31, 2021 and $1.1 billion as of June 30, 2020. Excluding PPP loans, total loans grew by $18.2 million from March 31, 2021 and grew by $108.1 million compared to June 30, 2020.
Investment Securities
Total investment securities were $3.97 billion at June 30, 2021, an increase of $69.6 million, or 1.79%, from $3.90 billion at March 31, 2021, an increase of $991.4 million from December 31, 2020, and an increase of $1.68 billion, or 73.37%, from $2.29 billion at June 30, 2020. In the second quarter of 2021, we purchased $317.1 million of securities with an average investment yield of approximately 1.69%, compared to $1.23 billion of securities purchased in the first quarter of 2021, with an average expected yield of approximately 1.57%.
At June 30, 2021, investment securities held-to-maturity (“HTM”) totaled $1.04 billion, a $458.3 million, or 79.20%, increase from December 31, 2020 and a $423.8 million increase, or 69.11%, from June 30, 2020. In the first quarter of 2021, we purchased approximately $546 million of HTM securities.
At June 30, 2021 investment securities available-for-sale (“AFS”) totaled $2.93 billion, inclusive of a pre-tax net unrealized gain of $23.3 million. AFS securities increased by $533.1 million, or 22.22%, from December 31, 2020, and increased by $1.26 billion, or 74.93%, from June 30, 2020. During the second quarter of 2021, we purchased approximately $317.1 million of AFS securities, compared to approximately $683 million of AFS securities purchased in the first quarter of 2021.
Combined, the AFS and HTM investments in mortgage backed securities (“MBS”) and collateralized mortgage obligations (“CMO”) totaled $3.13 billion at June 30, 2021, compared to $2.66 billion at December 31, 2020 and $1.97 billion at June 30, 2020. 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.
Our combined AFS and HTM municipal securities totaled $242.7 million as of June 30, 2021, or approximately 6% of our total investment portfolio. These securities are located in 28 states. Our largest concentrations of holdings by state, as a percentage of total municipal bonds, are located in Minnesota at 21.74%, Texas at 10.83%, Massachusetts at 10.31%, Ohio at 8.19%, and Connecticut at 5.76%.
Loans
Total loans and leases, net of deferred fees and discounts, of $8.07 billion at June 30, 2021 decreased by $221.7 million, or 2.67%, from $8.29 billion at March 31, 2021. The $221.7 million decrease in total loans included decreases of $239.9 million in PPP loans, $18.3 million in SFR mortgage loans, $15.9 million in Small Business Administration (“SBA”) loans, $8.1 million in construction loans and $13.4 million in other loans, partially offset by an increase of $73.9 million in commercial real estate loans. After adjusting for PPP loans, our loans grew by $18.2 million or at an annualized rate of approximately 1.0% from the end of the first quarter of 2021.
Total loans and leases, net of deferred fees and discounts, of $8.07 billion at June 30, 2021 decreased by $277.5 million, or 3.32%, from December 31, 2020. The $277.5 million decrease in total loans included decreases of $225.2 million in PPP loans, $103.4 million in dairy & livestock and agribusiness loans due to seasonal pay downs, $62.9 million in commercial and industrial loans, $33.4 million in SFR mortgage loans, $12.1 million in SBA loans, and $9.7 million in other loans, partially offset by an increase of $169.2 million in commercial real estate loans. After adjusting for seasonality and PPP loans, our loans grew by $51.0 million or at an annualized rate of approximately 1.4% from the end of the fourth quarter of 2020.
Total loans and leases, net of deferred fees and discounts decreased by $331.2 million, or 3.94%, from June 30, 2020. The decrease in total loans included a $439.3 million decline in PPP loans. After excluding the impact of PPP loans, the $108.1 million increase in core loans included increases of $305.6 million in commercial real estate loans and $5.9 million in dairy & livestock and agribusiness loans. Partially offsetting these increases were declines of $91.6 million in commercial and industrial loans, $49.4 million in SFR mortgage loans, $37.5 million in construction loans, $11.3 million in consumer and other loans, $8.4 million in SBA loans, and $5.2 million in municipal lease financings.
Asset Quality
During the second quarter of 2021, we experienced credit charge-offs of $510,000 and total recoveries of $47,000, resulting in net charge-offs of $463,000. The allowance for credit losses (“ACL”) totaled $69.3 million at June 30, 2021, compared to $93.7 million at December 31, 2020 and $94.0 million at June 30, 2020. The allowance for credit losses for 2021 was decreased by $21.5 million, due to the improved outlook in our forecast of certain macroeconomic variables that were influenced by the economic impact of the pandemic and government stimulus, and by $2.9 million in year-to-date net charge-offs. At June 30, 2021, ACL as a percentage of total loans and leases outstanding was 0.86%. This compares to 1.12% and 1.12% at December 31, 2020 and June 30, 2020, respectively. When PPP loans are excluded, ACL as a percentage of total adjusted loans and leases outstanding was 0.94% at June 30, 2021, compared to 1.25% at December 31, 2020 and 1.29% at June 30, 2020.
Nonperforming loans, defined as nonaccrual loans and loans 90 days past due accruing interest plus nonperforming TDR loans, were $8.5 million at June 30, 2021, or 0.10% of total loans. This compares to nonperforming loans of $14.3 million, or 0.17% of total loans, at December 31, 2020 and $6.8 million, or 0.08% of total loans, at June 30, 2020. The $8.5 million in nonperforming loans at June 30, 2021 are summarized as follows: $4.4 million in commercial real estate loans, $1.8 million in commercial and industrial loans, $1.4 million in SBA loans, $406,000 in SFR mortgage loans, $308,000 in consumer and other loans, and $118,000 in dairy & livestock and agribusiness loans.
As of June 30, 2021, we had no OREO properties, compared to $3.4 million at December 31, 2020 and $4.9 million at June 30, 2020.
At June 30, 2021, we had loans delinquent 30 to 89 days of $415,000. This compares to $3.1 million at December 31, 2020 and $2.6 million at June 30, 2020. As a percentage of total loans, delinquencies, excluding nonaccruals, were 0.01% at June 30, 2021, 0.04% at December 31, 2020, and 0.03% at June 30, 2020.
At June 30, 2021, we had $8.2 million in performing TDR loans, compared to $2.2 million in performing TDR loans at December 31, 2020 and $2.8 million in performing TDR loans at June 30, 2020.
Nonperforming assets, defined as nonaccrual loans and loans 90 days past due accruing interest plus OREO, totaled $8.5 million at June 30, 2021, $17.7 million at December 31, 2020, and $11.7 million at June 30, 2020. As a percentage of total assets, nonperforming assets were 0.05% at June 30, 2021, 0.12% at December 31, 2020, and 0.09% at June 30, 2020.
Classified loans are loans that are graded “substandard” or worse. At June 30, 2021, classified loans totaled $49.0 million, compared to $78.8 million at December 31, 2020 and $86.3 million at June 30, 2020.
Deposits & Customer Repurchase Agreements
Deposits of $12.67 billion and customer repurchase agreements of $578.2 million totaled $13.25 billion at June 30, 2021. This represented an increase of $662.3 million, or 5.26%, when compared with $12.59 billion at March 31, 2021. Total deposits and customer repurchase agreements increased $1.07 billion, or 8.80% when compared to $12.18 billion at December 31, 2020 and increased $1.80 billion, or 15.68%, when compared with $11.45 billion at June 30, 2020.
Noninterest-bearing deposits were $8.07 billion at June 30, 2021, an increase of $487.6 million, or 6.43%, when compared to March 31, 2021, $610.0 million, or 8.18%, when compared to $7.46 billion at December 31, 2020, and an increase of $1.16 billion, or 16.87%, when compared to $6.90 billion at June 30, 2020. At June 30, 2021, noninterest-bearing deposits were 63.66% of total deposits, compared to 62.74% at March 31, 2021, 63.52% at December 31, 2020 and 62.83% at June 30, 2020.
Capital
The Company’s total equity was $2.06 billion at June 30, 2021. This represented an increase of $47.1 million, or 2.34%, from total equity of $2.01 billion at December 31, 2020. The increase was primarily due to net earnings of $115.1 million, partially offset by a $22.1 million decrease in other comprehensive income from the tax effected impact of the decrease in market value of available-for-sale securities and $49.0 million in cash dividends. Our tangible common equity ratio was 9.2% at June 30, 2021.
Our capital ratios under the revised capital framework referred to as Basel III remain well-above regulatory standards. As of June 30, 2021, the Company’s Tier 1 leverage capital ratio was 9.4%, common equity Tier 1 ratio was 15.1%, Tier 1 risk-based capital ratio was 15.1%, and total risk-based capital ratio was 15.9%.
CitizensTrust
As of June 30, 2021 CitizensTrust had approximately $3.25 billion in assets under management and administration, including $2.40 billion in assets under management. Revenues were $3.2 million for the second quarter of 2021 and $5.8 million for the six months ended June 30, 2021, compared to $2.5 million and $4.9 million, respectively, for the same periods of 2020. 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 over $15 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 through 58 banking centers and 3 trust office locations serving the Inland Empire, Los Angeles County, Orange County, San Diego County, Ventura County, Santa Barbara County, and the Central Valley area of 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. PDT/10:30 a.m. EDT on Thursday, July 22, 2021 to discuss the Company’s second quarter 2021 financial results.
To listen to the conference call, please dial (833) 301-1161, participant passcode 2777402. A taped replay will be made available approximately one hour after the conclusion of the call and will remain available through July 29, 2021 at 6:00 a.m. PDT/9:00 a.m. EDT. To access the replay, please dial (855) 859-2056, participant passcode 2777402.
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 matters set forth herein (including the exhibits hereto) constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including forward-looking statements relating to the Company’s current business plans and expectations and our future financial position and operating results. 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. These forward-looking statements are subject to risks and uncertainties that could cause actual results, performance and/or achievements to differ materially from those projected. These risks and uncertainties include, but are not limited to, local, regional, national and international economic and market conditions, political events and public health developments and the impact they may have on us, our customers and our assets and liabilities; our ability to attract deposits and other sources of funding or liquidity; supply and demand for commercial or residential real estate and periodic deterioration in real estate prices and/or values in California or other states where we lend; a sharp or prolonged slowdown or decline in real estate construction, sales or leasing activities; changes in the financial performance and/or condition of our borrowers, depositors, key vendors or counterparties; changes in our levels of delinquent loans, nonperforming assets, allowance for credit losses and charge-offs; the costs or effects of mergers, acquisitions or dispositions we may make, whether we are able to obtain any required governmental approvals in connection with any such mergers, acquisitions or dispositions, and/or our ability to realize the contemplated financial or business benefits associated with any such mergers, acquisitions or dispositions; the effects of new laws, regulations and/or government programs, including those laws, regulations and programs enacted by federal, state or local governments in the geographic jurisdictions in which we do business in response to the current national emergency declared in connection with the COVID-19 pandemic; the impact of the federal CARES Act and the significant additional lending activities undertaken by the Company in connection with the Small Business Administration’s Paycheck Protection Program enacted thereunder, including risks to the Company with respect to the uncertain application by the Small Business Administration of new borrower and loan eligibility, forgiveness and audit criteria; the effects of the Company’s participation in one or more of the new lending programs recently established by the Federal Reserve, including the Main Street New Loan Facility, the Main Street Priority Loan Facility and the Nonprofit Organization New Loan Facility, and the impact of any related actions or decisions by the Federal Reserve Bank of Boston and its special purpose vehicle established pursuant to such lending programs; the effect of changes in other pertinent laws, regulations and applicable judicial decisions (including laws, regulations and judicial decisions concerning financial reforms, taxes, bank capital levels, allowance for credit losses, consumer, commercial or secured lending, securities and securities trading and hedging, bank operations, compliance, fair lending, the Community Reinvestment Act, employment, executive compensation, insurance, cybersecurity, vendor management and information security technology) with which we and our subsidiaries must comply or believe we should comply or which may otherwise impact us; changes in estimates of future reserve requirements and minimum capital requirements, based upon the periodic review thereof under relevant regulatory and accounting standards, including changes in the Basel Committee framework establishing capital standards for bank credit, operations and market risks; the accuracy of the assumptions and estimates and the absence of technical error in implementation or calibration of models used to estimate the fair value of financial instruments or currently expected credit losses or delinquencies; inflation, changes in market interest rates, securities market and monetary fluctuations; changes in government-established interest rates, reference rates or monetary policies, including the possible imposition of negative interest rates on bank reserves; the impact of the anticipated phase-out of the London Interbank Offered Rate (LIBOR) on interest rate indexes specified in certain of our customer loan agreements and in our interest rate swap arrangements, including any economic and compliance effects related to the expected change from LIBOR to an alternative reference rate; changes in the amount, cost and availability of deposit insurance; disruptions in the infrastructure that supports our business and the communities where we are located, which are concentrated in California, involving or related to public health, physical site access and/or communication facilities; cyber incidents, attacks, infiltrations, exfiltrations, or theft or loss of Company, customer or employee data or money; political developments, uncertainties or instability, catastrophic events, acts of war or terrorism, or natural disasters, such as earthquakes, drought, the effects of pandemic diseases, climate change or extreme weather events, that may affect electrical, environmental and communications or other services, computer services or facilities we use, or that may affect our assets, customers, employees or third parties with whom we conduct business; our timely development and implementation of new banking products and services and the perceived overall value of these products and services by our customers and potential customers; the Company’s relationships with and reliance upon outside vendors with respect to certain of the Company’s key internal and external systems, applications and controls; changes in commercial or consumer spending, borrowing and savings patterns, preferences or behaviors; technological changes and the expanding use of technology in banking and financial services (including the adoption of mobile banking, funds transfer applications, electronic marketplaces for loans, block-chain technology and other financial products, systems or services); our ability to retain and increase market share, to retain and grow customers and to control expenses; changes in the competitive environment among banks and other financial services and technology providers; competition and innovation with respect to financial products and services by banks, financial institutions and non-traditional providers including retail businesses and technology companies; volatility in the credit and equity markets and its effect on the general economy or local or regional business conditions or on the Company’s capital, deposits, assets or customers; fluctuations in the price of the Company’s common stock or other securities, and the resulting impact on the Company’s ability to raise capital or to make acquisitions; the effect of changes in accounting policies and practices, as may be adopted from time-to-time by the principal regulatory agencies with jurisdiction over the Company, as well as by the Public Company Accounting Oversight Board, the Financial Accounting Standards Board and other accounting standard-setters; changes in our organization, management, compensation and benefit plans, and our ability to recruit and retain or expand or contract our workforce, management team, key executive positions and/or our board of directors; our ability to identify suitable and qualified replacements for any of our executive officers who may leave their employment with us, including our Chief Executive Officer; the costs and effects of legal, compliance and regulatory actions, changes and developments, including the initiation and resolution of legal proceedings (including any securities, lender liability, bank operations, check or wire fraud, financial product or service, data privacy, health and safety, consumer or employee class action litigation); regulatory or other governmental inquiries or investigations, and/or the results of regulatory examinations or reviews; our ongoing relations with our various federal and state regulators, including the SEC, Federal Reserve Board, FDIC and California DFPI; our success at managing the risks involved in the foregoing items and all other factors set forth in the Company’s public reports, including our Annual Report on Form 10-K for the year ended December 31, 2020, and particularly the discussion of risk factors within that document. Among other risks, the ongoing COVID-19 pandemic may significantly affect the banking industry, the health and safety of the Company’s employees, and the Company’s business prospects. The ultimate impact of the COVID-19 pandemic on our business and financial results will depend on future developments, which are highly uncertain and cannot be predicted, including the scope and duration of the pandemic, the impact on the economy, our customers, our employees and our business partners, the safety, effectiveness, distribution and acceptance of vaccines developed to mitigate the pandemic, and actions taken by governmental authorities in response to the pandemic. 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.