ONTARIO, Calif.--(BUSINESS WIRE)--
CVB Financial Corp. (NASDAQ:CVBF) and its subsidiary, Citizens Business Bank ("the Company"), announced the results for the year ended December 31, 2007.
Net Income
CVB Financial Corp. reported net income of $60.6 million for the year ended December 31, 2007. This represents a decrease of $10.0 million, or 14.16%, when compared with net earnings of $70.6 million for the year ended December 31, 2006. Diluted earnings per share were $0.72 for the year ended December 31, 2007. This was down $0.11, or 13.34%, from diluted earnings per share of $0.83 for the same period last year.
Net income for the year ended December 31, 2007 produced a return on beginning equity of 15.64%, a return on average equity of 15.00% and a return on average assets of 1.00%. The efficiency ratio for the year was 55.93%, and operating expenses as a percentage of average assets were 1.73%.
The Company reported net income of $13.4 million for the fourth quarter ending December 31, 2007. This represented a decrease of $2.5 million, or 15.93%, when compared with the $15.9 million in net income reported for the fourth quarter of 2006. Diluted earnings per share were $0.16 for the fourth quarter of 2007. This was down $0.03, or 14.47%, from diluted earnings per share of $0.19 for the fourth quarter of 2006. These results include a $4 million provision for credit losses taken in the fourth quarter of 2007.
Net income for the fourth quarter of 2007 produced a return on beginning equity of 12.97%, a return on average equity of 12.68% and a return on average assets of 0.86%. The efficiency ratio for the fourth quarter was 60.50%, and operating costs as a percentage of average assets were 1.77%.
Net Interest Income and Net Interest Margin
Net interest income, after provision for credit losses, totaled $157.1 million for the year ended December 31, 2007. This represents a decrease of $8.5 million, or 5.12%, over the net interest income of $165.6 million for the same period of 2006. This decrease resulted from a $25.2 million increase in interest income, offset by a $32.7 million increase in interest expense and a $1.0 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 $37.4 million for the fourth quarter of 2007. This represented a decrease of $2.0 million, or 5.07%, over the net interest income of $39.4 million for the fourth quarter of 2006. These decreases resulted from a $1.1 million increase in interest income, and a $0.3 million decrease in interest expense offset by a $3.4 million increase in the provision for credit losses.
Net interest margin (tax equivalent) declined from 3.30% for the year ended December 31, 2006 to 3.03% for the year ended December 31, 2007. Total average earning asset yields increased from 6.04% for 2006 to 6.17% for 2007. The cost of funds increased from 2.76% for 2006 to 3.17% for 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. This decline in net interest margin has been mitigated by the strong growth in the balance sheet. In addition, the Company has approximately $1.30 billion, or 38.52%, of its deposits in interest free demand deposits.
Net interest margin (tax equivalent) for the fourth quarter of 2007 was 3.06%. This represents an increase of 5 basis points when compared to the 3.01% for the fourth quarter of 2006. Average earning asset yields for the fourth quarter of 2007 were 6.06%, compared with asset yields of 6.10% for the fourth quarter of 2006. The cost of funds for the fourth quarter of 2007 was 3.04% compared with 3.13% for the same period last year.
The credit quality of the loan portfolio continues to be strong. The allowance for credit losses increased from $27.7 million as of December 31, 2006 to $33.0 million as of December 31, 2007. During 2007, the Company experienced net charge-offs of $1.4 million and made a provision for credit losses of $4.0 million. During 2006, the Company had net recoveries of $1.5 million and a $3 million provision for credit losses. The allowance for credit losses was .95% and .90% of the total loans and leases outstanding as of December 31, 2007 and 2006, respectively.
Balance Sheet
The Company reported total assets of $6.29 billion at December 31, 2007. This represented an increase of $202 million, or 3.31%, over total assets of $6.09 billion on December 31, 2006. Earning assets totaling $5.91 billion were up $204 million, or 3.57%, when compared with earning assets of $5.70 billion at December 31, 2006. Total deposits and customer repos were $3.70 billion at December 31, 2007. This represents an increase of $200 million, or 5.70%, when compared with total deposits and customer repos of $3.50 billion at December 31, 2006. Gross loans and leases totaled $3.50 billion at December 31, 2007. This represents an increase of $425 million, or 13.84%, when compared with gross loans and leases of $3.07 billion at December 31, 2006.
Investment Securities
Investment securities totaled $2.37 billion at December 31, 2007. This represents a decrease of $217 million, or 8.42%, when compared with $2.58 billion in investment securities at December 31, 2006.
CitizensTrust
CitizensTrust has approximately $2.6 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 non-performing assets as of December 31, 2007 of $1.4 million compared with zero non-performing assets as of December 31, 2006. The $1.4 million in non-performing assets, while higher than December 31, 2006, was down $2.1 million from the $3.5 million in non-performing assets at the end of the September 30, 2007. Delinquencies at December 31, 2007 were .10% of the portfolio compared with the industry average of approximately 1.08% at September 30, 2007.
As of December 31, 2007, the Company had $308.4 million in construction loans. This represents 8.8% of the total loans outstanding of $3.5 billion. Of this $308.4 million in construction loans, approximately 52%, or $159.2 million, were for single-family residences and land loans. The remaining construction loans, totaling $149.2 million, were related to commercial construction.
Approximately 29% of the total loan portfolio of $3.5 billion is located in the Inland Empire region of California. The rest of the portfolio is from outside this region. The Company does not make "subprime" mortgage loans.
The allowance for loan and lease losses was $33.0 million as of December 31, 2007. This represents 0.95% 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.
During 2007, we made a provision for credit losses of $4 million and we added an additional $2.7 million from the acquisition of First Coastal Bank in June 2007. These increases to the Allowance for Credit Losses were offset by the net charge offs of $1.4 million in 2007.
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 37 cities with 44 business financial centers in the Inland Empire, Los Angeles County, Orange County and the Central Valley areas of California. Its leasing division, Citizens Financial Services, provides vehicle leasing, equipment leasing and real estate loan services.
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%.
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
Certain matters set forth herein constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including forward-looking statements relating to the Company's current business plan and expectations regarding future operating results. These forward-looking statements are subject to risks and uncertainties that could cause actual results, performance or achievements to differ materially from those projected. These risks and uncertainties include, but are not limited to, the impact of changes in interest rates, a decline in economic conditions, adverse changes resulting from natural and manmade disasters, effects of government regulation and increased competition among financial services providers and other factors set forth in the Company's public reports including its Annual Report on Form 10-K for the year ended December 31, 2006, and particularly the discussion of risk factors within that document. The Company does not undertake, 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 except as required by law.
CVB FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(unaudited)
dollars in thousands
December 31,
-----------------------
2007 2006
----------- -----------
Assets:
Cash and due from
banks $ 89,486 $ 146,411
Investment Securities
available-for-sale 2,365,513 2,582,902
Interest-bearing
balances due from
depository
institutions 475 -
Investment in stock of
Federal Home Loan
Bank (FHLB) 79,983 78,866
Loans and lease
finance receivables 3,495,144 3,070,196
Less allowance for
credit losses (33,049) (27,737)
----------- -----------
Net loans and lease
finance receivables 3,462,095 3,042,459
----------- -----------
Total earning
assets 5,908,066 5,704,227
Premises and
equipment, net 46,855 44,963
Intangibles 14,611 10,121
Goodwill 55,167 31,531
Cash value of life
insurance 103,400 99,861
Other assets 76,378 55,134
----------- -----------
TOTAL $6,293,963 $6,092,248
=========== ===========
Liabilities and Stockholders' Equity
Liabilities:
Deposits:
Demand Deposits
(noninterest-
bearing) $1,295,959 $1,363,411
Investment
Checking 409,912 318,431
Savings/MMDA 868,123 896,988
Time Deposits 790,355 827,978
----------- -----------
Total Deposits 3,364,349 3,406,808
Demand Note to U.S.
Treasury 540 7,245
Customer Repurchase
Agreements 336,309 94,350
Repurchase Agreements 250,000 250,000
Borrowings 1,753,500 1,794,900
Junior Subordinated
Debentures 115,055 108,250
Other liabilities 49,834 43,370
----------- -----------
Total
Liabilities 5,869,587 5,704,923
Stockholders' equity:
Stockholders' equity 420,246 400,546
Accumulated other
comprehensive
income (loss), net
of tax 4,130 (13,221)
----------- -----------
424,376 387,325
----------- -----------
TOTAL $6,293,963 $6,092,248
=========== ===========
CVB FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED AVERAGE BALANCE SHEET
(unaudited)
dollars in thousands
Three months ended Twelve months ended
December 31, December 31,
2007 2006 2007 2006
----------- ----------- ---------- -----------
Assets:
Cash and due from
banks $ 110,094 $ 126,432 $ 118,784 $ 127,186
Investment securities
available-for-sale 2,326,600 2,615,263 2,388,883 2,511,935
Interest-bearing
balances due from
depository
institution 1,477 - 1,876 1,843
Investment in stock of
Federal Home Loan
Bank (FHLB) 80,043 77,439 80,789 74,368
Loans and lease
finance receivables 3,368,058 2,966,099 3,226,086 2,811,782
Less allowance for
credit losses (30,186) (27,041) (29,017) (25,202)
----------- ----------- ----------- -----------
Net loans and lease
finance receivables 3,337,872 2,939,058 3,197,069 2,786,580
----------- ----------- ----------- -----------
Total earning
assets 5,745,992 5,631,760 5,668,617 5,374,726
Premises and
equipment, net 47,257 44,657 46,490 43,196
Intangibles 10,049 10,351 9,388 11,228
Goodwill 57,375 31,531 45,404 31,601
Cash value of life
insurance 102,814 99,213 101,406 80,760
Other assets 93,841 88,439 90,414 95,123
----------- ----------- ----------- -----------
TOTAL $6,167,422 $6,032,383 $6,080,503 $5,763,820
=========== =========== =========== ===========
Liabilities and Stockholders' Equity
Liabilities:
Deposits:
Noninterest-
bearing $1,275,259 $1,340,312 $1,285,857 $1,354,014
Interest-bearing 2,098,140 2,192,130 2,133,412 2,161,075
----------- ----------- ----------- -----------
Total Deposits 3,373,399 3,532,442 3,419,269 3,515,089
Other borrowings 2,216,721 1,947,692 2,102,030 1,720,400
Junior Subordinated
Debentures 115,579 108,250 112,078 106,132
Other liabilities 43,507 50,391 43,285 59,292
----------- ----------- ----------- -----------
Total
Liabilities 5,749,206 5,638,775 5,676,662 5,400,913
Stockholders' equity:
Stockholders' equity 427,740 403,432 417,719 386,376
Accumulated other
comprehensive
income (loss), net
of tax (9,524) (9,824) (13,878) (23,469)
----------- ----------- ----------- -----------
418,216 393,608 403,841 362,907
----------- ---------- ----------- -----------
TOTAL $6,167,422 $6,032,383 $6,080,503 $5,763,820
=========== =========== =========== ===========
CVB FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited)
dollar amounts in thousands, except per share
For the Three For the Twelve
Months Ended Months Ended
December 31, December 31,
2007 2006 2007 2006
--------- -------- -------- --------
Interest Income:
Loans, including fees $56,692 $51,935 $221,809 $194,704
Investment securities:
Taxable 20,498 24,405 85,899 91,029
Tax-advantaged 7,202 6,982 29,231 26,545
--------- -------- -------- --------
Total investment income 27,700 31,387 115,130 117,574
Dividends from FHLB Stock 1,077 1,049 4,229 3,721
Federal funds sold & Interest-
bearing CDs with other
institutions 17 - 109 92
--------- -------- -------- --------
Total interest income 85,486 84,371 341,277 316,091
Interest Expense:
Deposits 15,766 18,783 69,297 67,180
Borrowings and junior
subordinated debentures 28,332 25,602 110,838 80,284
--------- -------- -------- --------
Total interest expense 44,098 44,385 180,135 147,464
--------- -------- -------- --------
Net interest income before
provision for credit losses 41,388 39,986 161,142 168,627
Provision for credit losses 4,000 600 4,000 3,000
--------- -------- -------- --------
Net interest income after
provision for credit losses 37,388 39,386 157,142 165,627
Other Operating Income:
Service charges on deposit
accounts 3,554 3,247 13,381 13,080
Financial Advisory Services 1,871 1,918 7,226 7,385
Gain on sale of investment
securities - (5) - 1,057
Other 2,544 3,407 10,718 11,736
--------- -------- -------- --------
Total other operating
income 7,969 8,567 31,325 33,258
Other operating expenses:
Salaries and employee benefits 13,854 13,477 55,303 50,509
Occupancy 2,928 2,259 10,540 8,572
Equipment 1,733 1,748 7,026 7,025
Professional services 1,739 1,902 6,274 5,896
Amortization of intangible
assets 706 588 2,969 2,353
Other 6,482 5,491 23,292 21,469
--------- -------- -------- --------
Total other operating
expenses 27,442 25,465 105,404 95,824
--------- -------- -------- --------
Earnings before income taxes 17,915 22,488 83,063 103,061
Income taxes 4,548 6,589 22,479 32,481
--------- -------- -------- --------
Net earnings $13,367 $15,899 $60,584 $70,580
========= ======== ======== ========
Basic earnings per common share $0.16 $0.19 $0.72 $0.84
========= ======== ======== ========
Diluted earnings per common share $0.16 $0.19 $0.72 $0.83
========= ======== ======== ========
Cash dividends per common share $0.085 $0.085 $0.340 $0.355
========= ======== ======== ========
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,
2007 2006 2007 2006
------------ ------------ ------------ ------------
Interest income
- (Tax-
Effected) (te) $ 88,004 $ 86,713 $ 351,200 $ 324,841
Interest Expense 44,098 44,385 180,135 147,464
------------ ------------ ------------ ------------
Net Interest
income - (te) $ 43,906 $ 42,328 $ 171,065 $ 177,377
============ ============ ============ ============
Return on
average assets 0.86% 1.05% 1.00% 1.22%
Return on
average equity 12.68% 16.03% 15.00% 19.45%
Efficiency ratio 60.50% 53.10% 55.93% 48.18%
Net interest
margin (te) 3.06% 3.01% 3.03% 3.30%
Weighted average
shares
outstanding
Basic 83,257,179 84,262,599 83,600,316 84,154,216
Diluted 83,607,505 85,054,850 84,005,941 84,813,875
Dividends
declared $ 7,069 $ 7,164 $ 28,479 $ 27,876
Dividend payout
ratio 52.88% 45.06% 47.01% 39.50%
Number of shares
outstanding-EOP 83,164,906 84,281,722
Book value per
share $ 5.10 $ 4.60
December 31,
2007 2006
------------ ------------
Non-performing
Assets (dollar
amount in
thousands):
Non-accrual
loans $ 1,435 $ 0
Loans past due
90 days or more
and still
accruing
interest - -
Restructured
loans - -
Other real
estate owned
(OREO), net - -
------------ ------------
Total non-
performing
assets $ 1,435 $ 0
============ ============
Percentage of
non-performing
assets to total
loans
outstanding and
OREO 0.04% 0.00%
Percentage of
non-performing
assets to total
assets 0.02% 0.00%
Non-performing
assets to
allowance for
loan losses 4.34% 0.00%
Net Charge-off
(Recovered) to
Average loans 0.04% -0.05%
Allowance for
Credit Losses:
Beginning
Balance $ 27,737 $ 23,204
Total Loans
Charged-Off (2,098) (201)
Total Loans
Recovered 739 1,734
------------ ------------
Net Loans
Recovered (1,359) 1,533
Acquisition of
First Coastal
Bank 2,671 -
Provision
Charged to
Operating
Expense 4,000 3,000
------------ ------------
Allowance for
Credit Losses
at End of
period $ 33,049 $ 27,737
============ ============
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, $12.40 $ 10.63 $ 15.59 $ 13.25 $ 14.63 $ 12.36
September 30, $12.71 $ 9.51 $ 14.24 $ 12.83 $ 15.93 $ 13.12
December 31, $11.97 $ 9.98 $ 14.13 $ 12.83 $ 15.20 $ 12.63
Quarterly Consolidated Statements of Earnings
4Q 3Q 2Q 1Q 4Q
2007 2007 2007 2007 2006
------- ------- ------- ------- -------
Interest income
Loans, including fees $56,692 $58,677 $53,726 $52,714 $51,935
Investment securities and
federal funds sold 28,794 29,203 30,003 31,468 32,436
------- ------- ------- ------- -------
85,486 87,880 83,729 84,182 84,371
Interest expense
Deposits 15,766 18,445 17,928 17,158 18,783
Other borrowings 28,332 27,727 27,518 27,260 25,602
------- ------- ------- ------- -------
44,098 46,172 45,446 44,418 44,385
Net interest income
before provision for
credit losses 41,388 41,708 38,283 39,764 39,986
Provision for credit
losses 4,000 - - - 600
------- ------- ------- ------- -------
Net interest income
after provision for
credit losses 37,388 41,708 38,283 39,764 39,386
Non-interest income 7,969 7,863 7,596 7,898 8,567
Non-interest expenses 27,442 27,218 24,845 25,900 25,465
------- ------- ------- ------- -------
Earnings before income
taxes 17,915 22,353 21,034 21,762 22,488
Income taxes 4,548 6,232 5,080 6,620 6,589
------- ------- ------- ------- -------
Net earnings $13,367 $16,121 $15,954 $15,142 $15,899
======= ======= ======= ======= =======
Basic earning per common
share $ 0.16 $ 0.19 $ 0.19 $ 0.18 $ 0.19
Diluted earnings per
common share $ 0.16 $ 0.19 $ 0.19 $ 0.18 $ 0.19
Cash dividends per
common share $ 0.085 $ 0.085 $ 0.085 $ 0.085 $ 0.085
Dividends Declared $ 7,069 $ 7,067 $ 7,234 $ 7,109 $ 7,164
CVB FINANCIAL CORP. AND SUBSIDIARIES
SELECTED FINANCIAL HIGHLIGHTS
(in thousands)
(unaudited)
Distribution of Loan Portfolio
12/31/2007 9/30/2007 6/30/2007 3/31/2007 12/31/2006
------------ ---------- ---------- ---------- ------------
Commercial
and
Industrial $ 365,214 $ 345,697 $ 334,968 $ 294,265 $ 264,416
Real Estate:
Construction 308,354 307,506 310,390 289,013 299,112
Commercial
Real Estate 1,805,946 1,775,812 1,768,539 1,675,964 1,642,370
SFR Mortgage 365,849 363,765 358,347 316,661 284,725
Consumer 58,999 62,979 64,083 54,379 54,125
Municipal
lease
finance
receivables 156,646 143,399 143,316 131,073 126,393
Auto and
equipment
leases 58,505 58,958 55,151 52,321 51,420
Dairy and
Livestock 387,488 265,806 280,114 293,781 358,259
------------ ---------- ---------- ---------- ------------
Gross Loans 3,507,001 3,323,922 3,314,908 3,107,457 3,080,820
Less:
Deferred net
loan fees (11,857) (12,173) (11,635) (10,848) (10,624)
Allowance
for credit
losses (33,049) (30,428) (30,244) (27,632) (27,737)
------------ ---------------------------------------------
Net Loans $ 3,462,095 $3,281,321 $3,273,029 $3,068,977 $ 3,042,459
============ ========== ========== ========== ============
Source: CVB Financial Corp.
Contact: CVB Financial Corp. Christopher D. Myers, President and CEO, 909-980-4030