ONTARIO, Calif.--(BUSINESS WIRE)--
CVB Financial Corp. (NASDAQ:CVBF) and its subsidiary, Citizens Business Bank ("the Company"), announced the results for the third quarter of 2007.
Net Income
CVB Financial Corp. reported net income of $16.1 million for the third quarter ending September 30, 2007. This represents a decrease of $2.4 million, or 12.60%, when compared with the $18.5 million in net earnings reported for the third quarter of 2006. Diluted earnings per share were $0.19 for the third quarter of 2007. This was down $0.03, or 12.25%, when compared with earnings per share of $0.22 for the third 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 third quarter of 2007 produced a return on beginning equity of 16.13%, a return on average equity of 15.92% and a return on average assets of 1.04%. The efficiency ratio for the third quarter was 54.89%, and operating expenses as a percentage of average assets were 1.76%.
Net income for the nine months ending September 30, 2007 was $47.2 million. This represents a decrease of $8.4 million, or 15.20%, when compared with net earnings of $55.6 million for the same period of 2006. Diluted earnings per share were $0.56. This was down $0.09, or 14.63%, from diluted earnings per share of $0.65 for the same period last year.
Net income for the nine months ending September 30, 2007 produced a return on beginning equity of 16.20%, a return on average equity of 15.72% and a return on average assets of 1.04%. The efficiency ratio for the nine-month period was 54.51%, and operating expenses as a percentage of average assets was 1.72%.
Net Interest Income and Net Interest Margin
Net interest income totaled $41.7 million for the third quarter of 2007. This represented an increase of $1.0 million, or 2.46%, from net interest income of $40.7 million for the third quarter of 2006. This increase resulted from a $4.9 million increase in interest income, offset by a $5.1 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 $248,000, or 0.59%, in the third 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 3.22% for the third quarter of 2006 to 3.11% for the third quarter of 2007. However, from a quarter-to-quarter perspective, the third quarter net interest margin of 3.11% compares favorably to the 2007 first and second quarter figures of 3.03% and 2.91%, respectively. Total average earning asset yields have increased from 6.15% for the third quarter of 2006 to 6.28% for the third quarter of 2007. The cost of funds has increased from 2.94% for the third quarter of 2006 to 3.20%, for the third 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 $119.7 million for the nine months ending September 30, 2007. This represents a decrease of $6.9 million, or 5.45%, from the net interest income of $126.6 million for the same period in 2006. This decrease resulted from a $23.7 million increase in interest income, which was offset by a $33.0 million increase in interest expense and a $2.4 million decrease in the provision for credit losses. Net interest income before the provision for credit losses decreased $9.3 million, or 7.21%, for the first nine 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 3.43% for the first nine months of 2006 to 3.02% for the first nine months of 2007. Total average earning asset yields have increased from 6.01% for the first nine months of 2006 to 6.20% for the first nine months of 2007. The cost of funds has increased from 2.60% for the first nine months of 2006 to 3.22% for the first nine months of 2007.
The allowance for credit losses increased from $26.9 million as of September 30, 2006 to $30.4 million as of September 30, 2007. This increase was due to the provision for credit losses of $600,000 in the last quarter of 2006 and the addition of $2.7 million from the acquisition of First Coastal Bank in June, 2007. During the first nine months of 2007, the Company experienced net recoveries of $20,000. No additional provision for credit losses was made in 2007. During the first nine months of 2006, the Company had net recoveries of $1.3 million and a provision for credit losses of $2.4 million. The allowance for credit losses was 0.92% of the total loans and leases outstanding as of September 30, 2007 and 2006.
Other operating expenses increased for the third quarter and for the nine months ending September 30, 2007 when compared to the same period last year. The increases in salary and occupancy expenses were primarily related to the acquisition of First Coastal Bank. Intangible expense increased by $498,000 for the estimated amortization of intangibles acquired from First Coastal Bank. The Company also made a $741,000 provision to the reserve for unfunded commitments in the third quarter of 2007.
Balance Sheet
The Company reported total assets of $6.16 billion at September 30, 2007. This represented an increase of $184.7 million, or 3.09%, over total assets of $5.97 billion on September 30, 2006. Earning assets totaling $5.75 billion were up $144.3 million, or 2.57%, when compared with earning assets of $5.61 billion as of September 30, 2006. Total deposits were $3.44 billion as of September 30, 2007. This represents a decrease of $88.4 million, or 2.51%, from $3.52 billion at September 30, 2006. The Company has $1.29 billion, or 37.64%, of its deposits in non-interest bearing demand deposits. Gross loans and leases totaled $3.31 billion at September 30, 2007. This represents an increase of $394.7 million, or 13.53%, when compared with gross loans and leases of $2.92 billion at September 30, 2006.
Total assets of $6.16 billion as of September 30, 2007 reflect an increase of $65.1 million, or 1.07 %, over total assets of $6.09 billion on December 31, 2006. Earning assets of $5.75 billion increased by $48.7 million, or 0.85%, compared to total earning assets of $5.70 billion at December 31, 2006. Total deposits of $3.44 billion at September 30, 2007 increased $28.3 million, or 0.83%, when compared with total deposits of $3.41 billion at December 31, 2006. Gross loans and leases of $3.31 billion increased $241.6 million, or 7.87%, from $3.07 billion at December 31, 2006.
Investment Securities
Investment securities totaled $2.39 billion as of September 30, 2007. This represents a decrease of $252.8 million, or 9.56%, when compared with the $2.64 billion in securities at September 30, 2006. It represents a decrease of $192.6 million, or 7.46%, 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.
CitizensTrust
CitizensTrust 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 $3.5 million in non-performing assets as of September 30, 2007. Non-performing assets represent 0.10% of total loans and 0.06% of total assets. There were no non-performing assets as of December 31, 2006. The allowance for credit losses was $30.4 million as of September 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, supplemented by net recoveries of $20,000 during the first nine 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, 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
September 30, December 31,
----------------------- ------------
2007 2006 2006
----------- ----------- ------------
Assets:
Cash and due from banks $ 125,997 $ 127,217 $ 146,411
Investment Securities available-
for-sale 2,390,306 2,643,100 2,582,902
Interest-bearing balances due
from depository institutions 570 - -
Investment in stock of Federal
Home Loan Bank (FHLB) 80,743 75,399 78,866
Loans and lease finance
receivables 3,311,749 2,917,027 3,070,196
Less allowance for credit
losses (30,428) (26,912) (27,737)
----------- ----------- ------------
Net loans and lease finance
receivables 3,281,321 2,890,115 3,042,459
----------- ----------- ------------
Total earning assets 5,752,940 5,608,614 5,704,227
Premises and equipment, net 47,048 44,219 44,963
Intangibles 21,858 10,709 10,121
Goodwill 46,582 31,531 31,531
Cash value of life insurance 102,434 98,906 99,861
Other assets 62,493 53,452 57,148
----------- ----------- -------------
TOTAL $6,159,352 $5,974,648 $ 6,094,262
=========== =========== =============
Liabilities and Stockholders'
Equity
Liabilities:
Deposits:
Demand Deposits
(noninterest-bearing) $1,292,825 $1,288,569 $ 1,363,411
Investment Checking 349,618 297,659 318,431
Savings/MMDA 929,321 919,021 896,988
Time Deposits 863,323 1,018,228 827,978
----------- ----------- ------------
Total Deposits 3,435,087 3,523,477 3,406,808
Demand Note to U.S. Treasury 180 1,510 7,245
Customer Repurchase Agreements 330,666 - 94,350
Repurchase Agreements 250,000 250,000 250,000
Borrowings 1,545,500 1,654,501 1,794,900
Junior Subordinated Debentures 115,859 108,250 108,250
Other liabilities 73,284 54,020 43,370
----------- ----------- ------------
Total Liabilities 5,750,576 5,591,758 5,704,923
Stockholders' equity:
Stockholders' equity 418,450 392,600 402,560
Accumulated other
comprehensive income
(loss), net of tax (9,674) (9,710) (13,221)
----------- ----------- -------------
408,776 382,890 389,339
----------- ----------- -------------
TOTAL $6,159,352 $5,974,648 $ 6,094,262
=========== =========== =============
CVB FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED AVERAGE BALANCE SHEET
(unaudited)
dollars in thousands
Three months ended Nine months ended
September 30, September 30,
2007 2006 2007 2006
----------- ----------- ---------- -----------
Assets:
Cash and due from
banks $ 118,612 $ 126,716 $ 121,713 $ 127,440
Investment securities
available-for-sale 2,315,265 2,620,781 2,409,872 2,477,114
Interest-bearing
balances due from
depository
institution 5,377 32 2,010 2,464
Investment in stock of
Federal Home Loan
Bank (FHLB) 81,410 75,118 81,041 73,333
Loans and lease
finance receivables 3,327,462 2,857,573 3,178,242 2,759,778
Less allowance for
credit losses (30,264) (25,994) (28,623) (24,582)
----------- ----------- ----------- -----------
Net loans and lease
finance
receivables 3,297,198 2,831,579 3,149,619 2,735,196
----------- ----------- ----------- -----------
Total earning
assets 5,699,250 5,527,510 5,642,542 5,288,107
Premises and
equipment, net 47,189 44,395 46,232 42,704
Intangibles 8,572 10,941 9,166 11,524
Goodwill 60,456 31,531 41,370 31,625
Cash value of life
insurance 101,686 78,646 100,932 74,542
Other assets 95,635 113,077 91,262 98,326
----------- ----------- ----------- -----------
TOTAL $6,131,400 $5,932,816 $6,053,217 $5,674,268
=========== =========== =========== ===========
Liabilities and
Stockholders' Equity
Liabilities:
Deposits:
Noninterest-
bearing $1,316,035 $1,344,239 $1,289,429 $1,358,135
Interest-bearing 2,200,779 2,233,844 2,145,298 2,150,609
----------- ----------- ----------- -----------
Total Deposits 3,516,814 3,578,083 3,434,727 3,508,744
Other borrowings 2,049,765 1,805,765 2,063,380 1,643,804
Junior Subordinated
Debentures 115,859 108,250 110,898 105,418
Other liabilities 47,069 87,217 43,210 62,800
----------- ----------- ----------- -----------
Total
Liabilities 5,729,507 5,579,315 5,652,215 5,320,766
Stockholders' equity:
Stockholders'
equity 426,715 395,102 416,346 381,569
Accumulated other
comprehensive
income
(loss), net of tax (24,822) (41,601) (15,344) (28,067)
----------- ----------- ----------- -----------
401,893 353,501 401,002 353,502
----------- ---------- ----------- -----------
TOTAL $6,131,400 $5,932,816 $6,053,217 $5,674,268
=========== =========== =========== ===========
CVB FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited)
dollar amounts in thousands, except per share
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
2007 2006 2007 2006
---------- --------- --------- ---------
Interest Income:
Loans, including fees $ 58,677 $ 50,564 $ 165,117 $ 142,769
Investment securities:
Taxable 20,591 24,725 65,401 66,625
Tax-advantaged 7,493 6,510 22,029 19,563
--------- -------- --------- --------
Total investment
income 28,084 31,235 87,430 86,188
Dividends from FHLB Stock 1,063 1,200 3,058 2,990
Federal funds sold &
Interest-bearing CDs with
other institutions
72 6 92 92
--------- -------- -------- --------
Total interest
income 87,896 83,005 255,697 232,039
Interest Expense:
Deposits 18,445 18,903 53,531 48,398
Borrowings and junior
subordinated debentures 27,727 22,130 82,505 54,682
--------- -------- --------- --------
Total interest
expense 46,172 41,033 136,036 103,080
--------- -------- --------- --------
Net interest income
before provision for
credit losses 41,724 41,972 119,661 128,959
Provision for credit losses - 1,250 - 2,400
--------- -------- --------- --------
Net interest income after
provision for credit
losses 41,724 40,722 119,661 126,559
Other Operating Income:
Service charges on deposit
accounts 3,340 3,253 9,827 9,833
Financial Advisory
Services 1,657 1,807 5,355 5,467
Gain on sale of investment
securities - 1,029 - 1,062
Other 2,866 2,782 8,175 8,329
--------- -------- --------- --------
Total other
operating income 7,863 8,871 23,357 24,691
Other operating expenses:
Salaries and employee
benefits 13,794 11,541 41,449 37,031
Occupancy 2,862 2,209 7,612 6,313
Equipment 1,743 1,777 5,293 5,278
Professional services 1,844 1,237 4,535 3,995
Amortization of intangible
assets 1,086 588 2,263 1,765
Other 5,889 5,278 16,811 15,977
--------- -------- --------- --------
Total other
operating
expenses 27,218 22,630 77,963 70,359
--------- -------- --------- --------
Earnings before income taxes 22,369 26,963 65,055 80,891
Income taxes 6,239 8,508 17,893 25,279
---------- --------- --------- ---------
Net earnings $ 16,130 $ 18,455 $ 47,162 $ 55,612
========== ========= ========= =========
Basic earnings per common
share $ 0.19 $ 0.22 $ 0.56 $ 0.66
========== ========= ========= =========
Diluted earnings per common
share $ 0.19 $ 0.22 $ 0.56 $ 0.65
========== ========= ========= =========
Cash dividends per common
share $ 0.085 $ 0.09 $ 0.255 $ 0.27
========== ========= ========= =========
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 Nine months ended
September 30, September 30,
2007 2006 2007 2006
------------ ------------ ------------ ------------
Interest income -
(Tax-Effected)
(te) $ 90,416 $ 85,182 $ 263,102 $ 238,445
Interest Expense 46,172 41,033 136,036 103,080
------------ ------------ ------------ ------------
Net Interest
income - (te) $ 44,244 $ 44,149 $ 127,066 $ 135,365
============ ============ ============ ============
Return on average
assets 1.04% 1.23% 1.04% 1.31%
Return on average
equity 15.92% 20.71% 15.72% 21.03%
Efficiency ratio 54.89% 45.63% 54.51% 46.52%
Net interest
margin (te) 3.11% 3.22% 3.02% 3.43%
Weighted average
shares
outstanding
Basic 84,373,484 84,159,880 83,715,950 84,136,220
Diluted 84,730,295 85,069,856 84,373,142 84,931,352
Dividends declared $ 7,067 $ 6,891 $ 21,410 $ 20,659
Dividend payout
ratio 43.81% 37.34% 45.40% 37.15%
Number of shares
outstanding-EOP 83,353,404 84,226,832
Book value per
share $ 4.90 $ 4.55
September 30,
2007 2006
------------ ------------
Non-performing
Assets (dollar
amount in
thousands):
Non-accrual loans $ 3,474 $ 0
Loans past due 90
days or more and
still accruing
interest - -
Restructured loans - -
Other real estate
owned (OREO), net - -
------------ ------------
Total non-
performing assets $ 3,474 $ 0
============ ============
Percentage of non-
performing assets
to total loans
outstanding and
OREO 0.10% 0.00%
Percentage of non-
performing assets
to total assets 0.06% 0.00%
Non-performing
assets to
allowance for
loan losses 11.42% 0.00%
Net Charge-off
(Recovered) to
Average loans 0.00% -0.05%
Allowance for
Credit Losses:
Beginning Balance $ 27,737 $ 23,204
Total Loans
Charged-Off (345) (145)
Total Loans
Recovered 365 1,453
------------ ------------
Net Loans
Recovered 20 1,308
Acquisition of
First Coastal
Bank 2,671 -
Provision Charged
to Operating
Expense - 2,400
------------ ------------
Allowance for
Credit Losses at
End of period $ 30,428 $ 26,912
============ ============
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, $ 14.13 $ 12.83 $ 15.20 $ 12.63
Quarterly Consolidated Statements of Earnings
3Q 2Q 1Q 4Q 3Q
2007 2007 2007 2006 2006
------- ------- ------- ------- -------
Interest income
Loans, including fees $58,677 $53,726 $52,714 $51,935 $50,564
Investment securities and
federal funds sold 29,219 29,831 31,530 32,687 32,441
------- ------- ------- ------- -------
87,896 83,557 84,244 84,622 83,005
Interest expense
Deposits 18,445 17,928 17,158 18,783 18,903
Other borrowings 27,727 27,518 27,260 25,602 22,130
------- ------- ------- ------- -------
46,172 45,446 44,418 44,385 41,033
Net interest income before
provision for credit losses 41,724 38,111 39,826 40,237 41,972
Provision for credit losses - - - 600 1,250
------- ------- ------- ------- -------
Net interest income after
provision for credit losses 41,724 38,111 39,826 39,637 40,722
Non-interest income 7,863 7,596 7,898 8,567 8,871
Non-interest expenses 27,218 24,845 25,900 25,465 22,630
------- ------- ------- ------- -------
Earnings before income taxes 22,369 20,862 21,824 22,739 26,963
Income taxes 6,239 5,008 6,646 6,445 8,508
------- ------- ------- ------- -------
Net earnings $16,130 $15,854 $15,178 $16,294 $18,455
======= ======= ======= ======= =======
Basic earning per common share $ 0.19 $ 0.19 $ 0.18 $ 0.19 $ 0.22
Diluted earnings per common
share $ 0.19 $ 0.19 $ 0.18 $ 0.19 $ 0.22
Cash dividends per common
share $ 0.085 $ 0.085 $ 0.085 $ 0.085 $ 0.09
Dividends Declared $ 7,067 $ 7,234 $ 7,109 $ 7,164 $ 6,891
Source: CVB Financial Corp.
Contact: CVB Financial Corp. Christopher D. Myers, President and CEO, 909-980-4030