Community West Bancshares 10K/A 2023 Annual report (amended)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K/A

Amendment No. 1

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

For the fiscal year ended December 31, 2023

☐ 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: 000-31977

COMMUNITY WEST BANCSHARES

(Exact name of registrant as specified in its charter)


CALIFORNIA						77-0539125
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)
7100 N. Financial Dr., Suite 101, Fresno, CA						93720
(Address of principal executive offices)						(Zip Code)

559-298-1775

(Registrant’s telephone number, including area code)

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

Title of Each Class

Trading Symbol

Name of Each Exchange on which Registered

Common Stock, no par value

CWBC

NASDAQ Capital Market

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ☐ No ☒

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 Regulations S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit). Yes ☐ No ☒

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

Large accelerated filer

☐

Accelerated filer

☐

Emerging growth company

☐

Non-accelerated filer

☒

Smaller reporting 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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of June 30, 2023, the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was $152,738,000 based on the price at which the stock was last sold on June 30, 2023.

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.


Common Stock, No Par Value	Outstanding at March 15, 2024
	11,831,694	shares

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DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant’s definitive proxy statement to be filed with the Securities and Exchange Commission pursuant to Regulation 14A in connection with the 2024 Annual Meeting of Shareholders to be held on May 30, 2024 are incorporated by reference into Part III of this Report. The proxy statement will be filed with the Securities and Exchange Commission not later than 120 days after the Registrant’s fiscal year ended December 31, 2023.

EXPLANATORY NOTE

Community West Bancshares (the “Company”), formerly named Central Valley Community Bancorp, is filing this Amendment No. 1 on Form 10-K/A (this “Amendment”) to amend its Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission (“SEC”) on March 15, 2024 (the “Original 10-K”).

This Amendment is being filed for the sole purpose of correcting a typographical error in the signature date on the Report of Independent Registered Public Accounting Firm in Part II, Item 8, which was dated March 15, 2024 instead of March 9, 2023. As required by the SEC, this Amendment includes new certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002, filed as Exhibits 31.1, 31.2, 32.1 and 32.2, hereto.

Except as described above, the Company has not modified or updated the Original 10-K or the financial statements included therein or modified any disclosures contained in the Original 10-K. Accordingly, this Amendment, with the exception of the foregoing, does not reflect events occurring after the date of filing of the Original 10-K, or modify or update any disclosures affected by subsequent events. Consequently, all other information not affected by the correction described above is unchanged and reflects the disclosures and other information made at the date of the filing of the Original 10-K and should be read in conjunction with our filings with the SEC subsequent to the filing of the Original 10-K, including amendments to those filings, if any.

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ITEM 8 -	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	4

ITEM 15 -	EXHIBITS, FINANCIAL STATEMENT SCHEDULES	51

SIGNATURES		57

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PART II

ITEM 8 -FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of

Central Valley Community Bancorp

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of Central Valley Community Bancorp and subsidiary (the “Company”) as of December 31, 2023, the related consolidated statements of income, comprehensive income (loss), changes in shareholders’ equity, and cash flows for the year then ended, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2023, and the consolidated results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

Change in Accounting Principle

As discussed in Notes 1, 2, and 3 to the consolidated financial statements, the Company changed its method of accounting for allowance for credit losses as of January 1, 2023, due to the adoption of Accounting Standards Updated No. 2016-13, which established Accounting Standards Codification Topic 326, Financial Instruments – Credit Losses.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting in accordance with the standards of the PCAOB. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting in accordance with the standards of the PCAOB. Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures to respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Allowance for Credit Losses for Loans

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As described in Notes 1 and 3 to the consolidated financial statements, the Company adopted ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, as of January 1, 2023, using the modified retrospective method for all financial assets measured at amortized cost and off-balance sheet credit exposures. Upon adoption, the Company recorded a decrease to retained earnings of $3.7 million, net of taxes, for the cumulative effect. As further discussed in Note 3 to the consolidated financial statements, the Company’s allowance for credit losses for loans was $14.7 million as of December 31, 2023. The allowance for credit losses is maintained to cover lifetime expected credit losses in the loan portfolio. The Company estimates its allowance for credit losses based on modeled expectations of lifetime expected credit losses utilizing national and local peer group historical losses and weighting of economic scenarios. The Company incorporates forward-looking information using macroeconomic scenarios, which include variables that are considered key drivers of credit losses within the portfolio. These scenarios consist of a base forecast representing the most likely outcome, combined with downside or upside scenarios reflecting possible worsening or improving economic conditions.

We identified the elections and key assumptions involved in the adoption of Topic 326, and the selection and weighting of economic scenarios used by the Company’s management in the estimate of the allowance for credit losses for loans as a critical audit matter. The principal consideration for our determination of the allowance for credit losses for loans as a critical audit matter is the subjectivity required by management in the elections of national or local peer group historical losses and selection and weighting of the forecasted economic scenarios. Auditing management’s judgments regarding modeled expectations applied to the allowance for credit losses for loans involved significant audit effort, as well as especially challenging and subjective auditor judgment when performing audit procedures and evaluating the results of those procedures.

The primary procedures we performed to address this critical audit matter included:

•Testing the process used by management and evaluating the appropriateness of the methodology used to estimate the allowance for credit losses.

•Evaluating the appropriateness of the Company’s elections and key assumptions involved in the adoption of Topic 326.

•Evaluating the reasonableness of significant assumptions used by management, including the modeled economic scenarios selected and weighting applied.

•Evaluating the relevance and reliability of the data used by management in the economic scenarios, such as the use of national or local peer group historical losses by loan portfolio segment.

•Testing the completeness and accuracy of key model inputs including loan data.


			/s/ Moss Adams LLP


We have served as the Company’s auditor since 2023.

Sacramento, California
March 15, 2024

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Shareholders and the Board of Directors of

Central Valley Community Bancorp and Subsidiary

Fresno, California

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of Central Valley Community Bancorp and Subsidiary (the "Company") as of December 31, 2022, the related consolidated statements of income, comprehensive income (loss), changes in shareholders’ equity, and cash flows for each of the two years in the period ended December 31, 2022, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Crowe LLP

We served as the Company's auditor from 2011 to 2023.

Sacramento, California

March 9, 2023

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CENTRAL VALLEY COMMUNITY BANCORP AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

December 31, 2023 and 2022


(In thousands, except share amounts)	2023		2022
ASSETS
Cash and due from banks	$	30,017	$	25,485
Interest-earning deposits in other banks	23,711		5,685

Total cash and cash equivalents	53,728		31,170
Available-for-sale debt securities, at fair value, net of allowance for credit losses of $0, with an amortized cost of $669,646 at December 31, 2023 and $740,468 at December 31, 2022	597,196		648,825
Held-to-maturity debt securities, at amortized cost less allowance for credit losses of $1,051 at December 31, 2023 and $0 at December 31, 2022	302,442		305,107
Equity securities, at fair value	6,649		6,558
Loans, less allowance for credit losses of $14,653 at December 31, 2023 and $10,848 at December 31, 2022	1,276,144		1,245,456
Bank premises and equipment, net	14,042		7,987

Bank owned life insurance	41,572		40,537
Federal Home Loan Bank stock	7,136		6,169
Goodwill	53,777		53,777

Accrued interest receivable and other assets	80,740		76,933
Total assets	$	2,433,426	$	2,422,519

LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits:
Non-interest bearing	$	951,541	$	1,056,567
Interest bearing	1,090,071		1,043,082
Total deposits	2,041,612		2,099,649
Short-term borrowings	80,000		46,000

Senior debt and subordinated debentures, net	69,744		69,599
Accrued interest payable and other liabilities	35,006		32,611
Total liabilities	2,226,362		2,247,859
Commitments and contingencies (Note 11)
Shareholders’ equity:

Preferred stock, no par value; 10,000,000 shares authorized, none issued and outstanding	—		—
Common stock, no par value; 80,000,000 shares authorized; issued and outstanding: 11,818,039 at December 31, 2023 and 11,735,291 at December 31, 2022	62,550		61,487

Retained earnings	210,548		194,400
Accumulated other comprehensive loss, net of tax	(66,034)		(81,227)
Total shareholders’ equity	207,064		174,660
Total liabilities and shareholders’ equity	$	2,433,426	$	2,422,519

The accompanying notes are an integral part of these consolidated financial statements.

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CENTRAL VALLEY COMMUNITY BANCORP AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME

For the Years Ended December 31, 2023, 2022, and 2021


(In thousands, except per share amounts)	2023		2022		2021
Interest income:
Interest and fees on loans	$	69,803	$	55,907	$	54,077
Interest on deposits in other banks	3,576		391		129

Interest and dividends on investment securities:
Taxable	23,437		20,011		14,044
Exempt from Federal income taxes	5,602		6,679		5,606
Total interest income	102,418		82,988		73,856
Interest expense:
Interest on deposits	15,527		1,197		1,036
Interest on short-term borrowings	810		254		—
Interest on senior debt and subordinated debentures	3,652		1,971		266
Total interest expense	19,989		3,422		1,302
Net interest income before provision (credit) for credit losses	82,429		79,566		72,554
Provision (credit) for credit losses	309		995		(4,435)
Net interest income after provision (credit) for credit losses	82,120		78,571		76,989
Non-interest income:
Interchange fees	1,780		1,847		1,784
Service charges	1,503		2,014		1,901
Appreciation in cash surrender value of bank owned life insurance	1,035		985		840

Loan placement fees	584		899		1,974

Federal Home Loan Bank dividends	498		367		321
Net realized gain on sale of assets	402		15		8

Net realized (losses) gains on sales and calls of investment securities	(907)		(1,730)		501





Other income	2,125		657		1,676
Total non-interest income	7,020		5,054		9,005
Non-interest expenses:
Salaries and employee benefits	31,367		28,917		28,720
Occupancy and equipment	5,726		5,131		4,882
Information technology	3,616		3,344		2,868
Professional services	3,425		1,519		1,665
Data processing expense	2,621		2,245		2,394
Regulatory assessments	1,312		851		831


ATM/Debit card expenses	757		809		818

Directors’ expenses	614		282		422
Advertising	542		557		527



Loan related expenses	478		479		516
Personnel other	404		323		374
Amortization of core deposit intangibles	68		454		661

Other expense	4,370		3,573		3,299
Total non-interest expenses	55,300		48,484		47,977
Income before provision for income taxes	33,840		35,141		38,017
Provision for income taxes	8,304		8,496		9,616
Net income	$	25,536	$	26,645	$	28,401





Basic earnings per common share	$	2.17	$	2.27	$	2.32
Diluted earnings per common share	$	2.17	$	2.27	$	2.31
Cash dividends per common share	$	0.48	$	0.48	$	0.47

The accompanying notes are an integral part of these consolidated financial statements.

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CENTRAL VALLEY COMMUNITY BANCORP AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

For the Years Ended December 31, 2023, 2022, and 2021


(In thousands)	2023		2022		2021
Net income	$	25,536	$	26,645	$	28,401
Other Comprehensive Income (Loss):
Unrealized gains (losses) on securities:
Unrealized holdings gains (losses) arising during the period	18,286		(129,527)		(9,755)
Less: reclassification for net losses (gains) included in net income	907		1,730		(501)


Amortization of net unrealized losses transferred	2,376		1,651		—
Other comprehensive income (loss), before tax	21,569		(126,146)		(10,256)
Tax (expense) benefit related to items of other comprehensive income (loss)	(6,376)		37,287		3,032
Total other comprehensive income (loss)	15,193		(88,859)		(7,224)
Comprehensive income (loss)	$	40,729	$	(62,214)	$	21,177

The accompanying notes are an integral part of these consolidated financial statements.

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CENTRAL VALLEY COMMUNITY BANCORP AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

For the Years Ended December 31, 2023, 2022, and 2021


								Accumulated Other Comprehensive Income (Loss) (Net of Taxes)		Total Shareholders’ Equity
	Common Stock	Retained Earnings
(In thousands, except share amounts)				Shares			Amount
Balance, January 1, 2021			12,509,848		$	79,416		$	150,749	$	14,856	$	245,021
Net income			—		—			28,401		—		28,401
Other comprehensive loss, net of tax			—		—			—		(7,224)		(7,224)

Restricted stock granted, net of forfeitures			20,720		—			—		—		—

Stock issued under employee stock purchase plan			12,521		204			—		—		204

Stock awarded to employees			10,529		—			—		—		—
Stock-based compensation expense			—		562			—		—		562
Cash dividend ($0.47 per common share)			—		—			(5,757)		—		(5,757)
Stock options exercised			24,265		257			—		—		257
Repurchase and retirement of common stock			(661,232)		(13,619)			—		—		(13,619)


Balance, December 31, 2021			11,916,651		66,820			173,393		7,632		247,845
Net income			—		—			26,645		—		26,645
Other comprehensive loss, net of tax			—		—			—		(88,859)		(88,859)

Restricted stock granted, net of forfeitures			42,399		—			—		—		—
Stock issued under employee stock purchase plan			13,351		216			—		—		216


Stock awarded to employees			13,446		—			—		—		—
Stock-based compensation expense			—		776			—		—		776
Cash dividend ($0.48 per common share)			—		—			(5,638)		—		(5,638)
Stock options exercised			50,205		489			—		—		489
Repurchase and retirement of common stock			(300,761)		(6,814)			—		—		(6,814)

Balance, December 31, 2022			11,735,291		61,487			194,400		(81,227)		174,660
Implementation of ASU 2016-13, Current Expected Credit Loss (CECL) Day 1 Adjustment			—		—			(3,731)		—		(3,731)
Adjusted Balance, January 1, 2023			11,735,291		61,487			190,669		(81,227)		170,929
Net income			—		—			25,536		—		25,536
Other comprehensive income, net of tax			—		—			—		15,193		15,193

Restricted stock granted, net of forfeitures			58,467		—			—		—		—
Stock issued under employee stock purchase plan			13,973		206			—		—		206
Stock awarded to employees			10,347		—			—		—		—
Stock-based compensation expense			—		858			—		—		858
Cash dividend ($0.48 per common share)			—		—			(5,657)		—		(5,657)

Repurchase and retirement of common stock			(39)		(1)			—		—		(1)
Balance, December 31, 2023			11,818,039		$	62,550		$	210,548	$	(66,034)	$	207,064

The accompanying notes are an integral part of these consolidated financial statements.

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CENTRAL VALLEY COMMUNITY BANCORP AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS For the Years Ended December 31, 2023, 2022, and 2021
(In thousands)	2023		2022		2021
Cash flows from operating activities:
Net income	$	25,536	$	26,645	$	28,401
Adjustments to reconcile net income to net cash provided by operating activities:
Net decrease (increase) in deferred loan costs	786		(422)		3,483
Depreciation	891		755		897
Accretion	(1,890)		(1,520)		(1,404)
Amortization	9,005		9,662		8,102
Stock-based compensation	858		776		562

Provision (reversal) for credit losses	309		995		(4,435)

Net realized losses (gains) on sales and calls of available-for-sale investment securities	907		1,730		(501)

Net gain on sale and disposal of equipment	(402)		(15)		(8)

Net change in equity investments	(91)		858		218

Appreciation in cash surrender value of bank owned life insurance	(1,035)		(985)		(840)


Net increase in accrued interest receivable and other assets	(8,798)		(7,361)		(2,209)

Net increase (decrease) in accrued interest payable and other liabilities	1,666		(7,148)		9,124
(Benefit) provision for deferred income taxes	110		224		1,465
Net cash provided by operating activities	27,852		24,194		42,855
Cash Flows From Investing Activities:

Purchases of available-for-sale investment securities	—		(301,699)		(495,879)

Proceeds from sales or calls of available-for-sale investment securities	26,361		252,331		26,222
Proceeds from sales or calls of held-to-maturity investment securities	35		—		—
Proceeds from maturity and principal repayment of available-for-sale investment securities	38,229		67,795		54,822
Proceeds from principal repayments of held-to-maturity investment securities	2,377		1,421		—

Net (increase) decrease in loans	(35,297)		(216,523)		60,738

Purchases of premises and equipment	(9,806)		(362)		(1,049)
Purchases of bank owned life insurance	—		—		(10,000)
FHLB stock purchased	(967)		(574)		—

Proceeds from sale of premises and equipment	3,262		15		9
Net cash provided by (used in) investing activities	24,194		(197,596)		(365,137)
Cash Flows From Financing Activities:
Net (decrease) increase in demand, interest-bearing and savings deposits	(152,178)		(1,041)		399,903
Net increase (decrease) in time deposits	94,142		(22,107)		184
Proceeds from issuance of subordinated debt	—		—		34,299


Proceeds from short-term borrowings from Federal Home Loan Bank	3,411,500		2,452,826		—

Repayments of short-term borrowings to Federal Home Loan Bank	(3,422,500)		(2,406,826)		—

Proceeds of issuance of senior debt	—		30,000		—
Proceeds of borrowings from other financial institutions	116,500		—		—
Repayments of borrowings from other financial institutions	(71,500)		—		—
Purchase and retirement of common stock	(1)		(6,814)		(13,619)
Proceeds from stock issued under employee stock purchase plan	206		216		204
Proceeds from exercise of stock options	—		489		257


Cash dividend payments on common stock	(5,657)		(5,638)		(5,757)

Net cash (used in) provided by financing activities	(29,488)		41,105		415,471
Increase (decrease) in cash and cash equivalents	22,558		(132,297)		93,189
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR	31,170		163,467		70,278
CASH AND CASH EQUIVALENTS AT END OF YEAR	$	53,728	$	31,170	$	163,467

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CENTRAL VALLEY COMMUNITY BANCORP AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS For the Years Ended December 31, 2023, 2022, and 2021
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest	$	20,005	$	2,831	$	1,166
Income taxes	$	7,700	$	8,314	$	8,155
Operating cash flows from operating leases	$	2,484	$	2,221	$	2,259
Non-cash investing and financing activities:
Unrealized gain (loss) on securities available for sale	$	19,193	$	(127,797)	$	(10,256)


Transfer of securities from available-for-sale to held-to-maturity	$	—	$	332,007	$	—
Transfer of unrealized losses on securities from available-for-sale to held-to-maturity	$	—	$	(25,328)	$	—

The accompanying notes are an integral part of these consolidated financial statements.

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Central Valley Community Bancorp and Subsidiary

Notes to Consolidated Financial Statements

1.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

General - Central Valley Community Bancorp (the “Company”) was incorporated on February 7, 2000 and subsequently obtained approval from the Board of Governors of the Federal Reserve System to be a bank holding company in connection with its acquisition of Central Valley Community Bank (the “Bank”). The Company became the sole shareholder of the Bank on November 15, 2000 in a statutory merger, pursuant to which each outstanding share of the Bank’s common stock was exchanged for one share of common stock of the Company.

Service 1st Capital Trust I (the Trust) is a business trust formed by Service 1st for the sole purpose of issuing trust preferred securities. The Company succeeded to all the rights and obligations of Service 1st in connection with the acquisition of Service 1st. The Trust is a wholly-owned subsidiary of the Company.

The Bank operates 19 full service offices throughout California’s San Joaquin Valley and Greater Sacramento Region. The Bank’s primary source of revenue is providing loans to customers who are predominately small and middle-market businesses and individuals.

The deposits of the Bank are insured by the Federal Deposit Insurance Corporation (FDIC) up to applicable legal limits. Depositors’ accounts at an insured depository institution, including all non-interest bearing transactions accounts, will be insured by the FDIC up to the standard maximum deposit insurance amount of $250,000 for each deposit insurance ownership category.

The accounting and reporting policies of the Company and the Bank conform with accounting principles generally accepted in the United States of America and prevailing practices within the banking industry.

Management has determined that because all of the banking products and services offered by the Company are available in each branch of the Bank, all branches are located within the same economic environment and management does not allocate resources based on the performance of different lending or transaction activities, it is appropriate to aggregate the Bank branches and report them as a single operating segment. No customer accounts for more than 10 percent of revenues for the Company or the Bank.

Principles of Consolidation - The consolidated financial statements include the accounts of the Company and the consolidated accounts of its wholly-owned subsidiary, the Bank. Intercompany transactions and balances are eliminated in consolidation.

For financial reporting purposes, Service 1st Capital Trust I, is a wholly-owned subsidiary acquired in the merger of Service 1st Bancorp and formed for the exclusive purpose of issuing trust preferred securities. The Company is not considered the primary beneficiary of this trust (variable interest entity), therefore the trust is not consolidated in the Company’s financial statements, but rather the subordinated debentures are shown as a liability on the Company’s consolidated financial statements. The Company’s investment in the common stock of the Trust is included in accrued interest receivable and other assets on the consolidated balance sheet.

Use of Estimates - The preparation of these financial statements in accordance with U.S. generally accepted accounting principles requires management to make estimates and judgments that affect the reported amount of assets, liabilities, revenues and expenses. On an ongoing basis, management evaluates the estimates used. Estimates are based upon historical experience, current economic conditions and other factors that management considers reasonable under the circumstances.

These estimates result in judgments regarding the carrying values of assets and liabilities when these values are not readily available from other sources, as well as assessing and identifying the accounting treatments of contingencies and commitments. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from these estimates under different assumptions.

Cash and Cash Equivalents - For the purpose of the statement of cash flows, cash, due from banks with original maturities less than 90 days, interest-earning deposits in other banks, and Federal funds sold are considered to be cash equivalents. Generally, Federal funds are sold and purchased for one-day periods. Net cash flows are reported for customer loan and deposit transactions, interest-bearing deposits in other banks, and Federal funds purchased.

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Investment Securities - Investments are classified into the following categories:

•Available-for-sale securities, reported at fair value, with unrealized gains and losses excluded from earnings and reported, net of taxes, as accumulated other comprehensive income (loss) within shareholders’ equity.

•Held-to-maturity securities, which management has the positive intent and ability to hold to maturity, reported at amortized cost, adjusted for the accretion of discounts and amortization of premiums.

Management determines the appropriate classification of its investments at the time of purchase and may only change the classification in certain limited circumstances. All transfers between categories are accounted for at fair value in the period which the transfer occurs.

Gains or losses on the sale of investment securities are computed on the specific identification method. Interest earned on investment securities is reported in interest income, net of applicable adjustments for accretion of discounts and amortization of premiums. Premiums and discounts on securities are amortized or accreted on the level yield method without anticipating prepayments, except for mortgage backed securities where prepayments are anticipated.

Allowance for Credit Losses on Available-for-Sale Debt Securities - For available-for-sale (“AFS”) debt securities in an unrealized loss position, the Company first assesses whether it intends to sell, or it is more than likely than not that it will be required to sell the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through income. For AFS debt securities that do not meet the aforementioned criteria, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. If this assessment indicates that a credit loss exists, the present value of the cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis. Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income.

Changes in the allowance for credit losses are recorded as credit loss provision (or credit). Losses are charged against the allowance when management believes that the uncollectibility of an available-for-sale security is confirmed or when either of the criteria regarding intent or requirement to sell is met.

Allowance for Credit Losses on Held-to-Maturity Debt Securities - Management measures expected credit losses on held-to-maturity (“HTM”) debt securities on a collective basis by major security type. The estimate of expected credit losses considers historical credit loss information based on industry data that is adjusted for current conditions and reasonable and supportable forecasts. Management classifies the held-to-maturity portfolio into the following major security types: Obligations of States and Political Subdivisions, U.S. Government sponsored Entities and Agencies collateralized by Residential Mortgage Obligations, Private Label Mortgage and Asset Backed Securities, and Corporate Debt Securities.

The Company elected the practical expedient under ASC 326-20-30-5A to exclude accrued interest from the amortized cost basis when measuring potential impairment. Additionally, management notes that due to this election, accrued interest is separately reported from the securities’ amortized cost basis.

Loans - All loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are stated at principal balances outstanding net of deferred loan fees and costs, and the allowance for credit losses. Interest is accrued daily based upon outstanding loan principal balances. However, when a loan becomes impaired and the future collectability of interest and principal is in serious doubt, the loan is placed on nonaccrual status and the accrual of interest income is suspended. Any loan delinquent 90 days or more is automatically placed on nonaccrual status. Any interest accrued but unpaid is charged against income. Subsequent payments on these loans, or payments received on nonaccrual loans for which the ultimate collectability of principal is not in doubt, are applied first to principal until fully collected and then to interest.

Interest income on loans is discontinued at the time the loan is 90 days delinquent unless the loan is well-secured and in process of collection. Consumer and credit card loans are typically charged off no later than 90 days past due. Past due status is based on the contractual terms of the loan. In all cases, loans are placed on nonaccrual or charged-off at an earlier date if collection of principal or interest is considered doubtful. A loan placed on non-accrual status may be restored to accrual status when principal

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and interest are no longer past due and unpaid, or the loan otherwise becomes both well secured and in the process of collection. When a loan is brought current, the Company must also have reasonable assurance that the obligor has the ability to meet all contractual obligations in the future, that the loan will be repaid within a reasonable period of time, and that a minimum of six months of satisfactory repayment performance has occurred.

Substantially all loan origination fees, commitment fees, direct loan origination costs and purchase premiums and discounts on loans are deferred and recognized as an adjustment of yield, and amortized to interest income over the contractual term of the loan. The unamortized balance of deferred fees and costs is reported as a component of net loans.

Acquired Loans and Leases - Loans and leases acquired through purchase or through a business combination are recorded at their fair value at the acquisition date. At the time of an acquisition, we evaluate loans to determine if they are purchase credit deteriorated (“PCD”) loans. PCD loans are those acquired loans with evidence of more than insignificant credit deterioration since loan origination. This determination is made by considering past due and/or nonaccrual status, prior designation of a troubled debt restructuring, or other factors that may suggest we will not be able to collect all contractual payments. PCD loans are initially recorded at fair value with a gross up for the allowance for credit losses, which becomes the initial amortized cost basis. The difference between the initial amortized cost basis and the par value of the loan is a noncredit premium or discount which is amortized or accreted over the life of the loan. Subsequent changes to the allowance for credit losses are recorded through provision or credit to the allowance for credit losses.

While credit discounts are included in the determination of fair value for non-credit deteriorated loans, an allowance for loan loss is established at acquisition using the same methodology as originated loans since these discounts are accreted or amortized over the life of the loan. Subsequent deterioration or improvements in expected credit losses are recorded through a provision or credit to the allowance for credit losses on loans.

Allowance for Credit Losses on Loans - The allowance for credit losses (“ACL”) on loans is a valuation account that is deducted from the loans’ amortized cost basis to present the net amount expected to be collected on the loans. The allowance is established through a provision for credit losses which is charged to expense. Loans are charged off against the allowance when management believes the uncollectibility of a loan balance is confirmed. Cash received on previously charged off amounts is recorded as a recovery to the allowance.

Management estimates the allowance balance using relevant available information, from internal and external sources, relating to past events, current conditions and reasonable and supportable forecasts. Historical credit loss experience from national and local peer data provides the basis for the estimation of expected credit losses. Adjustments to historical loss information are made for the differences in the current loan-specific risk characteristics, such as differences in loan-to-values, portfolio mix, or term as well as for changes in environmental conditions, such as changes in unemployment rates, market interest rates, property values, or other relevant factors. Management may assign qualitative factors to each loan segment if there are material risks or improvements present but not yet captured in the model environment.

The allowance for credit losses is measured on a collective (pool) basis when similar risk characteristics exist. The Company segregates the allowance by portfolio segment. These portfolio segments include commercial, commercial real estate, 1-4 family real estate and consumer loans. The relative significance of risk considerations vary by portfolio segment. Real estate construction loans, as summarized by class within the loan footnote, are disaggregated into either the commercial real estate or 1-4 family real estate allowance segments based on the type of construction loan due to the varying risks between commercial and consumer construction.

Commercial:

Commercial and industrial - Commercial and industrial loans are generally underwritten to existing cash flows of operating businesses. Additionally, economic trends influenced by unemployment rates and other key economic indicators are closely correlated to the credit quality of these loans. Past due payments may indicate the borrower’s capacity to repay their obligations may be deteriorating.

Agricultural production - Loans secured by crop production and livestock are especially vulnerable to two risk factors that are largely outside the control of Company and borrowers: commodity prices and weather conditions.

Commercial Real Estate:

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Commercial real estate construction and other land loans - Commercial land and construction loans generally possess a higher inherent risk of loss than other real estate portfolio segments. A major risk arises from the necessity to complete projects within specified costs and time lines. Trends in the construction industry significantly impact the credit quality of these loans, as demand drives construction activity. In addition, trends in real estate values significantly impact the credit quality of these loans, as property values determine the economic viability of construction projects.

Commercial real estate - owner-occupied - Real estate collateral secured by commercial or professional properties with repayment arising from the owner’s business cash flows. To meet this classification, the owner’s operation must occupy no less than 50% of the real estate held. Financial profitability and capacity to meet the cyclical nature of the industry and related real estate market over a significant timeframe is essential.

Commercial real estate - non-owner occupied - Investor commercial real estate loans generally possess a higher inherent risk of loss than other real estate portfolio segments, except land and construction loans. Adverse economic developments or an overbuilt market impact commercial real estate projects and may result in troubled loans. Trends in vacancy rates of commercial properties impact the credit quality of these loans. High vacancy rates reduce operating revenues and the ability for properties to produce sufficient cash flows to service debt obligations.

Farmland - Agricultural loans secured by real estate generally possess a higher inherent risk of loss caused by changes in concentration of permanent plantings, government subsidies, and the value of the U.S. dollar affecting the export of commodities.

Multi-family - These properties are generally comprised of more than four rentable units, such as apartment buildings, with each unit intended to be occupied as the primary residence for one or more persons. Multi-family properties are also subject to changes in general or regional economic conditions, such as unemployment, ultimately resulting in increased vacancy rates or reduced rents or both. In addition, new construction can create an oversupply condition and market competition resulting in increased vacancy, reduced market rents, or both. Due to the nature of their use and the greater likelihood of tenant turnover, the management of these properties is more intensive and therefore is more critical to the preclusion of loss.

1-4 Family Real Estate: Including 1-4 family close-ended, revolving real estate loans, and residential construction loans, the degree of risk in residential real estate lending depends primarily on the loan amount in relation to collateral value, the interest rate and the borrower’s ability to repay in an orderly fashion. These loans generally possess a lower inherent risk of loss than other real estate portfolio segments. Economic trends determined by unemployment rates and other key economic indicators are closely correlated to the credit quality of these loans. Weak economic trends may indicate that the borrowers’ capacity to repay their obligations may be deteriorating

Consumer: A consumer installment loan portfolio is usually comprised of a large number of small loans scheduled to be amortized over a specific period. Most installment loans are made directly for consumer purchases. Other consumer loans include other open ended unsecured consumer loans. Open ended unsecured loans generally have a higher rate of default than all other portfolio segments and are also impacted by weak economic conditions and trends.

When loans do not share similar risk characteristics, the Company evaluates the loan for expected credit losses on an individual basis. Loans evaluated individually are not included in the collective evaluation. When management determines that foreclosure is probable or when the borrower is experiencing financial difficulty at the reporting date and repayment is expected to be provided substantially through the operation or sale of the collateral, expected credit losses are based on the fair value of the collateral at the reporting date, adjusted for selling costs as appropriate.

Allowance for Credit Losses on Unfunded Commitments - The Company estimates expected credit losses over the contractual period in which the Company is exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Company. The allowance for credit losses on unfunded commitments is adjusted through provision for credit losses. The estimate includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over its estimated life.

Bank Premises and Equipment - Land is carried at cost. Bank premises and equipment are carried at cost less accumulated depreciation. Depreciation is determined using the straight-line method over the estimated useful lives of the related assets. The useful lives of Bank premises are estimated to be between 20 and 40 years. The useful lives of improvements to Bank premises, furniture, fixtures and equipment are estimated to be three to ten years. Leasehold improvements are amortized over the life of the asset or the term of the related lease, whichever is shorter. When assets are sold or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts, and any resulting gain or loss is recognized in income for the period. The cost of maintenance and repairs is charged to expense as incurred.

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The Bank evaluates premises and equipment for financial impairment as events or changes in circumstances indicate that the carrying amount of such assets may not be fully recoverable.

Federal Home Loan Bank (FHLB) Stock - The Bank is a member of the FHLB system. Members are required to own a certain amount of stock based on the level of borrowings and other factors, and may invest in additional amounts. FHLB stock is carried at cost, classified as a restricted security, and periodically evaluated for impairment based on ultimate recovery of par value. Both cash and stock dividends are reported as income.

Investments in Low Income Housing Tax Credit Funds - The Bank has invested in limited partnerships that were formed to develop and operate affordable housing projects for low or moderate income tenants throughout California. In accordance with ASU No. 2014-01, Investments - Equity Method and Joint Ventures (Topic 323), we elected to account for the investments in qualified affordable housing tax credit funds using the proportional amortization method. Under the proportional amortization method, the initial cost of the investment is amortized in proportion to the tax credits and other tax benefits received and the net investment performance is recognized as part of income tax expense (benefit). Each of the partnerships must meet the regulatory minimum requirements for affordable housing for a minimum 15-year compliance period to fully utilize the tax credits. If the partnerships cease to qualify during the compliance period, the credit may be denied for any period in which the project is not in compliance and a portion of the credit previously taken is subject to recapture with interest. The Company’s investment in Low Income Housing Tax Credit (“LIHTC”) partnerships is reported in other assets on the consolidated balance sheet.

Other Real Estate Owned - Other real estate owned (OREO) is comprised of property acquired through foreclosure proceedings or acceptance of deeds-in-lieu of foreclosure. Losses recognized at the time of acquiring property in full or partial satisfaction of debt are charged against the allowance for credit losses. OREO, when acquired, is initially recorded at fair value less estimated disposition costs, establishing a new cost basis. Fair value of OREO is generally based on an independent appraisal of the property. Subsequent to initial measurement, OREO is carried at the lower of the recorded investment or fair value less disposition costs. If fair value declines subsequent to foreclosure, a valuation allowance is recorded through noninterest expense. Revenues and expenses associated with OREO are reported as a component of noninterest expense when incurred. There was no for other real estate owned at December 31, 2023 and at December 31, 2022.

Foreclosed Assets - Assets acquired through or instead of loan foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. If fair value declines subsequent to foreclosure, a valuation allowance is recorded through operations. Operating costs after acquisition are expensed. Gains and losses on disposition are included in noninterest expense. There was no for foreclosed assets at December 31, 2023 and at December 31, 2022.

Bank Owned Life Insurance - The Company has purchased life insurance policies on certain key executives. Company owned life insurance is recorded at the amount that can be realized under the insurance contract at the balance sheet date, which is the cash surrender value adjusted for other charges or other amounts due that are probable at settlement.

Business Combinations - The Company accounts for acquisitions of businesses using the acquisition method of accounting. Under the acquisition method, assets and liabilities assumed are recorded at their estimated fair values at the date of acquisition. Management utilizes various valuation techniques included discounted cash flow analyses to determine these fair values. Any excess of the purchase price over amounts allocated to the acquired assets, including identifiable intangible assets, and liabilities assumed is recorded as goodwill.

Goodwill - Business combinations involving the Bank’s acquisition of the equity interests or net assets of another enterprise give rise to goodwill. Goodwill represents the excess of the purchase price of acquired businesses over the net fair value of assets, including identified intangible assets, acquired and liabilities assumed in the transactions accounted for under the acquisition method of accounting. The value of goodwill is ultimately derived from the Bank’s ability to generate net earnings after the acquisitions. A decline in net earnings could be indicative of a decline in the fair value of goodwill and result in impairment. For that reason, goodwill is assessed at least annually for impairment.

The Company has selected September 30 as the date to perform the annual impairment test. Management assessed qualitative factors including performance trends and noted no factors indicating goodwill impairment. Goodwill is also tested for impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of the Company below its carrying amount. No such events or circumstances arose during the fourth quarter of 2023, so goodwill was not required to be retested. Goodwill is the only intangible asset with an indefinite life on the balance sheet.

Intangible Assets - The intangible assets at December 31, 2023 represent the estimated fair value of the core deposit relationships acquired in business combinations. Core deposit intangibles are being amortized using the straight-line method

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over an estimated life of five to ten years from the date of acquisition. Management evaluates the remaining useful lives quarterly to determine whether events or circumstances warrant a revision to the remaining periods of amortization. Based on the evaluation, no changes to the remaining useful lives was required. During 2023 the amortization of the core deposit intangible, from previously completed acquisitions, was completed. Therefore, Management did not need to perform an annual impairment test on core deposit intangibles as of September 30, 2023, as no impairment was possible. Core deposit intangibles could also be tested for impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value below its carrying amount.

Loan Commitments and Related Financial Instruments - Financial instruments include off‑balance sheet credit instruments, such as commitments to make loans and commercial letters of credit, issued to meet customer financing needs. The face amount of these items represents the exposure to loss, before considering customer collateral or ability to repay. Such financial instruments are recorded when they are funded.

Income Taxes - The Company files its income taxes on a consolidated basis with the Bank. The allocation of income tax expense represents each entity’s proportionate share of the consolidated provision for income taxes.

Income tax expense represents the total of the current year income tax due or refundable and the change in deferred tax assets and liabilities. Deferred tax assets and liabilities are recognized for the tax consequences of temporary differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. On the balance sheet, net deferred tax assets are included in accrued interest receivable and other assets.

The realization of deferred income tax assets is assessed and a valuation allowance is recorded if it is “more likely than not” that all or a portion of the deferred tax assets will not be realized. “More likely than not” is defined as greater than a 50% chance. All available evidence, both positive and negative is considered to determine whether, based on the weight of that evidence, a valuation allowance is needed.

Accounting for Uncertainty in Income Taxes - The Company uses a comprehensive model for recognizing, measuring, presenting and disclosing in the financial statements tax positions taken or expected to be taken on a tax return. A tax position is recognized as a benefit only if it is more likely than not that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the more likely than not test, no tax benefit is recorded.

Interest expense and penalties associated with unrecognized tax benefits, if any, are classified as income tax expense in the consolidated statement of income.

Retirement Plans - Employee 401(k) plan expense is the amount of employer matching contributions. Profit sharing plan expense is the amount of employer contributions. Contributions to the profit sharing plan are determined at the discretion of the Board of Directors. Deferred compensation and supplemental retirement plan expense is allocated over years of service.

Earnings Per Common Share - Basic earnings per common share (EPS), which excludes dilution, is computed by dividing income available to common shareholders (net income after deducting dividends, if any, on preferred stock and accretion of discount) by the weighted-average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock, such as stock options or warrants, result in the issuance of common stock which shares in the earnings of the Company. All data with respect to computing earnings per share is retroactively adjusted to reflect stock dividends and splits and the treasury stock method is applied to determine the dilutive effect of stock options in computing diluted EPS.

The shares awarded to employees and directors under the restricted stock agreements vest on applicable vesting dates only to the extent the recipient of the shares is then an employee or a director of the Company or one of its subsidiaries, and each recipient will forfeit all of the shares that have not vested on the date his or her employment or service is terminated. Common stock awards for performance vest immediately. Holders of restricted stock awards receive non-forfeitable dividends at the same rate as common stockholders and they both share equally in undistributed earnings. Therefore, under the two-class method the difference in EPS is not significant for these participating securities.

Comprehensive Income - Comprehensive income consists of net income and other comprehensive income. Other comprehensive income includes unrealized gains and losses on securities available for sale which are also recognized as separate components of equity.

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Loss Contingencies - Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. Management does not believe there are such matters that will have a material effect on the financial statements.

Restrictions on Cash - Cash on hand or on deposit with the Federal Reserve Bank was required to meet regulatory reserve and clearing requirements.

Share-Based Compensation - Compensation cost is recognized for stock options and restricted stock awards issued to employees, based on the fair value of these awards at the date of grant. A Black-Scholes model is utilized to estimate the fair value of stock options, while the market price of the Company’s common stock at the date of grant is used for restricted stock awards. Additionally, the compensation expense for the Company’s employee stock ownership plan is based on the market price of the shares as they are committed to be released to participant accounts. Compensation cost is recognized over the required service period, generally defined as the vesting period. For awards with graded vesting, compensation cost is recognized on a straight-line basis over the requisite service period for the entire award.

Dividend Restriction - Banking regulations require maintaining certain capital levels and may limit the dividends paid by the Bank to the Company or by the Company to shareholders.

Fair Value of Financial Instruments - Fair values of financial instruments are estimated using relevant market information and other assumptions, as more fully disclosed in Note 16. Fair value estimates involve uncertainties and matters of significant judgment regarding interest rates, credit risk, prepayments, and other factors, especially in the absence of broad markets for particular items. Changes in assumptions or in market conditions could significantly affect these estimates.

Reclassifications - Certain reclassifications have been made to prior year financial statements to conform to the classifications used in 2023. None of the reclassifications had an impact on equity or net income.

Impact of New Financial Accounting Standards Adopted in 2023

On January 1, 2023, the Company adopted ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, as amended, which replaces the incurred loss methodology with an expected loss methodology that is referred to as the current expected credit loss (CECL) methodology. The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including loan receivables and held-to-maturity securities. It also applies to off-balance sheet credit exposures not accounted for as insurance (loan commitments, standby letters of credit, financial guarantees, and other similar instruments). In addition, credit losses recognized on available-for-sale debt securities will be presented as an allowance as opposed to a write-down, based on management’s intent to sell the security or the likelihood the Company will be required to sell the security before recovery of the amortized cost basis.

The Company adopted ASC 326 using the modified retrospective method for all financial assets measured at amortized cost and off-balance sheet credit exposures. Results for the reporting periods beginning after January 1, 2023 are presented under ASC 326 while prior period amounts continue to be reported in accordance with previously applicable GAAP. The Company recognized an increase in the allowance for credit losses on loans totaling $3,910,000, a reserve for credit losses for held-to-maturity securities of $776,000, and an increase to the reserve for unfunded commitments of $612,000 with a corresponding decrease, net of taxes, in retained earnings, of $3,731,000 as of January 1, 2023 for the cumulative effect of adopting ASC 326.

The Company also adopted ASU 2022-02, Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures upon the adoption of ASU 2016-13 as of January 1, 2023 on a prospective basis. The amendments in this update eliminated the accounting guidance for troubled debt restructurings (“TDRs”) by creditors in Subtopic 310-40, Receivables-Troubled Debt Restructurings by Creditors, while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty. Specifically, rather than applying the recognition and measurement guidance for TDRs, an entity must apply the loan refinancing and restructuring guidance in paragraphs 310-20-35-9 through 35-11 to determine whether a modification results in a new loan or a continuation of an existing loan. Additionally, for public business entities, the amendments in this Update require that an entity disclose current-period gross write-offs by year of origination for financing receivables and net investments in leases within the scope of Subtopic 326-20, Financial Instruments-Credit Losses-Measured at Amortized Cost in the vintage disclosures required by paragraph 326-20-50-6. The adoption modified the Company’s disclosures but did not have a material impact on its financial position or results of operations.

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In March 2020, the FASB issued Accounting Standards Update (ASU) 2020-04, Reference Rate Reform (Subtopic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This ASU provides optional expedients and exceptions for contracts, hedging relationships, and other transactions that reference LIBOR or other reference rates expected to be discontinued because of reference rate reform. As the Company has an insignificant number of instruments that are applicable to this ASU, management has determined that no impact to the valuations of these instruments are applicable for financial reporting purposes.

2.INVESTMENT SECURITIES

The following tables summarize the amortized cost and fair value of securities available-for-sale and securities held-for-maturity at December 31, 2023 and 2022 and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive (loss) income and gross unrecognized gains and losses:


	December 31, 2023
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Estimated Fair Value
Available-for-Sale Securities
Debt Securities:
U.S. Treasury securities	$	9,990	$	—	$	(1,036)	$	—	$	8,954
U.S. Government agencies	102		—		(7)		—		95
Obligations of states and political subdivisions	198,070		—		(17,848)		—		180,222
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations	88,874		3		(5,525)		—		83,352
Private label mortgage and asset backed securities	372,610		10		(48,047)		—		324,573

	$	669,646	$	13	$	(72,463)	$	—	$	597,196


	December 31, 2023
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		Allowance for Credit Losses
Held to Maturity
Debt Securities:

Obligations of states and political subdivisions	$	192,070	$	70	$	(14,188)	$	177,952	$	20
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations	10,758		—		(1,692)		9,066		—
Private label mortgage and asset backed securities	54,579		—		(5,944)		48,635		11
Corporate debt securities	46,086		—		(4,736)		41,350		1,020
	$	303,493	$	70	$	(26,560)	$	277,003	$	1,051

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	December 31, 2022
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Available-for-Sale Securities
Debt Securities:
U.S. Treasury securities	$	9,990	$	—	$	(1,283)	$	8,707
U.S. Government agencies	107		—		(9)		98
Obligations of states and political subdivisions	201,638		—		(26,653)		174,985
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations	117,292		4		(7,803)		109,493
Private label mortgage and asset backed securities	411,441		14		(55,913)		355,542
Corporate debt securities	—		—		—		—
`	$	740,468	$	18	$	(91,661)	$	648,825


	December 31, 2022
Held-to-Maturity Securities	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Debt securities:
Obligations of states and political subdivisions	192,004		67		(23,166)		$	168,905
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations	10,430		—		(1,762)		8,668
Private label mortgage and asset backed securities	56,691		—		(5,931)		50,760
Corporate debt securities	45,982		—		(3,066)		42,916
Total held-to-maturity	$	305,107	$	67	$	(33,925)	$	271,249

Proceeds and gross realized (losses)/gains on investment securities for the years ended December 31, 2023, 2022, and 2021 are shown below (in thousands):


	Years Ended December 31,
	2023		2022		2021
Available-for-Sale Securities
Proceeds from sales or calls	$	26,361	$	252,331	$	26,222
Gross realized gains from sales or calls	$	—	$	5,235	$	580
Gross realized losses from sales or calls	$	(907)	$	(6,965)	$	(79)

During the second quarter of 2022, the Company re-designated certain securities previously classified as available-for-sale to the held-to-maturity classification. The securities re-designated consisted of obligations of states and political subdivision securities, U.S. Government sponsored entity and agency securities collateralized by residential mortgage obligations, private label mortgage and asset backed securities, and corporate debt securities with a total carrying value of $306.7 million at April 1, 2022. At the time of re-designation, the securities included $25.3 million of pretax unrealized losses in other comprehensive income; which is being amortized over the remaining life of the securities in a manner consistent with the amortization of a premium or discount.

As market interest rates or risks associated with an available-for-sale security’s issuer continue to change and impact the actual or perceived values of investment securities, the Company may determine that selling these securities and using proceeds to purchase securities that fit with the Company’s current risk profile is appropriate and beneficial to the Company.

Losses recognized in 2023, 2022, and 2021 were incurred in order to reposition the investment securities portfolio based on the current rate environment. The securities sold at a loss were acquired when the rate environment was not as volatile. The securities sold were primarily purchased to serve a purpose in the rate environment in which the securities were purchased. The Company addressed risks in the security portfolio by selling these securities and using the proceeds to fund loan growth.

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The provision for income taxes includes $(268,000), $(511,000), and $148,000 income (benefit)/tax impact from the reclassification of unrealized net (losses)/gains on available-for-sale securities to realized net (losses)/gains on available-for-sale securities for the years ended December 31, 2023, 2022, and 2021, respectively.

The amortized cost and estimated fair value of available-for-sale and held-to-maturity investment securities at December 31, 2023 and 2022 by contractual maturity are shown in the two tables below (in thousands). Expected maturities will differ from contractual maturities because the issuers of the securities may have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date are shown separately.


	December 31, 2023				December 31, 2022
Available-for-Sale Securities	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Within one year	$	—	$	—	$	—	$	—
After one year through five years	9,992		8,954		—		—
After five years through ten years	40,264		35,379		45,918		38,383
After ten years	157,804		144,843		165,710		145,309
	208,060		189,176		211,628		183,692
Investment securities not due at a single maturity date:

U.S. Government agencies	102		95		107		98
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations	88,874		83,352		117,292		109,493
Private label mortgage and asset backed securities	372,610		324,573		411,441		355,542

	$	669,646	$	597,196	$	740,468	$	648,825

	December 31, 2023				December 31, 2022
Held-to-Maturity Securities	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Within one year	$	—	$	—	$	—	$	—
After one year through five years	8,463		8,136		132		129
After five years through ten years	74,746		68,552		51,424		46,143
After ten years	108,861		101,264		140,448		122,633
	192,070		177,952		192,004		168,905
Investment securities not due at a single maturity date:
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations	10,758		9,066		10,430		8,668
Private label mortgage and asset backed securities	54,579		48,635		56,691		50,760
Corporate debt securities	46,086		41,350		45,982		42,916
	$	303,493	$	277,003	$	305,107	$	271,249

At December 31, 2023 there were five issuers of private label mortgage securities in which the Company had holdings of securities in amounts greater than 10% of shareholders’ equity. Investments with these issuers were in senior tranches and/or were rated “AAA” or higher and there were no credit issues identified.

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The following table summarizes the Company’s debt securities in an unrealized loss position for which an allowance for credit losses has not been recorded, aggregated by major security type and length of time in a continuous unrealized loss position (in thousands):


	December 31, 2023
	Less than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Available-for-Sale Securities
Debt Securities:
U.S. Treasury securities	$	—	$	—	$	8,954	$	(1,036)	$	8,954	$	(1,036)
U.S. Government agencies	—		—		95		(7)		95		(7)
Obligations of states and political subdivisions	—		—		180,222		(17,848)		180,222		(17,848)
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations	392		(3)		82,760		(5,522)		83,152		(5,525)
Private label residential mortgage and asset backed securities	—		—		323,655		(48,047)		323,655		(48,047)

	$	392	$	(3)	$	595,686	$	(72,460)	$	596,078	$	(72,463)


	December 31, 2023
	Less than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Held-to-Maturity Securities
Debt Securities:

Obligations of states and political subdivisions	$	108	$	(1)	$	175,309	$	(14,187)	$	175,417	$	(14,188)
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations	—		—		9,066		(1,692)		9,066		(1,692)
Private label residential mortgage and asset backed securities	—		—		48,635		(5,944)		48,635		(5,944)
Corporate debt securities	—		—		41,350		(4,736)		41,350		(4,736)
	$	108	$	(1)	$	274,360	$	(26,559)	$	274,468	$	(26,560)


	December 31, 2022
	Less than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Available-for-Sale Securities
Debt Securities:
U.S. Treasury securities	$	—	$	—	$	8,707	$	(1,283)	$	8,707	$	(1,283)
U.S. Government agencies	$	—	$	—	$	98	$	(9)	$	98	$	(9)
Obligations of states and political subdivisions	90,808		(12,208)		84,177		(14,445)		174,985		(26,653)
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations	20,825		(1,058)		88,520		(6,745)		109,345		(7,803)
Private label residential mortgage backed securities	126,284		(14,529)		229,152		(41,384)		355,436		(55,913)

	$	237,917	$	(27,795)	$	410,654	$	(63,866)	$	648,571	$	(91,661)

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	December 31, 2022
	Less than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Held-to-Maturity Securities
Debt Securities:

Obligations of states and political subdivisions	$	48,311	$	(5,505)	$	118,026	$	(17,661)	$	166,337	$	(23,166)
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations	—		—		8,668		(1,762)		8,668		(1,762)
Private label residential mortgage and asset backed securities	19,393		(1,916)		31,367		(4,015)		50,760		(5,931)
Corporate debt securities	23,997		(1,561)		18,919		(1,505)		42,916		(3,066)
	$	91,701	$	(8,982)	$	176,980	$	(24,943)	$	268,681	$	(33,925)

As of December 31, 2023, the Company had a total of 178 AFS debt securities in a gross unrealized loss position with no credit impairment, consisting of 6 U.S. Treasury securities and U.S. Government agencies, 43 obligations of states and political subdivisions, 52 U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations, and 77 private label mortgage and asset backed securities.

Allowance for Credit Losses on Available-for-Sale Debt Securities

Each reporting period, the Company assesses each AFS debt security that is in an unrealized loss position to determine whether the decline in fair value below the amortized cost basis results from a credit loss or other factors. The Company did not record an ACL on any available for sale securities at December 31, 2023 or upon adoption of ASU 2016-13 on January 1, 2023. As of both dates, the Company considers the unrealized losses across the classes of major security-type to be related to fluctuations in market conditions, primarily interest rates, and not reflective of a deterioration in credit value. As of December 31, 2023, the Company determined that it is not more likely than not that the Company would be required to sell securities.

The gross unrealized losses presented in the preceding tables were primarily attributable to interest rate increases and liquidity and were mainly comprised of the following:

•Obligations of States and Political Subdivisions: The unrealized losses on investments in obligations of states and political subdivisions are caused by increases in required yields by investors in these types of securities. It is expected that the securities would not be settled at a price less than the amortized cost of the investment.

•U.S. Treasury and Government Sponsored Entities and Agencies Collateralized by Residential Mortgage Obligations: The unrealized losses on the Company’s investments in U.S. treasuries and government sponsored entities and agencies collateralized by residential mortgage obligations were caused by interest rate changes. The contractual cash flows of those investments are guaranteed or supported by an agency or sponsored entity of the U.S. Government. Accordingly, it is expected that the securities would not be settled at a price less than the amortized cost of the Company’s investment.

•Private Label Mortgage and Asset Backed Securities: The Company has invested exclusively in AA and AAA tranches of various private label mortgage and asset backed securities. Each purchase is subject to a credit and structure review prior to their purchase. Ratings are reviewed on a quarterly basis in addition to other metrics provided through third-party services. Following review of the financial metrics and ratings, management concluded that the unrealized loss position of the private label mortgage and asset backed securities related exclusively to the fluctuation in market conditions and were not reflective of any credit concerns with the tranches comprising the Company’s investments.

No allowance for credit losses have been recognized on AFS debt securities in an unrealized loss position, as management does not believe that any of the securities are impaired due to credit risk factors as of December 31, 2023 and December 31, 2022.

Allowance for Credit Losses on Held-to-Maturity Debt Securities

The Company separately evaluates its HTM debt securities for any credit losses based on probability of default and loss given default utilizing historical industry data based on investment category, while also considering reasonable and supportable forecasts. The probability of default and loss given default are incorporated into the present value of expected cash flows and

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compared against amortized cost. The Company recorded an ACL on January 1, 2023 for held-to-maturity debt securities within the corporate bond and private label mortgage securities of $545,000 and $231,000, respectively.

The allowance for credit losses on HTM securities was $1,051,000 at December 31, 2023.

The Company monitors credit quality of debt securities held-to-maturity through the use of credit ratings. The Company monitors the credit ratings on a quarterly basis. For non-rated investment securities, management receives quarterly performance updates to monitor for any credit concerns. There were no HTM securities on nonaccrual or past due over 89 days and still on accrual. The following table summarizes the amortized cost of debt securities held-to-maturity at the dates indicated, aggregated by credit quality indicator. U.S. Government sponsored agencies are not included in the below tables as credit ratings are not applicable.


	December 31, 2023
Debt Securities Held-to-Maturity	AAA/AA/A		BBB		Unrated
Obligations of states and political subdivisions	$	192,070	$	—	$	—

Private label mortgage and asset backed securities	46,334		—		8,245
Corporate debt securities	—		30,173		15,913
Total debt securities held-to-maturity	$	238,404	$	30,173	$	24,158

Investment securities with amortized costs totaling $343,629,000 and $214,579,000 and fair values totaling $315,069,000 and $190,814,000 were pledged as collateral for borrowing arrangements, public funds and for other purposes at December 31, 2023 and 2022, respectively.

3. LOANS AND ALLOWANCE FOR CREDIT LOSSES

The majority of the disclosures in this footnote are prepared at the class level, which is equivalent to the call report or call code classification. The roll forward of the allowance for credit losses is presented at the portfolio segment level. Accrued interest receivable on loans of $4,752,000 and $4,512,000 at December 31, 2023 and December 31, 2022 respectively is not included in the loan tables below and is included in other assets on the Company’s balance sheets. Outstanding loans are summarized by class as follows:


Loan Type (Dollars in thousands)	December 31, 2023		December 31, 2022
Commercial:
Commercial and industrial	$	105,466	$	141,197
Agricultural production	33,556		37,007
Total commercial	139,022		178,204
Real estate:
Construction & other land loans	33,472		109,175
Commercial real estate - owner occupied	215,146		194,663
Commercial real estate - non-owner occupied	539,522		464,809
Farmland	120,674		119,648
Multi-family residential	61,307		24,586
1-4 family - close-ended	96,558		93,510
1-4 family - revolving	27,648		30,071
Total real estate	1,094,327		1,036,462
Consumer	55,606		40,252
Total gross loans	1,288,955		1,254,918
Net deferred origination fees	1,842		1,386
Loans, net of deferred origination fees	1,290,797		1,256,304
Allowance for credit losses	(14,653)		(10,848)
Total loans, net	$	1,276,144	$	1,245,456

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At December 31, 2023 and December 31, 2022, loans originated under Small Business Administration (SBA) programs totaling $18,246,000 and $19,947,000, respectively, were included in the real estate and commercial categories, of which, $13,955,000 or 76% and $15,333,000 or 77%, respectively, are secured by government guarantees.

Allowance for Credit Losses on Loans

The measurement of the allowance for credit losses on collectively evaluated loans is based on modeled expectations of lifetime expected credit losses utilizing national and local peer group historical losses, weighting of economic scenarios, and other relevant factors. The Company incorporates forward-looking information using macroeconomic scenarios, which include variables that are considered key drivers of credit losses within the portfolio. The Company uses a probability-weighted, multiple scenario forecast approach. These scenarios may consist of a base forecast representing the most likely outcome, combined with downside or upside scenarios reflecting possible worsening or improving economic conditions.

When a loan no longer shares similar risk characteristics with other loans, such as in the case of certain nonaccrual loans, the Company estimates the allowance for credit losses on an individual loan basis. There were no loans on nonaccrual or individually evaluated as of December 31, 2023 or December 31, 2022.

The following table shows the summary of activities for the allowance for credit losses as of and for the year ended December 31, 2023, 2022, and 2021 by portfolio segment (in thousands):


	Commercial		Commercial Real Estate		1-4 Family Real Estate		Consumer		Unallocated		Total
Allowance for credit losses:
Beginning balance, January 1, 2023 prior to adoption of ASU 2016-13 (CECL)	$	1,814	$	7,803	$	607	$	284	$	340	$	10,848
Impact of adoption of ASU 2016-13	454		1,693		1,614		489		(340)		3,910

(Credit) provision for credit losses (1)	(766)		296		199		186		—		(85)
Charge-offs	(636)		—		—		(53)		—		(689)
Recoveries	609		—		15		45		—		669
Ending balance, December 31, 2023	$	1,475	$	9,792	$	2,435	$	951	$	—	$	14,653

(1) Represents credit losses for loans only. The provision for credit losses on the Consolidated Statements of Income of $309 includes a $276 provision for held-to-maturity securities and a $118 provision for unfunded loan commitments.


	Commercial		Real Estate		Consumer		Unallocated		Total
Allowance for credit losses:
Beginning balance, January 1, 2022	$	2,011	$	6,741	$	568	$	280	$	9,600
(Credit) provision for credit losses (1)	(531)		1,062		409		60		1,000
Charge-offs	(27)		—		(151)		—		(178)
Recoveries	367		—		59		—		426
Ending balance, December 31, 2022	$	1,820	$	7,803	$	885	$	340	$	10,848

(1) Represents credit losses for loans only. The provision for credit losses on the Consolidated Statements of Income of $995 includes a $(5) credit for unfunded loan commitments.

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	Commercial		Real Estate		Consumer		Unallocated		Total
Allowance for credit losses:
Beginning balance, January 1, 2021	$	2,019	$	9,174	$	1,091	$	631	$	12,915
Credit for credit losses (1)	(663)		(2,752)		(534)		(351)		(4,300)
Charge-offs	(46)		—		(221)		—		(267)
Recoveries	701		319		232		—		1,252
Ending balance, December 31, 2021	$	2,011	$	6,741	$	568	$	280	$	9,600

(1) Represents credit losses for loans only. The credit for credit losses on the Consolidated Statements of Income of $(4,435) includes a $(135) credit for unfunded loan commitments.

During the year ended December 31, 2023, the credit to credit losses was primarily driven by stable economic scenario forecasts in commercial real estates, partially offset by loan balances changes. Management believes that the allowance for credit losses at December 31, 2023 appropriately reflected expected credit losses in the loan portfolio at that date.

The following table shows the loan portfolio by class, net of deferred fees, allocated by management’s internal risk ratings for the period indicated (in thousands):


	Term Loans Amortized Cost Basis by Origination Year As of December 31, 2023
	2023		2022		2021		2020		2019		Prior		Revolving Loans		Revolving Converted to Term		Total
Commercial and industrial
Pass/Watch	$	19,886	$	17,129	$	21,050	$	4,643	$	1,561	$	6,980	$	29,391	$	215	$	100,855
Special mention	—		277		139		183		107		272		3,750		—		4,728
Substandard	—		—		—		156		—		66		—		—		222
Total	$	19,886	$	17,406	$	21,189	$	4,982	$	1,668	$	7,318	$	33,141	$	215	$	105,805
Current period gross write-offs	$	241	$	—	$	323	$	—	$	—	$	—	$	—	$	—	$	564

Agricultural production
Pass/Watch	$	153	$	830	$	14	$	—	$	251	$	112	$	30,241	$	999	$	32,600
Special mention	—		—		—		—		—		—		—		—		—
Substandard	—		676		—		—		—		—		300		—		976
Total	$	153	$	1,506	$	14	$	—	$	251	$	112	$	30,541	$	999	$	33,576
Current period gross write-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Construction & other land loans
Pass/Watch	$	6,953	$	15,593	$	1,305	$	701	$	1,538	$	3,039	$	4,167	$	—	$	33,296
Special mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—		—
Total	$	6,953	$	15,593	$	1,305	$	701	$	1,538	$	3,039	$	4,167	$	—	$	33,296
Current period gross write-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Commercial real estate - owner occupied
Pass/Watch	$	20,648	$	25,132	$	20,783	$	39,356	$	21,831	$	80,384	$	3,207	$	—	$	211,341
Special mention	—		—		—		—		—		3,026		272		—		3,298
Substandard	—		—		—		—		—		497		—		—		497
Total	$	20,648	$	25,132	$	20,783	$	39,356	$	21,831	$	83,907	$	3,479	$	—	$	215,136

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Current period gross write-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Commercial real estate - non-owner occupied
Pass/Watch	$	81,153	$	115,031	$	77,375	$	38,307	$	12,181	$	175,419	$	19,218	$	3,216	$	521,900
Special mention	—		600		—		—		—		374		—		—		974
Substandard	—		—		—		—		13,625		2,344		—		—		15,969
Total	$	81,153	$	115,631	$	77,375	$	38,307	$	25,806	$	178,137	$	19,218	$	3,216	$	538,843
Current period gross write-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Farmland
Pass/Watch	$	8,382	$	24,063	$	10,873	$	29,770	$	11,155	$	23,324	$	8,695	$	1,955	$	118,217
Special mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		2,213		—		200		—		—		2,413
Total	$	8,382	$	24,063	$	10,873	$	31,983	$	11,155	$	23,524	$	8,695	$	1,955	$	120,630
Current period gross write-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Multi-family residential
Pass/Watch	$	2,988	$	1,847	$	38,644	$	2,364	$	4,538	$	10,417	$	532	$	—	$	61,330
Special mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—		—
Total	$	2,988	$	1,847	$	38,644	$	2,364	$	4,538	$	10,417	$	532	$	—	$	61,330
Current period gross write-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

1-4 family - close-ended
Pass/Watch	$	1,689	$	64,056	$	7,898	$	2,259	$	1,703	$	18,237	$	—	$	809	$	96,651
Special mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—		—
Total	$	1,689	$	64,056	$	7,898	$	2,259	$	1,703	$	18,237	$	—	$	809	$	96,651
Current period gross write-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

1-4 family - revolving
Pass/Watch	$	—	$	—	$	—	$	—	$	—	$	—	$	21,662	$	6,213	$	27,875
Special mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—		—
Total	$	—	$	—	$	—	$	—	$	—	$	—	$	21,662	$	6,213	$	27,875
Current period gross write-offs	$	75	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	75

Consumer
Pass/Watch	$	34,866	$	8,745	$	6,503	$	2,265	$	2,007	$	2,398	$	643	$	4	$	57,431
Special mention	—		—		—		—		—		—		—		—		—
Substandard	182		—		42		—		—		—		—		—		224
Total	$	35,048	$	8,745	$	6,545	$	2,265	$	2,007	$	2,398	$	643	$	4	$	57,655
Current period gross write-offs	$	23	$	—	$	—	$	—	$	27	$	—	$	—	$	—	$	50

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Total loans outstanding (risk rating):
Pass/Watch	$	176,718	$	272,426	$	184,445	$	119,665	$	56,765	$	320,310	$	117,756	$	13,411	$	1,261,496
Special mention	—		877		139		183		107		3,672		4,022		—		9,000
Substandard	182		676		42		2,369		13,625		3,107		300		—		20,301
Grand Total	$	176,900	$	273,979	$	184,626	$	122,217	$	70,497	$	327,089	$	122,078	$	13,411	$	1,290,797
Current period total gross write-offs	$	339	$	—	$	323	$	—	$	27	$	—	$	—	$	—	$	689

The following table shows the loan portfolio by class, net of deferred fees, allocated by management’s internal risk ratings at December 31, 2022 (in thousands):


	Pass		Special Mention		Substandard		Doubtful		Total
Commercial:
Commercial and industrial	$	131,300	$	8,707	$	1,655	$	—	$	141,662
Agricultural production	24,926		6,713		5,399		—		37,038
Real Estate:
Construction & other land loans	93,817		—		15,024		—		108,841
Commercial real estate - owner occupied	189,344		3,283		2,169		—		194,796
Commercial real estate - non-owner occupied	458,746		3,440		2,412		—		464,598
Farmland	109,898		8,879		824		—		119,601
Multi-family residential	24,636		—		—		—		24,636
1-4 family - close-ended	93,644		—		—		—		93,644
1-4 family - revolving	30,031		—		266		—		30,297
Consumer:	41,155		2		34		—		41,191
Total	$	1,197,497	$	31,024	$	27,783	$	—	$	1,256,304

The following table shows an aging analysis of the loan portfolio by class at December 31, 2023 (in thousands):


	30-59 Days Past Due		60-89 Days Past Due		Greater Than 89 Days Past Due		Total Past Due		Current		Total Loans		Loans Past Due > 89 Days, Still Accruing		Non-accrual
Commercial:
Commercial and industrial	$	25	$	—	$	—	$	25	$	105,441	$	105,466	$	—	$	—
Agricultural production	507		—		—		507		33,049		33,556		—		—
Real estate:	—
Construction & other land loans	—		—		—		—		33,472		33,472		—		—
Commercial real estate - owner occupied	—		—		—		—		215,146		215,146		—		—
Commercial real estate - non-owner occupied	—		—		—		—		539,522		539,522		—		—
Farmland	—		—		—		—		120,674		120,674		—		—
Multi-family residential	—		—		—		—		61,307		61,307		—		—
1-4 family - close-ended	2,973		—		—		—		96,558		96,558		—		—
1-4 family - revolving	—		—		—		—		27,648		27,648		—		—

Consumer	169		68		—		237		55,369		55,606		—		—
Deferred fees	—		—		—		—		$	1,842	1,842		—		—
Total	$	3,674	$	68	$	—	$	769	$	1,290,028	$	1,290,797	$	—	$	—

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The following table shows an aging analysis of the loan portfolio by class at December 31, 2022 (in thousands):


	30-59 Days Past Due		60-89 Days Past Due		Greater Than 89 Days Past Due		Total Past Due		Current		Total Loans		Loans Past Due > 89 Days, Still Accruing		Non- accrual
Commercial:
Commercial and industrial	$	440	$	—	$	—	$	440	$	140,757	$	141,197	$	—	$	—
Agricultural production	—		—		—		—		37,007		37,007		—		—
Real estate:	—								0
Construction & other land loans	—		—		—		—		109,175		109,175		—		—
Commercial real estate - owner occupied	250		—		—		250		194,413		194,663		—		—
Commercial real estate - non-owner occupied	4,507		—		—		4,507		460,302		464,809		—		—
Farmland	—		—		—		—		119,648		119,648		—		—
Multi-family residential	—		—		—		—		24,586		24,586		—		—
1-4 family - close-ended	—		—		—		—		93,510		93,510		—		—
1-4 family - revolving	465		—		—		465		29,606		30,071		—		—

Consumer	233		—		—		233		40,019		40,252		—		—
Deferred fees	—		—		—		—		1,386		1,386		—		—
Total	$	5,895	$	—	$	—	$	5,895	$	1,250,409	$	1,256,304	$	—	$	—

As of December 31, 2023 and December 31, 2022 there were no collateral dependent loans.

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There was no foregone interest on nonaccrual loans for the year ended December 31, 2023. Foregone interest on nonaccrual loans totaled $132,000 and $99,000 for the years ended December 31, 2022 and 2021, respectively.

Occasionally, the Company modifies loans to borrowers in financial distress by providing reductions of the stated interest rate of the loan or an extension of the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk. There were no loan modifications granted to borrowers experiencing financial difficulty during the years ended December 31, 2023 or 2022. As of December 31, 2022, the Company had a recorded investment in troubled debt restructurings (“TDR”) of $2,372,000. The Company allocated $314,000 of specific reserves for those loans at December 31, 2022. The Company committed to lend no additional amounts as of December 31, 2022 to customers with outstanding loans that were classified as troubled debt restructurings.

The following is a summary of the allowance for credit losses by impairment methodology and portfolio segment as of December 31, 2022 and December 31, 2021 (in thousands):


	Commercial		Real Estate		Consumer		Unallocated		Total
Allowance for credit losses:
Ending balance, December 31, 2022	$	1,820	$	7,803	$	885	$	340	$	10,848
Ending balance: individually evaluated for impairment	$	309	$	5	$	—	$	—	$	314
Ending balance: collectively evaluated for impairment	$	1,511	$	7,798	$	885	$	340	$	10,534

The following table shows the ending balances of loans as of December 31, 2022 and December 31, 2021 by portfolio segment and by impairment methodology (in thousands):


	Commercial		Real Estate		Consumer		Total
Loans:
Ending balance, December 31, 2022	$	180,204	$	910,881	$	163,833	$	1,254,918
Ending balance: individually evaluated for impairment	$	1,240	$	139	$	993	$	2,372
Ending balance: collectively evaluated for impairment	$	178,964	$	910,742	$	162,840	$	1,252,546

The following table shows information related to impaired loans by class at December 31, 2022 (in thousands):


	Recorded Investment		Unpaid Principal Balance		Related Allowance
With no related allowance recorded:











Consumer:
Equity loans and lines of credit	$	993	$	1,007	$	—


Total with no related allowance recorded	993		1,007		—

With an allowance recorded:
Commercial:
Commercial and industrial	1,240		1,240		309


Real estate:


Commercial real estate	126		126		2
Agricultural real estate	13		13		3

Total real estate	139		139		5




Total with an allowance recorded	1,379		1,379		314
Total	$	2,372	$	2,386	$	314

The recorded investment in loans excludes accrued interest receivable and net loan origination fees, due to immateriality.

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The following table shows information related to impaired loans by class at December 31, 2021 (in thousands):


	Recorded Investment		Unpaid Principal Balance		Related Allowance
With no related allowance recorded:











Consumer:
Equity loans and lines of credit	$	136	$	172	$	—


Total with no related allowance recorded	136		172		—

With an allowance recorded:
Commercial:
Commercial and industrial	6,452		6,491		544
Agricultural land and production	634		714		63
Total commercial	7,086		7,205		607
Real estate:

Real estate construction and other land loans	292		292		30
Commercial real estate	137		138		3
Agricultural real estate	21		21		5

Total real estate	450		451		38
Consumer:
Equity loans and lines of credit	914		914		4

Total consumer	914		914		4
Total with an allowance recorded	8,450		8,570		649
Total	$	8,586	$	8,742	$	649

4. BANK PREMISES AND EQUIPMENT

Bank premises and equipment consisted of the following (in thousands):


	December 31,
	2023		2022
Land	$	729	$	1,131
Buildings and improvements	5,020		8,360
Furniture, fixtures and equipment	15,725		11,885
Leasehold improvements	10,218		4,305
	31,692		25,681
Less accumulated depreciation and amortization	(17,650)		(17,694)
	$	14,042	$	7,987

Depreciation and amortization included in occupancy and equipment expense totaled $891,000, $755,000 and $897,000 for the years ended December 31, 2023, 2022, and 2021, respectively.

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5. GOODWILL AND INTANGIBLE ASSETS

Business combinations involving the Company’s acquisition of the equity interests or net assets of another enterprise give rise to goodwill. Total goodwill at December 31, 2023 and 2022 was $53,777,000. Total goodwill at December 31, 2023 consisted of $13,466,000, $10,394,000, $6,340,000, $14,643,000, and $8,934,000 representing the excess of the cost of Folsom Lake Bank, Sierra Vista Bank, Visalia Community Bank, Service 1st Bancorp, and Bank of Madera County, respectively, over the net of the amounts assigned to assets acquired and liabilities assumed in the transactions accounted for under the purchase method of accounting. The value of goodwill is ultimately derived from the Company’s ability to generate net earnings after the acquisitions and is not deductible for tax purposes. A decline in net earnings could be indicative of a decline in the fair value of goodwill and result in impairment. For that reason, goodwill is assessed at least annually for impairment.

Goodwill is also tested for impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of the Company below its carrying amount. No such events or circumstances arose during the fourth quarter of 2023, so goodwill was not required to be retested.

Intangible assets represent the estimated fair value of the core deposit relationships acquired in the 2013 acquisition of Visalia Community Bank. Core deposit intangibles are amortized using the straight-line method over an estimated life of five to ten years from the date of acquisition. Upon acquisition, the core deposit intangible asset of Visalia Community Bank was recorded as $1,365,000.

There was no carrying value remaining of this intangible asset at December 31, 2023, compared to a carrying value at December 31, 2022 of $68,000, which was net of $1,297,000 in accumulated amortization expense. Amortization expense recognized was $68,000 for 2023, $454,000 for 2022, and $661,000 for 2021.

6. DEPOSITS

Interest-bearing deposits consisted of the following (in thousands):


	December 31,
	2023		2022
Savings	$	179,609	$	215,287
Money market	497,043		435,783
NOW accounts	251,334		324,089
Time, $250,000 or more	24,257		13,338
Time, under $250,000	137,828		54,585
	$	1,090,071	$	1,043,082

Aggregate annual maturities of time deposits are as follows (in thousands):


Years Ending December 31,
2024	$	128,035
2025	3,327
2026	1,343
2027	15,334
2028	14,046
Thereafter	—
	$	162,085

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Interest expense recognized on interest-bearing deposits consisted of the following (in thousands):


	Years Ended December 31,
	2023		2022		2021
Savings	$	245	$	25	$	20
Money market	8,910		848		661
NOW accounts	366		207		162
Time certificates of deposit	6,006		117		193
	$	15,527	$	1,197	$	1,036

As of December 31, 2023 and December 31, 2022 uninsured deposits totaled $821,756,000 and $900,123,000, respectively.

7. BORROWING ARRANGEMENTS

Federal Home Loan Bank Advances - As of December 31, 2023, the Company had a $35,000,000 Federal Home Loan Bank (“FHLB”) of San Francisco advance with an interest rate of 5.70%, as compared to a $46,000,000 advance with an interest rate of 4.65% at December 31, 2022. Approximately $590,387,000 in loans were pledged under a blanket lien as collateral to the FHLB for the Bank’s remaining borrowing capacity of $307,483,000 as of December 31, 2023. FHLB advances are also secured by investment securities with amortized costs totaling $22,315,000 and $21,745,000 and market values totaling $29,727,000 and $28,961,000 at December 31, 2023 and 2022, respectively. The Bank’s credit limit varies according to the amount and composition of the investment and loan portfolios pledged as collateral.

Lines of Credit - The Bank had unsecured lines of credit with its correspondent banks which, in the aggregate, amounted to $110,000,000 and $110,000,000 at December 31, 2023 and 2022, respectively, at interest rates which vary with market conditions. As of December 31, 2023 and 2022, the Company had no advances with correspondent banks.

Federal Reserve Line of Credit and Bank Term Funding Program - The Bank has a line of credit in the amount of $4,448,000 and $4,702,000 with the Federal Reserve Bank of San Francisco (FRB) at December 31, 2023 and 2022, respectively, which bears interest at the prevailing discount rate collateralized by investment securities with amortized costs totaling $4,894,000 and $5,508,000 and market values totaling $4,374,000 and $4,893,000, respectively. The Bank participates in the Bank Term Funding Program (BTFP) which offers loans of up to one year in length to banks, savings associations, credit unions, and other eligible depository institutions pledging any collateral eligible for purchase by the Federal Reserve Banks in open market operations such as U.S. Treasuries, U.S. agency securities, and U.S. agency mortgage-backed securities. These assets are valued at par. The BTFP is an additional source of liquidity against high-quality securities

At December 31, 2023, the Bank had $45,000,000 as a short-term loan outstanding with the FRB under the Bank Term Funding Program at an interest rate of 4.81%. The Bank had no borrowings with the FRB as of December 31, 2022.

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The following table reflects the Company’s credit lines, balances outstanding, and pledged collateral at December 31, 2023 and December 31, 2022:


Credit Lines (In thousands)	December 31, 2023		December 31, 2022
Unsecured Credit Lines
Credit limit	$	110,000	$	110,000
Balance outstanding	$	—	$	—
Federal Home Loan Bank
Credit limit	$	342,483	$	365,309
Balance outstanding	$	35,000	$	46,000
Collateral pledged	$	612,702	$	687,357
Fair value of collateral	$	500,972	$	565,869
Federal Reserve Bank Term Loan Funding Program
Credit limit	$	46,174	$	—
Balance outstanding	$	45,000	$	—
Collateral pledged	$	53,650	$	—
Fair value of collateral	$	47,603	$	—
Federal Reserve Bank
Credit limit	$	4,448	$	4,702
Balance outstanding	$	—	$	—
Collateral pledged	$	4,894	$	5,508
Fair value of collateral	$	4,374	$	4,893

8. LEASES

Leases - The Bank leases certain of its branch facilities and administrative offices under noncancelable operating leases with terms extending through 2033. Leases with an initial term of twelve months or less are not recorded on the balance sheet. Operating lease cost is comprised of lease expense recognized on a straight-line basis, the amortization of the right-of-use asset and the implicit interest accreted on the operating lease liability. Operating lease cost is included in occupancy and equipment expense on our consolidated statements of income. We evaluate the lease term by assuming the exercise of options to extend that are reasonably assured and those option periods covered by an option to terminate the lease, if deemed not reasonably certain to be exercised. The lease term is used to determine the straight-line expense and limits the depreciable life of any related leasehold improvements. Certain leases require us to pay real estate taxes, insurance, maintenance and other operating expenses associated with the leased premises. These expenses are classified in occupancy and equipment expense on our consolidated statements of income, consistent with similar costs for owned locations, but is not included in operating lease cost below. We calculate the lease liability using a discount rate that represents our incremental borrowing rate at the lease commencement date.

Future undiscounted lease payments for operating leases with initial terms of one year or more as of December 31, 2023 are as follows (in thousands):


Years Ending December 31,
2024	2,214
2025	1,720
2023	1,535
2027	1,305
2028	663
Thereafter	1,920
Total lease payments	9,357
Less: imputed interest	(237)
Present value of operating lease liabilities	$	9,120

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The table below summarizes the total lease cost for the period ending:


(Dollars in thousands)	December 31, 2023		December 31, 2022		December 31, 2021
Operating lease cost	$	2,375	$	2,187	$	2,088
Short-term lease cost	—		—		3
Variable lease cost	347		307		353

Total lease cost	$	2,722	$	2,494	$	2,444

The table below summarizes other information related to our operating leases:


	December 31, 2023		December 31, 2022
Weighted average remaining lease term, in years	5.91		6.38
Weighted average discount rate	1.40	%	1.50	%

The table below shows operating lease right of use assets and operating lease liabilities as of :


(Dollars in thousands)	December 31, 2023		December 31, 2022
Operating lease right-of-use assets	$	8,311	$	10,629
Operating lease liabilities	$	9,120	$	11,449

The right-of-use-assets and lease liabilities are included with other assets and other liabilities on the consolidated balance sheet, respectively.

9. INCOME TAXES

The provision for income taxes for the years ended December 31, 2023, 2022, and 2021 consisted of the following (in thousands):


	Federal		State		Total
2023
Current	$	4,692	$	3,502	$	8,194
Deferred	176		(66)		110

Provision for income taxes	$	4,868	$	3,436	$	8,304
2022
Current	$	4,827	$	3,445	$	8,272
Deferred	80		144		224

Provision for income taxes	$	4,907	$	3,589	$	8,496
2021
Current	$	4,687	$	3,464	$	8,151
Deferred	1,002		463		1,465

Provision for income taxes	$	5,689	$	3,927	$	9,616

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Deferred tax assets (liabilities) consisted of the following (in thousands):


	December 31,
	2023		2022
Deferred tax assets:
Allowance for credit losses	$	4,643	$	3,207
Deferred compensation	4,152		4,204
Unrealized loss on available-for-sale investment securities	27,716		34,093
Net operating loss carryovers	1,754		1,907

Mark-to-market adjustment	301		497
Other deferred tax assets	302		84
Other-than-temporary impairment	30		30

Loan and investment impairment	280		376


Operating lease liabilities	2,696		3,385
Partnership income	74		52
State taxes	718		777

Bank premises and equipment	229		(385)
Total deferred tax assets	42,895		48,227


Deferred tax liabilities:
Operating lease right-of-use assets	(2,457)		(3,142)
Finance leases	(625)		(668)
Unrealized gain on available-for-sale investment securities	—		—
Core deposit intangible	—		(20)
FHLB stock	(191)		(191)
Loan origination costs	(1,166)		(829)

Total deferred tax liabilities	(4,439)		(4,850)
Net deferred tax assets	$	38,456	$	43,377

The determination of the amount of deferred income tax assets which are more likely than not to be realized is primarily dependent on projections of future earnings, which are subject to uncertainty and estimates that may change given economic conditions and other factors. The realization of deferred income tax assets is assessed and a valuation allowance is recorded if it is more likely than not that all or a portion of the deferred tax asset will not be realized. More likely than not is defined as greater than a 50% chance. All available evidence, both positive and negative is considered to determine whether, based on the weight of the evidence, a valuation allowance is needed. Thus, management concludes no valuation allowance is necessary against deferred tax assets as of December 31, 2023 and 2022.

The provision for income taxes differs from amounts computed by applying the statutory Federal income tax rates to operating income before income taxes. The significant items comprising these differences for the years ended December 31, 2023, 2022, and 2021 consisted of the following:


	2023		2022		2021
Federal income tax, at statutory rate	21.0	%	21.0	%	21.0	%
State taxes, net of Federal tax benefit	8.0	%	8.1	%	8.2	%
Tax exempt investment security income, net	(3.5)	%	(3.7)	%	(3.1)	%
Bank owned life insurance, net	(0.6)	%	(0.8)	%	(0.5)	%
Compensation - stock compensation	—	%	(0.2)	%	(0.2)	%

Low income housing tax credits	(0.6)	%	(0.3)	%	(0.3)	%

Other	0.2	%	0.1	%	0.2	%
Effective tax rate	24.5	%	24.2	%	25.3	%

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As of December 31, 2023, the Company had Federal and California net operating loss (“NOL”) carry-forwards of $5,659,000 and $6,599,000, respectively. These NOLs were acquired through business combinations and are subject to IRC 382 will begin expiring at various dates between 2030 and 2035, for federal purposes and various dates between 2030 and 2036 for California purposes. While they are subject to IRC Section 382, management has determined that all of the NOLs are more than likely than not to be utilized before they expire.

The Company and its subsidiary file income tax returns in the U.S. federal and California jurisdictions. The Company conducts all of its business activities in the State of California. There are no pending U.S. federal or state income tax examinations by those taxing authorities. The Company is no longer subject to the examination by U.S. federal taxing authorities for the years ended before December 31, 2020 and by the state taxing authorities for the years ended before December 31, 2019.

As of December 31, 2023, the Company has no unrecognized tax benefits and does not expect any material changes in the next 12 months.

During the years ended December 31, 2023 and 2022, the Company recorded no interest or penalties related to uncertain tax positions.

10. SENIOR DEBT AND SUBORDINATED DEBENTURES

The following table summarizes the Company’s subordinated debentures:


(Dollars in thousands)	December 31, 2023		December 31, 2022
Fixed - floating rate subordinated debentures, due 2031	$	35,000	$	35,000
Unamortized debt issuance costs	(411)		(556)
Floating rate senior debt bank loan, due 2032	30,000		30,000
Junior subordinated deferrable interest debentures, due October 2036	5,155		5,155
Total subordinated debentures	$	69,744	$	69,599

Subordinated Debentures

On November 12, 2021, the Company completed a private placement of $35.0 million aggregate principal amount of its fixed-to-floating rate subordinated notes (“Subordinated Debt”) due December 1, 2031. The Subordinated Debt initially bears a fixed interest rate of 3.125% per year. Commencing on December 1, 2026, the interest rate on the Subordinated Debt will reset each quarter at a floating interest rate equal to the then-current three month term SOFR plus 210 basis points. The Company may at its option redeem in whole or in part the Subordinated Debt on or after November 12, 2026 without a premium. The Subordinated Debt is treated as Tier 2 Capital for regulatory purposes.

Interest expense recognized by the Company for the Subordinated Debentures for the years ended December 31, 2023, 2022, and 2021 was $1,239,000, $1,239,000, and $173,000, respectively.

Senior Debt

On September 15, 2022, the Company entered into a $30.0 million loan agreement with Bell Bank. Initially, payments of interest only are payable in 12 quarterly payments commencing December 31, 2022. Commencing December 31, 2025, 27 equal quarterly principal and interest payments are payable based on the outstanding balance of the loan on August 30, 2025 and an amortization of 48 quarters. A final payment of outstanding principal and accrued interest is due at maturity on September 30, 2032. Variable interest is payable at the Prime Rate (published by the Wall Street Journal) less 50 basis points. The loan is secured by the assets of the Company and a pledge of the outstanding common stock of Central Valley Community Bank, the Company’s banking subsidiary. The Company may prepay the loan without penalty with one exception. If the loan is prepaid prior to August 30, 2025 with funds received from a financing source other than Bell Bank, the Company will incur a 2% prepayment penalty. The loan contains customary representations, covenants, and events of default.

Interest expense recognized by the Company for the Senior Debt for the years ended December 31, 2023, 2022, and 2021 was $2,053,000, $544,000, and $0, respectively.

Junior Subordinated Debentures

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Service 1st Capital Trust I is a Delaware business trust formed by Service 1st. The Company succeeded to all of the rights and obligations of Service 1st in connection with the merger with Service 1st as of November 12, 2008. The Trust was formed on August 17, 2006 for the sole purpose of issuing trust preferred securities fully and unconditionally guaranteed by Service 1st. Under applicable regulatory guidance, the amount of trust preferred securities that is eligible as Tier 1 capital is limited to 25% of the Company’s Tier 1 capital on a pro forma basis. At December 31, 2023, all of the trust preferred securities that have been issued qualify as Tier 1 capital. The trust preferred securities mature on October 7, 2036, are redeemable at the Company’s option, and require quarterly distributions by the Trust to the holder of the trust preferred securities at a variable interest rate which will adjust quarterly to equal the three month SOFR plus 1.60%.

The Trust used the proceeds from the sale of the trust preferred securities to purchase approximately $5,155,000 in aggregate principal amount of Service 1st’s junior subordinated notes (the Notes). The Notes bear interest at the same variable interest rate during the same quarterly periods as the trust preferred securities. The Notes are redeemable by the Company on any January 7, April 7, July 7, or October 7 or at any time within 90 days following the occurrence of certain events, such as: (i) a change in the regulatory capital treatment of the Notes (ii) in the event the Trust is deemed an investment company or (iii) upon the occurrence of certain adverse tax events. In each such case, the Company may redeem the Notes for their aggregate principal amount, plus any accrued but unpaid interest.

The Notes may be declared immediately due and payable at the election of the trustee or holders of 25% of the aggregate principal amount of outstanding Notes in the event that the Company defaults in the payment of any interest following the nonpayment of any such interest for 20 or more consecutive quarterly periods.

Holders of the trust preferred securities are entitled to a cumulative cash distribution on the liquidation amount of $1,000 per security. For each January 7, April 7, July 7 or October 7 of each year, the rate will be adjusted to equal the three month SOFR plus 1.60%. As of December 31, 2023, the rate was 7.26%. Interest expense recognized by the Company for the years ended December 31, 2023, 2022, and 2021 was $360,000, $188,000 and $93,000, respectively.

11. COMMITMENTS AND CONTINGENCIES

Correspondent Banking Agreements - The Bank maintains funds on deposit with other federally insured financial institutions under correspondent banking agreements. Uninsured deposits totaled $3,813,000 at December 31, 2023.

Financial Instruments With Off-Balance-Sheet Risk - The Bank is a party to financial instruments with off-balance-sheet risk in the normal course of business in order to meet the financing needs of its customers and to reduce its own exposure to fluctuations in interest rates. These financial instruments consist of commitments to extend credit and standby letters of credit. These instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized on the balance sheet.

The Bank’s exposure to credit loss in the event of nonperformance by the other party for commitments to extend credit and standby letters of credit is represented by the contractual amount of those instruments. The Bank uses the same credit policies in making commitments and standby letters of credit as it does for loans included on the balance sheet.

The following financial instruments represent off-balance-sheet credit risk (in thousands):


	December 31,
	2023		2022
Commitments to extend credit	$	274,282	$	286,925
Standby letters of credit	$	1,988	$	1,216

Commitments to extend credit consist primarily of unfunded commercial loan commitments and revolving lines of credit, single-family residential equity lines of credit and commercial and residential real estate construction loans. Construction loans are established under standard underwriting guidelines and policies and are secured by deeds of trust, with disbursements made over the course of construction. Commercial revolving lines of credit have a high degree of industry diversification. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being fully drawn upon, the total commitment amounts do not necessarily represent future cash requirements. Standby letters of credit are generally secured and are issued by the Bank to guarantee the financial obligation or performance of a customer to a third party. The credit risk involved in issuing standby letters of credit is essentially the same as that involved in extending loans to customers. The fair value of the liability related to these standby

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letters of credit, which represents the fees received for issuing the guarantees, was not significant at December 31, 2023 and 2022. The Company recognizes these fees as revenue over the term of the commitment or when the commitment is used.

At December 31, 2023, commercial loan commitments represent 47% of total commitments and are generally secured by collateral other than real estate or unsecured. Real estate loan commitments represent 49% of total commitments and are generally secured by property with a loan-to-value ratio not to exceed 80%. Consumer loan commitments represent the remaining 4% of total commitments and are generally unsecured. In addition, the majority of the Bank’s loan commitments have variable interest rates.

At December 31, 2023 and 2022, the balance of a contingent allocation for probable loan loss experience on unfunded obligations was $839,000 and $110,000, respectively. The contingent allocation for probable loan loss experience on unfunded obligations is calculated by management using an appropriate, systematic, and consistently applied process. While related to credit losses, this allocation is not a part of the allowance for credit losses and is considered separately as a liability for accounting and regulatory reporting purposes. Changes in this contingent allocation are recorded in other non-interest expense.

Concentrations of Credit Risk - At December 31, 2023, in management’s judgment, a concentration of loans existed in commercial loans and real-estate-related loans, representing approximately 95.5% of total loans of which 10.7% were commercial and 84.8% were real-estate-related.

At December 31, 2022, in management’s judgment, a concentration of loans existed in commercial loans and real-estate-related loans, representing approximately 96.8% of total loans of which 14.1% were commercial and 82.7% were real-estate-related.

Management believes the loans within these concentrations have no more than the typical risks of collectability. However, in light of the current economic environment, additional declines in the performance of the economy in general, or a continued decline in real estate values or drought-related decline in agricultural business in the Company’s primary market area could have an adverse impact on collectability, increase the level of real-estate-related nonperforming loans, or have other adverse effects which alone or in the aggregate could have a material adverse effect on the financial condition, results of operations and cash flows of the Company.

Contingencies - The Company is subject to legal proceedings and claims which arise in the ordinary course of business. In the opinion of management, the amount of ultimate liability with respect to such actions will not materially affect the consolidated financial position or consolidated results of operations of the Company.

Investments in Low Income Housing Tax Credit Funds - The unfunded commitments as of December 31, 2023 and 2022 in low income housing tax credit funds were $4,371,000 and $4,949,000, respectively. All commitments will be paid by the Company by 2038.

12. SHAREHOLDERS’ EQUITY

Regulatory Capital - The Company and the Bank are subject to certain regulatory capital requirements administered by the Board of Governors of the Federal Reserve System and the FDIC. Failure to meet these minimum capital requirements could result in mandatory or, discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s consolidated financial statements.

The Company and the Bank each meet specific capital guidelines that involve quantitative measures of their respective assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. The Company’s and the Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

The Bank is also subject to additional capital guidelines under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the Bank must maintain minimum total risk-based, Tier 1 risk-based and Tier 1 leverage ratios as set forth in the following table. The most recent notification from the FDIC categorized the Bank as well capitalized under these guidelines. Management knows of no conditions or events since that notification that would change the Bank’s category.

Capital ratios are reviewed by Management on a regular basis to ensure that capital exceeds the prescribed regulatory minimums and is adequate to meet our anticipated future needs. For all periods presented, the Bank’s ratios exceed the regulatory definition of well capitalized under the regulatory framework for prompt correct action and the Company’s ratios exceed the required minimum ratios for capital adequacy purposes.

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Bank holding companies with consolidated assets of $3 billion or more and banks like Central Valley Community Bank must comply with minimum capital ratio requirements which consist of the following: (i) a new common equity Tier 1 capital to total risk weighted assets ratio of 4.5%; (ii) a Tier 1 capital to total risk weighted assets ratio of 6%; (iii) a total capital to total risk weighted assets ratio of 8%; and (iv) a Tier 1 capital to adjusted average total assets (“leverage”) ratio of 4%.

In addition, a “capital conservation buffer” is established which requires maintenance of a minimum of 2.5% of common equity Tier 1 capital to total risk weighted assets in excess of the regulatory minimum capital ratio requirements described above. The 2.5% buffer increases the minimum capital ratios to (i) a common equity Tier 1 capital ratio of 7.0%, (ii) a Tier 1 capital ratio of 8.5%, and (iii) a total capital ratio of 10.5%. If the capital ratio levels of a banking organization fall below the capital conservation buffer amount, the organization will be subject to limitations on (i) the payment of dividends; (ii) discretionary bonus payments; (iii) discretionary payments under Tier 1 instruments; and (iv) engaging in share repurchases.

Management believes that the Company and the Bank met all their capital adequacy requirements as of December 31, 2023 and 2022. There are no conditions or events since those notifications that management believes have changed those categories. The capital ratios for the Company and the Bank are presented in the table below (exclusive of the capital conservation buffer).

The following table presents the Company’s regulatory capital ratios as of December 31, 2023 and December 31, 2022:


(Dollars in thousands)	Actual Ratio
December 31, 2023	Amount		Ratio
Tier 1 Leverage Ratio	$	222,567	9.18	%
Common Equity Tier 1 Ratio (CET 1)	$	217,567	12.78	%
Tier 1 Risk-Based Capital Ratio	$	222,567	13.07	%
Total Risk-Based Capital Ratio	$	273,699	16.08	%

December 31, 2022
Tier 1 Leverage Ratio	$	205,154	8.37	%
Common Equity Tier 1 Ratio (CET 1)	$	200,154	11.92	%
Tier 1 Risk-Based Capital Ratio	$	205,154	12.22	%
Total Risk-Based Capital Ratio	$	250,556	14.92	%

The following table presents the Bank’s regulatory capital ratios as of December 31, 2023 and December 31, 2022, as well as the minimum capital ratios for capital adequacy for the Bank:


(Dollars in thousands)	Actual Ratio				Minimum regulatory requirement (1)
December 31, 2023	Amount		Ratio		Amount		Ratio
Tier 1 Leverage Ratio	$	285,099	11.75	%	$	97,016	4.00	%
Common Equity Tier 1 Ratio (CET 1)	$	285,099	16.76	%	$	76,526	7.00	%
Tier 1 Risk-Based Capital Ratio	$	285,099	16.76	%	$	102,035	8.50	%
Total Risk-Based Capital Ratio	$	301,642	17.74	%	$	136,047	10.50	%

December 31, 2022
Tier 1 Leverage Ratio	$	266,373	10.86	%	$	98,075	4.00	%
Common Equity Tier 1 Ratio (CET 1)	$	266,373	15.87	%	$	75,516	7.00	%
Tier 1 Risk-Based Capital Ratio	$	266,373	15.87	%	$	100,688	8.50	%
Total Risk-Based Capital Ratio	$	277,331	16.53	%	$	134,251	10.50	%
(1) The minimum regulatory requirement threshold includes the capital conservation buffer of 2.50%.

Dividends - During 2023, the Bank declared and paid cash dividends to the Company in the amount of $6,963,000, in connection with cash dividends declared to the Company’s shareholders and holding company expenses as approved by the Company’s Board of Directors. The Company declared and paid a total of $5,657,000 or $0.48 per common share cash

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dividend to shareholders of record during the year ended December 31, 2023. The Company did not repurchase or retire any common stock during the year ended December 31, 2023.

During 2022, the Company paid dividends to the Bank in the amount of $38,000,000 in connection with the senior and subordinated debt proceeds approved by the Company’s Board of Directors. The Company declared and paid a total of $5,638,000 or $0.48 per common share cash dividend to shareholders of record during the year ended December 31, 2022. During the year ended December 31, 2022, the Company repurchased and retired common stock in the amount of $6,814,000.

During 2021, the Bank declared and paid cash dividends to the Company in the amount of $7,679,000, in connection with cash dividends declared to the Company’s shareholders and holding company expenses as approved by the Company’s Board of Directors. The Company declared and paid a total of $5,757,000 or $0.47 per common share cash dividend to shareholders of record during the year ended December 31, 2021. During the year ended December 31, 2021, the Company repurchased and retired common stock in the amount of $13,619,000.

The Company’s primary source of income with which to pay cash dividends is dividends from the Bank. The California Financial Code restricts the total amount of dividends payable by a bank at any time without obtaining the prior approval of the California Department of Business Oversight to the lesser of (1) the Bank’s retained earnings or (2) the Bank’s net income for its last three fiscal years, less distributions made to shareholders during the same three-year period. At December 31, 2023, $72,335,000 of the Bank’s retained earnings were free of these restrictions.

A reconciliation of the numerators and denominators of the basic and diluted earnings per common share computations is as follows (in thousands, except share and per-share amounts):


	For the Years Ended December 31,
	2023		2022		2021
Basic Earnings Per Common Share:
Net income	$	25,536	$	26,645	$	28,401


Weighted average shares outstanding	11,728,858		11,715,376		12,237,424
Net income per common share	$	2.17	$	2.27	$	2.32
Diluted Earnings Per Common Share:
Net income	$	25,536	$	26,645	$	28,401


Weighted average shares outstanding	11,728,858		11,715,376		12,237,424
Effect of dilutive stock options and warrants	24,014		23,698		44,508
Weighted average shares of common stock and common stock equivalents	11,752,872		11,739,074		12,281,932
Net income per diluted common share	$	2.17	$	2.27	$	2.31

No outstanding options or restricted stock awards considered were anti-dilutive at December 31, 2023, 2022, and 2021.

13. EQUITY-BASED COMPENSATION

In May 2015, the Company adopted the Central Valley Community Bancorp 2015 Omnibus Incentive Plan (2015 Plan). The plan provides for awards in the form of stock options, stock appreciation rights, and restricted stock. The plan also allows for performance awards that may be in the form of cash or shares of the Company’s common stock. With respect to stock options and restricted stock the exercise price in the case of stock options and the grant value in the case of restricted stock may not be less than the fair market value at the date of the award. The options and awards under the plan expire on dates determined by the Board of Directors, but not later than ten years from the date of grant. The vesting period for stock options and restricted stock rights is determined by the Board of Directors and ranges one to five years. The maximum number of shares that can be issued with respect to all awards under the plan is 875,000. Currently under the 2015 Plan, 612,652 shares remain reserved for future grants as of December 31, 2023.

Share-based compensation cost recognized for the 2015 Plan plans was $858,000, $776,000, and $562,000 for the years ended December 31, 2023, 2022, and 2021, respectively. The recognized tax benefit for the share-based compensation expense, forfeitures of restricted stock, and exercise of stock options, resulted in the recognition of $0, $87,000, and $50,000 for the years ended December 31, 2023, 2022, and 2021, respectively.

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No options to purchase shares of the Company’s common stock were granted during the years ending December 31, 2023, 2022 and 2021 from any of the Company’s stock based compensation plans.

A summary of the combined activity of the Plans during the years then ended is presented below (dollars in thousands, except per-share amounts):


	Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value




Options outstanding at January 1, 2021	77,070	$	10.06	1.51	$	382
Options exercised	(24,265)	$	10.6

Options outstanding at December 31, 2021	52,805	$	9.81	0.57	$	581


Options exercised	(50,205)	$	9.74
Options forfeited	(2,600)	$	11.12
Options outstanding at December 31, 2022 and 2023	—	$	—	0.00	$	—

Information related to the stock option plan during each year follows (in thousands):


	2023		2022		2021

Intrinsic value of options exercised	$	—	$	496	$	253
Cash received from options exercised	$	—	$	489	$	257
Excess tax benefit realized for option exercises	$	—	$	87	$	50

As of December 31, 2023, there is no unrecognized compensation cost related to stock options granted under all Plans. All options are fully vested.

Restricted Stock and Common Stock Awards

The 2015 Plan provides for the issuance of restricted common stock to directors and officers and common stock awards based on the achievement of performance goals as determined by the Board of Directors or in accordance with executive employment agreements. Restricted common stock grants typically vest over a one to five-year period. Restricted common stock is subject to forfeiture if employment terminates prior to vesting. The cost of these awards is recognized over the vesting period of the awards based on the fair value of our common stock on the date of the grant.

The shares awarded to employees and directors under the restricted stock agreements vest on applicable vesting dates only to the extent the recipient of the shares is then an employee or a director of the Company or one of its subsidiaries, and each recipient will forfeit all of the shares that have not vested on the date his or her employment or service is terminated. Outstanding restricted awards related to these agreements are presented in the table below. Common stock awards for performance vest immediately. During 2023 and 2022 the Company awarded 10,347 and 13,446 shares, recognizing compensation expense for these shares of $221,000 and $279,000, respectively.

Holders of restricted stock awards receive non-forfeitable dividends at the same rate as common stockholders and they both share equally in undistributed earnings. Therefore, under the two-class method the difference in EPS is not significant for these participating securities.

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The following table summarizes restricted stock activity for the years ended as follows:


	Shares	Weighted Average Grant Date Fair Value
Nonvested outstanding shares at January 1, 2021	30,013	$	15.60
Granted	31,496	$	18.83
Vested	(37,085)	$	15.12
Forfeited	(247)	$	20.26
Nonvested outstanding shares at December 31, 2021	24,177	$	20.50
Granted	56,089	$	17.75
Vested	(33,316)	$	20.39
Forfeited	(244)	$	20.50
Nonvested outstanding shares at December 31, 2022	46,706	$	17.28
Granted	69,692	$	15.86
Vested	(40,387)	$	17.90
Forfeited	(878)	$	15.79
Nonvested outstanding shares at December 31, 2023	75,133	$	15.65

As of December 31, 2023, there were 75,133 shares of restricted stock that are nonvested and expected to vest. Share-based compensation cost charged against income for restricted stock awards was $612,000, $474,000, and $385,000 for the year ended December 31, 2023, 2022, and 2021 respectively.

As of December 31, 2023, there was $763,000 of total unrecognized compensation cost related to nonvested restricted common stock. Restricted stock compensation expense is recognized on a straight-line basis over the vesting period. This cost is expected to be recognized over a weighted average remaining period of 2.16 years and will be adjusted for subsequent changes in estimated forfeitures. Restricted common stock awards had an intrinsic value of $649,000 at December 31, 2023.

14. EMPLOYEE BENEFITS

401(k) and Profit Sharing Plan - The Bank has established a 401(k) and profit sharing plan. The 401(k) plan covers substantially all employees who have completed a one-month employment period. Participants in the profit sharing plan are eligible to receive employer contributions after completion of two years of service. Bank contributions to the profit sharing plan are determined at the discretion of the Board of Directors. Participants are automatically vested 100% in all employer contributions. The Bank contributed $850,000, $1,000,000, and $1,050,000 to the profit sharing plan in 2023, 2022, and 2021, respectively.

Additionally, the Bank may elect to make a matching contribution to the participants’ 401(k) plan accounts. The amount to be contributed is announced by the Bank at the beginning of the plan year. For the years ended December 31, 2023, 2022, and 2021, the Bank made a 100% matching contribution on all deferred amounts up to 5% of eligible compensation. For the years ended December 31, 2023, 2022, and 2021, the Bank made matching contributions totaling $1,089,000, $1,046,000, and $1,014,000, respectively.

Deferred Compensation Plans - The Bank has a nonqualified Deferred Compensation Plan which provides directors with an unfunded, deferred compensation program. Under the plan, eligible participants may elect to defer some or all of their current compensation or director fees. Deferred amounts earn interest at an annual rate determined by the Board of Directors (5.10% at December 31, 2023). At December 31, 2023 and 2022, the total net deferrals included in accrued interest payable and other liabilities were $4,131,000 and $4,023,000, respectively.

In connection with the implementation of the above plan, single premium universal life insurance policies on the life of each participant were purchased by the Bank, which is the beneficiary and owner of the policies. The cash surrender value of the policies totaled $11,252,000 and $10,915,000 and at December 31, 2023 and 2022, respectively. Income recognized on these

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policies, net of related expenses, for the years ended December 31, 2023, 2022, and 2021, was $292,000, $278,000, and $264,000, respectively.

In October 2015, the Board of Directors of the Company and the Bank adopted a board resolution to create the Central Valley Community Bank Executive Deferred Compensation Plan (the Executive Plan). Pursuant to the Executive Plan, all eligible executives of the Bank may elect to defer up to 50 percent of their compensation for each deferral year. Deferred amounts earn interest at an annual rate determined by the Board of Directors (5.10% at December 31, 2023). At December 31, 2023 and 2022, the total net deferrals included in accrued interest payable and other liabilities were $271,000 and $300,000, respectively.

Salary Continuation Plans - The Board of Directors has approved salary continuation plans for certain key executives. Under these plans, the Bank is obligated to provide the executives with annual benefits for 10-15 years after retirement. In connection with the acquisitions of Folsom Lake Bank (FLB), Service 1st Bank, and Visalia Community Bank (VCB), the Bank assumed a liability for the estimated present value of future benefits payable to former key executives of FLB, Service 1st, and VCB. The liability relates to change in control benefits associated with their salary continuation plans. The benefits are payable to the individuals when they reach retirement age. These benefits are substantially equivalent to those available under split-dollar life insurance policies purchased by the Bank on the life of the executives. The expense/(benefit) recognized under these plans for the years ended December 31, 2023, 2022, and 2021, totaled $186,000, $(430,000), and $377,000, respectively. Note, the expense is effected by the changing discount rate used to calculate the liability. Accrued compensation payable under the salary continuation plans totaled $9,291,000 and $9,554,000 at December 31, 2023 and 2022, respectively. These benefits are substantially equivalent to those available under split-dollar life insurance policies acquired.

In connection with these plans, the Bank purchased single-premium life insurance policies with cash surrender values totaling $30,320,000 and $29,622,000 at December 31, 2023 and 2022, respectively. Income recognized on these policies, net of related expense, for the years ended December 31, 2023, 2022, and 2021 totaled $743,000, $706,000, and $576,000, respectively.

Employee Stock Purchase Plan - During 2017, the Company adopted an Employee Stock Purchase Plan which allows employees to purchase the Company’s stock at a discount to fair market value as of the date of purchase. The Company bears all costs of administering the plan, including broker’s fees, commissions, postage and other costs actually incurred.

As of December 31, 2023, the Company had 418,083 shares remaining for purchase under the plan.

15. RELATED PARTIES

During the normal course of business, the Bank enters into loans with related parties, including executive officers and directors. The following is a summary of the aggregate activity involving related-party borrowers (in thousands):


Balance, January 1, 2023	$	23,727
Disbursements	1,383

Amounts repaid	(832)
Balance, December 31, 2023	$	24,278
Undisbursed commitments to related parties, December 31, 2023	$	547

As of December 31, 2023 and 2022, the Company had $12,921,000 and $14,549,000 in related party deposits, respectively.

16. FAIR VALUE MEASUREMENTS

Fair Value Hierarchy

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values:

Level 1 — Quoted market prices (unadjusted) for identical instruments traded in active markets that the entity has the ability to access as of the measurement date.

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Level 2 —Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3 — Significant unobservable inputs that reflect an entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

Management monitors the availability of observable market data to assess the appropriate classification of financial instruments within the fair value hierarchy. Changes in economic conditions or model-based valuation techniques may require the transfer of financial instruments from one fair value level to another. In such instances, we report the transfer at the beginning of the reporting period.

The estimated carrying and fair values of the Company’s financial instruments are as follows (in thousands):


	December 31, 2023
	Carrying Amount		Fair Value
			Level 1		Level 2		Level 3		Total
Financial assets:
Cash and due from banks	$	30,017	$	30,017	$	—	$	—	$	30,017
Interest-earning deposits in other banks	23,711		23,711		—		—		23,711


Held-to-maturity investment securities	302,442		—		277,003		—		277,003

Loans, net	1,276,144		—		—		1,213,098		1,213,098

Accrued interest receivable	10,898		—		6,146		4,752		10,898
Financial liabilities:
Time deposits	162,085		—		160,839		—		160,839
Short-term borrowings	80,000		—		79,991		—		79,991
Senior debt and subordinated debentures	69,744		—		—		61,121		61,121
Accrued interest payable	778		—		594		184		778


	December 31, 2022
	Carrying Amount		Fair Value
			Level 1		Level 2		Level 3		Total
Financial assets:
Cash and due from banks	$	25,485	$	25,485	$	—	$	—	$	25,485
Interest-earning deposits in other banks	5,685		5,685		—		—		5,685



Held-to-maturity investment securities	305,107		—		271,249		—		271,249
Loans, net	1,245,456		—		—		1,113,849		1,113,849

Accrued interest receivable	10,547		—		6,035		4,512		10,547
Financial liabilities:
Time deposits	67,923		—		67,047		—		67,047
Short-term borrowings	46,000		—		46,000		—		46,000
Senior debt and subordinated debentures	69,599		—		—		62,504		62,504
Accrued interest payable	794		—		83		711		794

The methods and assumptions used to estimate fair values are described as follows:

(a) Cash and Cash Equivalents — The carrying amounts of cash and due from banks, interest-earning deposits in other banks, and Federal funds sold approximate fair values and are classified as Level 1.

(b) Investment securities — The fair values for investment securities are determined by quoted market prices, if available (Level 1). For securities where quoted prices are not available, fair values are calculated based on market prices of similar securities (Level 2), using matrix pricing. Matrix pricing is a mathematical technique commonly used to price debt securities that are not actively traded, values debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs). For securities where

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quoted prices or market prices of similar securities are not available, fair values are calculated using discounted cash flows or other market indicators (Level 3).

(c) Loans — Fair values of loans are estimated as follows: fixed and variable loans are estimated using discounted cash flow analyses, taking into consideration various factors including loan type, credit loss and prepayment expectations. The loan cash flows are discounted to present value using a combination of existing market rates and liquidity spreads as well as underlying index rates and margins on variable rate loans resulting in a Level 3 classification.

(d) Time Deposits — Fair value for fixed and variable rate certificates of deposit are estimated using discounted cash flow analyses using interest rates offered at each reporting date by the Company for certificates with similar remaining maturities resulting in a Level 2 classification.

(e) Short-Term Borrowings — The carrying amounts of federal funds purchased, borrowings under repurchase agreements, and other short-term borrowings, maturing within one year, approximate their fair values resulting in a Level 2 classification.

(f) Subordinated Debentures and Senior Debt — The fair values of the Company’s Subordinated Debentures are estimated using discounted cash flow analyses based on the current borrowing rates for similar types of borrowing arrangements resulting in a Level 3 classification.

(g) Accrued Interest Receivable/Payable — The fair value of accrued interest receivable and payable is based on the fair value hierarchy of the related asset or liability.

Assets Recorded at Fair Value

The following tables present information about the Company’s assets and liabilities measured at fair value on a recurring and non-recurring basis as of December 31, 2023 and 2022:

Recurring Basis

The Company is required or permitted to record the following assets at fair value on a recurring basis under other accounting pronouncements (in thousands):


	Fair Value Measurements Using
	Fair Value		Level 1		Level 2		Level 3
December 31, 2023
Available-for-sale debt securities:

U.S. Treasury securities	$	8,954	$	—	$	8,954	$	—
U.S. Government agencies	95		—		95		—
Obligations of states and political subdivisions	180,222		—		180,222		—
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations	83,352		—		83,352		—
Private label mortgage and asset backed securities	324,573		—		324,573		—

Equity Securities	6,649		6,649		—		—
Total assets measured at fair value on a recurring basis	$	603,845	$	6,649	$	597,196	$	—

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	Fair Value Measurements Using
	Fair Value		Level 1		Level 2		Level 3
December 31, 2022
Available-for-sale debt securities:

U.S. Treasury securities	$	8,707	$	—	$	8,707	$	—
U.S. Government agencies	98		—		98		—
Obligations of states and political subdivisions	174,985		—		174,985		—
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations	109,493		—		109,493		—
Private label residential mortgage and asset backed securities	355,542		—		355,542		—
Corporate debt securities	—		—		—		—
Equity Securities	6,558		6,558		—		—
Total assets measured at fair value on a recurring basis	$	655,383	$	6,558	$	648,825	$	—

Securities in Level 1 are mutual funds and fair values are based on quoted market prices for identical instruments traded in active markets. Fair values for available-for-sale investment securities in Level 2 are based on quoted market prices for similar securities in active markets. For securities where quoted prices or market prices of similar securities are not available, fair values are calculated using discounted cash flows or other market indicators.

Management evaluates the significance of transfers between levels based upon the nature of the financial instrument and size of the transfer relative to total assets, total liabilities or total earnings. During the years ended December 31, 2023 and 2022, no transfers between levels occurred.

There were no Level 3 assets measured at fair value on a recurring basis at December 31, 2023 or December 31, 2022. Also there were no liabilities measured at fair value on a recurring basis at December 31, 2023 or December 31, 2022.

Non-Recurring Basis

There were no assets measured on a non-recurring basis at December 31, 2023 and December 31, 2022.

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17. PARENT ONLY CONDENSED FINANCIAL STATEMENTS

CONDENSED BALANCE SHEETS

December 31, 2023 and 2022


(In thousands)	2023		2022
ASSETS
Cash and cash equivalents	$	776	$	3,202
Investment in Bank subsidiary	274,596		240,879
Other assets	1,704		989
Total assets	$	277,076	$	245,070
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Senior debt and subordinated debentures	$	69,744	$	69,599
Other liabilities	268		811
Total liabilities	70,012		70,410
Shareholders’ equity:



Common stock	62,550		61,487
Retained earnings	210,548		194,400
Accumulated other comprehensive loss, net of tax	(66,034)		(81,227)
Total shareholders’ equity	207,064		174,660
Total liabilities and shareholders’ equity	$	277,076	$	245,070

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CONDENSED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (LOSS)

For the Years Ended December 31, 2023, 2022, and 2021


(In thousands)	2023		2022		2021
Income:
Dividends declared by (Company) Subsidiary - eliminated in consolidation	$	6,963	$	(38,000)	$	7,679
Other income	11		6		3
Total income	6,974		(37,994)		7,682
Expenses:
Interest on subordinated debentures and borrowings	3,652		1,971		266
Professional fees	1,305		239		296
Other expenses	283		601		560
Total expenses	5,240		2,811		1,122
Income (loss) before equity in undistributed net income of Subsidiary	1,734		(40,805)		6,560
Equity in undistributed net income of Subsidiary, net of distributions	22,256		66,583		21,496
Income before income tax benefit	23,990		25,778		28,056
Benefit from income taxes	1,546		867		345


Net income	$	25,536	$	26,645	$	28,401

Total other comprehensive income (loss)	15,193		(88,859)		(7,224)
Comprehensive income (loss)	$	40,729	$	(62,214)	$	21,177

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CONDENSED STATEMENTS OF CASH FLOWS

For the Years Ended December 31, 2023, 2022, and 2021


(In thousands)	2023		2022		2021
Cash flows from operating activities:
Net income	$	25,536	$	26,645	$	28,401
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Undistributed net income of subsidiary, net of distributions	(22,256)		(66,583)		(21,496)
Equity-based compensation	858		776		562
Amortization of unamortized issuance cost	145		145		—
Net (increase) decrease in other assets	(715)		(499)		1
Net increase (decrease) in other liabilities	(542)		390		307
Benefit for deferred income taxes	—		15		6
Net cash provided by (used in) operating activities	3,026		(39,111)		7,781
Cash flows used in investing activities:
Investment in subsidiary	—		—		—
Cash flows from financing activities:



Proceeds from issuance of subordinated and senior debt	—		30,000		34,299
Cash dividend payments on common stock	(5,657)		(5,638)		(5,757)

Purchase and retirement of common stock	(1)		(6,814)		(13,619)
Proceeds from exercise of stock options	—		489		256
Proceeds from stock issued under employee stock purchase plan	206		216		204


Net cash (used in) provided by financing activities	(5,452)		18,253		15,383
(Decrease) increase in cash and cash equivalents	(2,426)		(20,858)		23,164
Cash and cash equivalents at beginning of year	3,202		24,060		896
Cash and cash equivalents at end of year	$	776	$	3,202	$	24,060

Supplemental Disclosure of Cash Flow Information:
Cash paid during the year for interest	$	4,180	$	1,431	$	119

18. SUBSEQUENT EVENT

On February 8, 2024, the Company received shareholder approval of the merger of Community West Bancshares with and into the Company, with Central Valley Community Bancorp as the resulting company, and Community West Bank with and into Central Valley Community Bank.

Additionally, all required regulatory approvals have been received for the merger and the closing of the transaction is expected to be completed as of April 1, 2024, subject to certain other customary closing conditions. Following the closing of the merger, the resulting company will assume the name Community West Bancshares, and Central Valley Community Bank will assume the name Community West Bank to reflect the expanded territory of the combined company.

Dividend Declared

On January 17, 2024, the Board of Directors declared a 0.12 per share cash dividend payable on February 19, 2024 to shareholders of record as of February 2, 2024.

PART IV

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ITEM 15 EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a)(1) FINANCIAL STATEMENTS

The Financial Statements of the Company and the Report of Independent Registered Public Accounting Firm (PCAOB ID:659) are set forth in Part II, Item 8 and incorporated by reference herein.

(a)(2) FINANCIAL STATEMENT SCHEDULES

All schedules to the Financial Statements are omitted because of the absence of the conditions under which they are required or because the required information is included in the Financial Statements or accompanying notes.

(a)(3) EXHIBITS

The exhibits filed as part of this report and exhibits incorporated by reference to other documents are as follows:


Exhibit
Number						Exhibit

2.1						Agreement and Plan of Reorganization and Merger, dated October 10, 2023, by and among Central Valley Community Bancorp and Community West Bancshares, attached as Exhibit 2.1 to the Form 8-K, filed October 10, 2023 and incorporated herein by reference.

2.2						Agreement and Plan of Reorganization and Merger, dated December 19, 2012, by and among Central Valley Community Bancorp, Central Valley Community Bank and Visalia Community Bank, incorporated by reference to Appendix A to the proxy statement-prospectus contained in the Amendment No. 2 to Form S-4, Registration Statement No. 333-187260, filed May 8, 2013 and incorporated herein by reference.

2.3						The Agreement and Plan of Reorganization and Merger among Central Valley Community Bancorp, Central Valley Community Bank, and Sierra Vista Bank, dated April 28, 2016, attached as Exhibit 2.2 to the Form 8-K, filed April 29, 2016 and incorporated herein by reference.

2.4						The Agreement and Plan of Reorganization and Merger among Central Valley Community Bancorp, Central Valley Community Bank, and Folsom Lake Bank, dated April 27, 2017, incorporated by reference to Appendix A to the proxy statement-prospectus contained in the Amendment No. 1 to Form S-4, Registration Statement No. 333-218664, filed June 26, 2017 and incorporated herein by reference.

3.1						Amended and Restated Articles of Incorporation of Central Valley Community Bancorp, attached as Exhibit 3.1 to the Form 10-Q for quarter ended June 30, 2010, refiled herein.**

3.2						Revised and Restated Bylaws of the Company.**

4.1						Indenture, dated as of August 17, 2006 between Service 1st Bancorp, as Issuer, and Wells Fargo Bank, National Association, as trustee, attached as Exhibit 4.2 to the Quarterly Report on Form 10-Q for the quarter ended August June 30, 2007 and incorporated herein by reference.

4.2						Declaration of Trust for Service 1st Capital Trust I, dated as of August 17, 2006, between Wells Fargo Bank, National Association as trustee, and Central Valley Community Bancorp as successor through merger to Service 1st Bancorp, attached as Exhibit 4.3 to the Quarterly Report on Form 10-Q for the quarter ended August June 30, 2007 and incorporated herein by reference.

4.3						Description of Securities Registered under Section 12 of the Securities Exchange Act of 1934.**

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10.1						Clovis Community Bank Amended and Restated Deferred Fee Agreement for Daniel N. Cunningham, attached as Exhibit 10.23 to the Form 10-K for the year ended December 31, 2000, filed on March 30, 2001 and incorporated herein by reference.*

10.2						Clovis Community Bank Amended and Restated Deferred Fee Agreement for Steven McDonald, attached as Exhibit 10.24 to the Form 10-K for the year ended December 31, 2000, filed on March 30, 2001 and incorporated herein by reference.*

10.3						Clovis Community Bank Amended and Restated Deferred Fee Agreement for Louis McMurray, attached as Exhibit 10.25 to the Form 10-K for the year ended December 31, 2000, filed on March 30, 2001 and incorporated herein by reference.*

10.4						Clovis Community Bank Amended and Restated Deferred Fee Agreement for William S. Smittcamp, attached as Exhibit 10.27 to the Form 10-K for the year ended December 31, 2000, filed on March 30, 2001 and incorporated herein by reference.*

10.5						Form of Second Amended and Restated Director Deferred Fee Agreement by and between Clovis Community Bank and Daniel N. Cunningham, Steven McDonald, Louis McMurray, and William S. Smittcamp, effective February 13, 2002, attached as Exhibit 10.36 to the Quarterly Report on Form 10-QSB for the quarter ended June 30, 2002, filed August 12, 2002 and incorporated herein by reference.*

10.6						Schedule A, Participants’ Normal Retirement Age and Form of Benefit Elected to Second Amended and Restated Director Deferred Fee Agreement by and between Clovis Community Bank and Daniel N. Cunningham, Steven McDonald, Louis McMurray, and William S. Smittcamp, effective February 13, 2002, attached as Exhibit 10.37 to the Quarterly Report on Form 10-QSB for the quarter ended June 30, 2002, filed August 12, 2002 and incorporated herein by reference.*

10.7						Addendum A, Clovis Community Bank Split Dollar Agreement and Endorsement by and between Clovis Community Bank and Daniel N. Cunningham, Steven McDonald, Louis McMurray, and William S. Smittcamp, effective February 13, 2002, attached as Exhibit 10.38 to the Quarterly Report on Form 10-QSB for the quarter ended June 30, 2002, filed August 12, 2002 and incorporated herein by reference.*

10.8						Schedule B, Participants and Their Executive Interest in Clovis Community Bank Split Dollar Agreement and Endorsement, by and between Clovis Community Bank and Daniel N. Cunningham, Steven McDonald, Louis McMurray, and William S. Smittcamp, effective February 13, 2002, attached as Exhibit 10.39 to the Quarterly Report on Form 10-QSB for the quarter ended June 30, 2002, filed August 12, 2002 and incorporated herein by reference.*

10.9						Amendment No. 1 to Salary Continuation Agreement by and between Central Valley Community Bank and Daniel J. Doyle effective October 16, 2002, attached as Exhibit 10.42 to the Annual Report on Form 10-KSB for the year ended December 31, 2002, filed March 31, 2003 and incorporated herein by reference.*

10.10						Form of Amendment to the Split Dollar Agreement and Policy Endorsement with Central Valley Community Bank by and between Central Valley Community Bank f/k/a Clovis Community Bank and Daniel N. Cunningham, Steven McDonald, Louis McMurray, and William S. Smittcamp, effective January 1, 2003, attached as Exhibit 10.43 to the Quarterly Report on Form 10-QSB for the quarter ended March 31, 2003, filed May 8, 2003 and incorporated herein by reference.*

10.11						Schedule C, Participants and life insurance policies in Central Valley Community Bank Amended Split Dollar Agreement and Policy Endorsement by and between Central Valley Community Bank f/k/a Clovis Community Bank and Daniel N. Cunningham, Steven McDonald, Louis McMurray, and William S. Smittcamp, effective January 1, 2003, attached as Exhibit 10.44 to the Quarterly Report on Form 10-QSB for the quarter ended March 31, 2003, filed May 8, 2003 and incorporated herein by reference.*

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10.12						Schedule C, Participants and life insurance policies in Central Valley Community Bank Amended Split Dollar Agreement and Policy Endorsement by and between Central Valley Community Bank f/k/a Clovis Community Bank and Daniel N. Cunningham, Steven McDonald, Louis McMurray, and William S. Smittcamp, effective January 1, 2003, attached as Exhibit 10.44 to the Quarterly Report on Form 10-QSB for the quarter ended March 31, 2003, filed May 8, 2003 and incorporated herein by reference.*

10.13						Schedule C, Participants and life insurance policies in Central Valley Community Bank Amended Split Dollar Agreement and Policy Endorsement by and between Central Valley Community Bank f/k/a Clovis Community Bank and Daniel N. Cunningham, Steven McDonald, Louis McMurray, and William S. Smittcamp, effective January 1, 2003, attached as Exhibit 10.44 to the Quarterly Report on Form 10-QSB for the quarter ended March 31, 2003, filed May 8, 2003 and incorporated herein by reference.*

10.14						Second Amendment to the Clovest Corporation Director Deferred Compensation Plan Agreement Dated November 14, 1996 by and between Clovest Corporation and Daniel N. Cunningham effective October 31, 2003, attached as Exhibit 10.47 to the Annual Report on Form 10-KSB for the year ended December 31, 2003, filed March 26, 2004 and incorporated herein by reference.*

10.15						Second Amendment to the Clovest Corporation Director Deferred Compensation Plan Agreement Dated November 14, 1996 by and between Clovest Corporation and William S. Smittcamp effective October 31, 2003, attached as Exhibit 10.48 to the Annual Report on Form 10-KSB for the year ended December 31, 2003, filed March 26, 2004 and incorporated herein by reference.*

10.16						Second Amendment to the Clovest Corporation Director Deferred Compensation Plan Agreement Dated November 14, 1996 by and between Clovest Corporation and Louis McMurray effective October 31, 2003, attached as Exhibit 10.49 to the Annual Report on Form 10-KSB for the year ended December 31, 2003, filed March 26, 2004 and incorporated herein by reference.*

10.17						Amendment No. 3 To Salary Continuation Agreement by and between Central Valley Community Bank and Daniel Doyle effective February 1, 2005, attached as Exhibit 10.62 to the Quarterly Report on Form 10-Q for the quarter ended June, 30 2005, filed August 15, 2005 and incorporated herein by reference.*

10.18						Salary Continuation Agreement Amendment dated March 1, 2008 by and between Central Valley Community Bank and Daniel J. Doyle, attached as Exhibit 10.82 to Annual Report on Form 10-K for the year ended December 31, 2007, filed March 5, 2008 and incorporated herein by reference.*

10.19						Form of Second Amendment to the Director Deferred Compensation Agreement effective January 1, 2009 by and between Central Valley Community Bank and Daniel N. Cunningham, Edwin S. Darden, Jr., Steven D. McDonald, Louis C. McMurray, and William S. Smittcamp, attached as Exhibit 10.83 to Quarterly Report on Form 10-Q for the quarter ended September 30, 2009, filed November 13, 2009 and incorporated herein by reference.

10.20						Second Amended and Restated Executive Salary Continuation Agreement effective July 1, 2011, by and between Central Valley Community Bank and Daniel J. Doyle, attached as Exhibit 10.89 to the Quarterly Report on Form 10-Q for the quarter ended September 30, 2011, filed on November 14, 2011 and incorporated herein by reference.*

10.21						Second Amended and Restated Life Insurance Endorsement Method Split Dollar Plan Agreement effective July 1, 2011, by and between Central Valley Community Bank and Daniel J. Doyle, attached as Exhibit 10.90 to the Quarterly Report on Form 10-Q for the quarter ended September 30, 2011, filed on November 14, 2011 and incorporated herein by reference.*

10.22						Amended Split Dollar Plan Agreement and Endorsement effective March 21, 2012, by and between Central Valley Community Bank and William S. Smittcamp, attached as Exhibit 10.99 to the Quarterly Report on Form 10-Q for the quarter ended March 31, 2012, filed May 11, 2012 and incorporated herein by reference.*

10.23						Amended Split Dollar Plan Agreement and Endorsement effective March 21, 2012, by and between Central Valley Community Bank and Daniel N. Cunningham, attached as Exhibit 10.100 to the Quarterly Report on Form 10-Q for the quarter ended March 31, 2012, filed May 11, 2012 and incorporated herein by reference.*

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10.24						Amended Split Dollar Plan Agreement and Endorsement effective March 21, 2012, by and between Central Valley Community Bank and Louis McMurray, attached as Exhibit 10.101 to the Quarterly Report on Form 10-Q for the quarter ended March 31, 2012, filed May 11, 2012 and incorporated herein by reference.*

10.25						Amended Split Dollar Plan Agreement and Endorsement effective March 21, 2012, by and between Central Valley Community Bank and Steven D. McDonald, attached as Exhibit 10.102 to the Quarterly Report on Form 10-Q for the quarter ended March 31, 2012, filed May 11, 2012 and incorporated herein by reference.*

10.26						Amended Split Dollar Plan Agreement and Endorsement effective December 18, 2013, by and between Central Valley Community Bank and Daniel N. Cunningham, attached as Exhibit 10.104 to Annual Report on Form 10K for the year ended December 31, 2013, filed March 21, 2014 and incorporated herein by reference.*

10.27						Amended Split Dollar Plan Agreement and Endorsement effective December 18, 2013, by and between Central Valley Community Bank and Louis McMurray, attached as Exhibit 10.106 to Annual Report on Form 10K for the year ended December 31, 2013, filed March 21, 2014 and incorporated herein by reference.*

10.28						Amended Split Dollar Plan Agreement and Endorsement effective December 18, 2013, by and between Central Valley Community Bank and Steven D. McDonald, attached as Exhibit 10.107 to Annual Report on Form 10K for the year ended December 31, 2013, filed March 21, 2014 and incorporated herein by reference.*

10.29						Amended Split Dollar Plan Agreement and Endorsement effective December 18, 2013, by and between Central Valley Community Bank and William S. Smittcamp, attached as Exhibit 10.108 to Annual Report on Form 10K for the year ended December 31, 2013, filed March 21, 2014 and incorporated herein by reference.*

10.30						Central Valley Community Bank Executive Deferred Compensation Plan dated October 21, 2015, attached as Exhibit 10.110 to Annual Report on Form 10-K for the year ended December 31, 2015, filed March 15, 2016 and incorporated herein by reference.*

10.31						Central Valley Community Bancorp 2015 Omnibus Incentive Plan dated May 20, 2015, attached as Exhibit 10.114 to Annual Report on Form 10-K for the year ended December 31, 2016, filed March 29, 2017 and incorporated herein by reference.*

10.32						Service 1st Bank Salary Continuation Agreement by and between Service 1st Bank and Patrick J. Carman effective August 22, 2008, as amended, attached as Exhibit 10.11 to the Annual Report on Form 10-K for the year ended December 31, 2016, filed on March 29, 2017 and incorporated herein by reference.*

10.33						Central Valley Community Bancorp Employee Stock Purchase Plan dated June 1, 2017, attached as Exhibit 4.3 to Registration Statement No. 333-218408 on Form S-8, filed June 1, 2017 and incorporated herein by reference.*

10.34						Life Insurance Endorsement Method Split Dollar Plan Agreement by and between Central Valley Community Bank and James J. Kim, dated February 1, 2019, attached as Exhibit 10.84 to the Annual Report on Form 10-K for the year ended December 31, 2018 filed March 8, 2019 and incorporated herein by reference.*

10.35						Executive Salary Continuation Agreement by and between Central Valley Community Bank and Teresa Gilio, dated May 1, 2019, attached as Exhibit 10.84 to the Annual Report on Form 10-K for the year ended December 31, 2019 filed as March 6, 2020 and incorporated herein by reference.*

10.36						Life Insurance Endorsement Method Split Dollar Plan Agreement by and between Central Valley Community Bank and Teresa Gilio, dated May 1, 2019. attached as Exhibit 10.85 to the Annual Report on Form 10-K for the year ended December 31, 2019 filed on March 6, 2020 and incorporated herein by reference.*

10.37						Amended Executive Salary Continuation Agreement effective April 1, 2020, by and between Central Valley Community Bank and James J. Kim, attached as Exhibit 10.86 to the Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 filed May 6, 2020 and incorporated herein by reference.*

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10.38						Amended Life Insurance Endorsement Method Split Dollar Agreement effective April 1, 2020, by and between Central Valley Community Bank and James J. Kim, attached as Exhibit 10.87 to the Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 filed May 6, 2020 and incorporated herein by reference.*

10.39						Executive Salary Continuation Agreement by and between Central Valley Community Bank and Ken Ramos, dated April 1, 2020, attached as Exhibit 10.88 to the Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 filed May 6, 2020 and incorporated herein by reference.*

10.40						Life Insurance Endorsement Method Split Dollar Plan Agreement by and between Central Valley Community Bank and Ken Ramos, dated April 1, 2020, attached as Exhibit 10.89 to the Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 filed May 6, 2020 and incorporated herein by reference.*

10.41						Change in Control Agreement by and between Central Valley Community Bank and James J. Kim, Patrick A. Luis, A. Kenneth Ramos, Teresa Gilio, and Blaine C. Lauhon, Dated April 30, 2021, attached as Exhibit 99.1 to file Form 8-K, filed May 5, 2021 and incorporated herein by reference.*

10.42						Executive Salary Continuation Agreement by and between Central Valley Community Bank and Patrick Luis, dated July 1, 2021, attached as Exhibit 10.93 to the Quarterly Report on Form 10-Q for the quarter ended June 30, 2021 filed August 4, 2021 and incorporated herein by reference.*

10.43						Life Insurance Endorsement Method Split Dollar Plan Agreement by and between Central Valley Community Bank and Patrick Luis, dated July 1, 2021, attached as Exhibit 10.94 to the Quarterly Report on Form 10-Q for the quarter ended June 30, 2021 filed August 4, 2021 and incorporated herein by reference.*

10.44						Employment Agreement by and between Central Valley Community Bank and James J. Kim effective November 1, 2021, attached as Exhibit 99.2 to the Form 8K filed September 10, 2021 and incorporated herein by reference.*

10.45						Restricted Stock Award Agreement by and between Central Valley Community Bancorp and James J. Kim, dated February 1, 2022, attached as Exhibit 10.86 to the Annual Report on Form 10-K for the year ended December 31, 2021 filed March 9, 2022 and incorporated herein by reference.*

10.46						Change in Control Agreement by and between Central Valley Community Bank and Jeffrey Martin, effective June 3, 2022, attached as Exhibit 99.1 to the Form 8K filed June 3, 2022 and incorporated herein by reference.*

10.47						Restricted Stock Award Agreement by and between Central Valley Community Bancorp and James J. Kim, dated February 1, 2023., *

10.48						Change in Control Agreement by and between Central Valley Community Bank and Shannon Livingston, effective September 22, 2023, attached as Exhibit 99.1 to the Form 8K filed September 22, 2023 and incorporated herein by reference.*

21						Subsidiaries, attached as Exhibit 21 to the Annual Report on Form 10-K for the year ended December 31, 2023 and incorporated by reference. **



23.1						Consent of Moss Adams LLP

23.2						Consent of Crowe LLP

24						Power of Attorney (incorporated by reference to the signature page of this Annual Report on Form 10-K)**

31.1						Rule 13a-14(a) [Section 302] Certification Of Principal Executive Officer

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31.2						Rule 13a-14(a) [Section 302] Certification Of Principal Financial Officer

32.1						Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes Oxley Act of 2002

32.2						Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350. As Adopted Pursuant to Section 906 of the Sarbanes Oxley Act of 2002

97.1						Executive Officer Incentive Compensation Recovery Policy.**

101.INS						XBRL Instance Document

101.SCH						XBRL Taxonomy Extension Schema Document

101.CAL						XBRL Taxonomy Extension Calculation Document

101.DEF						XBRL Taxonomy Extension Definition Linkbase

101.LAB						XBRL Taxonomy Extension Labels Linkbase Document

101.PRE						XBRL Taxonomy Extension Presentation Link Document

* Management contract and compensatory plans.

** Filed with initial filing

SIGNATURES

Pursuant to the requirements of Section 13 of the Securities Exchange Act of 1934, the Company has duly caused this Amendment No. 1 report to be signed on its behalf by the undersigned, thereunto duly authorized.

COMMUNITY WEST BANCSHARES

Date:

October 1, 2024

By:

/s/ James J. Kim

James J. Kim

Chief Executive Officer

(Principal Executive Officer)

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/s/ James J. Kim									Date: October 1, 2024
James J. Kim,
Chief Executive Officer and Director (Principal Executive Officer)

/s/ Shannon Livingston									Date: October 1, 2024
Shannon Livingston
Executive Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)

/s/ Daniel J. Doyle*									Date: October 1, 2024
Daniel J. Doyle,
Chairman of the Board and Director

/s/ Daniel N. Cunningham*									Date: October 1, 2024
Daniel N. Cunningham, Vice Chairman of the Board and Director

/s/ F.T. “Tommy” Elliott, IV*									Date: October 1, 2024
F.T. “Tommy” Elliott, IV, Director

/s/ Robert J. Flautt*									Date: October 1, 2024
Robert J. Flautt, Director

/s/ Gary D. Gall*									Date: October 1, 2024
Gary D. Gall, Director

/s/ Andriana D. Majarian*									Date: October 1, 2024
Andriana D. Majarian, Director

/s/ Steven D. McDonald*									Date: October 1, 2024
Steven D. McDonald, Director

/s/ Louis McMurray*									Date: October 1, 2024
Louis McMurray, Director

/s/ Karen Musson*									Date: October 1, 2024
Karen Musson, Director

/s/ Dorothea D. Silva*									Date: October 1, 2024
Dorothea D. Silva, Director

/s/ William S. Smittcamp*									Date: October 1, 2024
William S. Smittcamp, Director

*By /s/ James J. Kim									Date: October 1, 2024
Attorney-In-Fact

Positive
Negative
Uncertain
Constraining
Legalese
Litigous
Readability	H.S. sophomore Bad

Community West Bancshares 10-K/A2023 FY Annual report (amended)

Content analysis