CVB Financial Corp. Reports Record Earnings For 2011

CVB Financial Corp. (NASDAQ:CVBF) and its subsidiary, Citizens Business Bank (“the Company”), announced record earnings for the year ended December 31, 2011.

CVB Financial Corp. reported net income of $81.7 million for the year ended December 31, 2011. This represents an increase of $18.8 million, or 29.87%, when compared with net income of $62.9 million for the year ended December 31, 2010. Diluted earnings per share were $0.77 for the year ended December 31, 2011. 2011 represents the most profitable year in company history. Previously, 2006 was the most profitable year with $70.6 million in net profit.

Chris Myers, President and CEO, commented, “We had an excellent year in 2011 and achieved many of our objectives. I am extremely proud of the tremendous effort put forth by our valued associates and Board of Directors in achieving these outstanding results. I would also like to thank our longstanding shareholders for their faith and loyalty.”

Net income for the year ended December 31, 2011 produced a return on beginning equity of 12.69%, a return on average equity of 12.00% and a return on average assets of 1.26%. The efficiency ratio, excluding the provision for credit losses, was 53.86% for the year. Operating expenses as a percentage of average assets were 2.17%. This represents a $12.1 million decrease, year over year, excluding borrowing prepayment penalties of $3.3 million in 2011 and $18.7 million in 2010. This decrease was primarily attributable to a $3.8 million decrease in regulatory assessment fees, a $2.7 million decrease in supplies and software expense, and a $1.9 million decrease in equipment expense.

The Company reported net income of $21.7 million for the fourth quarter ended December 31, 2011. This represents an increase of $11.8 million, or 119.89%, when compared with the $9.9 million in net income reported for the fourth quarter of 2010. Diluted earnings per share were $0.21 for the fourth quarter of 2011. This was up $0.12 from diluted earnings per share of $0.09 for the fourth quarter of 2010.

Net income for the fourth quarter of 2011 produced an annualized return on beginning equity of 12.31%, an annualized return on average equity of 12.08% and an annualized return on average assets of 1.31%. The efficiency ratio, excluding the provision for credit losses, was 52.64%. Operating expenses as a percentage of average assets were 2.09% including a $3.3 million fee for the prepayment of a $100 million FHLB advance.

Interest income and fees on loans for 2011 totaled $207.1 million, which includes $12.6 million of discount accretion from accelerated principal reductions on covered loans acquired from San Joaquin Bank (“SJB”). This represents a decrease of $33.6 million, or 13.97%, when compared to interest income and fees on loans of $240.7 million for 2010. Excluding the discount accretion, interest income and fees on loans would have been $194.5 million for 2011 and $214.0 million for 2010.

In addition to the $12.6 million of discount accretion for 2011, we recorded a net increase of $171,000 in the FDIC loss sharing asset as a result of higher estimated losses than originally projected as well as legal, appraisal and other workout costs being claimed. The increase is included in other operating income.

Net Interest Income and Net Interest Margin

Net interest income, before the provision for credit losses, totaled $234.7 million for the year ended December 31, 2011, compared to $259.3 million for 2010. The decrease resulted from a $47.6 million decrease in interest income offset by a $22.9 million decrease in interest expense.

Excluding the impact of the yield adjustment on covered loans, net interest margin (tax equivalent) increased from 3.76% for 2010 to 3.78% for 2011. Total average earning asset yields decreased from 5.20% for 2010 to 4.61% for 2011. Total cost of funds decreased from 0.96% for 2010 to 0.60% for 2011.

Net interest income, before provision for credit losses, totaled $55.2 million for the fourth quarter of 2011. This represents a decrease of $3.9 million, or 6.68%, over net interest income of $59.1 million for the same period in 2010. The decrease resulted from a $6.5 million decrease in interest income, partially offset by a $2.6 million decrease in interest expense.

Excluding the impact of the yield adjustment on covered loans, net interest margin (tax equivalent) decreased from 3.66% for the fourth quarter of 2010 to 3.62% for the same period in 2011. Total average earning asset yields decreased from 4.73% for the fourth quarter of 2010 to 4.24% for the same period in 2011. Total cost of funds decreased from 0.73% for the fourth quarter of 2010 to 0.56% for the same period in 2011.

Assets

The Company reported total assets of $6.48 billion at December 31, 2011. This represents an increase of $46.2 million, or 0.72%, from total assets of $6.44 billion at December 31, 2010. Earning assets (excluding the allowance for loan and lease losses) totaling $6.13 billion increased $109.8 million, or 1.82%, when compared with earning assets of $6.02 billion at December 31, 2010. The increase in earning assets was primarily due to increases in our investment portfolio, partially offset by decreases in the loan portfolio.

Investment Securities

Investment securities totaled $2.20 billion at December 31, 2011. This represents an increase of $409.2 million, or 22.80%, when compared with $1.79 billion in investment securities at December 31, 2010. As of December 31, 2011, our portfolio had a pretax unrealized gain of $71.5 million of which $43.5 million is attributed to our municipal securities portfolio and $27.8 million is attributed to our mortgage-backed securities (“MBS”) portfolio.

MBS totaled $1.49 billion at December 31, 2011. Virtually all of our MBS are issued by Freddie Mac or Fannie Mae, which have the implied guarantee of the U.S. Government. We have one private-label mortgage-backed security that is impaired. This Alt-A bond, with a book value of $2.4 million as of December 31, 2011, has produced $1.8 million in net impairment losses to date since it was purchased in early 2008. $656,000 in impairment losses was recorded in 2011.

Our municipal securities, totaling $652.0 million, are diversified among 598 individual issues and located in 28 states with 6.3% located within the state of California. Our largest holdings are in New Jersey 14.3%, Illinois 12.5% and Michigan 12.2%. All municipal bond securities are performing.

In the fourth quarter of 2011, we purchased and now hold $10.5 million in trust preferred securities.

We continue to reinvest our cash flows from the investment portfolio. During 2011 we purchased $761.6 million in MBS with an average yield of 2.41% and $34.2 million in municipal securities with an average tax-equivalent yield of 5.63%. MBS purchased in 2011 have an average duration of about 3.4 years. One of the objectives of our purchasing strategy is to minimize extension risk as interest rates rise.

Loans

Total loans and leases of $3.48 billion at December 31, 2011 decreased by $268.1 million, or 7.15%, from $3.75 billion at December 31, 2010. We attribute a significant portion of the decrease to the following:
  • $111.5 million from working down loans acquired from SJB.
  • $62.8 million decline in non-covered construction loans.
  • $45.3 million in note sales related to our former largest borrower.
  • $36.2 million decline in purchased mortgage pools.

Construction loans and purchased mortgage pools are considered non-core lending niches. Our core lending strategy is focused on commercial & industrial business lending, dairy, livestock, and agribusiness lending and commercial real estate loans.

Deposits & Customer Repurchases

Deposits of $4.60 billion and customer repurchase agreements of $509.4 million totaled $5.11 billion at December 31, 2011. This represents an increase of $52.9 million, or 1.05%, when compared with total deposits and customer repurchase agreements of $5.06 billion at December 31, 2010.

Non-interest bearing deposits were $2.03 billion at December 31, 2011, an increase of $326.4 million, or 19.18%, from $1.70 billion at December 31, 2010. At December 31, 2011, non-interest bearing deposits were 44.04% of total deposits, up from 37.65% at December 31, 2010.

Our cost of total deposits was 0.15% for the three months ended December 31, 2011, compared to 0.17% for the third quarter of 2011. Our cost of total deposits was 0.19% for 2011, compared to 0.40% for 2010. Our cost of total deposits including customer repurchase agreements was 0.17% for the three months ended December 31, 2011 and 0.21% for the 2011 full-year.

Borrowings

At December 31, 2011, we had $448.7 million in borrowings. This represents a decrease of $104.7 million from borrowings of $553.4 million at December 31, 2010. In July 2011, we redeemed $5.0 million in subordinated debt with no prepayment cost. This debt carried an interest rate of three month LIBOR plus 1.65%. In December 2011, we prepaid a $100.0 million FHLB advance which carried an interest rate of 2.89% and was scheduled to mature in April 2013. The repayment of this debt resulted in a $3.3 million prepayment charge recorded in other operating expense.

Asset Quality

We have separated the discussion of asset quality into two sections: non-covered loans and covered loans. The non-covered loans represent the legacy Citizens Business Bank loans and exclude all loans acquired in the 2009 SJB acquisition. The SJB loans were marked to fair value at the acquisition date and are “covered” loans as defined in the loss sharing agreement with the FDIC.

Citizens Business Bank Asset Quality (non-covered loans)

The allowance for credit losses decreased from $105.3 million as of December 31, 2010 to $94.0 million as of December 31, 2011. The decrease was due to net loan charge-offs totaling $18.4 million versus a provision for credit losses of $7.1 million. By comparison, for 2010, the Company experienced net charge-offs of $65.5 million versus a provision for credit losses of $61.2 million. The allowance for credit losses was 2.92% and 3.12% of total loans and leases outstanding as of December 31, 2011 and 2010, respectively.

We had $62.7 million in non-performing loans at December 31, 2011, or 1.95% of total non-covered loans. This compares to non-performing loans of $157.0 million, or 4.65%, of total loans at December 31, 2010. The non-performing loans at December 31, 2011 are summarized as follows: $920,000 in residential construction, $12.4 million in commercial construction, $17.0 million in residential mortgages, $26.0 million in commercial real estate, $3.5 million in commercial and industrial, $2.5 million in dairy & livestock loans, and $382,000 in all other loans.

At December 31, 2011, we had $13.8 million in Other Real Estate Owned (“OREO”), an increase of $8.5 million from OREO of $5.3 million at December 31, 2010. At December 31, 2010, we had three OREO properties. During 2011, we added fifteen properties for a total of $16.2 million to OREO. We sold seven properties with an OREO value of $6.9 million for cash proceeds of $7.2 million. We also recorded $0.8 million in write-downs of OREO properties due to appraisal revaluations. We now have eleven OREO properties valued at $13.8 million.

At December 31, 2011, we had loans delinquent 30 to 89 days of $5.5 million, or 0.17%, of total performing loans. This compares to delinquent loans of $9.1 million at December 31, 2010 or 0.27%. Any loan delinquent 90 days or more was categorized as non-performing.

At December 31, 2011, we had $38.6 million in performing troubled debt restructured loans (“TDRs”), an increase of $25.3 million from performing TDRs of $13.3 million at December 31, 2010. In terms of number of loans, we had five performing TDRs at December 31, 2010 compared to sixteen performing TDRs at December 31, 2011. $17.1 million of the $25.3 million year-over-year increase in performing TDRs is due to two commercial real estate loans that emerged out of bankruptcy court and are now paying in accordance with the terms approved by the court.

In total, non-performing assets, defined as non-covered, non-accrual loans plus OREO, have decreased significantly over the past several quarters and totaled $76.5 million at December 31, 2011, $81.2 million at September 30, 2011, $88.8 million at June 30, 2011, $114.4 million at March 31, 2011 and $162.3 million at December 31, 2010.

We have also made substantial progress in reducing our classified loans on a year-over-year basis. Classified loans are loans that are graded “substandard” or worse. At December 31, 2011, classified loans totaled $358.6 million, a decrease of $295.5 million from $654.1 million at December 31, 2010.

San Joaquin Bank Asset Quality (covered loans)

At December 31, 2011 we had $330.4 million in gross loans from SJB with a carrying value of $262.5 million, compared to $488.8 million of gross loans at December 31, 2010 and $374.0 million in carrying value. Of the gross loans, we have $83.7 million in loans 90 days or more past due as of December 31, 2011, or 25.35%, compared to $133.1 million in loans 90 days or more past due at December 31, 2010. We have 16 properties in OREO totaling $9.8 million compared to 17 properties totaling $11.3 million at December 31, 2010.

CitizensTrust

CitizensTrust has approximately $2.0 billion in assets under administration, including $1.6 billion in assets under management as of December 31, 2011. This compares with $2.1 billion in assets under administration, including $1.1 billion in assets under management at December 31, 2010. The increase in managed assets is primarily due to the conversion of custodial and non-managed accounts into managed accounts. Revenues from CitizensTrust were $8.7 million for 2011, up 3.83% or $320,000 over 2010. CitizensTrust provides trust, investment and brokerage related services, as well as financial, estate and business succession planning.

Repurchase of Common Stock

In July 2008, our Board of Directors authorized the repurchase of up to 10,000,000 shares of our common stock. During 2011, we repurchased 1,594,488 shares of common stock at the average price of $7.86. As of December 31, 2011, we have 7,805,512 shares of our common stock remaining that are eligible for repurchase.

Corporate Overview

CVB Financial Corp. is the holding company for Citizens Business Bank, a financial services company based in Ontario, California. Citizens Business Bank serves 40 cities with 42 Business Financial Centers, five Commercial Banking Centers and two trust office locations in the Inland Empire, Los Angeles County, Orange County and the Central Valley areas of California.

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 plans 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 real estate in California and other states where our bank makes loans, 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, business and consumer credit, 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; the availability and effectiveness of hedging instruments and strategies; 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; threats to the stability and security of our technology hardware and software, and to the stability and security of any related vendor or customer hardware and software; 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 effects 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, 2010, 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
                 
 
December 31,
2011 2010
Assets:
Cash and due from banks $ 35,407 $ 67,279
Interest-bearing balances due from Federal Reserve Bank 309,936 286,769
Interest-bearing balances due from depository institutions   -     50,227  
Total cash and cash equivalents 345,343 404,275
 
Interest-bearing balances due from depository institutions 60,000 50,190
Investment securities available-for-sale 2,201,526 1,791,558
Investment securities held-to-maturity 2,383 3,143
Investment in stock of Federal Home Loan Bank (FHLB) 72,689 86,744
 
Non-covered loans held-for-sale 348 2,954
Covered loans held-for-sale 5,664 -
Non-covered loans and lease finance receivables 3,219,727 3,373,728
Less allowance for credit losses   (93,964 )   (105,259 )
Net non-covered loans and lease finance receivables   3,125,763     3,268,469  
 
Covered loans and lease finance receivables, net 256,869 374,012
Premises and equipment, net 36,280 40,921
Intangibles 5,548 9,029
Goodwill 55,097 55,097
Cash value of life insurance 116,132 112,901
FDIC loss sharing asset 59,453 101,461
Other assets   139,820     135,937  
TOTAL ASSETS $ 6,482,915   $ 6,436,691  
 
Liabilities and Stockholders' Equity
Liabilities:
Deposits:
Demand deposits (noninterest-bearing) $ 2,027,876 $ 1,701,523
Investment checking 338,424 384,674
Savings and money market demand 1,401,098 1,342,758
Time deposits   837,150     1,089,873  
Total Deposits 4,604,548 4,518,828
 
Demand Note to U.S. Treasury - 1,917
Customer repurchase agreements 509,370 542,188
Borrowings 448,662 553,390
Junior subordinated debentures 115,055 115,055
Other liabilities   90,466     61,458  
Total Liabilities 5,768,101 5,792,836
Stockholders' equity:
Stockholders' equity 673,345 637,670
Accumulated other comprehensive income, net of tax   41,469     6,185  
Total stockholders' equity   714,814     643,855  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 6,482,915   $ 6,436,691  
 
 
 
CVB FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED AVERAGE BALANCE SHEETS
(unaudited)
dollars in thousands
                         
 
Three months ended December 31, Twelve months ended December 31,
2011 2010 2011 2010
Assets:
Cash and due from banks $ 40,060 $ 111,464 $ 75,360 $ 109,403

Interest-bearing balances due from Federal Reserve Bank
473,856 293,836 380,462 273,471
Federal funds sold and Interest-bearing balances due from depository institutions   -     50,184     30,588     40,904  
Total cash and cash equivalents 513,916 455,484 486,410 423,778
 
Interest-bearing balances due from depository institutions 52,558 50,190 50,787 23,533
Investment securities available-for-sale 2,128,703 1,818,102 1,980,984 1,967,175
Investment securities held-to-maturity 2,489 2,984 2,790 3,237
Investment in stock of Federal Home Loan Bank (FHLB) 74,410 88,547 80,091 93,461
 
Non-covered loans held-for-sale 1,135 3,872 3,052 3,078
Covered loans held-for-sale 5,692 - 1,419 -
Non-covered loans and lease finance receivables 3,180,872 3,398,824 3,222,450 3,482,758
Less allowance for credit losses   (94,842 )   (109,950 )   (101,080 )   (114,358 )
Net non-covered loans and lease finance receivables   3,086,030     3,288,874     3,121,370     3,368,400  
Covered loans and lease finance receivables, net 268,603 388,917 318,840 422,277
Premises and equipment, net 36,390 41,997 38,353 41,961
Intangibles 5,908 9,423 7,198 10,816
Goodwill 55,097 55,097 55,097 55,097
Cash value of life insurance 115,729 112,489 114,583 111,210
FDIC loss sharing asset 56,823 105,951 72,538 117,087
Other assets   177,414     154,287     171,996     130,707  
TOTAL $ 6,580,897   $ 6,576,214   $ 6,505,508   $ 6,771,817  
 
Liabilities and Stockholders' Equity
Liabilities:
Deposits:
Noninterest-bearing $ 2,039,670 $ 1,780,340 $ 1,905,605 $ 1,669,611
Interest-bearing   2,587,155     2,832,396     2,652,093     2,887,507  
Total Deposits 4,626,825 4,612,736 4,557,698 4,557,118
 
Other borrowings 1,057,655 1,115,141 1,085,558 1,369,301
Junior subordinated debentures 115,055 115,055 115,055 115,055
Other liabilities   68,005     60,275     65,847     61,020  
Total Liabilities 5,867,540 5,903,207 5,824,158 6,102,494
Stockholders' equity:
Stockholders' equity 674,072 644,815 661,310 636,628

Accumulated other comprehensive income, net of tax
  39,285     28,192     20,040     32,695  
  713,357     673,007     681,350     669,323  
TOTAL $ 6,580,897   $ 6,576,214   $ 6,505,508   $ 6,771,817  
 
 
                           
CVB FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited)
dollar amounts in thousands, except per share
 
For the Three Months For the Twelve Months

Ended December 31,

Ended December 31,
2011 2010 2011 2010
Interest income:
Loans held-for-sale $ 10 $ 14 $ 56 $ 54
Loans and leases, including fees 47,332 51,200 194,448 213,932
Accelerated accretion on acquired loans   948     4,407     12,586     26,740  
Total loans and leases, including fees 48,290 55,621 207,090 240,726
Investment securities:
Taxable 8,913 7,784 37,310 49,720
Tax-advantaged   5,849     6,129     23,640     25,394  
Total investment income 14,762 13,913 60,950 75,114
Dividends from FHLB stock 59 90 242 324
Federal funds sold & Interest-bearing CDs   385     367     1,438     1,125  
Total interest income 63,496 69,991 269,720 317,289
Interest expense:

Deposits
1,721 3,814 8,708 18,253
Borrowings and junior subordinated debentures   6,578     7,028     26,331     39,719  
Total interest expense   8,299     10,842     35,039     57,972  
Net interest income before provision for credit losses 55,197 59,149 234,681 259,317
Provision for credit losses   -     12,700     7,068     61,200  

Net interest income after provision for credit losses
55,197 46,449 227,613 198,117
Other operating income:
Impairment loss on investment securities (110 ) (92 ) (254 ) (317 )
Loss reclassified from other comprehensive income  

-
 

-
    (402 )   (587 )

Net impairment loss on investment securities recognized in earnings
(110 ) (92 ) (656 ) (904 )
Service charges on deposit accounts 3,995 4,060 15,768 16,745
Trust and investment services 2,215 2,108 8,683 8,363
Gain on sale of investment securities - - - 38,900
Increase (decrease) in FDIC loss sharing asset 1,289 (1,056 ) 171 (15,856 )
Other   3,341     2,168     10,250     9,866  
Total other operating income 10,730 7,188 34,216 57,114
Other operating expenses:
Salaries and employee benefits 16,534 16,556 69,993 69,419
Occupancy 2,912 2,959 11,261 12,127
Equipment 1,117 1,748 5,322 7,221
Professional services 2,666 3,485 15,031 13,308
Amortization of intangible assets 852 909 3,481 3,732
Provision for unfunded commitments - 450 (918 ) 2,600
OREO expenses 1,706 6,344 6,729 7,490
Prepayment penalties on borrowings 3,310 - 3,310 18,663
Other   5,610     9,354     26,816     33,932  
Total other operating expenses   34,707     41,805     141,025     168,492  
Earnings before income taxes 31,220 11,832 120,804 86,739
Income taxes   9,508     1,958     39,071     23,804  
Net earnings 21,712 9,874 81,733 62,935
Allocated to restricted stock   63     41     292     217  
Net earnings allocated to common shareholders $ 21,649   $ 9,833   $ 81,441   $ 62,718  
 
Basic earnings per common share $ 0.21   $ 0.09   $ 0.77   $ 0.59  
Diluted earnings per common share $ 0.21   $ 0.09   $ 0.77   $ 0.59  
 
Cash dividends per common share $ 0.085   $ 0.085   $ 0.340   $ 0.340  
 
 
                           
CVB FINANCIAL CORP. AND SUBSIDIARIES
SELECTED FINANCIAL HIGHLIGHTS
(unaudited)
dollar amounts in thousands, except per share
 
Three months ended December 31, Twelve months ended December 31,
2011 2010 2011 2010
 
Interest income - (Tax-Effected) (te) $ 65,942 $ 72,534 $ 279,587 $ 327,769
Interest expense   8,299     10,842     35,039     57,972  
Net Interest income - (te) $ 57,643   $ 61,692   $ 244,548   $ 269,797  
 
Return on average assets, annualized 1.31 % 0.60 % 1.26 % 0.93 %
Return on average equity, annualized 12.08 % 5.82 % 12.00 % 9.40 %
Efficiency ratio 52.64 % 77.94 % 53.86 % 66.02 %
Yield on average earning assets 4.24 % 4.73 % 4.61 % 5.20 %
Cost of deposits 0.15 % 0.33 % 0.19 % 0.40 %
Cost of deposits and customer repurchase agreements 0.17 % 0.36 % 0.21 % 0.44 %
Cost of funds 0.56 % 0.73 % 0.60 % 0.96 %
Net interest margin (te) 3.71 % 4.03 % 4.04 % 4.28 %
Net interest margin (te) excluding discount 3.62 % 3.66 % 3.78 % 3.76 %
 
 
Weighted average shares outstanding
Basic 104,159,966 105,043,076 105,142,650 105,879,779
Diluted 104,236,764 105,303,245 105,222,566 106,125,761
Dividends declared $ 8,858 $ 9,016 $ 35,805 $ 36,103
Dividend payout ratio 40.80 % 91.31 % 43.81 % 57.37 %
 
Number of shares outstanding-EOP 104,482,271 106,075,576
Book value per share $ 6.84 $ 6.07
Tangible Book value per share $ 6.26 $ 5.46
 
 
December 31,
2011 2010
(Non-covered loans)
Non-performing assets (dollar amount in thousands):
Non-accrual loans $ 62,672 $ 157,020

Loans past due 90 days or more and still accruing interest
- -
Other real estate owned (OREO), net   13,820     5,290  
Total non-performing assets $ 76,492   $ 162,310  
 

Percentage of non-performing assets to total loans outstanding and OREO
2.37 % 4.80 %
 

Percentage of non-performing assets to total assets
1.18 % 2.52 %
 

Allowance for loan losses to non-performing assets
122.84 % 64.85 %
 
Net Charge-offs to Average loans 0.57 % 1.86 %
 
Allowance for credit losses:
Beginning Balance $ 105,259 $ 108,924
Total loans charged-off (20,521 ) (65,523 )
Total Loans Recovered   2,158     658  
Net Loans Charged-off (18,363 ) (64,865 )
Provision Charged to Operating Expense   7,068     61,200  
Allowance for Credit Losses at End of period $ 93,964   $ 105,259  
 
 
                                   
CVB FINANCIAL CORP. AND SUBSIDIARIES
SELECTED FINANCIAL HIGHLIGHTS
(in thousands, except per share data)
(unaudited)
 
Quarterly Common Stock Price
 
2011 2010 2009
Quarter End High Low High Low High Low
March 31, $ 9.32 $ 7.83 $ 10.89 $ 8.44 $ 12.11 $ 5.31
June 30, $ 9.94 $ 8.18 $ 11.85 $ 9.00 $ 7.77 $ 5.69
September 30, $ 10.00 $ 7.41 $ 10.99 $ 6.61 $ 8.70 $ 4.90
December 31, $ 10.27 $ 7.28 $ 9.09 $ 7.30 $ 9.00 $ 6.93
 
 
Quarterly Consolidated Statements of Earnings
 
4Q 3Q 2Q 1Q 4Q
2011 2011 2011 2011 2010
Interest income
Loans, including fees $ 48,290 $ 52,788 $ 54,697 $ 51,315 $ 55,621
Investment securities and other   15,206   15,742   16,485   15,197   14,370
63,496 68,530 71,182 66,512 69,991
Interest expense
Deposits 1,721 1,979 2,220 2,788 3,814
Other borrowings   6,578   6,571   6,567   6,615   7,028
8,299 8,550 8,787 9,403 10,842

Net interest income before provision for credit losses
55,197 59,980 62,395 57,109 59,149
Provision for credit losses   -   -   -   7,068   12,700

Net interest income after provision for credit losses
55,197 59,980 62,395 50,041 46,449
 
Non-interest income 10,730 7,514 5,994 9,978 7,188
Non-interest expenses   34,707   32,858   37,155   36,305   41,805
Earnings before income taxes 31,220 34,636 31,234 23,714 11,832
Income taxes   9,508   12,253   10,196   7,114   1,958
Net earnings 21,712 22,383 21,038 16,600 9,874
Allocated to restricted stock   63   81   82   66   41
Net earnings allocated to common shareholders $ 21,649 $ 22,302 $ 20,956 $ 16,534 $ 9,833
 
Basic earning per common share $ 0.21 $ 0.21 $ 0.20 $ 0.16 $ 0.09
Diluted earnings per common share $ 0.21 $ 0.21 $ 0.20 $ 0.16 $ 0.09
 
Cash dividends per common share $ 0.085 $ 0.085 $ 0.085 $ 0.085 $ 0.085
 
Dividends Declared $ 8,858 $ 8,912 $ 9,018 $ 9,017 $ 9,016
 
 
                             
CVB FINANCIAL CORP. AND SUBSIDIARIES
SELECTED FINANCIAL HIGHLIGHTS
(in thousands)
(unaudited)
 
Distribution of Loan Portfolio
 
12/31/2011 9/30/2011 6/30/2011 3/31/2011 12/31/2010
 
Commercial and Industrial $ 523,950 $ 510,950 $ 500,746 $ 490,316 $ 499,986
Real Estate:
Construction 94,831 101,429 119,637 169,562 223,478
Commercial Real Estate 2,171,399 2,172,050 2,237,975 2,255,247 2,272,270
SFR Mortgage 179,731 191,650 201,457 210,445 224,325
Consumer 59,789 58,668 59,496 61,622 67,371
Municipal lease finance receivables 113,629 115,803 119,792 122,897 129,128
Auto and equipment leases 17,370 16,237 16,998 17,399 17,982
Dairy and Livestock 343,549 292,049 296,801 325,052 376,143
Agribusiness   28,523     48,627     52,528     49,664     57,304  
Gross Loans 3,532,771 3,507,463 3,605,430 3,702,204 3,867,987
Less:
Purchase accounting discount (50,780 ) (51,646 ) (73,449 ) (98,117 ) (114,763 )
Deferred net loan fees (5,395 ) (5,115 ) (5,385 ) (5,640 ) (5,484 )
Allowance for credit losses   (93,964 )   (95,528 )   (96,895 )   (101,067 )   (105,259 )
Net Loans $ 3,382,632   $ 3,355,174   $ 3,429,701   $ 3,497,380   $ 3,642,481  
 
Covered loans $ 256,869 $ 280,337 $ 334,225 $ 348,759 $ 374,012
Non-covered loans   3,125,763     3,074,837     3,095,476     3,148,621     3,268,469  
Total Net Loans $ 3,382,632   $ 3,355,174   $ 3,429,701   $ 3,497,380   $ 3,642,481  
 
 
                             
CVB FINANCIAL CORP. AND SUBSIDIARIES
SELECTED FINANCIAL HIGHLIGHTS
(in thousands)
(unaudited)
 
Non-Performing Assets & Delinquency Trends
(Non-Covered Loans)                                  
December 31, September 30, June 30, March 31, December 31,
2011 2011 2011 2011 2010

Non-Performing Loans
Residential Construction and Land $ 920 $ 989 $ 1,080 $ 4,001 $ 4,090
Commercial Construction and Land 12,397 13,779 23,953 39,976 60,591
Residential Mortgage 16,970 18,792 17,786 18,425 17,800
Commercial Real Estate 25,992 25,461 24,731 34,950 64,859
Commercial and Industrial 3,536 3,277 4,649 7,542 3,936
Dairy & Livestock 2,475 2,574 2,672 2,996 5,207
Consumer   382     340     179     260     537  
Total $ 62,672   $ 65,212   $ 75,050   $ 108,150   $ 157,020  
 
% of Total Loans 1.95 % 2.06 % 2.35 % 3.33 % 4.65 %
 
 

Past Due 30-89 Days
Residential Construction and Land $ - $ - $ - $ - $ -
Commercial Construction and Land - - - 1,492 -
Residential Mortgage 1,568 - 460 993 2,597
Commercial Real Estate 787 2,590 898 3,194
Commercial and Industrial 3,042 1,937 740 239 3,320
Dairy & Livestock - - - - -
Consumer   59     14     91     9     29  
Total $ 5,456   $ 1,951   $ 3,881   $ 3,631   $ 9,140  
 
% of Total Loans 0.17 % 0.06 % 0.12 % 0.11 % 0.27 %
 

OREO
Residential Construction and Land

 
$ - $ - $ - $ - $ -
Commercial Construction and Land 7,117 8,580 7,117 2,709 2,709
Commercial Real Estate 6,566 7,376 6,314 3,322 2,581
Commercial and Industrial 137 - - 209 -
Residential Mortgage - - 287 - -
Consumer   -     -     -     -     -  
Total $ 13,820   $ 15,956   $ 13,718   $ 6,240   $ 5,290  
         
Total Non-Performing, Past Due & OREO $ 81,948   $ 83,119   $ 92,649   $ 118,021   $ 171,450  
 
% of Total Loans 2.55 % 2.62 % 2.90 % 3.63 % 5.08 %
 
 
                                   
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 fourth quarter of 2011 net interest income and net interest margin include a yield adjustment of $0.9 million from discount accretion on covered loans. The adjustment for 2011 was $12.6 million. 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

December 31, 2011
Twelve months ended

December 31, 2011

(amounts in thousands)

AverageBalance
Interest Yield

AverageVolume
Interest Yield
Total interest-earning assets $ 6,188,318 $ 63,496 4.24 % $ 6,071,463 $ 269,720 4.61 %
Accelerated accretion on acquired loans   50,613   (948 )   81,847   (12,586 )
Total interest-earning assets, excluding SJB loan discount and yield adjustment $ 6,238,931 $ 62,548   4.14 % $ 6,153,310 $ 257,134   4.34 %
 
Net interest income and net interest margin (TE) $ 57,643 3.71 % $ 244,548 4.04 %
Yield adjustment to interest income from discount accretion   (948 )   (12,586 )
Net interest income and net interest margin (TE), excluding yield adjustment $ 56,695   3.62 % $ 231,962   3.78 %
 
 
               
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 December 31, 2011.
 
As of December 31, 2011

(Amounts in thousands)
 
Stockholders' Equity $ 714,814
Less: Goodwill (55,097 )
Less: Intangible Assets   (5,548 )
Tangible Book Value $ 654,169  
 
 
 
Common shares issued and outstanding 104,482,271
 
Tangible Book Value Per Share $ 6.26  

Copyright Business Wire 2010

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