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 2007.
Net Income
CVB Financial Corp. reported net income of $15.9 million for the second quarter ending June 30, 2007. This represents a decrease of $3.1 million, or 16.19%, when compared with $18.9 million in net earnings reported for the second quarter of 2006. Diluted earnings per share were $0.19 for the second quarter of 2007. This was down $0.03, or 14.73%, when compared with earnings per share of $0.22 for the second quarter of 2006. These per share amounts have been adjusted to reflect a 10% stock dividend declared in December of 2006.
Net income for the second quarter of 2007 produced a return on beginning equity of 16.15%, a return on average equity of 15.86% and a return on average assets of 1.06%. The efficiency ratio for the second quarter was 54.36%, and operating expenses as a percentage of average assets were 1.66%.
Net income for the six months ending June 30, 2007 was $31.0 million. This represents a decrease of $6.1 million, or 16.48%, when compared with net earnings of $37.2 million for the same period of 2006. Diluted earnings per share were $0.37. This was down $0.07, or 15.82%, from diluted earnings per share of $0.44 for the same period last year.
Net income for the six months ending June 30, 2007 produced a return on beginning equity of 16.07%, a return on average equity of 15.62% and a return on average assets of 1.04%. The efficiency ratio for the six-month period was 54.31%, and operating expenses as a percentage of average assets was 1.70%.
Net Interest Income and Net Interest Margin
Net interest income totaled $38.1 million for the second quarter of 2007. This represented a decrease of $4.2 million, or 9.82%, from net interest income of $42.3 million for the second quarter of 2006. This decrease resulted from a $6.7 million increase in interest income, offset by an $11.7 million increase in interest expense and a $900,000 decrease in the provision for credit losses. Net interest income before the provision for credit losses decreased $5.1 million, or 11.70%, in the second quarter of 2007. The increases in interest income were primarily due to the growth in average earning assets and an increase in interest rates. The increases in interest expense were due to the increase in the cost of interest bearing deposits and borrowed funds caused by deposit and borrowing instruments repricing at higher rates this year.
The net interest margin (tax equivalent) declined from 3.48% for the second quarter of 2006 to 2.91% for the second quarter of 2007. Total average earning asset yields have increased from 6.02% for the second quarter of 2006 to 6.12% for the second quarter of 2007. The cost of funds has increased from 3.47% for the second quarter of 2006 to 4.21% for the second quarter of 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.
Net interest income totaled $77.9 million for the six months ending June 30, 2007. This represents a decrease of $7.9 million, or 9.20%, from the net interest income of $85.8 million for the same period in 2006. This decrease resulted from an $18.8 million increase in interest income, which was offset by a $27.8 million increase in interest expense and a $1.2 million decrease in the provision for credit losses. Net interest income before the provision for credit losses decreased $9.0 million, or 10.40%, for the first six months of 2007. The increases in interest income were primarily due to the growth in average earning assets and an increase in interest rates. The increases in interest expense were due to the increases in interest rates on deposits and borrowed funds.
The net interest margin (tax equivalent) decreased from 3.47% for the first six months of 2006 to 2.97% for the first six months of 2007. Total average earning asset yields have increased from 5.86% for the first six months of 2006 to 6.15% for the first six months of 2007. The cost of funds has increased from 3.29% for the first six months of 2006 to 4.18% for the first six months of 2007.
The credit quality of the loan portfolio continues to be strong. The allowance for credit losses increased from $25.6 million as of June 30, 2006 to $30.2 million as of June 30, 2007. This increase was due to the provision for credit losses of $1.9 million in the second half of 2006 and the addition of $2.7 million from the acquisition of First Coastal Bank in June, 2007. During the first six months of 2007, the Company experienced net charge-offs of $164,000. No additional provision for credit losses was made in 2007, thus far. During the first six months of 2006, the Company had net recoveries of $1.3 million and a provision for credit losses of $1.2 million. The allowance for credit losses was 0.92% and 0.90% of the total loans and leases outstanding as of June 30, 2007 and 2006, respectively.
Balance Sheet
The Company reported total assets of $6.14 billion at June 30, 2007. This represented an increase of $184.6 million, or 3.10%, over total assets of $5.95 billion on June 30, 2006. Earning assets totaling $5.70 billion were up $140.8 million, or 2.53%, when compared with earning assets of $5.56 billion as of June 30, 2006. Total deposits were $3.51 billion as of June 30, 2007. This represents a decrease of $84.1 million, or 2.34%, from $3.59 billion at June 30, 2006. The Company has $1.34 billion, or 38.21%, of its deposits in non-interest bearing demand deposits. Gross loans and leases totaled $3.30 billion at June 30, 2007. This represents an increase of $464.1 million, or 16.35%, when compared with gross loans and leases of $2.84 billion at June 30, 2006.
Total assets of $6.14 billion as of June 30, 2007 reflect an increase of $42.8 million, or 0.70%, over total assets of $6.09 billion on December 31, 2006. Earning assets of $5.70 billion were comparable to total earning assets at December 31, 2006. Total deposits of $3.51 billion at June 30, 2007 increased $101.9 million, or 2.99%, when compared with total deposits of $3.41 billion at December 31, 2006. Gross loans and leases of $3.30 billion increased $233.1 million, or 7.59%, from $3.07 billion at December 31, 2006.
Investment Securities
Investment securities totaled $2.35 billion as of June 30, 2007. This represents a decrease of $330.6 million, or 12.36%, when compared with the $2.68 billion in securities at June 30, 2006. It represents a decrease of $238.4 million, or 9.23%, when compared with $2.58 billion in investment securities at December 31, 2006. The Company is utilizing the monthly cash flow from investments to pay down borrowings or fund new loans. This is in keeping with their plan to reduce the size of the investment portfolio.
Financial Advisory Services
The Financial Advisory Services Group has over $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 $806,000 in non-performing assets as of June 30, 2007. This consisted of one loan from the First Coastal Bank acquisition. Subsequent to June 30, 2007, this loan was paid off. There were no non-performing assets as of December 31, 2006. The allowance for credit losses was $30.2 million as of June 30, 2007. This represents 0.92% of gross loans and leases. It compares with an allowance for credit losses of $27.7 million, or 0.90%, of gross loans and leases on December 31, 2006. The increase was primarily due to the addition of $2.7 million from the acquisition of First Coastal Bank in June, 2007, offset by loan net charge-offs of $164,000 during the first six months of 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 39 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, Golden West 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%.
For the fourth consecutive year, CVB Financial Corp. received the KBW Honor Roll award at the Annual Community Bank Investor Conference hosted by Keefe, Bruyette & Woods, Inc. in New York on August 1 - 2, 2006. The Company was also recognized as a SmAll-Star by Sandler O'Neill, and named to 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
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.
CONSOLIDATED BALANCE SHEET
(unaudited)
dollars in thousands
December
June 30, 31,
----------------------- ----------
2007 2006 2006
----------- ----------- ----------
Assets:
Investment Securities available-
for-sale $2,344,537 $2,675,165 $2,582,902
Interest-bearing balances due
from depository institutions 3,070 99 -
Investment in stock of Federal
Home Loan Bank (FHLB) 83,392 74,441 78,866
Loans and lease finance
receivables 3,303,273 2,839,145 3,070,196
Less allowance for credit
losses (30,244) (25,620) (27,737)
----------- ----------- ----------
Net loans and lease finance
receivables 3,273,029 2,813,525 3,042,459
----------- ----------- ----------
Total earning assets 5,704,028 5,563,230 5,704,227
Cash and due from banks 142,699 143,212 146,411
Premises and equipment, net 46,391 43,862 44,963
Intangibles 8,944 11,297 10,121
Goodwill 60,357 31,531 31,531
Cash value of life insurance 101,222 73,282 99,861
Other assets 73,402 86,005 57,148
----------- ----------- -----------
TOTAL $6,137,043 $5,952,419 $6,094,262
=========== =========== ===========
Liabilities and Stockholders'
Equity
Liabilities:
Deposits:
Demand Deposits
(noninterest-bearing) $1,340,768 $1,367,015 $1,363,411
Investment Checking 334,229 299,393 318,431
Savings/MMDA 912,001 910,083 896,988
Time Deposits 921,756 1,016,362 827,978
----------- ----------- ----------
Total Deposits 3,508,754 3,592,853 3,406,808
Demand Note to U.S. Treasury 4,754 4,462 7,245
Repurchase Agreements 507,202 250,000 344,350
Borrowings 1,561,000 1,496,000 1,794,900
Junior Subordinated Debentures 115,859 108,250 108,250
Other liabilities 42,640 162,600 43,370
----------- ----------- ----------
Total Liabilities 5,740,209 5,614,165 5,704,923
Stockholders' equity:
Stockholders' equity 422,167 380,564 402,560
Accumulated other
comprehensive income (loss),
net of tax (25,333) (42,310) (13,221)
----------- ----------- -----------
396,834 338,254 389,339
----------- ----------- -----------
TOTAL $6,137,043 $5,952,419 $6,094,262
=========== =========== ===========
CVB FINANCIAL CORP.
CONSOLIDATED AVERAGE BALANCE SHEET
(unaudited)
dollars in thousands
Three months ended Six months ended
June 30, June 30,
2007 2006 2007 2006
----------- ----------- ---------- -----------
Assets:
Investment securities
available-for-sale $2,404,257 $2,417,985 $2,457,960 $2,404,090
Interest-bearing
balances due from
depository
institution 155 2,745 299 3,701
Investment in stock
of Federal Home Loan
Bank (FHLB) 81,657 73,541 80,853 72,426
Loans and lease
finance receivables 3,145,131 2,767,014 3,102,396 2,710,070
Less allowance for
credit losses (27,856) (24,424) (27,788) (23,865)
----------- ----------- ----------- -----------
Net loans and
lease finance
receivables 3,117,275 2,742,590 3,074,608 2,686,205
----------- ----------- ----------- -----------
Total earning
assets 5,603,344 5,236,861 5,613,720 5,166,422
Cash and due from
banks 122,164 125,323 123,289 127,045
Premises and
equipment, net 46,017 43,019 45,746 41,844
Intangibles 9,175 11,527 9,468 11,820
Goodwill 31,805 31,531 31,669 31,673
Cash value of life
insurance 100,891 72,871 100,548 72,456
Other assets 89,736 95,101 88,874 90,825
----------- ----------- ----------- -----------
TOTAL $6,003,132 $5,616,233 $6,013,314 $5,542,085
=========== =========== =========== ===========
Liabilities and
Stockholders' Equity
Liabilities:
Deposits:
Noninterest-
bearing $1,268,150 $1,343,664 $1,275,906 $1,365,198
Interest-
bearing 2,120,022 2,155,113 2,117,099 2,108,302
----------- ----------- ----------- -----------
Total
Deposits 3,388,172 3,498,777 3,393,005 3,473,500
Other borrowings 2,062,509 1,611,443 2,070,300 1,561,480
Junior Subordinated
Debentures 108,501 108,250 108,376 103,978
Other liabilities 42,883 46,109 41,084 49,625
----------- ----------- ----------- -----------
Total
Liabilities 5,602,065 5,264,579 5,612,765 5,188,583
Stockholders' equity:
Stockholders'
equity 409,050 380,391 411,075 374,690
Accumulated other
comprehensive
income (loss),
net of tax (7,983) (28,737) (10,527) (21,188)
----------- ----------- ----------- -----------
401,067 351,654 400,548 353,502
----------- ---------- ----------- ----------
TOTAL $6,003,132 $5,616,233 $6,013,313 $5,542,085
=========== =========== =========== ===========
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,
2007 2006 2007 2006
------- ------- -------- --------
Interest Income:
Loans, including fees $53,726 $47,913 $106,440 $ 92,205
Investment securities:
Taxable 21,717 21,163 44,810 41,900
Tax-advantaged 7,305 6,807 14,536 13,052
------ ------ -------- -------
Total investment income 29,022 27,970 59,346 54,952
Dividends from FHLB Stock 795 990 1,995 1,790
Federal funds sold & Interest-
bearing CDs with other
institutions 14 28 20 86
------ ------ ------- -------
Total interest income 83,557 76,901 167,801 149,033
Interest Expense:
Deposits 17,928 16,294 35,086 29,495
Borrowings and junior
subordinated debentures 27,518 17,446 54,778 32,552
------ ------ -------- -------
Total interest expense 45,446 33,740 89,864 62,047
------ ------ -------- -------
Net interest income before
provision for credit losses 38,111 43,161 77,937 86,986
Provision for credit losses - 900 - 1,150
------ ------ -------- -------
Net interest income after
provision for credit losses 38,111 42,261 77,937 85,836
Other Operating Income:
Service charges on deposit
accounts 3,211 3,288 6,487 6,579
Financial Advisory Services 1,747 1,815 3,698 3,660
Gain/(Loss) on sale of
investment securities - - - 33
Other 2,638 2,988 5,309 5,548
------ ------ -------- -------
Total other operating
income 7,596 8,091 15,494 15,820
Other operating expenses:
Salaries and employee benefits 13,583 12,771 27,655 25,491
Occupancy 2,345 2,075 4,750 4,104
Equipment 1,815 1,756 3,550 3,501
Professional services 1,587 1,485 2,691 2,758
Amortization of intangible
assets 588 589 1,177 1,177
Other 4,927 5,583 10,922 10,698
------ ------ -------- -------
Total other operating
expenses 24,845 24,259 50,745 47,729
------ ------ -------- -------
Earnings before income taxes 20,862 26,093 42,686 53,927
Income taxes 5,008 7,176 11,654 16,770
------- ------- -------- --------
Net earnings $15,854 $18,917 $ 31,032 $ 37,157
======= ======= ======== ========
Basic earnings per common share $ 0.19 $ 0.22 $ 0.37 $ 0.44
======= ======= ======== ========
Diluted earnings per common share $ 0.19 $ 0.22 $ 0.37 $ 0.44
======= ======= ======== ========
Cash dividends per common share $ 0.085 $ 0.09 $ 0.17 $ 0.18
======= ======= ======== ========
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 Six months ended
June 30, June 30,
2007 2006 2007 2006
------------ ------------ ------------ ------------
Interest income -
(Tax
Effective)(te) $ 86,012 $ 79,111 $ 172,686 $ 153,262
Interest Expense 45,446 33,740 89,864 62,047
------------ ------------ ------------ ------------
Net Interest
income - (te) $ 40,566 $ 45,371 $ 82,822 $ 91,215
============ ============ ============ ============
Return on average
assets 1.06% 1.35% 1.04% 1.35%
Return on average
equity 15.86% 21.58% 15.62% 21.20%
Efficiency ratio 54.36% 48.18% 54.31% 46.95%
Net interest
margin (te) 2.91% 3.48% 2.97% 3.47%
Weighted average
shares
outstanding
Basic 83,489,680 84,142,733 83,691,851 84,124,625
Diluted 84,143,533 84,903,310 84,213,269 84,893,549
Dividends
declared $ 7,234 $ 6,885 $ 14,333 $ 13,768
Dividend payout
ratio 45.63% 36.40% 46.19% 37.05%
Number of shares
outstanding-EOP 84,603,880 84,150,986
Book value per
share $ 4.69 $ 4.02
June 30,
2007 2006
------------ ------------
Non-performing Assets (dollar amount in thousands):
Non-accrual loans $ 806 $ 885
Loans past due 90
days or more and
still accruing
interest - -
Restructured
loans - -
Other real estate
owned (OREO),
net - -
------------ ------------
Total non-
performing
assets $ 806 $ 885
============ ============
Percentage of
non-performing
assets to total
loans
outstanding and
OREO 0.02% 0.03%
Percentage of
non-performing
assets to total
assets 0.01% 0.01%
Non-performing
assets to
allowance for
loan losses 2.66% 3.45%
Net Charge-off
(Recovered) to
Average loans -0.08% -0.05%
Allowance for
Credit Losses:
Beginning
Balance $ 27,737 $ 23,204
Total Loans
Charged-Off (216) (64)
Total Loans
Recovered 52 1,330
Acquisition
of First
Coastal Bank 2,671 -
------------ ------------
Net Loans
Recovery
(Charged-Off) 2,507 1,266
Provision Charged
to Operating
Expense - 1,150
------------ ------------
Allowance for
Credit Losses at
End of period $ 30,244 $ 25,620
============ ============
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, $ 14.24 $ 12.83 $ 15.93 $ 13.12
December 31, $ 14.13 $ 12.83 $ 15.20 $ 12.63
Quarterly Consolidated
Statements of Earnings
2Q 1Q 4Q 3Q 2Q
2007 2007 2006 2006 2006
------- ------- ------- ------- -------
Interest income
Loans, including fees $53,726 $52,714 $51,935 $50,564 $47,913
Investment securities and
federal funds sold 29,831 31,530 32,687 32,441 28,988
------- ------- ------- ------- -------
83,557 84,244 84,622 83,005 76,901
Interest expense
Deposits 17,928 17,158 18,783 18,903 16,294
Other borrowings 27,518 27,260 25,601 22,130 17,446
------- ------- ------- ------- -------
45,446 44,418 44,384 41,033 33,740
Net interest income
before provision for
credit losses 38,111 39,826 40,238 41,972 43,161
Provision for credit
losses - - 600 1,250 900
------- ------- ------- ------- -------
Net interest income
after provision for
credit losses 38,111 39,826 39,638 40,722 42,261
Non-interest income 7,596 7,898 8,567 8,871 8,091
Non-interest expenses 24,845 25,900 25,465 22,630 24,259
------- ------- ------- ------- -------
Earnings before income
taxes 20,862 21,824 22,740 26,963 26,093
Income taxes 5,008 6,646 6,446 8,508 7,176
------- ------- ------- ------- -------
Net earnings $15,854 $15,178 $16,294 $18,455 $18,917
======= ======= ======= ======= =======
Basic earning per common
share $ 0.19 $ 0.18 $ 0.19 $ 0.22 $ 0.22
Diluted earnings per
common share $ 0.19 $ 0.18 $ 0.19 $ 0.22 $ 0.22
Cash dividends per
common share $ 0.085 $ 0.085 $ 0.085 $ 0.09 $ 0.09
Dividends Declared $ 7,234 $ 7,109 $ 7,164 $ 6,891 $ 6,885
Source: CVB Financial Corp.
Contact: CVB Financial Corp. Christopher D. Myers, President and CEO, 909-980-4030