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Section 1: 8-K (8-K)

8-K
CVB FINANCIAL CORP false 0000354647 0000354647 2020-04-22 2020-04-22

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):  April 22, 2020

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 April 22, 2020, CVB Financial Corp. issued a press release setting forth the financial results for the quarter ended March 31, 2020, 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

Number

   

Description

         
 

99.1

   

Press Release, dated April 22, 2020.

         
 

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.

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Exhibit Index

 

99.1

   

Press Release, dated April 22, 2020, announcing the financial results of CVB Financial Corp. for the quarter ended March 31, 2020.

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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: April 23, 2020

 

                

 

By:

 

/s/ E. Allen Nicholson                

 

 

 

Executive Vice President and

Chief Financial Officer

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Section 2: EX-99.1 (EX-99.1)

EX-99.1

Exhibit 99.1

 

LOGO

Press Release

For Immediate Release

 

Contact:  

David A. Brager

 

Chief Executive Officer

 

(909) 980-4030

CVB Financial Corp. Reports Earnings for the First Quarter of 2020

 

   

172nd Consecutive Quarter of Profitability

 

   

Net Earnings of $38.0 million for the first quarter of 2020, or $0.27 per share

 

   

Return on Average Tangible Common Equity of 12.27% for the first quarter of 2020

 

   

TCE Ratio of 11.3%, Total Risk-based Capital Ratio of 15.5% and CET1 Ratio of 14.1%

 

   

Growth in Noninterest-bearing Deposits of $474 million or 9% year-over-year

Ontario, CA, April 22, 2020-CVB Financial Corp. (NASDAQ:CVBF) and its subsidiary, Citizens Business Bank (the “Company”), announced earnings for the quarter ended March 31, 2020.

CVB Financial Corp. reported net income of $38.0 million for the quarter ended March 31, 2020, compared with $51.3 million for the fourth quarter of 2019 and $51.6 million for the first quarter of 2019. Diluted earnings per share were $0.27 for the first quarter, compared to $0.37 for the prior quarter and $0.37 for the same period last year. The Company adopted the Current Expected Credit Losses (“CECL”) accounting standard for credit losses on January 1, 2020 and recorded $12 million in provision for credit losses during the quarter as a result of the forecasted economic impact from the coronavirus pandemic.

David Brager, Chief Executive Officer of Citizens Business Bank, commented “While it is impossible to know how this crisis will continue to unfold, Citizens Business Bank will focus on our commitment to our customers, our associates, and our shareholders. Our strong capital, liquidity and credit quality will allow us to continue to support the communities we serve and navigate through this pandemic. Although our earnings in the first quarter were negatively impacted by the economic uncertainties that have been brought on by this virus, which among other things, resulted in our $12 million provision for credit losses, we believe our Bank will successfully navigate this crisis just as we have throughout our 45-year history. I am proud of our associates and confident in our ability to succeed despite these challenges.”

Net income of $38.0 million for the first quarter of 2020 produced an annualized return on average equity (“ROAE”) of 7.61% and an annualized return on average tangible common equity (“ROATCE”) of 12.27%. ROAE and ROATCE for the fourth quarter of 2019 were 10.21% and 16.36%, respectively, and 11.14% and 18.75%, respectively, for the first quarter of 2019. Annualized return on average assets (“ROAA”) was 1.34% for the

 

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first quarter, compared to 1.79% for the fourth quarter of 2019 and 1.84% for the first quarter of 2019. The efficiency ratio for the first quarter of 2020 was 42.69%, compared to 41.01% for the fourth quarter of 2019 and 41.01% for the first quarter of 2019.

Net interest income before provision for credit losses was $102.3 million for the first quarter of 2020. This represented a $4.7 million, or 4.40%, decrease from the fourth quarter of 2019, and a $7.2 million, or 6.60%, decrease from the first quarter of 2019. Total interest income was $107.1 million for the first quarter of 2020, which was $5.1 million, or 4.55%, lower than the fourth quarter of 2019 and $8.2 million, or 7.09%, lower than the same period last year. Total interest income and fees on loans for the first quarter of 2020 of $92.1 million decreased $5.2 million, or 5.33%, from the fourth quarter of 2019, and decreased $7.6 million, or 7.59%, from the first quarter of 2019. Total investment income of $14.0 million increased $563,000, or 4.18%, from the fourth quarter of 2019 and decreased $1.1 million, or 7.40%, from the first quarter of 2019. Interest expense decreased $396,000, or 7.62%, from the prior quarter and decreased $944,000, or 16.43%, over the first quarter of 2019.

The Company adopted ASU 2016-13, commonly referred to as CECL which replaces the “incurred loss” approach with an “expected loss” model over the life of the loan, effective on January 1, 2020. The implementation of this accounting standard resulted in a beginning balance transition adjustment to our allowance for credit losses (“ACL”) of $1.9 million with a cumulative effect adjustment to beginning retained earnings of $1.3 million, net of tax. A $12.0 million credit loss provision was recorded for the first quarter of 2020, due primarily to economic disruption resulting from COVID-19. During the quarter, we experienced minimal credit charge-offs of $86,000 and total recoveries of $227,000, resulting in net recoveries of $141,000.

Noninterest income was $11.6 million for the first quarter of 2020, compared with $12.6 million for the fourth quarter of 2019 and $16.3 million for the first quarter of 2019. The year-over-year decrease of $4.7 million was primarily due to a $4.5 million net gain on the sale of one of our bank owned buildings in the first quarter of 2019.

Noninterest expense for the first quarter of 2020 was $48.6 million, compared to $49.1 million for the fourth quarter of 2019 and $51.6 million for the first quarter of 2019. There were no merger related expenses related to the Community Bank acquisition for the first quarter of 2020, compared to $442,000 for the fourth quarter of 2019 and $3.1 million for the first quarter of 2019. The year-over-year decrease also included a $776,000 decrease in regulatory assessments, a $587,000 decrease in occupancy and equipment expense primarily due to the consolidation of banking centers, and a $412,000 decrease in Core Deposit Intangible (“CDI”) amortization. These decreases were partially offset by a $1.6 million increase in salaries and employee benefit costs. As a percentage of average assets, noninterest expense was 1.72% for the first quarter of 2020, compared to 1.71% for the fourth quarter of 2019 and 1.83% for the first quarter of 2019.

Net Interest Income and Net Interest Margin

Net interest income, before provision for credit losses, was $102.3 million for the first quarter of 2020, compared to $107.0 million for the fourth quarter of 2019 and $109.5 million for the first quarter of 2019. Our net interest margin (tax equivalent) was 4.08% for the first quarter of 2020, compared to 4.24% for the fourth quarter of 2019 and 4.39% for the first quarter of 2019. Total average earning asset yields (tax equivalent) were 4.27% for the first quarter of 2020, compared to 4.44% for the fourth quarter of 2019 and 4.62% for the first quarter of 2019. The decrease in earning asset yield from the prior quarter was primarily due to a 20 basis point decrease in average loan yields. The decrease in earning asset yield compared to the first quarter of 2019 was primarily due to a 32 basis point decrease in loan yields from 5.27% in the year ago quarter to 4.95%

 

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for the first quarter of 2020. Discount accretion on acquired loans decreased by $1.7 million quarter-over-quarter and decreased by $2.4 million compared to the first quarter of 2019. The significant decline in interest rates over the past three quarters had a negative impact on loans yields, which after excluding discount accretion, declined by 9 basis points compared to the prior quarter and 18 basis points from the prior year. The tax equivalent yield on investments increased two basis points from the fourth quarter of 2019 and decreased 12 basis points from the first quarter of 2019. Average earning assets increased from the fourth quarter of 2019 by $32.4 million to $10.12 billion for the first quarter of 2020. Average loans declined by $13.3 million quarter-over-quarter and investment securities increased on average by $51.5 million from the fourth quarter. Average earning assets declined by $17.2 million from the first quarter of 2019, as loans declined by $179.8 million and investments decreased by $79.8 million, while balances at the Federal Reserve grew on average by $232.0 million compared to the first quarter of 2019.

Total cost of funds declined to 0.21% for the first quarter of 2020 from 0.22% for the fourth quarter of 2019. On average, noninterest bearing deposits were 60% of total deposits during the current quarter. Noninterest bearing deposits declined on average by $51.1 million, or 0.96%, from the fourth quarter of 2019. This modest decline compares favorably to the typical seasonal decline we have experienced between the first quarter and fourth quarter in past years. During the first quarter of 2019, average noninterest bearing deposits declined by $226.1 million or 4.26% from the previous quarter. Interest-bearing deposits and customer repurchase agreements grew on average by $69.2 million during the first quarter of 2020, compared to the fourth quarter of 2019. The cost of interest-bearing deposits and customer repurchase agreements declined from 0.51% for the prior quarter to 0.46% for the first quarter of 2020. In comparison to the first quarter of 2019, our overall cost of funds decreased by 4 basis points, as noninterest bearing deposits grew by $161.3 million and overnight borrowings decreased by $159 million. Interest-bearing deposits declined by $150.5 million compared to the first quarter of 2019, while the cost of interest-bearing deposits increased by 4 basis points.

Income Taxes

Our effective tax rate for the quarter ended March 31, 2020 was 28.75%, compared with 29.00% for the quarter ended March 31, 2019. Our estimated annual effective tax rate can vary depending upon the level of tax-advantaged income as well as available tax credits.

Assets

The Company reported total assets of $11.61 billion at March 31, 2020. This represented an increase of $324.4 million, or 2.88%, from total assets of $11.28 billion at December 31, 2019. Interest-earning assets of $10.40 billion at March 31, 2020 increased $369.7 million, or 3.69%, when compared with $10.03 billion at December 31, 2019. The increase in interest-earning assets was primarily due to a $539.9 million increase in interest-earning balances due from the Federal Reserve, partially offset by a $98.4 million decrease in total loans and a $92.7 million decrease in investment securities. The Company is well positioned to use the excess liquidity built-up during the quarter to fund customer loan requests under the SBA’s Paycheck Protection Program. The SBA exhausted the funding for these loans on April 15, 2020, but through that date we processed 911 loans, totaling $558 million.

Total assets of $11.61 billion at March 31, 2020 increased $301.9 million, or 2.67%, from total assets of $11.30 billion at March 31, 2019. Interest-earning assets totaled $10.40 billion at March 31, 2020, an increase of $354.5 million, or 3.53%, when compared with earning assets of $10.04 billion at March 31, 2019. The increase in interest-earning assets was primarily due to a $563.8 million increase in interest-earning balances

 

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due from the Federal Reserve. This was partially offset by a $140.7 million decrease in total loans and an $85.0 million decrease in investment securities.

Investment Securities

Total investment securities were $2.32 billion at March 31, 2020, a decrease of $92.7 million, or 3.84%, from $2.41 billion at December 31, 2019, and a decrease of $85.0 million, or 3.53%, from $2.41 billion at March 31, 2019.

At March 31, 2020, investment securities held-to-maturity (“HTM”) totaled $642.3 million, a $32.2 million decrease, or 4.77%, from December 31, 2019 and a $91.2 million decrease, or 12.44%, from March 31, 2019.

At March 31, 2020 investment securities available-for-sale (“AFS”) totaled $1.68 billion, inclusive of a pre-tax net unrealized gain of $58.5 million. AFS securities decreased by $60.5 million, or 3.48%, from December 31, 2019, and increased by $6.3 million, or 0.37%, from March 31, 2019.

Combined, the AFS and HTM investments in mortgage backed securities (“MBS”) and collateralized mortgage obligations (“CMO”) totaled $1.99 billion at March 31, 2020, compared to $2.06 billion at December 31, 2019 and $2.01 billion at March 31, 2019. Virtually all of our MBS and CMO are issued or guaranteed by government or government sponsored enterprises, which have the implied guarantee of the U.S. Government.

Our combined AFS and HTM municipal securities totaled $221.5 million as of March 31, 2020. These securities are located in 27 states. Our largest concentrations of holdings are located in Minnesota at 26.76%, Massachusetts at 13.08%, Connecticut at 6.72%, Texas at 6.57%, and Wisconsin at 6.09%.

Loans

Total loans and leases, net of deferred fees and discounts, of $7.47 billion at March 31, 2020 decreased by $98.4 million, or 1.30%, from December 31, 2019. The decrease in total loans included a $111.6 million decline in dairy & livestock and agribusiness loans primarily due to seasonal pay downs, which historically occur in the first quarter of each calendar year. Excluding dairy and livestock loans, total loans grew by $13.2 million, or 0.18%. The $13.2 million increase in loans included increases of $25.6 million in commercial and industrial loans, $11.1 million in construction loans, and $8.1 million in Small Business Administration (“SBA”) loans, partially offset by a $26.7 million decrease in commercial real estate loans and collectively a $4.9 million decline in other loan segments.

Total loans and leases, net of deferred fees and discounts, of $7.47 billion at March 31, 2020 decreased by $140.7 million, or 1.85%, from March 31, 2019. The decrease in total loans included declines of $54.1 million in commercial real estate loans, $50.2 million in dairy & livestock and agribusiness loans, $26.1 million in SBA loans, $10.0 million in municipal lease finance receivables, $7.2 million in SFR loans, and collectively $800,000 in other loan segments. Partially offsetting these declines was an increase in construction loans of $6.1 million.

Deposits & Customer Repurchase Agreements

Deposits of $9.11 billion and customer repurchase agreements of $368.9 million totaled $9.48 billion at March 31, 2020. This represented an increase of $348.9 million, or 3.82%, when compared with $9.13 billion at

 

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December 31, 2019 and increased $365.6 million, or 4.01%, when compared with $9.12 billion at March 31, 2019.

Noninterest-bearing deposits were $5.57 billion at March 31, 2020, an increase of $327.1 million, or 6.24%, when compared to $5.25 billion at December 31, 2019, and an increase of $473.8 million, or 9.29%, when compared to March 31, 2019. At March 31, 2020, noninterest-bearing deposits were 61.15% of total deposits, compared to 60.26% at December 31, 2019 and 58.92% at March 31, 2019.

FHLB Advance, Other Borrowings and Debentures

At March 31, 2020 and December 31, 2019 we had no short-term borrowings, compared to $153.0 million at March 31, 2019.

At March 31, 2020, we had $25.8 million of junior subordinated debentures, unchanged from December 31, 2019. These debentures bear interest at three-month LIBOR plus 1.38% and mature in 2036.

Capital

The Company’s total equity was $1.94 billion at March 31, 2020. This represented a decrease of $52.7 million, or 2.64%, from total equity of $1.99 billion at December 31, 2019. This decrease was primarily due to repurchase of common stock of $91.7 million, that was offset by a $25.8 million increase in other comprehensive income resulting from the tax effected impact of the increase in market value of our investment securities portfolio. Equity also increased by $13.6 million in retained earnings for the quarter after $24.4 million in cash dividends were declared by the Company for the first quarter of 2020. Our tangible common equity ratio was 11.3% at March 31, 2020.

Our capital ratios under the revised capital framework referred to as Basel III remain well-above regulatory standards. As of March 31, 2020, the Company’s Tier 1 leverage capital ratio totaled 11.6%, common equity Tier 1 ratio totaled 14.1%, Tier 1 risk-based capital ratio totaled 14.4%, and total risk-based capital ratio totaled 15.5%.

Asset Quality

The allowance for credit losses totaled $82.6 million at March 31, 2020, compared to $68.7 million at December 31, 2019 and $65.2 million at March 31, 2019. Due to the implementation of CECL, which was effective January 1, 2020, a transition adjustment of $1.9 million was added to the beginning balance of the allowance and was increased by $12.0 million in provision for credit losses in the first quarter of 2020 due to the severe economic disruption forecasted as a result of the coronavirus pandemic. The allowance for credit losses was 1.11%, 0.91%, and 0.86% of total loans and leases outstanding, at March 31, 2020, December 31, 2019, and March 31, 2019, respectively.

Nonperforming loans, defined as nonaccrual loans plus nonperforming TDR loans, were $6.4 million at March 31, 2020, or 0.09% of total loans. Total nonperforming loans at March 31, 2020 included $4.7 million of nonperforming loans acquired with the acquisition of Community Bank in the third quarter of 2018. This compares to nonperforming loans of $5.3 million, or 0.07% of total loans, at December 31, 2019 and $17.0 million, or 0.22% of total loans, at March 31, 2019. The $6.4 million in nonperforming loans at March 31, 2020

 

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are summarized as follows: $2.7 million in SBA loans, $1.7 million in commercial and industrial loans, $947,000 in commercial real estate loans, $864,000 in SFR mortgage loans, and $166,000 in consumer and other loans.

As of March 31, 2020, we had $4.9 million in OREO compared to $4.9 million at December 31, 2019 and $2.3 million at March 31, 2019.

At March 31, 2020, we had loans delinquent 30 to 89 days of $4.4 million. This compares to $1.7 million at December 31, 2019 and $1.2 million at March 31, 2019. As a percentage of total loans, delinquencies, excluding nonaccruals, were 0.06% at March 31, 2020, 0.02% at December 31, 2019, and 0.02% at March 31, 2019. Through April 17, 2020, we have granted temporary payment deferments of interest or of principal and interest for 508 loans in the amount of $768 million, or approximately 10% of our total loan portfolio, at March 31, 2020. These deferments range from 60 to 90 days.

At March 31, 2020, we had $2.8 million in performing TDR loans, compared to $3.1 million in performing TDR loans at December 31, 2019 and $3.3 million in performing TDR loans at March 31, 2019. In terms of the number of loans, we had 11 performing TDR loans at March 31, 2020, compared to 12 performing TDR loans at December 31, 2019 and 12 performing TDR loans at March 31, 2019.

Nonperforming assets, defined as nonaccrual loans plus OREO, totaled $11.3 million at March 31, 2020, $10.2 million at December 31, 2019, and $19.3 million at March 31, 2019. As a percentage of total assets, nonperforming assets were 0.10% at March 31, 2020, 0.09% at December 31, 2019, and 0.17% at March 31, 2019.

Classified loans are loans that are graded “substandard” or worse. At March 31, 2020, classified loans totaled $83.6 million, compared to $73.4 million at December 31, 2019 and $52.0 million at March 31, 2019. Total classified loans at March 31, 2020 included $41.3 million of classified loans acquired from Community Bank in the third quarter of 2018. Classified loans increased $10.1 million quarter-over-quarter and included a $10.5 million increase in classified commercial and industrial loans and a $4.2 million increase in classified commercial real estate loans, partially offset by a $4.9 million decrease in classified dairy & livestock and agribusiness loans.

At March 31, 2020 loans to customers in the hotel, restaurant, entertainment, or recreation industries represented approximately 3% of our loan portfolio and loans to customers in educational services were only 1% of the overall portfolio. Other retail related loans, primarily loans collateralized by commercial real estate, comprised approximately 12% of the loan portfolio at March 31, 2020. At origination, these loans were underwritten with loan-to-values averaging approximately 53%.

CitizensTrust

As of March 31, 2020 CitizensTrust had approximately $2.70 billion in assets under management and administration, including $1.95 billion in assets under management. Revenues were $2.4 million for the first quarter of 2020, compared to $2.2 million for the first quarter ended March 31, 2019. CitizensTrust provides trust, investment and brokerage related services, as well as financial, estate and business succession planning.

 

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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 $11 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 through 58 banking centers and 3 trust office locations serving the Inland Empire, Los Angeles County, Orange County, San Diego County, Ventura County, Santa Barbara County, and the Central Valley area of 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. PST/10:30 a.m. EST on Thursday, April 23, 2020 to discuss the Company’s first quarter 2020 financial results.

To listen to the conference call, please dial (877) 506-3368. A taped replay will be made available approximately one hour after the conclusion of the call and will remain available through May 7, 2020 at 6:00 a.m. PDT/9:00 a.m. EDT. To access the replay, please dial (877) 344-7529, passcode 10141229.

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.

 

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Safe Harbor

Certain matters set forth herein (including the exhibits hereto) constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including forward-looking statements relating to the Company’s current business plans and expectations and our future financial position and operating results. 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. These forward-looking statements are subject to risks and uncertainties that could cause actual results, performance and/or achievements to differ materially from those projected. These risks and uncertainties include, but are not limited to, local, regional, national and international economic and market conditions and political events and the impact they may have on us, our customers and our assets and liabilities; our ability to attract deposits and other sources of funding or liquidity; supply and demand for commercial or residential real estate and periodic deterioration in real estate prices and/or values in California or other states where we lend; a sharp or prolonged slowdown or decline in real estate construction, sales or leasing activities; changes in the financial performance and/or condition of our borrowers, depositors, key vendors or counterparties; changes in our levels of delinquent loans, nonperforming assets, allowance for credit losses and charge-offs; the costs or effects of mergers, acquisitions or dispositions we may make, whether we are able to obtain any required governmental approvals in connection with any such mergers, acquisitions or dispositions, and/or our ability to realize the contemplated financial or business benefits associated with any such mergers, acquisitions or dispositions; the effect of changes in laws, regulations and applicable judicial decisions (including laws, regulations and judicial decisions concerning financial reforms, taxes, bank capital levels, allowance for credit losses, consumer, commercial or secured lending, securities and securities trading and hedging, bank operations, compliance, fair lending, the Community Reinvestment Act, employment, executive compensation, insurance, cybersecurity, vendor management and information security technology) with which we and our subsidiaries must comply or believe we should comply or which may otherwise impact us; the effects of additional legal and regulatory requirements to which we have or will become subject as a result of our total assets exceeding $10 billion, which first occurred in the third quarter of 2018 due to the closing of our merger transaction with Community Bank; changes in estimates of future reserve requirements and minimum capital requirements, based upon the periodic review thereof under relevant regulatory and accounting standards, including changes in the Basel Committee framework establishing capital standards for bank credit, operations and market risks; the accuracy of the assumptions and estimates and the absence of technical error in implementation or calibration of models used to estimate the fair value of financial instruments or currently expected credit losses or delinquencies; inflation, changes in market interest rates, securities market and monetary fluctuations; changes in government-established interest rates, reference rates (including the anticipated phase-out of LIBOR) or monetary policies; changes in the amount, cost and availability of deposit insurance; disruptions in the infrastructure that supports our business and the communities where we are located, which are concentrated in California, involving or related to physical site access and/or communication facilities; cyber incidents, or theft or loss of Company, customer or employee data or money; political developments, uncertainties or instability, catastrophic events, acts of war or terrorism, or natural disasters, such as earthquakes, drought, the effects of pandemic diseases, climate change, or extreme weather events, that affect electrical, environmental, computer servers, and communications or other services we use, or that affect our assets, customers, employees or third parties with whom we conduct business; the effects of the COVID-19 pandemic on the economy (local, national and international), our organization and our customers, suppliers and employees, as well as the effects of various governmental responses to the pandemic, including stimulus packages; our timely development and implementation of new banking products and services and the perceived overall value of these products and services by our customers and potential customers; the Company’s relationships with and reliance upon outside vendors with respect to certain of the Company’s key internal and external systems, applications and controls; changes in commercial or consumer spending, borrowing and savings preferences or behaviors; technological changes and the expanding use of technology in banking and financial services (including the adoption of mobile banking, funds transfer applications, electronic marketplaces for loans, block-chain technology and other banking products, systems or services); our ability to retain and increase market share, retain and grow customers and to control expenses; changes in the competitive environment among banks and other financial services and technology providers; competition and innovation with respect to financial products and services by banks, financial institutions and non-traditional providers including retail businesses and technology companies; volatility in the credit and equity markets and its effect on the general economy or local or regional business conditions or on the Company’s assets or customers; fluctuations in the price of the Company’s common stock or other securities, and the resulting impact on the Company’s ability to raise capital or to make acquisitions; the effect of changes in accounting

 

- 8 -


policies and practices, as may be adopted from time-to-time by the principal regulatory agencies with jurisdiction over the Company, as well as by the Public Company Accounting Oversight Board, the Financial Accounting Standards Board and other accounting standard-setters; changes in our organization, management, compensation and benefit plans, and our ability to recruit and retain or expand or contract our workforce, management team, key executive positions and/or our board of directors; the costs and effects of legal, compliance and regulatory actions, changes and developments, including the initiation and resolution of legal proceedings (including any securities, bank operations, consumer or employee class action litigation); regulatory or other governmental inquiries or investigations, and/or the results of regulatory examinations or reviews; our ongoing relations with our various federal and state regulators, including the SEC, Federal Reserve Board, FDIC and California DBO; our success at managing the risks involved in the foregoing items and all other factors set forth in the Company’s public reports, including our Annual Report on Form 10-K for the year ended December 31, 2019, and particularly the discussion of risk factors within that document. The Company does not undertake, and specifically disclaims any obligation, to update any forward-looking statements to reflect occurrences or unanticipated events or circumstances after the date of such statements, except as required by law. 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.

###

 

- 9 -


CVB FINANCIAL CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(Dollars in thousands)

 

     March 31,
2020
     December 31,
2019
     March 31,
2019
 

Assets

        

Cash and due from banks

     $ 138,615          $ 158,310          $ 168,877    

Interest-earning balances due from Federal Reserve

     567,124          27,208          3,337    
  

 

 

    

 

 

    

 

 

 

Total cash and cash equivalents

     705,739          185,518          172,214    
  

 

 

    

 

 

    

 

 

 

Interest-earning balances due from depository institutions

     23,799          2,931          7,420    

Investment securities available-for-sale

     1,679,755          1,740,257          1,673,501    

Investment securities held-to-maturity

     642,255          674,452          733,464    
  

 

 

    

 

 

    

 

 

 

Total investment securities

     2,322,010          2,414,709          2,406,965    
  

 

 

    

 

 

    

 

 

 

Investment in stock of Federal Home Loan Bank (FHLB)

     17,688          17,688          17,688    

Loans and lease finance receivables

     7,466,152          7,564,577          7,606,863    

Allowance for credit losses

     (82,641)         (68,660)         (65,201)   
  

 

 

    

 

 

    

 

 

 

  Net loans and lease finance receivables

     7,383,511          7,495,917          7,541,662    
  

 

 

    

 

 

    

 

 

 

Premises and equipment, net

     52,867          53,978          55,833    

Bank owned life insurance (BOLI)

     225,455          226,281          222,010    

Intangibles

     40,541          42,986          50,927    

Goodwill

     663,707          663,707          666,539    

Other assets

     171,571          178,735          163,699    
  

 

 

    

 

 

    

 

 

 

Total assets

     $         11,606,888          $         11,282,450          $         11,304,957    
  

 

 

    

 

 

    

 

 

 

Liabilities and Stockholders’ Equity

        

    Liabilities:

        

    Deposits:

        

  Noninterest-bearing

     $ 5,572,649          $ 5,245,517          $ 5,098,822    

  Investment checking

     454,153          454,565          426,983    

  Savings and money market

     2,635,364          2,558,538          2,612,996    

  Time deposits

     451,438          446,308          515,319    
  

 

 

    

 

 

    

 

 

 

  Total deposits

     9,113,604          8,704,928          8,654,120    

    Customer repurchase agreements

     368,915          428,659          462,774    

    Other borrowings

     -          -          153,000    

    Junior subordinated debentures

     25,774          25,774          25,774    

    Other liabilities

     157,209          128,991          118,362    
  

 

 

    

 

 

    

 

 

 

    Total liabilities

     9,665,502          9,288,352          9,414,030    
  

 

 

    

 

 

    

 

 

 

Stockholders’ Equity

        

    Stockholders’ equity

     1,902,980          1,981,484          1,896,372    

    Accumulated other comprehensive income (loss), net of tax

     38,406          12,614          (5,445)   
  

 

 

    

 

 

    

 

 

 

    Total stockholders’ equity

     1,941,386          1,994,098          1,890,927    
  

 

 

    

 

 

    

 

 

 

Total liabilities and stockholders’ equity

     $ 11,606,888          $ 11,282,450          $ 11,304,957    
  

 

 

    

 

 

    

 

 

 

 

- 10 -


CVB FINANCIAL CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED AVERAGE BALANCE SHEETS

(Unaudited)

(Dollars in thousands)

 

     Three Months Ended  
     March 31,      December 31,      March 31,  
     2020      2019      2019  

Assets

        

Cash and due from banks

     $ 166,816          $ 177,591          $ 175,359    

Interest-earning balances due from Federal Reserve

     243,069          262,707          11,114    
  

 

 

    

 

 

    

 

 

 

Total cash and cash equivalents

     409,885          440,298          186,473    
  

 

 

    

 

 

    

 

 

 

Interest-earning balances due from depository institutions

     17,972          4,126          7,581    

Investment securities available-for-sale

     1,697,480          1,614,511          1,698,704    

Investment securities held-to-maturity

     658,916          690,375          737,516    
  

 

 

    

 

 

    

 

 

 

Total investment securities

     2,356,396          2,304,886          2,436,220    
  

 

 

    

 

 

    

 

 

 

Investment in stock of FHLB

     17,688          17,688          17,688    

Loans and lease finance receivables

     7,482,805          7,496,133          7,662,573    

Allowance for credit losses

     (70,736)         (68,675)         (63,610)    
  

 

 

    

 

 

    

 

 

 

Net loans and lease finance receivables

     7,412,069          7,427,458          7,598,963    
  

 

 

    

 

 

    

 

 

 

Premises and equipment, net

     53,689          53,846          57,170    

Bank owned life insurance (BOLI)

     225,463          225,849          221,171    

Intangibles

     41,732          44,185          52,777    

Goodwill

     663,707          663,707          666,539    

Other assets

     177,199          187,521          163,672    
  

 

 

    

 

 

    

 

 

 

Total assets

     $     11,375,800          $     11,369,564          $     11,408,254    
  

 

 

    

 

 

    

 

 

 

Liabilities and Stockholders’ Equity

        

Liabilities:

        

Deposits:

        

Noninterest-bearing

     $ 5,247,025          $ 5,298,111          $ 5,085,764    

Interest-bearing

     3,502,174          3,509,866          3,652,661    
  

 

 

    

 

 

    

 

 

 

Total deposits

     8,749,199          8,807,977          8,738,425    

Customer repurchase agreements

     478,373          401,478          506,743    

Other borrowings

     438          4,870          159,448    

Junior subordinated debentures

     25,774          25,774          25,774    

Other liabilities

     115,552          136,150          98,179    
  

 

 

    

 

 

    

 

 

 

Total liabilities

     9,369,336          9,376,249          9,528,569    
  

 

 

    

 

 

    

 

 

 

Stockholders’ Equity

        

Stockholders’ equity

     1,993,560          1,981,266          1,898,173    

Accumulated other comprehensive income (loss), net of tax

     12,904          12,049          (18,488)   
  

 

 

    

 

 

    

 

 

 

Total stockholders’ equity

     2,006,464          1,993,315          1,879,685    
  

 

 

    

 

 

    

 

 

 

Total liabilities and stockholders’ equity

     $ 11,375,800          $ 11,369,564          $ 11,408,254    
  

 

 

    

 

 

    

 

 

 

 

- 11 -


CVB FINANCIAL CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(Unaudited)

(Dollars in thousands, except per share amounts)

 

    Three Months Ended  
    March 31,
         2020        
    December 31,
         2019        
    March 31,
         2019        
 

Interest income:

     

Loans and leases, including fees

    $ 92,117         $ 97,302         $ 99,687    

Investment securities:

     

Investment securities available-for-sale

    10,049         9,345         10,645    

Investment securities held-to-maturity

    3,998         4,139         4,525    
 

 

 

   

 

 

   

 

 

 

Total investment income

    14,047         13,484         15,170    

Dividends from FHLB stock

    332         304         332    

Interest-earning deposits with other institutions

    613         1,129         94    
 

 

 

   

 

 

   

 

 

 

Total interest income

    107,109         112,219         115,283    
 

 

 

   

 

 

   

 

 

 

Interest expense:

     

Deposits

    4,124         4,567         3,871    

Borrowings and junior subordinated debentures

    679         632         1,876    
 

 

 

   

 

 

   

 

 

 

Total interest expense

    4,803         5,199         5,747    
 

 

 

   

 

 

   

 

 

 

Net interest income before provision for credit losses

    102,306         107,020         109,536    

Provision for credit losses

    12,000         -         1,500    
 

 

 

   

 

 

   

 

 

 

Net interest income after provision for credit losses

    90,306         107,020         108,036    
 

 

 

   

 

 

   

 

 

 

Noninterest income:

            

Service charges on deposit accounts

    4,776         4,971         5,141    

Trust and investment services

    2,420         2,561         2,182    

Gain on OREO, net

    10         -         105    

Gain on sale of building, net

    -         231         4,545    

Other

    4,434         4,877         4,330    
 

 

 

   

 

 

   

 

 

 

Total noninterest income

    11,640         12,640         16,303    
 

 

 

   

 

 

   

 

 

 

Noninterest expense:

            

Salaries and employee benefits

    30,877         31,189         29,302    

Occupancy and equipment

    4,837         4,727         5,424    

Professional services

    2,256         2,099         1,925    

Computer software expense

    2,816         2,626         2,613    

Marketing and promotion

    1,555         1,741         1,394    

Amortization of intangible assets

    2,445         2,460         2,857    

Acquisition related expenses

    -         442         3,149    

Other

    3,855         3,789         4,940    
 

 

 

   

 

 

   

 

 

 

Total noninterest expense

    48,641         49,073         51,604    
 

 

 

   

 

 

   

 

 

 

Earnings before income taxes

    53,305         70,587         72,735    

Income taxes

    15,325         19,306         21,093    
 

 

 

   

 

 

   

 

 

 

Net earnings

    $  37,980         $  51,281         $ 51,642    
 

 

 

   

 

 

   

 

 

 

Basic earnings per common share

    $ 0.27         $ 0.37         $ 0.37    
 

 

 

   

 

 

   

 

 

 

Diluted earnings per common share

    $ 0.27         $ 0.37         $ 0.37    
 

 

 

   

 

 

   

 

 

 

Cash dividends declared per common share

    $ 0.18         $ 0.18         $ 0.18    
 

 

 

   

 

 

   

 

 

 

 

- 12 -


CVB FINANCIAL CORP. AND SUBSIDIARIES

SELECTED FINANCIAL HIGHLIGHTS

(Unaudited)

(Dollars in thousands, except per share amounts)

 

    Three Months Ended  
    March 31,
2020
    December 31,
2019
    March 31,
2019
 

Interest income - tax equivalent (TE)

    $ 107,477         $ 112,606         $ 115,738    

Interest expense

    4,803         5,199         5,747    
 

 

 

   

 

 

   

 

 

 

Net interest income - (TE)

    $ 102,674         $ 107,407         $ 109,991    
 

 

 

   

 

 

   

 

 

 

Return on average assets, annualized

    1.34%       1.79%       1.84%  

Return on average equity, annualized

    7.61%       10.21%       11.14%  

Efficiency ratio [1]

    42.69%       41.01%       41.01%  

Noninterest expense to average assets, annualized

    1.72%       1.71%       1.83%  

Yield on average loans

    4.95%       5.15%       5.27%  

Yield on average earning assets (TE)

    4.27%       4.44%       4.62%  

Cost of deposits

    0.19%       0.21%       0.18%  

Cost of deposits and customer repurchase agreements

    0.20%       0.21%       0.20%  

Cost of funds

    0.21%       0.22%       0.25%  

Net interest margin (TE)

    4.08%       4.24%       4.39%  

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

 

Weighted average shares outstanding

     

Basic

    139,106,596         139,839,331         139,615,195    

Diluted

    139,315,514         140,024,746         139,831,429    

Dividends declared

    $ 24,416         $ 25,248         $ 25,168    

Dividend payout ratio [2]

    64.29%       49.23%       48.74%  

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

 

Number of shares outstanding - (end of period)

            135,510,960                 140,102,480                 140,009,185    

Book value per share

    $ 14.33         $ 14.23         $ 13.51    

Tangible book value per share

    $ 9.13         $ 9.19         $ 8.38    
    March 31,
2020
    December 31,
2019
    March 31,
2019
 

Nonperforming assets:

     

Nonaccrual loans

    $ 6,428         $ 5,033         $ 16,714    

Loans past due 90 days or more and still accruing interest

    -         -         -    

Troubled debt restructured loans (nonperforming)

    -         244         277    

Other real estate owned (OREO), net

    4,889         4,889         2,275    
 

 

 

   

 

 

   

 

 

 

Total nonperforming assets

    $ 11,317         $ 10,166         $ 19,266    
 

 

 

   

 

 

   

 

 

 

Troubled debt restructured performing loans

    $ 2,813         $ 3,112         $ 3,299    
 

 

 

   

 

 

   

 

 

 

Percentage of nonperforming assets to total loans outstanding and OREO

    0.15%       0.13%       0.25%  

Percentage of nonperforming assets to total assets

    0.10%       0.09%       0.17%  

Allowance for credit losses to nonperforming assets

    730.24%       675.39%       338.43%  
    Three Months Ended  
    March 31,
2020
    December 31,
2019
    March 31,
2019
 

Allowance for credit losses:

     

Beginning balance

    $ 68,660        $ 68,672        $ 63,613   

Impact of adopting ASU 2016-13

    1,840               

Total charge-offs

    (86)       (26)       (99)  

Total recoveries on loans previously charged-off

    227        14        187   
 

 

 

   

 

 

   

 

 

 

Net recoveries

    141        (12)       88   

Provision for credit losses

    12,000              1,500   
 

 

 

   

 

 

   

 

 

 

Allowance for credit losses at end of period

    $ 82,641         $ 68,660         $ 65,201    
 

 

 

   

 

 

   

 

 

 

Net recoveries to average loans

    0.002%       -0.0002%       0.001%  

 

- 13 -


CVB FINANCIAL CORP. AND SUBSIDIARIES

SELECTED FINANCIAL HIGHLIGHTS

(Unaudited)

(Dollars in millions)

 

Allowance for Credit Losses by Loan Type                    
    March 31, 2020   December 31, 2019
    Allowance for
Credit Losses
    Allowance as a %
of Total Loans by
Respective Loan Type
  Allowance for
Loan Losses
    Allowance as a %
of Total Loans by
Respective Loan Type

Commercial and industrial

    $ 9.4       1.0%   $ 8.9       0.9%

SBA

    3.9       1.3%     1.5       0.5%

Real estate:

       

Commercial real estate

    58.4       1.1%     48.6       0.9%

Construction

    4.5       3.6%     0.9       0.7%

SFR mortgage

    0.3       0.1%     2.3       0.8%

Dairy & livestock and agribusiness

    4.3       1.6%     5.3       1.4%

Municipal lease finance receivables

    0.3       0.5%     0.6       1.2%

Consumer and other loans

    1.4       1.2%     0.6       0.5%
 

 

 

     

 

 

   

Total

  $             82.6           1.1%         $             68.7           0.9%    
 

 

 

   

 

 

 

 

   

 

 

-  14 -


CVB FINANCIAL CORP. AND SUBSIDIARIES

SELECTED FINANCIAL HIGHLIGHTS

(Unaudited)

(Dollars in thousands, except per share amounts)

Quarterly Common Stock Price

 

     2020      2019      2018  
Quarter End            High                      Low                      High                      Low                      High                      Low          

March 31,

     $       22.01          $       14.92        $       23.18        $       19.94        $ 25.14        $       21.64    

June 30,

         $       22.22        $       20.40        $ 24.11        $ 21.92    

September 30,

         $       22.23        $       20.00        $ 24.97        $ 22.19    

December 31,

         $       22.18        $       19.83        $       23.51        $ 19.21    

Quarterly Consolidated Statements of Earnings

 

    Q1     Q4     Q3     Q2     Q1  
            2020                     2019                     2019                     2019                     2019          

Interest income

         

Loans and leases, including fees

    $         92,117         $ 97,302         $ 98,796         $ 101,843         $ 99,687    

Investment securities and other

    14,992         14,917         14,767         14,942         15,596    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total interest income

    107,109         112,219         113,563         116,785         115,283    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Interest expense

         

Deposits

    4,124         4,567         4,589         4,093         3,871    

Other borrowings

    679         632         815         1,635         1,876    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total interest expense

    4,803         5,199         5,404         5,728         5,747    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net interest income before provision for credit losses

    102,306         107,020         108,159         111,057         109,536    

Provision for credit losses

    12,000         -         1,500         2,000         1,500    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net interest income after provision for credit losses

    90,306         107,020         106,659         109,057         108,036    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Noninterest income

    11,640         12,640         11,894         18,205         16,303    

Noninterest expense

    48,641         49,073         47,535         50,528         51,604    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Earnings before income taxes

    53,305         70,587         71,018         76,734         72,735    

Income taxes

    15,325         19,306         20,595         22,253         21,093    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net earnings

    $ 37,980         $ 51,281         $ 50,423         $ 54,481         $ 51,642    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Effective tax rate

    28.75%       27.35%       29.00%       29.00%       29.00%  

Basic earnings per common share

    $ 0.27         $ 0.37         $ 0.36         $ 0.39         $ 0.37    

Diluted earnings per common share

    $ 0.27         $ 0.37         $ 0.36         $ 0.39         $ 0.37    

Cash dividends declared per common share

    $ 0.18         $ 0.18         $ 0.18         $ 0.18         $ 0.18    

Cash dividends declared

    $ 24,416         $ 25,248         $ 25,276         $ 25,248         $ 25,168    

 

- 15 -


CVB FINANCIAL CORP. AND SUBSIDIARIES

SELECTED FINANCIAL HIGHLIGHTS

(Unaudited)

(Dollars in thousands)

Loan Portfolio by Type

 

    March 31,
         2020        
    December 31,
         2019        
    September 30,
         2019        
    June 30,
         2019        
    March 31,
         2019        
 

Commercial and industrial

    $     960,761         $     935,127         $     921,678         $     917,953         $     957,742    

SBA

    313,071         305,008         319,571         327,606         339,192    

Real estate:

                              

Commercial real estate

    5,347,925         5,374,617         5,375,668         5,417,351         5,402,049    

Construction

    128,045         116,925         119,931         116,457         121,912    

SFR mortgage

    278,743         283,468         278,644         278,285         285,928    

Dairy & livestock and agribusiness

    272,114         383,709         311,229         301,752         322,321    

Municipal lease finance receivables

    51,287         53,146         54,468         59,985         61,249    

Consumer and other loans

    114,206         116,319         117,128         120,779         120,949    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross loans

    7,466,152         7,568,319         7,498,317         7,540,168         7,611,342    

Less:

         

Deferred loan fees, net [1]

    -         (3,742)        (3,866)        (4,478)        (4,479)   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross loans, net of deferred loan fees and discounts

    7,466,152         7,564,577         7,494,451         7,535,690         7,606,863    

Allowance for credit losses

    (82,641)        (68,660)        (68,672)        (67,132)        (65,201)   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loans

    $ 7,383,511         $ 7,495,917         $ 7,425,779         $ 7,468,558         $ 7,541,662    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

[1] Beginning with March 31, 2020, gross loans are presented net of deferred loan fees by respective class of financing receivables.

 

Deposit Composition by Type and Customer Repurchase Agreements              
    March 31,
         2020        
    December 31,
         2019        
    September 30,
         2019        
    June 30,
         2019        
    March 31,
         2019        
 

Noninterest-bearing

    $ 5,572,649         $ 5,245,517         $ 5,385,104         $ 5,250,235         $ 5,098,822    

Investment checking

    454,153         454,565         433,615         436,090         426,983    

Savings and money market

    2,635,364         2,558,538         2,513,888         2,496,904         2,612,996    

Time deposits

    451,438         446,308         461,723         479,594         515,319    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total deposits

    9,113,604         8,704,928         8,794,330         8,662,823         8,654,120    

Customer repurchase agreements

    368,915         428,659         407,850         421,271         462,774    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total deposits and customer repurchase agreements

    $ 9,482,519         $ 9,133,587         $ 9,202,180         $ 9,084,094         $ 9,116,894    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

- 16 -


CVB FINANCIAL CORP. AND SUBSIDIARIES

SELECTED FINANCIAL HIGHLIGHTS

(Unaudited)

(Dollars in thousands)

Nonperforming Assets and Delinquency Trends

 

     March 31,      December 31,      September 30,      June 30,      March 31,  
     2020      2019      2019      2019      2019  

Nonperforming loans:

              

Commercial and industrial

     $ 1,703          $ 1,266          $ 1,550          $ 1,993          $ 8,388    

SBA

     2,748          2,032          2,706          5,082          4,098    

Real estate:

              

Commercial real estate

     947          724          1,083          1,095          1,134    

Construction

     -          -          -          -          -    

SFR mortgage

     864          878          888          2,720          2,894    

Dairy & livestock and agribusiness

     -          -          -          -          -    

Consumer and other loans

     166          377          385          397          477    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

     $ 6,428          $ 5,277          $ 6,612          $ 11,287          $ 16,991    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

% of Total gross loans

     0.09%        0.07%        0.09%        0.15%        0.22%  

Past due 30-89 days:

              

Commercial and industrial

     $ 665          $ 2          $ 756          $ 310          $ 369    

SBA

     3,086          1,402          303          -          601    

Real estate:

              

Commercial real estate

     210          -          368          -          124    

Construction

     -          -          -          -          -    

SFR mortgage

     233          249          -          -          -    

Dairy & livestock and agribusiness

     166          -          -          -          -    

Consumer and other loans

     -          -          -          22          101    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

     $ 4,360          $ 1,653          $ 1,427          $ 332          $ 1,195    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

% of Total gross loans

     0.06%        0.02%        0.02%        0.004%        0.02%  

OREO:

              

SBA

     $ 797          $ 797          $ 444          $ -          $ -    

Real estate:

              

Commercial real estate

     2,275          2,275          2,275          2,275          2,275    

SFR mortgage

     1,817          1,817          6,731          -          -    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

     $ 4,889          $ 4,889          $ 9,450          $ 2,275          $ 2,275    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total nonperforming, past due, and OREO

     $         15,677          $         11,819          $         17,489          $         13,894          $         20,461    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

% of Total gross loans

     0.21%        0.16%        0.23%        0.18%        0.27%  

 

- 17 -


CVB FINANCIAL CORP. AND SUBSIDIARIES

SELECTED FINANCIAL HIGHLIGHTS

(Unaudited)

Regulatory Capital Ratios

 

     Minimum Required Plus
Capital Conservation  Buffer
   CVB Financial Corp. Consolidated

Capital Ratios

   March 31, 2020    December 31, 2019

Tier 1 leverage capital ratio

   4.0%    11.6%    12.3%

Common equity Tier 1 capital ratio

   7.0%    14.1%    14.8%

Tier 1 risk-based capital ratio

   8.5%    14.4%    15.1%

Total risk-based capital ratio

   10.5%    15.5%    16.0%

Tangible common equity ratio

      11.3%    12.2%

 

- 18 -


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 March 31, 2020, December 31, 2019 and March 31, 2019.

 

     March 31,      December 31,      March 31,  
     2020      2019      2019  
     (Dollars in thousands, except per share amounts)  

Stockholders’ equity

     $ 1,941,386          $ 1,994,098          $ 1,890,927    

Less: Goodwill

     (663,707)         (663,707)         (666,539)   

Less: Intangible assets

     (40,541)         (42,986)         (50,927)   
  

 

 

    

 

 

    

 

 

 

Tangible book value

     $ 1,237,138          $ 1,287,405          $ 1,173,461    

Common shares issued and outstanding

         135,510,960              140,102,480              140,009,185    
  

 

 

    

 

 

    

 

 

 

Tangible book value per share

     $ 9.13          $ 9.19          $ 8.38    
  

 

 

    

 

 

    

 

 

 

 

- 19 -


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  
     March 31,      December 31,      March 31,  
     2020      2019      2019  
     (Dollars in thousands)  

Net Income

     $ 37,980          $ 51,281          $ 51,642    

Add: Amortization of intangible assets

     2,445          2,460          2,857    

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

     (723)         (727)         (845)   
  

 

 

    

 

 

    

 

 

 

Tangible net income

     $ 39,702          $ 53,014          $ 53,654    
  

 

 

    

 

 

    

 

 

 

Average stockholders’ equity

     $     2,006,464          $     1,993,315          $     1,879,685    

Less: Average goodwill

     (663,707)         (663,707)         (666,539)   

Less: Average intangible assets

     (41,732)         (44,185)         (52,777)   
  

 

 

    

 

 

    

 

 

 

Average tangible common equity

     $ 1,301,025          $ 1,285,423          $ 1,160,369    
  

 

 

    

 

 

    

 

 

 

Return on average equity, annualized

     7.61%        10.21%        11.14%  

Return on average tangible common equity, annualized

     12.27%        16.36%        18.75%  

[1] Tax effected at respective statutory rates.

 

- 20 -

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