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CVB Financial Corp. Reports Highest Quarterly Profit In Company History

Non-interest expense for the second quarter of 2012 was $28.9 million, a decrease of $1.3 million from $30.2 million for the first quarter of 2012, and an $8.2 million decrease from $37.2 million for the second quarter of 2011.

Our efficiency ratio improved to 44.36% for the second quarter of 2012, compared with 47.31% for the first quarter of 2012, and 54.33% for the second quarter of 2011.

Decreases in non-interest expense and a lower cost of funds were the main reasons for improvement in our efficiency ratio.

Effective June 17, 2012, we redeemed 50% of the Trust Preferred Securities in CVB Statutory Trust I. We paid $20 million for this redemption. The second quarter included $141,000 in interest expense associated with the redeemed debt.

Net Interest Income and Net Interest Margin

Net interest income, before the provision for credit losses, totaled $63.0 million for the three months ending June 30, 2012. Net interest income for the second quarter of 2012 increased $565,000, or 0.91 %, compared to the same period in 2011.

Excluding the impact of the yield adjustment on covered loans, net interest margin (tax equivalent) increased to 3.77% for the second quarter of 2012 from 3.69% for the first quarter of 2012. Total average earning asset yields increased to 4.23 % for the second quarter of 2012 from 4.16% for the first quarter of 2012. Total cost of funds decreased to 0.50% for the second quarter of 2012 from 0.52% for the first quarter of 2012. During the second quarter, we had several non-performing loans that were paid in full resulting in a 10 basis point increase in interest income for the second quarter. Excluding this impact, net interest margin was down slightly quarter-over-quarter, primarily due to the refinancing and runoff of higher yielding loans.

Excluding the impact of the yield adjustment on covered loans, net interest margin (tax equivalent) decreased to 3.77% for the second quarter of 2012 from 3.92% for the second quarter of 2011. Total average earning asset yields decreased to 4.23% for the second quarter of 2012 from 4.49% for the second quarter of 2011. Total cost of funds decreased to 0.50% for the second quarter of 2012 from 0.61% for the second quarter of 2011.

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