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CVB Financial Corp. Reports First Quarter Earnings For 2012

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

Safe Harbor

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 plan and expectations regarding future operating results. These forward-looking statements are subject to risks and uncertainties that could cause actual results, performance or achievements to differ materially from those projected. These risks and uncertainties include, but are not limited to, local, regional, national and international economic conditions and events and the impact they may have on us and our customers; ability to attract deposits and other sources of liquidity; oversupply of inventory and continued deterioration in values of California real estate, both residential and commercial; a prolonged slowdown in construction activity; changes in the financial performance and/or condition of our borrowers; changes in the level of non-performing assets and charge-offs; the effect of changes in laws and regulations (including laws and regulations concerning taxes, banking, securities, executive compensation and insurance) with which we and our subsidiaries must comply; changes in estimates of future reserve requirements based upon the periodic review thereof under relevant regulatory and accounting requirements; inflation, interest rate, securities market and monetary fluctuations; political instability; acts of war or terrorism, or natural disasters, such as earthquakes, or the effects of pandemic flu; the timely development and acceptance of new banking products and services and perceived overall value of these products and services by users; changes in consumer spending, borrowing and savings habits; technological changes; cyber-security threats including loss of system functionality or theft or loss of data; the ability to increase market share and control expenses; changes in the competitive environment among financial and bank holding companies and other financial service providers; continued volatility in the credit and equity markets and its effect on the general economy; the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as 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; the costs and effects of legal and regulatory developments including the resolution of legal proceedings or regulatory or other governmental inquiries and the results of regulatory examinations or reviews; our success at managing the risks involved in the foregoing items and other factors set forth in the Company's public reports including its Annual Report on Form 10-K for the year ended December 31, 2011, 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.

CVB FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(unaudited)
(dollars in thousands)
         
 
March 31, December 31,
2012 2011
Assets
Cash and due from banks $ 94,523 $ 35,407
Interest-earning balances due from Federal Reserve Bank 181,795 309,936
Interest-earning balances due from depository institutions -   -  
Total cash and cash equivalents 276,318 345,343
 
Interest-earning balances due from depository institutions 60,000 60,000
Investment securities available-for-sale 2,372,729 2,201,526
Investment securities held-to-maturity 2,280 2,383
Investment in stock of Federal Home Loan Bank (FHLB) 69,222 72,689
 
Non-covered loans held-for-sale 630 348
Covered loans held-for-sale 3,771 5,664
Non-covered loans and lease finance receivables 3,186,013 3,219,727
Allowance for credit losses   (91,922 )   (93,964 )
Net non-covered loans and lease finance receivables   3,094,091     3,125,763  
 
Covered loans and lease finance receivables, net 241,943 256,869
Premises and equipment, net 35,624 36,280
Intangibles 4,731 5,548
Goodwill 55,097 55,097
Bank owned life insurance 116,878 116,132
FDIC loss sharing asset 55,193 59,453
Other assets   117,576     139,820  
TOTAL ASSETS $ 6,506,083   $ 6,482,915  
 
Liabilities and Stockholders' Equity
Liabilities:
Deposits:
Noninterest-bearing demand deposits $ 2,120,382 $ 2,027,876
Investment checking 327,741 338,424
Savings and money market demand 1,435,082 1,401,098
Time deposits   796,902     837,150  
Total deposits 4,680,107 4,604,548
 
Customer repurchase agreements 477,568 509,370
Borrowings 448,730 448,662
Junior subordinated debentures 108,250 115,055
Other liabilities   61,421     90,466  
Total liabilities   5,776,076   5,768,101  
 
Stockholders' Equity:
Stockholders' equity 688,580 673,345
Accumulated other comprehensive income, net of tax   41,427     41,469  
Total stockholders' equity   730,007     714,814  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 6,506,083   $ 6,482,915  
 

CVB FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED AVERAGE BALANCE SHEETS
(unaudited)
(dollars in thousands)
         
 
Three Months Ended March 31,
2012 2011
Assets:
Cash and due from banks $ 138,289 $ 108,923
Interest-earning balances due from Federal Reserve Bank 224,346 331,001
Interest-earning balances due from depository institutions -   50,248  
Total cash and cash equivalents 362,635 490,172
 
Interest-earning balances due from depository institutions 60,000 50,190
Investment securities available-for-sale 2,291,320 1,856,465
Investment securities held-to-maturity 2,292 2,999
Investment in stock of Federal Home Loan Bank (FHLB) 72,194 86,591
 
Non-covered loans held-for-sale 1,753 3,460
Covered loans held-for-sale 5,692 -
Non-covered loans and lease finance receivables 3,176,919 3,317,201
Allowance for credit losses   (93,785 )   (109,861 )
Net non-covered loans and lease finance receivables   3,083,134     3,207,340  
Covered loans and lease finance receivables, net 249,406 361,386
Premises and equipment, net 36,087 40,552
Intangibles 5,068 8,522
Goodwill 55,097 55,097
Bank owned life insurance 116,428 113,207
FDIC loss sharing asset 58,310 90,157
Other assets   159,958     155,428  
TOTAL $ 6,559,374   $ 6,521,566  
 
Liabilities and Stockholders' Equity
Liabilities:
Deposits:
Noninterest-bearing demand deposits $ 2,079,571 $ 1,790,839
Interest-bearing   2,567,436     2,773,622  
Total deposits 4,647,007 4,564,461
 
Other borrowings 987,893 1,134,516
Junior subordinated debentures 108,624 115,055
Other liabilities   86,137     55,690  
Total liabilities   5,829,661     5,869,722  
 
Stockholders' equity:
Stockholders' equity 688,245 645,630
Accumulated other comprehensive income, net of tax   41,468     6,214  
Total stockholders' equity   729,713     651,844  
TOTAL $ 6,559,374   $ 6,521,566  
 

CVB FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited)
(dollars in thousands, except per share amounts)
         
 
For the Three Months
Ended March 31,
2012 2011
Interest income:
Loans held-for-sale $ 4 $ 20
Loans and leases, including fees 46,028 49,344
Accelerated accretion on acquired loans   4,692     1,951
Total loans and leases, including fees 50,724 51,315
Investment securities:
Taxable 9,170 8,839
Tax-advantaged   5,796     5,919
Total investment income 14,966 14,758
Dividends from FHLB stock 90 65
Federal funds sold & interest-earning CDs   285     374
Total interest income 66,065 66,512
Interest expense:
Deposits 1,653 2,788
Borrowings and junior subordinated debentures   5,810     6,615
Total interest expense   7,463     9,403
Net interest income before provision for credit losses 58,602 57,109
Provision for credit losses   -     7,068
Net interest income after
provision for credit losses 58,602 50,041
Noninterest income:
Service charges on deposit accounts 4,124 3,723
Trust and investment services 2,185 2,152
Increase (decrease) in FDIC loss sharing asset (2,944 ) 1,415
Other   1,891     2,688
Total noninterest income 5,256 9,978
Noninterest expense:
Salaries and employee benefits 16,721 17,660
Occupancy 2,847 2,831
Equipment 1,101 1,490
Professional services 1,991 3,610
Amortization of intangible assets 816 901
Provision for unfunded commitments - 732
OREO expenses 730 1,105
Other   6,006     7,976
Total noninterest expense   30,212     36,305
Earnings before income taxes 33,646 23,714
Income taxes   11,378     7,114
Net earnings   22,268     16,600
 
Basic earnings per common share $ 0.21   $ 0.16
Diluted earnings per common share $ 0.21   $ 0.16
 
Cash dividends per common share $ 0.085   $ 0.085
 

CVB FINANCIAL CORP. AND SUBSIDIARIES
SELECTED FINANCIAL HIGHLIGHTS
(unaudited)
(dollars in thousands, except per share amounts)
       
Three Months Ended March 31,
2012 2011
 
Interest income - (Tax-Effected) (te) $ 68,238 $ 68,982
Interest expense   7,463     9,403  
Net Interest income - (te) $ 60,775   $ 59,579  
 
Return on average assets, annualized 1.37 % 1.03 %
Return on average equity, annualized 12.27 % 10.33 %
Efficiency ratio [1] 47.31 % 54.12 %
Yield on average earning assets (te) 4.53 % 4.60 %

Yield on average earning assets (te) excluding discount

4.16 % 4.39 %
Cost of deposits 0.14 % 0.25 %
Cost of deposits and customer repurchase agreements 0.17 % 0.27 %
Cost of funds 0.52 % 0.65 %
Net interest margin (te) 4.04 % 3.98 %
Net interest margin (te) excluding discount 3.69 % 3.78 %
 
[1] Noninterest expense divided by net interest income before provision for credit losses plus noninterest income.
 
Weighted average shares outstanding
Basic 104,303,158 105,651,193
Diluted 104,499,932 105,703,855
Dividends declared $ 8,903 $ 9,017
Dividend payout ratio 39.98 % 54.32 %
 
Number of shares outstanding-EOP 104,707,012 106,078,253
Book value per share $ 6.97 $ 6.17
Tangible Book value per share $ 6.40 $ 5.57
 
 
March 31,
2012 2011
(Non-covered loans)
Non-performing assets (dollar amount in thousands):
Non-accrual loans $ 55,312 $ 108,150
Loans past due 90 days or more
and still accruing interest - -
Other real estate owned (OREO), net   11,427     6,240  
Total non-performing assets $ 66,739   $ 114,390  
 
Percentage of non-performing assets
to total loans outstanding and OREO 2.09 % 3.51 %
 
Percentage of non-performing
assets to total assets 1.03 % 1.76 %
 
Allowance for loan losses to
non-performing assets 137.73 % 88.35 %
 
Net Charge-offs to Average loans 0.06 % 0.34 %
 
Allowance for credit losses:
Beginning Balance $ 93,964 $ 105,259
Total loans charged-off (2,356 ) (12,038 )
Total Loans Recovered   314     778  
Net Loans Charged-off (2,042 ) (11,260 )
Provision Charged to Operating Expense   -     7,068  
Allowance for Credit Losses at End of period $ 91,922   $ 101,067  
 

CVB FINANCIAL CORP. AND SUBSIDIARIES
SELECTED FINANCIAL HIGHLIGHTS
(unaudited)
(dollars in thousands, except per share amounts)
                       
Quarterly Common Stock Price
 
2012 2011 2010
Quarter End High Low High Low High Low
March 31, $ 11.97 $ 9.99 $ 9.32 $ 7.83 $ 10.89 $ 8.44
June 30, $ 9.94 $ 8.18 $ 11.85 $ 9.00
September 30, $ 10.00 $ 7.41 $ 10.99 $ 6.61
December 31, $ 10.27 $ 7.28 $ 9.09 $ 7.30
 
 
Quarterly Consolidated Statements of Earnings
 
1Q 4Q 3Q 2Q 1Q
2012 2011 2011 2011 2011
Interest income
Loans, including fees $ 50,724 $ 48,290 $ 52,788 $ 54,697 $ 51,315
Investment securities and other   15,341   15,206   15,742   16,485   15,197
66,065 63,496 68,530 71,182 66,512
Interest expense
Deposits 1,653 1,721 1,979 2,220 2,788
Other borrowings   5,810   6,578   6,571   6,567   6,615
7,463 8,299 8,550 8,787 9,403
Net interest income before
provision for credit losses 58,602 55,197 59,980 62,395 57,109
Provision for credit losses   -   -   -   -   7,068
Net interest income after
provision for credit losses 58,602 55,197 59,980 62,395 50,041
 
Non-interest income 5,256 10,730 7,514 5,994 9,978
Non-interest expenses   30,212   34,707   32,858   37,155   36,305
Earnings before income taxes 33,646 31,220 34,636 31,234 23,714
Income taxes   11,378   9,508   12,253   10,196   7,114
Net earnings $ 22,268 $ 21,712 $ 22,383 $ 21,038 $ 16,600
 
Basic earning per common share $ 0.21 $ 0.21 $ 0.21 $ 0.20 $ 0.16
Diluted earnings per common share $ 0.21 $ 0.21 $ 0.21 $ 0.20 $ 0.16
 
Cash dividends per common share $ 0.085 $ 0.085 $ 0.085 $ 0.085 $ 0.085
 
Dividends Declared $ 8,903 $ 8,858 $ 8,912 $ 9,018 $ 9,017
 

CVB FINANCIAL CORP. AND SUBSIDIARIES
SELECTED FINANCIAL HIGHLIGHTS
(unaudited)
(dollars in thousands)
                     
Distribution of Loan Portfolio
 
3/31/2012 12/31/2011 9/30/2011 6/30/2011 3/31/2011
 
Commercial and Industrial $ 521,779 $ 523,950 $ 510,950 $ 500,745 $ 490,316
Real Estate:
Construction 77,385 94,831 101,429 119,638 169,562
Commercial Real Estate 2,223,533 2,171,399 2,172,050 2,237,975 2,255,247
SFR Mortgage 167,465 179,731 191,650 201,457 210,445
Consumer 58,613 59,789 58,668 59,496 61,622
Municipal lease finance receivables 114,792 113,629 115,803 119,792 122,897
Auto and equipment leases 17,105 17,370 16,237 16,998 17,399
Dairy and Livestock 286,027 343,549 292,049 296,801 325,052
Agribusiness   12,216     28,523     48,627     52,528     49,664  
Gross Loans 3,478,915 3,532,771 3,507,463 3,605,430 3,702,204
Less:
Purchase accounting discount (45,456 ) (50,780 ) (51,646 ) (73,449 ) (98,117 )
Deferred net loan fees (5,503 ) (5,395 ) (5,115 ) (5,385 ) (5,640 )
Allowance for credit losses   (91,922 )   (93,964 )   (95,528 )   (96,895 )   (101,067 )
Net Loans $ 3,336,034   $ 3,382,632   $ 3,355,174   $ 3,429,701   $ 3,497,380  
 
Covered loans $ 241,943 $ 256,869 $ 280,337 $ 334,225 $ 348,759
Non-covered loans   3,094,091     3,125,763     3,074,837     3,095,476     3,148,621  
Total Net Loans $ 3,336,034   $ 3,382,632   $ 3,355,174   $ 3,429,701   $ 3,497,380  
 

CVB FINANCIAL CORP. AND SUBSIDIARIES
SELECTED FINANCIAL HIGHLIGHTS
(unaudited)
(dollars in thousands)
                 
 
Non-Performing Assets & Delinquency Trends
(Non-Covered Loans)                  
March 31, December 31, September 30, June 30, March 31,
2012 2011 2011 2011 2011

Non-Performing Loans

Residential Construction and Land $ 920 $ 920 $ 989 $ 1,080 $ 4,001
Commercial Construction and Land 8,349 12,397 13,779 23,953 39,975
Residential Mortgage 13,129 16,970 18,792 17,786 18,425
Commercial Real Estate 27,238 25,992 25,454 24,731 34,951
Commercial and Industrial 4,082 3,432 3,277 4,649 7,542
Dairy & Livestock 1,200 2,475 2,574 2,672 2,996
Consumer 308 382 340 179 259
Auto & Equipment Leases   86     104     7     -     1  
Total $ 55,312   $ 62,672   $ 65,212   $ 75,050   $ 108,150  
 
% of Total Loans 1.74 % 1.95 % 2.06 % 2.35 % 3.33 %
 
 

Past Due 30-89 Days

Residential Construction and Land $ - $ - $ - $ - $ -
Commercial Construction and Land - - - - 1,492
Residential Mortgage 4,109 1,568 - 460 993
Commercial Real Estate 5,798 787 2,590 898
Commercial and Industrial 1,317 3,022 940 675 72
Dairy & Livestock - - - - -
Consumer 13 59 14 91 9
Auto & Equipment Leases     20     997     65     167  
Total $ 11,237   $ 5,456   $ 1,951   $ 3,881   $ 3,631  
 
% of Total Loans 0.35 % 0.17 % 0.06 % 0.12 % 0.11 %
 

OREO

Residential Construction and Land

 

$ - $ - $ - $ - $ -
Commercial Construction and Land 7,117 7,117 8,580 7,117 2,709
Commercial Real Estate 4,173 6,566 7,376 6,314 3,322
Commercial and Industrial 137 137 - - 209
Residential Mortgage - - - 287 -
Consumer - - - - -
Auto & Equipment Leases     -     -     -     -  
Total $ 11,427   $ 13,820   $ 15,956   $ 13,718   $ 6,240  
         
Total Non-Performing, Past Due & OREO $ 77,976   $ 81,948   $ 83,119   $ 92,649   $ 118,021  
 
% of Total Loans 2.45 % 2.55 % 2.62 % 2.90 % 3.63 %
 

Net interest income and net interest margin reconciliations (Non-GAAP)
We use certain non-GAAP financial measures to provide supplemental information regarding our performance. The first quarter of 2012 net interest income and net interest margin include a yield adjustment of $4.7 million from discount accretion on covered loans. We believe that presenting the net interest income and net interest margin excluding the yield adjustment provides additional clarity to the users of financial statements regarding core net interest income and net interest margin.
         

Three months ended March 31, 2012

(Dollars in thousands)

Average Balance

Interest Yield
Total interest-earning assets $ 6,083,922 $ 66,065 4.53 %
Accelerated accretion on acquired loans   50,155   (4,692 )
Total interest-earning assets, excluding SJB loan discount and yield adjustment $ 6,134,077 $ 61,373   4.16 %
 
Net interest income and net interest margin (TE) $ 60,775 4.04 %
Yield adjustment to interest income from discount accretion   (4,692 )
Net interest income and net interest margin (TE), excluding yield adjustment $ 56,083   3.69 %
 

Tangible book value reconciliations (Non-GAAP)
The tangible book value per share is Non-GAAP disclosure. The Company uses certain non-GAAP financial measures to provide supplemental information regarding the Company's performance to provide additional disclosure. 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, 2012.
   
As of March 31, 2012
(Dollars in thousands)
 
Stockholders' Equity $ 730,007
Less: Goodwill (55,097 )
Less: Intangible Assets   (4,731 )
Tangible Book Value $ 670,179  
 
 
 
Common shares issued and outstanding 104,707,012
 
Tangible Book Value Per Share $ 6.40  




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