ONTARIO, Calif.--(BUSINESS WIRE)--July 21, 2005--CVB Financial Corp. (NASDAQ:CVBF) and its subsidiary, Citizens Business Bank ("the Company"), announced record financial results for the second quarter of 2005. This included record deposits, record loans and record earnings from operations. It was the strongest second quarter in the history of the Company.
Net Income
CVB Financial Corp. reported net income of $17.5 million for the second quarter ending June 30, 2005. This represents an increase of $27,000, or 0.15%, when compared with the $17.5 million in net earnings reported for the second quarter 2004. Diluted earnings per share were $0.28 for the second quarter of 2005. This was down $0.01, or 3.57%, when compared with earnings per share of $0.29 for the second quarter of 2004.
Net income for the second quarter of 2005 produced a return on beginning equity of 21.62%, a return on average equity of 21.30% and a return on average assets of 1.47%. The efficiency ratio for the second quarter of 2005 was 47.27%, and operating expenses as a percentage of average assets were 1.96%.
Net income from operations, before gains and losses on the sale of securities, was $17.5 million for the second quarter of 2005. This represents an increase of $3.4 million, or 24.43%, over the $14.1 million in net income from operations, before gains and losses on the sale of securities, in the second quarter of 2004. Net income from operations for the second quarter of 2005 produced a return on beginning equity of 21.66%, a return on average equity of 21.34% and a return on average assets of 1.47%. The efficiency ratio on this basis was 47.23%, and operating expenses as a percentage of assets was 1.96%.
Net income for the six months ending June 30, 2005 was $35.2 million. This represents an increase of $7.7 million, or 27.82%, when compared with net earnings of $27.5 million for the same period of 2004. Diluted earnings per share were $0.57. This was up $0.12, or 26.67%, from diluted earnings per share of $0.45 for the same period last year.
Net income for the six months ending June 30, 2005 produced a return on beginning equity of 22.34%, a return on average equity of 21.58% and a return on average assets of 1.52%. The efficiency ratio for the six-month period was 45.22%, and operating expenses as a percentage of average assets were 1.91%.
Net income from operations, before gains and losses on the sale of securities and the recovery of the settlement of a possible robbery loss in the first quarter of 2005, was $33.5 million. This represents an increase in net income from operations for the first six months of 2005 of $5.3 million, or 18.62%. This is an increase over the $28.2 million in net income before gains and losses on the sales of securities and the other-than-temporary impairment write-down in the first six months of 2004. As a result, the net income for the first six months of 2005, without the gains/losses on sales of securities and the settlement of robbery loss, would have produced a return on beginning equity of 21.28%, a return on average equity of 20.55% and a return on average assets of 1.45%. The efficiency ratio for the first six months of 2005 would have been 47.87%, and operating expenses as a percentage of average assets would have been 2.02%.
Net Interest Income and Net Interest Margin
Net interest income totaled $42.2 million for the second quarter of 2005. This represented an increase of $6.3 million, or 17.63%, over the net interest income of $35.9 million for the second quarter of 2004. This increase resulted from a $13.6 million increase in interest income which was partially offset by a $7.3 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 increases in deposit rates and borrowed funds.
Net interest margin (tax equivalent) increased slightly from 3.91% for the second quarter of 2004 to 3.95% for the second quarter of 2005. Total average earning asset yields have increased from 5.01% for the second quarter of 2004 to 5.54% for second quarter of 2005. The cost of funds has increased from 1.64% for the second quarter of 2004 to 2.34% for the second quarter of 2005. This increase in the net interest margin is a result of strong growth in the balance sheet and the recent increases in interest rates. The Company has approximately $1.39 billion, or 46.61%, of its deposits in interest free demand deposits. The Company believes its deposit base should position it well for a rising interest rate environment.
Net interest income totaled $83.2 million for the six months ending June 30, 2005. This represents an increase of $11.7 million, or 16.38%, over the net interest income of $71.5 million for the same period in 2004. This increase resulted from a $23.7 million increase in interest income which was partially offset by a $12.0 million increase in interest expense. The increase in interest income was primarily due to the growth in average earning assets and an increase in interest rates. The increase in interest expense was due to the increases in deposit rates and borrowed funds.
Net interest margin (tax equivalent) decreased slightly from 3.97% for the first six months of 2004 to 3.96% for the first six months of 2005. Total average earning asset yields have increased from 5.07% for the first six months of 2004 to 5.47% for the first six months of 2005. The cost of funds has increased from 1.65% for the first six months of 2004 to 2.23% for the first six months of 2005. This slight decrease in net interest margin has been mitigated by the strong growth in the balance sheet.
Balance Sheet
The Company reported total assets of $4.81 billion at June 30, 2005. This represented an increase of $447.8 million, or 10.26%, over total assets of $4.36 billion on June 30, 2004. Earning assets totaling $4.49 billion were up $459.4 million, or 11.39%, when compared with earning assets of $4.03 billion as of June 30, 2004. Deposits of $2.99 billion grew $160.9 million, or 5.68%, from $2.83 billion for the same period of the prior year. Demand deposits of $1.39 billion jumped $103.6 million, or 8.02%, from $1.29 billion. Gross loans and leases of $2.30 billion on June 30, 2005 rose $357.2 million, or 18.42%, from $1.94 billion on June 30, 2004.
Total assets of $4.81 billion as of June 30, 2005 reflect an increase of $300.8 million, or 6.67%, over total assets of $4.51 billion on December 31, 2004. Earning assets of $4.49 billion were up $236.1 million, or 5.55%, over the total earning assets of $4.26 billion on December 31, 2004. Deposits of $2.99 billion on June 30, 2005 grew $117.5 million, or 4.09%, from $2.88 billion as of December 31, 2004. Demand deposits of $1.39 billion were up $72.6 million, or 5.49%, from $1.32 billion. Gross loans and leases of $2.30 billion increased $156.1 million, or 7.29%, from $2.14 billion on December 31, 2004. Total equity of $336.8 million on June 30, 2005 was up $19.4 million, or 6.10%, from $317.5 million as of December 31, 2004.
Investment Securities
Investment securities totaled $2.15 billion as of June 30, 2005. It represents an increase of $84.7 million, or 4.09%, when compared with the $2.07 billion in investment securities as of June 30, 2004. This represents an increase of $69.8 million, or 3.35%, when compared with $2.09 billion in investment securities as of December 31, 2004.
Wealth Management Group
The Wealth Management Group has over $2.1 billion in assets under administration. They provide trust, investment and brokerage related services.
Loan and Lease Quality
CVB Financial Corp. reported zero non-performing assets as of June 30, 2005. The allowance for loan and lease losses was $24.1 million as of June 30, 2005. This represents 1.05% of gross loans and leases. It compares with an allowance for loan and lease losses of $22.5 million, or 1.05% of gross loans and leases on December 31, 2004. The increase was primarily due to the allowance for loan and lease losses acquired from Granite State Bank of $756,000 and the net recoveries of $877,000 during the first six months of 2005. Non-performing assets were $2,000 as of December 31, 2004.
The Company has not made a provision for loan and lease losses since 2001 due to the high quality of its loan portfolio. This has been the case even though loans increased from $2.14 billion as of December 31, 2004 to $2.30 billion as of June 30, 2005. Recoveries of $1.0 million more than offset charge offs of $133,000 during the first six months of 2005.
Other Items in 2005
On February 25, 2005, the Company acquired 100% of the stock of Granite State Bank. The merger agreement provides for Granite State Bank to merge with and into Citizens Business Bank. Citizens Business Bank represents the continuing operation.
On May 2, 2005, Citizens Business Bank opened its 40th business financial center in the Central Valley city of Madera.
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 40 business financial centers in the Inland Empire, Los Angeles County, Orange County and the Central Valley areas of California. Its subsidiary, Golden West Financial Services, provides vehicle leasing, equipment leasing and real estate loan services.
For the third consecutive year, CVB Financial Corp. will receive the KBW Honor Roll award at the Annual Community Bank Investor Conference hosted by Keefe, Bruyette & Woods, Inc. in New York on July 25, 26, and 27, 2005. The Company was also recognized as a SmAll-Star by Sandler O'Neill and named on 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 year ended December 31, 2004, 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
June 30, December 31,
2005 2004 2004
Assets:
Investment Securities available-
for-sale $2,154,809 $2,070,091 $2,085,014
Investment in stock of Federal
Home Loan Bank (FHLB) 65,439 45,919 53,565
Loans and lease finance
receivables 2,296,135 1,938,960 2,140,074
Less allowance for credit
losses (24,127) (22,140) (22,494)
Net loans and lease finance
receivables 2,272,008 1,916,820 2,117,580
Total earning assets 4,492,256 4,032,830 4,256,159
Cash and due from banks 128,577 164,988 84,400
Premises and equipment, net 39,596 29,607 33,508
Goodwill and intangibles 42,386 26,308 25,716
Cash value of life insurance 70,598 66,262 68,233
Other assets 38,441 44,027 42,995
TOTAL $4,811,854 $4,364,022 $4,511,011
Liabilities and Stockholders' Equity
Liabilities:
Deposits:
Demand Deposits
(noninterest-bearing) $1,394,898 $1,291,278 1,322,255
Investment Checking 248,726 227,269 258,636
Savings/MMDA 838,657 805,390 813,983
Time Deposits 510,255 507,666 480,165
Total Deposits 2,992,536 2,831,603 2,875,039
Demand Note to U.S. Treasury 5,079 2,431 6,453
Borrowings 1,352,000 1,119,700 1,186,000
Junior Subordinated Debentures 82,476 82,476 82,476
Other liabilities 42,908 46,956 43,560
Total Liabilities 4,474,999 4,083,166 4,193,528
Stockholders' equity:
Stockholders' equity 333,552 283,726 308,591
Accumulated other comprehensive
income (loss), net of tax 3,303 (2,870) 8,892
336,855 280,856 317,483
TOTAL $4,811,854 $4,364,022 $4,511,011
CVB FINANCIAL CORP.
CONSOLIDATED AVERAGE BALANCE SHEET
(unaudited)
dollars in thousands
Three months ended Six months ended
June 30, June 30,
2005 2004 2005 2004
Assets:
Federal funds sold and
reverse repos $ - $ 264 $ - $ 571
Investment securities
available-for-sale 2,184,318 1,921,402 2,158,534 1,904,568
Investment in stock of
Federal Home Loan
Bank (FHLB) 63,581 43,093 59,436 41,341
Loans and lease
finance receivables 2,202,295 1,848,755 2,151,089 1,807,735
Less allowance for
credit losses (24,024) (22,137) (23,592) (21,935)
Net loans and lease
finance receivables 2,178,271 1,826,618 2,127,497 1,785,800
Total earning
assets 4,426,170 3,791,377 4,345,467 3,732,280
Cash and due from
banks 124,058 115,656 121,051 111,967
Premises and
equipment, net 38,140 29,925 36,276 30,322
Goodwill and
intangibles 43,090 26,429 34,464 26,582
Cash value of life
insurance 70,536 66,050 69,779 50,222
Other assets 81,338 73,826 61,339 63,200
TOTAL $4,783,332 $4,103,263 $4,668,376 $4,014,573
Liabilities and
Stockholders' Equity
Liabilities:
Deposits:
Noninterest-
bearing $1,375,603 $1,192,256 $1,356,372 $1,147,478
Interest-
bearing 1,608,114 1,528,356 1,599,649 1,532,785
Total
Deposits 2,983,717 2,720,612 2,956,021 2,680,263
Other borrowings 1,344,502 949,134 1,271,302 907,654
Junior Subordinated
Debentures 82,476 82,476 82,476 82,476
Other liabilities 43,565 46,589 29,828 45,101
Total
Liabilities 4,454,260 3,798,811 4,339,627 3,715,494
Stockholders' equity:
Stockholders'
equity 339,071 281,084 329,460 278,720
Accumulated other
comprehensive
income (loss), net
of tax (9,999) 23,368 (711) 20,359
329,072 304,452 328,749 299,079
TOTAL $4,783,332 $4,103,263 $4,668,376 $4,014,573
CVB FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited)
dollar amounts in thousands, except per share
For the Three For the Six
Months Ended Months Ended
June 30, June 30,
2005 2004 2005 2004
Interest Income:
Loans, including fees $35,619 $27,136 $ 68,312 $53,386
Investment securities:
Taxable 19,559 15,659 38,738 31,387
Tax-advantaged 4,798 3,656 8,885 7,626
Total investment
income 24,357 19,315 47,623 39,013
Federal funds sold 97 1 135 3
Total interest income 60,073 46,452 116,070 92,402
Interest Expense:
Deposits 6,247 3,605 11,309 7,288
Borrowings and junior
subordinated debentures 11,589 6,940 21,587 13,644
Total interest
expense 17,836 10,545 32,896 20,932
Net interest income before
provision for credit losses 42,237 35,907 83,174 71,470
Provision for credit losses - - - -
Net interest income after
provision for credit losses 42,237 35,907 83,174 71,470
Other Operating Income:
Service charges on deposit
accounts 3,252 3,512 6,293 7,305
Wealth Management services 1,039 1,111 2,271 2,274
Gain/(Loss) on sale of
investment securities (46) 5,212 (46) 5,212
Other-than-temporary
impairment write down - - - (6,300)
Other 3,048 2,175 5,853 4,301
Total other operating
income 7,293 12,010 14,371 12,792
Other operating expenses:
Salaries and employee benefits 13,142 11,610 26,288 23,352
Occupancy 1,959 1,907 3,957 3,680
Equipment 2,112 1,855 3,856 3,711
Professional services 1,195 1,001 2,220 2,122
Amortization of intangible
assets 588 296 885 592
Other 4,419 4,335 6,906 9,052
Total other operating
expenses 23,415 21,004 44,112 42,509
Earnings before income taxes 26,115 26,913 53,433 41,753
Income taxes 8,637 9,462 18,254 14,230
Net earnings $17,478 $17,451 $ 35,179 $27,523
Basic earnings per common share $ 0.28 $ 0.29 $ 0.57 $ 0.46
Diluted earnings per common share $ 0.28 $ 0.29 $ 0.57 $ 0.45
Cash dividends per common share $ 0.11 $ 0.12 $ 0.22 $ 0.24
All per share information has been retroactively adjusted to reflect
the 5 or 4 stock split declared on December 29, 2004.
CVB FINANCIAL CORP. AND SUBSIDIARIES
SELECTED FINANCIAL HIGHLIGHTS
(unaudited)
Three months ended Six months ended
June 30, June 30,
2005 2004 2005 2004
Interest income -
(Tax Effective)(te) $61,610 $47,624 $118,923 $94,858
Interest Expense 17,836 10,545 32,896 20,932
Net Interest income -
(te) $43,774 $37,079 $86,027 $73,926
Other-than-temporary
impairment write-
down $0 $0 $0 ($6,300)
Return on average
assets 1.47% 1.71% 1.52% 1.38%
Return on average
equity 21.30% 23.05% 21.58% 18.51%
Efficiency ratio 47.27% 43.83% 45.22% 50.45%
Net interest margin
(te) 3.95% 3.91% 3.96% 3.97%
Weighted average
shares outstanding
Basic 62,045,450 60,477,926 61,243,226 60,474,768
Diluted 62,685,994 61,203,345 61,963,264 61,218,938
Dividends declared $6,716 $5,836 $13,491 $11,642
Dividend payout ratio 38.43% 33.44% 38.35% 42.30%
Number of shares
outstanding-EOP 61,068,798 60,464,579
Book value per share $5.52 $4.64
June 30,
2005 2004
Non-performing Assets
(dollar amount in
thousands):
Non-accrual loans $0 $1,455
Loans past due 90
days or more and
still accruing
interest - -
Restructured loans - -
Other real estate
owned (OREO), net - -
Total non-performing
assets $0 $1,455
Percentage of non-
performing assets to
total loans
outstanding and OREO 0.00% 0.08%
Percentage of non-
performing assets to
total assets 0.00% 0.03%
Non-performing assets
to allowance for
loan losses 0.00% 6.57%
Net Charge-off
(Recovered) to
Average loans -0.07% -0.05%
Allowance for Credit
Losses:
Beginning Balance $22,494 $21,282
Total Loans
Charged-Off (133) (476)
Total Loans
Recovered 1,010 1,334
Acquisition of
Granite State
Bank 756
Net Loans Recovery
(Charged-Off) 1,633 858
Provision Charged to
Operating Expense - -
Allowance for Credit
Losses at End of
period $24,127 $22,140
CVB FINANCIAL CORP. AND SUBSIDIARIES
SELECTED FINANCIAL HIGHLIGHTS
(in thousands, except per share data)
(unaudited)
Quarterly Common Stock Price
2005 2004 2003
Quarter End High Low High Low High Low
March 31, $21.30 $17.60 $17.04 $15.13 $18.50 $14.10
June 30, $20.12 $17.00 $17.56 $15.72 $16.06 $14.07
September 30, $18.70 $16.16 $15.69 $13.35
December 31, $22.34 $17.80 $15.87 $13.94
Quarterly Consolidated Statements of Income
2Q 1Q 4Q 3Q 2Q
2005 2005 2004 2004 2004
Interest income
Loans, including fees $35,619 $32,693 $31,095 $30,061 $27,136
Investment securities
and federal funds
sold 24,454 23,303 22,184 21,960 19,316
60,073 55,996 53,279 52,021 46,452
Interest expense
Deposits 6,247 5,061 4,356 3,863 3,605
Other borrowings 11,589 9,998 9,183 8,182 6,940
17,836 15,059 13,539 12,045 10,545
Net interest income
before provision for
credit losses 42,237 40,937 39,740 39,976 35,907
Provision for credit
losses - - - - -
Net interest income
after provision for
credit losses 42,237 40,937 39,740 39,976 35,907
Non-interest income 7,293 7,079 7,596 7,519 12,010
Non-interest expenses 23,415 20,697 25,462 21,752 21,004
Earnings before income
taxes 26,115 27,319 21,874 25,743 26,913
Income taxes 8,637 9,618 4,986 8,668 9,462
Net earnings $17,478 $17,701 $16,888 $17,075 $17,451
Basic earning per common
share $0.28 $0.29 $0.28 $0.28 $0.29
Diluted earnings per
common share $0.28 $0.29 $0.28 $0.28 $0.29
Cash dividends per
common share $0.11 $0.11 $0.11 $0.13 $0.12
Dividends Declared $6,716 $6,775 $6,733 $6,293 $5,836
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
The following table reconciles the differences in net earnings with
and without the settlement of robbery loss, gain/loss on sale of
securities and the other-than-temporary impairment write-down in
conformity with GAAP.
Net Earnings Reconciliation (non- Three months Six months
GAAP disclosure): ended June 30, ended June 30,
2005 2004 2005 2004
Net earnings without the
gains/(loss) on sales of
securities, the settlement of
robbery loss and other-than-
temporary impairment write-down $17,508 $14,071 $33,497 $28,240
Settlement of robbery loss,
net of tax - $1,712
Gain/(Loss) on Sale of
Securities, net of tax ($30) $3,380 ($30) $3,436
Other-than-temporary
impairment write-down, net
of tax - - (4,153)
Reported net earnings $17,478 $17,451 $35,179 $27,523
Settlement of robbery loss - - $2,600 -
Gain/(Loss) on Sale of
Securities (46) 5,212 (46) 5,212
Other-than-temporary
impairment write-down - - $0 (6,300)
Tax effect 16 (1,832) (872) 371
Net of taxes ($30) 3,380 $1,682 (717)
We have presented net earnings without the settlement of robbery loss,
gain/loss on sale of securities and other-than-temporary impairment
write-down on investment 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.
Ratios Reconciliation (non-GAAP disclosure):
The following table reconciles the differences in ratios with and
without the settlement of robbery loss, the other-than-temporary
impairment write-down on investment securities and the net gain/loss
on sale of securities in conformity with GAAP.
Ratios Reconciliation
For the Three Months
Ended June 30,
2005
Without net loss Net loss on Reported
on sale of securities earnings
securities
( amounts in thousands )
Other Operating Expense $23,415 $- $23,415
Net Revenues $49,576 $(46) $49,530
Net Earnings $17,508 $(30) $17,478
Return on Beginning
Equity 21.66% 21.62%
Return on Average
Equity 21.34% 21.30%
Return on Average
Assets 1.47% 1.47%
Efficiency Ratio 47.23% 47.27%
Operating Costs as % of
Average assets 1.96% 1.96%
Ratios Reconciliation
For the Three Months
Ended June 30,
2004
Without net gain Net gain on Reported
on sale of securities earnings
securities
( amounts in thousands )
Other Operating Expense $21,004 $- $21,004
Net Revenues $42,705 $5,212 $47,917
Net Earnings $14,071 $3,380 $17,451
Return on Beginning
Equity 19.09% 23.68%
Return on Average
Equity 18.59% 23.05%
Return on Average
Assets 1.38% 1.71%
Efficiency Ratio 49.18% 43.83%
Operating Costs as % of
Average assets 2.06% 2.06%
Ratios Reconciliation
For the Six Months
Ended June 30,
2005
Without Robbery loss and Reported
settlement of net loss on earnings
robbery loss securities
and net loss on
sale of
securities
( amounts in thousands )
Other Operating Expense $46,712 $(2,600) $44,112
Net Revenues $97,591 $(46) $97,545
Net Earnings $33,497 $1,682 $35,179
Return on Beginning
Equity 21.28% 22.34%
Return on Average
Equity 20.55% 21.58%
Return on Average
Assets 1.45% 1.52%
Efficiency Ratio 47.87% 45.22%
Operating Costs as % of
Average assets 2.02% 1.91%
Ratios Reconciliation
For the Six Months
Ended June 30,
2004
Without other- Impairment Reported
than-temporary write-down and earnings
impairment net gain on
write-down and securities
net gain on
sale of
securities
( amounts in thousands )
Other Operating Expense $42,509 $- $42,509
Net Revenues $85,350 $(1,088) $84,262
Net Earnings $28,240 $(717) $27,523
Return on Beginning
Equity 19.81% 19.30%
Return on Average
Equity 18.99% 18.51%
Return on Average
Assets 1.41% 1.38%
Efficiency Ratio 49.81% 50.45%
Operating Costs as % of
Average assets 2.13% 2.13%
We have presented ratios without the settlement of robbery loss, the
other-than-temporary impairment write-down on investment securities
and the net 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.
CONTACT: CVB Financial Corp.
D. Linn Wiley, 909-980-4030
SOURCE: CVB Financial Corp.