Company: CVBF
Filing Date: 2025-02-28
Form Type: 10-K
Source: 0000950170-25-029985
Chunk: 29

Company: CVB FINANCIAL CORP
Filing Date: 2025-02-28
Form: 10-K
Item: Item 16
Chunk 29
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 assets and liabilities, the valuation methodologies used and its impact to earnings. Additionally, for financial instruments not recorded at fair value we disclose the estimate of their fair value. Fair values of financial instruments are estimated using relevant market information and other assumptions, as more fully described in a separate note.Bank Owned Life Insurance — The Company invests in Bank Owned Life Insurance (“BOLI”). BOLI involves the purchasing of life insurance by the Company on a select group of employees. The Company is the owner and primary beneficiary of these policies. BOLI is recorded as an asset at the cash surrender value. Increases in the cash value of these policies, as well as insurance proceeds received, are recorded in other noninterest income and are not subject to income tax for as long as they are held for the life of the covered employee.

98

Qualified Affordable Housing Partnerships and Tax Credit Partnerships — The Bank invests in qualified affordable housing partnerships and accounts for these investments using the proportional amortization method. Under the proportional amortization method, the Bank amortizes the initial cost of the investment in proportion to the tax credits and other tax benefits received, and recognizes the amortization as a component of income tax expense. The Bank also invests in various tax credit partnerships pursuant to Sections 42 and 48 of the Internal Revenue Code of 1986. The Bank acts as a limited partner in these investments and does not exercise control over the financial or operating policies of the partnerships and as such, is not considered the primary beneficiary of the partnership. Upon entering into new solar tax equity investments in the second quarter of 2023, the Company elected to account for tax credit partnerships using the proportional amortization method on a prospective basis.  Income Taxes — Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Future realization of deferred tax assets ultimately depends on the existence of sufficient taxable income of the appropriate character (for example, ordinary income or capital gain) within the carryback or carryforward periods available under the tax law. Based on historical and future expected taxable