CVB Financial Corp. Reports Record Results for Third Quarter 2009
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-- Quarterly Net Income of $19.3 million, highest in company history
-- Diluted Earnings per Common Share $0.10 (reduced by $0.07 for TARP
repayment)
-- Deposits, including customer repos, grew $943.6 million over September
30, 2008
-- Allowance for credit losses 2.43% of total loans & leases
ONTARIO, Calif.--(BUSINESS WIRE)-- CVB Financial Corp. (NASDAQ: CVBF) and its subsidiary, Citizens Business Bank ("the Company"), announced record results for the third quarter of 2009. The Company reported net income of $19.3 million for the third quarter of 2009. This represents the highest quarterly net income in the history of the Company.
Net income of $19.3 million reflects an increase of $1.8 million, or 10.66%, compared to net income of $17.5 million for the third quarter of 2008. Diluted earnings per common share were $0.10 for the third quarter of 2009, a decrease of $0.11, or 49.43%, from diluted earnings per common share of $0.21 for the third quarter of 2008. Due to the repayment of TARP preferred stock, current-quarter diluted earnings per common share reflected a one-time, non-cash reduction in net income applicable to common stockholders of $7.6 million, or $0.07 per share.
"We are very pleased to report these outstanding results for the third quarter, particularly in these challenging times," said Chris Myers, President & CEO. "Our net income increased 21.82% sequentially, our deposit growth (including customer repos) increased $943.6 million year-over-year, or 26.53%, and our overall credit quality remains sound."
Net income for the third quarter of 2009 produced a return on beginning common equity of 15.30%, a return on average common equity of 12.77% and a return on average assets of 1.17%. The efficiency ratio for the third quarter was 52.44%. Excluding the provision for credit losses and the gain on sale of securities, the efficiency ratio was 47.37%. Operating expenses as a percentage of average assets were 1.81%.
Net income for the nine months ending September 30, 2009 was $48.4 million. This represents a decrease of $2.4 million, or 4.82%, when compared with net income of $50.8 million for the same period of 2008. Diluted earnings per common share for the nine months ending September 30, 2009 were $0.40, a decrease of $0.21, or 34.18%, from diluted earnings per common share of $0.61 for the same period last year. A substantial portion of the decrease is due to the dividends and amortization of the discount on our preferred stock which was repaid in the third quarter.
The net income for the nine months of 2009 includes a provision of $55.0 million for credit losses and a $28.4 million gain on sale of investment securities, as compared to the provision for credit losses of $8.7 million and no gain on sale of securities for the first nine months of 2008. Operating expenses increased $6.4 million for the nine months ending September 30, 2009 compared to the same period last year. This was primarily due to $6.1 million in charges for FDIC special assessments and increases in insurance premiums.
Net income for the nine months ending September 30, 2009 produced a return on beginning common equity of 13.10%, a return on average common equity of 11.99% and a return on average assets of 0.99%. The efficiency ratio for the nine-month period was 58.76%. Excluding the provision for credit losses, the gain on sale of securities, and the one-time FDIC special assessment, the efficiency ratio was 48.80%. Operating expenses as a percentage of average assets were 1.93%.
The Company made provisions for credit losses totaling $13.0 million during the third quarter ending September 30, 2009. For the nine months ending September 30, 2009, provisions for credit losses totaled $55.0 million. This compares with provisions of $4.0 million for the third quarter of 2008 and $8.7 million for the nine months ending September 30, 2008. The Company's non-performing assets increased from $18.6 million as of September 30, 2008 to $59.2 million as of September 30, 2009. This represents 0.29% of total assets as of September 30, 2008 and 0.91% of total assets as of September 30, 2009. Past due loans (defined as 30-89 days past due as all loans over 90 days are on non-accrual) as a percentage of total loans were 0.19% at September 30, 2009, compared to 0.20% at June 30, 2009, and 0.38% at March 31, 2009.
Net Interest Income and Net Interest Margin
Net interest income, before provision for credit losses, totaled $54.8 million for the third quarter of 2009. This represents an increase of $5.8 million, or 11.82%, over net interest income of $49.0 million for the same period in 2008. The increase resulted from a $13.4 million decrease in interest expense, which overshadowed a $7.6 million decrease in interest income. The decrease in interest income was primarily due to the decrease in interest rates. The decrease in interest expense was due to the decrease in the interest rates paid on deposits and borrowed funds, coupled with a decrease in average borrowed funds of $621.0 million, which was partially offset by the increase in average interest-bearing deposits.
Net interest margin (tax equivalent) increased from 3.43% for the third quarter of 2008 to 3.75% for the third quarter of 2009. Total average earning asset yields decreased from 5.65% for the third quarter of 2008 to 5.11% for the third quarter of 2009. The cost of funds decreased from 2.28% for the third quarter of 2008 to 1.43% for the third quarter of 2009. The increase in net interest margin is due to the cost of interest-bearing liabilities decreasing faster than the decrease in yields on earning assets.
Net interest income, before the provision for credit losses, totaled $164.2 million for the nine months ending September 30, 2009. This represents an increase of $22.6 million, or 15.93%, compared to the same period in 2008. The increase resulted from a $41.6 million decrease in interest expense which overshadowed a $19.0 million decrease in interest income.
The net interest margin (tax equivalent) increased from 3.37% for the first nine months of 2008 to 3.75% for the first nine months of 2009. Total average earning asset yields decreased from 5.75% for the first nine months of 2008 to 5.18% for the first nine months of 2009. Total cost of funds decreased from 2.43% for the first nine months of 2008 to 1.51% for the first nine months of 2009.
Assets
The Company reported total assets of $6.55 billion at September 30, 2009. This represented an increase of $124.5 million, or 1.94%, over total assets of $6.42 billion at September 30, 2008. Earning assets totaling $6.05 billion increased $3.3 million, or 0.05%, when compared with earning assets of $6.04 billion at September 30, 2008. Total loans and leases remained flat at $3.60 billion at September 30, 2009 and 2008.
Total assets of $6.55 billion at September 30, 2009 decreased $103.4 million, or 1.55%, from total assets of $6.65 billion at December 31, 2008. This was due to the decrease in investment securities of $210.6 million partially offset by an increase in cash. Total earning assets of $6.05 billion decreased $230.8 million, or 3.68%, from total earning assets of $6.28 billion at December 31, 2008. Loans and leases totaled $3.60 billion at September 30, 2009, decreasing by $136.8 million, or 3.66%, from loans and leases of $3.74 billion at December 31, 2008.
Investment Securities
Investment securities totaled $2.29 billion at September 30, 2009. This represents a decrease of $104.9 million, or 4.38%, when compared with $2.40 billion in investment securities at September 30, 2008. It also represents a decrease of $210.6 million, or 8.42%, when compared with $2.50 billion in investment securities at December 31, 2008. During the first nine months of 2009, we sold certain securities with relatively short maturities and recognized a gain on sale of securities of $28.4 million.
During the third quarter of 2009, we also recognized an other-than-temporary impairment on a private-label mortgage-backed investment security. The total impairment of $1.8 million was reduced by $1.6 million for the non-credit portion which was reflected in other comprehensive income. The remaining $200,000 loss was recognized in third quarter earnings.
Our investment portfolio continues to perform well. We have no preferred stock and no trust preferred securities. Virtually all of our mortgage-backed securities are issued by Freddie Mac or Fannie Mae, which have the guarantee of the U.S. Government. Except for the bond discussed above, the remaining private-label mortgage-backed issues of approximately $31 million are performing well. Ninety-four percent of our $696.7 million municipal bond portfolio contains securities which have an underlying rating of investment grade. Our municipal securities are located throughout the United States, with approximately $43.5 million, or 6.2%, located within the state of California. All municipal bond securities are fully performing.
Deposits
Total deposits and customer repos were $4.50 billion at September 30, 2009. This represents an increase of $943.6 million, or 26.53%, when compared with total deposits and customer repos of $3.56 billion at September 30, 2008. Total deposits and customer repos of $4.50 billion at September 30, 2009 increased by $634.1 million, or 16.40%, when compared to total deposits and customer repos of $3.87 billion at December 31, 2008. "Last year we expanded our deposit gathering initiatives through the creation of our Specialty Banking Group and our Commercial Banking Centers," said Chris Myers. "The growth in deposits and customer repos is a reflection of the success of those initiatives."
Borrowings
Borrowings decreased by $782.7 million, or 45.04%, from December 31, 2008. As a result of the increase in deposits and customer repurchases of $634.1 million and the net decrease of $210.6 million in securities, it was possible for us to reduce our reliance on borrowed funds. The replacement of high cost borrowings with low cost deposits helped to improve our margin during the first nine months of 2009. "One of our goals has been to decrease our reliance on borrowed funds; we have made significant progress thus far and will continue our efforts going forward" commented Mr. Myers.
Asset Quality
The overall credit quality of the loan portfolio is sound. Our allowance for credit losses increased from $40.1 million as of September 30, 2008 and $54.0 million as of December 31, 2008 to $87.3 million as of September 30, 2009. The increase was primarily due to provisions for credit losses of $17.9 million during the fourth quarter of 2008 and a provision for credit losses of $55.0 million during the first nine months of 2009. The allowance for credit losses was 2.43% and 1.11% of total loans and leases outstanding as of September 30, 2009 and 2008, respectively.
During the third quarter 2009, we increased provision for credit losses by $13.0 million and had net charge-offs of only $439,000. Net charge-offs as a percentage of average loans were 0.01% for the third quarter.
During the first nine months of 2009, we had loan charge-offs totaling $22.4 million and recoveries on previously charged-off loans of $718,000. This resulted in net charge-offs of $21.6 million. By comparison, during the first nine months of 2008, the Company had net charge-offs of $1.7 million.
"We continue to make greater provisions for credit losses in order to build our reserves. One of our key internal measurements is the ratio of our loan loss allowance to our non-performing loans. We are pleased to report that this ratio improved from 146% at June 30, 2009 to 150% at September 30, 2009. In looking forward, our goal is to be proactive in building our reserves, preparing for any further deterioration in economic conditions," said Chris Myers.
We had $58.1 million in non-performing loans at September 30, 2009 or 1.61% of total loans. This compares to $17.7 million at December 31, 2008 and $16.6 million at September 30, 2008. At September 30, 2009, we had loans delinquent 30 to 89 days of $6.9 million. This compares to delinquent loans of $5.2 million as of December 31, 2008, and $4.9 million as of September 30, 2008. Please see attached schedule for a breakdown of our non-performing assets and delinquency trends by loan type for the past five consecutive quarters.
A misconception is that most of our loans are in the Inland Empire, one of the hardest hit areas of the United States during this recession. However, of our total loan portfolio, approximately 22% is based in the Inland Empire and 33% is based in L.A. County. Please see attached schedules for a geographic breakdown of our loan portfolio.
Our construction loan portfolio totaled $295.3 million as of September 30, 2009 down from $351.5 million as of December 31, 2008. This represents 8.2% of our total loans outstanding at September 30, 2009. Of the $295.3 million, $76.7 million is for residential construction and residential land loans. This represents 26% of the construction loans outstanding or 2.1% of our total loan portfolio. Of note, 34% of our total construction loan portfolio is based in the Inland Empire.
CitizensTrust
CitizensTrust has approximately $1.9 billion in assets under administration, including $991.9 million in assets under management, as of September 30, 2009. This compares with $2.0 billion in assets under administration, including $839.0 million in assets under management at September 30, 2008. CitizensTrust provides trust, investment and brokerage related services, as well as financial, estate and business succession planning.
Corporate Overview
CVB Financial Corp. is the holding company for Citizens Business Bank. The Bank is the largest financial institution headquartered in the Inland Empire region of Southern California. On October 16th, 2009, we acquired most of the assets of San Joaquin Bank (SJB) headquartered in Bakersfield, CA. Upon acquisition, SJB had approximately $732 million in total assets and five branch locations.
On a current-day basis, CVB Financial Corp. now has approximately $7.3 billion in assets. The Company serves 40 cities with 46 business financial centers and 5 commercial banking centers 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 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; ability to repurchase our securities issued to the U.S. Treasury pursuant to its Capital Purchase Program; 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; 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, 2008, 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 SHEET
(unaudited)
dollars in thousands
September 30, December 31,
2009 2008 2008
Assets:
Cash and due from banks $ 222,158 $ 92,421 $ 95,297
Investment Securities 2,285,456 2,387,444 2,493,476
available-for-sale
Investment Securities 4,237 7,121 6,867
held-to-maturity
Federal funds sold and
Interest-bearing balances due 150,285 475 285
from depository institutions
Investment in stock of 93,240 92,354 93,240
Federal Home Loan Bank (FHLB)
Loans and lease finance 3,600,087 3,595,337 3,736,838
receivables
Less allowance for credit (87,316 ) (40,058 ) (53,960 )
losses
Net loans and lease finance 3,512,771 3,555,279 3,682,878
receivables
Total earning assets 6,045,989 6,042,673 6,276,746
Premises and equipment, net 42,285 44,015 44,420
Intangibles 8,763 11,917 11,020
Goodwill 55,097 55,097 55,097
Cash value of life insurance 108,744 106,840 106,366
Other assets 63,229 68,823 60,705
TOTAL $ 6,546,265 $ 6,421,786 $ 6,649,651
Liabilities and Stockholders'
Equity
Liabilities:
Deposits:
Demand Deposits $ 1,416,558 $ 1,302,205 $ 1,334,248
(noninterest-bearing)
Investment Checking 415,644 327,337 324,907
Savings/MMDA 984,194 851,245 818,872
Time Deposits 1,223,375 714,754 1,030,129
Total Deposits 4,039,771 3,195,541 3,508,156
Demand Note to U.S. Treasury 3,441 3,734 5,373
Customer Repurchase 460,326 360,973 357,813
Agreements
Repurchase Agreements 250,000 250,000 250,000
Borrowings 955,000 2,006,598 1,737,660
Junior Subordinated 115,055 115,055 115,055
Debentures
Other liabilities 71,162 55,065 60,702
Total Liabilities 5,894,755 5,986,966 6,034,759
Stockholders' equity:
Stockholders' equity 604,610 451,049 586,161
Accumulated other
comprehensive income (loss), 46,900 (16,229 ) 28,731
net of tax
651,510 434,820 614,892
TOTAL $ 6,546,265 $ 6,421,786 $ 6,649,651
CVB FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED AVERAGE BALANCE SHEET
(unaudited)
dollars in thousands
Three months ended September Nine months ended September 30,
30,
2009 2008 2009 2008
Assets:
Cash and due from $ 197,380 $ 100,408 $ 129,946 $ 102,942
banks
Investment
securities 2,294,860 2,433,409 2,362,978 2,456,734
available-for-sale
Investment
securities 6,152 7,206 6,423 6,930
held-to-maturity
Federal funds sold
and
Interest-bearing 143,220 752 68,786 1,334
balances due from
depository
institutions
Investment in stock
of Federal Home 93,240 91,729 93,240 88,508
Loan Bank (FHLB)
Loans and lease 3,606,945 3,556,724 3,646,862 3,459,916
finance receivables
Less allowance for (81,956 ) (38,634 ) (72,635 ) (36,067 )
credit losses
Net loans and lease 3,524,989 3,518,090 3,574,227 3,423,849
finance receivables
Total earning 6,062,461 6,051,186 6,105,654 5,977,355
assets
Premises and 42,695 44,783 43,665 45,907
equipment, net
Intangibles 9,051 12,267 9,779 13,160
Goodwill 55,097 55,097 55,097 55,108
Cash value of life 108,305 106,016 107,548 104,911
insurance
Other assets 83,125 74,864 82,780 71,243
TOTAL $ 6,558,114 $ 6,444,621 $ 6,534,469 $ 6,370,626
Liabilities and
Stockholders'
Equity
Liabilities:
Deposits:
Noninterest-bearing $ 1,427,916 $ 1,299,630 $ 1,380,349 $ 1,257,843
Interest-bearing 2,594,891 1,936,102 2,455,159 1,994,533
Total Deposits 4,022,807 3,235,732 3,835,508 3,252,376
Other borrowings 1,681,179 2,600,493 1,869,471 2,490,488
Junior Subordinated 115,055 115,055 115,055 115,055
Debentures
Other liabilities 62,538 46,620 68,597 63,389
Total Liabilities 5,881,579 5,997,900 5,888,631 5,921,308
Stockholders'
equity:
Stockholders' 651,817 452,553 616,383 442,378
equity
Accumulated other
comprehensive 24,718 (5,832 ) 29,455 6,940
income (loss), net
of tax
676,535 446,721 645,838 449,318
TOTAL $ 6,558,114 $ 6,444,621 $ 6,534,469 $ 6,370,626
CVB FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited)
dollar amounts in thousands, except per share
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
2009 2008 2009 2008
Interest Income:
Loans and leases, $ 50,561 $ 52,954 $ 149,858 $ 159,211
including fees
Investment securities:
Taxable 18,278 22,142 59,848 65,448
Tax-advantaged 6,749 7,036 20,560 21,336
Total investment income 25,027 29,178 80,408 86,784
Dividends from FHLB Stock 195 1,367 195 3,666
Federal funds sold &
Interest-bearing CDs with 136 8 195 34
other institutions
Total interest income 75,919 83,507 230,656 249,695
Interest Expense:
Deposits 5,934 7,417 18,963 28,233
Borrowings and junior 15,179 27,078 47,500 79,838
subordinated debentures
Total interest expense 21,113 34,495 66,463 108,071
Net interest income
before provision for 54,806 49,012 164,193 141,624
credit losses
Provision for credit 13,000 4,000 55,000 8,700
losses
Net interest income after
provision for credit 41,806 45,012 109,193 132,924
losses
Other Operating Income:
Impairment loss on (1,850 ) - (1,850 ) -
investment securities
Less: Noncredit-related
impairment loss recorded 1,618 - 1,618 -
in other comprehensive
income
Net impairment loss on
investment securities (232 ) - (232 ) -
recognized in earnings
Service charges on 3,720 3,829 11,080 11,381
deposit accounts
Trust and investment 1,682 2,019 4,948 5,906
services
Gain on sale of 6,898 - 28,446 -
investment securities
Other 3,034 2,525 6,926 7,929
Total other operating 15,102 8,373 51,168 25,216
income
Other operating expenses:
Salaries and employee 15,618 15,943 46,814 46,987
benefits
Occupancy 2,777 2,923 8,315 8,874
Equipment 1,553 1,888 4,884 5,556
Professional services 1,646 1,600 4,998 5,015
Amortization of 734 898 2,257 2,694
intangible assets
Provision for unfunded 450 (100 ) 1,800 1,150
commitments
OREO Expense 24 - 1,198 -
Other 7,043 5,905 23,955 17,558
Total other operating 29,845 29,057 94,221 87,834
expenses
Earnings before income 27,063 24,328 66,140 70,306
taxes
Income taxes 7,741 6,868 17,789 19,510
Net earnings $ 19,322 $ 17,460 $ 48,351 $ 50,796
Basic earnings per common $ 0.10 $ 0.21 $ 0.40 $ 0.61
share
Diluted earnings per $ 0.10 $ 0.21 $ 0.40 $ 0.61
common share
Cash dividends per common $ 0.085 $ 0.085 $ 0.255 $ 0.255
share
CVB FINANCIAL CORP. AND SUBSIDIARIES
SELECTED FINANCIAL HIGHLIGHTS
(unaudited)
Three months ended September 30, Nine months ended September 30,
2009 2008 2009 2008
Interest income
- $ 78,679 $ 86,368 $ 239,046 $ 258,356
(Tax-Effected)
(te)
Interest 21,113 34,495 66,463 108,071
Expense
Net Interest $ 57,566 $ 51,873 $ 172,583 $ 150,285
income - (te)
Return on 1.17 % 1.08 % 0.99 % 1.07 %
average assets
Return on 11.33 % 15.55 % 10.01 % 15.10 %
average equity
Efficiency 52.44 % 54.43 % 58.76 % 55.54 %
ratio
Net interest 3.75 % 3.43 % 3.75 % 3.37 %
margin (te)
Weighted
average shares
outstanding
Basic 99,241,561 83,148,006 88,600,560 83,105,726
Diluted 99,332,146 83,372,848 88,697,581 83,328,918
Dividends $ 9,012 $ 7,088 $ 23,174 $ 21,239
declared
Dividend payout 46.64 % 40.60 % 47.93 % 41.81 %
ratio
Number of
shares 106,231,511 83,270,263
outstanding-EOP
Book value per $ 6.13 $ 5.22
share
September 30,
2009 2008
Non-performing
Assets (dollar
amount in
thousands):
Non-accrual $ 58,134 $ 16,637
loans
Loans past due
90 days or more
and still - -
accruing
interest
Other real
estate owned 1,137 1,927
(OREO), net
Total
non-performing $ 59,271 $ 18,564
assets
Percentage of
non-performing
assets to total 1.65 % 0.52 %
loans
outstanding and
OREO
Percentage of
non-performing 0.91 % 0.29 %
assets to total
assets
Allowance for
loan losses to 147.32 % 215.78 %
non-performing
assets
Net Charge-off
to Average 0.59 % 0.05 %
loans
Allowance for
Credit Losses:
Beginning $ 53,960 $ 33,049
Balance
Total Loans (22,362 ) (1,992 )
Charged-Off
Total Loans 718 301
Recovered
Net Loans (21,644 ) (1,691 )
Charged-off
Provision
Charged to 55,000 8,700
Operating
Expense
Allowance for
Credit Losses $ 87,316 $ 40,058
at End of
period
CVB FINANCIAL CORP. AND SUBSIDIARIES
SELECTED FINANCIAL HIGHLIGHTS
(in thousands, except per share data)
(unaudited)
Quarterly Common Stock
Price
2009 2008 2007
Quarter High Low High Low High Low
End
March 31, $12.11 $5.31 $11.20 $8.45 $13.38 $11.42
June 30, $7.77 $5.69 $12.10 $9.44 $12.40 $10.63
September $8.70 $4.90 $15.01 $7.65 $12.71 $9.51
30,
December $13.89 $9.29 $11.97 $9.98
31,
Quarterly Consolidated
Statements of Earnings
3Q 2Q 1Q 4Q 3Q
2009 2009 2009 2008 2008
Interest income
Loans, including fees $50,561 $49,771 $49,526 $53,416 $52,954
Investment securities 25,358 26,004 29,436 29,407 30,553
and federal funds sold
75,919 75,775 78,962 82,823 83,507
Interest expense
Deposits 5,934 6,439 6,590 7,569 7,417
Other borrowings 15,179 15,241 17,080 23,200 27,078
21,113 21,680 23,670 30,769 34,495
Net interest income
before provision for 54,806 54,095 55,292 52,054 49,012
credit losses
Provision for credit 13,000 20,000 22,000 17,900 4,000
losses
Net interest income
after provision for 41,806 34,095 33,292 34,154 45,012
credit losses
Non-interest income 15,102 19,709 16,357 9,242 8,373
Non-interest expenses 29,845 32,979 31,397 27,954 29,057
Earnings before income 27,063 20,825 18,252 15,442 24,328
taxes
Income taxes 7,741 4,964 5,084 3,165 6,868
Net earnings $19,322 $15,861 $13,168 $12,277 $17,460
Basic earning per $0.10 $0.17 $0.13 $0.14 $0.21
common share
Diluted earnings per $0.10 $0.17 $0.13 $0.14 $0.21
common share
Cash dividends per $0.085 $0.085 $0.085 $0.085 $0.085
common share
Dividends Declared $9,012 $7,079 $7,083 $7,078 $7,088
CVB FINANCIAL CORP. AND SUBSIDIARIES
SELECTED FINANCIAL HIGHLIGHTS
(in thousands)
(unaudited)
Distribution
of Loan
Portfolio
9/30/2009 6/30/2009 3/31/2009 12/31/2008 9/30/2008
Commercial
and $385,274 $372,162 $355,591 $370,829 $356,973
Industrial
Real Estate:
Construction 295,315 303,629 333,234 351,543 359,859
Commercial 1,959,725 1,964,258 1,965,531 1,945,706 1,932,778
Real Estate
SFR Mortgage 290,831 306,225 328,145 333,931 341,389
Consumer 67,317 67,947 69,708 66,255 61,710
Municipal
lease 162,962 165,527 169,230 172,973 173,600
finance
receivables
Auto and
equipment 34,072 37,242 41,708 45,465 47,753
leases
Dairy and 411,574 405,427 404,090 459,329 331,333
Livestock
Gross Loans 3,607,070 3,622,417 3,667,237 3,746,031 3,605,395
Less:
Deferred net (6,983) (7,661) (8,378) (9,193) (10,058)
loan fees
Allowance
for credit (87,316) (74,755) (65,755) (53,960) (40,058)
losses
Net Loans $3,512,771 $3,540,001 $3,593,104 $3,682,878 $3,555,279
CVB FINANCIAL CORP. AND SUBSIDIARIES
SELECTED FINANCIAL HIGHLIGHTS
(in thousands)
(unaudited)
Non-Performing
Assets &
Delinquency
Trends
September June 30, March 31, December 31, September 30,
30,
2009 2009 2009 2008 2008
Non-Performing
Loans
Residential
Construction $ 15,729 $ 17,348 $ 20,943 $ 7,524 $ 8,020
and Land
Commercial 19,636 21,270 22,102 - -
Construction
Residential 8,102 4,632 2,203 3,116 2,062
Mortgage
Commercial Real 13,522 7,041 1,661 4,658 4,995
Estate
Commercial and 1,045 859 792 2,074 1,248
Industrial
Consumer 100 115 336 312 312
Total $ 58,134 $ 51,265 $ 48,037 $ 17,684 $ 16,637
% of Total 1.61 % 1.42 % 1.31 % 0.47 % 0.46 %
Loans
Past Due 30-89
Days
Commercial $ - $ - $ - $ - $ 2,500
Construction
Residential 1,510 2,069 3,814 1,931 481
Mortgage
Commercial Real 190 1,074 8,341 2,402 19
Estate
Commercial and 5,094 590 1,720 592 1,852
Industrial
Dairy & - 3,551 - - -
Livestock
Consumer 87 8 62 231 55
Total $ 6,881 $ 7,292 $ 13,937 $ 5,156 $ 4,907
% of Total 0.19 % 0.20 % 0.38 % 0.14 % 0.14 %
Loans
OREO
Residential
Construction $ 1,137 $ 1,789 $ 2,416 $ 6,158 $ 1,612
and Land
Commercial Real - 1,187 4,612 87 -
Estate
Commercial and - 893 893 - -
Industrial
Residential - - 745 320 315
Mortgage
Consumer - 166 - - -
Total $ 1,137 $ 4,035 $ 8,666 $ 6,565 $ 1,927
Total
Non-Performing, $ 66,152 $ 62,592 $ 70,640 $ 29,405 $ 23,471
Past Due & OREO
% of Total 1.84 % 1.73 % 1.93 % 0.79 % 0.65 %
Loans
CVB FINANCIAL CORP. AND SUBSIDIARIES
SELECTED FINANCIAL HIGHLIGHTS
(in thousands)
(unaudited)
September 30, 2009
Total Loans
Total Loans by County (amounts in thousands)
Los Angeles $ 1,185,471 32.9 %
Inland Empire 788,770 21.9 %
Central Valley 619,352 17.2 %
Orange 525,939 14.5 %
Other Areas 487,538 13.5 %
$ 3,607,070 100.0 %
Financial Measures That Supplement GAAP
Our discussions sometimes contain financial information not required to be
presented by generally accepted accounting principles (GAAP). We do this to
better inform readers of our financial statements. The SEC requires us to
present a reconciliation of GAAP.
The following table reconciles the differences in net earnings excluding the
provision for credit losses, the gain on sale of securities, and the one-time
FDIC Special Assessment in conformity with GAAP.
Net Earnings Reconciliation September 30, 2009
(non-GAAP disclosure):
Three months Nine months
ended ended
(Amounts in thousands)
Net earnings excluding the provision for credit
losses, the gain on sale of securities, and the $22,860 $65,491
one-time FDIC Special Assessment
Provision for Credit Losses (13,000 ) (55,000 )
Gain on Sale of Securities 6,898 28,446
One-time FDIC Special Assessment - (3,000 )
Tax Effect 2,564 12,414
GAAP Net Earnings $19,322 $48,351
We have presented net earnings excluding the provision for credit losses, the
gain on sale of securities, and the one-time FDIC Special Assessment to show
shareholders the earnings from operations were unaffected by the impact of these
items. We believe this presentation allows the reader to more easily assess the
results of the Company's operations and business.
Ratios Reconciliation (non-GAAP disclosure):
The following table reconciles the differences in ratios excluding the provision for
credit losses, the gain on sale of securities, and the one-time FDIC Special
Assessment in conformity with GAAP.
Ratios Reconciliation Ratios Reconciliation
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
2009 2009
Excluding Provision
provision for
Excluding Provision for credit
provision for credit losses,
for credit credit losses, gain on
losses and losses GAAP Net gain sale GAAP Net
gain on and gain Earnings on sale of of Earnings
sale of on securities, securities,
securities sale of and and FDIC
securities FDIC special
special assessment
assessment
(amounts in thousands) (amounts in thousands)
Other
Operating $ 29,845 $ - $ 29,845 $ 91,221 $ 3,000 $ 94,221
Expense
Net $ 63,010 $ (6,102 ) $ 56,908 $ 186,914 $ (26,554 ) $ 160,360
Revenues
Net $ 22,860 $ (3,538 ) $ 19,322 $ 65,491 $ (17,141 ) $ 48,350
Earnings
Return on
Beginning 14.55 % 12.30 % 14.24 % 10.51 %
Equity
Return on
Average 13.41 % 11.33 % 13.56 % 10.01 %
Equity
Return on
Average 1.38 % 1.17 % 1.34 % 0.99 %
Assets
Efficiency 47.37 % 52.44 % 48.80 % 58.76 %
Ratio
We have presented ratios excluding the provision for credit losses, the gain on sale
of securities, and the one-time FDIC Special Assessment to show shareholders the
earnings from operations were unaffected by the impact of these items. We believe
this presentation allows the reader to more easily assess the results of the
Company's operations and business.
Source: CVB Financial Corp.
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