ONTARIO, Calif.--(BUSINESS WIRE)--
CVB Financial Corp. (NASDAQ:CVBF) and its subsidiary, Citizens Business Bank ("the Company"), announced the results for the second quarter of 2008.
Net Income
CVB Financial Corp. reported net income of $17.2 million for the second quarter ending June 30, 2008. This represents an increase of $1.2 million, or 7.51%, when compared with net earnings of $16.0 million for the second quarter of 2007. Diluted earnings per share were $0.21 for the second quarter of 2008. This was up $0.02, or 8.36%, from diluted earnings per share of $0.19 for the same period last year. The net income for the second quarter of 2008 includes a provision of $3.0 million for credit losses. There was no such provision in the second quarter of 2007. Had we not made a provision in the second quarter of 2008, our net income would have been $19.3 million, an increase of $3.3 million, or 21.13%, compared to the second quarter of 2007.
Net income for the second quarter of 2008 produced a return on beginning equity of 15.27%, a return on average equity of 14.85% and a return on average assets of 1.07%. The efficiency ratio for the second quarter was 56.06%, and operating expenses as a percentage of average assets were 1.90%.
Net income for the six months ending June 30, 2008 was $33.3 million. This represents an increase of $2.2 million, or 7.20%, when compared with net earnings of $31.1 million for the same period of 2007. Diluted earnings per share were $0.40. This was up $0.03, or 8.18%, from diluted earnings per share of $0.37 for the same period last year. The net income for the six months of 2008 includes a provision of $4.7 million for credit losses. There was no such provision in the first six months of 2007. Had we not made a provision in the first six months of 2008, our net income would have been $36.7 million, an increase of $5.6 million, or 18.16%, compared to the same period in 2007.
Net income for the six months ending June 30, 2008 produced a return on beginning equity of 15.78%, a return on average equity of 14.88% and a return on average assets of 1.06%. The efficiency ratio for the six-month period was 56.11%, and operating expenses as a percentage of average assets was 1.87%.
Net Interest Income and Net Interest Margin
Net interest income, after provision for credit losses, totaled $45.5 million for the second quarter of 2008. This represents an increase of $7.2 million, or 18.81%, from the $38.3 million for the same period of 2007. This increase resulted from an $11.0 million decrease in interest expense, offset by a $0.8 million decrease in interest income and a $3.0 million increase in the provision for credit losses. The decrease in interest income was primarily due to the decrease in interest rates, partially offset by the growth in average earning assets. The decrease in interest expense was due to the decrease in the cost of interest-bearing deposits and borrowed funds, partially offset by the increase in average borrowed funds.
Net interest margin (tax equivalent) increased from 2.92% for the second quarter of 2007 to 3.43% for the second quarter of 2008. Total average earning asset yields decreased from 6.13% for the second quarter of 2007 to 5.69% for the second quarter of 2008. The cost of funds decreased from 4.21% for the second quarter of 2007 to 2.95% for the second quarter of 2008. The increase in net interest margin is due to the cost of interest-bearing liabilities decreasing faster than the decrease in yields on earning assets.
Net interest income totaled $87.9 million for the six months ending June 30, 2008. This represents an increase of $9.9 million, or 12.64%, from the net interest income of $78.0 million for the same period in 2007. This increase resulted from a $16.3 million decrease in interest expense, which was offset by a $1.7 million decrease in interest income and a $4.7 million increase in the provision for credit losses. Net interest income before the provision for credit losses increased $14.6 million, or 18.66%, for the first six months of 2008. The decrease in interest income was primarily due to the decrease in interest rates partially offset by the growth in average earning assets. The decrease in interest expense was due to the decreases in interest rates on deposits and borrowed funds partially offset by the increase in average borrowed funds.
The net interest margin (tax equivalent) increased from 2.97% for the first six months of 2007 to 3.34% for the first six months of 2008. Total average earning asset yields have decreased from 6.16% for the first six months of 2007 to 5.80% for the first six months of 2008. The cost of funds has decreased from 4.18% for the first six months of 2007 to 3.20% for the first six months of 2008.
Balance Sheet
The Company reported total assets of $6.45 billion at June 30, 2008. This represented an increase of $317.8 million, or 5.18%, over total assets of $6.14 billion as of June 30, 2007. Earning assets totaled $6.07 billion and were up $364.4 million, or 6.39%, when compared with earning assets of $5.70 billion as of June 30, 2007. Total deposits and customer repurchase agreements were $3.61 billion as of June 30, 2008. This represents a decrease of $152.0 million, or 4.04%, when compared with total deposits and customer repurchase agreements of $3.77 billion at June 30, 2007. Gross loans and leases totaled $3.52 billion at June 30, 2008. This represents an increase of $213.0 million, or 6.45%, when compared with gross loans and leases of $3.30 billion at June 30, 2007.
Investment Securities
Investment securities totaled $2.50 billion at June 30, 2008. This represents an increase of $153.5 million, or 6.55%, when compared with $2.34 billion in investment securities at June 30, 2007.
CitizensTrust
CitizensTrust has approximately $2.5 billion in assets under administration and $807 million in assets under management. They provide trust, investment and brokerage related services, as well as financial, estate and business succession planning. Income from CitizensTrust was $2.0 million in the current quarter, up $228,000 from the $1.7 million in the second quarter of 2007.
Loan and Lease Quality
The credit quality of the loan portfolio remains solid. The allowance for credit losses increased from $30.2 million as of June 30, 2007 to $37.3 million as of June 30, 2008. The increase was primarily due to the provision for credit losses of $4.0 million in the fourth quarter of 2007 and $4.7 million in the first six months of 2008. During the first six months of 2008, we had loan charge-offs totaling $685,000 and recoveries on previously charged off loans of $246,000. This resulted in net charge-offs of $439,000. By comparison, during the first six months of 2007, the Company had net charge-offs of $164,000, and no provision for credit losses. The allowance for credit losses was 1.06% and 0.92% of total loans and leases outstanding as of June 30, 2008 and 2007, respectively.
At December 31, 2007, we had $1.4 million in non-performing loans. As of March 31, 2008, we had $2.7 million in non-performing loans and we had $12.3 million in non-performing loans at June 30, 2008, or 0.35% of total loans. The non-performing loans consist of $9.8 million in residential construction and residential land loans, $1.7 million in single family mortgage loans, $0.5 million in commercial loans and $0.3 million in consumer loans. In addition, we had $1.1 million in Other Real Estate Owned. The OREO represents a foreclosed condominium project. The majority of the loan amount was charged-off in December 2007.
At December 31, 2007, we had loans delinquent 30 to 89 days of $2.2 million. This increased to $18.2 million at March 31, 2008 and decreased to $1.0 million at June 30, 2008. Of the March 31, 2008 delinquencies, $1.8 million became non-performing at June 30, 2008 and the remaining were brought current. As a percentage of total loans, delinquencies were 0.06% at December 31, 2007, 0.53% at March 31, 2008 and 0.03% at June 30, 2008.
Our construction loan portfolio totaled $333.3 million as of June 30, 2008. This represents 9.45% of our total loans outstanding at the end of the quarter. Of the $333.3 million, $120.2 million is for residential construction and residential land loans. This represents 36.07% of the construction loans outstanding, or 3.41% of our total loan portfolio. Of note, 32.26% of our construction loan portfolio is based in the Inland Empire.
Stock Repurchase Program
At the July 16, 2008 board meeting, the Board of Directors approved increasing the amount of shares in the Company's repurchase program to 10 million shares. "Due to the tremendous amount of short selling in the financial services sector, the Board felt that it was appropriate to increase our capacity to repurchase our shares," said Chris Myers, President and CEO.
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 40 cities with 44 business financial centers and 3 commercial banking groups 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.
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, 2007, 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
June 30, December 31,
----------------------- -------------
2008 2007 2007
----------- ----------- -------------
Assets:
Cash and due from banks $ 110,966 $ 142,699 $ 89,486
Investment Securities available-
for-sale 2,490,677 2,344,537 2,390,566
Investment Securities held-to-
maturity 7,380 - -
Federal funds sold and Interest-
bearing balances due from
depository institutions 475 3,070 475
Investment in stock of Federal
Home Loan Bank (FHLB) 90,987 83,392 79,983
Loans and lease finance
receivables 3,516,243 3,303,273 3,495,144
Less allowance for credit
losses (37,310) (30,244) (33,049)
----------- ----------- -------------
Net loans and lease finance
receivables 3,478,933 3,273,029 3,462,095
----------- ----------- -------------
Total earning assets 6,068,452 5,704,028 5,933,119
Premises and equipment, net 45,206 46,391 46,855
Intangibles 12,815 8,944 14,611
Goodwill 55,097 60,357 55,167
Cash value of life insurance 105,644 101,222 103,400
Other assets 55,666 72,433 51,325
----------- ----------- -------------
TOTAL $6,453,846 $6,136,074 $ 6,293,963
=========== =========== =============
Liabilities and Stockholders'
Equity
Liabilities:
Deposits:
Demand Deposits
(noninterest-bearing) $1,281,838 $1,340,495 $ 1,295,959
Investment Checking 346,916 334,229 409,912
Savings/MMDA 861,337 912,001 868,123
Time Deposits 723,542 921,756 790,355
----------- ----------- -------------
Total Deposits 3,213,633 3,508,481 3,364,349
Demand Note to U.S. Treasury 77 4,754 540
Customer Repurchase
Agreements 400,306 257,475 336,309
Repurchase Agreements 250,000 250,000 250,000
Borrowings 1,994,850 1,561,000 1,753,500
Junior Subordinated
Debentures 115,055 115,859 115,055
Other liabilities 45,731 43,621 49,262
----------- ----------- -------------
Total Liabilities 6,019,652 5,741,190 5,869,015
Stockholders' equity:
Stockholders' equity 439,912 420,217 420,818
Accumulated other
comprehensive income (loss),
net of tax (5,718) (25,333) 4,130
----------- ----------- -------------
434,194 394,884 424,948
----------- ----------- -------------
TOTAL $6,453,846 $6,136,074 $ 6,293,963
=========== =========== =============
CVB FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED AVERAGE BALANCE SHEET
(unaudited)
dollars in thousands
Three months ended Six months ended
June 30, June 30,
2008 2007 2008 2007
----------- ----------- ----------- -----------
Assets:
Cash and due from
banks $ 100,568 $ 122,164 $ 104,223 $ 123,289
Investment securities
available-for-sale 2,550,132 2,404,257 2,468,525 2,457,960
Investment securities
held-to-maturity 7,463 - 6,790 -
Federal funds sold and
Interest-bearing
balances due from
depository
institutions 1,958 155 1,627 299
Investment in stock of
Federal Home Loan
Bank (FHLB) 89,043 81,657 86,880 80,852
Loans and lease
finance receivables 3,438,189 3,145,131 3,410,981 3,102,396
Less allowance for
credit losses (35,635) (27,856) (34,770) (27,788)
----------- ----------- ----------- -----------
Net loans and lease
finance
receivables 3,402,554 3,117,275 3,376,211 3,074,608
----------- ----------- ----------- -----------
Total earning
assets 6,051,150 5,603,344 5,940,033 5,613,719
Premises and
equipment, net 46,176 46,017 46,475 45,746
Intangibles 13,163 9,175 13,612 9,468
Goodwill 55,097 31,805 55,114 31,669
Cash value of life
insurance 104,918 100,891 104,353 100,548
Other assets 75,019 87,686 72,492 86,842
----------- ----------- ----------- -----------
TOTAL $6,446,091 $6,001,082 $6,336,302 $6,011,281
=========== =========== =========== ===========
Liabilities and
Stockholders' Equity
Liabilities:
Deposits:
Noninterest-
bearing $1,248,113 $1,268,150 $1,236,720 $1,275,906
Interest-bearing 1,997,510 2,120,022 2,024,069 2,117,099
----------- ----------- ----------- -----------
Total
Deposits 3,245,623 3,388,172 3,260,789 3,393,005
Other borrowings 2,530,603 2,062,509 2,434,881 2,070,300
Junior Subordinated
Debentures 115,055 108,501 115,055 108,376
Other liabilities 90,148 42,883 74,946 41,084
----------- ----------- ----------- -----------
Total
Liabilities 5,981,429 5,602,065 5,885,671 5,612,765
Stockholders' equity:
Stockholders'
equity 442,203 407,000 437,234 409,043
Accumulated other
comprehensive
income (loss), net
of tax 22,459 (7,983) 13,397 (10,527)
----------- ----------- ----------- -----------
464,662 399,017 450,631 398,516
----------- ----------- ----------- -----------
TOTAL $6,446,091 $6,001,082 $6,336,302 $6,011,281
=========== =========== =========== ===========
CVB FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited)
dollar amounts in thousands, except per share
For the Three For the Six
Months Months
Ended June 30, Ended June 30,
2008 2007 2008 2007
------- ------- -------- --------
Interest Income:
Loans and leases, including fees $52,211 $53,726 $106,257 $106,440
Investment securities:
Taxable 22,430 21,717 43,306 44,810
Tax-advantaged 7,111 7,305 14,299 14,536
------ ------ -------- -------
Total investment income 29,541 29,022 57,605 59,346
Dividends from FHLB Stock 1,205 967 2,299 2,105
Federal funds sold & Interest-
bearing CDs with other
institutions 12 14 27 20
------ ------ ------- -------
Total interest income 82,969 83,729 166,188 167,911
Interest Expense:
Deposits 8,537 17,928 20,816 35,086
Borrowings and junior subordinated
debentures 25,949 27,518 52,760 54,778
------ ------ -------- -------
Total interest expense 34,486 45,446 73,576 89,864
------ ------ -------- -------
Net interest income before
provision for credit losses 48,483 38,283 92,612 78,047
Provision for credit losses 3,000 - 4,700 -
------ ------ -------- -------
Net interest income after
provision for credit losses 45,483 38,283 87,912 78,047
Other Operating Income:
Service charges on deposit
accounts 3,807 3,211 7,552 6,487
Trust and investment services 1,975 1,747 3,888 3,698
Gain on sale of investment
securities - - - -
Other 2,920 2,638 5,403 5,309
------ ------ -------- -------
Total other operating
income 8,702 7,596 16,843 15,494
Other operating expenses:
Salaries and employee benefits 15,501 13,583 31,044 27,655
Occupancy 3,080 2,345 5,951 4,750
Equipment 2,019 1,815 3,668 3,550
Professional services 1,874 1,587 3,415 2,691
Amortization of intangible assets 898 588 1,796 1,177
Provision for unfunded commitments 1,000 - 1,250 -
Other 6,006 4,927 11,653 10,922
------ ------ -------- -------
Total other operating
expenses 30,378 24,845 58,777 50,745
------ ------ -------- -------
Earnings before income taxes 23,807 21,034 45,978 42,796
Income taxes 6,655 5,080 12,642 11,700
------- ------- -------- --------
Net earnings $17,152 $15,954 $ 33,336 $ 31,096
======= ======= ======== ========
Basic earnings per common share $ 0.21 $ 0.19 $ 0.40 $ 0.37
======= ======= ======== ========
Diluted earnings per common share $ 0.21 $ 0.19 $ 0.40 $ 0.37
======= ======= ======== ========
Cash dividends per common share $ 0.085 $ 0.085 $ 0.17 $ 0.17
======= ======= ======== ========
CVB FINANCIAL CORP. AND SUBSIDIARIES
SELECTED FINANCIAL HIGHLIGHTS
(unaudited)
Three months ended Six months ended
June 30, June 30,
2008 2007 2008 2007
------------ ------------ ------------ ------------
Interest income
- (Tax-
Effected) (te) $ 85,856 $ 86,184 $ 171,988 $ 172,796
Interest
Expense 34,486 45,446 73,576 89,864
------------ ------------ ------------ ------------
Net Interest
income - (te) $ 51,370 $ 40,738 $ 98,412 $ 82,932
============ ============ ============ ============
Return on
average assets 1.07% 1.07% 1.06% 1.04%
Return on
average equity 14.85% 16.04% 14.88% 15.74%
Efficiency
ratio 56.06% 54.15% 56.11% 54.25%
Net interest
margin (te) 3.43% 2.92% 3.34% 2.97%
Weighted
average shares
outstanding
Basic 83,105,378 83,489,680 83,128,353 83,691,851
Diluted 83,478,290 84,143,533 83,456,005 84,213,269
Dividends
declared $ 7,058 $ 7,234 $ 14,151 $ 14,333
Dividend payout
ratio 41.14% 45.34% 42.45% 46.09%
Number of
shares
outstanding-
EOP 83,221,358 84,603,880
Book value per
share $ 5.22 $ 4.67
June 30,
2008 2007
------------ ------------
Non-performing
Assets (dollar
amount in
thousands):
Non-accrual
loans $ 12,337 $ 806
Loans past due
90 days or
more and still
accruing
interest - -
Restructured
loans - -
Other real
estate owned
(OREO), net 1,137 -
------------ ------------
Total non-
performing
assets $ 13,474 $ 806
============ ============
Percentage of
non-performing
assets to
total loans
outstanding
and OREO 0.38% 0.02%
Percentage of
non-performing
assets to
total assets 0.21% 0.01%
Non-performing
assets to
allowance for
loan losses 36.11% 2.66%
Net Charge-off
(Recovered) to
Average loans 0.01% 0.01%
Allowance for
Credit Losses:
Beginning
Balance $ 33,049 $ 27,737
Total
Loans
Charged-
Off (685) (216)
Total
Loans
Recovered 246 52
------------ ------------
Net Loans
Recovered (439) (164)
Acquisition of
First Coastal
Bank 0 2,671
Provision
Charged to
Operating
Expense 4,700 -
------------ ------------
Allowance for
Credit Losses
at End of
period $ 37,310 $ 30,244
============ ============
CVB FINANCIAL CORP. AND SUBSIDIARIES
SELECTED FINANCIAL HIGHLIGHTS
(in thousands, except per share data)
(unaudited)
Quarterly Common Stock Price
2008 2007 2006
------------- -------------- --------------
Quarter End High Low High Low High Low
------ ----- ------ ------ ------ ------
March 31, $11.20 $8.45 $13.38 $11.42 $15.60 $14.71
June 30, $12.10 $9.44 $12.40 $10.63 $15.59 $13.25
September 30, $12.71 $ 9.51 $14.24 $12.83
December 31, $11.97 $ 9.98 $14.13 $12.83
Quarterly Consolidated
Statements of Earnings
2Q 1Q 4Q 3Q 2Q
2008 2008 2007 2007 2007
------- ------- ------- ------- -------
Interest income
Loans, including fees $52,211 $54,046 $56,692 $58,677 $53,726
Investment securities and
federal funds sold 30,758 29,173 28,794 29,203 30,003
------- ------- ------- ------- -------
82,969 83,219 85,486 87,880 83,729
Interest expense
Deposits 8,537 12,278 15,766 18,445 17,928
Other borrowings 25,949 26,811 28,333 27,727 27,518
------- ------- ------- ------- -------
34,486 39,089 44,099 46,172 45,446
Net interest income before
provision for credit
losses 48,483 44,130 41,387 41,708 38,283
Provision for credit losses 3,000 1,700 4,000 - -
------- ------- ------- ------- -------
Net interest income after
provision for credit
losses 45,483 42,430 37,387 41,708 38,283
Non-interest income 8,702 8,140 7,968 7,863 7,596
Non-interest expenses 30,378 28,399 27,441 27,218 24,845
------- ------- ------- ------- -------
Earnings before income taxes 23,807 22,171 17,914 22,353 21,034
Income taxes 6,655 5,987 4,547 6,232 5,080
------- ------- ------- ------- -------
Net earnings $17,152 $16,184 $13,367 $16,121 $15,954
======= ======= ======= ======= =======
Basic earning per common share $ 0.21 $ 0.19 $ 0.16 $ 0.19 $ 0.19
Diluted earnings per common
share $ 0.21 $ 0.19 $ 0.16 $ 0.19 $ 0.19
Cash dividends per common
share $ 0.085 $ 0.085 $ 0.085 $ 0.085 $ 0.085
Dividends Declared $ 7,058 $ 7,093 $ 7,069 $ 7,067 $ 7,234
CVB FINANCIAL CORP. AND SUBSIDIARIES
SELECTED FINANCIAL HIGHLIGHTS
(in thousands)
(unaudited)
Distribution of Loan Portfolio
6/30/2008 3/31/2008
----------- -----------
Commercial and Industrial $ 424,515 $ 386,274
Real Estate:
Construction 333,303 318,549
Commercial Real Estate 1,851,123 1,822,610
SFR Mortgage 351,120 356,415
Consumer 57,380 57,554
Municipal lease finance receivables 163,459 153,270
Auto and equipment leases 53,121 54,795
Dairy and Livestock 293,133 254,156
------------------------
Gross Loans 3,527,154 3,403,623
Less:
Deferred net loan fees (10,911) (11,431)
Allowance for credit losses (37,310) (34,711)
----------- -----------
Net Loans $3,478,933 $3,357,481
=========== ===========
12/31/2007 9/30/2007 6/30/2007
----------- ----------- -----------
Commercial and Industrial $ 365,214 $ 345,697 $ 334,968
Real Estate:
Construction 308,354 307,506 310,390
Commercial Real Estate 1,805,946 1,775,812 1,768,539
SFR Mortgage 365,849 363,765 358,347
Consumer 58,999 62,979 64,083
Municipal lease finance
receivables 156,646 143,399 143,316
Auto and equipment leases 58,505 58,958 55,151
Dairy and Livestock 387,488 265,806 280,114
----------------------- -----------
Gross Loans 3,507,001 3,323,922 3,314,908
Less:
Deferred net loan fees (11,857) (12,173) (11,635)
Allowance for credit losses (33,049) (30,428) (30,244)
----------- ----------- -----------
Net Loans $3,462,095 $3,281,321 $3,273,029
=========== =========== ===========
CVB FINANCIAL CORP. AND SUBSIDIARIES
SELECTED FINANCIAL HIGHLIGHTS
(in thousands)
(unaudited)
Non-Performing Assets & Delinquency Trends
June 30, March 31, December 31,
-------------------------------
2008 2008 2007
-------- --------- ------------
Non-Performing Loans
--------------------------------------
Construction $ 9,802 $ 1,535 $ 1,137
Commercial 551 19 -
Mortgage 1,672 1,153 298
Consumer 312 - -
-------- --------- ------------
Total $12,337 $ 2,707 $ 1,435
-------- --------- ------------
% of Total Loans 0.35% 0.08% 0.04%
Past Due 30+ Days
--------------------------------------
Construction $ - $ 768 $ -
Commercial 483 15,709 1,713
Mortgage 483 1,180 460
Consumer - 533 26
-------- --------- ------------
Total $ 966 $18,190 $ 2,199
-------- --------- ------------
% of Total Loans 0.03% 0.53% 0.06%
OREO
--------------------------------------
Construction $ 1,137 $ 1,137 $ -
-------- --------- ------------
Total $ 1,137 $ 1,137 $ -
-------- --------- ------------
-------- --------- ------------
Total Non-Performing, Past Due & OREO $14,440 $22,034 $ 3,634
-------- --------- ------------
% of Total Loans 0.41% 0.65% 0.10%
Source: CVB Financial Corp.
Contact: CVB Financial Corp. Christopher D. Myers President and CEO (909) 980-4030