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

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

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

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

Effective August 30, 2018, bank holding companies with consolidated assets of $3 billion or more and banks like Central Valley Community Bank must comply with minimum capital ratio requirements which consist of the following: (i) a new common equity Tier 1 capital to total risk weighted assets ratio of 4.5%; (ii) a Tier 1 capital to total risk weighted assets ratio of 6%; (iii) a total capital to total risk weighted assets ratio of 8% (unchanged from current rules); and (iv) a Tier 1 capital to adjusted average total assets (“leverage”) ratio of 4%.

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

Management believes that the Company and the Bank met all their capital adequacy requirements as of December 31, 2020 and 2019. There are no conditions or events since those notifications that management believes have changed those categories. The capital ratios for the Company and the Bank are presented in the table below (exclusive of the capital conservation buffer).

The following table presents the Company’s and the Bank’s actual capital ratios as of December 31, 2020 and December 31, 2019, as well as the minimum capital ratios for capital adequacy for the Bank.


(Dollars in thousands)	Actual Ratio
December 31, 2020	Amount		Ratio
Tier 1 Leverage Ratio	$	178,407	9.28	%
Common Equity Tier 1 Ratio (CET 1)	$	173,407	14.10	%
Tier 1 Risk-Based Capital Ratio	$	178,407	14.50	%
Total Risk-Based Capital Ratio	$	191,572	15.58	%

December 31, 2019
Tier 1 Leverage Ratio	$	172,945	11.38	%
Common Equity Tier 1 Ratio (CET 1)	$	167,945	14.55	%
Tier 1 Risk-Based Capital Ratio	$	172,945	14.98	%
Total Risk-Based Capital Ratio	$	182,325	15.79	%


(Dollars in thousands)	Actual Ratio				Minimum regulatory requirement (1)
December 31, 2020	Amount		Ratio		Amount		Ratio
Tier 1 Leverage Ratio	$	177,269	9.23	%	$	76,852	4.00	%
Common Equity Tier 1 Ratio (CET 1)	$	177,269	14.41	%	$	55,346	7.00	%
Tier 1 Risk-Based Capital Ratio	$	177,269	14.41	%	$	73,795	8.50	%
Total Risk-Based Capital Ratio	$	190,434	15.48	%	$	98,394	10.50	%

December 31, 2019
Tier 1 Leverage Ratio	$	171,332	11.27	%	$	60,810	4.00	%
Common Equity Tier 1 Ratio (CET 1)	$	171,332	14.85	%	$	51,930	7.00	%
Tier 1 Risk-Based Capital Ratio	$	171,332	14.85	%	$	69,240	8.50	%
Total Risk-Based Capital Ratio	$	180,712	15.66	%	$	92,320	10.50	%
(1) The minimum regulatory requirement threshold includes the capital conservation buffer of 2.50%.

Dividends - During 2020, the Bank declared and paid cash dividends to the Company in the amount of $15,622,000 in connection with the cash dividends to the Company’s shareholders approved by the Company’s Board of Directors. The Company declared and paid a total of $5,530,000 or $0.44 per common share cash dividend to shareholders of record during the

During 2019, the Bank declared and paid cash dividends to the Company in the amount of $20,100,000, in connection with the cash dividends to the Company’s shareholders approved by the Company’s Board of Directors. The Company declared and paid a total of $5,805,000 or $0.43 per common share cash dividend to shareholders of record during the year ended December 31, 2019. During the year ended December 31, 2019, the Company repurchased and retired common stock in the amount of $15,619,000

During 2018, the Bank declared and paid cash dividends to the Company in the amount of $2,850,000, in connection with the cash dividends to the Company’s shareholders approved by the Company’s Board of Directors. The Company declared and paid a total of $4,270,000 or $0.31 per common share cash dividend to shareholders of record during the year ended December 31, 2018. During the year ended December 31, 2018, the Company repurchased and retired common stock in the amount of $894,000.

The Company’s primary source of income with which to pay cash dividends is dividends from the Bank. The California Financial Code restricts the total amount of dividends payable by a bank at any time without obtaining the prior approval of the California Department of Business Oversight to the lesser of (1) the Bank’s retained earnings or (2) the Bank’s net income for its last three fiscal years, less distributions made to shareholders during the same three-year period. At December 31, 2020, $26,191,000 of the Bank’s retained earnings were free of these restrictions.

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


	For the Years Ended December 31,
	2020		2019		2018
Basic Earnings Per Common Share:
Net income	$	20,347	$	21,443	$	21,289


Weighted average shares outstanding	12,534,078		13,415,118		13,699,823
Net income per common share	$	1.62	$	1.60	$	1.55
Diluted Earnings Per Common Share:
Net income	$	20,347	$	21,443	$	21,289


Weighted average shares outstanding	12,534,078		13,415,118		13,699,823
Effect of dilutive stock options and warrants	42,241		98,489		125,185
Weighted average shares of common stock and common stock equivalents	12,576,319		13,513,607		13,825,008
Net income per diluted common share	$	1.62	$	1.59	$	1.54