FORM 10-Q
                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549


              [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended June 30, 1998

                                       or

              [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                  For the transition period from _____ to _____

        For Quarter Ended June 30, 1998 Commission File Number: 1-10394


                               CVB FINANCIAL CORP.
             (Exact name of registrant as specified in its charter)


California                                           95-3629339
(State or other jurisdiction of         (I.R.S. Employer Identification No.)
incorporation or organization)

           701 North Haven Ave, Suite 350, Ontario, California 91764
               (Address of Principal Executive Offices) (Zip Code)

      (Registrant's telephone number, including area code) (909) 980-4030


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.


                                    YES X NO

 Number of shares of common stock of the registrant:15,048,760 outstanding as of
                                 August 5, 1998.

           This Form 10-Q contains 33 pages. Exhibit index on page 31.

PART I - FINANCIAL INFORMATION CVB FINANCIAL CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS dollar amounts in thousands June 30, December 31, 1998 1997 (unaudited) ASSETS Investment securities held-to-maturity (market values of $58,840 and $59,658) $ 57,327 $ 58,044 Investment securities available-for-sale 560,847 434,106 Federal funds sold 12,000 0 Loans and lease finance receivables, net 623,723 605,484 ------------ ----------- Total earning assets 1,253,897 1,097,634 Cash and due from banks 76,313 107,725 Premises and equipment, net 21,669 23,415 Other real estate owned, net 4,767 4,395 Goodwill and intangibles 10,227 10,818 Other assets 14,444 14,782 ------------ ----------- TOTAL $ 1,381,317 $ 1,258,769 ============ =========== LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Deposits: Noninterest-bearing $ 458,888 $ 469,841 Interest-bearing 645,572 605,854 ------------ ----------- 1,104,460 1,075,695 Demand note issued to U.S. Treasury 16,017 7,922 Federal Funds Purchased 0 4,000 Repurchase Agreement 135,000 45,000 Securities purchased not settled 0 10,300 Long-term capitalized lease 416 429 Other liabilities 16,234 13,339 ------------ ----------- 1,272,127 1,156,685 Stockholders' Equity: Preferred stock (authorized, 20,000,000 shares without par; none issued or outstanding) 0 0 Common stock (authorized, 50,000,000 shares without par; issued and outstanding 15,036,681 and 14,974,732) 62,404 62,255 Retained earnings 45,883 39,057 Accumulated other comprehensive income 903 772 ------------ ----------- 109,190 102,084 ------------ ----------- TOTAL $ 1,381,317 $ 1,258,769 ============ =========== See accompanying notes to the consolidated financial statements. 2

CVB FINANCIAL CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (unaudited) dollar amounts in thousands, except per share For the Three Months For the Six Months Ended June 30, Ended June 30, 1998 1997 1998 1997 Interest income: Loans, including fees $ 15,106 $ 14,177 $ 30,179 $ 28,176 Investment securities: Taxable 7,481 5,954 14,268 10,985 Tax-advantaged 1,113 594 2,019 1,149 --------- ---------- ---------- ---------- 8,594 6,548 16,287 12,134 Federal funds sold and interest bearing deposits with other financial institutions 166 21 248 93 --------- ---------- ---------- ---------- 23,866 20,746 46,714 40,403 Interest expense: Deposits 5,926 4,845 11,716 9,712 Other borrowings 1,718 1,438 2,944 2,151 --------- ---------- ---------- ---------- 7,644 6,283 14,660 11,863 --------- ---------- ---------- ---------- Net interest income 16,222 14,463 32,054 28,540 Provision for credit losses 450 275 1,300 1,055 --------- ---------- ---------- ---------- Net interest income after provision for credit losses 15,772 14,188 30,754 27,485 Other operating income: Service charges on deposit accounts 1,846 1,853 3,588 3,630 Gains on sale of other real estate owned 36 53 51 54 Trust services 886 813 1,772 1,567 Gain on sale of premises and equipment 0 10 652 27 Other 701 886 1,402 1,616 --------- ---------- ---------- ---------- 3,469 3,615 7,465 6,894 Other operating expenses: Salaries and employee benefits 5,510 5,612 11,149 11,111 Deposit insurance premiums 31 30 61 57 Occupancy 890 885 1,973 1,686 Equipment 911 917 1,805 1,745 Provision for losses on other real estate owned 0 880 500 1,195 Other 3,861 3,093 7,076 6,592 --------- ---------- ---------- ---------- 11,203 11,417 22,564 22,386 --------- ---------- ---------- ---------- Earnings before income taxes 8,038 6,386 15,655 11,993 Provision for income taxes 2,961 2,636 5,813 4,893 --------- ---------- ---------- ---------- Net earnings $ 5,077 $ 3,750 $ 9,842 $ 7,100 Basic earnings per common share $ 0.34 $ 0.25 $ 0.65 $ 0.47 ========= ========== ========== ========== Diluted earnings per common share $ 0.32 $ 0.24 $ 0.63 $ 0.45 ========= ========== ========== ========== Cash dividends per common share $ 0.10 $ 0.07 $ 0.20 $ 0.13 ========= ========== ========== ========== See accompanying notes to the consolidated financial statements. 3

CVB FINANCIAL CORP. AND SUBSIDIARIES STATEMENT OF CHANGES IN EQUITY (unaudited) dollar amounts in thousands Accumulated Other Comprehensive Retained Comprehensive Common Total Income Earnings Income Stock Beginning balance, January 1, 1997 $ 89,087 $27,341 ($196) $61,942 Comprehensive income Net Income 17,370 $17,370 17,370 Other comprehensive income, net of tax Unrealized gains on securities, net of reclassification adjustment (see disclosure) 968 968 968 ------- Comprehensive income $18,338 ======= Common Stock issued 904 904 Repurchase of Common Stock (1,935) (1,344) (591) Tax benefit from exercise of stock options 193 193 Dividends declared on common stock (4,503) (4,503) --------- -------- ------ -------- Ending balance, December 31, 1997 $102,084 $39,057 $772 $62,255 --------- -------- ------ -------- Comprehensive income Net Income 9,842 $ 9,842 9,842 Other comprehensive income, net of tax Unrealized gains on securities, net of reclassification adjustment (see disclosure) 131 131 131 ------- Comprehensive income $ 9,973 ======= Common Stock issued 149 149 Dividends declared on common stock (3,016) (3,016) ========= ======== ====== ======== Ending balance, June 30, 1998 $109,190 $45,883 $903 $62,404 ========= ======== ====== ======== Disclosure of reclassification amount Unrealized holding gains arising during period, net of tax effects of $711 $ 977 Less: Reclassification adjustment for gains included in net income, net of tax effects of $7 (9) -------- Net unrealized gain on securities, December 31, 1997 $ 968 ======== Unrealized holding gains arising during period, net of tax effects of $96 $ 145 Less: Reclassification adjustment for gains included in net income, net of tax effects of $10 (14) -------- Net unrealized gains on securities, June 30, 1998 $ 131 ======== See accompanying notes to the consolidated financial statements. 4

CVB FINANCIAL CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) dollar amounts in thousands For the Six Months Ended June 30, 1998 1997 CASH FLOWS FROM OPERATING ACTIVITIES: Interest received $ 45,133 $ 39,244 Service charges and other fees received 7,440 6,897 Interest paid (13,449) (11,640) Cash paid to suppliers and employees (20,684) (20,443) Income taxes paid (3,905) (3,700) ------------- ------------ Net cash provided by operating activities 14,535 10,358 ------------- ------------ CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from sales of securities available for sale 20,043 4,496 Proceeds from maturities of securities available for sale 58,288 33,591 Proceeds from maturities of securities held to maturity 746 841 Purchases of securities available for sale (214,226) (79,644) Purchases of securities held to maturity (171) (6,545) Net increase in loans (22,084) (3,734) Proceeds from sale of premises and equipment 2,174 55 Purchase of premises and equipment (1,328) (793) Other investing activities 2,618 6,176 ------------- ------------- Net cash used in investing activities (153,940) (45,557) ------------- ------------- CASH FLOWS FROM FINANCING ACTIVITIES: Net increase (decrease) in transaction deposits 13,359 (48,553) Net increase in time deposits 15,406 20,686 Net increase in short-term borrowings 94,095 14,587 Cash dividends on common stock (3,016) (2,009) Stock repurchase 0 (1,718) Proceeds from exercise of stock options 149 380 ------------- ------------- Net cash provided by (used in) financing activities 119,993 (16,627) ------------- ------------- NET DECREASE IN CASH AND CASH EQUIVALENTS (19,412) (51,826) CASH AND CASH EQUIVALENTS, beginning of period 107,725 142,502 ------------- ------------- CASH AND CASH EQUIVALENTS, end of period $ 88,313 $ 90,676 ============ ============= See accompanying notes to the consolidated financial statements. 5

CVB FINANCIAL CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) dollar amounts in thousands For the Six Months Ended June 30, 1998 1997 RECONCILIATION OF NET EARNINGS TO NET CASH PROVIDED BY OPERATING ACTIVITIES: Net earnings $ 9,842 $ 7,100 Adjustments to reconcile net earnings to net cash provided by operating activities: (Accretion of discount) amortization of premiums on investment (753) 2 securities Provisions for loan and OREO losses 1,800 2,250 Depreciation and amortization 1,552 1,503 Change in accrued interest receivable (828) 10 Change in accrued interest payable 1,211 223 Change in other assets and liabilities 1,711 (730) ----------- ----------- Total adjustments 4,693 3,258 ----------- ----------- NET CASH PROVIDED BY OPERATING ACTIVITIES $ 14,535 $ 10,358 =========== =========== 6

CVB FINANCIAL CORP. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the six months ended June 30, 1998, and 1997 1. Summary of Significant Accounting Policies. See Note 1 of the Notes to Consolidated Financial Statements in CVB Financial Corp.'s 1997 Annual Report. Goodwill resulting from purchase accounting treatment of acquired banks is amortized on a straight line basis over 15 years. The Bank accounts for impaired loans in accordance with Financial Accounting Standards ("SFAS") No. 114, "Accounting by Creditors for Impairment of a Loan,"as amended by SFAS No. 118, "Accounting by Creditors for Impairment of a Loan -- Income Recognition and Disclosures." Impaired loans totaled $6.7 million at June 30, 1998. Of this total, $6.0 million, for 89.66%, represented loans that were supported by collateral with a fair market value, net of prior liens, of $11.0 million. At June 30, 1998, $693,000, or 10.34%, of total impaired loans represented loans for which repayment was projected to come from cash flows. 2. Certain reclassifications have been made in the 1997 financial information to conform to the presentation used in 1998. 3. In the ordinary course of business, the Company enters into commitments to extend credit to its customers. These commitments are not reflected in the accompanying consolidated financial statements. As of June 30, 1998, the Company had entered into commitments with certain customers amounting to $187.2 million compared to $153.7 million at December 31, 1997. Letters of credit at June 30, 1998, and December 31, 1997, were $8.3 million and $7.9 million, respectively. 4. The interim consolidated financial statements are unaudited and reflect all adjustments and reclassifications which, in the opinion of management, are necessary for a fair statement of the results of operations and financial condition for the interim period. All adjustments and reclassifications are of a normal and recurring nature. Results for the period ending June 30, 1998, are not necessarily indicative of results which may be expected for any other interim period or for the year as a whole. 5. The actual number of shares outstanding at June 30, 1998, was 15,036,681. Basic earnings per share are calculated on the basis of the weighted average number of shares outstanding during the period. Diluted earnings per share are calculated on the basis of the weighted average number of shares outstanding during the period plus shares issuable upon the assumed exercise of outstanding common stock options. All 1997 per share information in the financial statements and in Management's Discussion and Analysis has been restated to give retroactive effect to the 3-for-2 stock split declared on December 17, 1997. The tables below present the reconciliation of earnings per share for the periods indicated. 7

Earnings Per Share Reconciliation For the Three Months Ended June 30, 1998 1997 Weighted Weighted Income Average Shares Per Share Income Average Shares Per Share (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount BASIC EPS Income available to common stockholders $ 5,076,472 15,033,352 $0.34 $ 3,749,798 14,977,942 $0.25 EFFECT OF DILUTIVE SECURITIES Incremental shares from assumed exercise of outstanding options 624,915 (0.02) 590,753 (0.01) ------------------------------------- -------------------------------------- DILUTED EPS Income available to common stockholders $ 5,076,472 15,658,267 $0.32 $ 3,749,798 15,568,695 $0.24 ===================================== ====================================== Earnings Per Share Reconciliation For the Six Months Ended June 30, 1998 1997 Weighted Weighted Income Average Shares Per Share Income Average Shares Per Share (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount BASIC EPS Income available to common stockholders $ 9,841,696 15,044,207 $0.65 $ 7,099,523 14,999,493 $0.47 EFFECT OF DILUTIVE SECURITIES Incremental shares from assumed exercise of outstanding options 644,440 (0.02) 577,422 (0.02) ------------------------------------- -------------------------------------- DILUTED EPS Income available to common stockholders $ 9,841,696 15,688,647 $0.63 $ 7,099,523 15,576,915 $0.45 ===================================== ====================================== 8

6. Supplemental cash flow information. During the six-month period ended June 30, 1998, loans amounting to $2.5 million were transferred to Other Real Estate Owned ("OREO") as a result of foreclosure on the real properties held as collateral. 7. In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," effective for fiscal years beginning after June 15, 1999. This Statement establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. The Company does not believe that the adoption of SFAS No. 133 will have a material impact on its operations and financial position. 9

CVB FINANCIAL CORP. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS Management's discussion and analysis is written to provide greater insight into the results of operations and the financial condition of CVB Financial Corp. and its subsidiaries. For a more complete understanding of CVB Financial Corp. and its operations, reference should be made to the financial statements included in this report and in the Company's 1997 Annual Report on Form 10-K. Certain statements in this Report on Form 10-Q constitute "forward-looking statements" under the Private Securities Litigation Reform Act of 1995 which involve risk and uncertainties. The Company's actual results may differ significantly from the results discussed in such forward-looking statements. Factors that might cause such a difference include but are not limited to economic conditions, competition in the geographic and business areas in which the Company conducts operations, fluctuations in interest rates, credit quality and government regulations. For additional information concerning these factors, see "Item 1. Business - Factors that May Affect Results" contained in the Company's Annual Report on Form 10-K for the year ended December 31, 1997. Throughout this discussion, "Company" refers to CVB Financial Corp. and its subsidiaries as a consolidated entity. "CVB" refers to CVB Financial Corp. as the unconsolidated parent company, and "Bank" refers to Citizens Business Bank. RESULTS OF OPERATIONS The Company reported net earnings of $9.8 million for the six months ended June 30, 1998. This represented an increase of $2.7 million, or 38.62%, over net earnings of $7.1 million, for the six months ended June 30, 1997. Basic earnings per share for the six month period increased to $0.65 per share for 1998, compared to $0.47 per share for 1997. Diluted earnings per share increased to $0.63 per share for the first six months of 1998, compared to $0.45 per share for the same six month period last year. The annualized return on average assets increased to 1.52% for the first half of 1998 compared to a return on average assets of 1.26% for the six months ended June 30, 1997. The annualized return on average equity was 18.39% for the six months ended June 30, 1998, compared to a return of 15.45% for the six months ended June 30, 1997. For the second quarter of 1998, the Company generated net earnings of $5.1 million. This represented an increase of $1.3 million, or 35.38%, over earnings of $3.8 million, for the second quarter of 1997. Basic earnings per share increased to $0.34 per share for the most recent quarter, compared to $0.25 per share for the second quarter of last year. Diluted earnings per share increased to $0.32 per share for the second quarter of 1998, compared to $0.24 per share for the same three month period for 1997. The annualized return on average assets was 1.52% for the second quarter of 1998, compared to a return of 1.31% for the second quarter of 1997. The annualized return on average equity was 18.69%, for the second quarter of this year, compared to a return of 16.37%, for the same period last year. 10

Pre-tax operating earnings, which exclude the impact of gains or losses on sale of securities and OREO, and the provisions for credit and OREO losses, totaled $17.4 million for the six months ended June 30, 1998, This represented an increase of $3.2 million, or 22.45%, compared to operating earnings of $14.2 million for the first half of 1997. For the second quarter of 1998, pre-tax operating earnings totaled $8.4 million. This represented an increase of $957,000, or 12.78%, over pre-tax operating earnings of $7.5 million for the second quarter of 1997. Net Interest Income/Net Interest Margin The principal component of the Company's earnings is net interest income, which is the difference between the interest and fees earned on loans and investments and the interest paid on deposits and other borrowed funds. When net interest income is expressed as a percentage of average earning assets, the result is the net interest margin. The net interest spread is the yield on average earning assets minus the average cost of interest-bearing deposits and borrowed funds. For the six months ended June 30, 1998, net interest income was $32.1 million. This represented an increase of $3.5 million, or 12.31%, over net interest income of $28.5 million for the six months ended June 30, 1997. Although net interest income increased, the net interest margin decreased to 5.57% for the six months ended June 30, 1998, compared to 5.90% for the six months ended June 30, 1997. In addition, the net interest spread decreased to 4.10% for the six months ended June 30, 1998, compared to a spread of 4.63% for the six months ended June 30, 1997. The increase in net interest income for the most recent six months period was the result of an increased volume of average earning assets. Earning assets averaged $1.2 billion for the first six months of 1998. This represented an increase of $196.7 million, or 20.00%, compared to average earning assets of $983.4 million for the first six months of 1997. The decrease in the net interest margin for the six months ended June 30, 1998 compared to the first six months of 1997 was the result of a lower yield on average earning assets. The decrease in the net interest spread resulted as the yield on average earning assets decreased and the cost of interest bearing liabilities increased. Similarly, net interest income increased for the second quarter of 1998, compared to the second quarter of 1997. For the second quarter of 1998, net interest income totaled $16.2 million. This represented an increase of $1.8 million, or 12.16%, over net interest income of $14.5 million for the second quarter of 1997. The increases in net interest income for the second quarter of this year also resulted from an increased volume in average earning assets. For the second quarter of 1997, earning assets, averaged $1.2 billion. This represented an increase of $213.0 million, or 21.17%, over average earning assets of $1.0 billion for the second quarter of 1997. The net interest margin decreased to 5.47% for the second quarter of 1998, compared to a net interest margin of 5.84% for the second quarter of 1997. Again, the decrease in the net interest margin was the result of a lower yield on average earning assets. The net interest spread decreased to 4.00% for the second quarter of 1998, compared to a spread of 4.54% for the second quarter of 1997. 11

The Company reported total interest income of $46.7 million for the six months ended June 30, 1998. This represented an increase of $6.3 million, or 15.62%, over total interest income of $40.4 million for the six months ended June 30, 1997. The increase reflected the greater volume of earning assets noted above. The yield on average total earning assets decreased to 8.05% for the six months ended June 30, 1998, from a yield of 8.31% for the six months ended June 30, 1997. The decrease in the yield on average earning assets resulted from lower yields on average loans and a greater concentration of earning assets in investments as opposed to loans. The yield on average loans decreased to 9.70% for the six months ended June 30, 1998, from a yield of 9.73% for the first six months of 1997. The 3 basis point decrease in average loan yields primarily reflected increased price competition for loans. Loans typically generate higher yields than investments. Accordingly, the higher the loan portfolio is as a percentage of earning assets, the higher will be the yield on earning assets. For the six months ended June 30, 1998, loans represented 52.73% of average earning assets, compared to 58.89% for the six months ended June 30, 1997. Similar trends were evident when comparing the second quarter of 1998 with the second quarter of 1997. Total interest income was $23.9 million for the second quarter of 1998. This represented an increase of $3.1 million, or 15.04% over total interest income of $20.7 million for the second quarter of 1997. The yield on average loans decreased to 9.67% for the second quarter of 1998, compared to a 9.83% yield for the second quarter of 1997. Average loans as a percent of average earning assets decreased to 51.24% for the three months ended June 30, 1998, compared to 57.34% for the same period last year. The increase in total interest income was partially offset by an increase in interest expense for both the six months and the quarter ended June 30, 1998 when compared to the same periods for 1997. Interest expense totaled $14.7 million for the six months ended June 30, 1998. This represented an increase of $2.8 million, or 23.58%, over total interest expense of $11.9 million for the six months ended June 30, 1997. For the three months ended June 30, 1998, interest expense totaled $7.6 million. This represented an increase of $1.4 million, or 21.66% compared to the same period last year. The increase reflected an increase in both the average volume and cost of interest bearing liabilities. Average interest bearing liabilities were $742.4 million for the first six months of 1998. This represented an increase of $98.4 million, or 15.28%, from average interest bearing liabilities of $644.0 million for the first six months of 1997. The cost of average interest bearing liabilities increased to 3.95% for the six months ended June 30, 1998, compared to a cost of 3.68% for the first half of 1997. The increase in the cost of interest bearing liabilities was primarily the result of an increase in average time deposits and other borrowed funds. Average time deposits totaled $272.1 million for the six months ended June 30, 1998. This represented an increase of $70.3 million, or 34.85%, over average time deposits of $201.8 million for the six months ended June 30, 1997. The cost of average time deposits increased to 5.24% for the first six months of 1998, compared to an average cost of 5.16% for the same period last year. 12

Other borrowed funds averaged $107.7 million for the six months ended June 30, 1998. This represented an increase of $29.3 million, or 37.41%, over average other borrowed funds of $78.4 million for the six months ended June 30, 1997. The cost of other borrowed funds decreased to 5.47% for the six months ended June 30, 1998, compared to a cost of 5.49% for the six months ended June 30, 1997. Table 1 shows the average balances of assets, liabilities, and stockholders' equity and the related interest income, expense, and rates for the six month periods ended June 30, 1998, and 1997. Rates for tax-preferenced investments are shown on a taxable equivalent basis using a 35.0% tax rate. 13

TABLE 1 - Distribution of Average Assets, Liabilities, and Stockholders' Equity; Interest Rates and Interest Differentials (dollars in thousands) Six-month periods ended June 30, 1998 1997 Average Average ASSETS Balance Interest Rate Balance Interest Rate Investment Securities Taxable $ 457,840 14,268 6.23% $ 353,894 10,985 6.21% Tax-advantaged (F1) 90,830 2,019 6.24% 46,799 1,149 6.89% Federal Funds Sold & Interest-bearing deposits with other financial institutions 9,188 248 5.40% 3,602 93 5.16% Loans (F2) (F3) 622,264 30,179 9.70% 579,128 28,176 9.73% ------------------------------ ----------------------------- Total Earning Assets 1,180,122 46,714 8.05% 983,423 40,403 8.31% Total Non-earning Assets 117,035 139,671 ------------ ------------ Total Assets $ 1,297,157 $ 1,123,094 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Non-interest bearing deposits $ 424,516 $ 373,833 Savings Deposits (F4) 362,567 4,587 2.53% 363,819 4,501 2.47% Time Deposits 272,142 7,129 5.24% 201,816 5,211 5.16% ------------------------------- ------------------------------ Total Deposits 1,059,225 11,716 2.21% 939,468 9,712 2.07% ------------------------------- ------------------------------ Other Borrowings 107,683 2,944 5.47% 78,364 2,151 5.49% ------------------------------- ----------------------------- Total Interest-Bearing Liabilities 742,392 14,660 3.95% 643,999 11,863 3.68% ------------- ------------ Other Liabilities 23,225 13,354 Stockholders' Equity 107,024 91,908 ------------- ------------ Total Liabilities and Stockholders' Equity $ 1,297,157 $ 1,123,094 ============= ============ Net interest spread 4.10% 4.63% Net interest margin 5.57% 5.90% (F1) Yields are calculated on a taxable equivalent basis. (F2) Loan fees are included in total interest income as follows: 1998, $2,179; 1997, $1,647. (F3) Nonperforming loans are included in net loans as follows: 1998, $4,828; 1997, $7,303. (F4) Includes interest-bearing demand and money market accounts. 14

Table 2 summarizes the changes in interest income and interest expense based on changes in average asset and liability balances (volume) and changes in average rates (rate). For each category of earning assets and interest-bearing liabilities, information is provided with respect to changes attributable to (1) changes in volume (change in volume multiplied by initial rate), (2) changes in rate (change in rate multiplied by initial volume) and (3) changes in rate/volume (change in rate multiplied by change in volume). During periods of changing interest rates, the ability to reprice interest earning assets and interest bearing liabilities can influence net interest income, net interest margin, and consequently, the Company's earnings. Interest rate risk is managed by attempting to control the spread between rates earned on interest-earning assets and the rates paid on interest-bearing liabilities within the constraints imposed by market competition in the Bank's service area. Short term repricing risk is minimized by controlling the level of floating rate loans and maintaining a downward sloping ladder of bond payments and maturities. Basis risk is managed by the timing and magnitude of changes to interest-bearing deposits rates. Yield curve risk is reduced by keeping the duration of the loan and bond portfolios relatively short. Options risk in the bond portfolio is monitored monthly and actions are recommended when appropriate. Both the net interest spread and the net interest margin are largely affected by the Company's ability to reprice assets and liabilities as interest rates change. The Company's management utilizes the results of a dynamic simulation model to quantify the estimated exposure of net interest income to sustained changes in interest rates. The sensitivity of the Company's net interest income is measured over a rolling two year horizon. The simulation model estimates the impact of changing interest rates on the net interest income from all interest earning assets and interest expense paid on all interest bearing liabilities reflected on the Company's balance sheet. The sensitivity analysis is compared to policy limits which specify a maximum tolerance level for net interest income exposure over a one year time horizon assuming no balance sheet growth, given both a 200 basis point upward and downward shift in interest rates. A parallel and pro rata shift in interest rates over a 12 month period is assumed. The following reflects the Company's net interest income sensitivity over a one year horizon as of June 30, 1998. Estimated Net Simulated Interest Income Rate Changes Sensitivity +200 basis points -1.17% -200 basis points -0.80% The table indicates that net interest income would decrease by approximately 1.17% over a 12 month period if there was a sustained, parallel and pro rata 200 basis point downward shift in interest rates. Net interest income would decrease approximately 0.80% over a 12 month period if there was a sustained, parallel and pro rata 200 basis point upward shift in interest rates. 15

TABLE 2 - Rate and Volume Analysis for Changes in Interest Income, Interest Expense and Net Interest Income (amounts in thousands) Comparison of six-month period ended June 30, 1998 and 1997 Increase (decrease) in interest income or expense due to changes in Rate/ Volume Rate Volume Total Interest Income: Taxable investment securities $ 3,226 $ 44 $ 13 $ 3,283 Tax-advantaged investment securities 1,080 (108) (102) 870 Federal funds sold and interest bearing deposits with other institutions 145 4 6 155 Loans 2,100 (90) (7) 2,003 ------------------------------------------- Total earning assets 6,551 (150) (90) 6,311 ------------------------------------------- Interest Expense: Savings deposits (15) 101 (0) 86 Time deposits 1,815 76 27 1,918 Other borrowings 806 (9) (4) 793 -------------------------------------------- Total interest-bearing liabilities 2,606 168 23 2,797 -------------------------------------------- Net Interest Income $ 3,945 $ (318) $ (113) $ 3,514 ============================================ 16

Credit Loss Experience The Company maintains an allowance for potential credit losses that is increased by a provision for credit losses charged against operating results. The allowance for credit losses is also increased by recoveries on loans previously charged off and reduced by actual loan losses charged to the allowance. The provision for credit losses was $1.3 million for the six months ended June 30, 1998. This represented an increase of $245,000, or 23.22% from the provision for credit losses of $1.1 million for the six months ended June 30, 1997. For the second quarter of 1998, the provision for credit losses was $450,000. This represented an increase of $175,000, or 63.64%, from the provision for credit losses of $275,000 for the second quarter of 1997. The allowance for credit losses at June 30, 1997 was $12.8 million. This represented an increase of $2.6 million, or 26.05%, from the allowance for credit losses of $10.2 million at June 30, 1997. The allowance for credit losses increased to 2.06% of average gross loans for the first half of 1998, compared to 1.75% of average gross loans for the same period last year. For the six months ended June 30, 1998, loans charged to the allowance for credit losses, net of recoveries ("net loan charge offs") totaled $12,000, compared to net loans charge offs of $3.1 million for the first six months of 1997. Nonperforming assets, which includes nonaccrual loans, loans past due 90 or more days and still accruing, restructured loans, and other real estate owned, decreased to $9.6 million at June 30, 1998. This represented a decrease of $1.3 million, or 11.66%, from nonperforming assets of $10.9 million at December 31, 1997. Nonperforming loans, which include nonaccrual loans, loans past due 90 or more days and still accruing, and restructured loans were $4.8 million at June 30, 1998. This represented a decrease of $1.6 million, or 25.33%, from the level of nonperforming loans at December 31, 1997. Table 6 presents nonperforming assets as of June 30 1998, and December 31, 1997. The Company applies the methods prescribed by Statement of Financial Accounting Standards No. 114 for determining the fair value of specific loans for which the eventual collection of all principal and interest is considered impaired. While management believes that the allowance at June 30, 1998, was adequate to absorb losses from any known or inherent risks in the portfolio, no assurance can be given that economic conditions which adversely affect the Company's service areas or other circumstances will not be reflected in increased provisions or credit losses in the future. Table 3 shows comparative information on net credit losses, provisions for credit losses, and the allowance for credit losses for the periods indicated. 17

TABLE 3 - Summary of Credit Loss Experience (amounts in thousands) Six-months ended June 30, 1998 1997 Amount of Total Loans at End of Period $ 636,533 $ 580,328 =========== ============ Average Total Loans Outstanding $ 622,264 $ 579,128 =========== ============ Allowance for Credit Losses at Beginning of Period $ 11,522 $ 12,239 Loans Charged-Off: Real Estate Loans 52 3,066 Commercial and Industrial 114 153 Consumer Loans 26 59 ----------- ------------ Total Loans Charged-Off 192 3,278 ----------- ------------ Recoveries: Real Estate Loans 155 21 Commercial and Industrial 14 119 Consumer Loans 11 6 ----------- ------------ Total Loans Recovered 180 146 ----------- ------------ Net Loans Charged-Off 12 3,132 ----------- ------------ Provision Charged to Operating Expense 1,300 1,055 ----------- ------------ Allowance for Credit Losses at End of period $ 12,810 $ 10,162 =========== ============ Net Loans Charged-Off to Average Total Loans* 0.00% 1.08% Net Loans Charged-Off to Total Loans at End of Period* 0.00% 1.08% Allowance for Credit Losses to Average Total Loans 2.06% 1.75% Allowance for Credit Losses to Total Loans at End of Period 2.01% 1.75% Net Loans Charged-Off to Allowance for Credit Losses* 0.19% 61.64% Net Loans Charged-Off to Provision for Credit Losses 0.92% 296.87% * Net Loan Charge-Off amounts are annualized. 18

Other Operating Income Other operating income includes revenues earned from sources other than interest income. These sources include: service charges and fees on deposit accounts, fee income from the Asset Management Division, other fee oriented products and services, gain (or loss) on sale of securities or other real estate owned and gross revenue from Community Trust Deed Services (the Company's nonbank subsidiary). Other operating income totaled $7.5 million for the six months ended June 30, 1998. This represented an increase of $571,000, or 8.28%, from other operating income of $6.9 million for the six months ended June 30, 1997. Trust income totaled $1.8 million for the six months ended June 30, 1998. This represented an increase of $205,000, or 13.08%, over trust income of $1.6 million for the six months ended June 30, 1997. In March of 1998, the Bank sold an office building used as its Brea office. The Bank realized a gain on the sale of approximately $450,000 which is included in the $652,000 gain on sale of premises and equipment for the first six months of 1998. During the first six months of 1997, gains on sale of premises and equipment totaled $27,000. Other operating income totaled $3.5 million for the second quarter of 1998. This represented a decrease of $146,000, or 4.04%, over other operating income of $3.6 million for the second quarter of 1997. Other Operating Expenses Other operating expenses totaled $22.6 million for the six months ended June 30, 1998. This represented an increase of $178,000, or 0.80%, over other operating expenses of $22.4 million for the six months ended June 30, 1997. For the second quarter of 1998, other operating expenses totaled $11.2 million, representing a decrease of $214,000, or 1.87%, over operating expenses of $11.4 million for the second quarter of 1997. The Company maintains an allowance for potential losses on other real estate owned. The allowance is increased by a provision for losses on other real estate owned, and reduced by losses on the sale of other real estate owned charged directly to the allowance. The allowance was established to provide for declining Southern California real estate values over the past several years. For the six months ended June 30, 1998, the provision for other real estate owned was $500,000. This represented a decrease of $695,000, or 58.16%, from a provision of $1.2 million for the six months ended June 30, 1997. The decrease in the provision for 1998 reflects firmer real estate values for this year. As a percent of average assets, annualized other operating expenses decreased to 3.48% for the six months ended June 30, 1998, compared to a ratio of 3.99% for the six months ended June 30, 1997. The decrease in the ratio indicates that the Company is managing a greater level of assets with proportionately lower levels of operating expenses. The Company's efficiency ratio decreased to 57.10% for the six months ended June 30, 1998, compared to a ratio of 63.18% for the six months ended June 30, 1997. The decrease in the efficiency ratio indicates that the Company is allocating a lower percentage of net revenue to operating expenses. 19

BALANCE SHEET ANALYSIS The Company reported total assets of $1.38 billion at June 30, 1998. This represented an increase of $122.5 million, or 9.74%, over total assets of $1.26 billion at December 31, 1997. Gross loans totaled $636.5 million at June 30, 1998. This represented an increase of $19.5 million, or 3.16%, over gross loans of $617.0 million at December 31, 1997. Total deposits increased $28.8 million, or 2.67%, to $1.10 billion at June 30, 1998, from $1.08 billion at December 31, 1997. Investment Securities and Debt Securities Available-for-Sale The Company reported total investment securities of $618.2 million at June 30, 1998. This represented an increase of $126.0 million, or 25.61%, over total investment securities of $492.2 million at December 31, 1997. At June 30, 1998, the Company's net unrealized gain on securities available-for-sale totaled $1.6 million. The Company recorded an adjustment increasing accumulated other comprehensive income to $903,000, and an adjustment to increase deferred tax assets to $663,000. At December 31, 1997, the Company reported a net unrealized gain on investment securities available for sale of $1.3 million, with an adjustment to equity capital of $772,000 and deferred taxes of $567,000. Note 2 of the Notes to the Consolidated Financial Statements in the Company's 1997 Annual Report on discusses it current accounting policy as it pertains to recognition of market values for investment securities held as available-for-sale. Table 4 sets forth investment securities held-to-maturity and available-for-sale, at June 30, 1998 and December 31, 1997. 20

Table 4 - Composition of Securities Portfolio (dollars in thousands) June 30, 1998 December 31, 1997 Amortized Market Net Yield Amortized Market Net Yield Cost Value Unrealized Cost Value Unrealized Gain/(Loss) Gain/(Loss) U.S. Treasury securities Available for Sale $ 36,140 $ 36,354 $ 214 6.30% $ 51,238 $ 51,525 $ 287 5.71% FHLMC, FNMA CMO's, REMIC's and mortgage-backed pass-through securities Available for Sale 355,339 356,862 1,523 6.43% 279,835 280,920 1,085 6.41% Held to Maturity 4,371 4,466 95 6.06% 4,969 5,068 99 6.49% Other Government Agency Securities Available for Sale 37,777 37,875 98 6.54% 53,052 53,018 (34) 6.52% GNMA mortgage-backed pass-through securities Available for Sale 64,430 64,257 (173) 6.77% 9,854 9,878 24 6.61% Held to Maturity 868 943 75 6.46% 964 1,046 82 6.53% Tax-exempt Municipal Securities Available for Sale 48,124 48,142 18 4.46% 25,364 25,509 145 4.56% Held to Maturity 50,602 51,945 1,343 4.80% 50,789 52,222 1,433 4.52% Other securities Available for Sale 17,357 17,357 0 0.00% 13,256 13,256 0 0.00% Held to Maturity 1,486 1,486 0 6.51% 1,322 1,322 0 6.37% -------------------------------------- ----------------------------------------- $616,494 $619,687 $ 3,193 5.99% $ 490,643 $ 493,764 $ 3,121 5.89% ====================================== ========================================= 21

Loan Composition and Nonperforming Assets Table 5 sets forth the distribution of the loan portfolio by type as of the dates indicated (dollar amounts in thousands): June 30, December 31, 1998 1997 Commercial and Industrial $244,316 $258,987 Real Estate: Construction 28,440 19,819 Mortgage 260,835 229,926 Consumer 18,313 17,445 Lease finance receivables 21,039 24,008 Agribusiness 65,915 69,404 -------- -------- Gross Loans $638,858 $619,589 Less: Allowance for credit losses 12,810 11,522 Deferred net loan fees 2,325 2,583 -------- -------- Net loans $623,723 $605,484 ======== ======== As set forth in Table 6, nonperforming assets (nonaccrual loans, loans 90 days or more past due and still accruing interest, restructured loans, and other real estate owned) totaled $9.6 million at June 30, 1998. This represented a decrease of $1.3 million, or 11.66%, from nonperforming assets of $10.9 million at December 31, 1997. As a percent of total assets, nonperforming assets decreased to 0.69% at June 30, 1998, from 0.86% at December 31, 1997. Although management believes that nonperforming assets are generally well secured and that potential losses are reflected in the allowance for credit losses, there can be no assurance that a general deterioration of economic conditions or collateral values would not result in future credit losses. Table 6 - Nonperforming Assets June 30, 1998 December 31, 1997 Nonaccrual loans $4,828 $ 3,955 Loans past due 90 days or more and still accruing interest 4 424 Restructured loans 0 2,092 Other real estate owned (OREO), net 4,767 4,395 ------ ------- Total nonperforming assets $9,599 $10,866 ====== ======= Percentage of nonperforming assets to total loans outstanding and OREO 1.50% 1.75% Percentage of nonperforming assets to total assets 0.69% 0.86% 22

The decrease in nonperforming assets was primarily the result of a decrease in restructured loans. Restructured loans declined $2.1 million for the first six months of 1998. At June 30, 1998, the majority of nonaccrual loans were collateralized by real property. The estimated loan balances to the fair value of related collateral (loan-to-value ratio) for nonaccrual loans ranged from approximately 16% to 131%. Other real estate owned totaled $4.8 million at June 30, 1998. This represented an increase of $372,000, or 8.46%, from total real estate owned of $4.4 million at December 31, 1997. The Bank has allocated specific reserves to provide for any potential loss on non-performing loans. Management cannot, however, predict the extent to which the current economic environment may persist or worsen or the full impact such environment may have on the Company's loan portfolio. Deposits and Other Borrowings At June 30, 1998, total deposits were $1.1 billion. This represented an increase of $28.8 million, or 2.67%, from total deposits of $1.08 billion at December 31, 1997. Demand deposits totaled $458.9 million at June 30, 1998, representing a decrease of $10.9 million, or 2.33%, from total demand deposits of $469.8 million at December 31, 1997. The decrease in demand deposits from the year end total reflects normal seasonal fluctuations relating to agricultural and other depositors. Average demand deposits for the second quarter of 1998 were $437.2 million. This represented an increase of $55.9 million, or 14.67%, from average demand deposits of $381.3 million for the second quarter of 1997. The comparison of average balances for the second quarters of 1998 and 1997, is more representative of the Company's growth in deposits as it excludes the seasonal peak in deposits at year end. Time deposits totaled $279.8 million at June 30, 1998. This represented an increase of $15.4 million, or 5.83%, over total time deposits of $264.4 million at December 31, 1997. Time deposits are not affected by the Company's seasonal fluctuation in demand deposits. 23

Liquidity Liquidity risk is the risk to earnings or capital resulting from the Bank's inability to meet its obligations when they come due without incurring unacceptable losses. It includes the ability to manage unplanned changes in funding sources and to recognize or address changes in market conditions that affect the Bank's ability to liquidate assets quickly and with minimum loss of value. Factors considered in liquidity risk management are stability of the deposit base; marketability, maturity, and pledging of investments; and the demand for credit. In general, liquidity risk is managed daily by controlling the level of Fed funds and the use of funds provided by the cash flow from the investment portfolio. To meet unexpected demands, lines of credit are maintained with correspondent banks, the Federal Home Loan Bank and the Federal Reserve Bank. The sale of bonds maturing in the near future can also serve as a contingent source of funds. Increases in deposit rates are considered a last resort as a means of raising funds to increase liquidity. For the Bank, sources of funds normally include principal payments on loans and investments, other borrowed funds, and growth in deposits. Uses of funds include withdrawal of deposits, interest paid on deposits, increased loan balances, purchases, and other operating expenses. Net cash provided by operating activities totaled $14.5 million for the first six months of 1998, compared to net cash provided by operating activities of $10.4 million for the same period last year. The increase was primarily the result of increased interest received on loans and investment securities. Net cash used for investing activities totaled $153.9 million for the first six months of 1998, compared to net cash used for investing activities of $45.6 million for the same period last year. The increase in net cash used for investing activities was primarily from the purchase of additional investment securities. Financing activities provided net cash flows of $120.0 million for the six months ended June 30, 1998. This compares to a use of cash of $16.6 million for the six months ended June 30, 1997. A net increase in deposits of $13.4 million for the six months ended June 30, 1998, compared to a net decrease in deposits of $48.6 million for the same period last year contributed to the change. In addition, net cash flows provided by financing activities was impacted by an increase in short term borrowings of $94.1 million for the first six months of 1998 compared to $14.6 million for the first six months of 1997. At June 30, 1998, cash and cash equivalents totaled $88.3 million. This represented a decrease of $2.4 million, or 2.6%, from a total of $90.7 million at June 30, 1997. 24

Since the primary sources and uses of funds for the Bank are loans and deposits, the relationship between gross loans and total deposits provides a useful measure of the Bank's liquidity. Typically, the closer the ratio of loans to deposits is to 100%, the more reliant the Bank is on its loan portfolio to provide for short term liquidity needs. Since repayment of loans tends to be less predictable than the maturity of investments and other liquid resources, the higher the loan to deposit ratio the less liquid are the Bank's assets. For the first six months of 1998, the Bank's loan to deposit ratio averaged 58.75%, compared to an average ratio of 61.64% for the first six months of 1997. CVB is a company separate and apart from the Bank that must provide for its own liquidity. Substantially all of CVB's revenues are obtained from dividends declared and paid by the Bank. There are statutory and regulatory provisions that could limit the ability of the Bank to pay dividends to CVB. At June 30, 1998, approximately $36.1 million of the Bank's equity was unrestricted and available to be paid as dividends to CVB. Management of CVB believes that such restrictions will not have an impact on the ability of CVB to meet its ongoing cash obligations. At June 30, 1998, neither the Bank nor CVB had any material commitments for capital expenditures. Capital Resources The Company's equity capital was $109.2 million at June 30, 1998. The primary source of capital for the Company continues to be the retention of net after tax earnings. The Company's 1997 annual report (management's discussion and analysis and note 15 of the accompanying financial statements) describes the regulatory capital requirements of the Company and the Bank. The Bank and the Company are required to meet risk-based capital standards set by the respective regulatory authorities. The risk-based capital standards require the achievement of a minimum ratio of total capital to risk-weighted assets of 8.0% (of which at least 4.0% must be Tier 1 capital). In addition, the regulatory authorities require the highest rated institutions to maintain a minimum leverage ratio of 3.0%. At June 30, 1998, the Bank and the Company exceeded the minimum risk-based capital ratio and leverage ratio required to be considered "Well Capitalized". Table 7 below presents the Company's and the Bank's risk-based and leverage capital ratios as of June 30, 1998, and December 31, 1997. Table 7 - Regulatory Capital Ratios Required Minimum June 30, 1998 December 31, 1997 Capital Ratios Ratios Company Bank Company Bank Risk-based capital ratios Tier 1 4.00% 12.62% 12.42% 12.08% 11.84% Total 8.00% 13.89% 13.69% 13.35% 13.11% Leverage Ratio 4.00% 7.39% 7.26% 7.56% 7.40% 25

On April 16, 1997, the board of directors of the Company authorized the repurchase of shares of its common stock, from time to time, at the discretion of the Company, through open market purchases or in private transactions in an aggregate amount of up to $9.0 million, or 750,000 shares. As of December 31, 1997, the Company had purchased 142,772 shares for an average price of $13.56 per share. The Company has not repurchased any of its outstanding shares of common stock during the first six months of 1998. Risk Management The Company's management has adopted a Risk Management Policy to ensure the proper control and management of all risk factors inherent in the operation of the Company and the Bank. The policy is designed to address specific risk factors defined by federal bank regulators. These risk factors are not mutually exclusive. It is recognized that any product or service offered may expose the Bank to one or more of these risks. The Risk Management Policy identifies the significant risks as: credit risk, interest rate risk, liquidity risk, transaction risk, compliance risk, strategic risk, and price risk. Year 2000 The financial institutions industry, as with other industries, is faced with year 2000 issues. These issues center around computer programs that do not recognize a year which begins with "20" instead of "19", or uses only 2 digits for the year. Certain statements in this section on the Year 2000 constitute forward-looking statements under the Private Securities Litigation Reform Act of 1995 which involve risk and uncertainties. The Company's actual results may differ significantly from the results discussed in these forward-looking statements. Such factors include but are not limited to the costs of remediation and the preparedness of third party vendors. The Company has been working on these issues for the last 18 months. A committee, known as Team 2000, was established to analyze the issues and determine compliance with the requirements for year 2000. To date all of the Company's systems have been analyzed. The Company relies on third party vendors for all of its hardware and software. The third party vendor for the main applications (loans, deposits, investments and accounting) which the Company uses has indicated that their software is compliant. The Company has tested this software and found it to be compliant. However, periodic testing will continue to determine that new releases to the software are compliant. The Company uses personal computers extensively throughout the Bank. These are all compliant. However, the third party vendor of the Bank's teller terminal system has indicated that their hardware is not compliant and will not be made compliant. It is of an older generation of technology. The Bank is in the process of replacing this system, which is anticipated to be completed by March 31, 1999. There are other systems which are provided by third party vendors. These vendors have indicated that they will be compliant by the end of this year. The Company has no evidence that these vendors will not be compliant within that timeframe. However, the Company has written contingency plans for each of these systems and will prepare to convert to other vendors if needed. 26

The Bank has notified its customers by means of statement stuffers of year 2000 issues. It is also in the process of contacting each of its major borrowing customers to make them aware of the issues and to seek information regarding its customers' preparedness for the year 2000. The Board of Directors of CVB and the Bank have approved a Year 2000 Policy and budget. The Board has approved a budget of $1.3 million for the anticipated costs of year 2000 issues. The Board has allocated $500,000 of the Bank's allowance for loan and lease losses to cover potential losses from customers due to their year 2000 problems. In addition, it is anticipated that the replacement of the teller system hardware will cost $450,000. The remaining $350,000 is budgeted for software needs although the specifics are not completely known. Approximately $200,000 could be used in relation to the teller terminal system replacement. To date, the Company has expended approximately $20,000 for the testing of software and hardware. Of the $1.3 million, the $500,000 allocation from the allowance for loan and lease losses has already been provided through the income statement. The Company believes that costs to replace the teller system which could be as much as $650,000 will be capitalized as these costs relate to the purchase of new equipment and, therefore, will only impact the earnings of the Company as it is depreciated. The Company anticipates that the remaining $150,000 will be reflected in the income statement over the next six quarters. Business Segments On March 29, 1996, the Bank acquired Citizens Commercial Trust and Savings Bank of Pasadena ("Citizens"). At the time of the acquisition, Citizens had a trust division with managed assets of approximately $800.0 million. The acquired division, now called the Asset Management division, managed assets of $990.1 million at June 30, 1998. The Asset Management division has served as a significant and growing source of noninterest income for the Company. The division offers a number of trust and asset management services to the Bank's branch operations that were not available prior to the acquisition. For purposes of business segmentation, table 8 provides a summary of the sources of revenue and expenses for the Asset Management division and the other divisions of the Company. 27

Table 8 - Business Segments Amounts in Thousands (Unaudited) For the Six Months Ended June 30, 1998 June 30, 1997 Banking Asset Banking Asset Operations Management Company Operations Management Company Net interest income $ 32,054 $ $ 32,054 $ 28,540 $ $ 28,540 Less: Provision for credit losses 1,300 1,300 1,055 1,055 Other operating income 5,693 1,772 7,465 5,327 1,567 6,894 ---------- --------- -------- --------- -------- --------- Net revenue $ 36,447 $ 1,772 $ 38,219 $ 32,812 $ 1,567 $ 34,379 Other operating expenses Salaries and employee benefits 10,427 722 11,149 10,397 714 11,111 Occupancy and equipment 3,584 194 3,778 3,274 157 3,431 Other 7,316 321 7,637 7,485 359 7,844 ---------- --------- -------- ---------- -------- --------- 21,327 1,237 22,564 21,156 1,230 22,386 Earnings before taxes $ 15,120 $ 535 $ 15,655 $ 11,656 $ 337 $ 11,993 ========== ========= ======== ========== ======== ========= 28

PART II - OTHER INFORMATION Item 1 - Legal Proceedings Not Applicable Item 2 - Changes in Securities Not Applicable Item 3 - Defaults upon Senior Securities Not Applicable Item 4 - Submission of Matters to a Vote of Security Holders The annual Meeting of Shareholders of CVB Financial Corp. was held May 20, 1998. At the meeting, the following individuals were elected to serve as the Company's Board of Directors until the 1999 Annual Meeting of Shareholders and until their successors are elected and have qualified. Against or Broker For Withheld Abstained Non-votes George A. Borba 15,015,474 1,484 -0- -0- John A. Borba 15,015,474 1,484 -0- -0- Ronald O. Kruse 15,015,474 1,484 -0- -0- John J. LoPorto 15,015,474 1,484 -0- -0- Charles M. Magistro 15,015,474 1,484 -0- -0- James C. Seley 15,015,474 1,484 -0- -0- D. Linn Wiley 15,015,474 1,484 -0- -0- The appointment of Deloitte & Touche LLP as independent public accountants of the Company for the year ended December 31, 1998 was ratified at the 1998 Annual Meeting of Shareholders by the following: 14,990,296 shares voted for 4,021 shares voted against 22,641 shares abstained -0- broker non-votes Item 5 - Other Information The proxy materials for the 1998 Annual Meeting of Shareholders held on May 20, 1998 were mailed to shareholders of the Company on April 13, 1998. Shareholders wishing to submit a proposal for consideration at the Company's 1999 Annual Meeting of Shareholders may do so by following the procedures prescribed in the Securities Exchange Act of 1934, as amended. To be eligible for inclusion, the Company's Corporate Secretary must receive the proposal no later than December 14, 1998. In addition, in the event a shareholder proposal is not submitted to the Company prior to February 28, 1999, the proxy to be solicited by the Board of Directors for the 1999 Annual Meeting of Shareholders will confer authority on the holders of the proxy to vote the shares in accordance with their best judgment and discretion if the proposal is presented at the 1999 Annual Meeting of Shareholders without any discussion of the proposal in the proxy statement for such meeting. 29

Item 6 - Exhibits and Reports on Form 8-K (a) Exhibits Exhibit 27 - Financial Data Schedule (b) Reports on Form 8-K Not Applicable 30

Exhibit Index Exhibit No. Description Page 27 Financial Data Schedule 33 31

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 thereunto duly authorized. CVB FINANCIAL CORP. (Registrant) Date: August 13, 1998 /s/ Edward J. Biebrich Jr. -------------------------- Edward J. Biebrich Jr. Chief Financial Officer 32

  

9 THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE JUNE 30, 1998, CONSOLIDATED BALANCE SHEET, AND THE JUNE 30, 1998, CONSOLIDATED STATEMENT OF EARNINGS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS 6-MOS DEC-31-1998 JUN-30-1998 76,313 0 12,000 0 560,847 57,327 58,840 636,533 12,810 1,381,317 1,104,460 135,000 32,251 416 0 0 62,404 46,786 1,381,317 30,179 16,287 248 46,714 11,716 14,660 32,054 1,300 25 22,564 15,655 9,842 0 0 9,842 0.65 0.63 5.57 4,828 4 0 1,874 11,522 192 180 12,810 8,862 0 3,948