Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED June 30, 2020 ☐ 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 CENTRAL VALLEY COMMUNITY BANCORP (Exact name of registrant as specified in its charter) 7100 N. Financial D ...

Jim Ford President & CEO Dave Kinross EVP CFO Investor Presentation D.A. Davidson & Company 22nd Annual Financial Institutions Virtual Conference May 7, 2020 Forward-Looking Statements Certain matters discussed in this report constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained herein that are not historical facts, such as statements regarding the Company's current business strategy and the Company's plans for future devel ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED March 31, 2020 o 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 CENTRAL VALLEY COMMUNITY BANCORP (Exact name of registrant as specified in its charter) California 77-0539 ...

Part I [Item 1. Business](index=3&type=section&id=ITEM%201%20-%20DESCRIPTION%20OF%20BUSINESS) Central Valley Community Bancorp is a bank holding company offering commercial banking services in California's central valley - Central Valley Community Bancorp is a bank holding company for its wholly-owned subsidiary, Central Valley Community Bank, serving nine counties in California's central valley[7](index=7&type=chunk) Company Snapshot (as of Dec 31, 2019) | Metric | Value | | :--- | :--- | | Consolidated Total Assets | ~$1,596,755,000 | | Total Loans | $943,380,000 | | Full-Service Banking Offices | 20 | | Employees (as of Mar 1, 2020) | 288 (273 FTE) | Loan Portfolio Composition (as of Dec 31, 2019) | Loan Type | Amount (in thousands) | | :--- | :--- | | Commercial and Industrial | $102,541 | | Agricultural Land and Production | $23,159 | | Real Estate Construction & Land | $73,718 | | Other Real Estate | $634,824 | | Equity Loans and Lines of Credit | $64,841 | | Consumer Installment | $42,782 | - The company's business is **highly concentrated in California's central valley**, making its performance dependent on local economic conditions, particularly in the residential and commercial real estate markets[10](index=10&type=chunk) - The company faces intense competition from major banks and other financial institutions, competing by leveraging local promotion, personal contacts, and personalized service; its deposit market share in its primary counties was **3.31% in 2019**, down from 3.42% in 2018[11](index=11&type=chunk) - The company and its bank subsidiary are subject to a **complex and extensive regulatory framework** from multiple agencies, including the Federal Reserve, FDIC, and California Department of Business Oversight (DBO)[13](index=13&type=chunk) [Item 1A. Risk Factors](index=13&type=section&id=ITEM%201A%20-%20RISK%20FACTORS) The company faces material risks from its geographic concentration, real estate loan portfolio, interest rates, and regulations - The company's operations are principally in California's Central Valley, which is heavily dependent on agriculture; a downturn in the **agricultural economy** could materially harm the business[45](index=45&type=chunk) - A significant portion of the loan portfolio, **$773 million or 82.00%** as of December 31, 2019, is comprised of real estate loans concentrated in California, where negative changes in property values could impair collateral[51](index=51&type=chunk) - The company faces **liquidity risk**, as an inability to raise funds through deposits or borrowings could negatively affect operations and a decrease in customer deposits could increase funding costs[50](index=50&type=chunk) - **Fluctuations in interest rates** could reduce profitability, as the company's income is primarily derived from the net interest spread and its asset/liability management strategy may not prevent adverse effects[63](index=63&type=chunk) - The company is subject to **stringent capital requirements under Basel III rules**, and failure to meet these requirements could result in regulatory limitations on activities and growth[65](index=65&type=chunk)[67](index=67&type=chunk) - **Cybersecurity incidents** and fraudulent activity pose a significant risk, where a breach could result in financial losses, reputational damage, and increased regulatory scrutiny[71](index=71&type=chunk)[73](index=73&type=chunk) - The upcoming implementation of the **Current Expected Credit Loss (CECL) standard** is expected to require significantly more data and may increase the allowance for credit losses, thereby decreasing net income[76](index=76&type=chunk) [Item 1B. Unresolved Staff Comments](index=23&type=section&id=ITEM%201B%20-%20UNRESOLVED%20STAFF%20COMMENTS) The company reports no unresolved staff comments - Not applicable[98](index=98&type=chunk) [Item 2. Properties](index=24&type=section&id=ITEM%202%20-%20DESCRIPTION%20OF%20PROPERTY) The company owns six branch office properties and leases all other facilities, which are considered adequate for current operations - The Company owns the property for its branch offices in Clovis (Main office), Prather (Foothill office), Modesto, Kerman, Visalia (Floral office), and Exeter[100](index=100&type=chunk) - The principal executive offices in Fresno and all other branch properties are leased, with management considering the facilities adequate for present operations[100](index=100&type=chunk) [Item 3. Legal Proceedings](index=24&type=section&id=ITEM%203%20-%20LEGAL%20PROCEEDINGS) Management believes that legal proceedings arising in the ordinary course of business will not materially affect the company - In the opinion of management, the amount of ultimate liability with respect to legal actions arising in the ordinary course of business will not materially affect the company's financial position or results[101](index=101&type=chunk) [Item 4. Mine Safety Disclosures](index=24&type=section&id=ITEM%204%20-%20MINE%20SAFETY%20DISCLOSURES) The company reports no mine safety disclosures - None to report[102](index=102&type=chunk) Part II [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=24&type=section&id=ITEM%205%20-%20MARKET%20FOR%20COMMON%20EQUITY%2C%20RELATED%20STOCKHOLDER%20MATTERS%20AND%20ISSUER%20PURCHASES%20OF%20EQUITY%20SECURITIES) The company's stock (CVCY) trades on Nasdaq, with details on dividends, stock prices, and share repurchase activity provided - The company's common stock is listed on the Nasdaq Capital Market under the ticker symbol **CVCY**[104](index=104&type=chunk) Common Stock Prices and Dividends per Share (2019) | Quarter | High ($) | Low ($) | Dividends ($) | | :--- | :--- | :--- | :--- | | Q1 2019 | 20.35 | 18.10 | 0.10 | | Q2 2019 | 21.48 | 19.08 | 0.11 | | Q3 2019 | 21.75 | 18.97 | 0.11 | | Q4 2019 | 22.15 | 19.24 | 0.11 | - Total cash dividends paid were **$0.43 per share in 2019** and $0.31 per share in 2018, with payments subject to regulatory policies from the Federal Reserve[105](index=105&type=chunk) Issuer Purchases of Equity Securities (2019 Summary) | Metric | Value | | :--- | :--- | | Total Shares Purchased | 768,754 | | Average Price Paid per Share | $20.29 | | Total Cost (approx.) | $15.6 million | [Item 6. Selected Financial Data](index=26&type=section&id=ITEM%206%20-%20SELECTED%20FINANCIAL%20DATA) This section presents a five-year summary of key consolidated financial data, showing trends in income, assets, and per-share metrics Selected Consolidated Financial Data (2017-2019) | (In thousands, except per-share amounts) | 2019 | 2018 | 2017 | | :--- | :--- | :--- | :--- | | **Income Statement Data** | | | | | Net interest income | $63,772 | $62,703 | $56,239 | | Net income | $21,443 | $21,289 | $14,026 | | Diluted earnings per share | $1.59 | $1.54 | $1.10 | | **Balance Sheet Data (Year-End)** | | | | | Total assets | $1,596,755 | $1,537,836 | $1,661,655 | | Net loans | $934,250 | $909,591 | $891,901 | | Total deposits | $1,333,285 | $1,282,298 | $1,425,687 | | Shareholders' equity | $228,128 | $219,738 | $209,559 | [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=ITEM%207-%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management discusses the company's financial performance, highlighting modest net income growth and improved asset quality in 2019 [Overview and Key Performance Metrics](index=29&type=section&id=Overview%20and%20Key%20Performance%20Metrics) The company reported modest net income growth in 2019, with increased EPS and total assets but a slightly higher efficiency ratio Key Performance Metrics (2019 vs. 2018) | Metric | 2019 | 2018 | | :--- | :--- | :--- | | Diluted EPS | $1.59 | $1.54 | | Net Income (in thousands) | $21,443 | $21,289 | | Return on Average Equity (ROE) | 9.39% | 10.07% | | Return on Average Assets (ROA) | 1.36% | 1.35% | | Total Assets (in thousands) | $1,596,755 | $1,537,836 | | Nonperforming Assets (in thousands) | $1,693 | $2,740 | - The net interest margin (fully tax equivalent) **increased to 4.51% in 2019** from 4.44% in 2018, driven by higher yields on earning assets[131](index=131&type=chunk) - The efficiency ratio was **62.77% for 2019**, compared to 61.23% for 2018, indicating that growth in non-interest expense outpaced revenue growth[138](index=138&type=chunk) [Results of Operations](index=32&type=section&id=Results%20of%20Operations) Net income increased slightly in 2019, driven by higher net interest income and security gains, offset by a larger credit provision - Net interest income before provision for credit losses **increased by $1.07 million (1.70%)** in 2019, driven by a higher net interest margin of 4.51%[154](index=154&type=chunk) - The company recorded a provision for credit losses of **$1,025,000 in 2019**, a significant increase from the $50,000 provision in 2018[157](index=157&type=chunk) - Non-interest income **increased by $2.98 million (28.87%)** in 2019, primarily due to a $5.2 million in net realized gains on sales and calls of investment securities[161](index=161&type=chunk) - Non-interest expenses **rose by $1.03 million (2.29%)** in 2019, mainly due to increases in information technology ($1.5 million) and salaries and employee benefits ($0.4 million)[162](index=162&type=chunk)[164](index=164&type=chunk) - The effective income tax rate **increased to 28.4% in 2019** from 23.7% in 2018, while the 2017 rate was elevated due to a one-time charge from tax reform[168](index=168&type=chunk) [Financial Condition](index=42&type=section&id=Financial%20Condition) Total assets, loans, and deposits all grew in 2019, while asset quality improved and shareholders' equity increased Balance Sheet Summary (in thousands) | Account | Dec 31, 2019 | Dec 31, 2018 | % Change | | :--- | :--- | :--- | :--- | | Total Assets | $1,596,755 | $1,537,836 | 3.83% | | Total Gross Loans | $943,380 | $918,695 | 2.69% | | Total Deposits | $1,333,285 | $1,282,298 | 3.98% | | Shareholders' Equity | $228,128 | $219,738 | 3.82% | - The available-for-sale securities portfolio had a fair value of $470.7 million and an **unrealized gain of $4.0 million** at year-end 2019, a significant improvement from the $6.3 million unrealized loss at year-end 2018[175](index=175&type=chunk)[344](index=344&type=chunk) - The loan portfolio is heavily concentrated in real estate, which comprised **82.0% of total loans** at year-end 2019[180](index=180&type=chunk)[413](index=413&type=chunk) Nonperforming Assets (in thousands) | Category | Dec 31, 2019 | Dec 31, 2018 | | :--- | :--- | :--- | | Nonaccrual Loans | $1,693 | $2,740 | | Other Real Estate Owned (OREO) | $0 | $0 | | **Total Nonperforming Assets** | **$1,693** | **$2,740** | | As a % of Total Assets | 0.11% | 0.18% | - The allowance for credit losses was **$9.13 million (0.97% of total loans)** at year-end 2019, compared to $9.10 million (0.99% of total loans) at year-end 2018[196](index=196&type=chunk)[198](index=198&type=chunk) [Liquidity and Capital Resources](index=52&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains a strong liquidity position and robust capital levels, with all regulatory ratios exceeding 'well-capitalized' standards - Liquid assets (cash, federal funds sold, and available-for-sale securities) totaled **$530.8 million, or 33.24% of total assets**, at December 31, 2019[139](index=139&type=chunk) Available Borrowing Capacity (as of Dec 31, 2019) | Source | Limit (in thousands) | | :--- | :--- | | Unsecured Correspondent Lines | $70,000 | | Federal Home Loan Bank (FHLB) | $304,987 | | Federal Reserve Bank | $4,931 | Company Regulatory Capital Ratios (as of Dec 31, 2019) | Ratio | Actual | | :--- | :--- | | Common Equity Tier 1 Ratio | 14.55% | | Tier 1 Risk-Based Capital Ratio | 14.98% | | Total Risk-Based Capital Ratio | 15.79% | | Tier 1 Leverage Ratio | 11.38% | [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=57&type=section&id=ITEM%207A-%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company's primary market risk is interest rate risk, which is managed by the ALCO and monitored via simulation modeling - The company's main market risk is interest rate volatility; as of December 31, 2019, **68.59% of the loan portfolio** consisted of adjustable-rate loans[229](index=229&type=chunk)[235](index=235&type=chunk) Sensitivity Analysis of Net Interest Income (NII) | Hypothetical Rate Change | Projected % Change in NII | | :--- | :--- | | Up 400 bps | +4.51% | | Up 200 bps | +2.58% | | Up 100 bps | +1.61% | | Down 100 bps | -7.09% | - The simulation results indicate the balance sheet is relatively evenly matched in the short term and **slightly asset-sensitive** over the longer term, with management considering the risk level acceptable[231](index=231&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=59&type=section&id=ITEM%208%20-%20FINANCIAL%20STATEMENTS%20AND%20SUPPLEMENTARY%20DATA) This section contains the company's audited consolidated financial statements and the independent auditor's report for fiscal year 2019 - The independent registered public accounting firm, Crowe LLP, issued an **unqualified opinion** on the consolidated financial statements and the effectiveness of internal control over financial reporting as of December 31, 2019[237](index=237&type=chunk)[238](index=238&type=chunk) Consolidated Balance Sheet Highlights (in thousands) | | Dec 31, 2019 | Dec 31, 2018 | | :--- | :--- | :--- | | **Assets** | | | | Total cash and cash equivalents | $52,574 | $31,727 | | Net loans | $934,250 | $909,591 | | Total assets | $1,596,755 | $1,537,836 | | **Liabilities & Equity** | | | | Total deposits | $1,333,285 | $1,282,298 | | Total liabilities | $1,368,627 | $1,318,098 | | Total shareholders' equity | $228,128 | $219,738 | Consolidated Income Statement Highlights (in thousands) | | 2019 | 2018 | 2017 | | :--- | :--- | :--- | :--- | | Net interest income | $63,772 | $62,703 | $56,239 | | Provision for credit losses | $1,025 | $50 | $(1,150) | | Non-interest income | $13,305 | $10,324 | $10,836 | | Non-interest expenses | $46,100 | $45,068 | $44,406 | | Net income | $21,443 | $21,289 | $14,026 | [Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure](index=113&type=section&id=ITEM%209%20-%20CHANGES%20IN%20AND%20DISAGREEMENTS%20WITH%20ACCOUNTANTS%20ON%20ACCOUNTING%20AND%20FINANCIAL%20DISCLOSURE) The company reports no changes in or disagreements with its accountants - Not Applicable[449](index=449&type=chunk) [Item 9A. Controls and Procedures](index=113&type=section&id=ITEM%209A%20-%20CONTROLS%20AND%20PROCEDURES) Management concluded that the company's disclosure controls and internal control over financial reporting were effective as of year-end 2019 - Management concluded that the company's **disclosure controls and procedures were effective** as of the end of the period covered by this report[450](index=450&type=chunk) - Management's assessment concluded that the company's **internal control over financial reporting was effective** as of December 31, 2019, an assessment audited by Crowe LLP[452](index=452&type=chunk) - There were **no changes in internal control** over financial reporting during the fourth quarter of 2019 that materially affected, or are reasonably likely to materially affect, these controls[453](index=453&type=chunk) [Item 9B. Other Information](index=114&type=section&id=ITEM%209B-%20OTHER%20INFORMATION) The company reports no other information - Not Applicable[455](index=455&type=chunk) Part III [Item 10. Directors, Executive Officers and Corporate Governance](index=114&type=section&id=ITEM%2010%20-%20DIRECTORS%2C%20EXECUTIVE%20OFFICERS%2C%20PROMOTERS%20AND%20CONTROL%20PERSONS%3B%20COMPLIANCE%20WITH%20SECTION%2016(a)%20OF%20THE%20EXCHANGE%20ACT) Information regarding directors, officers, and corporate governance is incorporated by reference from the 2020 Proxy Statement - Information concerning directors and executive officers is **incorporated by reference** from the definitive Proxy Statement for the 2020 Annual Meeting of Shareholders[457](index=457&type=chunk) - The company believes that for the 2019 fiscal year, all officers and directors **complied with Section 16(a)** filing requirements[460](index=460&type=chunk) [Item 11. Executive Compensation](index=115&type=section&id=ITEM%2011%20-%20EXECUTIVE%20COMPENSATION) Information regarding executive compensation is incorporated by reference from the company's definitive Proxy Statement - The required information is **incorporated by reference** from the Company's Definitive Proxy Statement under the caption 'Executive Compensation'[461](index=461&type=chunk) [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=115&type=section&id=ITEM%2012%20-%20SECURITY%20OWNERSHIP%20OF%20CERTAIN%20BENEFICIAL%20OWNERS%20AND%20MANAGEMENT%20AND%20RELATED%20STOCKHOLDER%20MATTERS) Information regarding security ownership is incorporated by reference from the company's definitive Proxy Statement - The required information is **incorporated by reference** from the Company's Definitive Proxy Statement[462](index=462&type=chunk) [Item 13. Certain Relationships and Related Transactions, and Director Independence](index=115&type=section&id=ITEM%2013%20-%20CERTAIN%20RELATIONSHIPS%20AND%20RELATED%20TRANSACTIONS) Information regarding related transactions and director independence is incorporated by reference from the Proxy Statement - The required information is **incorporated by reference** from the Company's Definitive Proxy Statement[463](index=463&type=chunk) [Item 14. Principal Accountant Fees and Services](index=115&type=section&id=ITEM%2014%20-%20PRINCIPAL%20ACCOUNTING%20FEES%20AND%20SERVICES) Information regarding accountant fees and services is incorporated by reference from the company's definitive Proxy Statement - The required information is **incorporated by reference** from the Company's Definitive Proxy Statement[464](index=464&type=chunk) Part IV [Item 15. Exhibits, Financial Statement Schedules](index=115&type=section&id=ITEM%2015%20-%20EXHIBITS%2C%20FINANCIAL%20STATEMENT%20SCHEDULES) This section lists the financial statements, schedules, and exhibits filed as part of the Form 10-K report - The Financial Statements of the Company and the Report of Independent Registered Public Accounting Firm are located in **Part II, Item 8**[464](index=464&type=chunk) - All financial statement schedules are **omitted** because the conditions requiring them are absent or the necessary information is already included in the Financial Statements or notes[465](index=465&type=chunk) - An index to exhibits is provided, listing various agreements, articles of incorporation, bylaws, and certifications filed with the report[468](index=468&type=chunk)

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED September 30, 2019 o 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 CENTRAL VALLEY COMMUNITY BANCORP (Exact name of registrant as specified in its charter) California 77- ...

PART 1 FINANCIAL INFORMATION [ITEM 1 FINANCIAL STATEMENTS (Unaudited)](index=4&type=section&id=ITEM%201%20FINANCIAL%20STATEMENTS%20(Unaudited)) The unaudited consolidated financial statements show asset growth and increased net income for the six months ended June 30, 2019 [Consolidated Financial Statements](index=4&type=section&id=Consolidated%20Financial%20Statements) Total assets grew to $1.61 billion, with net income rising to $11.3 million for the first six months of 2019 Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2019 | December 31, 2018 | | :--- | :--- | :--- | | **Total Assets** | **$1,613,227** | **$1,537,836** | | Total Loans, net | $950,806 | $909,591 | | Total Deposits | $1,294,087 | $1,282,298 | | **Total Liabilities** | **$1,381,547** | **$1,318,098** | | **Total Shareholders' Equity** | **$231,680** | **$219,738** | Consolidated Income Statement Highlights (in thousands) | Metric | Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | | :--- | :--- | :--- | | Net Interest Income | $31,781 | $30,823 | | Provision for Credit Losses | $275 | $50 | | Non-Interest Income | $7,574 | $5,457 | | Non-Interest Expenses | $23,439 | $22,867 | | **Net Income** | **$11,303** | **$10,256** | | **Diluted EPS** | **$0.83** | **$0.74** | - Cash and cash equivalents increased to **$48.6 million** at the end of the period, up from $31.7 million at the beginning of the year, primarily driven by net cash provided by financing activities of **$46.9 million**[32](index=32&type=chunk) - Total shareholders' equity grew to **$231.7 million** from $219.7 million at the start of the year, influenced by net income of **$11.3 million** and a positive change in other comprehensive income of **$9.2 million**, partially offset by stock repurchases and dividends[29](index=29&type=chunk) [Notes to Unaudited Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) The notes detail the basis of presentation, the impact of new accounting standards like ASU 2016-02, and portfolio disclosures - The Company adopted ASU 2016-02 (Leases) on January 1, 2019, recording a right-of-use asset and a lease liability of approximately **$10 million** on the balance sheet for its operating leases[36](index=36&type=chunk) - The Company is preparing for the implementation of ASU 2016-13 (CECL), which becomes effective January 1, 2020[37](index=37&type=chunk)[40](index=40&type=chunk) Fair Value of Financial Instruments (June 30, 2019, in thousands) | Instrument | Carrying Amount | Fair Value (Total) | | :--- | :--- | :--- | | **Financial Assets** | | | | Available-for-sale debt securities | $476,211 | $476,211 | | Loans, net | $950,806 | $947,248 | | **Financial Liabilities** | | | | Deposits | $1,294,087 | $1,198,932 | | Short-term borrowings | $54,000 | $54,000 | Loan Portfolio Composition (in thousands) | Loan Type | June 30, 2019 | December 31, 2018 | | :--- | :--- | :--- | | Commercial | $136,165 | $109,531 | | Real Estate | $708,870 | $699,576 | | Consumer | $113,452 | $107,996 | | **Total Gross Loans** | **$960,211** | **$918,695** | [ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=37&type=section&id=ITEM%202%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management discusses strong financial performance, including a 10.21% increase in net income and an expanded net interest margin - For the first six months of 2019, consolidated net income was **$11.3 million**, a **10.21% increase** from the same period in 2018, and Diluted EPS rose to **$0.83** from $0.74[141](index=141&type=chunk) - Total assets grew by **4.90%** to **$1.61 billion** in the first six months of 2019, while total gross loans increased by **4.52%** to **$960.2 million**[153](index=153&type=chunk) - Asset quality remains strong, with nonperforming assets at **$2.4 million**, representing just **0.15%** of total assets as of June 30, 2019[152](index=152&type=chunk)[222](index=222&type=chunk) Key Performance Ratios (Annualized) | Ratio | Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | | :--- | :--- | :--- | | Return on Average Equity (ROE) | 10.06% | 9.84% | | Return on Average Assets (ROA) | 1.45% | 1.28% | | Net Interest Margin (FTE) | 4.56% | 4.33% | [ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=65&type=section&id=ITEM%203%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company's primary market risk is interest rate risk, with no material changes reported since year-end 2018 - The company's primary market risk is interest rate risk, which is assessed quarterly, and **no material changes** to this risk exposure were reported since the year-end 2018 Form 10-K[250](index=250&type=chunk) [ITEM 4 CONTROLS AND PROCEDURES](index=65&type=section&id=ITEM%204%20CONTROLS%20AND%20PROCEDURES) Management concluded that disclosure controls and procedures were effective, with no material changes to internal controls - The CEO and CFO concluded that the company's disclosure controls and procedures were **effective** as of June 30, 2019[251](index=251&type=chunk) - There were **no changes** in internal controls over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, these controls[251](index=251&type=chunk) PART II OTHER INFORMATION [ITEM 1 LEGAL PROCEEDINGS](index=65&type=section&id=ITEM%201%20LEGAL%20PROCEEDINGS) The company reported no legal proceedings for the period - There are **no legal proceedings** to report[252](index=252&type=chunk) [ITEM 1A RISK FACTORS](index=65&type=section&id=ITEM%201A%20RISK%20FACTORS) No material changes were reported from the risk factors disclosed in the 2018 Annual Report on Form 10-K - **No material changes** from the risk factors disclosed in the 2018 Annual Report on Form 10-K were reported[253](index=253&type=chunk) [ITEM 2 UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=66&type=section&id=ITEM%202%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) The company details its stock repurchase program, having bought back 320,600 shares in the first half of 2019 - The stock repurchase program, approved on July 18, 2018, authorized up to **$10 million** in share buybacks and was set to expire on July 18, 2019[256](index=256&type=chunk) Stock Repurchase Activity (Six Months Ended June 30, 2019) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | Jan 2019 | 46,281 | $18.71 | | Feb 2019 | 17,505 | $19.69 | | Mar 2019 | 33,693 | $19.60 | | Apr 2019 | 23,262 | $19.90 | | May 2019 | 145,199 | $20.02 | | Jun 2019 | 54,660 | $19.67 | | **Total** | **320,600** | **$19.70** | [ITEM 3 DEFAULTS UPON SENIOR SECURITIES](index=66&type=section&id=ITEM%203%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) The company reported no defaults upon senior securities - There are **no defaults** upon senior securities to report[257](index=257&type=chunk) [ITEM 4 MINE SAFETY DISCLOSURES](index=66&type=section&id=ITEM%204%20MINE%20SAFETY%20DISCLOSURES) This item is not applicable to the company - There are **no mine safety disclosures** to report[258](index=258&type=chunk) [ITEM 5 OTHER INFORMATION](index=66&type=section&id=ITEM%205%20OTHER%20INFORMATION) The company reported no other information - There is **no other information** to report[259](index=259&type=chunk) [ITEM 6 EXHIBITS](index=67&type=section&id=ITEM%206%20EXHIBITS) This section lists filed exhibits, including officer certifications and XBRL interactive data files - Exhibits filed include officer certifications (31.1, 31.2, 32.1, 32.2) and XBRL data files[261](index=261&type=chunk) [SIGNATURES](index=68&type=section&id=SIGNATURES) The report was signed by the CEO and CFO on August 7, 2019 - The report was signed on August 7, 2019, by James M. Ford, President and Chief Executive Officer, and David A. Kinross, Executive Vice President and Chief Financial Officer[263](index=263&type=chunk)

```markdown [PART 1 FINANCIAL INFORMATION](index=3&type=section&id=PART%201%20FINANCIAL%20INFORMATION) [ITEM 1 FINANCIAL STATEMENTS (Unaudited)](index=4&type=section&id=ITEM%201%20FINANCIAL%20STATEMENTS%20(Unaudited)) This section presents unaudited consolidated financial statements, including balance sheets, income statements, and cash flow statements, with detailed notes [Consolidated Balance Sheets](index=4&type=section&id=CONSOLIDATED%20BALANCE%20SHEETS) | (In thousands) | March 31, 2019 | December 31, 2018 | |:---------------|:---------------|:------------------| | Total assets | $ 1,564,237 | $ 1,537,836 | | Total loans, less allowance for credit losses | 912,692 | 909,591 | | Total deposits | 1,292,564 | 1,282,298 | | Total shareholders' equity | 227,455 | 219,738 | [Consolidated Statements of Income](index=5&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20INCOME) | (In thousands) | For the Quarter Ended March 31, 2019 | For the Quarter Ended March 31, 2018 | |:---------------|:-------------------------------------|:-------------------------------------| | Net income | $ 5,216 | $ 5,291 | | Total interest income | 16,289 | 15,730 | | Total non-interest income | 2,976 | 2,771 | | Total non-interest expenses | 11,667 | 11,368 | | Basic earnings per share | $ 0.38 | $ 0.39 | | Diluted earnings per share | $ 0.38 | $ 0.38 | [Consolidated Statements of Comprehensive Income](index=7&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20COMPREHENSIVE%20INCOME) | (In thousands) | For the Quarter Ended March 31, 2019 | For the Quarter Ended March 31, 2018 | |:---------------|:-------------------------------------|:-------------------------------------| | Net income | $ 5,216 | $ 5,291 | | Unrealized holding gains (losses) arising during the period | 8,618 | (8,571) | | Total other comprehensive income (loss) | 5,329 | (6,611) | | Comprehensive income (loss) | $ 10,545 | $ (1,320) | [Consolidated Statements of Changes in Shareholders' Equity](index=8&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20CHANGES%20IN%20SHAREHOLDERS'%20EQUITY) | (In thousands) | January 1, 2019 Balance | March 31, 2019 Balance | |:---------------|:------------------------|:-----------------------| | Total Shareholders' Equity | $ 219,738 | $ 227,455 | | Net income | 5,216 | | | Other comprehensive income | 5,329 | | | Cash dividend ($0.10 per common share) | (1,372) | | | Repurchase and retirement of common stock | (1,874) | | [Consolidated Statements of Cash Flows](index=9&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) | (In thousands) | For the Quarter Ended March 31, 2019 | For the Quarter Ended March 31, 2018 | |:---------------|:-------------------------------------|:-------------------------------------| | Net cash provided by operating activities | $ 6,902 | $ 6,349 | | Net cash used in investing activities | (10,589) | (29,363) | | Net cash provided by (used in) financing activities | 4,195 | (35,146) | | Increase (decrease) in cash and cash equivalents | 508 | (58,160) | | Cash and cash equivalents at end of period | $ 32,235 | $ 42,223 | [Note 1. Basis of Presentation](index=11&type=section&id=Note%201.%20Basis%20of%20Presentation) - The Company adopted FASB Accounting Standards Update (ASU) 2016-02 - Leases on January 1, 2019, resulting in the recognition of a right-of-use asset and lease liability of approximately **$10 million** on the balance sheet for operating leases[30](index=30&type=chunk) - The Company is evaluating the impact of ASU 2016-13 - Measurement of Credit Losses on Financial Instruments (CECL), effective January 1, 2020, which will require reserves for all expected credit losses over the contractual term of financial assets[31](index=31&type=chunk)[33](index=33&type=chunk)[34](index=34&type=chunk) - ASU 2017-04 (Goodwill Impairment) and ASU 2017-08 (Callable Debt Securities) were adopted effective Q1 2019, with no material impact on the Company's financial position, results of operations, or cash flows[35](index=35&type=chunk)[36](index=36&type=chunk) [Note 2. Fair Value Measurements](index=13&type=section&id=Note%202.%20Fair%20Value%20Measurements) - Fair value measurements are categorized into a three-level hierarchy: Level 1 (quoted market prices for identical instruments), Level 2 (observable market data for similar instruments), and Level 3 (unobservable assumptions)[41](index=41&type=chunk)[42](index=42&type=chunk)[43](index=43&type=chunk) | (In thousands) | March 31, 2019 Total Assets Measured at Fair Value on a Recurring Basis | |:---------------|:----------------------------------------------------------------------| | Total assets measured at fair value on a recurring basis | $ 486,968 | | Level 1 (Equity securities) | $ 7,346 | | Level 2 (Available-for-sale debt securities) | $ 479,622 | | Level 3 | $ — | | (In thousands) | December 31, 2018 Impaired Loans Measured at Fair Value on a Non-Recurring Basis | |:---------------|:---------------------------------------------------------------------------------| | Total assets measured at fair value on a non-recurring basis | $ 134 | | Level 3 (Commercial real estate) | $ 134 | [Note 3. Investments](index=17&type=section&id=Note%203.%20Investments) - The available-for-sale investment portfolio shifted from a net unrealized loss of **$6,257 thousand** at December 31, 2018, to a net unrealized gain of **$1,309 thousand** at March 31, 2019[67](index=67&type=chunk) | (In thousands) | March 31, 2019 Estimated Fair Value | December 31, 2018 Estimated Fair Value | |:---------------|:------------------------------------|:-------------------------------------| | Total available-for-sale securities | $ 479,622 | $ 463,905 | | Proceeds from sales or calls (Q1) | 52,985 | 69,315 | | Gross realized gains from sales or calls (Q1) | 1,099 | 1,067 | | Gross realized losses from sales or calls (Q1) | (47) | (252) | - No other-than-temporary impairment (OTTI) losses were recorded for investment securities during the three months ended March 31, 2019, or 2018, as declines in market value were attributed to interest rate changes, not credit quality, and the Company has the ability and intent to hold these investments[71](index=71&type=chunk)[72](index=72&type=chunk)[73](index=73&type=chunk)[76](index=76&type=chunk)[77](index=77&type=chunk) [Note 4. Loans and Allowance for Credit Losses](index=21&type=section&id=Note%204.%20Loans%20and%20Allowance%20for%20Credit%20Losses) | (In thousands) | March 31, 2019 | December 31, 2018 | |:---------------|:---------------|:------------------| | Total gross loans | $ 921,810 | $ 918,695 | | Allowance for credit losses | (9,118) | (9,104) | | Total loans (net) | $ 912,692 | $ 909,591 | | (In thousands) | March 31, 2019 | December 31, 2018 | |:---------------|:---------------|:------------------| | Nonaccrual loans | $ 1,548 | $ 2,740 | | Total nonperforming loans | $ 1,548 | $ 2,740 | | Ratio of nonperforming loans to total loans | 0.17% | 0.30% | | Loans considered to be impaired | $ 4,683 | $ 5,909 | | Related allowance for credit losses on impaired loans | $ 101 | $ 90 | - The recorded investment in troubled debt restructurings (TDRs) was **$3,135 thousand** at March 31, 2019, with **$53 thousand** in specific reserves allocated to these loans[97](index=97&type=chunk) [Note 5. Borrowing Arrangements](index=29&type=section&id=Note%205.%20Borrowing%20Arrangements) | (In thousands) | March 31, 2019 | December 31, 2018 | |:---------------|:---------------|:------------------| | FHLB advances | $ 7,000 | $ 10,000 | - Approximately **$443,162 thousand** in loans were pledged as collateral to the FHLB for the Bank's remaining borrowing capacity of **$287,839 thousand** at March 31, 2019[101](index=101&type=chunk) [Note 6. Leases](index=29&type=section&id=Note%206.%20Leases) - The Bank leases branch facilities and administrative offices under noncancelable operating leases with terms extending through **2028**[102](index=102&type=chunk) | (In thousands) | March 31, 2019 | |:---------------|:---------------| | Present value of operating lease liabilities | $ 10,472 | | Operating lease right-of-use assets | $ 10,472 | | Weighted average remaining lease term | 7 years | | Weighted average discount rate | 2.91% | [Note 7. Commitments and Contingencies](index=31&type=section&id=Note%207.%20Commitments%20and%20Contingencies) | (In thousands) | March 31, 2019 | December 31, 2018 | |:---------------|:---------------|:------------------| | Commitments to extend credit | $ 326,191 | $ 312,274 | | Standby letters of credit and financial guarantees | 2,490 | 2,450 | | Contingent allocation for probable loan loss experience on unfunded obligations | 250 | 225 | - In 2018, the Company sold its credit card portfolio to a third-party vendor and provides a guarantee of certain accounts, totaling **$2,100 thousand** as of March 31, 2019[106](index=106&type=chunk) [Note 8. Earnings Per Share](index=31&type=section&id=Note%208.%20Earnings%20Per%20Share) | (In thousands, except share and per share amounts) | For the Quarter Ended March 31, 2019 | For the Quarter Ended March 31, 2018 | |:---------------------------------------------------|:-------------------------------------|:-------------------------------------| | Basic earnings per share | $ 0.38 | $ 0.39 | | Diluted earnings per share | $ 0.38 | $ 0.38 | | Weighted average common shares used in basic computation | 13,646,489 | 13,669,976 | | Weighted average common shares used in diluted computation | 13,755,615 | 13,804,480 | [Note 9. Share-Based Compensation](index=32&type=section&id=Note%209.%20Share-Based%20Compensation) | (In thousands) | For the Quarter Ended March 31, 2019 | For the Quarter Ended March 31, 2018 | |:---------------|:-------------------------------------|:-------------------------------------| | Share-based compensation cost recognized | $ 143 | $ 74 | | Stock Options (March 31, 2019) | Shares | Weighted Average Exercise Price | |:-------------------------------|:-------|:--------------------------------| | Options outstanding | 139,804 | $ 8.87 | | Restricted Stock Awards (March 31, 2019) | Shares | Weighted Average Grant-Date Fair Value | |:-----------------------------------------|:-------|:---------------------------------------| | Nonvested outstanding shares | 57,827 | $ 16.43 | | Total unrecognized compensation cost | $ 540 | | [ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=34&type=section&id=ITEM%202%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management's perspective on financial condition and results of operations, highlighting key performance indicators and financial metrics [Forward-Looking Statements](index=34&type=section&id=Forward-Looking%20Statements) - The report contains forward-looking statements, identified by words such as "anticipate," "estimate," "expect," "project," "intend," "commit," and "believe," which are subject to risks and uncertainties[116](index=116&type=chunk) - Risks include increased competitive pressure, changes in interest rates, economic downturns in the Central Valley, ability to maintain growth and net interest margin, decline in asset quality, regulatory changes, real estate market fluctuations, and acquisition-related challenges[116](index=116&type=chunk) [Critical Accounting Policies and Estimates](index=34&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) - No material changes to the Company's critical accounting policies occurred during the three months ended March 31, 2019[117](index=117&type=chunk) [Overview](index=34&type=section&id=Overview) - Central Valley Community Bancorp is a central California-based bank holding company for Central Valley Community Bank, providing commercial banking services to businesses and individuals[118](index=118&type=chunk) - The Bank operates **21** full-service branches across various counties in central California and is subject to supervision by the California Department of Business Oversight (DBO) and the Federal Deposit Insurance Corporation (FDIC)[120](index=120&type=chunk) [First Quarter of 2019 Financial Highlights](index=35&type=section&id=First%20Quarter%20of%202019%20Financial%20Highlights) | Financial Metric | Q1 2019 | Q1 2018 | |:-----------------|:--------|:--------| | Consolidated Net Income | $5,216,000 | $5,291,000 | | Diluted EPS | $0.38 | $0.38 | | Net Interest Margin (fully tax equivalent basis) | 4.63% | 4.31% | | Annualized Return on Average Equity (ROE) | 9.42% | 10.15% | | Annualized Return on Average Assets (ROA) | 1.35% | 1.30% | | Total Average Assets | $1,540,721,000 | $1,624,504,000 | - The Board of Directors declared an **$0.11 per share** cash dividend payable on May 17, 2019[121](index=121&type=chunk) [Key Factors in Evaluating Financial Condition and Operating Performance](index=36&type=section&id=Key%20Factors%20in%20Evaluating%20Financial%20Condition%20and%20Operating%20Performance) - Key factors for evaluation include Return to shareholders (ROE), Return on average assets (ROA), Development of revenue streams (net interest income and non-interest income), Asset quality, Asset growth, Capital adequacy, Operating efficiency, and Liquidity[124](index=124&type=chunk) | Metric | Q1 2019 | Q1 2018 | |:-------|:--------|:--------| | Annualized ROE | 9.42% | 10.15% | | Annualized ROA | 1.35% | 1.30% | | Net Interest Margin (NIM) | 4.63% | 4.31% | | Efficiency Ratio | 63.92% | 62.59% | - Liquid assets totaled **$519,203 thousand**, representing **33.19%** of total assets at March 31, 2019[134](index=134&type=chunk) [Results of Operations](index=38&type=section&id=RESULTS%20OF%20OPERATIONS) [Net Income for the Three Months Ended March 31, 2019 Compared to the Three Months Ended March 31, 2018](index=38&type=section&id=Net%20Income%20for%20the%20Three%20Months%20Ended%20March%2031,%202019%20Compared%20to%20the%20Three%20Months%20Ended%20March%2031,%202018) | Metric | Q1 2019 | Q1 2018 | |:-------|:--------|:--------| | Net income | $5,216,000 | $5,291,000 | | Basic EPS | $0.38 | $0.39 | | Diluted EPS | $0.38 | $0.38 | | Annualized ROE | 9.42% | 10.15% | | Annualized ROA | 1.35% | 1.30% | - The decrease in net income was primarily due to increased non-interest expense and provision for income taxes, partially offset by higher net interest income and net realized gains on investment securities[135](index=135&type=chunk) - A **$25,000** reversal of the provision for credit losses was recorded in Q1 2019, compared to no provision in Q1 2018[135](index=135&type=chunk) [Interest Income and Expense](index=38&type=section&id=Interest%20Income%20and%20Expense) | Metric | Q1 2019 | Q1 2018 | |:-------|:--------|:--------| | Net interest income before provision for credit losses | $15,835,000 | $15,426,000 | | Yield on average loans | 5.64% | 5.42% | | Yield on average total investments | 3.13% | 2.77% | | Cost of interest-bearing liabilities | 0.24% | 0.15% | | Average interest-earning assets | $1,399,220,000 | $1,476,572,000 | - Net interest income was positively impacted by **$127,000** in nonrecurring income from prepayment penalties and payoff of nonaccrual loans in Q1 2019, compared to **$21,000** in income reversals in Q1 2018[141](index=141&type=chunk) - The average life of the investment portfolio was **3.31 years** at March 31, 2019, with a net pre-tax unrealized gain of **$1,309,000**[143](index=143&type=chunk) [Provision for Credit Losses](index=42&type=section&id=Provision%20for%20Credit%20Losses) - The Company recorded a **$25,000** reverse provision for credit losses in Q1 2019, compared to no provision in Q1 2018[149](index=149&type=chunk) | Metric | Q1 2019 | Q1 2018 | |:-------|:--------|:--------| | Net recoveries | $39,000 | $10,000 | | Nonperforming loans | $1,548,000 | $4,058,000 | | Nonperforming loans as a percentage of total loans | 0.17% | 0.44% | | Annualized net charge-off (recovery) ratio | (0.02)% | 0.00% | | Allowance for Credit Losses | March 31, 2019 | December 31, 2018 | |:----------------------------|:---------------|:------------------| | Total allowance for credit losses | $9,118,000 | $9,104,000 | | Allowance for credit losses to total loans at end of period | 0.99% | 0.99% | [Net Interest Income after Provision for Credit Losses](index=43&type=section&id=Net%20Interest%20Income%20after%20Provision%20for%20Credit%20Losses) | (In thousands) | Q1 2019 | Q1 2018 | |:---------------|:--------|:--------| | Net interest income after provision for credit losses | $15,860 | $15,426 | [Non-Interest Income](index=43&type=section&id=Non-Interest%20Income) | (In thousands) | Q1 2019 | Q1 2018 | |:---------------|:--------|:--------| | Total non-interest income | $2,976 | $2,771 | | Net realized gains on sales and calls of investment securities | 1,052 | 815 | | Customer service charges | 690 | 755 | | Loan placement fees | 139 | 166 | - The **$205,000 (7.40%)** increase in non-interest income was primarily driven by higher net realized gains on investment securities, partially offset by decreases in service charges and loan placement fees[151](index=151&type=chunk) [Non-Interest Expenses](index=44&type=section&id=Non-Interest%20Expenses) | (In thousands) | Q1 2019 | Q1 2018 | |:---------------|:--------|:--------| | Total non-interest expenses | $11,667 | $11,368 | | Salaries and employee benefits | 6,490 | 6,416 | | Occupancy and equipment | 1,479 | 1,537 | | Information technology | 395 (decrease) | 480 | | Efficiency ratio | 63.92% | 62.59% | - The net increase in non-interest expenses was due to increases in information technology, salaries and employee benefits, amortization of intangibles, directors' expenses, and advertising, partially offset by decreases in acquisition and integration expenses, professional services, and data processing[154](index=154&type=chunk) - The increase in information technology expenses was a result of outsourcing network maintenance and IT support in Q4 2018[154](index=154&type=chunk) [Provision for Income Taxes](index=45&type=section&id=Provision%20for%20Income%20Taxes) | (In thousands) | Q1 2019 | Q1 2018 | |:---------------|:--------|:--------| | Provision for income taxes | $1,953 | $1,538 | | Effective income tax rate | 27.24% | 22.52% | - The increase in the effective tax rate was primarily due to a decrease in tax-exempt interest[158](index=158&type=chunk) [Financial Condition](index=45&type=section&id=FINANCIAL%20CONDITION) [Summary of Changes in Consolidated Balance Sheets March 31, 2019 compared to December 31, 2018](index=45&type=section&id=Summary%20of%20Changes%20in%20Consolidated%20Balance%20Sheets%20March%2031,%202019%20compared%20to%20December%2031,%202018) | (In thousands) | March 31, 2019 | December 31, 2018 | Change (%) | |:---------------|:---------------|:------------------|:-----------| | Total assets | $1,564,237 | $1,537,836 | 1.72% | | Total gross loans | 921,810 | 918,695 | 0.34% | | Total investment portfolio | 489,441 | 477,932 | 2.41% | | Total deposits | 1,292,564 | 1,282,298 | 0.80% | | Shareholders' equity | 227,455 | 219,738 | 3.51% | [Fair Value](index=46&type=section&id=Fair%20Value) - The Company measures fair values of financial instruments using a hierarchical framework, where the degree of judgment correlates with the observability of pricing scenarios[161](index=161&type=chunk) [Investments](index=46&type=section&id=Investments) - The total investment portfolio increased by **2.41%** to **$489,441 thousand** at March 31, 2019, with a net unrealized gain of **$1,309 thousand** on available-for-sale securities, compared to a net unrealized loss of **$6,257 thousand** at December 31, 2018[162](index=162&type=chunk) - The Company's loan-to-deposit ratio was **71.32%** at March 31, 2019, which is considered higher than peers due to a comparatively low ratio[162](index=162&type=chunk) - No other-than-temporary impairment (OTTI) losses were recorded for investment securities during the three months ended March 31, 2019, or 2018[162](index=162&type=chunk)[163](index=163&type=chunk)[164](index=164&type=chunk) [Loans](index=47&type=section&id=Loans) | (In thousands) | March 31, 2019 | December 31, 2018 | |:---------------|:---------------|:------------------| | Total gross loans | $921,810 | $918,695 | | Commercial loans | 107,960 (11.7%) | 109,531 (12.0%) | | Real estate loans | 699,745 (76.1%) | 699,576 (76.2%) | | Consumer loans | 112,351 (12.2%) | 107,996 (11.8%) | - A significant concentration of loans (approximately **95.7%**) existed in commercial and real estate loans at March 31, 2019[167](index=167&type=chunk) - Loans acquired from FLB, SVB, and VCB acquisitions totaled **$175,177 thousand** at March 31, 2019[165](index=165&type=chunk) [Nonperforming Assets](index=48&type=section&id=Nonperforming%20Assets) | (In thousands) | March 31, 2019 | December 31, 2018 | |:---------------|:---------------|:------------------| | Total nonperforming assets | $1,548 | $2,740 | | Nonperforming assets as % of total assets | 0.10% | 0.18% | | Nonaccrual loans | $1,548 | $2,740 | | Ratio of nonperforming loans to total loans | 0.17% | 0.30% | - Nonperforming assets consisted entirely of nonaccrual loans, with no OREO or repossessed assets at March 31, 2019, or December 31, 2018[168](index=168&type=chunk)[171](index=171&type=chunk) [Allowance for Credit Losses](index=49&type=section&id=Allowance%20for%20Credit%20Losses) | (In thousands) | March 31, 2019 | December 31, 2018 | |:---------------|:---------------|:------------------| | Balance, end of period (ALLL) | $9,118 | $9,104 | | Allowance for credit losses to total loans at end of period | 0.99% | 0.99% | | Contingent allocation for probable loan loss experience on unfunded obligations | $250 | $225 | - Excluding acquired loans, the ALLL to total gross loans was **1.22%** at March 31, 2019[175](index=175&type=chunk) - Management believes the ALLL is adequate to absorb probable incurred losses within the loan portfolio, based on a systematic risk evaluation methodology and consideration of economic conditions[149](index=149&type=chunk)[175](index=175&type=chunk) [Goodwill and Intangible Assets](index=51&type=section&id=Goodwill%20and%20Intangible%20Assets) | (In thousands) | March 31, 2019 | |:---------------|:---------------| | Total goodwill | $53,777 | | Carrying value of intangible assets | $2,399 | | Amortization expense (Q1) | $174 | | Estimated remaining core deposit intangible amortization (2019) | $523 | - No goodwill impairment was required based on the annual impairment test in Q3 2018, and no such events arose in Q1 2019[177](index=177&type=chunk)[178](index=178&type=chunk) - Core deposit intangibles are amortized using the straight-line method over estimated lives of **five to ten years**[179](index=179&type=chunk) [Deposits and Borrowings](index=52&type=section&id=Deposits%20and%20Borrowings) | (In thousands) | March 31, 2019 | December 31, 2018 | |:---------------|:---------------|:------------------| | Total deposits | $1,292,564 | $1,282,298 | | Interest-bearing deposits | 742,154 | 731,641 | | Non-interest bearing deposits | 550,410 | 550,657 | | Average non-interest bearing deposits to average total deposits | 42.10% | 40.01% | - Total deposits increased by **$10,266 thousand (0.80%)** due to recurring seasonal patterns[180](index=180&type=chunk) | (In thousands) | March 31, 2019 | December 31, 2018 | |:---------------|:---------------|:------------------| | FHLB advances | $7,000 | $10,000 | [Capital](index=53&type=section&id=Capital) | (In thousands) | March 31, 2019 | December 31, 2018 | |:---------------|:---------------|:------------------| | Shareholders' equity | $227,455 | $219,738 | | Common stock cash dividends paid (Q1) | $1,372 | $0 (Q1 2018: $962) | | Common stock repurchased and retired (Q1) | 1,874 | 0 (Q1 2018: $0) | - The Company and the Bank met or exceeded all regulatory capital requirements, including Basel III, at March 31, 2019[130](index=130&type=chunk)[184](index=184&type=chunk) | Bank's Regulatory Capital Ratios (March 31, 2019) | Actual Ratio | Minimum Regulatory Requirement | |:--------------------------------------------------|:-------------|:-------------------------------| | Tier 1 Leverage Ratio | 11.64% | 4.00% | | Common Equity Tier 1 Ratio (CET 1) | 15.50% | 7.00% | | Tier 1 Risk-Based Capital Ratio | 15.50% | 8.50% | | Total Risk-Based Capital Ratio | 16.34% | 10.50% | [Liquidity](index=55&type=section&id=Liquidity) - Liquid assets totaled **$519,203 thousand**, or **33.19%** of total assets, at March 31, 2019[134](index=134&type=chunk) - Primary liquidity sources include customer deposits, Federal funds facilities, and FHLB advances, augmented by unpledged securities (**$415,303 thousand**) and available credit lines[190](index=190&type=chunk) | (In thousands) | March 31, 2019 | December 31, 2018 | |:---------------|:---------------|:------------------| | Unsecured Credit Lines (Credit limit) | $40,000 | $40,000 | | Federal Home Loan Bank (Credit limit) | $287,839 | $286,934 | | Federal Reserve Bank (Credit limit) | $3,551 | $4,364 | [ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=56&type=section&id=ITEM%203%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) Interest rate risk is identified as a significant market risk, with no material change in exposure since the 2018 Annual Report - Interest rate risk is considered a significant market risk that could materially affect the Company's financial condition and results of operations[193](index=193&type=chunk) - There has been no material change in the Company's interest rate risk exposure since the information disclosed in its Annual Report on Form 10-K for the year ended December 31, 2018[193](index=193&type=chunk) [ITEM 4 CONTROLS AND PROCEDURES](index=56&type=section&id=ITEM%204%20CONTROLS%20AND%20PROCEDURES) Management concluded disclosure controls were effective, with no material changes to internal controls over financial reporting in Q1 2019 - Management, including the CEO and CFO, evaluated the effectiveness of the Company's disclosure controls and procedures and concluded they were effective[194](index=194&type=chunk) - No material change in the Company's internal controls over financial reporting occurred during the quarter ended March 31, 2019[194](index=194&type=chunk) [PART II OTHER INFORMATION](index=56&type=section&id=PART%20II%20OTHER%20INFORMATION) [ITEM 1 LEGAL PROCEEDINGS](index=56&type=section&id=ITEM%201%20LEGAL%20PROCEEDINGS) The Company reported no legal proceedings for the period - No legal proceedings to report[195](index=195&type=chunk) [ITEM 1A RISK FACTORS](index=56&type=section&id=ITEM%201A%20RISK%20FACTORS) Refers to risk factors from the 2018 Annual Report on Form 10-K, with no material changes from previously disclosed risks - No material changes from the risk factors previously disclosed in the Company's 2018 Annual Report on Form 10-K[196](index=196&type=chunk) - Additional risks and uncertainties not currently known or deemed immaterial may also materially adversely affect the business, financial condition, and/or operating results[196](index=196&type=chunk) [ITEM 2 UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=57&type=section&id=ITEM%202%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) Details Q1 2019 common stock repurchase activity, with 97,479 shares retired at $1,874 thousand under a $10 million program | Period | Total shares purchased | Average price per share | |:-------|:-----------------------|:------------------------| | 01/1/2019 - 01/31/2019 | 46,281 | $18.71 | | 02/1/2019 - 02/28/2019 | 17,505 | $19.69 | | 03/1/2019 - 03/31/2019 | 33,693 | $19.60 | | Total (Q1 2019) | 97,479 | $19.20 | - During Q1 2019, the Company repurchased and retired **97,479 shares** at an approximate cost of **$1,874,000** under a **$10 million** stock repurchase program expiring on July 18, 2019[199](index=199&type=chunk) [ITEM 3 DEFAULTS UPON SENIOR SECURITIES](index=57&type=section&id=ITEM%203%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) The Company reported no defaults upon senior securities - None to report[200](index=200&type=chunk) [ITEM 4 MINE SAFETY DISCLOSURES](index=57&type=section&id=ITEM%204%20MINE%20SAFETY%20DISCLOSURES) The Company reported no mine safety disclosures - None to report[201](index=201&type=chunk) [ITEM 5 OTHER INFORMATION](index=57&type=section&id=ITEM%205%20OTHER%20INFORMATION) The Company reported no other information - None to report[202](index=202&type=chunk) [ITEM 6 EXHIBITS](index=58&type=section&id=ITEM%206%20EXHIBITS) Lists exhibits filed with the Form 10-Q, including articles of incorporation, bylaws, executive certifications, and XBRL documents - Exhibits include Amended and Restated Articles of Incorporation, Bylaws, Certifications of Principal Executive Officer and Principal Financial Officer (Rule 13a-14(d)/15d-14(a) and Rule 13a-14(b)/15d-14(b)), and various XBRL documents[204](index=204&type=chunk) [SIGNATURES](index=59&type=section&id=SIGNATURES) - The report was signed on May 6, 2019, by James M. Ford, President and Chief Executive Officer, and David A. Kinross, Executive Vice President and Chief Financial Officer[206](index=206&type=chunk) ```

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2018 OR ¨ 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 CENTRAL VALLEY COMMUNITY BANCORP (Exact name of registrant as specified in its charter) CALIFORNIA 77-0539125 (State or ...