CVB Financial CVBF Q2 2026 earnings

Net Interest Income

Net interest income was $162.4 million for the second quarter of 2026, an increase of $44.6 million, or 37.83%, from the first quarter of 2026, and an increase of $50.8 million, or 45.52%, from the second quarter of 2025. The quarter-over-quarter and year-over-year increases in net interest income largely reflects the impact of operating as a combined company for approximately two and a half months following the Heritage acquisition. Interest income increased by $53.0 million, or 35.56%, from the first quarter of 2026, while interest expense increased by $8.4 million, or 27.00%, to $39.7 million in the second quarter of 2026. The quarter-over-quarter increase in net interest income was primarily due to a 28 basis point increase in net interest margin and a $3.67 billion increase in average interest-earning assets.

[1] Non-U.S. generally accepted accounting principles (“GAAP”) financial measures. See GAAP to non–GAAP reconciliations of the measures are set forth at the last section of this press release.

Compared to the second quarter of 2025, the $50.8 million increase in net interest income was primarily driven by a $57.9 million increase in interest income driven by a $4.01 billion increase in average interest-earning assets and a 34 basis point increase in the yield on earning assets. The increase in interest income was offset by a $7.1 million increase in interest expense attributable to a $2.83 billion increase in average interest-bearing deposits and customer repurchase agreements.

Net Interest Margin

Our tax equivalent net interest margin was 3.72% for the second quarter of 2026, compared to 3.44% for the first quarter of 2026 and 3.31% for the second quarter of 2025. The 28 basis points increase in our net interest margin compared to the first quarter of 2026 was primarily attributable to a 28 basis points increase in our average interest-earning assets yield, which was primarily driven by a 21 basis points increase in our average loan yield and a 11 basis points increase in our average investment securities yield. The increase in average loan yields reflected the Company's acquisition of Heritage and the addition of higher-yielding acquired assets, including approximately $86.1 million of average factored receivables during the quarter. Through the acquisition, the Company acquired CSNK Working Capital Finance Corp., doing business as Bay View Funding, a wholly owned subsidiary of the Bank that provides working capital factoring financing to businesses throughout the United States. During the quarter, the average yield on factored receivables was 18.04%. Cost of funds remained stable at 0.96% for the second quarter of 2026 compared to 0.97% in the first quarter of 2026, reflecting a 24 basis points decrease in the cost of FHLB borrowing, offset by a five basis point increase in our cost of deposits to 0.83%, from 0.78%.

Our tax equivalent net interest margin for the second quarter of 2026 increased by 41 basis points compared to the second quarter of 2025, reflecting a 34 basis point increase in the average interest-earning assets yield and a seven basis point decrease in cost of funds. The increase in earning assets yield was primarily due to a 31 basis point increase in average loan yields, reflecting the addition of higher-yielding acquired factored receivables portfolio acquired through the Heritage acquisition. Partially offsetting this increase was a lower yield on funds deposited at the Federal Reserve, resulting from the 75 basis points reduction in federal funds target rate by FOMC during the last four months of 2025. The average yield on investment securities increased by 12 basis points from the second quarter of 2025, despite the impact of the fair value hedges of our investment securities available-for-sale ("AFS"), which generated a negative carry during the second quarter of 2026 and reduced interest income by $1.4 million compared to the positive carry recognized in the same quarter last year. Cost of funds decreased to 0.96% in the second quarter of 2026 from 1.03% in the second quarter of 2025. This decrease was driven by a 35 basis point reduction in cost of interest-bearing deposits and a 29 basis point decrease in cost of FHLB borrowing. Partially offsetting these lower funding costs, noninterest-bearing deposits declined as a percentage of average total deposits to 52.3% in the second quarter of 2026 from 59.7% in the second quarter of 2025, resulting in a less favorable deposit mix.

Earning Assets and Deposits

The increases in average earning assets and average total deposits were primarily attributable to the Heritage acquisition. On average, earning assets increased by $3.67 billion compared to the first quarter of 2026 and increased $4.01 billion compared to the second quarter of 2025. The quarter-over-quarter increase in interest-earning assets was primarily attributable to a $2.92 billion increase in average loans, a $388.0 million increase in average interest-earning deposits at the Federal Reserve, and $349.7 million increase in average investment securities. The year-over-year increase in interest-earning assets was primarily attributable to a $3.19 billion increase in average loans, a $423.5 million increase in average investment securities and a $331.2 million increase in average interest-earning deposits at the Federal Reserve.

The average balance on noninterest-bearing deposits increased by $1.23 billion, or 17.83%, from the first quarter of 2026 and by $1.07 billion, or 15.20%, from the second quarter of 2025. The average balance on interest-bearing deposits and customer repurchase agreements increased by $2.38 billion from the first quarter of 2026 and increased by $2.83 billion from the second quarter of 2025. On average, noninterest-bearing deposits were 52.3% of total deposits for the second quarter of 2026, compared to 57.8% for the first quarter of 2026 and 59.7% for the second quarter of 2025.

Provision for Credit Losses

There was no provision for credit losses in the second quarter of 2026, compared to a $3.0 million provision for credit losses in the first quarter of 2026 and no provision for credit losses in the second quarter of 2025.

Noninterest Income

Noninterest income totaled $17.0 million for the second quarter of 2026, an increase of $2.7 million from $14.3 million for the first quarter of 2026 and an increase of $2.3 million from $14.7 million for the second quarter of 2025, including the impact of the Heritage acquisition. The quarter-over-quarter increase includes a $519,000 increase in service charges on deposit accounts, a $460,000 increase in trust and investment services income, and a $353,000 increase in bank-owned life insurance (“BOLI”) income.

Noninterest Expense

Noninterest expense totaled $114.4 million for the second quarter of 2026, compared to $60.6 million for the first quarter of 2026 and $57.6 million for the second quarter of 2025. The increase was primarily attributable to the Heritage acquisition, and the related addition of operations, personnel, and banking centers. Acquisition related expenses associated with the Heritage merger totaled $31.4 million in the second quarter of 2026, compared to $1.1 million for the first quarter of 2026. Excluding acquisition expense, noninterest expense increased $23.5 million compared to the first quarter of 2026. This increase was primarily driven by a $9.1 million increase in salaries and employee benefits, a $3.8 million increase in provision for unfunded loan commitments attributable to day 1 provision from the Heritage acquisition of $4.25 million, and a $2.7 million increase in amortization of intangible assets resulting from the core deposit intangibles associated with the acquisition, and $1.8 million increase in computer software expense. Excluding acquisition expense and the provision for unfunded loan commitments, the increase in noninterest expense compared to the second quarter of 2025 was $21.2 million.

As a percentage of average assets, noninterest expense was 2.31% for the second quarter of 2026, 1.58% for the first quarter of 2026, and 1.52% for the second quarter of 2025. The efficiency ratio was 63.75% for the second quarter of 2026, compared to 45.84% for the first quarter of 2026 and 45.55% for the second quarter of 2025. Excluding acquisition related expenses and the provision for unfunded loan commitments, the adjusted efficiency ratio[1] was 43.88% for the second quarter of 2026, compared to 44.61% for the first quarter of 2026 and 45.55% for the second quarter of 2025.

Income Taxes

Our effective tax rate for the quarter ended June 30, 2026 was 25.81%, compared with 25.60% for the first quarter of 2026, and 26.50% for the second quarter of 2025. Our estimated annual effective tax rate can vary depending upon the level of tax-advantaged income from municipal securities and BOLI, as well as tax credit investments.

BALANCE SHEET HIGHLIGHTS

Assets

Total assets were $21.18 billion at June 30, 2026, an increase of $5.68 billion, or 36.60%, from $15.51 billion at March 31, 2026. The increase was primarily attributable to a $3.37 billion increase in total loans, $839.1 million increase in investment securities and a $596.0 million increase in interest-earning balances due from the Federal Reserve. The increases in total assets compared to prior periods primarily reflect the impact of the Heritage acquisition completed on April 17, 2026, partially offset by balance sheet optimization activities during the quarter.

Total assets increased by $5.55 billion, or 35.52%, from $15.63 billion at December 31, 2025. The increase in assets was primarily driven by an increase of $3.32 billion, or 38.14%, in total loans, a $722.8 million, or 14.59% increase in investment securities and a $640.9 million, or 238.36%, increase in interest-earnings balances due from the Federal Reserve.

Total assets at June 30, 2026 increased by $5.77 billion, or 37.42%, from $15.41 billion at June 30, 2025. The increase in assets was primarily driven by an increase of $3.66 billion, or 43.77%, in total loans, an increase of $862.8 million, or 17.92%, in investment securities, and an increase of $366.2 million, or 67.37%, in interest-earning balances due from the Federal Reserve.

Investment Securities

Total investment securities were $5.68 billion at June 30, 2026, an increase of $839.1 million, or 17.35%, from $4.84 billion at March 31, 2026, an increase of $722.8 million, or 14.59%, from December 31, 2025, and an increase of $862.8 million, or 17.92%, from $4.81 billion at June 30, 2025. The increase in investment securities in the second quarter of 2026 compared to prior quarters was primarily the result of approximately $519.0 million of investment securities acquired and retained from the Heritage acquisition as well as approximately $500.0 million of purchases of AFS securities during the quarter. As part of the Company's balance sheet management strategy to improve portfolio yields and reduce asset duration, approximately $490 million of securities acquired from Heritage were sold at close of the merger and reinvested in lower duration securities at an average yield of approximately 4.70%.

At June 30, 2026, investment securities held-to-maturity (“HTM”) totaled $2.22 billion, a decrease of $29.5 million, or 1.31%, from March 31, 2026 and a decrease of $108.7 million, or 4.67%, from June 30, 2025.

[1] Non-GAAP financial measures. See GAAP to non–GAAP reconciliations of the measures are set forth at the last section of this press release.

At June 30, 2026, investment securities AFS totaled $3.46 billion, inclusive of a pre-tax net unrealized loss of $323.5 million. AFS securities increased by $868.6 million, or 33.55% from March 31, 2026 and increased by $971.5 million, or 39.07%, from $2.49 billion at June 30, 2025. The pre-tax net unrealized loss at June 30, 2026 increased by $13.1 million from March 31, 2026 and decreased by $40.2 million from June 30, 2025.

Loans

Total loans and leases, at amortized cost, of $12.02 billion at June 30, 2026 increased by $3.37 billion, or 39.03%, from $8.64 billion at March 31, 2026. The quarter-over-quarter increase was primarily due to increases of $2.35 billion in commercial real estate loans, $526.6 million in commercial and industrial loans, $166.3 million in consumer loans, $150.7 million in construction loans, $149.9 million in Small Business Administration (“SBA”) loans, and $63.1 million in single-family residential (“SFR”) mortgage loans, partially offset by decreases of $33.8 million in dairy & livestock and agribusiness loans, and $1.4 million in municipal lease finance receivables. The increase in total loans and leases compared to prior quarters was primarily attributable to the Heritage acquisition, which added $3.10 billion of loans held for investment recorded at fair value as of the acquisition date.

Total loans and leases, at amortized cost, increased by $3.32 billion, or 38.14%, from December 31, 2025. The increase included increases of $2.41 billion in commercial real estate loans, $505.3 million in commercial and industrial loans, $172.2 million in construction loans, $166.7 million in consumer loans, $159.2 million in SBA loans, and $59.6 million in SFR mortgage loans. These increases were partially offset by decreases of $150.6 million in dairy & livestock and agribusiness loans associated with the seasonal increase that occurs every calendar year end, and $3.5 million in municipal lease finance receivables loans.

Total loans and leases, at amortized cost, increased by $3.66 billion, or 43.77%, from June 30, 2025. The $3.66 billion increase included increases of $2.47 billion in commercial real estate loans, $566.5 million in commercial and industrial loans, $192.3 million in construction loans, $170.9 million in consumer loans, $169.8 million in SBA loans, $52.9 million in SFR mortgage loans, partially offset by a decrease of $7.6 million in municipal lease finance receivables.

Asset Quality

During the second quarter of 2026, we experienced credit charge-offs of $141,000 and total recoveries of $4,000, resulting in net charge-offs of $137,000, which compares to net recoveries of $9,000 in the prior quarter. The allowance for credit losses (“ACL”) totaled $126.7 million at June 30, 2026, compared to $80.2 million at March 31, 2026 and $78.0 million at June 30, 2025. The ACL increased $46.5 million in the second quarter of 2026, reflecting the initial ACL of $46.6 million on the purchased credit deteriorated (“PCD”) loans and purchased seasoned loans (“PSL”) acquired from the Heritage acquisition. At June 30, 2026, the ACL as a percentage of total loans and leases outstanding was 1.05%. This compares to 0.93% at both March 31, 2026 and June 30, 2025.

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

The $10.5 million increase in nonperforming loans from March 31, 2026 was primarily due to the addition of 12 nonperforming commercial and industrial loans totaling $6.2 million, three nonperforming commercial real estate loans totaling $4.3 million, and one nonperforming construction loan for $685,000, offset by three commercial real estate nonaccrual loan payoffs totaling $1.5 million.

Classified loans are loans that are graded “substandard” or worse. Classified loans increased $26.7 million quarter-over-quarter, primarily driven by $29.1 million of classified loans acquired in the Heritage merger.

Deposits & Customer Repurchase Agreements Deposits of $16.29 billion and customer repurchase agreements of $563.4 million totaled $16.85 billion at June 30, 2026, compared to $12.44 billion at March 31, 2026, $12.56 billion at December 31, 2025, and $12.39 billion at June 30, 2025. Deposits and customer repurchase agreements increased $4.41 billion, or 35.47%, from March 31, 2026, $4.29 billion, or 34.15% from December 31, 2025, and $4.46 billion, or 36.03%, from June 30, 2025. The increases primarily reflected $1.2 billion of noninterest-bearing deposits and $3.5 billion of interest-bearing deposits assumed in connection with the Heritage acquisition completed during the second quarter of 2026.

Noninterest-bearing deposits were $8.61 billion at June 30, 2026, an increase of $1.51 billion, or 21.22%, compared to $7.10 billion at March 31, 2026. Noninterest-bearing deposits increased $1.81 billion, or 26.56%, from $6.80 billion at December 31, 2025 and $1.36 billion, or 18.76%, from $7.25 billion at June 30, 2025. At June 30, 2026, noninterest-bearing deposits were 52.84% of total deposits, compared to 59.44% at March 31, 2026, 56.33% at December 31, 2025, and 60.47% at June 30, 2025. The decrease in noninterest-bearing deposits as a percentage of total deposits primarily reflected the mix of deposits assumed in the Heritage acquisition, which included a higher proportion of interest-bearing deposits.

Borrowings

As of June 30, 2026, total borrowings were $539.0 million, consisting of $500.0 million of Federal Home Loan Bank ("FHLB") advances and $39.0 million of subordinated debt assumed in the Heritage acquisition, compared to $500.0 million of FHLB advances at both March 31, 2026 and December 31, 2025. At June 30, 2026, FHLB advances consisted of $300.0 million of 90 day advances that have been hedged with a cashflow hedge in which the Company pays a fixed rate cost of 4.10% and receives SOFR and $200.0 million putable advance with a cost of 4.27% maturing in May 2027. During the second quarter of 2026, $300.0 million of FHLB advances, with a weighted-average cost of 4.73%, matured in May and were not replaced during the quarter.

Capital

The Company’s total equity was $3.17 billion at June 30, 2026, compared to $2.30 billion at December 31, 2025 and $2.24 billion at June 30, 2025. The increase of $874.5 million from December 31, 2025 was primarily due to $840.2 million of common shares issued and exchanged as a result of the Heritage acquisition and $99.3 million in net earnings, partially offset by $62.5 million in cash dividends declared and $5.1 million common stock repurchases. On June 15, 2026, the Board of Directors approved a program to repurchase up to 15,000,000 shares of CVB common stock (the “2026 Repurchase Program”). The 2026 Repurchase Program replaced in its entirety the Company's previous 2024 share repurchase program. During the second quarter of 2026, the Company purchased 241,034 shares under the 2026 Repurchase Program, at an average price of $21.06 per share for an aggregate purchase price of $5.1 million.

Our tangible book value per share was $11.07 at June 30, 2026, compared to $11.42 at March 31, 2026 and $10.64 at June 30, 2025, respectively.

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

CitizensTrust

As of June 30, 2026, CitizensTrust had approximately $5.18 billion in assets under management and administration, including $3.81 billion in assets under management. Revenues were $4.2 million for the second quarter of 2026, compared to $3.7 million in the first quarter and $3.7 million for the second quarter of 2025. CitizensTrust provides trust, investment and brokerage related services, as well as financial, estate and business succession planning.

Corporate Overview

CVB Financial Corp. (“CVBF”) is the holding company for Citizens Business Bank, National Association. CVBF is one of the ten largest bank holding companies headquartered in California with more than $20 billion in total assets as of the closing of the mergers with Heritage Commerce Corp and its principal banking subsidiary, Heritage Bank of Commerce. Citizens Business Bank, National Association, is consistently recognized as one of the top performing banks in the nation and offers a wide array of banking, lending and investing services with more than 75 banking centers and three trust office locations serving California.

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

Conference Call

Management will hold a conference call at 7:30 a.m. PDT/10:30 a.m. EDT on Thursday, July 23, 2026, to discuss the Company’s second quarter 2026 financial results. The conference call can be accessed live by registering at: https://register-conf.media-server.com/register/BIf3989c35152a4f7d8d7a5a51b75f972f The conference call will also be simultaneously webcast over the Internet; please visit our Citizens Business Bank website at www.cbbank.com and click on the “Investors” tab to access the call from the site. Please access the website 15 minutes prior to the call to download any necessary audio software. This webcast will be recorded and available for replay on the Company’s website approximately two hours after the conclusion of the conference call and will be available on the website for approximately 12 months.

Forward-Looking Statements

Certain statements set forth herein constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbor for "forward-looking statements" provided by the Private Securities Litigation Reform Act of 1995. Words such as “will likely result”, “aims”, “anticipates”, “believes”, “could”, “estimates”, “expects”, “hopes”, “intends”, “may”, “plans”, “projects”, “seeks”, “should”, “will,” “strategy”, “possibility”, and variations of these words and similar expressions help to identify these forward-looking statements, which involve risks and uncertainties that could cause actual results or performance to differ materially from those projected. These forward-looking statements are based on management’s current expectations and beliefs concerning future developments and their potential effects on the Company including, without limitation, plans, strategies, goals and statements about the Company’s outlook regarding revenue and asset growth, financial performance and profitability, capital and liquidity levels, loan and deposit levels, growth and retention, yields and returns, loan diversification and credit management, stockholder value creation, tax rates, the impact of business, economic, or political developments, the impact of monetary, fiscal and trade policies, and the impact of acquisitions we have made or may make, including our recent acquisition of Heritage Commerce Corp and its wholly-owned banking subsidiary, Heritage Bank of Commerce (collectively “Heritage”) . Such statements involve inherent risks and uncertainties, many of which are difficult to predict and are generally beyond the control of the Company, and there can be no assurance that future developments affecting the Company will be the same as those anticipated by management. The Company cautions readers that a number of important factors, in addition to those set forth below, could cause actual results to differ materially from those expressed in, or implied or projected by, such forward-looking statements.

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

Additional factors that could cause actual results to differ materially from those expressed in the forward-looking statements are discussed in the Company's 2025 Annual Report on Form 10-K filed with the SEC and available at the SEC’s website (http://www.sec.gov).

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

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

GAAP TO NON-GAAP RECONCILIATIONS

The Company uses certain non-GAAP financial measures to provide supplemental information regarding the Company's operational performance and to enhance investors’ overall understanding of such financial performance. However, these non-GAAP financial measures are supplemental and are not a substitute for an analysis based on GAAP measures. As other companies may use different calculations for these adjusted measures, this presentation may not be comparable to other similarly titled adjusted measures reported by other companies.

Pretax Pre-Provision Income (Non-GAAP)

Pretax pre-provision income is a Non-GAAP financial measure that represents total revenue less noninterest expense and is calculated before provision for credit losses and income tax expense. Management believes this measure provides useful information for comparing the results of operations between periods.

Tangible Book Value and Tangible Common Equity Ratio (Non-GAAP) The tangible book value per share and tangible common equity ratios are a Non-GAAP financial measures derived from GAAP-based amounts. The following is a reconciliation of tangible book value and tangible common equity to the Company stockholders' equity computed in accordance with GAAP, as well as a calculation of tangible book value per share and tangible common equity ratio.

Return on Average Tangible Common Equity (Non-GAAP) The return on average tangible common equity is a non-GAAP disclosure. The following is a reconciliation of net income, adjusted for tax-effected amortization of intangibles, to net income computed in accordance with GAAP; a reconciliation of average tangible common equity to the Company's average stockholders' equity computed in accordance with GAAP; as well as a calculation of return on average tangible common equity.

Adjusted Efficiency Ratio (Non-GAAP)

Adjusted efficiency ratio is a non-GAAP financial measure derived from GAAP-based amounts. This figure represents the ratio of noninterest expense, less acquisition related expense and provision for unfunded loan commitments, where applicable, to the sum of net interest income before provision for credit losses and total noninterest income. Management believes that the exclusion of such items from this financial measure provides useful information to gain an understanding of the operating results of our core business.