ONTARIO, Calif.--(BUSINESS WIRE)--July 21, 2004--CVB Financial Corp. (Nasdaq:CVBF) and its subsidiary, Citizens Business Bank, announced record results for the second quarter of 2004. This included record deposits, record loans, record assets and record earnings. 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, 2004. This represents an increase of $4.9 million, or 39.39%, when compared with the $12.5 million in net income reported for the second quarter of 2003. Diluted earnings per share were $0.36 for the second quarter of 2004. This is up $0.11, or 44.00%, when compared with earnings per share of $0.25 for the second quarter of 2003.
Net income for the second quarter of 2004 produced a return on beginning equity of 25.77%, a return on average equity of 23.05% and a return on average assets of 1.71%. The efficiency ratio for the second quarter was 43.83%, and operating costs as a percentage of average assets were 2.06%.
Net income for the six months ending June 30, 2004 was $27.5 million. This represents an increase of $2.3 million, or 9.11%, when compared with net earnings of $25.2 million for the same period of 2003. Diluted earnings per share were $0.56. This was up $0.05, or 9.80%, from diluted earnings per share of $0.51 for the same period last year.
Net income for the six months ending June 30, 2004 produced a return on beginning equity of 19.30%, a return on average equity of 18.51% and a return on average assets of 1.38%. The efficiency ratio for the six-month period was 50.45%, and operating expenses as a percentage of average assets were 2.13%.
Net Interest Income and Net Interest Margin
Net interest income (before provision for credit losses) for the second quarter of 2004 totaled $35.9 million. This represented an increase of $5.4 million, or 17.54%, over the net interest income of $30.5 million for the second quarter of 2003. These increases resulted from a $5.8 million increase in interest income, offset by a $0.4 million increase in interest expense.
Net interest income increased $343,000 or 0.96%, from $35.6 million for the first quarter of 2004 to $35.9 million for the second quarter of 2004. This nominal growth in net interest income was the result of the sale of $63.0 million in securities with relatively short maturities. This sale resulted in securities gains of $4.3 million. It is believed that this opportunity to take advantage of these gains would have dissipated rapidly with the anticipated rise in interest rates.
The yield on the $63.0 million in securities that were sold was 5.58%. Proceeds from the sale were used to purchase securities with a yield of 5.01%. Although the yields are reasonably comparable, interest income on investments was adversely impacted by the delay between the time the $63.0 million in securities were sold and the new securities were purchased and settled. This reduced interest income from investments by $295,000 for the quarter. The $4.3 million gain on the sale of the securities appears to far outweigh this reduction in investment interest income. Interest income on investments is expected to increase in the third quarter.
Net interest income (before provision for credit losses) totaled $71.5 million for the six months ending June 30, 2004. This represented an increase of $9.7 million, or 15.67%, over the net interest income of $61.8 million for the same period of 2003. This increase resulted from an $11.4 million increase in interest income, partially offset by a $1.7 million increase in interest expense. The increases in interest income period over period were primarily due to the increase in average earnings assets, partially offset by a decline in interest rates.
We experienced a decline in the net interest margin when compared with the same period last year due to the lower interest rate environment. Net interest margin (tax equivalent) declined from 4.04% for the second quarter of 2003 to 3.91% for the second quarter of 2004. It declined from 4.29% for the first six months of 2003 to 3.97% for the first six months of 2004. Asset yields have declined from 5.57% for the first six months of 2003 to 5.08% for the first six months of 2004. This has been mitigated by the strong growth in the balance sheet, and the decline in the cost of funds from 1.92% to 1.65% for the same periods.
Asset yields for the second quarter of 2004 were 5.01%, compared with asset yields of 5.31% for the second quarter last year. The cost of funds was 1.64% and 1.89% for the same periods, respectively. The margin compression appears to be moderating with the recent stability of interest rates. The Company has approximately $1.29 billion, or 45.57%, of its deposits in interest free demand deposits. This should position it well for a rising interest rate environment.
Investment Securities
Investment securities totaled $2.12 billion as of June 30, 2004. This represents an increase of $212.3 million, or 11.15%, when compared with $1.90 billion in investment securities as of December 31, 2003. It represents an increase of $291.5 million, or 15.98%, when compared with $1.82 billion for the second quarter of 2003.
Balance Sheet
The Company reported total assets of $4.36 billion at June 30, 2004. This represented an increase of $851.0 million, or 24.22%, over total assets of $3.51 billion on June 30, 2003. Earning assets totaling $4.03 billion were up $725.0 million, or 21.92%, when compared with earning assets of $3.31 billion as of June 30, 2003. Deposits of $2.83 billion grew $424.4 million, or 17.63%, from $2.41 billion for the prior year. Demand deposits of $1.29 billion jumped $282.7 million, or 28.03%, from $1.01 billion. Gross loans and leases of $1.94 billion on June 30, 2004 rose $434.8 million, or 28.91%, from $1.50 billion on June 30, 2003.
Total assets of $4.36 billion as of June 30, 2004 reflect an increase of $509.7 million, or 13.22%, over total assets of $3.85 billion on December 31, 2003. Earning assets of $4.03 billion were up $390.4 million, or 10.72%, during the same period. Deposits of $2.83 billion on June 30, 2004 grew $171.1 million, or 6.43%, from $2.66 billion as of December 31, 2003. Demand deposits of $1.29 billion were up $148.9 million, or 13.04%, from $1.14 billion. Gross loans and leases of $1.94 billion increased $179.0 million, or 10.17%, from $1.76 billion on December 31, 2003. Total equity of $280.9 million on June 30, 2004 was down $5.9 million, or 2.05%, from $286.7 million as of December 31, 2003. This decline was the result of a $20.1 million reduction in the unrealized gain in the investment portfolio.
Assets Under Administration
The Wealth Management Group has over $1.1 billion in assets under administration. They provide trust, investment and related services.
Loan and Lease Quality
CVB Financial Corp reported non-performing assets of $1.5 million as of June 30, 2004. This represents a ratio of non-performing assets to total assets of 0.03%, and it represents 0.07% of gross loans and leases. The allowance for loan and lease losses was $22.1 million as of June 30, 2004. This represents 1.14% of gross loans and leases, and it compares with 1.38% on June 30, 2003. Non-performing loans and leases represented 6.57% of the allowance for loan and lease losses. Non-performing assets increased by $736,000 from the $719,000 reported as of March 31, 2004.
The Company has not made a provision for loan and lease losses due to the high quality of its loan portfolio. This has been the case even though loans increased from $1.50 billion as of June 30, 2003 to $1.94 billion as of June 30, 2004. Recoveries of $2.5 million and the addition of $2.8 million from acquisitions more than offset charge offs of $2.2 million during this twelve-month period.
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 30 cities with 37 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.
Citizens Business Bank was recently recognized at the Annual Strategic Issues Summit with the "Market Cap" Award. This Award was presented to recognize the Company for producing a return to its original shareholders of 41,034%--over 400 times the original investment. This is the highest return in the history of the banking industry in California. The Strategic Issues Summit is co-sponsored by Carpenter & Company and the California Bankers Association.
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 may contain forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from the projected. For a discussion of 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, 2003, and particularly the discussion on risk factors within that document.
CVB FINANCIAL CORP.
CONSOLIDATED BALANCE SHEET
(unaudited)
dollars in thousands
June 30, December 31,
2004 2003 2003
Assets:
Federal funds sold and reverse
repos $- $- $-
Investment Securities trading 58,340 - -
Investment Securities available-
for-sale 2,011,751 1,788,606 1,865,782
Investment in stock of Federal
Home Loan Bank (FHLB) 45,919 35,933 37,966
Loans and lease finance
receivables 1,938,960 1,504,116 1,759,941
Less allowance for credit
losses (22,140) (20,808) (21,282)
Net loans and lease finance
receivables 1,916,820 1,483,308 1,738,659
Total earning assets 3,974,490 3,307,847 3,642,407
Cash and due from banks 164,988 114,012 112,008
Premises and equipment, net 29,607 31,602 31,069
Goodwill and intangibles 26,309 15,405 26,901
Cash value of life insurance 66,262 13,189 15,800
Other assets 102,366 30,956 26,164
TOTAL $4,364,022 $3,513,011 $3,854,349
Liabilities and Stockholders'
Equity
Liabilities:
Deposits:
Demand
Deposits(noninterest-
bearing) $1,291,278 $1,008,555 $1,142,330
Investment Checking 227,269 204,529 227,031
Savings/MMDA 805,390 642,979 732,992
Time Deposits 507,666 551,107 558,157
Total Deposits 2,831,603 2,407,170 2,660,510
Demand Note to U.S. Treasury 2,431 4,538 3,834
Borrowings 1,119,700 787,000 786,500
Junior Subordinated Debentures 82,476 - 82,476
Other liabilities 46,955 42,504 34,308
Total Liabilities 4,083,165 3,241,212 3,567,628
Stockholders' equity:
Stockholders' equity 283,727 249,203 269,441
Accumulated other
comprehensive income
(loss), net of tax (2,870) 22,596 17,280
280,857 271,799 286,721
TOTAL $4,364,022 $3,513,011 $3,854,349
CVB FINANCIAL CORP.
CONSOLIDATED AVERAGE BALANCE SHEET
(unaudited)
dollars in thousands
Three months ended June Six months ended June
30, 30,
2004 2003 2004 2003
Assets:
Federal funds sold and
reverse repos $264 $8,681 $571 $4,807
Investment Securities
trading 641 - 321 -
Investment securities
available-for-sale 1,920,760 1,679,243 1,904,247 1,552,383
Investment in stock of
Federal Home Loan Bank
(FHLB) 43,093 35,643 41,341 29,790
Loans and lease finance
receivables 1,848,755 1,481,196 1,807,735 1,457,773
Less allowance for
credit losses (22,137) (21,384) (21,935) (21,522)
Net loans and lease
finance receivables 1,826,618 1,459,812 1,785,800 1,436,251
Total earning
assets 3,790,735 3,183,379 3,731,959 3,023,231
Cash and due from banks 115,656 108,140 111,967 110,254
Premises and equipment,
net 29,925 31,128 30,322 30,505
Goodwill and intangibles 26,429 15,490 26,582 15,611
Cash value of life
insurance 66,050 13,161 50,222 13,021
Other assets 74,468 52,218 63,521 48,529
TOTAL $4,103,263 $3,403,516 $4,014,573 $3,241,151
Liabilities and
Stockholders' Equity
Liabilities:
Deposits:
Noninterest-
bearing $1,192,256 $916,311 $1,147,478 $904,966
Interest-bearing 1,528,356 1,426,371 1,532,785 1,410,219
Total Deposits 2,720,612 2,342,682 2,680,263 2,315,185
Other borrowings 949,134 708,515 907,654 590,174
Junior Subordinated
Debentures 82,476 - 82,476 -
Other liabilities 46,589 79,912 45,101 65,554
Total
Liabilities 3,798,811 3,131,109 3,715,494 2,970,913
Stockholders' equity:
Stockholders' equity 281,084 248,932 278,720 245,690
Accumulated other
comprehensive income
(loss), net of tax 23,368 23,475 20,359 24,548
304,452 272,407 299,079 270,238
TOTAL $4,103,263 $3,403,516 $4,014,573 $3,241,151
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,
2004 2003 2004 2003
Interest Income:
Loans, including fees $27,136 $23,813 $53,386 $47,633
Investment securities:
Taxable 15,659 12,802 31,387 25,186
Tax-advantaged 3,655 4,021 7,626 8,150
Total investment income 19,314 16,823 39,013 33,336
Federal funds sold 1 28 3 40
Total interest income 46,451 40,664 92,402 81,009
Interest Expense:
Deposits 3,605 4,266 7,288 8,782
Borrowings and junior subordinated
debentures 6,939 5,851 13,644 10,441
Total interest expense 10,544 10,117 20,932 19,223
Net interest income before
provision for credit losses 35,907 30,547 71,470 61,786
Provision for credit losses - - - -
Net interest income after
provision for credit losses 35,907 30,547 71,470 61,786
Other Operating Income:
Service charges on deposit accounts 3,512 3,749 7,305 7,445
Wealth Management services 1,111 925 2,274 1,972
Gains on sale of investment
securities 5,212 29 5,212 823
Other-than-temporary impairment
write down - - (6,300) -
Other 2,175 1,777 4,301 3,129
Total other operating
income 12,010 6,480 12,792 13,369
Other operating expenses:
Salaries and employee benefits 11,610 9,907 23,352 19,895
Occupancy 1,907 1,621 3,680 3,172
Equipment 1,855 1,579 3,711 3,071
Professional services 1,001 1,302 2,122 1,983
Amortization of intangible assets 296 203 592 315
Other 4,334 3,246 9,052 7,161
Total other operating
expenses 21,003 17,858 42,509 35,597
Earnings before income taxes 26,914 19,169 41,753 39,558
Income taxes 9,462 6,649 14,230 14,334
Net earnings $17,452 $12,520 $27,523 $25,224
Basic earnings per common share $0.36 $0.26 $0.57 $0.52
Diluted earnings per common share $0.36 $0.25 $0.56 $0.51
Cash dividends per common share $0.12 $0.12 $0.24 $0.24
All per share information has been retroactively adjusted to reflect
the 10% stock dividend declared on December 17, 2003.
CVB FINANCIAL CORP. AND SUBSIDIARIES
SELECTED FINANCIAL HIGHLIGHTS
(unaudited)
Three months ended June Six months ended June
30, 30,
2004 2003 2004 2003
Interest income -
(Tax Effective)(te) $47,624 $41,959 $94,858 $83,631
Interest Expense 10,544 10,117 20,932 19,223
Net Interest income -
(te) $37,080 $31,842 $73,926 $64,408
Other-than-temporary
impairment write-
down $0 - ($6,300) -
Gains on sales of
securities $5,212 $29 $5,212 $823
Gain on sale of OREO - - - -
Return on average
assets 1.71% 1.48% 1.38% 1.49%
Return on average
equity 23.05% 18.43% 18.51% 18.67%
Efficiency ratio 43.83% 48.23% 50.45% 47.36%
Net interest margin
(te) 3.69% 3.86% 3.77% 4.09%
Weighted average
shares outstanding
Diluted 49,189,544 49,283,376 49,187,787 49,053,725
Basic 48,356,327 48,402,709 48,379,814 48,078,558
Dividends declared $5,836 $5,249 $11,687 $10,492
Dividend payout ratio 33.44% 41.92% 42.46% 41.60%
Number of shares
outstanding-EOP 48,371,663 48,114,022
Book value per share $5.81 $5.96
June 30,
2004 2003
Non-performing Assets
(dollar amount in
thousands):
Non-accrual loans $1,455 $1,126
Loans past due 90
days or more
and still accruing
interest - -
Restructured loans - -
Other real estate
owned (OREO), net - -
Total non-performing
assets $1,455 $1,126
Percentage of non-
performing assets
to total loans
outstanding and
OREO 0.08% 0.07%
Percentage of non-
performing
assets to total
assets 0.03% 0.03%
Non-performing assets
to
allowance for loan
losses 6.57% 5.41%
Net Charge-off
(Recovered) to
Average loans -0.05% 0.06%
Allowance for Credit
Losses:
Beginning Balance $21,282 $21,666
Total Loans
Charged-Off (476) (1,309)
Total Loans
Recovered 1,334 451
Net Loans Recovery
(Charged-Off) 858 (858)
Provision Charged to
Operating Expense - -
Allowance for Credit
Losses at End of
period $22,140 $20,808
CVB FINANCIAL CORP. AND SUBSIDIARIES
SELECTED FINANCIAL HIGHLIGHTS
(in thousands, except per share data)
(unaudited)
Quarterly Common Stock Price
2004 2003 2002
Quarter End High Low High Low High Low
March 31, $21.30 $18.91 $23.12 $17.62 $14.66 $12.75
June 30, $21.95 $19.65 $20.08 $17.59 $17.51 $14.52
September 30, $19.61 $16.69 $17.04 $12.51
December 31, $19.84 $17.43 $19.44 $14.89
Quarterly Consolidated Statements of Income
2Q 1Q 4Q 3Q 2Q
2004 2004 2003 2003 2003
Interest income
Loans,
including fees $27,136 $26,250 $26,780 $24,629 $23,813
Investment securities
and federal funds sold 19,315 19,701 18,208 15,719 16,851
46,451 45,951 44,988 40,348 40,664
Interest expense
Deposits 3,605 3,683 3,818 3,723 4,266
Other
borrowings 6,939 6,704 5,098 5,191 5,851
10,544 10,387 8,916 8,914 10,117
Net interest
income before
provision for
credit losses 35,907 35,564 36,072 31,434 30,547
Provision for
credit losses - - - - -
Net interest
income after
provision for
credit losses 35,907 35,564 36,072 31,434 30,547
Non-interset
income 12,011 781 6,480 10,140 6,480
Non-interest
expenses 21,004 21,505 20,909 21,287 17,858
Earnings before
income taxes 26,914 14,840 21,643 20,287 19,169
Income taxes 9,462 4,768 7,538 6,785 6,649
Net earnings $17,452 $10,072 $14,105 $13,502 $12,520
Basic earning per
common share $0.36 $0.21 $0.29 $0.29 $0.26
Diluted earnings
per common share $0.36 $0.20 $0.29 $0.28 $0.25
Cash dividends per
common share $0.12 $0.12 $0.12 $0.12 $0.12
CONTACT: CVB Financial Corp.
D. Linn Wiley, 909-980-4030
SOURCE: CVB Financial Corp.