8-K
CVB FINANCIAL CORP false 0000354647 0000354647 2023-07-26 2023-07-26

 

 

UNITED STATES

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 (Date of earliest event reported): July 26, 2023

 

 

CVB FINANCIAL CORP.

(Exact name of registrant as specified in its charter)

 

 

 

California   000-10140   95-3629339

(State or other jurisdiction of

incorporation or organization)

 

(Commission

file number)

 

(I.R.S. employer

identification number)

 

701 North Haven Avenue, Ontario, California   91764
(Address of principal executive offices)   (Zip Code)

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

Not Applicable

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (See General Instruction A.2. below):

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange

on which registered

Common Stock, No Par Value   CVBF   The Nasdaq Stock Market, LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). Emerging growth company  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

 

 


Item 2.02

Results of Operations and Financial Condition.*

On July 26, 2023, CVB Financial Corp. issued a press release setting forth the financial results for the quarter ended June 30, 2023, and information relating to our quarterly conference call and webcast. A copy of this press release is attached hereto as Exhibit 99.1 and is being furnished pursuant to this Item 2.02.

 

Item 9.01

Financial Statements and Exhibits.*

 

(d)

Exhibits.

 

Exhibit
No
   Description
99.1    Press Release, dated July 26, 2023.
104    Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

*

The information in this report (including Exhibit 99.1) shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as set forth in Item 8.01 herein and as expressly set forth by specific reference in such filing.

 

2


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.
    (Registrant)
Date: July 27, 2023     By:  

/s/ E. Allen Nicholson

      E. Allen Nicholson
      Executive Vice President and Chief Financial Officer

 

3

EX-99.1

Exhibit 99.1

 

LOGO

Press Release

For Immediate Release

 

  Contact:    David A. Brager
    

President and Chief

Executive Officer

     (909) 980-4030

CVB Financial Corp. Reports Earnings for the Second Quarter 2023

 

   

Net Earnings of $55.8 million, or $0.40 per share

 

   

Return on Average Tangible Common Equity of 18.39%

 

   

Return on Average Assets of 1.36%

 

   

Efficiency Ratio of 40.86%

 

   

$126 million Deposit Growth QTR/QTR

Ontario, Calif., July 26, 2023-CVB Financial Corp. (NASDAQ:CVBF) and its subsidiary, Citizens Business Bank (the “Company”), announced earnings for the quarter ended June 30, 2023.

CVB Financial Corp. reported net income of $55.8 million for the quarter ended June 30, 2023, compared with $59.3 million for the first quarter of 2023 and $59.1 million for the second quarter of 2022. Diluted earnings per share were $0.40 for the second quarter, compared to $0.42 for the prior quarter and $0.42 for the same period last year. The second quarter of 2023 included $500,000 in provision for credit losses, compared to $1.5 million in provision for the first quarter and $3.6 million in the second quarter of 2022. Net income of $55.8 million for the second quarter of 2023 produced an annualized return on average equity (“ROAE”) of 11.03%, an annualized return on average tangible common equity (“ROATCE”) of 18.39%, and an annualized return on average assets (“ROAA”) of 1.36%. Our net interest margin, tax equivalent (“NIM”), was 3.22% for the second quarter of 2023, while our efficiency ratio was 40.86%.

David Brager, President and Chief Executive Officer of Citizens Business Bank, commented, “We are pleased to present our second quarter results. Despite the challenging environment, the Bank continued to produce solid financial performance across our key operating metrics. We will continue to focus on executing on our core strategies and supporting our customers through these demanding times. I would like to thank our customers and associates for their commitment and loyalty.”

 

- 1 -


INCOME STATEMENT HIGHLIGHTS

 

     Three Months Ended     Six Months Ended  
     June 30,     March 31,     June 30,     June 30,     June 30,  
     2023     2023     2022     2023     2022  
     (Dollars in thousands, except per share amounts)  

Net interest income

   $ 119,535     $ 125,728     $ 121,940     $ 245,263     $ 234,780  

Provision for credit losses

     (500     (1,500     (3,600     (2,000     (6,100

Noninterest income

     12,656       13,202       14,670       25,858       25,934  

Noninterest expense

     (54,017     (54,881     (50,871     (108,898     (109,109

Income taxes

     (21,904     (23,279     (23,081     (45,183     (40,887
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net earnings

   $ 55,770     $ 59,270     $ 59,058     $ 115,040     $ 104,618  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Earnings per common share:

          

Basic

   $ 0.40     $ 0.42     $ 0.42     $ 0.83     $ 0.74  

Diluted

   $ 0.40     $ 0.42     $ 0.42     $ 0.82     $ 0.74  

NIM

     3.22     3.45     3.16     3.33     3.03

ROAA

     1.36     1.47     1.39     1.42     1.23

ROAE

     11.03     12.15     11.33     11.58     9.74

ROATCE

     18.39     20.59     18.67     19.46     15.73

Efficiency ratio

     40.86     39.50     37.24     40.17     41.85

Noninterest expense to average assets, annualized

     1.32     1.36     1.20     1.34     1.28

Net Interest Income

Net interest income was $119.5 million for the second quarter of 2023. This represented a $6.2 million, or 4.93%, decrease from the first quarter of 2023, and a $2.4 million, or 1.97%, decrease from the second quarter of 2022. The $6.2 million quarter-over-quarter decline in net interest income was primarily due to a 0.23% decline in net interest margin. The decline in net interest income compared to the second quarter of 2022 was primarily due to a $593.1 million decrease in average earning assets, that was partially offset by a six basis point increase in the net interest margin.

Net Interest Margin

Our tax equivalent net interest margin was 3.22% for the second quarter of 2023, compared to 3.45% for the first quarter of 2023 and 3.16% for the second quarter of 2022. The 23 basis point decrease in our net interest margin compared to the first quarter of 2023, was primarily due to a 34 basis point increase in our cost of funds. Cost of funds increased in part due to a $555 million increase in short-term borrowings, which had an average cost of 4.90% during the second quarter of 2023. The cost of interest-bearing deposits increased by 49 basis points from the first quarter; however, our total cost of deposits and customer repurchases only increased by 18 basis points, as noninterest-bearing deposits were more than 63% of average deposits during the second quarter of 2023. Our interest-earning asset yield increased by 10 basis points over the prior quarter, primarily due to an 11 basis point increase in loan yields. The six basis point increase in net interest margin, compared to the second quarter of 2022 was the net result of an 81 basis point increase in earning asset yield, offset by a 79 basis point increase in cost of funds. Loan yields grew from 4.31% for the second quarter of 2022 to 5.01% for the second quarter of 2023. Likewise, the yield on investment securities increased by 44 basis points from the prior year quarter. Loan balances grew to 59.41% of earning assets on average for the second quarter of 2023, compared to 55.49% for the second quarter of 2022, while our average balance at the Fed declined from 5.1% of earning assets in the second quarter of 2022 to 2.3% in the second quarter of 2023. Total cost of funds of 0.83% for the second quarter of 2023 increased from 0.04% for the year ago quarter. This 79 basis point increase in cost of funds was the result of an 87 basis point increase in the cost of interest-bearing deposits and an average cost of 4.90% on $1.53 billion of short-term borrowings for the second quarter of 2023. On average, noninterest-bearing deposits were 63.58% of total deposits during the most recent quarter, compared to 63.65% for the first quarter of 2023 and 62.96% for the second quarter of 2022.

 

- 2 -


Earning Assets and Deposits

On average, earning assets grew by $164.8 million, compared to the first quarter of 2023, while declining by $593.1 million when compared to the second quarter of 2022. The $164.8 million quarter-over-quarter increase in earning assets resulted from a $310.2 million increase in average earning balances due from the Federal Reserve, offset by average investment securities declining by $73.1 million and average loans decreasing by $70.9 million. Compared to the second quarter of 2022, average loans increased by $257.8 million, while the average balance of investment securities declined by $414.4 million, and the average amount of funds held at the Federal Reserve declined by $450.1 million. Noninterest-bearing deposits declined on average by $269.2 million, or 3.33%, from the first quarter of 2023, while interest-bearing deposits and customer repurchase agreements declined on average by $195.1 million. Compared to the second quarter of 2022, total deposits and customer repurchase agreements declined on average by $1.95 billion, or 13.24%, including a decline of $1.1 billion in noninterest-bearing deposits.

 

     Three Months Ended
SELECTED FINANCIAL HIGHLIGHTS            June 30, 2023                    March 31, 2023                    June 30, 2022        
          (Dollars in thousands)     

Yield on average investment securities (TE)

   2.37%    2.37%    1.93%

Yield on average loans

   5.01%    4.90%    4.31%

Core Loan Yield [1]

   4.96%    4.85%    4.20%

Yield on average earning assets (TE)

   4.01%    3.91%    3.20%

Cost of deposits

   0.35%    0.17%    0.03%

Cost of funds

   0.83%    0.49%    0.04%

Net interest margin (TE)

   3.22%    3.45%    3.16%

 

Average Earning Asset Mix    Avg      % of Total     Avg      % of Total     Avg      % of Total  

Total investment securities

   $ 5,689,606        38.01   $ 5,762,728        38.93   $ 6,104,037        39.23

Interest-earning deposits with other institutions

     353,610        2.36     47,934        0.32     804,147        5.17

Loans

     8,892,413        59.41     8,963,323        60.55     8,634,575        55.49

Total interest-earning assets

     14,967,661          14,802,853          15,560,771     

 

[1]

Represents yield on average loans excluding the impact of discount accretion and PPP loans .

Provision for Credit Losses

The second quarter of 2023 included $500,000 in provision for credit losses, compared to a $1.5 million in provision for credit losses in the first quarter of 2023 and $3.6 million in the second quarter of 2022. The year-to-date provision for credit losses of $2.0 million was the result of an overall increase in projected loss rates from 0.94% at the end of 2022 to 0.98% at June 30, 2023. The increase in projected loss rates continues to be driven primarily by a deteriorating economic forecast that assumes modest GDP growth through 2024, as well as lower commercial real estate values and an increase in the rate of unemployment.

 

- 3 -


Noninterest Income

Noninterest income was $12.7 million for the second quarter of 2023, compared with $13.2 million for the first quarter of 2023 and $14.7 million for the second quarter of 2022. Service charges on deposits decreased by $506,000, or 9.47% over the first quarter of 2023 and declined by $495,000, or 9.28% in comparison to the second quarter of 2022. Trust and investment services income grew by $401,000 compared to the first quarter of 2023 and increased by $353,000 year-over-year. The second quarter of 2023 included approximately $800,000 in death benefits that exceeded the asset value of certain BOLI policies, and approximately $100,000 in swap fees for transitioning swaps out of LIBOR, partially offset by a $475,000 decrease in CRA investment income due to underlying asset valuation declines. The first quarter of 2023 included approximately $500,000 in interest rate swap related fees for the conversion of instruments from LIBOR to SOFR and the recapture of a previous impairment charge of $500,000, as a result of the payoff of a CRA investment that was previously identified as impaired. Compared to the second quarter of 2022, BOLI income increased $1.5 million due to valuation changes and death benefits that exceeded policy values. Income related to CRA investments declined by $716,000 compared to the year ago quarter. The second quarter of 2022 also included $2.7 million in net gains on the sale of properties associated with our banking centers.

Noninterest Expense

Noninterest expense for the second quarter of 2023 was $54.0 million, compared to $54.9 million for the first quarter of 2023 and $50.9 million for the second quarter of 2022. The second quarter of 2023 included $400,000 in provision for unfunded loan commitments, compared to $500,000 in provision for the first quarter of 2023 and no provision for the second quarter of 2022. The $1.7 million quarter-over-quarter decrease in salaries and employee benefit costs was primarily due to the higher payroll taxes typically incurred in the first quarter of each year. The $866,000 quarter-over-quarter increase in professional services included increases of $357,000 in legal expense and $228,000 in other professional services due to the timing of various projects. The $3.1 million increase in noninterest expense year-over-year included an increase of $2.0 million in salaries and employee benefits and a $785,000 increase in FDIC assessments. As a percentage of average assets, noninterest expense was 1.32% for the second quarter of 2023, compared to 1.36% for the first quarter of 2023 and 1.20% for the second quarter of 2022. The efficiency ratio for the second quarter of 2023 was 40.86%, compared to 39.50% for the first quarter of 2023 and 37.24% for the second quarter of 2022.

Income Taxes

Our effective tax rate for the quarter ended June 30, 2023 and year-to-date was 28.20%, compared with 28.10% for the second quarter of 2022. Our estimated annual effective tax rate can vary depending upon the level of tax-advantaged income as well as available tax credits.

BALANCE SHEET HIGHLIGHTS

Assets

The Company reported total assets of $16.48 billion at June 30, 2023. This represented an increase of $210.5 million, or 1.29%, from total assets of $16.27 billion at March 31, 2023. Interest-earning assets of $14.94 billion at June 30, 2023 increased by $136.8 million, or 0.92%, when compared with $14.80 billion at March 31, 2023. The increase in interest-earning assets was primarily due a $322.2 million increase in interest-earning balances due from the Federal Reserve, partially offset by a $159.6 million decrease in investment securities and a $35.1 million decrease in total loans.

Total assets increased by $8.0 million, or 0.05%, from total assets of $16.48 billion at December 31, 2022. Interest-earning assets of $14.94 billion at June 30, 2023 decreased by $36.1 million, or 0.24%, when compared with $14.97 billion at December 31, 2022. The decrease in interest-earning assets was primarily due to a $228.7 million decrease in investment securities and a $172.0 million decrease in total loans, partially offset by a $341.8 million increase in interest-earning balances due from the Federal Reserve.

 

- 4 -


Total assets at June 30, 2023 decreased by $275.4 million, or 1.64%, from total assets of $16.76 billion at June 30, 2022. Interest-earning assets decreased by $344.3 million, or 2.25%, when compared with $15.28 billion at June 30, 2022. The decrease in interest-earning assets included a $457.6 million decrease in investment securities and a $136.4 million decrease in interest-earning balances due from the Federal Reserve, partially offset by a $215.2 million increase in total loans. The increase in total loans from June 30, 2022, included a $61.9 million decrease in PPP loans with a remaining outstanding balance totaling $5.0 million as of June 30, 2023. Excluding PPP loans, total loans increased by $277.1 million from June 30, 2022.

Investment Securities

Total investment securities were $5.58 billion at June 30, 2023, a decrease of $228.7 million, or 3.94%, from $5.81 billion at December 31, 2022 and a decrease of $457.6 million, or 7.58%, from $6.04 billion at June 30, 2022.

At June 30, 2023, investment securities held-to-maturity (“HTM”) totaled $2.51 billion, a decrease of $41.6 million, or 1.63%, from December 31, 2022 and a $100.4 million increase, or 4.16%, from June 30, 2022.

At June 30, 2023, investment securities available-for-sale (“AFS”) totaled $3.07 billion, inclusive of a pre-tax net unrealized loss of $497.7 million. AFS securities decreased by $187.1 million, or 5.75%, from $3.26 billion at December 31, 2022 and decreased by $558.0 million, or 15.39%, from June 30, 2022.

In June of 2023, fair value hedging transactions were executed in which $1 billion notional pay-fixed interest rate swaps were consummated with maturities ranging from four to five years, wherein the Company pays a weighted average fixed rate of approximately 3.8% and receives daily SOFR. The fair value of these instruments totaled approximately $8 million on June 30, 2023.    

Combined, the AFS and HTM investments in mortgage-backed securities (“MBS”) and collateralized mortgage obligations (“CMO”) totaled $4.54 billion or approximately 81% of our total investment securities at June 30, 2023. Virtually all of our MBS and CMOs are issued or guaranteed by government or government-sponsored enterprises, which have the implied guarantee of the U.S. Government. In addition, at June 30, 2023, we held $538.9 million of Government Agency securities (HTM) that represent approximately 9.7% of the total investment securities.

Our combined AFS and HTM municipal securities totaled $496.6 million as of June 30, 2023, or approximately 8.9% of our total investment portfolio. These securities are located in 35 states. Our largest concentrations of holdings by state, as a percentage of total municipal bonds, are located in Texas at 15.84%, Minnesota at 11.20%, California at 9.53%, Ohio at 6.30%, Massachusetts at 6.25%, and Washington at 5.79%.

 

- 5 -


Loans

Total loans and leases, at amortized cost of $8.91 billion at June 30, 2023, decreased by $35.1 million, or 0.39%, from March 31, 2023. The quarter-over quarter decrease in core loans included decreases of $46.2 million in commercial real estate loans, $15.2 million in construction loans, $4.6 million in SBA loans, and $16.1 million in consumer and other loans, partially offset by an increase of $58.1 million in commercial and industrial loans.

Total loans and leases, at amortized cost, decreased by $172.0 million, or 1.89%, from December 31, 2022. After adjusting for seasonality of dairy & livestock and PPP loans, our core loans declined by $31.9 million, or 0.37%, from December 31, 2022. The $172.0 million decrease in total loans included decreases of $136.0 million in dairy & livestock loans, $19.4 million in construction loans, $12.0 million in SBA loans, $4.1 million in PPP loans, and $21.8 million in consumer and other loans, partially offset by increases of $19.1 million in commercial real estate loans, and $7.6 million in commercial and industrial loans. Commercial and industrial line utilization was 31% at June 30, 2023, compared to 33% at the end of 2022. The decline in dairy & livestock loans primarily relates to the seasonal peak in line utilization at the end of every calendar year, demonstrated by a decline in utilization from 78% at December 31, 2022 to 68% at June 30, 2023.

Total loans and leases, at amortized cost, increased by $215.2 million, or 2.48%, from June 30, 2022. After adjusting for PPP loans, our core loans grew by $277.1 million, or 3.21%, from the end of the second quarter of 2022. Commercial real estate loans grew by $260.5 million, dairy & livestock and agribusiness loans grew by $24.7 million, commercial and industrial loans increased $14.6 million, municipal lease financings increased by $13.4 million, and SFR mortgage loans increased by $3.0 million. This core loan growth was partially offset by decreases of $18.2 million in SBA loans and $29.1 million in consumer and other loans.

Asset Quality

During the second quarter of 2023, we experienced credit charge-offs of $88,000 and total recoveries of $15,000, resulting in net charge-offs of $73,000. The allowance for credit losses (“ACL”) totaled $87.0 million at June 30, 2023, compared to $86.5 million at March 31, 2023 and $80.2 million at June 30, 2022. The ACL was increased by $1.9 million in 2023, including a $2.0 million provision for credit losses. At June 30, 2023, ACL as a percentage of total loans and leases outstanding was 0.98%. This compares to 0.97% and 0.92% at March 31, 2023 and June 30, 2022, respectively.

Nonperforming loans, defined as nonaccrual loans, including modified loans on nonaccrual, plus loans 90 days past due and accruing interest, and nonperforming assets, defined as nonperforming loans plus OREO, are highlighted below.

 

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Nonperforming Assets and Delinquency Trends    June 30,     March 31,     June 30,  
     2023     2023     2022  
Nonperforming loans    (Dollars in thousands)  

Commercial real estate

   $ 3,159     $ 2,634     $ 6,843  

SBA

     629       702       1,075  

SBA - PPP

     —         —         —    

Commercial and industrial

     2,039       2,049       1,655  

Dairy & livestock and agribusiness

     273       406       3,354  

SFR mortgage

     —         —         —    

Consumer and other loans

     354       384       37  
  

 

 

   

 

 

   

 

 

 

Total

   $ 6,454     $ 6,175     $ 12,964  
  

 

 

   

 

 

   

 

 

 

% of Total loans

     0.07     0.07     0.15

OREO

      

Commercial real estate

   $ —       $ —       $ —    

SFR mortgage

     —         —         —    
  

 

 

   

 

 

   

 

 

 

Total

   $ —       $ —       $ —    
  

 

 

   

 

 

   

 

 

 

Total nonperforming assets

   $ 6,454     $ 6,175     $ 12,964  
  

 

 

   

 

 

   

 

 

 

% of Nonperforming assets to total assets

     0.04     0.04     0.08

Past due 30-89 days

      

Commercial real estate

   $ 532     $ 425     $ 559  

SBA

     —         575       —    

Commercial and industrial

     —         —         —    

Dairy & livestock and agribusiness

     555       183       —    

SFR mortgage

     —         —         —    

Consumer and other loans

     —         —         —    
  

 

 

   

 

 

   

 

 

 

Total

   $ 1,087     $ 1,183     $ 559  
  

 

 

   

 

 

   

 

 

 

% of Total loans

     0.01     0.01     0.01

Classified Loans

   $ 77,834     $ 66,977     $ 76,170  

The $279,000 increase in nonperforming loans from March 31, 2023 was primarily due to an increase of $525,000 in commercial real estate loans. Classified loans are loans that are graded “substandard” or worse. Classified loans increased $10.9 million quarter-over-quarter, primarily due to a $9.7 million increase in classified commercial real estate loans and a $6.1 million increase in classified dairy & livestock and agribusiness loans, partially offset by a $4.4 million decrease in classified commercial and industrial loans.

Deposits & Customer Repurchase Agreements

Deposits of $12.40 billion and customer repurchase agreements of $452.3 million totaled $12.85 billion at June 30, 2023. This represented an increase of $125.7 million in deposits and a decrease of $37.9 million in customer repurchases compared to March 31, 2023. Deposits and customer repurchase agreements declined by $551.8 million, or 4.12%, when compared with $13.40 billion at December 31, 2022. Total deposits and customer repurchase agreements decreased $1.73 billion, or 11.84% when compared with $14.58 billion at June 30, 2022. Higher interest rates that have resulted from the Federal Reserve’s significant increase in the federal funds rate over the last year have continued to impact deposit levels, including approximately $550 million of funds on deposit at the end of 2022 that were transferred from the Bank’s balance sheet to be invested by Citizens Trust in higher yielding instruments such as treasury notes.

 

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Noninterest-bearing deposits were $7.88 billion at June 30, 2023, an increase of $34.5 million, or 0.44%, when compared to $7.84 billion at March 31, 2023. Noninterest-bearing deposits decreased $285.6 million, or 3.50% when compared to $8.16 billion at December 31, 2022, and decreased $1.0 billion, or 11.29%, when compared to $8.88 billion at June 30, 2022. At June 30, 2023, noninterest-bearing deposits were 63.55% of total deposits, compared to 63.92% at March 31, 2023, 63.60% at December 31, 2022, and 63.11% at June 30, 2022.

Short–Term Borrowings

As of June 30, 2023, total short-term borrowings, consisted of $695 million of one-year advances from the Federal Reserve’s Bank Term Funding Program, at a cost of 4.7% and $800 million of short-term Federal Home Loan Bank advances, at an average cost of approximately 5%.

Capital

The Company’s total equity was $2.00 billion at June 30, 2023. This represented an overall increase of $52.9 million from total equity of $1.95 billion at December 31, 2022. Increases to equity included $115.0 million in net earnings and a $9.9 million increase in other comprehensive income. At the end of the second quarter of 2023, we entered into pay-fixed rate swaps to mitigate the risks of rising interest rates. This resulted in a fair value remeasurement of this swap derivative of $7.8 million at June 30, 2023, resulting in an increase in other comprehensive income. Decreases from December 31, 2022 included $55.8 million in cash dividends. We engaged in no stock repurchases during the second quarter of 2023, compared to the first quarter of 2023, when we repurchased, under our 10b5-1 stock repurchase plan, 791,800 shares of common stock, at an average repurchase price of $23.43, totaling $18.5 million. This 10b5-1 plan expired on March 2, 2023 and no new plan has been put in place since that time. Our tangible book value per share at June 30, 2023 was $8.74.

Our capital ratios under the revised capital framework referred to as Basel III remain well-above regulatory standards.

 

           CVB Financial Corp. Consolidated  
     Minimum Required Plus     June 30,     December 31,     June 30,  

Capital Ratios

   Capital Conservation Buffer     2023     2022     2022  

Tier 1 leverage capital ratio

     4.0     9.8     9.5     8.8

Common equity Tier 1 capital ratio

     7.0     14.1     13.6     13.4

Tier 1 risk-based capital ratio

     8.5     14.1     13.6     13.4

Total risk-based capital ratio

     10.5     14.9     14.4     14.2

Tangible common equity ratio

       7.8     7.4     7.5

CitizensTrust

As of June 30, 2023 CitizensTrust had approximately $3.61 billion in assets under management and administration, including $2.41 billion in assets under management. Revenues were $3.3 million for the second quarter of 2023 and $6.2 million for the six months ended June 30, 2023, compared to $3.0 million and $5.8 million, respectively, for the same periods of 2022. CitizensTrust provides trust, investment and brokerage related services, as well as financial, estate and business succession planning.

 

- 8 -


Corporate Overview

CVB Financial Corp. (“CVBF”) is the holding company for Citizens Business Bank. CVBF is one of the 10 largest bank holding companies headquartered in California with over $16 billion in total assets. Citizens Business Bank is consistently recognized as one of the top performing banks in the nation and offers a wide array of banking, lending and investing services with more than 60 banking centers and 3 trust office locations serving California.

Shares of CVB Financial Corp. common stock are listed on the NASDAQ under the ticker symbol “CVBF”. For investor information on CVB Financial Corp., visit our Citizens Business Bank website at www.cbbank.com and click on the “Investors” tab.

Conference Call

Management will hold a conference call at 7:30 a.m. PDT/10:30 a.m. EDT on Thursday, July 27, 2023 to discuss the Company’s second quarter 2023 financial results. The conference call can be accessed live by registering at: https://register.vevent.com/register/BI330d7e9b6832431083833dedd79e1141

The conference call will also be simultaneously webcast over the Internet; please visit our Citizens Business Bank website at www.cbbank.com and click on the “Investors” tab to access the call from the site. Please access the website 15 minutes prior to the call to download any necessary audio software. This webcast will be recorded and available for replay on the Company’s website approximately two hours after the conclusion of the conference call and will be available on the website for approximately 12 months.

Safe Harbor

Certain statements set forth herein constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “will likely result”, “aims”, “anticipates”, “believes”, “could”, “estimates”, “expects”, “hopes”, “intends”, “may”, “plans”, “projects”, “seeks”, “should”, “will,” “strategy”, “possibility”, and variations of these words and similar expressions help to identify these forward-looking statements, which involve risks and uncertainties that could cause actual results or performance to differ materially from those projected. These forward-looking statements are based on management’s current expectations and beliefs concerning future developments and their potential effects on the Company including, without limitation, plans, strategies, goals, and statements about the Company’s outlook regarding revenue and asset growth, financial performance and profitability, capital and liquidity levels, loan and deposit growth and retention, yields and returns, loan diversification and credit management, stockholder value creation, tax rates, the impact of economic developments, and the impact of acquisitions we have made or may make. Such statements involve inherent risks and uncertainties, many of which are difficult to predict and are generally beyond the control of the Company, and there can be no assurance that future developments affecting the Company will be the same as those anticipated by management. The Company cautions readers that a number of important factors, in addition to those set forth below could cause actual results to differ materially from those expressed in, or implied or projected by, such forward-looking statements.

General risks and uncertainties include, but are not limited to, the following: the strength of the United States economy in general and the strength of the local economies in which we conduct business; the effects of, and changes in, trade, monetary, and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System; inflation/deflation, interest rate, market, and monetary fluctuations; the effect of acquisitions we have made or may make, including, without limitation, the failure to obtain the necessary regulatory approvals, the failure to achieve the expected revenue growth and/or expense savings from such acquisitions, and/or the failure to effectively integrate an acquisition target and key personnel into our operations; the timely development of competitive new products and services and the acceptance of these products and services by new and existing customers; the impact of changes in financial services policies, laws, and regulations, including those concerning taxes, banking, securities, and insurance, and the application thereof by regulatory bodies; the effectiveness of our risk management framework and quantitative models; changes in the level of our nonperforming assets and charge-offs; the transition away from USD LIBOR and uncertainties regarding potential alternative reference rates, including SOFR; the effect of changes in accounting policies and practices or accounting standards, as may be adopted from time-to-time by bank regulatory agencies, the U.S. Securities and Exchange Commission (“SEC”), the Public Company Accounting Oversight Board, the Financial Accounting Standards Board or other accounting standards setters; possible credit related impairments or declines in the fair value of loans and securities held by us; possible impairment charges to goodwill; changes in customer spending, borrowing, and savings habits; the effects of our lack of a diversified loan portfolio, including the risks of geographic and industry concentrations; periodic fluctuations in commercial or residential real estate prices or values; our ability to attract or retain deposits or to access government or private lending facilities and other sources of liquidity; the possibility that we may reduce or discontinue the payment of

 

- 9 -


dividends on our common stock; changes in the financial performance and/or condition of our borrowers; changes in the competitive environment among financial and bank holding companies and other financial service providers; technological changes in banking and financial services; geopolitical conditions, including acts or threats of terrorism, actions taken by the United States or other governments in response to acts or threats of terrorism, and/or military conflicts, which could impact business and economic conditions in the United States and abroad; catastrophic events or natural disasters, including earthquakes, drought, climate change or extreme weather events that may affect our assets, communications or computer services, customers, employees or third party vendors; public health crises and pandemics, and their effects on the economic and business environments in which we operate, including on our credit quality, business operations, and employees, as well as the impact on general economic and financial market conditions; cybersecurity threats and the costs of defending against them, including the costs of compliance with potential legislation to combat cybersecurity at a state, national, or global level; our ability to recruit and retain key executives, board members and other employees, and changes in employment laws and regulations; unanticipated regulatory or legal proceedings or outcomes; and our ability to manage the risks involved in the foregoing. Additional factors that could cause actual results to differ materially from those expressed in the forward-looking statements are discussed in the Company’s 2022 Annual Report on Form 10-K filed with the SEC and available at the SEC’s Internet site (http://www.sec.gov).

The Company does not undertake, and specifically disclaims any obligation, to update any forward-looking statements to reflect occurrences or unanticipated events or circumstances after the date of such statements, except as required by law. Any statements about future operating results, such as those concerning accretion and dilution to the Company’s earnings or shareholders, are for illustrative purposes only, are not forecasts, and actual results may differ.

Non-GAAP Financial Measures — Certain financial information provided in this presentation has not been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and is presented on a non-GAAP basis. Investors and analysts should refer to the reconciliations included in this presentation and should consider the Company’s non-GAAP measures in addition to, not as a substitute for or as superior to, measures prepared in accordance with GAAP. These measures may or may not be comparable to similarly titled measures used by other companies.

###

 

- 10 -


CVB FINANCIAL CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(Dollars in thousands)

 

     June 30,
2023
    December 31,
2022
    June 30,
2022
 

Assets

      

Cash and due from banks

   $ 231,316     $ 158,236     $ 173,266  

Interest-earning balances due from Federal Reserve

     387,039       45,225       523,443  
  

 

 

   

 

 

   

 

 

 

Total cash and cash equivalents

     618,355       203,461       696,709  
  

 

 

   

 

 

   

 

 

 

Interest-earning balances due from depository institutions

     30,478       9,553       7,382  

Investment securities available-for-sale

     3,068,151       3,255,211       3,626,157  

Investment securities held-to-maturity

     2,512,707       2,554,301       2,412,308  
  

 

 

   

 

 

   

 

 

 

Total investment securities

     5,580,858       5,809,512       6,038,465  
  

 

 

   

 

 

   

 

 

 

Investment in stock of Federal Home Loan Bank (FHLB)

     29,484       27,627       18,012  

Loans and lease finance receivables

     8,907,397       9,079,392       8,692,229  

Allowance for credit losses

     (86,967     (85,117     (80,222
  

 

 

   

 

 

   

 

 

 

Net loans and lease finance receivables

     8,820,430       8,994,275       8,612,007  
  

 

 

   

 

 

   

 

 

 

Premises and equipment, net

     45,518       46,698       47,100  

Bank owned life insurance (BOLI)

     257,348       255,528       259,958  

Intangibles

     18,303       21,742       25,312  

Goodwill

     765,822       765,822       765,822  

Other assets

     317,948       342,322       289,226  
  

 

 

   

 

 

   

 

 

 

Total assets

   $ 16,484,544     $ 16,476,540     $ 16,759,993  
  

 

 

   

 

 

   

 

 

 

Liabilities and Stockholders’ Equity

      

Liabilities:

      

Deposits:

      

Noninterest-bearing

   $ 7,878,810     $ 8,164,364     $ 8,881,223  

Investment checking

     574,817       723,870       695,054  

Savings and money market

     3,627,858       3,653,385       4,145,634  

Time deposits

     316,036       294,626       350,308  
  

 

 

   

 

 

   

 

 

 

Total deposits

     12,397,521       12,836,245       14,072,219  

Customer repurchase agreements

     452,373       565,431       502,829  

Other borrowings

     1,495,000       995,000       —    

Payable for securities purchased

     —         —         80,230  

Other liabilities

     138,283       131,347       122,504  
  

 

 

   

 

 

   

 

 

 

Total liabilities

     14,483,177       14,528,023       14,777,782  
  

 

 

   

 

 

   

 

 

 

Stockholders’ Equity

      

Stockholders’ equity

     2,346,243       2,303,313       2,229,050  

Accumulated other comprehensive loss, net of tax

     (344,876     (354,796     (246,839
  

 

 

   

 

 

   

 

 

 

Total stockholders’ equity

     2,001,367       1,948,517       1,982,211  
  

 

 

   

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 16,484,544     $ 16,476,540     $ 16,759,993  
  

 

 

   

 

 

   

 

 

 


CVB FINANCIAL CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED AVERAGE BALANCE SHEETS    

(Unaudited)

(Dollars in thousands)

 

     Three Months Ended     Six Months Ended  
     June 30,
2023
    March 31,
2023
    June 30,
2022
    June 30,
2023
    June 30,
2022
 

Assets

          

Cash and due from banks

   $ 178,405     $ 175,129     $ 178,752     $ 176,776     $ 182,884  

Interest-earning balances due from Federal Reserve

     347,161       36,950       797,268       192,913       1,222,943  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total cash and cash equivalents

     525,566       212,079       976,020       369,689       1,405,827  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Interest-earning balances due from depository institutions

     6,449       10,984       6,879       8,704       9,985  

Investment securities available-for-sale

     3,162,917       3,216,143       3,736,076       3,189,384       3,642,009  

Investment securities held-to-maturity

     2,526,689       2,546,585       2,367,961       2,536,580       2,299,134  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total investment securities

     5,689,606       5,762,728       6,104,037       5,725,964       5,941,143  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Investment in stock of FHLB

     32,032       28,868       18,012       30,459       18,470  

Loans and lease finance receivables

     8,892,413       8,963,323       8,634,575       8,927,672       8,567,876  

Allowance for credit losses

     (86,508     (85,151     (76,492     (85,833     (74,796
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loans and lease finance receivables

     8,805,905       8,878,172       8,558,083       8,841,839       8,493,080  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Premises and equipment, net

     45,629       46,258       51,607       45,942       52,804  

Bank owned life insurance (BOLI)

     257,428       256,137       259,500       256,786       259,649  

Intangibles

     19,298       20,983       26,381       20,136       27,280  

Goodwill

     765,822       765,822       765,822       765,822       762,437  

Other assets

     308,789       331,105       240,607       319,885       223,733  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total assets

   $ 16,456,524     $ 16,313,136     $ 17,006,948     $ 16,385,226     $ 17,194,408  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Liabilities and Stockholders’ Equity

          

Liabilities:

          

Deposits:

          

Noninterest-bearing

   $ 7,823,496     $ 8,092,704     $ 8,923,043     $ 7,957,357     $ 8,822,444  

Interest-bearing

     4,481,766       4,621,247       5,249,262       4,551,121       5,356,312  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total deposits

     12,305,262       12,713,951       14,172,305       12,508,478       14,178,756  

Customer repurchase agreements

     495,179       550,754       581,574       522,813       630,481  

Other borrowings

     1,526,958       971,701       39       1,250,863       45  

Payable for securities purchased

     —         79       66,693       39       115,906  

Other liabilities

     101,417       98,407       94,883       99,921       102,245  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities

     14,428,816       14,334,892       14,915,494       14,382,114       15,027,433  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Stockholders’ Equity

          

Stockholders’ equity

     2,353,975       2,332,625       2,238,788       2,343,358       2,243,801  

Accumulated other comprehensive (loss) income, net of tax

     (326,267     (354,381     (147,334     (340,246     (76,826
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total stockholders’ equity

     2,027,708       1,978,244       2,091,454       2,003,112       2,166,975  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 16,456,524     $ 16,313,136     $ 17,006,948     $ 16,385,226     $ 17,194,408  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 


CVB FINANCIAL CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(Unaudited)

(Dollars in thousands, except per share amounts)

 

     Three Months Ended      Six Months Ended  
     June 30,
2023
     March 31,
2023
     June 30,
2022
     June 30,
2023
     June 30,
2022
 

Interest income:

              

Loans and leases, including fees

   $ 110,990      $ 108,394      $ 92,770      $ 219,384      $ 182,231  

Investment securities:

              

Investment securities available-for-sale

     19,356        19,596        17,042        38,952        29,874  

Investment securities held-to-maturity

     13,740        13,956        11,714        27,696        22,377  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total investment income

     33,096        33,552        28,756        66,648        52,251  

Dividends from FHLB stock

     483        349        273        832        644  

Interest-earning deposits with other institutions

     4,670        491        1,463        5,161        2,236  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total interest income

     149,239        142,786        123,262        292,025        237,362  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Interest expense:

              

Deposits

     10,765        5,365        1,201        16,130        2,328  

Borrowings and junior subordinated debentures

     18,939        11,693        121        30,632        254  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total interest expense

     29,704        17,058        1,322        46,762        2,582  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net interest income before provision for credit losses

     119,535        125,728        121,940        245,263        234,780  

Provision for credit losses

     500        1,500        3,600        2,000        6,100  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net interest income after provision for credit losses

     119,035        124,228        118,340        243,263        228,680  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Noninterest income:

              

Service charges on deposit accounts

     4,838        5,344        5,333        10,182        10,392  

Trust and investment services

     3,315        2,914        2,962        6,229        5,784  

Other

     4,503        4,944        6,375        9,447        9,758  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total noninterest income

     12,656        13,202        14,670        25,858        25,934  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Noninterest expense:

              

Salaries and employee benefits

     33,548        35,247        31,553        68,795        64,209  

Occupancy and equipment

     5,517        5,450        5,567        10,967        11,138  

Professional services

     2,562        1,696        2,305        4,258        4,350  

Computer software expense

     3,316        3,408        3,103        6,724        6,898  

Marketing and promotion

     1,321        1,715        1,638        3,036        3,096  

Amortization of intangible assets

     1,719        1,720        1,998        3,439        3,996  

Provision for unfunded loan commitments

     400        500        —          900        —    

Acquisition related expenses

     —          —          375        —          6,013  

Other

     5,634        5,145        4,332        10,779        9,409  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total noninterest expense

     54,017        54,881        50,871        108,898        109,109  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Earnings before income taxes

     77,674        82,549        82,139        160,223        145,505  

Income taxes

     21,904        23,279        23,081        45,183        40,887  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net earnings

   $ 55,770      $ 59,270      $ 59,058      $ 115,040      $ 104,618  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Basic earnings per common share

   $ 0.40      $ 0.42      $ 0.42      $ 0.83      $ 0.74  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Diluted earnings per common share

   $ 0.40      $ 0.42      $ 0.42      $ 0.82      $ 0.74  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Cash dividends declared per common share

   $ 0.20      $ 0.20      $ 0.19      $ 0.40      $ 0.37  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 


CVB FINANCIAL CORP. AND SUBSIDIARIES

SELECTED FINANCIAL HIGHLIGHTS

(Unaudited)

(Dollars in thousands, except per share amounts)

 

     Three Months Ended     Six Months Ended  
     June 30,
2023
    March 31,
2023
    June 30,
2022
    June 30,
2023
    June 30,
2022
 

Interest income - tax equivalent (TE)

   $ 149,785     $ 143,332     $ 123,661     $ 293,117     $ 238,124  

Interest expense

     29,704       17,058       1,322       46,762       2,582  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net interest income - (TE)

   $ 120,081     $ 126,274     $ 122,339     $ 246,355     $ 235,542  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Return on average assets, annualized

     1.36     1.47     1.39     1.42     1.23

Return on average equity, annualized

     11.03     12.15     11.33     11.58     9.74

Efficiency ratio [1]

     40.86     39.50     37.24     40.17     41.85

Noninterest expense to average assets, annualized

     1.32     1.36     1.20     1.34     1.28

Yield on average loans

     5.01     4.90     4.31     4.95     4.29

Yield on average earning assets (TE)

     4.01     3.91     3.20     3.96     3.06

Cost of deposits

     0.35     0.17     0.03     0.26     0.03

Cost of deposits and customer repurchase agreements

     0.35     0.17     0.04     0.26     0.04

Cost of funds

     0.83     0.49     0.04     0.66     0.04

Net interest margin (TE)

     3.22     3.45     3.16     3.33     3.03

[1] Noninterest expense divided by net interest income before provision for credit losses plus noninterest income.

  

Tangible Common Equity Ratio (TCE) [2]

 

     

CVB Financial Corp. Consolidated

     7.75     7.77     7.46    

Citizens Business Bank

     7.67     7.69     7.17    

[2]   (Capital - [GW+Intangibles])/(Total Assets - [GW+Intangibles])

    

   

Weighted average shares outstanding

 

     

Basic

     138,330,131       138,592,371       139,748,311       138,420,067       140,467,038  

Diluted

     138,383,239       138,953,172       140,053,074       138,556,510       140,730,309  

Dividends declared

   $ 27,787     $ 28,007     $ 26,719     $ 55,794     $ 52,186  

Dividend payout ratio [3]

     49.82     47.25     45.24     48.50     49.88

[3]   Dividends declared on common stock divided by net earnings.

    

   

Number of shares outstanding - (end of period)

     139,343,284       139,302,451       140,025,579      

Book value per share

   $ 14.36     $ 14.28     $ 14.16      

Tangible book value per share

   $ 8.74     $ 8.64     $ 8.51      
     June 30,
2023
    December 31,
2022
    June 30,
2022
             

Nonperforming assets:

          

Nonaccrual loans

   $ 6,454     $ 4,930     $ 12,964      
  

 

 

   

 

 

   

 

 

     

Total nonperforming assets

   $ 6,454     $ 4,930     $ 12,964      
  

 

 

   

 

 

   

 

 

     

Modified loans/performing troubled debt restructured loans (TDR) [4]

   $ 3,307     $ 7,817     $ 5,198      
  

 

 

   

 

 

   

 

 

     

[4]   Effective January 1, 2023, performing and nonperforming TDRs are reflected as Loan Modifications to borrowers experiencing financial difficulty.

    

Percentage of nonperforming assets to total loans outstanding and OREO

     0.07     0.05     0.15    

Percentage of nonperforming assets to total assets

     0.04     0.03     0.08    

Allowance for credit losses to nonperforming assets

     1347.49     1726.51     618.81    
     Three Months Ended     Six Months Ended  
     June 30,
2023
    March 31,
2023
    June 30,
2022
    June 30,
2023
    June 30,
2022
 

Allowance for credit losses:

          

Beginning balance

   $ 86,540     $ 85,117     $ 76,119     $ 85,117     $ 65,019  

Suncrest FV PCD loans

     —         —         —         —         8,605  

Total charge-offs

     (88     (110     (8     (198     (24

Total recoveries on loans previously charged-off

     15       33       511       48       522  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net recoveries (charge-offs)

     (73     (77     503       (150     498  

Provision for (recapture of) credit losses

     500       1,500       3,600       2,000       6,100  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Allowance for credit losses at end of period

   $ 86,967     $ 86,540     $ 80,222     $ 86,967     $ 80,222  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net recoveries (charge-offs) to average loans

     -0.001     -0.001     0.006     -0.002     0.006


CVB FINANCIAL CORP. AND SUBSIDIARIES

SELECTED FINANCIAL HIGHLIGHTS

(Unaudited)

(Dollars in millions)

Allowance for Credit Losses by Loan Type

 

     June 30, 2023     December 31, 2022     June 30, 2022  
     Allowance
For Credit
Losses
     Allowance
as a     % of
Total Loans
by Respective
Loan Type
    Allowance
For Credit
Losses
     Allowance
as a     % of
Total Loans
by Respective
Loan Type
    Allowance
For Credit
Losses
     Allowance
as a     % of
Total Loans
by Respective
Loan Type
 

Commercial real estate

   $ 67.9        0.98   $ 64.8        0.94   $ 61.5        0.93

Construction

     1.2        1.69     1.7        1.93     1.1        1.75

SBA

     2.7        0.95     2.8        0.97     2.6        0.88

Commercial and industrial

     9.1        0.95     10.2        1.08     7.2        0.76

Dairy & livestock and agribusiness

     5.0        1.66     4.4        1.01     6.8        2.50

Municipal lease finance receivables

     0.3        0.35     0.3        0.36     0.2        0.28

SFR mortgage

     0.4        0.17     0.4        0.14     0.2        0.10

Consumer and other loans

     0.4        0.73     0.5        0.69     0.6        0.68
  

 

 

      

 

 

      

 

 

    

Total

   $ 87.0        0.98   $ 85.1        0.94   $ 80.2        0.92
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 


CVB FINANCIAL CORP. AND SUBSIDIARIES

SELECTED FINANCIAL HIGHLIGHTS

(Unaudited)

(Dollars in thousands, except per share amounts)

Quarterly Common Stock Price

 

     2023      2022      2021  
Quarter End    High      Low      High      Low      High      Low  

March 31,

   $ 25.98      $ 16.34      $ 24.37      $ 21.36      $ 25.00      $ 19.15  

June 30,

   $ 16.89      $ 10.66      $ 25.59      $ 22.37      $ 22.98      $ 20.50  

September 30,

   $ —        $ —        $ 28.14      $ 22.63      $ 20.86      $ 18.72  

December 31,

   $ —        $ —        $ 29.25      $ 25.26      $ 21.85      $ 19.00  

Quarterly Consolidated Statements of Earnings

 

     Q2
2023
    Q1
2023
    Q4
2022
    Q3
2022
    Q2
2022
 

Interest income

          

Loans and leases, including fees

   $ 110,990     $ 108,394     $ 106,884     $ 100,077     $ 92,770  

Investment securities and other

     38,249       34,392       35,234       35,111       30,492  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total interest income

     149,239       142,786       142,118       135,188       123,262  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Interest expense

          

Deposits

     10,765       5,365       2,774       1,728       1,201  

Other borrowings

     18,939       11,693       1,949       122       121  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total interest expense

     29,704       17,058       4,723       1,850       1,322  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net interest income before provision for credit losses

     119,535       125,728       137,395       133,338       121,940  

Provision for credit losses

     500       1,500       2,500       2,000       3,600  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net interest income after provision for credit losses

     119,035       124,228       134,895       131,338       118,340  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Noninterest income

     12,656       13,202       12,465       11,590       14,670  

Noninterest expense

     54,017       54,881       54,419       53,027       50,871  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Earnings before income taxes

     77,674       82,549       92,941       89,901       82,139  

Income taxes

     21,904       23,279       26,773       25,262       23,081  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net earnings

   $ 55,770     $ 59,270     $ 66,168     $ 64,639     $ 59,058  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Effective tax rate

     28.20     28.20     28.81     28.10     28.10

Basic earnings per common share

   $ 0.40     $ 0.42     $ 0.47     $ 0.46     $ 0.42  

Diluted earnings per common share

   $ 0.40     $ 0.42     $ 0.47     $ 0.46     $ 0.42  

Cash dividends declared per common share

   $ 0.20     $ 0.20     $ 0.20     $ 0.20     $ 0.19  

Cash dividends declared

   $ 27,787     $ 28,007     $ 27,995     $ 27,965     $ 26,719  


CVB FINANCIAL CORP. AND SUBSIDIARIES    

SELECTED FINANCIAL HIGHLIGHTS    

(Unaudited)    

(Dollars in thousands)    

Loan Portfolio by Type    

 

     June 30,     March 31,     December 31,     September 30,     June 30,  
     2023     2023     2022     2022     2022  

Commercial real estate

   $ 6,904,095     $ 6,950,302     $ 6,884,948     $ 6,685,245     $ 6,643,628  

Construction

     68,836       83,992       88,271       76,495       60,584  

SBA

     278,904       283,464       290,908       296,664       297,109  

SBA - PPP

     5,017       5,824       9,087       17,348       66,955  

Commercial and industrial

     956,242       898,167       948,683       952,231       941,595  

Dairy & livestock and agribusiness

     298,247       307,820       433,564       323,105       273,594  

Municipal lease finance receivables

     77,867       79,552       81,126       76,656       64,437  

SFR mortgage

     263,201       262,324       266,024       263,646       260,218  

Consumer and other loans

     54,988       71,044       76,781       82,746       84,109  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross loans, at amortized cost

     8,907,397       8,942,489       9,079,392       8,774,136       8,692,229  

Allowance for credit losses

     (86,967     (86,540     (85,117     (82,601     (80,222
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loans

   $ 8,820,430     $ 8,855,949     $ 8,994,275     $ 8,691,535     $ 8,612,007  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Deposit Composition by Type and Customer Repurchase Agreements    

 

     June 30,      March 31,      December 31,      September 30,      June 30,  
     2023      2023      2022      2022      2022  

Noninterest-bearing

   $ 7,878,810      $ 7,844,329      $ 8,164,364      $ 8,764,556      $ 8,881,223  

Investment checking

     574,817        668,947        723,870        751,618        695,054  

Savings and money market

     3,627,858        3,474,651        3,653,385        3,991,531        4,145,634  

Time deposits

     316,036        283,943        294,626        364,694        350,308  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total deposits

     12,397,521        12,271,870        12,836,245        13,872,399        14,072,219  

Customer repurchase agreements

     452,373        490,235        565,431        467,844        502,829  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total deposits and customer repurchase agreements

   $ 12,849,894      $ 12,762,105      $ 13,401,676      $ 14,340,243      $ 14,575,048  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 


CVB FINANCIAL CORP. AND SUBSIDIARIES

SELECTED FINANCIAL HIGHLIGHTS

(Unaudited)

(Dollars in thousands)

Nonperforming Assets and Delinquency Trends

 

     June 30,     March 31,     December 31,     September 30,     June 30,  
     2023     2023     2022     2022     2022  

Nonperforming loans:

          

Commercial real estate

   $ 3,159     $ 2,634     $ 2,657     $ 6,705     $ 6,843  

Construction

     —         —         —         —         —    

SBA

     629       702       443       1,065       1,075  

SBA - PPP

     —         —         —         —         —    

Commercial and industrial

     2,039       2,049       1,320       1,308       1,655  

Dairy & livestock and agribusiness

     273       406       477       1,007       3,354  

SFR mortgage

     354       384       —         —         —    

Consumer and other loans

     —         —         33       32       37  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

   $ 6,454     $ 6,175     $ 4,930     $ 10,117     $ 12,964  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

% of Total loans

     0.07     0.07     0.05     0.12     0.15

Past due 30-89 days:

          

Commercial real estate

   $ 532     $ 425     $ —       $ —       $ 559  

Construction

     —         —         —         —         —    

SBA

     —         575       556       —         —    

Commercial and industrial

     —         —         —         —         —    

Dairy & livestock and agribusiness

     555       183       —         —         —    

SFR mortgage

     —         —         388       —         —    

Consumer and other loans

     —         —         175       —         —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

   $ 1,087     $ 1,183     $ 1,119     $ —       $ 559  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

% of Total loans

     0.01     0.01     0.01     0.00     0.01

OREO:

          

Commercial real estate

   $ —       $ —       $ —       $ —       $ —    

SBA

     —         —         —         —         —    

SFR mortgage

     —         —         —         —         —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

   $ —       $ —       $ —       $ —       $ —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total nonperforming, past due, and OREO

   $ 7,541     $ 7,358     $ 6,049     $ 10,117     $ 13,523  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

% of Total loans

     0.08     0.08     0.07     0.12     0.16


CVB FINANCIAL CORP. AND SUBSIDIARIES

SELECTED FINANCIAL HIGHLIGHTS

(Unaudited)

Regulatory Capital Ratios

 

           CVB Financial Corp. Consolidated  

Capital Ratios

   Minimum Required Plus
Capital Conservation Buffer
    June 30,
2023
    December 31,
2022
    June 30,
2022
 

Tier 1 leverage capital ratio

     4.0     9.8     9.5     8.8

Common equity Tier 1 capital ratio

     7.0     14.1     13.6     13.4

Tier 1 risk-based capital ratio

     8.5     14.1     13.6     13.4

Total risk-based capital ratio

     10.5     14.9     14.4     14.2

Tangible common equity ratio

       7.8     7.4     7.5


Tangible Book Value Reconciliations (Non-GAAP)

The tangible book value per share is a Non-GAAP disclosure. The Company uses certain non-GAAP financial measures to provide supplemental information regarding the Company’s performance. The following is a reconciliation of tangible book value to the Company stockholders’ equity computed in accordance with GAAP, as well as a calculation of tangible book value per share as of June 30, 2023, December 31, 2022 and June 30, 2022.

 

     June 30,
2023
     December 31,
2022
     June 30,
2022
 
                      
     (Dollars in thousands, except per share amounts)  

Stockholders’ equity

   $ 2,001,367      $ 1,948,517      $ 1,982,211  

Less: Goodwill

     (765,822      (765,822      (765,822

Less: Intangible assets

     (18,303      (21,742      (25,312
  

 

 

    

 

 

    

 

 

 

Tangible book value

   $ 1,217,242      $ 1,160,953      $ 1,191,077  

Common shares issued and outstanding

     139,343,284        139,818,703        140,025,579  
  

 

 

    

 

 

    

 

 

 

Tangible book value per share

   $ 8.74      $ 8.30      $ 8.51  
  

 

 

    

 

 

    

 

 

 


Return on Average Tangible Common Equity Reconciliations (Non-GAAP)

The return on average tangible common equity is a non-GAAP disclosure. The Company uses certain non-GAAP financial measures to provide supplemental information regarding the Company’s performance. The following is a reconciliation of net income, adjusted for tax-effected amortization of intangibles, to net income computed in accordance with GAAP; a reconciliation of average tangible common equity to the Company’s average stockholders’ equity computed in accordance with GAAP; as well as a calculation of return on average tangible common equity.

 

     Three Months Ended      Six Months Ended  
     June 30,
2023
     March 31,
2023
     June 30,
2022
     June 30,
2023
     June 30,
2022
 
                                    
     (Dollars in thousands)  

Net Income

   $ 55,770      $ 59,270      $ 59,058      $ 115,040      $ 104,618  

Add: Amortization of intangible assets

     1,719        1,720        1,998        3,439        3,996  

Less: Tax effect of amortization of intangible assets [1]

     (508      (508      (591      (1,017      (1,181
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Tangible net income

   $ 56,981      $ 60,482      $ 60,465      $ 117,462      $ 107,433  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Average stockholders’ equity

   $ 2,027,708      $ 1,978,244      $ 2,091,454      $ 2,003,112      $ 2,166,975  

Less: Average goodwill

     (765,822      (765,822      (765,822      (765,822      (762,437

Less: Average intangible assets

     (19,298      (20,983      (26,381      (20,136      (27,280
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Average tangible common equity

   $ 1,242,588      $ 1,191,439      $ 1,299,251      $ 1,217,154      $ 1,377,258  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Return on average equity, annualized

     11.03      12.15      11.33      11.58      9.74

Return on average tangible common equity, annualized

     18.39      20.59      18.67      19.46      15.73

[1] Tax effected at respective statutory rates.