ONTARIO, Calif.--(BUSINESS WIRE)--
CVB Financial Corp. (NASDAQ:CVBF) and its subsidiary, Citizens Business Bank ("the Company"), announced record results for the year ended December 31, 2006. This included record loans, record assets and record earnings.
Net Income
CVB Financial Corp. reported net income of $71.9 million for the year ended December 31, 2006. This represents an increase of $1.3 million, or 1.83%, when compared with net earnings of $70.6 million for the year ended December 31, 2005. Diluted earnings per share were $0.85 for the year ended December 31, 2006. This was up $0.02, or 2.41%, from diluted earnings per share of $0.83 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 year ended December 31, 2006 produced a return on beginning equity of 20.97%, a return on average equity of 19.75% and a return on average assets of 1.25%. The efficiency ratio for the year was 48.04%, and operating expenses as a percentage of average assets were 1.66%.
The Company reported net income of $16.3 million for the fourth quarter ending December 31, 2006. This represented a decrease of $0.9 million, or 5.11%, when compared with the $17.2 million in net income reported for the fourth quarter of 2005. Diluted earnings per share were $0.19 for the fourth quarter of 2006. This was down $0.01, or 5.26%, from diluted earnings per of $0.20 for the fourth quarter of 2005.
Net income for the fourth quarter of 2006 produced a return on beginning equity of 16.88%, a return on average equity of 16.36% and a return on average assets of 1.07%. The efficiency ratio for the fourth quarter was 52.83%, and operating costs as a percentage of average assets were 1.67%.
Net Interest Income and Net Interest Margin
Net interest income after provision for credit losses totaled $166.2 million for the year ended December 31, 2006. This represents a decrease of $3.3 million, or 1.96%, over the net interest income of $169.5 million for the same period of 2005. This decrease resulted from a $69.7 million increase in interest income, offset by a $70.0 million increase in interest expense and a $3.0 million increase in provision for credit losses. The increases in interest income were primarily due to the growth in average earning assets and the increase in interest rates. The increases in interest expense were due to the increases in interest bearing deposits and borrowed funds and the increase in interest rates.
Net interest income after provision for credit losses totaled $39.6 million for the fourth quarter of 2006. This represented a decrease of $4.8 million, or 10.76%, over the net interest income of $44.4 million for the fourth quarter of 2005. These decreases resulted from a $16.2 million increase in interest income, offset by a $20.3 million increase in interest expense and $600,000 increase in provision for credit losses.
Net interest margin (tax equivalent) declined from 3.86% for the year ended December 31, 2005 to 3.31% for the year ended December 31, 2006. Total average earning asset yields increased from 5.57% for 2005 to 6.05% for 2006. The cost of funds increased from 1.72% for 2005 to 2.76% for 2006. 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. This decline in net interest margin has been mitigated by the strong growth in the balance sheet. In addition, the Company has approximately $1.36 billion, or 40.02%, of its deposits in interest free demand deposits.
Net interest margin (tax equivalent) for the fourth quarter of 2006 was 3.03%. This represents a decline of 79 basis points when compared to the 3.82% for the fourth quarter of 2005. Average earning asset yields for the fourth quarter of 2006 were 6.12%, compared with asset yields of 5.77% for the fourth quarter of 2005. The cost of funds for the fourth quarter of 2006 was 3.13% compared with 1.98% for the same period last year.
The credit quality of the loan portfolio continues to be strong. The allowance for credit losses increased from $23.2 million as of December 31, 2005 to $27.7 million as of December 31, 2006. During 2006, the Company experienced net recoveries of $1.5 million and made a provision for credit losses of $3.0 million. During 2005, the Company had net charge-offs of $46,000 and $756,000 was added to the allowance from the acquisition of Granite State Bank. The allowance for credit losses was 0.90% and 0.87% of the total loans and leases outstanding as of December 31, 2006 and 2005, respectively.
Balance Sheet
The Company reported total assets of $6.09 billion at December 31, 2006. This represented an increase of $671.3 million, or 12.38%, over total assets of $5.42 billion on December 31, 2005. Earning assets totaling $5.70 billion were up $621.0 million, or 12.22%, when compared with earning assets of $5.08 billion at December 31, 2005. Total deposits were $3.41 billion at December 31, 2006. This represents a decrease of $17.2 million, or 0.50%, when compared with total deposits of $3.42 billion at December 31, 2005. Gross loans and leases totaled $3.07 billion at December 31, 2006. This represents an increase of $406.3 million, or 15.25%, when compared with gross loans and leases of $2.66 billion at December 31, 2005.
Investment Securities
Investment securities totaled $2.58 billion at December 31, 2006. This represents an increase of $213.0 million, or 8.99%, when compared with $2.37 billion in investment securities at December 31, 2005.
Financial Advisory Services
The Financial Advisory Services Group has over $3.1 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 December 31, 2006 and 2005. The allowance for loan and lease losses was $27.7 million as of December 31, 2006. This represents 0.90% of gross loans and leases. It compares with an allowance for loan and lease losses of $23.2 million, or 0.87% of gross loans and leases as of December 31, 2005. The increase was primarily due to a provision for credit losses of $3.0 million and recoveries of $1.7 million, offset by loan charge-offs of $200,000 during the twelve months of 2006.
Other Items in 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 on the FPK Honor Roll by Fox-Pitt, Kelton. Citizens Business Bank was awarded the Dividend Achiever by Mergent, Inc. This is a result of its outstanding record of ten or more consecutive years of dividend increases. CVB Financial Corp. received this recognition for the three consecutive years.
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 year ended December 31, 2005, 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
December 31,
-----------------------
2006 2005
----------- -----------
Assets:
Investment Securities available-for-sale $2,582,902 $2,369,892
Interest-bearing balances due from depository
institutions - 1,883
Investment in stock of Federal Home Loan Bank
(FHLB) 78,866 70,770
Loans and lease finance receivables 3,070,196 2,663,863
Less allowance for credit losses (27,737) (23,204)
----------- -----------
Net loans and lease finance receivables 3,042,459 2,640,659
----------- -----------
Total earning assets 5,704,227 5,083,204
Cash and due from banks 146,411 130,141
Premises and equipment, net 44,963 40,020
Intangibles 10,121 12,474
Goodwill 31,531 32,357
Cash value of life insurance 99,861 71,811
Other assets 57,148 52,964
----------- -----------
TOTAL $6,094,262 $5,422,971
=========== ===========
Liabilities and Stockholders' Equity
Liabilities:
Deposits:
Demand Deposits (noninterest-bearing) $1,363,411 $1,490,613
Investment Checking 318,431 298,067
Savings/MMDA 896,988 852,189
Time Deposits 827,978 783,177
----------- -----------
Total Deposits 3,406,808 3,424,046
Demand Note to U.S. Treasury 7,245 6,433
Borrowings 2,139,250 1,496,000
Junior Subordinated Debentures 108,250 82,476
Other liabilities 43,370 71,139
----------- -----------
Total Liabilities 5,704,923 5,080,094
Stockholders' equity:
Stockholders' equity 402,560 356,263
Accumulated other comprehensive income
(loss), net of tax (13,221) (13,386)
----------- -----------
389,339 342,877
----------- -----------
TOTAL $6,094,262 $5,422,971
=========== ===========
CVB FINANCIAL CORP.
CONSOLIDATED AVERAGE BALANCE SHEET
(unaudited)
dollars in thousands
Three months ended Twelve months ended
December 31, December 31,
2006 2005 2006 2005
----------- ----------- ----------- -----------
Assets:
Investment securities
available-for-sale $2,615,263 $2,277,340 $2,511,935 $2,200,720
Interest-bearing
balances due from
depository
institution - 5,817 1,843 8,908
Investment in stock of
Federal Home Loan
Bank (FHLB) 77,439 70,272 74,368 64,144
Loans and lease
finance receivables 2,966,099 2,482,190 2,811,782 2,277,304
Less allowance for
credit losses (27,041) (24,031) (25,202) (23,851)
----------- ----------- ----------- -----------
Net loans and lease
finance
receivables 2,939,058 2,458,159 2,786,580 2,253,453
----------- ----------- ----------- -----------
Total earning
assets 5,631,760 4,811,588 5,374,726 4,527,225
Cash and due from
banks 126,432 130,346 127,186 124,988
Premises and
equipment, net 44,657 40,127 43,196 38,155
Intangibles 10,351 12,703 11,228 11,621
Goodwill 31,531 28,735 31,601 26,508
Cash value of life
insurance 99,213 71,473 80,760 70,470
Other assets 90,059 83,633 96,244 70,193
----------- ----------- ----------- -----------
TOTAL $6,034,003 $5,178,605 $5,764,941 $4,869,160
=========== =========== =========== ===========
Liabilities and
Stockholders' Equity
Liabilities:
Deposits:
Noninterest-
bearing $1,340,312 $1,412,029 $1,354,014 $1,382,966
Interest-
bearing 2,192,130 1,840,994 2,161,075 1,680,136
----------- ----------- ----------- -----------
Total
Deposits 3,532,442 3,253,023 3,515,089 3,063,102
Other borrowings 1,947,692 1,442,294 1,720,400 1,347,156
Junior Subordinated
Debentures 108,250 82,476 106,132 82,476
Other liabilities 50,391 51,586 59,292 38,067
----------- ----------- ----------- -----------
Total
Liabilities 5,638,775 4,829,379 5,400,913 4,530,801
Stockholders' equity:
Stockholders'
equity 405,052 357,622 387,497 340,027
Accumulated other
comprehensive
income (loss), net
of tax (9,824) (8,396) (23,469) (1,668)
----------- ----------- ----------- -----------
395,228 349,226 364,028 338,359
----------- ----------- ----------- -----------
TOTAL $6,034,003 $5,178,605 $5,764,941 $4,869,160
=========== =========== =========== ===========
CVB FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited)
dollar amounts in thousands, except per share
For the Three Months For the Twelve Months
Ended December 31, Ended December 31,
2006 2005 2006 2005
----------- -------- ----------- ---------
Interest Income:
Loans, including fees $51,935 $42,432 $194,704 $148,421
Investment securities:
Taxable 24,405 19,980 91,029 76,573
Tax-advantaged 6,982 5,205 26,545 19,078
----------- -------- ----------- ---------
Total
investment
income 31,387 25,185 117,574 95,651
Dividends from FHLB Stock 1,300 810 4,290 2,623
Federal funds sold - - 32 2
Interest-bearing CDs with
other institutions - 44 60 251
----------- -------- ----------- ---------
Total interest
income 84,622 68,471 316,660 246,948
Interest Expense:
Deposits 18,783 10,060 67,180 28,908
Borrowings and junior
subordinated debentures 25,602 13,991 80,284 48,528
----------- -------- ----------- ---------
Total interest
expense 44,385 24,051 147,464 77,436
----------- -------- ----------- ---------
Net interest income
before provision for
credit losses 40,237 44,420 169,196 169,512
Provision for credit losses 600 - 3,000 -
----------- -------- ----------- ---------
Net interest income
after provision for
credit losses 39,637 44,420 166,196 169,512
Other Operating Income:
Service charges on
deposit accounts 3,247 3,481 13,080 13,251
Financial Advisory
Services 1,918 1,723 7,385 6,652
Gain/(Loss) on sale of
investment securities (5) - 1,057 (46)
Other-than-temporary
impairment write down - (2,270) - (2,270)
Other 3,407 2,339 11,736 9,918
----------- -------- ----------- ---------
Total other
operating
income 8,567 5,273 33,258 27,505
Other operating expenses:
Salaries and employee
benefits 13,477 13,211 50,509 51,535
Occupancy 2,259 2,279 8,572 8,327
Equipment 1,748 1,995 7,025 7,578
Professional services 1,902 1,001 5,896 4,268
Amortization of
intangible assets 588 588 2,353 2,061
Other 5,491 4,852 21,469 16,284
----------- -------- ----------- ---------
Total other
operating
expenses 25,465 23,926 95,824 90,053
----------- -------- ----------- ---------
Earnings before income
taxes 22,739 25,767 103,630 106,964
Income taxes 6,445 8,593 31,724 36,346
----------- -------- ----------- ---------
Net earnings $16,294 $17,174 $71,906 $70,618
=========== ======== =========== =========
Basic earnings per common
share $0.19 $0.20 $0.85 $0.84
=========== ======== =========== =========
Diluted earnings per common
share $0.19 $0.20 $0.85 $0.83
=========== ======== =========== =========
Cash dividends per common
share $0.085 $0.09 $0.355 $0.42
=========== ======== =========== =========
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 Twelve months ended
December 31, December 31,
2006 2005 2006 2005
----------- ----------- ----------- -----------
Interest income - (Tax
Effective)(te) $86,964 $70,140 $325,410 $253,071
Interest Expense 44,385 24,051 147,464 77,436
----------- ----------- ----------- -----------
Net Interest income -
(te) $42,579 $46,089 $177,946 $175,635
=========== =========== =========== ===========
Return on average
assets 1.07% 1.32% 1.25% 1.45%
Return on average
equity 16.36% 19.51% 19.75% 20.87%
Efficiency ratio 52.83% 48.15% 48.04% 45.71%
Net interest margin
(te) 3.03% 3.82% 3.31% 3.90%
Weighted average
shares outstanding
Basic 84,262,599 84,052,084 84,154,212 84,139,254
Diluted 84,888,989 84,752,953 84,954,539 84,911,893
Dividends declared $7,164 $6,877 $27,823 $27,090
Dividend payout ratio 43.97% 40.04% 38.69% 38.36%
Number of shares
outstanding-EOP 84,281,722 84,073,227
Book value per share $4.62 $4.08
December 31,
2006 2005
----------- -----------
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 -0.05% -0.03%
Allowance for Credit
Losses:
Beginning Balance $23,204 $22,494
Total Loans
Charged-Off (200) (1,380)
Total Loans
Recovered 1,733 1,334
Acquisition of
Granite State
Bank 0 756
----------- -----------
Net Loans Recovery
(Charged-Off) 1,533 710
Provision Charged to
Operating Expense 3,000 -
----------- -----------
Allowance for Credit
Losses at End of
period $27,737 $23,204
=========== ===========
CVB FINANCIAL CORP. AND SUBSIDIARIES
SELECTED FINANCIAL HIGHLIGHTS
(in thousands, except per share data)
(unaudited)
Quarterly Common Stock Price
2006 2005 2004
--------------- --------------- ---------------
Quarter End High Low High Low High Low
------- ------- ------- ------- ------- -------
March 31, $15.60 $14.71 $15.49 $12.80 $12.39 $11.00
June 30, $15.59 $13.25 $14.63 $12.36 $12.77 $11.43
September 30, $14.24 $12.83 $15.93 $13.12 $13.60 $11.75
December 31, $14.13 $12.83 $15.20 $12.63 $16.25 $12.95
Quarterly Consolidated Statements of Earnings
4Q 3Q 2Q 1Q 4Q
2006 2006 2006 2006 2005
-------- -------- -------- -------- --------
Interest income
Loans, including fees $51,935$50,564$47,913$44,292$42,432
Investment securities
and federal funds
sold 32,687 32,441 28,988 27,840 26,039
-------- -------- -------- -------- --------
84,622 83,005 76,901 72,132 68,471
Interest expense
Deposits 18,783 18,903 16,294 13,201 10,060
Other borrowings 25,602 22,130 17,446 15,106 13,991
-------- -------- -------- -------- --------
44,385 41,033 33,740 28,307 24,051
Net interest income
before provision for
credit losses 40,237 41,972 43,161 43,825 44,420
Provision for credit
losses 600 1,250 900 250 -
-------- -------- -------- -------- --------
Net interest income
after provision for
credit losses 39,637 40,722 42,261 43,575 44,420
Non-interest income 8,567 8,871 8,091 7,729 5,273
Non-interest expenses 25,465 22,630 24,259 23,470 23,926
-------- -------- -------- -------- --------
Earnings before income
taxes 22,739 26,963 26,093 27,834 25,767
Income taxes 6,445 8,508 7,176 9,594 8,593
-------- -------- -------- -------- --------
Net earnings $16,294 $18,455 $18,917 $18,240 $17,174
======== ======== ======== ======== ========
Basic earning per common
share $0.19 $0.22 $0.22 $0.22 $0.20
Diluted earnings per
common share $0.19 $0.22 $0.22 $0.22 $0.20
Cash dividends per common
share $0.085 $0.09 $0.09 $0.09 $0.09
Dividends Declared $7,164 $6,891 $6,885 $6,883 $6,877
CVB FINANCIAL CORP. AND SUBSIDIARIES
TOTAL LOANS AND LEASES
(unaudited)
2006 2005
----------- -----------
(Amounts in thousands)
Commercial and Industrial $1,050,189 34.1% $980,602 36.7%
Real Estate:
Construction 299,112 9.7% 270,436 10.1%
Mortgage 1,141,322 37.0% 877,481 32.8%
Consumer 54,125 1.8% 59,801 2.2%
Municipal lease finance
receivables 126,393 4.1% 108,832 4.1%
Auto and equipment leases 51,420 1.7% 39,442 1.5%
Dairy and Livestock 358,259 11.6% 338,035 12.6%
----------- ------ ----------- ------
Gross Loans 3,080,820 100.0% 2,674,629 100.0%
Less:
Allowance for credit
losses (27,737) (23,204)
Deferred net loan fees (10,624) (10,766)
----------- -----------
Net Loans $3,042,459 $2,640,659
=========== ===========
Financial Measures That
Supplement GAAP
Our discussions sometimes contain financial information not required
to be presented by generally accepted accounting principles (GAAP).
We do this to better inform readers of our financial statements. The
SEC requires us to present a reconciliation of GAAP presentation with
non-GAAP presentation.
The following table reconciles the differences in net earnings with
and without the settlement of robbery loss, other-than-temporary
impairment write-down, and gain/(loss) on sale of securities in
conformity with GAAP.
Net Earnings Reconciliation
(non-GAAP disclosure): Three months ended Twelve months ended
December 31, December 31,
2006 2005 2006 2005
--------- -------- ---------- --------
Net earnings without the
settlement of robbery loss and
gain/(loss) on sale of
securities $16,299 $18,685 $71,173 $70,430
Settlement of robbery loss, net
of tax $1,717
Other-than-temporary impairment
write-down, net of tax - (1,513) - (1,499)
Gain/(Loss) on Sale of
Securities, net of tax ($5) - $733 (30)
--------- -------- ---------- --------
Reported net earnings $16,294 $17,172 $71,906 $70,618
========= ======== ========== ========
Settlement of robbery
loss, net of tax 2,600
Other-than-temporary
impairment write-down - (2,270) - ($2,270)
Gain/(Loss) on Sale of
Securities ($6) - $1,057 (46)
Tax effect 1 757 (324) (96)
--------- -------- ---------- --------
Net of taxes ($5) ($1,513) $733 $188
========= ======== ========== ========
We have presented net earnings without the settlement of robbery loss,
other-than-temporary impairment write-down, and gain/(loss) on sale
of securities to show shareholders the earnings from operations
unaffected by the impact of these items. We believe this presentation
allows the reader to more easily assess the results of the Company's
operations and business.
Source: CVB Financial Corp.
Contact: CVB Financial Corp. Christopher D. Myers, President and CEO, 909-980-4030