ONTARIO, Calif.--(BUSINESS WIRE)--
CVB Financial Corp. (NASDAQ:CVBF) and its subsidiary, Citizens Business Bank ("the Company"), announced the results for the first quarter of 2007.
Net Income
CVB Financial Corp. reported net income of $15.2 million for the first quarter ending March 31, 2007. This represents a decrease of $3.1 million, or 16.78%, when compared with net earnings of $18.2 million for the first quarter of 2006. Diluted earnings per share were $0.18 for the first quarter of 2007. This was down $0.04, or 18.18%, from diluted earnings per share of $0.22 for the same period last year. These per share amounts have been adjusted to reflect a 10% stock dividend declared in December of 2006.
Net income for the first quarter of 2007 produced a return on beginning equity of 15.81%, a return on average equity of 15.39% and a return on average assets of 1.02%. The efficiency ratio for the first quarter was 54.27%, and operating expenses as a percentage of average assets were 1.74%.
Net Interest Income and Net Interest Margin
Net interest income totaled $39.8 million for the first quarter of 2007. This represents a decrease of $3.7 million, or 8.60%, from the $43.6 million for the same period of 2006. This decrease resulted from a $12.1 million increase in interest income, offset by a $16.1 million increase in interest expense. The increase in interest income was primarily due to the growth in average earning assets and the increase in interest rates. The increase in interest expense was due to the increase in the cost of interest bearing deposits and borrowed funds and the overall increase in interest rates.
Net interest margin (tax equivalent) declined from 3.63% for the first quarter of 2006 to 3.03% for the first quarter of 2007. Total average earning asset yields increased from 5.84% for the first quarter of 2006 to 6.19% for the first quarter of 2007. The cost of funds increased from 3.10% for the first quarter of 2006 to 4.15% for the first quarter of 2007. The decline in net interest margin is due to the cost of interest-bearing liabilities rising faster than the increase in yields on earning assets.
The credit quality of the loan portfolio continues to be strong. The allowance for credit losses increased from $23.6 million as of March 31, 2006 to $27.6 million as of March 31, 2007. The increase was primarily due to the provision for credit losses of $3.0 million and net recoveries of $1.7 million in 2006. During the first three months of 2007, the Company experienced net charge-offs of $105,000. No additional provision for credit losses was made in the first quarter of 2007. By comparison, during the first three months of 2006, the Company had net recoveries of $130,000, and a provision for credit losses of $250,000. The allowance for credit losses was 0.89% and 0.87% of the total loans and leases outstanding as of March 31, 2007 and 2006, respectively.
Balance Sheet
The Company reported total assets of $5.99 billion at March 31, 2007. This represented an increase of $465.5 million, or 8.42%, over total assets of $5.53 billion as of March 31, 2006. Earning assets totaled $5.63 billion and were up $459.8 million, or 8.89%, when compared with earning assets of $5.17 billion as of March 31, 2006. Total deposits were $3.39 billion as of March 31, 2007. This represents a decrease of $86.5 million, or 2.49%, when compared with total deposits of $3.48 billion at March 31, 2006. The Company has approximately $1.26 billion, or 37.30%, of its deposits in non-interest bearing demand deposits. Gross loans and leases totaled $3.10 billion at March 31, 2007. This represents an increase of $379.5 million, or 13.97%, when compared with gross loans and leases of $2.72 billion at March 31, 2006.
Total assets of $5.99 billion at March 31, 2007 reflect a decrease of $100.8 million, or 1.65%, from total assets of $6.09 billion on December 31, 2006. Earning assets of $5.63 billion were down $69.8 million, or 1.22%, from total earning assets of $5.71 billion at December 31, 2006. The decrease was primarily due to the decrease in the investment portfolio. Total deposits of $3.39 billion at March 31, 2007 represent a decrease of $17.2 million, or 0.50%, when compared with total deposits of $3.41 billion at December 31, 2006. Gross loans and leases of $3.10 billion at March 31, 2007 represent an increase of $26.4 million, or 0.86%, when compared with gross loans and leases of $3.07 billion at December 31, 2006.
Investment Securities
Investment securities totaled $2.48 billion at March 31, 2007. This represents an increase of $77.7 million, or 3.23%, when compared with $2.41 billion in investment securities at March 31, 2006. It represents a decrease of $98.2 million, or 3.80%, when compared with $2.58 billion in investment securities as of December 31, 2006. The Company is de-leveraging by utilizing the monthly cash flow from investments to pay down borrowings or fund new loans.
Financial Advisory Services
The Financial Advisory Services Group has over $3.3 billion in assets under administration. They provide trust, investment and brokerage related services, as well as financial, estate and business succession planning.
Loan and Lease Quality
CVB Financial Corp reported no non-performing assets as of March 31, 2007 and March 31, 2006. The allowance for loan and lease losses was $27.6 million as of March 31, 2007. This represents 0.89% of gross loans and leases. It compares with an allowance for loan and lease losses of $27.7 million, or 0.90% of gross loans and leases as of December 31, 2006.
Corporate Overview
CVB Financial Corp. is the holding company for Citizens Business Bank. The Bank is the largest financial institution headquartered in the Inland Empire region of Southern California. It serves 33 cities with 39 business financial centers in the Inland Empire, Los Angeles County, Orange County and the Central Valley areas of California. Its leasing division, Golden West Financial Services, provides vehicle leasing, equipment leasing and real estate loan services, with offices in Orange and Tulare counties.
U.S. Banker Magazine named Citizens Business Bank the "Top Business Bank" in the nation in their January 2007 issue. The Bank was also recognized for having the fifteenth highest return on equity in the nation at 20.88%.
For the fourth consecutive year, CVB Financial Corp. received the KBW Honor Roll award at the Annual Community Bank Investor Conference hosted by Keefe, Bruyette & Woods, Inc. in New York on August 1 - 2, 2006. The Company was also recognized as a SmAll-Star by Sandler O'Neill, and named to the FPK Honor Roll by Fox-Pitt, Kelton.
Shares of CVB Financial Corp. common stock are listed on the NASDAQ under the ticker symbol of CVBF. For investor information on CVB Financial Corp., visit our Citizens Business Bank website at www.cbbank.com and click on the CVB Investor tab.
Safe Harbor
This document contains forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from the projected. In addition, these forward-looking statements relate to the Company's current expectations regarding future operating results. Such issues and uncertainties include impact of changes in interest rates, a decline in economic conditions and increased competition among financial services providers. For a discussion of other factors that could cause actual results to differ, please see the publicly available Securities and Exchange Commission filings of CVB Financial Corp., including its Annual Report on Form 10-K for the quarter ended December 31, 2006, and particularly the discussion on risk factors within that document. The Company does not undertake any, and specifically, disclaims any obligation to update any forward-looking statements to reflect occurrences or unanticipated events or circumstances after the date of such statements.
CVB FINANCIAL CORP.
CONSOLIDATED BALANCE SHEET
(unaudited)
dollars in thousands
March 31, December 31,
----------------------------------
2007 2006 2006
----------------------------------
Assets:
Investment Securities available-
for-sale $2,484,664 $2,406,986 $2,582,902
Interest-bearing balances due from
depository institutions - 1,784 -
Investment in stock of Federal Home
Loan Bank (FHLB) 80,826 72,362 78,866
Loans and lease finance receivables 3,096,609 2,717,127 3,070,196
Less allowance for credit losses (27,632) (23,584) (27,737)
---------------------- ----------
Net loans and lease finance
receivables 3,068,977 2,693,543 3,042,459
---------------------- ----------
Total earning assets 5,634,467 5,174,675 5,704,227
Cash and due from banks 117,981 131,453 146,411
Premises and equipment, net 45,597 41,258 44,963
Intangibles 9,533 11,886 10,121
Goodwill 31,531 31,531 31,531
Cash value of life insurance 100,758 72,633 99,861
Other assets 53,561 64,478 57,148
----------------------------------
TOTAL $5,993,428 $5,527,914 $6,094,262
==================================
Liabilities and Stockholders' Equity
Liabilities:
Deposits:
Demand Deposits
(noninterest-bearing) $1,264,243 $1,362,022 $1,363,411
Investment Checking 334,229 298,278 318,431
Savings/MMDA 957,538 924,402 896,988
Time Deposits 833,602 891,379 827,978
---------------------- ----------
Total Deposits 3,389,612 3,476,081 3,406,808
Demand Note to U.S. Treasury 468 936 7,245
Repurchase Agreements 458,023 - 344,350
Borrowings 1,597,500 1,550,000 1,794,900
Junior Subordinated Debentures 108,250 108,250 108,250
Other liabilities 45,734 53,082 43,370
---------------------- ----------
Total Liabilities 5,599,587 5,188,349 5,704,923
Stockholders' equity:
Stockholders' equity 401,631 368,152 402,560
Accumulated other comprehensive
income (loss), net of tax (7,790) (28,587) (13,221)
393,841 339,565 389,339
----------------------------------
TOTAL $5,993,428 $5,527,914 $6,094,262
==================================
CVB FINANCIAL CORP.
CONSOLIDATED AVERAGE BALANCE SHEET
(unaudited)
dollars in thousands
Three months ended
March 31,
2007 2006
----------------------
Assets:
Investment securities available-
for-sale $2,512,704 $2,390,040
Interest-bearing balances due from
depository institution - 4,667
Investment in stock of Federal Home
Loan Bank (FHLB) 80,039 71,299
Loans and lease finance receivables 3,059,186 2,652,493
Less allowance for credit losses (27,720) (23,299)
----------------------
Net loans and lease finance
receivables 3,031,466 2,629,194
----------------------
Total earning assets 5,624,209 5,095,200
Cash and due from banks 124,427 130,321
Premises and equipment, net 45,471 40,657
Intangibles 9,763 12,116
Goodwill 31,531 31,816
Cash value of life insurance 100,202 72,037
Other assets 88,003 84,965
----------------------
TOTAL $6,023,606 $5,467,112
======================
Liabilities and Stockholders' Equity
Liabilities:
Deposits:
Noninterest-bearing $1,283,749 $1,386,972
Interest-bearing 2,114,142 2,060,971
----------------------
Total Deposits 3,397,891 3,447,943
Other borrowings 2,078,177 1,510,960
Junior Subordinated Debentures 108,250 99,659
Other liabilities 39,264 53,179
----------------------
Total Liabilities 5,623,582 5,111,741
Stockholders' equity:
Stockholders' equity 413,124 368,926
Accumulated other comprehensive
income (loss), net of tax (13,100) (13,555)
400,024 355,371
----------- ----------
TOTAL $6,023,606 $5,467,112
======================
CVB FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited)
dollar amounts in thousands, except per share
For the Three Months
Ended March 31,
2007 2006
--------------------
Interest Income:
Loans, including fees $ 52,714 $ 44,292
Investment securities:
Taxable 23,093 20,737
Tax-advantaged 7,231 6,245
--------- ---------
Total investment income 30,324 26,982
Dividends from FHLB Stock 1,200 800
Federal funds sold 6 32
Interest-bearing CDs with other institutions - 26
--------- ---------
Total interest income 84,244 72,132
Interest Expense:
Deposits 17,158 13,201
Borrowings and junior subordinated debentures 27,260 15,106
--------- ---------
Total interest expense 44,418 28,307
--------- ---------
Net interest income before provision for
credit losses 39,826 43,825
Provision for credit losses - (250)
--------- ---------
Net interest income after provision for
credit losses 39,826 43,575
Other Operating Income:
Service charges on deposit accounts 3,276 3,291
Financial Advisory Services 1,951 1,845
Other 2,671 2,593
--------- ---------
Total other operating income 7,898 7,729
Other operating expenses:
Salaries and employee benefits 14,072 12,720
Occupancy 2,405 2,029
Equipment 1,735 1,745
Professional services 1,103 1,273
Amortization of intangible assets 588 588
Other 5,997 5,115
--------- ---------
Total other operating expenses 25,900 23,470
--------- ---------
Earnings before income taxes 21,824 27,834
Income taxes 6,646 9,594
--------------------
Net earnings $ 15,178 $ 18,240
====================
Basic earnings per common share $ 0.18 $ 0.22
====================
Diluted earnings per common share $ 0.18 $ 0.22
====================
Cash dividends per common share $ 0.085 $ 0.09
====================
All per share information has been retroactively
adjusted to reflect the 10% stock dividend
declared on December 20, 2006.
CVB FINANCIAL CORP. AND SUBSIDIARIES
SELECTED FINANCIAL HIGHLIGHTS
(unaudited)
Three months ended March 31,
2007 2006
-------------- -------------
Interest income - (Tax Effective)(te) $86,674 $74,153
Interest Expense 44,418 28,307
-------------- -------------
Net Interest income - (te) $42,256 $45,846
============== =============
Return on average assets 1.02% 1.35%
Return on average equity 15.39% 20.82%
Efficiency ratio 54.27% 45.75%
Net interest margin (te) 3.03% 3.63%
Weighted average shares outstanding
Basic 83,482,208 84,106,317
Diluted 84,175,313 84,788,655
Dividends declared $7,109 $6,883
Dividend payout ratio 46.84% 37.74%
Number of shares outstanding-EOP 83,537,214 84,127,205
Book value per share $4.71 $4.04
March 31,
2007 2006
-------------- -------------
Non-performing Assets (dollar amount in
thousands):
Non-accrual loans $0 $0
Loans past due 90 days or more and still
accruing interest - -
Restructured loans - -
Other real estate owned (OREO), net - -
-------------- -------------
Total non-performing assets $0 $0
============== =============
Percentage of non-performing assets to
total loans outstanding and OREO 0.00% 0.00%
Percentage of non-performing assets to
total assets 0.00% 0.00%
Non-performing assets to allowance for
loan losses 0.00% 0.00%
Net Charge-off (Recovered) to Average
loans 0.00% 0.00%
Allowance for Credit Losses:
Beginning Balance $27,737 $23,204
Total Loans Charged-Off (129) (20)
Total Loans Recovered 24 150
-------------- -------------
Net Loans Recovery (Charged-Off) (105) 130
Provision Charged to Operating Expense - 250
-------------- -------------
Allowance for Credit Losses at End of
period $27,632 $23,584
============== =============
CVB FINANCIAL CORP. AND SUBSIDIARIES
SELECTED FINANCIAL HIGHLIGHTS
(in thousands, except per share data)
(unaudited)
Quarterly Common Stock Price
2007 2006 2005
---------------- ----------------- -----------------
Quarter End High Low High Low High Low
------- -------- -------- -------- -------- --------
March 31, $13.38 $11.42 $15.60 $14.71 $15.49 $12.80
June 30, $15.59 $13.25 $14.63 $12.36
September 30, $14.24 $12.83 $15.93 $13.12
December 31, $14.13 $12.83 $15.20 $12.63
Quarterly Consolidated Statements of Earnings
1Q 4Q 3Q 2Q 1Q
2007 2006 2006 2006 2006
-------- -------- -------- -------- --------
Interest income
Loans,
including
fees $52,714 $51,935 $50,564 $47,913 $44,292
Investment
securities
and federal
funds sold 31,530 32,687 32,441 28,988 27,840
-------- -------- -------- -------- --------
84,244 84,622 83,005 76,901 72,132
Interest expense
Deposits 17,158 18,783 18,903 16,294 13,201
Other
borrowings 27,260 25,601 22,130 17,446 15,106
-------- -------- -------- -------- --------
44,418 44,384 41,033 33,740 28,307
Net interest
income before
provision for
credit losses 39,826 40,238 41,972 43,161 43,825
Provision for
credit losses - 600 1,250 900 250
-------- -------- -------- -------- --------
Net interest
income after
provision for
credit losses 39,826 39,638 40,722 42,261 43,575
Non-interest
income 7,898 8,567 8,871 8,091 7,729
Non-interest
expenses 25,900 25,465 22,630 24,259 23,470
-------- -------- -------- -------- --------
Earnings before
income taxes 21,824 22,740 26,963 26,093 27,834
Income taxes 6,646 6,446 8,508 7,176 9,594
-------- -------- -------- -------- --------
Net earnings $15,178 $16,294 $18,455 $18,917 $18,240
======== ======== ======== ======== ========
Basic earning per
common share $0.18 $0.19 $0.22 $0.22 $0.22
Diluted earnings
per common share $0.18 $0.19 $0.22 $0.22 $0.22
Cash dividends
per common share $0.085 $0.085 $0.09 $0.09 $0.09
Dividends
Declared $7,109 $7,164 $6,891 $6,885 $6,883
Source: CVB Financial Corp.
Contact: CVB Financial Corp. Christopher D. Myers, President and CEO, 909-980-4030