What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2025-03-03 compared with 2024-02-29 · 100 added, 62 removed, 282 unchanged (36% of the section changed)

34 unchanged sentences

VRB was headquartered in Bakersfield, California, and operated four branch locations in and around Bakersfield, and a loan production office in Fresno, California.

Human Capital Resources

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Human Capital Resources

At December 31, 2024, we employed 1,201 persons.

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Our employees are critical to our success and competition for qualified banking personnel has historically been intense;

therefore our corporate culture is an important element of our board of director's oversight of risk.

therefore, our corporate culture is an important element of our board of directors' oversight of risk.

Senior management is responsible for embodying, maintaining, and communicating our culture to employees.

In that regard, our culture is designed to promote our commitment to improving the livelihood of our employees and guides us in making decisions throughout the Company.

Our culture is designed to adhere to TriCo’s values of trust, respect, integrity, communication and opportunity.

In keeping with that culture, we expect our people to treat each other and our customers with the highest level of honesty and respect and to do the right thing.

Our culture adheres to TriCo’s values of trust, respect, integrity, communication and opportunity.

We expect our people to treat each other and our customers with the highest level of honesty and respect and to do the right thing.

We strive to be a force for good in everyday life.

We dedicate resources to promote a safe and inclusive workplace;

attract, develop and retain talented, diverse employees;

promote our values;

and reward and recognize employees for both the results they deliver and, importantly, how they deliver them.

We provide a wide variety of opportunities for professional growth for all employees with a focus on in-classroom and on-line trainings, on-the-job experience, internal and external development opportunities and education tuition assistance.

We seek to create an engaged workforce through proactive listening, forward-looking career conversation and constructive dialogue through frequent and ongoing performance discussions as well as employee engagement and exit surveys.

We focus on attracting and retaining employees by providing compensation and benefits packages that we believe are competitive within the applicable market, taking into account the position’s location and responsibilities.

We provide competitive health and other benefits focused on physical and financial health, including employer subsidized health insurance, robust wellness initiatives, employee assistance programs, a 401(k) retirement plan and an employee stock ownership plan.

We dedicate resources to provide a safe and inclusive workplace;

promoting diversity of thought and perspective, attracting and retaining diverse talent, and promoting our values by recognizing employees for both the results they deliver and how they achieve them.

We offer professional growth opportunities through various training and development programs.

We aim to engage our workforce through proactive listening, career conversations, performance discussions, and employee surveys.

We attract and retain employees by offering competitive compensation and benefit programs, considering the position’s location and responsibilities.

Our benefits include employer subsidized health insurance, wellness initiatives, employee assistance programs, tuition reimbursement, a 401(k) retirement plan and an employee stock ownership plan.

In addition, we offer a portfolio of additional services and tools to support our employees’ health and well-being.

We encourage our team members to share their talents in their communities through volunteer activities in education, economic development, human and health services, and community reinvestment.

During 2023, our team members logged more than 11,000 volunteer hours, supporting nearly 400 organizations, and more than 3,700 of those hours were for the benefit of community development efforts to support programs and services to low- or moderate-income communities.

While we believe that the diversity of our employees generally represents and reflects the communities which we serve, we recognize and continue to promote the need for diversity enhancements in leadership roles throughout the Company.

We are dedicated to providing a workplace for our employees that is inclusive, supportive, and free of any form of discrimination or harassment;

rewarding and recognizing our employees based on their individual results and performance as well as that of their department and the Company overall;

and recognizing and respecting all of the characteristics and differences that make each of our employees unique.

During 2024, our team members logged more than 11,000 volunteer hours, supporting more than 350 organizations, and almost 4,700 of those hours were for the benefit of community development efforts to support programs and services to low- or moderate-income communities.

We strive to have a workforce that reflects the communities we serve and continue to promote diversity in leadership roles.

We are dedicated to providing an inclusive, supportive, and discrimination-free workplace.

We recognize employees based on their individual and departmental results, as well as overall Company results.

The banking business in California generally is highly competitive with respect to both loans and deposits.

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The description is qualified in its entirety by reference to the applicable laws and regulations.

Regulatory Agencies

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Regulatory Agencies

The Company is a legal entity separate and distinct from the Bank and its other subsidiaries.

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Activities that are financial in nature include securities underwriting and dealing, insurance underwriting and agency, and making merchant banking investments.

The Company currently has not elected to become a financial holding company.

The Company has not elected to become a financial holding company.

As a bank holding company, TriCo is required to file reports with the FRB and the FRB periodically examines the Company.

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In determining whether to approve a proposed bank acquisition, bank regulators will consider, among other factors, the effect of the acquisition on competition, the public benefits expected to be received from the acquisition, capital adequacy and the acquiring institution’s effectiveness in combating money laundering and its record of addressing the credit needs of the communities it serves, including the needs of low- and moderate-income neighborhoods under the Community Reinvestment Act of 1997, as amended ("CRA").

On July 9, 2021, President Biden issued an Executive Order on Promoting Competition in the American Economy.

On July 9, 2021, President Biden issued an Executive Order on Promoting Competition in the American Economy (Executive Order 14036).

Among other initiatives, the Executive Order encouraged the federal banking agencies to review their current merger oversight practices under the BHC Act and the Bank Merger Act and adopt a plan for revitalization of such practices.

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however, the adoption of more expansive or prescriptive standards may have a negative impact on any future acquisition activities.

As of the date of this filing, Executive Order 14036 has not been revoked;

however, it is uncertain how this order will be administered under the Trump Administration.

Safety and Soundness Standards

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If a federal bank regulatory agency determines that a depository institution fails to meet any standard established by the guidelines, the agency may require the institution to submit to the agency an acceptable plan to achieve compliance with the standard.

The agencies may elect to initiate enforcement actions in certain cases rather than relying on a plan, particularly where and institution has failed to comply with an acceptable plan or where a failure to meet one or more of the standards could threaten the safe and sound operation of the institution.

The agencies may elect to initiate enforcement actions in certain cases rather than relying on a plan, particularly where an institution has failed to comply with an acceptable plan or where a failure to meet one or more of the standards could threaten the safe and sound operation of the institution.

Dividends, Distributions and Stock Repurchases

A California corporation such as TriCo may make a distribution to its shareholders to the extent that either the corporation’s retained earnings meet or exceed the amount of the proposed distribution or the value of the corporation’s assets exceed the amount of its liabilities plus the amount of shareholders preferences, if any, and certain other conditions are met.

It is the FRB’s policy that bank holding companies should generally pay dividends on common stock only out of income available over the past year, and only if prospective earnings retention

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is consistent with the organization’s expected future needs and financial condition.

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It is the FRB’s policy that bank holding companies should generally pay dividends on common stock only out of income available over the past year, and only if prospective earnings retention is consistent with the organization’s expected future needs and financial condition.

In addition, a bank holding company’s ability to pay dividends on its common stock may be limited if it fails to maintain an adequate capital conservation buffer under these capital rules.

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With certain exceptions, the value of stock repurchased is determined net of stock issued in the year, including shares issued pursuant to compensatory arrangements.

The primary source of funds for payment of dividends by TriCo to its shareholders has been and will be the receipt of dividends and management fees from the Bank.

The primary source of funds for payment of dividends by TriCo to its shareholders has been and will be the receipt of dividends.

TriCo’s ability to receive dividends from the Bank is limited by applicable state and federal law.

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The ratings range from a high of “outstanding” to a low of “substantial noncompliance.” A less than “satisfactory” rating could result in the suspension of any growth of the Bank through acquisitions or opening de novo branches until the rating is improved.

As of its most recent CRA examination, the Bank’s CRA rating was “Satisfactory."

On October 24, 2023, the FRB, OCC and FDIC issued a joint final rule to modernize the CRA regulatory framework.

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The new rule also includes data collection and reporting requirements, some of which are applicable only to banks with over $10 billion in assets.

Most provisions of the final rule will become effective on January 1, 2026, and the data reporting requirements will become effective on January 1, 2027.

We continue to evaluate and adapt as necessary for the impact of the changes.

Most provisions of the final rule were to become effective on January 1, 2026, and the data reporting requirements were to become effective on January 1, 2027.

Several banking industry groups filed a lawsuit seeking to invalidate the CRA final rule, in which they argued that the federal banking agencies exceeded their statutory authority in adopting the CRA final rule.

In March 2024, a federal judge granted an injunction to extend the CRA final rule’s effective date, originally set for April 1, 2024.

The effective date will be extended each day the injunction remains in place, pending the resolution of the lawsuit.

Consumer Protection Laws and Supervision

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• The Home Mortgage Disclosure Act, which includes a “fair lending” aspect, requires the collection and disclosure of data about applicant and borrower characteristics as a way of identifying possible discriminatory lending patterns and enforcing anti-discrimination statutes.

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• The Real Estate Settlement Procedures Act requires lenders to provide borrowers with disclosures regarding the nature and cost of real estate settlements and prohibits certain abusive practices, such as kickbacks, and places limitations on the amount of escrow accounts.

The CFPB has broad rule making authority for a wide range of consumer financial laws that apply to all banks, including, among other things, laws relating to fair lending and the authority to prohibit “unfair, deceptive or abusive” acts and practices.

The CFPB has promulgated

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many mortgage-related rules, including rules related to requirements for "qualified mortgages," standards by which lenders must satisfy themselves of a borrower's ability to repay a mortgage loan, mortgage servicing standards, disclosure requirements, loan originator compensation standards, high-cost mortgage requirements, HMDA requirements, and appraisal and escrow standards for higher priced mortgages.

The CFPB has promulgated many mortgage-related rules, including rules related to requirements for "qualified mortgages," standards by which lenders must satisfy themselves of a borrower's ability to repay a mortgage loan, mortgage servicing standards, disclosure requirements, loan originator compensation standards, high-cost mortgage requirements, HMDA requirements, and appraisal and escrow standards for higher priced mortgages.

The mortgage-related rules issued by the CFPB have materially restructured the origination, servicing, and securitization of residential mortgages in the United States.

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The CFPB’ rules and policies have impacted, and will continue to impact, the business practices of mortgage lenders, including the Bank.

In October 2024, the CFPB issued a final rule that requires a provider of payment accounts or products, such as a bank, to make data available to consumers, free upon request, regarding the products or services they obtain from the provider.

Any such data provider is also required to make such data available to third parties, with the consumer’s express authorization and through an interface that satisfies formatting, performance, and security standards, for the purpose of such third parties providing the consumer with financial products or services requested by the consumer.

Data required to be made available under the rule includes transaction information, account balance, account and routing numbers, terms and conditions, upcoming bill information, and certain account verification data.

The final rule is intended to give consumers control over their financial data, including with whom it is shared, and encourage competition in the provision of consumer financial products or services.

Banks with over $10 billion and less than $250 billion in total assets must comply with the new requirements by April 1, 2027.

In December 2024, the CFPB issued a final rule that amends Regulation Z, which implements the Truth in Lending Act, to apply to overdraft credit provided by insured depository institutions with more than $10 billion in total assets.

The final rule is scheduled to go into effect on October 1, 2025.

Under the final rule, covered institutions, including the Bank, would be allowed to choose to offer overdrafts as a courtesy overdraft service or as a line of credit.

If the courtesy overdraft option is chosen, overdrafts would remain exempt from Regulation Z, as long as fees charged are based on the higher of an institutions breakeven point derived from its own costs and losses, or a benchmark fee of $5 established by the CFPB.

If the overdraft line of credit option is chosen, overdrafts would be considered a loan subject to Regulation Z, and therefore, subject to account opening and loan disclosures, required to be held in an account separate from the customer’s checking or transaction account, and may not be conditioned on preauthorized electronic funds transfers.

Several banking industry groups filed a lawsuit seeking to invalidate the final rule, in which they argued that the CFPB exceeded its statutory authority in adopting the final rule.

The court has not yet ruled on the merits of the lawsuit nor granted a preliminary injunction.

We continue to evaluate this rulemaking and assess its potential impact on the Company and the Bank in the event we exceed $10 billion in total assets.

We are also subject to certain state consumer protection laws and state attorneys general and other state officials are empowered to enforce certain federal consumer protection laws and regulations.

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Penalties for violations of the above laws may include fines, reimbursements, injunctive relief and other penalties.

Failure to comply with consumer protection requirements may also result in our failure to obtain any required bank regulatory approval for merger or acquisition transactions we may wish to pursue or our prohibition from engaging in such transactions even if approval is not required.

Privacy and Data Protection

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For example, the California Consumer Privacy Act ("CCPA"), which became effective on January 1, 2020, applies to for-profit businesses that conduct business in California and meet certain revenue or data collection thresholds.

The CCPA gives consumers the right to request disclosure of information collected about them, and whether that information has been sold or shared with others, the right to request deletion of personal information (subject to certain exceptions), the right to opt out of the sale of the consumer’s personal information, and the right not to be discriminated against for exercising these rights.

The CCPA gives consumers the right to request disclosure of information collected about them, and whether that

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information has been sold or shared with others, the right to request deletion of personal information (subject to certain exceptions), the right to opt out of the sale of the consumer’s personal information, and the right not to be discriminated against for exercising these rights.

In addition, the California Privacy Rights Act (“CPRA”), which took effect on January 1, 2023, significantly modified the CCPA, including imposing additional obligations on covered companies and expanding California consumers’ rights with respect to certain sensitive personal information.

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In California, the CCPA, the CPRA, and their implementing regulations may be interpreted or applied in a manner inconsistent with our understanding.

State regulators have also been increasingly active in implementing privacy and cybersecurity standards and regulations.

Recently, several states have adopted regulations requiring certain financial institutions to implement cybersecurity programs and many states, including California, have also recently implemented or modified their data breach notification, information security and data privacy requirements.

State regulators have been increasingly active in implementing privacy and cybersecurity standards and regulations.

Recently, several states have adopted regulations requiring certain financial institutions to implement cybersecurity programs and many states, including California, have recently implemented or modified their data breach notification, information security and data privacy requirements.

We expect this trend of state-level activity in those areas to continue and are continually monitoring developments in the states in which our customers are located.

Cybersecurity

Under a rule adopted by federal banking agencies in 2021, banking organizations are required to notify their primary banking regulator within 36 hours of determining that a “computer-security incident” has materially disrupted or degraded, or is reasonably likely to materially disrupt or degrade, the banking organization’s ability to carry out banking operations or deliver banking products and services to a material portion of its customer base, its businesses and operations that would result in material loss, or its operations that would impact the stability of the United States.

The federal banking regulators regularly issue new guidance and standards, and update existing guidance and standards, regarding cybersecurity intended to enhance cyber risk management among financial institutions.

Financial institutions are expected to comply with such guidance and standards and to accordingly develop appropriate security controls and risk management processes.

If we fail to observe such regulatory guidance or standards, we could be subject to various regulatory sanctions, including financial penalties.

In 2023, the SEC issued a final rule that requires disclosure of material cybersecurity incidents, as well as cybersecurity risk management, strategy and governance.

Under this rule, SEC registrants must generally disclose information about a material cybersecurity incident within four business days of determining it is material with periodic updates as to the status of the incident in subsequent filings, as necessary.

Banking organizations are required to notify their primary banking regulator within 36 hours of determining that a “computer-security incident” has materially disrupted or degraded, or is reasonably likely to materially disrupt or degrade, the banking organization’s ability to carry out banking operations or deliver banking products and services to a material portion of its customer base, its businesses and operations that would result in material loss, or its operations that would impact the stability of the United States.

Banks' service providers are required to notify any affected bank to or on behalf of which the service provider provides services "as soon as possible" after determining that it has experienced an incident that materially disrupts or degrades, or is reasonably likely to materially disrupt or degrade, covered services provided to such bank for as much as four hours.

Recent cyberattacks against banks and other financial institutions that resulted in unauthorized access to confidential customer information have prompted the federal banking regulators to issue guidance on cybersecurity.

Among other things, financial institutions are expected to design multiple layers of security controls to establish lines of defense and ensure that their risk management processes address the risks

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posed by compromised customer credentials, including security measures to authenticate customers accessing internet-based services.

Among other things, financial institutions are expected to design multiple layers of security controls to establish lines of defense and ensure that their risk management processes address the risks posed by compromised customer credentials, including security measures to authenticate customers accessing internet-based services.

A financial institution also should have a robust business continuity program to recover from a cyberattack and procedures for monitoring the security of third-party service providers that may have access to nonpublic data at the institution.

Further, our service providers have obligations to safeguard their systems and sensitive information and the Company may be bound contractually and/or by regulation to comply with the same requirements.

If the Company or its service providers fail to comply with applicable regulations and contractual requirements, the Company could be exposed to lawsuits, governmental proceedings or the imposition of fines, among other consequences.

Further, our service providers have obligations to safeguard their systems and sensitive information and we may be bound contractually and/or by regulation to comply with the same requirements.

If the Company or its service providers fail to comply with applicable regulations and contractual requirements, we could be exposed to lawsuits, governmental proceedings or the imposition of fines, among other consequences.

Risks and exposures related to cybersecurity attacks, including litigation and enforcement risks, are expected to be elevated for the foreseeable future due to the rapidly evolving nature and sophistication of these threats.

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(3) Total capital (that is, Tier 1 capital plus Tier 2 capital) to risk‑weighted assets of 8%;

and (4) a leverage ratio (Tier 1 capital to average consolidated assets as reported on regulatory financial statements) of 4.0%.

and (4) a leverage ratio (Tier 1

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capital to average consolidated assets as reported on regulatory financial statements) of 4.0%.

The Basel III capital framework includes a “capital conservation buffer” of 2.5%, composed entirely of CET1, on top of the minimum risk‑weighted asset ratios.

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In addition, the FDIC can impose special assessments in certain instances.

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The FDIC, as required under the FDIA, established a plan on September 15, 2020, to restore the DIF reserve ratio to meet or exceed the statutory minimum of 1.35% within eight years.

This plan did not include an increase in the deposit insurance assessment rate.

Based on the FDIC’s recent projections, however, the FDIC determined that the DIF reserve ratio is at risk of not reaching the statutory minimum by the statutory deadline of September 30, 2028 without increasing the deposit insurance assessment rates.

In October 2022, the FDIC adopted a final rule to increase initial base deposit insurance assessment rate schedules uniformly by 2 basis points, beginning on January 1, 2023.

The FDIC also concurrently maintained the Designated Reserve Ratio for the DIF at 2%.

In addition, on November 16, 2023, the FDIC issued a final rule to implement a special assessment to recover losses to the DIF incurred as a result of recent bank failures and the FDIC's use of the systemic risk exception to cover certain deposits that were otherwise uninsured.

The special assessment was based on estimated uninsured deposits as of December 31, 2022 (excluding the first $5.0 billion) and will be assessed at a quarterly rate of 3.36 basis points over eight quarterly assessment periods, beginning in the first quarter of 2024.

In October 2022, the FDIC adopted a final rule to increase initial base deposit insurance assessment rate schedules uniformly by 2 basis points, beginning with the first quarterly assessment period of 2023.

The increased assessment was expected to improve the likelihood that the DIF reserve ratio would reach the statutory minimum of 1.35% by the statutory deadline prescribed under the FDIC’s amended restoration plan.

In November 2023, the FDIC issued a final rule to implement a special assessment to recover losses to the DIF incurred as a result of bank failures earlier that year and the FDIC's use of the systemic risk exception to cover certain deposits that were otherwise uninsured.

The special assessment was based on estimated uninsured deposits as of December 31, 2022 (excluding the first $5.0 billion of deposits at an institution) and was assessed at a quarterly rate of 3.36 basis points over eight quarterly assessment periods, beginning in the first quarter of 2024.

In June 2024, due to the increased estimate of losses, the FDIC announced that it projects that the special assessment will be collected for an additional two quarters beyond the initial eight-quarter collection period, at a lower rate.

The Bank’s uninsured deposits were below the threshold and therefore is not required to pay the special assessment.

Under the final rule, the estimated loss pursuant to the systemic risk determination will be periodically adjusted, and the FDIC has retained the ability to cease collection early, extend the special assessment collection period and impose a final shortfall special assessment on a one-time basis.

This updated assessment was made under the FDIC’s final rule whereby the estimated loss pursuant to the systemic risk determination can be periodically adjusted.

The FDIC has also retained the ability to cease collection early, extend the special assessment collection period and impose a final shortfall special assessment.

The special assessments are tax deductible.

The extent to which any such additional future assessments will impact our future deposit insurance expense is currently uncertain.

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The termination of deposit insurance for the Bank would also result in the revocation of the Bank’s charter by the DPFI.

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Depositor Preference

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(3) designate an individual responsible for coordinating and monitoring day-to-day compliance;

and (4) provide training for appropriate personnel.

and (4) provide training fo r appropriate personnel.

In addition, banks are required to adopt a customer identification program, performing ongoing customer due diligence to understand the nature and purpose of customer relationships for the purpose of developing customer risk profiles and file reports regarding known or suspected violations of federal law or suspicious transactions.

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thus, the statement only pertains to customers who are lawfully growing or cultivating hemp and are not otherwise engaged in unlawful or suspicious activity.

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On September 24, 2024, the California Governor announced emergency regulations to protect children and teens from the adverse effects of dangerous intoxicating hemp products are now in effect.

Retailers must cease selling any industrial hemp food, beverage or dietary product intended for human consumption if there is any detectable THC or other intoxicating cannabinoids per serving.

We are evaluating the impact of these regulations on our compliance operations.

Failure to comply with these requirements could have serious financial, legal and reputational consequences, including causing applicable bank regulatory authorities not to approve merger or acquisition transactions when regulatory approval is required or to prohibit such transactions even if approval is not required.

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Regulation W requires that certain transactions between the Bank and its affiliates, including its holding company, be on terms substantially the same, or at least as favorable to the Bank, as those prevailing at the time for comparable transactions with or involving non-affiliated companies or, in the absence of comparable transactions, on terms and under circumstances, including credit standards, that in good faith would be offered to or would apply to non-affiliated companies.

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Source of Strength Doctrine

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In October 2023, the Federal Reserve issued a proposed rule under which the maximum permissible interchange fee for an electronic debit transaction would be the sum of 14.4 cents per transaction and 4 basis points multiplied by the value of the transaction.

Furthermore, the fraud-prevention adjustment would increase from a maximum of 1 cent to 1.3 cents.

Furthermore, the fraud-prevention adjustment would increase from a maximum of 1 cent to 1.3 cents per debit card transaction.

The proposal would adopt an approach for future adjustments to the interchange fee cap, which would occur every other year based on issuer cost data gathered by the FRB from large debit card issuers.

The Bank is currently not subject to these restrictions or those proposed, however if our assets exceed $10 billion or more at December 31, 2024, these rules would be applicable to the Bank in July 2025.

The Bank is currently not subject to these restrictions or those proposed, however if our assets exceed $10 billion or more at December 31, 2025, these rules, if adopted, would be applicable to the Bank in July 2026.

The extent to which any such proposed changes in permissible interchange fees will impact our future revenues is currently uncertain.

Effective July 1, 2023, debit card issuers are required to enable all debit card transactions, including card-not-present transactions such as online payments, to be processed on at least two unaffiliated payment card networks.

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Monitoring methods and processes used by a banking organization should be commensurate with the size and complexity of the organization and its use of incentive compensation.

The Dodd-Frank Act requires the federal banking agencies and the SEC to establish joint regulations or guidelines for specified regulated entities having at least $1 billion in total assets, such as us, to prohibit incentive-based payment arrangements that encourage inappropriate risk taking by providing an executive officer, employee, director or principal shareholder with excessive compensation, fees, or benefits or

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that could lead to material financial loss to the entity.

In addition, these regulators must establish regulations or guidelines requiring enhanced disclosure to regulators of incentive-based compensation arrangements.

The agencies have not yet finalized these rules.

Pursuant to the Dodd-Frank Act, in 2023, effective October 2, 2023, the Nasdaq Stock Market adopted a rule requiring listed companies to adopt policies to recover or "clawback" of excess incentive-based compensation earned by a current or former executive officer during the three fiscal years preceding the date the listed company is required to prepare an accounting restatement, including to correct an error that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period.

Pursuant to the Dodd-Frank Act, in 2023, effective October 2, 2023, the Nasdaq Stock Market adopted a rule requiring listed companies to adopt policies to recover or "clawback" excess incentive-based compensation earned by a current or former executive officer during the three fiscal years preceding the date the listed company is required to prepare an accounting restatement, including to correct an error that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period.

We adopted a compensation clawback policy pursuant to the listing standards that is included as Exhibit 97.1 to this report.

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In recent years, federal, state and international lawmakers and regulators have increased their focus on financial institutions' and other companies' risk oversight, disclosures and practices in connection with climate change and other environmental, social and governance ("ESG") matters.

For example, in March 2022, the SEC issued a proposed rule on the enhancement and standardization of climate-related disclosures for investors.

The proposed rule would require public issuers, including us, to significantly expand the scope of climate-related disclosures in their SEC filings.

The SEC has also announced plans to propose rules to require enhanced disclosure regarding human capital management and board diversity for public issuers.

In addition, several states, including California, have enacted or proposed statutes or regulations addressing climate change and other ESG issues, while other states have enacted or proposed “anti-ESG” statutes or regulations.

In California, the Climate Corporate Data and Accountability Act (“CCDAA”) requires both public and private U.S.

businesses with revenues greater than $1 billion doing business in California to report their greenhouse gas emissions including scopes 1, 2, and 3, beginning in 2026 (for 2025 data) and also requires reporting companies to get third-party assurance of their reports.

The Climate-Related Financial Risk Act mandates U.S.

The Climate-Related Financial Risk Act

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mandates U.S.

businesses with annual revenues over $500 million doing business in California to bi-annually disclose climate-related financial risks and their mitigation strategies beginning January 1, 2026.

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In addition, adverse economic conditions could make a higher provision for loan losses a prudent course and could cause higher loan loss charge-offs, thus adversely affecting the Company’s net earnings.

Future Legislation and Regulation

Congress may enact legislation from time to time that affects the regulation of the financial services industry, and state legislatures may enact legislation from time to time affecting the regulation of financial institutions chartered by or operating in those states.

Federal and state regulatory agencies also periodically propose and adopt changes to their regulations or change the way existing regulations are applied.

The substance or impact of pending or future legislation or regulation, or the application thereof, cannot be predicted, although any change could impact the regulatory structure under which we or our competitors operate and may significantly increase costs, impede the efficiency of internal business processes, require an increase in regulatory capital, require modifications to our business strategy, and limit our ability to pursue business opportunities in an efficient manner.

It could also affect our competitors differently than us, including in a manner that would make them more competitive.

A change in statutes, regulations or regulatory policies applicable to us could have a material, adverse effect on our business, financial condition and results of operations.

President Trump has issued many executive orders that could impact our operations.

We are evaluating the orders to determine if any would have material impact on our financial condition or results of operations.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business