ONTARIO, Calif.--(BUSINESS WIRE)--Oct. 20, 2005--CVB Financial Corp. (NASDAQ:CVBF) and its subsidiary, Citizens Business Bank ("the Company"), announced record financial results for the third quarter of 2005. This included record deposits, record loans, record assets and record earnings. It was the strongest third quarter in the history of the Company.
Net Income
CVB Financial Corp. reported net income of $18.3 million for the third quarter ending Sept. 30, 2005. This represents an increase of $1.2 million, or 6.98%, when compared with the $17.1 million in net earnings reported for the third quarter of 2004. Diluted earnings per share were $0.29 for the third quarter of 2005. This was up $0.01, or 3.57%, when compared with earnings per share of $0.28 for the third quarter of 2004.
Net income for the third quarter of 2005 produced a return on beginning equity of 21.51%, a return on average equity of 20.75% and a return on average assets of 1.46%. The efficiency ratio for the third quarter of 2005 was 45.43%, and operating expenses as a percentage of average assets were 1.85%.
Net income for the nine months ending Sept. 30, 2005 was $53.4 million. This represents an increase of $8.8 million, or 19.83%, when compared with net earnings of $44.6 million for the same period of 2004. Diluted earnings per share were $0.87. This was up $0.14, or 19.18%, from diluted earnings per share of $0.73 for the same period last year.
Net income for the nine months ending Sept. 30, 2005 produced a return on beginning equity of 22.51%, a return on average equity of 21.29% and a return on average assets of 1.50%. The efficiency ratio for the nine-month period was 45.29%, and operating expenses as a percentage of average assets were 1.89%.
We had income from the settlement of a robbery loss of $2.6 million. Net income from operations before this item was $51.8 million for the first nine months of 2005. This represents an increase in net income from operations for the first nine months of 2005 of $6.7 million, or 14.94%, compared to the same period in 2004. In 2004 we had $45.0 million in net income before gains and losses on the sales of securities, the gain on real estate and the other-than-temporary impairment write-down.
Excluding the items mentioned above, the net income from operations for the first nine months of 2005 would have produced a return on beginning equity of 21.80%, a return on average equity of 20.62% and a return on average assets of 1.45%. The efficiency ratio for the first nine months of 2005 would have been 47.03%, and operating expenses as a percentage of average assets would have been 1.96%.
Net Interest Income and Net Interest Margin
Net interest income totaled $43.0 million for the third quarter of 2005. This represented an increase of $3.0 million, or 7.61%, over the net interest income of $40.0 million for the third quarter of 2004. This increase resulted from an $11.5 million increase in interest income, which was partially offset by an $8.4 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 deposits and borrowed funds and the increase in interest rates.
Net interest margin (tax equivalent) decreased from 4.09% for the third quarter of 2004 to 3.85% for the third quarter of 2005. Total average earning asset yields have increased from 5.27% for the third quarter of 2004 to 5.60% for third quarter of 2005. The cost of funds has increased from 1.73% for the third quarter of 2004 to 2.55% for the third quarter of 2005. Although the yield on earning assets increased, this was offset by higher interest paid on interest-bearing liabilities. The Company has approximately $1.42 billion, or 44.33%, of its deposits in interest free demand deposits.
Net interest income totaled $126.2 million for the nine months ending Sept. 30, 2005. This represents an increase of $14.7 million, or 13.23%, over net interest income of $111.4 million for the same period in 2004. This increase resulted from a $35.2 million increase in interest income, which was partially offset by a $20.4 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 interest-bearing deposits and borrowed funds and the increase in interest rates.
Net interest margin (tax equivalent) decreased from 4.01% for the first nine months of 2004 to 3.92% for the first nine months of 2005. Total average earning asset yields have increased from 5.14% for the first nine months of 2004 to 5.52% for the first nine months of 2005. The cost of funds has increased from 1.68% for the first nine months of 2004 to 2.34% for the first nine months of 2005. This decrease in net interest margin has been mitigated by the strong growth in the balance sheet.
Balance Sheet
The Company reported total assets of $5.02 billion at Sept. 30, 2005. This represented an increase of $667.4 million, or 15.33%, over total assets of $4.35 billion on September 30, 2004. Earning assets totaling $4.69 billion were up $606.5 million, or 14.87%, when compared with earning assets of $4.08 billion as of September 30, 2004. Deposits of $3.21 billion grew $345.4 million, or 12.04%, from $2.87 billion for the same period of the prior year. Demand deposits of $1.42 billion jumped $121.2 million, or 9.30%, from $1.30 billion. Gross loans and leases of $2.38 billion on Sept. 30, 2005 rose $365.4 million, or 18.18%, from $2.01 billion on Sept. 30, 2004.
Total assets of $5.02 billion as of Sept. 30, 2005 reflect an increase of $509.2 million, or 11.29%, over total assets of $4.51 billion on Dec. 31, 2004. Earning assets of $4.69 billion were up $428.9 million, or 10.08%, over the total earning assets of $4.26 billion on Dec. 31, 2004. Deposits of $3.21 billion on Sept. 30, 2005 grew $338.3 million, or 11.77%, from $2.88 billion as of Dec. 31, 2004. Demand deposits of $1.42 billion were up $102.4 million, or 7.74%, from $1.32 billion. Gross loans and leases of $2.38 billion increased $235.2 million, or 10.99%, from $2.14 billion on Dec. 31, 2004. Total equity of $337.2 million on Sept. 30, 2005 was up $19.7 million, or 6.20%, from $317.5 million as of Dec. 31, 2004.
Investment Securities
Investment securities totaled $2.26 billion as of Sept. 30, 2005. This represents an increase of $225.8 million, or 11.08%, when compared with the $2.04 billion in investment securities as of Sept. 30, 2004. It represents an increase of $179.1 million, or 8.59%, when compared with $2.09 billion in investment securities as of Dec. 31, 2004.
Financial Advisory Services
The Financial Advisory Services Group has over $2.7 billion in assets under administration. They provide trust, investment and brokerage related services.
Loan and Lease Quality
CVB Financial Corp. reported non-performing assets of $2,000 as of Sept. 30, 2005. The allowance for loan and lease losses was $24.2 million as of Sept. 30, 2005. This represents 1.02% 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 Dec. 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 $1.2 million during the first nine months of 2005. Non-performing assets were $2,000 as of Dec. 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 Dec. 31, 2004 to $2.38 billion as of Sept. 30, 2005. Recoveries of $1.2 million more than offset charge offs of $191,000 during the first nine months of 2005.
Other Items in 2005
On Feb. 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. This transaction added $103.1 million in deposits, $62.8 million in loans and $111.4 million in total assets.
On May 2, 2005, Citizens Business Bank opened its 40th business financial center in the Central Valley city of Madera, Calif. This increased the total number of offices to seven business financial centers in the fast-growing Central Valley area of California.
Corporate Overview
CVB Financial Corp. is the holding company for Citizens Business Bank. The Bank is the largest financial institution with headquarters 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. received 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 Web site 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 Dec. 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
Sept. 30, Dec. 31,
2005 2004 2004
Assets:
Investment Securities available-for-
sale $2,264,081 $2,038,322 $2,085,014
Investment in stock of Federal Home
Loan Bank (FHLB) 69,994 53,439 53,565
Loans and lease finance receivables 2,375,226 2,009,875 2,140,074
Less allowance for credit losses (24,237) (23,068) (22,494)
Net loans and lease finance
receivables 2,350,989 1,986,807 2,117,580
Total earning assets 4,685,064 4,078,568 4,256,159
Cash and due from banks 132,741 116,125 84,400
Premises and equipment, net 39,823 26,865 33,508
Intangibles 13,062 6,432
Goodwill 28,735 19,580 25,716
Cash value of life insurance 71,232 66,801 68,233
Other assets 49,507 38,370 42,995
TOTAL $5,020,164 $4,352,741 $4,511,011
Liabilities and Stockholders' Equity
Liabilities:
Deposits:
Demand Deposits (noninterest-
bearing) $1,424,623 $1,303,410 1,322,255
Investment Checking 260,484 228,444 258,636
Savings/MMDA 991,102 842,401 813,983
Time Deposits 537,129 493,682 480,165
Total Deposits 3,213,338 2,867,937 2,875,039
Demand Note to U.S. Treasury 1,529 5,053 6,453
Borrowings 1,312,000 1,042,200 1,186,000
Junior Subordinated Debentures 82,476 82,476 82,476
Other liabilities 73,646 44,993 43,560
Total Liabilities 4,682,989 4,042,659 4,193,528
Stockholders' equity:
Stockholders' equity 345,460 294,619 308,591
Accumulated other comprehensive
income (loss), net of tax (8,285) 15,463 8,892
337,175 310,082 317,483
TOTAL $5,020,164 $4,352,741 $4,511,011
CVB FINANCIAL CORP.
CONSOLIDATED AVERAGE BALANCE SHEET
(unaudited)
dollars in thousands
Three months ended Nine months ended
Sept. 30, Sept. 30,
2005 2004 2005 2004
Assets:
Federal funds sold and
reverse repos $- $109 $- $416
Investment securities
available-for-sale 2,236,619 2,013,691 2,184,849 1,941,208
Investment in stock of
Federal Home Loan Bank
(FHLB) 67,277 49,609 62,078 44,117
Loans and lease finance
receivables 2,320,733 1,960,836 2,208,258 1,859,140
Less allowance for
credit losses (24,183) (22,751) (23,791) (22,209)
Net loans and lease
finance receivables 2,296,550 1,938,085 2,184,467 1,836,931
Total earning
assets 4,600,446 4,001,494 4,431,394 3,822,672
Cash and due from banks 127,374 147,941 123,182 124,046
Premises and equipment,
net 39,881 29,427 37,491 30,021
Intangibles 13,294 6,554 11,256 6,851
Goodwill 28,735 19,580 25,757 19,580
Cash value of life
insurance 70,824 66,320 70,131 55,627
Other assets 77,121 60,202 66,613 61,284
TOTAL $4,957,675 $4,331,518 $4,765,824 $4,120,081
Liabilities and Stockholders' Equity
Liabilities:
Deposits:
Noninterest-bearing $1,406,223 $1,256,509 $1,373,174 $1,184,086
Interest-bearing 1,677,630 1,572,898 1,625,927 1,545,930
Total Deposits 3,083,853 2,829,407 2,999,101 2,730,016
Other borrowings 1,401,252 1,084,854 1,315,095 967,152
Junior Subordinated
Debentures 82,476 82,476 82,476 82,476
Other liabilities 40,889 43,803 33,511 44,078
Total
Liabilities 4,608,470 4,040,540 4,430,183 3,823,722
Stockholders' equity:
Stockholders' equity 346,028 293,648 335,042 283,732
Accumulated other
comprehensive income
(loss), net of tax 3,177 (2,670) 599 12,627
349,205 290,978 335,641 296,359
TOTAL $4,957,675 $4,331,518 $4,765,824 $4,120,081
CVB FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited)
dollar amounts in thousands, except per share
For the Three For the Nine
Months Ended Months Ended
Sept. 30, Sept. 30,
2005 2004 2005 2004
Interest Income:
Loans, including fees $38,777 $30,061 $107,089 $83,447
Investment securities:
Taxable 19,668 18,323 58,407 49,710
Tax-advantaged 4,989 3,636 13,873 11,262
Total investment income 24,657 21,959 72,280 60,972
Federal funds sold - 1 2 3
Interest-bearing CDs with other
institutions 74 - 206 -
Total interest income 63,508 52,021 179,577 144,422
Interest Expense:
Deposits 7,539 3,863 18,848 11,151
Borrowings and junior subordinated
debentures 12,951 8,182 34,537 21,826
Total interest expense 20,490 12,045 53,385 32,977
Net interest income before
provision for credit losses 43,018 39,976 126,192 111,445
Provision for credit losses - - - -
Net interest income after
provision for credit losses 43,018 39,976 126,192 111,445
Other Operating Income:
Service charges on deposit
accounts 3,477 3,240 9,770 10,544
Wealth Management services 1,237 993 3,509 3,266
Gain/(Loss) on sale of investment
securities - 7 (46) 5,219
Other-than-temporary impairment
write down - - - (6,300)
Other 3,147 3,279 8,999 7,582
Total other operating
income 7,861 7,519 22,232 20,311
Other operating expenses:
Salaries and employee benefits 13,136 11,970 39,424 35,323
Occupancy 2,091 2,281 6,048 5,961
Equipment 1,727 1,896 5,583 5,607
Professional services 1,047 907 3,267 3,030
Amortization of intangible assets 588 296 1,473 889
Other 4,526 4,402 11,432 13,450
Total other operating
expenses 23,115 21,752 67,227 64,260
Earnings before income taxes 27,764 25,743 81,197 67,496
Income taxes 9,499 8,668 27,753 22,898
Net earnings $18,265 $17,075 $53,444 $44,598
Basic earnings per common share $0.30 $0.28 $0.87 $0.74
Diluted earnings per common share $0.29 $0.28 $0.87 $0.73
Cash dividends per common share $0.11 $0.13 $0.33 $0.37
All per share information has been retroactively adjusted to reflect
the 5-for-4 stock split declared on Dec. 29, 2004.
CVB FINANCIAL CORP. AND SUBSIDIARIES
SELECTED FINANCIAL HIGHLIGHTS
(unaudited)
Three months ended Nine months ended
Sept. 30, Sept. 30,
2005 2004 2005 2004
Interest income - (Tax
Effective)(te) $65,110 $53,184 $184,033 $148,042
Interest Expense 20,490 12,045 53,385 32,977
Net Interest income - (te) $44,620 $41,139 $130,648 $115,065
Other-than-temporary
impairment write-down $0 $0 $0 ($6,300)
Return on average assets 1.46% 1.57% 1.50% 1.45%
Return on average equity 20.75% 23.34% 21.29% 20.10%
Efficiency ratio 45.43% 45.80% 45.29% 48.77%
Net interest margin (te) 3.85% 4.09% 3.92% 4.01%
Weighted average shares
outstanding
Basic 61,790,827 60,506,915 61,200,254 60,493,150
Diluted 62,341,740 61,229,890 61,779,538 61,228,203
Dividends declared $6,722 $6,261 $20,213 $17,948
Dividend payout ratio 36.80% 36.67% 37.82% 40.24%
Number of shares
outstanding-EOP 61,107,359 60,510,231
Book value per share $5.52 $5.12
Sept. 30,
2005 2004
Non-performing Assets (dollar amount in thousands):
Non-accrual loans $2 $689
Loans past due 90 days or more and still accruing
interest - -
Restructured loans - -
Other real estate owned (OREO), net - -
Total non-performing assets $2 $689
Percentage of non-performing assets to total loans
outstanding and OREO 0.00% 0.03%
Percentage of non-performing assets to total
assets 0.00% 0.02%
Non-performing assets to allowance for loan losses 0.01% 2.99%
Net Charge-off (Recovered) to Average loans -0.08% -0.09%
Allowance for Credit Losses:
Beginning Balance $22,494 $21,282
Total Loans Charged-Off (191) (1,133)
Total Loans Recovered 1,178 2,919
Acquisition of Granite State Bank 756
Net Loans Recovery (Charged-Off) 1,743 1,786
Provision Charged to Operating Expense - -
Allowance for Credit Losses at End of period $24,237 $23,068
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, $21.90 $18.04 $18.70 $16.16 $15.69 $13.35
December 31, $22.34 $17.80 $15.87 $13.94
Quarterly Consolidated Statements of Income Earnings
3Q 2Q 1Q 4Q 3Q
2005 2005 2005 2004 2004
Interest income
Loans, including fees $38,777 $35,619 $32,693 $31,095 $30,061
Investment securities and
federal funds sold 24,731 24,454 23,303 22,184 21,960
63,508 60,073 55,996 53,279 52,021
Interest expense
Deposits 7,539 6,247 5,061 4,356 3,863
Other borrowings 12,951 11,589 9,998 9,183 8,182
20,490 17,836 15,059 13,539 12,045
Net interest income before
provision for credit
losses 43,018 42,237 40,937 39,740 39,976
Provision for credit losses - - - - -
Net interest income after
provision for credit
losses 43,018 42,237 40,937 39,740 39,976
Non-interest income 7,861 7,293 7,079 7,596 7,519
Non-interest expenses 23,115 23,415 20,697 25,462 21,752
Earnings before income taxes 27,764 26,115 27,319 21,874 25,743
Income taxes 9,499 8,637 9,618 4,986 8,668
Net earnings $18,265 $17,478 $17,701 16,888 $17,075
Basic earning per common share $0.30 $0.28 $0.29 $0.28 $0.28
Diluted earnings per common
share $0.29 $0.28 $0.29 $0.28 $0.28
Cash dividends per common
share $0.11 $0.11 $0.11 $0.11 $0.13
Dividends Declared $6,722 $6,716 $6,775 $6,733 $6,261
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, gain on sale of real estate, and the other-than-temporary
impairment write down in conformity with GAAP.
Net Earnings Reconciliation (non-
GAAP disclosure): Three months ended Nine months ended
Sept. 30, Sept. 30,
2005 2004 2005 2004
Net earnings without the
settlement of robbery loss, the
gains/(loss) on sales of
securities, the gain on sale of
real estate, and other-than-
temporary impairment write-down $18,265 $16,792 $51,764 $45,036
Settlement of robbery loss,
net of tax 0 1,711
Gain/(Loss) on Sale of
Securities, net of tax 0 5 (31) 3,448
Gain on Sale of Real Estate,
net of tax 278 278
Other-than-temporary
impairment write-down, net
of tax 0 0 0 (4,164)
Reported net earnings $18,265 $17,075 $53,444 $44,598
Settlement of robbery loss - - $2,600 -
Gain/(Loss) on Sale of
Securities - 7 (46) $5,219
Gain on Sale of Real Estate - 419 0 419
Other-than-temporary
impairment write-down - 0 0 (6,300)
Tax effect - (143) (874) 224
Net of taxes $0 $283 $1,680 ($438)
We have presented net earnings without the settlement of robbery loss,
gain/loss on sale of securities, gain on sale of real estate, 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 September 30,
2005
Without net Net loss on Reported
loss on securities earnings
sale of
securities
(amounts in thousands)
Other Operating Expense $23,115 $- $23,115
Net Revenues $50,879 $- $50,879
Net Earnings $18,265 $- $18,265
Return on Beginning Equity 21.51% 21.51%
Return on Average Equity 20.75% 20.75%
Return on Average Assets 1.46% 1.46%
Efficiency Ratio 45.43% 45.43%
Operating Costs as % of Average
assets 1.85% 1.85%
Ratios Reconciliation
For the Three Months
Ended September 30,
2004
Without net Net gain on Reported
gain on securities earnings
sale of and gain
securities on sale of
and gain real
on sale of estate
real
estate
(amounts in thousands)
Other Operating Expense $21,752 $- $21,752
Net Revenues $47,069 $426 $47,495
Net Earnings $16,792 $283 $17,075
Return on Beginning Equity 23.79% 24.19%
Return on Average Equity 22.96% 23.34%
Return on Average Assets 1.54% 1.57%
Efficiency Ratio 46.21% 45.80%
Operating Costs as % of Average
assets 2.00% 2.00%
Ratios Reconciliation
For the Nine Months
Ended September 30,
2005
Without Robbery Reported
settlement loss and earnings
of robbery net loss
loss and on
net loss securities
on sale of
securities
(amounts in thousands)
Other Operating Expense $69,827 $(2,600) $67,227
Net Revenues $148,470 $(46) $148,424
Net Earnings $51,762 $1,682 $53,444
Return on Beginning Equity 21.80% 22.51%
Return on Average Equity 20.62% 21.29%
Return on Average Assets 1.45% 1.50%
Efficiency Ratio 47.03% 45.29%
Operating Costs as % of Average
assets 1.96% 1.89%
Ratios Reconciliation
For the Nine Months
Ended September 30,
2004
Without Impairment Reported
other- write-down, earnings
than- net gain on
temporary securities,
impairment gain on
write- sale of
down, net real estate
gain on
sale of
securities
and gain
on sale of
real
estate
(amounts in thousands)
Other Operating Expense $64,260 $- $64,260
Net Revenues $132,418 $(662) $131,756
Net Earnings $45,035 $(437) $44,598
Return on Beginning Equity 20.98% 20.78%
Return on Average Equity 20.30% 20.10%
Return on Average Assets 1.46% 1.45%
Efficiency Ratio 48.53% 48.77%
Operating Costs as % of Average
assets 2.08% 2.08%
We have presented ratios without the settlement of robbery loss, the
other-than-temporary impairment write-down on investment securities,
the net gain/loss on sale of securities and the gain on sale of real
estate 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., Ontario
D. Linn Wiley, 909-980-4030
SOURCE: CVB Financial Corp.