ONTARIO, Calif.--(BUSINESS WIRE)--Oct. 20, 2004--CVB Financial Corp. (NASDAQ:CVBF) and its subsidiary, Citizens Business Bank, announced record results for the third quarter of 2004. This included record deposits, record loans, record assets and record earnings. It was the strongest third quarter in the history of the Company.
Net Income
CVB Financial Corp. reported net income of $17.1 million for the third quarter ending September 30, 2004. This represents an increase of $3.6 million, or 26.46%, when compared with the $13.5 million in net income reported for the third quarter of 2003. Diluted earnings per share were $0.35 for the third quarter of 2004. This is up $0.07, or 25.00%, when compared with earnings per share of $0.28 for the third quarter of 2003.
Net income for the third quarter of 2004 produced a return on beginning equity of 24.19%, a return on average equity of 23.34% and a return on average assets of 1.57%. The efficiency ratio for the third quarter was 45.80%, and operating costs as a percentage of average assets were 2.00%.
Net income before gains and losses from securities and the sale of real estate was $16.8 million for the third quarter of 2004. This was up $5.5 million, or 49.29%, from net income before gains and losses from securities and the sale of real estate of $11.2 million for the third quarter of 2003. These results produced a return on beginning equity of 23.79%, a return on average equity of 22.96%, and a return on average assets of 1.54%. The corresponding efficiency ratio for the third quarter of 2004 was 46.07%, and operating costs as a percentage of average assets was 2.00%.
Net income for the nine months ending September 30, 2004 was $44.6 million. This represents an increase of $5.9 million, or 15.16%, when compared with net earnings of $38.7 million for the same period of 2003. Diluted earnings per share were $0.91. This was up $0.12, or 15.19%, from diluted earnings per share of $0.79 for the same period last year.
Net income for the nine months ending September 30, 2004 produced a return on beginning equity of 20.78%, a return on average equity of 20.10% and a return on average assets of 1.45%. The efficiency ratio for the nine-month period was 48.77%, and operating expenses as a percentage of average assets were 2.08%.
Net income before gains and losses from securities and the sale of real estate was $45.0 million for the nine months ending September 30, 2004. This represents an increase of $9.0 million, or 25.09%, when compared to net earnings before gains and losses from securities and the sale of real estate of $36.0 million for the same nine months period in 2003. These results produced a return on beginning equity of 20.98%, a return on average equity of 20.30%, and a return on average assets of 1.46%. The related efficiency ratio for the nine months period was 48.61%, and operating costs as a percentage of average assets were 2.08%.
The Company sold one of its buildings in Pasadena during the third quarter of 2004. This building houses the Pasadena Business Financial Center and the Wealth Management Group. The Company has agreed to lease back the Pasadena Business Financial Center space for five years and the Wealth Management Group space for two years.
The sale of the building resulted in a gross gain of $2.1 million of which $1.7 million is required to be deferred and amortized as an adjustment to rental expense over the life of the leases. The Company recognized $419,000 of the gain during the third quarter.
Net Interest Income and Net Interest Margin
Net interest income (before provision for credit losses) totaled $39.9 million for the third quarter of 2004. This represented an increase of $8.5 million, or 27.17%, over the net interest income of $31.4 million for the third quarter of 2003. These increases resulted from an $11.7 million increase in interest income, offset by a $3.1 million increase in interest expense.
Net interest income (before provision for credit losses) totaled $111.4 million for the nine months ending September 30, 2004. This represented an increase of $18.2 million, or 19.55%, over the net interest income of $93.2 million for the same period of 2003. This increase resulted from a $23.1 million increase in interest income, partially offset by a $4.9 million increase in interest expense. The increases in interest income were primarily due to the increase in average earnings assets.
Net interest margin (tax equivalent) for the third quarter of 2004 was 4.08%. This represents a slight increase when compared to the 3.95% for the third quarter of 2003. Asset yields for the third quarter of 2004 were 5.26%, compared with asset yields of 5.01% for the third quarter of 2003. The cost of funds was 1.73% and 1.58% for the same periods, respectively.
Net interest margin (tax equivalent) for the first nine months declined from 4.17% for the first nine months of 2003 to 4.01% for the first nine months of 2004. Asset yields have declined from 5.37% for the first nine months of 2003 to 5.15% for the first nine months of 2004. This has been mitigated by the strong growth in the balance sheet, and the decline in the cost of funds from 1.80% to 1.68% for the same periods. The margin compression appears to be moderating with the recent stability of interest rates. The Company has approximately $1.30 billion, or 45.45%, of its deposits in interest free demand deposits. This should position it well for a rising interest rate environment.
Balance Sheet
The Company reported total assets of $4.35 billion at September 30, 2004. This represented an increase of $690.9 million, or 18.87%, over total assets of $3.66 billion on September 30, 2003. Earning assets totaling $4.08 billion were up $654.4 million, or 19.11%, when compared with earning assets of $3.42 billion as of September 30, 2003. Deposits of $2.87 billion grew $254.1 million, or 9.72%, from $2.61 billion for the prior year. Demand deposits of $1.30 billion jumped $183.4 million, or 16.37%, from $1.12 billion. Gross loans and leases of $2.01 billion on September 30, 2004 rose $380.1 million, or 23.32%, from $1.63 billion on September 30, 2003.
Total assets of $4.35 billion as of September 30, 2004 reflect an increase of $498.4 million, or 12.93%, over total assets of $3.85 billion on December 31, 2003. Earning assets of $4.08 billion were up $436.2 million, or 11.97%, during the same period. Deposits of $2.87 billion on September 30, 2004 grew $207.4 million, or 7.80%, from $2.66 billion as of December 31, 2003. Demand deposits of $1.30 billion were up $161.1 million, or 14.10%, from $1.14 billion. Gross loans and leases of $2.01 billion increased $249.9 million, or 14.20%, from $1.76 billion on December 31, 2003. Total equity of $310.1 million on September 30, 2004 was up $23.4 million, or 8.15%, from $286.7 million as of December 31, 2003.
Investment Securities
Investment securities totaled $2.04 billion as of September 30, 2004. This represents an increase of $172.5 million, or 9.25%, when compared with $1.87 billion in investment securities as of December 31, 2003. It represents an increase of $259.6 million, or 14.59%, when compared with the $1.78 billion for the third quarter of 2003.
Assets Under Administration
The Wealth Management Group has over $1.2 billion in assets under administration. They provide trust, investment and related services.
Loan and Lease Quality
CVB Financial Corp. reported non-performing assets of $689,000 as of September 30, 2004. This represents a ratio of non-performing assets to total assets of 0.02%, and it represents 0.03% of gross loans and leases. The allowance for loan and lease losses was $23.1 million as of September 30, 2004. This represents 1.15% of gross loans and leases. It compares with an allowance for loan and lease losses of $23.8 million, or 1.46% of gross loans and leases on September 30, 2003. Non-performing loans and leases represented 2.99% of the allowance for loan and lease losses. Non-performing assets decreased by $944,000 from the $1.6 million reported as of September 30, 2003.
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 $1.63 billion as of September 30, 2003 to $2.01 billion as of September 30, 2004. Recoveries of $3.5 million and the addition of $2.8 million from acquisitions more than offset charge offs of $2.5 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.
CVB Financial Corp. 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.
For the second year, the Company received the KBW Honor Roll award at the Annual Community Bank Investor Conference hosted by Keefe, Bruyette & Woods, Inc. in New York on July 27, 28 and 29, 2004. This award was presented to the 31 banks in the United States that have reported increased earnings per share every year for the past ten years.
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
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
September 30, December 31,
2004 2003 2003
Assets:
Federal funds sold and
reverse repos $- $- $-
Investment Securities trading - - -
Investment Securities
available-for-sale 2,038,322 1,778,751 1,865,782
Investment in stock of Federal
Home Loan Bank (FHLB) 53,439 39,448 37,966
Loans and lease finance
receivables 2,009,875 1,629,775 1,759,941
Less allowance for credit
losses (23,068) (23,787) (21,282)
Net loans and lease
finance receivables 1,986,807 1,605,988 1,738,659
Total earning assets 4,078,568 3,424,187 3,642,407
Cash and due from banks 116,125 126,018 112,008
Premises and equipment, net 26,865 31,683 31,069
Goodwill and intangibles 26,012 26,699 26,901
Cash value of life insurance 66,801 15,370 15,800
Other assets 38,370 37,870 26,164
TOTAL $4,352,741 $3,661,827 $3,854,349
Liabilities and Stockholders' Equity
Liabilities:
Deposits:
Demand Deposits
(noninterest-bearing) $1,303,410 $1,120,037 $1,142,330
Investment Checking 228,444 200,572 227,031
Savings/MMDA 842,401 715,557 732,992
Time Deposits 493,682 577,692 558,157
Total Deposits 2,867,937 2,613,858 2,660,510
Demand Note to U.S. Treasury 5,053 10,251 3,834
Borrowings 1,042,200 729,000 786,500
Junior Subordinated
Debentures 82,476 - 82,476
Other liabilities 44,993 30,896 34,308
Total Liabilities 4,042,659 3,384,005 3,567,628
Stockholders' equity:
Stockholders' equity 294,619 263,990 269,441
Accumulated other
comprehensive income
(loss), net of tax 15,463 13,832 17,280
310,082 277,822 286,721
TOTAL $4,352,741 $3,661,827 $3,854,349
CVB FINANCIAL CORP.
CONSOLIDATED AVERAGE BALANCE SHEET
(unaudited)
dollars in thousands
Three months ended Nine months ended
September 30, September 30,
2004 2003 2004 2003
Assets:
Federal funds sold and
reverse repos $109 $210 $416 $3,257
Investment Securities
trading - - - -
Investment securities
available-for-sale 2,013,691 1,758,568 1,941,208 1,621,867
Investment in stock of
Federal Home Loan
Bank (FHLB) 49,609 38,528 44,117 32,735
Loans and lease finance
receivables 1,960,836 1,522,765 1,859,140 1,479,676
Less allowance for
credit losses (22,751) (21,179) (22,209) (21,406)
Net loans and lease
finance receivables 1,938,085 1,501,586 1,836,931 1,458,270
Total earning
assets 4,001,494 3,298,892 3,822,672 3,116,129
Cash and due from banks 147,941 111,655 124,046 110,726
Premises and equipment,
net 29,427 31,713 30,021 30,882
Goodwill and intangibles 26,134 15,287 26,431 15,502
Cash value of life
insurance 66,320 13,234 55,627 13,093
Other assets 60,202 79,451 61,284 58,982
TOTAL $4,331,518 $3,550,232 $4,120,081 $3,345,314
Liabilities and Stockholders' Equity
Liabilities:
Deposits:
Noninterest-bearing $1,256,509 $1,008,109 $1,184,086 $939,725
Interest-bearing 1,572,898 1,475,017 1,545,930 1,432,392
Total Deposits 2,829,407 2,483,126 2,730,016 2,372,117
Other borrowings 1,084,854 741,774 967,152 641,263
Junior Subordinated
Debentures 82,476 - 82,476 -
Other liabilities 43,803 47,149 44,078 59,354
Total
Liabilities 4,040,540 3,272,049 3,823,722 3,072,734
Stockholders' equity:
Stockholders' equity 293,648 255,682 283,732 248,722
Accumulated other
comprehensive income
(loss), net of tax (2,670) 22,501 12,627 23,858
290,978 278,183 296,359 272,580
TOTAL $4,331,518 $3,550,232 $4,120,081 $3,345,314
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,
2004 2003 2004 2003
Interest Income:
Loans, including fees $30,061 $24,629 $83,447 $72,262
Investment securities:
Taxable 18,323 11,780 49,710 36,966
Tax-advantaged 3,636 3,938 11,262 12,088
Total investment
income 21,959 15,718 60,972 49,054
Federal funds sold 1 1 3 41
Total interest
income 52,021 40,348 144,422 121,357
Interest Expense:
Deposits 3,863 3,723 11,151 12,505
Borrowings and junior
subordinated debentures 8,182 5,191 21,826 15,632
Total interest
expense 12,045 8,914 32,977 28,137
Net interest income
before provision for
credit losses 39,976 31,434 111,445 93,220
Provision for credit losses - - - -
Net interest income after
provision for credit
losses 39,976 31,434 111,445 93,220
Other Operating Income:
Service charges on deposit
accounts 3,240 3,835 10,544 11,280
Wealth Management services 993 932 3,266 2,903
Gains on sale of
investment securities 7 3,387 5,219 4,210
Other-than-temporary
impairment write down - - (6,300) -
Other 3,279 1,986 7,582 5,116
Total other
operating income 7,519 10,140 20,311 23,509
Other operating expenses:
Salaries and employee
benefits 11,970 10,498 35,323 30,393
Occupancy 2,281 1,771 5,961 4,944
Equipment 1,896 1,833 5,607 4,904
Professional services 907 1,037 3,030 3,020
Amortization of intangible
assets 296 203 889 518
Other 4,402 5,945 13,450 13,105
Total other
operating
expenses 21,752 21,287 64,260 56,884
Earnings before income taxes 25,743 20,287 67,496 59,845
Income taxes 8,668 6,785 22,898 21,119
Net earnings $17,075 $13,502 $44,598 $38,726
Basic earnings per common
share $0.35 $0.28 $0.92 $0.81
Diluted earnings per common
share $0.35 $0.28 $0.91 $0.79
Cash dividends per common
share $0.13 $0.12 $0.37 $0.36
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 Nine months ended
September 30, September 30,
2004 2003 2004 2003
Interest income - (Tax
Effective)(te) $53,184 $41,625 $148,042 $125,256
Interest Expense 12,045 8,914 32,977 28,137
Net Interest income - (te) $41,139 $32,711 $115,065 $97,119
Other-than-temporary
impairment write-down $0 - ($6,300) -
Gains on sales of
securities $7 $3,387 $5,219 $4,210
Gain on sale of real
estate $419 - $419 -
Gain on sale of OREO - - - -
Return on average assets 1.57% 1.51% 1.45% 1.55%
Return on average equity 23.34% 19.26% 20.10% 18.99%
Efficiency ratio 45.80% 51.20% 48.77% 48.73%
Net interest margin (te) 4.08% 3.95% 4.01% 4.17%
Weighted average shares
outstanding
Diluted 49,189,154 49,003,539 49,191,946 49,040,893
Basic 48,405,532 48,121,682 48,394,520 48,097,177
Dividends declared $6,261 $5,206 $17,948 $15,759
Dividend payout ratio 36.67% 38.56% 40.25% 40.69%
Number of shares
outstanding-EOP 48,408,185 48,114,022
Book value per share $6.41 $5.77
September 30,
2004 2003
Non-performing Assets
(dollar amount in
thousands):
Non-accrual loans $689 $1,633
Loans past due 90 days or
more and still accruing
interest - -
Restructured loans - -
Other real estate owned
(OREO), net - -
Total non-performing
assets $689 $1,633
Percentage of non-
performing assets
to total loans
outstanding and OREO 0.03% 0.10%
Percentage of non-
performing assets to
total assets 0.02% 0.04%
Non-performing assets to
allowance for loan losses 2.99% 6.87%
Net Charge-off (Recovered)
to Average loans -0.09% 0.04%
Allowance for Credit
Losses:
Beginning Balance $21,282 $21,666
Acquisition of Kaweah
National Bank $2,770
Total Loans Charged-
Off (1,133) (1,673)
Total Loans Recovered 2,919 1,024
Net Loans Recovery
(Charged-Off) 1,786 (649)
Provision Charged to
Operating Expense - -
Allowance for Credit
Losses at End of period $23,068 $23,787
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, $23.37 $22.07 $19.61 $16.69 $17.04 $12.51
December 31, $19.84 $17.43 $19.44 $14.89
Quarterly Consolidated Statements of Income
3Q 2Q 1Q 4Q 3Q
2004 2004 2004 2003 2003
Interest income
Loans, including fees $30,061 $27,136 $26,250 $26,780 $24,629
Investment securities
and federal funds sold 21,960 19,315 19,701 18,208 15,719
52,021 46,451 45,951 44,988 40,348
Interest expense
Deposits 3,863 3,605 3,683 3,818 3,723
Other borrowings 8,182 6,939 6,704 5,098 5,191
12,045 10,544 10,387 8,916 8,914
Net interest income
before provision for
credit losses 39,976 35,907 35,564 36,072 31,434
Provision for credit
losses - - - - -
Net interest income
after provision for
credit losses 39,976 35,907 35,564 36,072 31,434
Non-interest income 7,519 12,011 781 6,480 10,140
Non-interest expenses 21,752 21,004 21,505 20,909 21,287
Earnings before income
taxes 25,743 26,914 14,840 21,643 20,287
Income taxes 8,668 9,462 4,768 7,538 6,785
Net earnings $17,075 $17,452 $10,072 $14,105 $13,502
Basic earning per common
share $0.35 $0.36 $0.21 $0.29 $0.28
Diluted earnings per
common share $0.35 $0.36 $0.20 $0.29 $0.28
Cash dividends per common
share $0.13 $0.12 $0.12 $0.12 $0.12
Financial Measure That Supplement GAAP
Our discussions sometimes contain financial information not required
to be presented by generally accepted accounting principles (GAAP).
We do this to better inform readers of our financial statements. The
SEC requires us to present a reconciliation of GAAP presentation with
non-GAAP presentation.
The following table reconciles the differences in net earnings with
and without the other-than-temporary impairment write down and net
gains on sale of investment securities, gain on sale of real estate
in conformity with GAAP:
Net Earnings Reconciliation
(non-GAAP disclosure): Three months ended Nine months ended
September 30, September 30,
2004 2003 2004 2003
Net earnings without the other-
than-temporary impairment write-
down and net gain on sale of
securities $16,792 $11,248 $45,036 $36,002
Other-than-temporary
impairment write-down, net
of tax - - (4,163) -
Net gains on sale of
securities, net of tax 5 2,254 3,448 2,724
Net gains on sale of real
estate, net of tax 278 - 277 -
Reported net earnings $17,075 $13,502 $44,598 $38,726
Other-than-temporary impairment
write-down - - ($6,300) -
Gains on sale of securities $7 $3,387 $5,219 $4,210
Gain on sale of real estate 419 - 419 -
Tax effect (143) (1,133) 224 (1,486)
Net of taxes $283 $2,254 ($438) $2,724
We have presented net earnings without the other-than-temporary
impairment write down and the realized gains of investment
securities, and the gain on sale of real estate to show shareholders
the earnings from operations unaffected by the impact of these items.
We believe this presentation allows the reader to more easily
determine the operational profit of the Company.
CONTACT: CVB Financial Corp.
D. Linn Wiley, 909-980-4030
SOURCE: CVB Financial Corp.