SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant
to Section 13 or 15(d)of the
Securities Exchange Act of 1934
Date of Report: January 27, 2004
Commission file number: 0-10140
CVB Financial Corp.
Incorporated pursuant to the Laws of California
Internal Revenue Service — Employer Identification No. 95-3629339
701 North Haven Avenue, Ontario, California 91764
(909) 980-4030
Item 12. Results of Operations and Financial Condition
On January 22, 2004, CVB Financial Corp. issued a press release setting forth its fourth quarter and annual 2003 earnings. A copy of this press release is attached hereto as Exhibit 99.1, incorporated herein by reference. This press release includes certain non-GAAP financial measures. A reconciliation of these measures to the most comparable GAAP measures is included as part of Exhibit 99.1.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, hereunto duly authorized.
| CVB Financial Corp. | ||
|---|---|---|
| Date: January 27, 2004 | By: /s/ Edward J. Biebrich, Jr. | |
| Edward J. Biebrich, Jr. | ||
| Executive Vice President and Chief | ||
| Financial and Accounting Officer | ||
Exhibit Index
99.1 Press Release, dated January 22, 2004
Press Release
For Immediate Release
| Contact: D. Linn Wiley | ||
| President and CEO | ||
| (909)980-4030 |
CVB Financial Corp. Reports Record Results
Ontario, CA, January 22, 2004-CVB Financial Corp. (NASDAQ:CVBF) and its subsidiary, Citizens Business Bank, announced record results for the fourth quarter ending December 31, 2003. This was the 47th consecutive quarter of record results for the Company. The results included record deposits, record loans, record assets and record earnings.
Net income for the fourth quarter was $14.1 million. This compares with earnings of $12.6 million for the fourth quarter of 2002, and represents an increase of $1.5 million, or 12.03%. These earnings results produced a return on beginning equity of 21.34%, a return on average equity of 19.68% and a return on average assets of 1.50%. The efficiency ratio for the quarter was 49.14%.
Deposits ended the year at $2.66 billion. This was up $350.5 million, or 15.18%, from deposits of $2.31 billion on December 31, 2002. Gross loans and leases increased from $1.45 billion at December 31, 2002 to $1.76 billion at December 31, 2003. This reflects an increase of $313.9 million, or 21.71%. Total assets grew from $3.12 billion to $3.85 billion. This was up $730.9 million, or 23.40%.
The acquisition of Visalia-based Kaweah National Bank in September 2003 contributed to the growth. At December 31, 2003, the four Business Financial Centers of the former Kaweah National Bank had $77.9 million in deposits, $69.0 million in loans and $78.5 million in total assets. If these are removed from the final year-end totals for the Company, deposit growth would have been $272.7 million, or an 11.80% increase. Loan growth would have been $244.9 million, or 16.94%, and total asset growth would have been $652.4 million, or 20.89%.
CVB Financial Corp. reported net income of $52.8 million for the year ending December 31, 2003. This represents an increase of $3.1 million, or 6.21%, when compared with the $49.7 million in net income reported for the year 2002. Diluted earnings per share were $1.08. This is up $0.07, or 6.04%, when compared with earnings per share of $1.01 for 2002.
During the year of 2003, the Company restructured its investment portfolio and its advances with the Federal Home Loan Bank (FHLB). The Company had security gains of $4.2 million in 2003 compared with $4.9 million in 2002. In 2003, the company restructured its advances with the FHLB to lower its interest costs. By doing this, the Company paid a prepayment penalty of $5.3 million. This expense was offset by the gains on securities. The effect will be to reduce the Company’s borrowing costs in 2004 and 2005 by renewing the advances at lower interest rates. The Company also reversed an excess accrual of legal fees of $3.3 million as a result of the settlement of a lawsuit
Had the company not recognized the gain on sale of securities, prepayment penalties and the reversal of litigation accruals in 2003, the net income for the Company would have been $51.4 million in 2003 ($52.8 million minus the tax effected security gains of $2.7 million, the prepayment penalty of $3.4 million, and the reversal of litigation accruals of $2.1 million). Net income excluding the security gain, in 2002 would have been $46.6 million ($49.7 million minus the tax effected security gains of $3.1 million). The increase in income in 2003 over 2002 on this basis would have been $4.8 million, or 10.31%.
Citizens Business 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. The Bank’s Wealth Management Group, based in Pasadena, has over $1 billion under administration.
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, 2002, and particularly the discussion on risk factors within that document.
CVB FINANCIAL CORP.
CONSOLIDATED BALANCE SHEET
(unaudited)
dollars in thousands
December 31
2003 2002
------------------- -------------------
Assets:
Federal funds sold and reverse repos $ - $ 40,000
Investment Securities available-for-sale 1,865,782 1,430,599
Investment in stock of Federal Home Loan Bank (FHLB) 37,966 21,900
Loans and lease finance receivables 1,759,941 1,446,009
Less allowance for credit losses (21,282) (21,666)
------------------- -------------------
Net loans and lease finance receivables 1,738,659 1,424,343
------------------- -------------------
Total earning assets 3,642,407 2,916,842
Cash and due from banks 112,008 124,973
Premises and equipment, net 31,069 29,413
Goodwill and intangibles 26,901 15,720
Other assets 41,964 36,463
------------------- -------------------
TOTAL $ 3,854,349 $ 3,123,411
=================== ===================
Liabilities and Stockholders' Equity
Liabilities:
Deposits:
Demand Deposits(noninterest-bearing) $ 1,142,330 $ 958,671
Investment Checking 227,031 195,419
Savings/MMDA 732,992 589,280
Time Deposits 558,157 566,594
------------------- -------------------
Total Deposits 2,660,510 2,309,964
Demand Note to U.S. Treasury 3,834 14,888
Borrowings 786,500 468,000
Trust Preferred 82,476 -
Other liabilities 35,593 70,738
------------------- -------------------
Total Liabilities 3,568,913 2,863,590
Stockholders' equity:
Stockholders' equity 268,156 234,165
Accumulated other comprehensive income
(loss), net of tax 17,280 25,656
------------------- -------------------
285,436 259,821
------------------- -------------------
TOTAL $ 3,854,349 $ 3,123,411
=================== ===================
CVB FINANCIAL CORP.
CONSOLIDATED AVERAGE BALANCE SHEET
(unaudited)
dollars in thousands
Three months ended December 31 Twelve months ended December 31
2003 2002 2003 2002
------------------- ------------------- -------------------- ----------------------
Assets:
Federal funds sold and reverse repos $ - $ 28,666 $ 2,436 $ 31,877
Investment securities available-for-sale 1,789,051 1,322,357 1,664,007 1,258,228
Investment in stock of Federal Home Loan Bank (FHLB) 38,425 21,232 34,169 20,988
Loans and lease finance receivables 1,679,099 1,353,391 1,529,944 (21,970)
Less allowance for credit losses (23,639) (22,479) (21,970) (22,173)
----------------- ----------------- ------------------ --------------------
Net loans and lease finance receivables 1,655,460 1,330,912 1,507,974 1,225,211
------------------- ------------------- -------------------- ----------------------
Total earning assets 3,482,936 2,703,167 3,208,586 2,536,304
Cash and due from banks 104,780 117,044 109,227 112,535
Premises and equipment, net 31,545 28,772 31,049 29,387
Goodwill and intangibles 17,376 6,269 15,974 6,336
Other assets 84,493 34,297 75,205 39,937
------------------- ------------------- -------------------- ----------------------
TOTAL $ 3,721,130 $ 2,889,549 $ 3,440,041 $ 2,724,499
=================== =================== ==================== ======================
Liabilities and Stockholders' Equity
Liabilities:
Deposits:
Noninterest-bearing $ 1,080,209 $ 872,327 $ 975,134 $ 807,505
Interest-bearing 1,543,094 1,354,709 1,460,296 1,253,790
------------------- ------------------- -------------------- ----------------------
Total Deposits 2,623,303 2,227,036 2,435,430 2,061,295
Other borrowings 766,488 364,575 672,827 384,928
Trust Preferred 14,344 - 3,615 -
Other liabilities 32,682 35,660 52,606 34,987
----------------- ----------------- ------------------ --------------------
Total Liabilities 3,436,817 2,627,271 3,164,478 2,481,210
Stockholders' equity:
Stockholders' equity 270,443 233,374 254,223 224,652
Accumulated other comprehensive income
(loss), net of tax 13,870 28,904 21,340 18,637
------------------- ------------------- -------------------- ----------------------
284,313 262,278 275,563 243,289
------------------- ------------------- -------------------- ----------------------
TOTAL $ 3,721,130 $ 2,889,549 $ 3,440,041 $ 2,724,499
=================== =================== ==================== ======================
CVB FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited)
dollar amounts in thousands, except per share
For the Three Months For the Twelve Months
Ended December 31, Ended December 31,
2003 2002 2003 2002
--------------- --------------- ------------- ------------
Interest Income:
Loans, including fees $ 26,780 $ 24,014 $ 99,042 $ 90,351
Investment securities:
Taxable 14,239 11,488 51,204 47,097
Tax-advantaged 3,977 4,145 16,065 16,273
------------- ------------ ------------- -------------
Total investment income 18,216 15,633 67,269 63,370
Federal funds sold (7) 124 34 602
------------- ------------ ------------ -------------
Total interest income 44,989 39,771 166,345 154,323
Interest Expense:
Deposits 3,818 4,925 16,323 21,470
Borrowings 5,098 4,418 20,730 18,969
------------- ------------ ------------- --------------
Total interest expense 8,916 9,343 37,053 40,439
------------- ------------ ------------- --------------
Net interest income before provision for credit losses 36,073 30,428 129,292 113,884
Provision for credit losses - - - -
------------- ------------ ------------- --------------
Net interest income after
provision for credit losses 36,073 30,428 129,292 113,884
Other Operating Income:
Service charges on deposit accounts 3,758 3,818 15,039 14,154
Wealth Management services 1,000 872 3,904 3,764
Gain(Loss) on sale of securities - (43) 4,210 4,897
Other 1,721 1,746 6,836 6,203
------------- ------------ ------------- --------------
Total other operating income 6,479 6,393 29,989 29,018
Other operating expenses:
Salaries and employee benefits 11,099 9,204 41,493 35,970
Occupancy 1,794 1,608 6,738 6,339
Equipment 1,974 1,781 6,878 6,212
Professional services 985 1,073 4,005 4,084
Goodwill Amortization 297 297 815 578
Other 4,760 3,379 17,864 12,873
------------- ------------ ------------- ------------
Total other operating expenses 20,909 17,342 77,793 66,056
------------- ------------ ------------- ------------
Earnings before income taxes 21,643 19,479 81,488 76,846
Income taxes 7,537 6,887 28,656 27,101
------------- ------------ ------------- ------------
Net earnings $ 14,106 $ 12,592 $ 52,832 $ 49,745
=============== ============= ============= ============
Basic earnings per common share $ 0.29 $ 0.26 $ 1.10 $ 1.04
================ ============= ============= ============
Diluted earnings per common share $ 0.29 $ 0.26 $ 1.08 $ 1.01
================ ============= ============= ============
Cash dividends per common share $ 0.12 $ 0.14 $ 0.54 $ 0.56
================= ============= ============= ============
All per share information has been retroactively adjusted to reflect
the 10% stock dividend declared on December 17, 2003.
Three months ended December 31 Twelve months ended December 31
2003 2002 2003 2002
------------------------------------------ -------------------------------------------
Interest income - (Tax Effective)(te) 46,274 41,108 171,530 159,574
Interest Expense 8,916 9,343 37,053 40,439
------------------- -------------------- -------------------- --------------------
Net Interest income - (te) 37,358 31,765 134,477 119,135
=================== ==================== ==================== ====================
Net Earnings Reconciliation (non-GAAP disclosure):
Net operating income without net gain on sale of
securities, the prepayment penalty, and reversal of
excess accrual on legal expense 14,105 12,617 51,373 46,571
Net gain on sale of securities, net of tax 0 (25) 2,724 3,174
Prepayment penalty, net of tax 0 0 (3,401) 0
Reversal of excess legal accrual, net of tax 0 0 2,136 0
------------------- -------------------- -------------------- --------------------
Reported net earnings 14,105 12,592 52,832 49,745
=================== ==================== ==================== ====================
Gain(Loss) on sale of securities 0 (43) 4,210 4,897
Gain on sale of OREO 0 0 0 0
Return on average assets 1.50% 1.73% 1.54% 1.83%
Return on average equity 19.68% 19.05% 19.17% 20.40%
Efficiency ratio 49.14% 47.08% 48.84% 46.22%
Net interest margin (te) 4.25% 4.83% 4.18% 4.66%
Weighted average shares outstanding
Diluted 49,283,376 48,993,445 49,110,326 49,035,768
Basic 48,402,709 47,876,530 48,182,424 47,985,700
Dividend payout ratio 41.67% 41.38% 40.96% 41.81%
Number of shares outstanding-EOP 48,289,347 47,886,442
Book value per share 5.91 5.43
December 31
2003 2002
------------------- --------------------
Non-performing Assets (dollar amount in thousands):
Non-accrual loans $548 $190
Loans past due 90 days or more
and still accruing interest 0 634
Restructured loans 0 0
Other real estate owned (OREO), net 0 0
------------------- --------------------
Total non-performing assets $548 $824
=================== ====================
Percentage of non-performing assets
to total loans outstanding and OREO 0.03% 0.06%
Percentage of non-performing
assets to total assets 0.01% 0.03%
Non-performing assets to
allowance for loan losses 2.57% 3.80%
Net loan losses to Average loans 0.09% 0.09%
Allowance for Credit Losses at Beginning of Period:
Citizens Business Bank $21,666 $20,469
Acquisition of Western Security Bank 2,325
Acquisition of Kaweah National Bank 2,767
Reclass Uncommitted LOC Reserve to Other Liab (1,733) 0
Total Loans Charged-Off (3,017) (2,409)
Total Loans Recovered 1,599 1,281
------------------- --------------------
Net Loans Charged-Off (1,418) (1,128)
Provision Charged to Operating Expense 0 0
------------------- --------------------
Allowance for Credit Losses at End of period $21,282 $21,666
=================== ====================