Net earnings were $77.3 million for 2012, or $0.74 per diluted
share.
Net earnings were $22.1 million, or $0.21 per share, for the fourth
quarter of 2012.
Total loans and leases, net of deferred fees and discount, grew by
$11.8 million over the previous quarter.
Allowance for credit losses represented 2.84% of total non-covered
loans and leases, and non-performing loans totaled $58.0 million, or
1.78% of total non-covered loans and leases, at December 31, 2012.
Non-interest bearing deposits totaled $2.42 billion (50.7% of total
deposits), an increase of $393.1 million from $2.03 billion at
December 31, 2011.
CVB Financial Corp. (NASDAQ:CVBF) and its subsidiary, Citizens Business
Bank ("the Company"), announced earnings for the year ended December 31,
2012.
CVB Financial Corp. reported net income of $77.3 million for the year
ended December 31, 2012, compared with net income of $81.7 million for
2011. Diluted earnings per share were $0.74 for the year ended December
31, 2012, compared to $0.77 for the same period last year. Net income
for 2012 included pre-tax debt termination expense of approximately
$20.4 million, which represents the present value of future interest
payments and lender hedge termination fees, related to the August 2012
redemption of $250.0 million of fixed rate loans from the Federal Home
Loan Bank ("FHLB"). The terminated FHLB loans carried an average coupon
rate of 3.39% and a weighted average remaining life of 2.6 years. The
Company also elected to redeem $48.0 million in junior subordinated
debentures during 2012 bearing interest at 2.85% to 3.25% above the
90-day LIBOR. These repayments were made to reduce future interest
expense. Operating results for the year ended December 31, 2012
reflected zero loan loss provision, compared to $7.1 million for 2011.
Chris Myers, President and CEO, commented, "2012 was the second most
profitable year in CVBF history and would have been the
most profitable had we not elected to prepay $250 million in FHLB debt
in August. We are pleased with the consistency of our operating
performance over the last seven fiscal quarters and remain proud of the
outstanding efforts of our associates."
Net income for the year ended December 31, 2012 produced a return on
beginning equity of 10.81%, a return on average equity of 10.31% and a
return on average assets of 1.19%. The efficiency ratio for 2012 was
54.64% (46.58% excluding the FHLB debt termination), compared to 52.45%
(51.21% excluding the prior year FHLB debt termination) for 2011.
Non-interest income was $15.9 million for 2012, compared with $34.2
million for 2011. Non-interest income for 2012 was reduced by a $21.9
million net decrease in the FDIC loss sharing asset, compared to an
increase of $171,000 for 2011.
As a percentage of average assets, non-interest expense was 2.13% for
2012, compared to 2.17% for 2011. If the FHLB debt termination expense
of $20.4 million and $3.3 million for 2012 and 2011, respectively, are
eliminated from this calculation, non-interest expense was 1.82% for
2012 and 2.12% for 2011. In terms of dollars, this represents a
year-over-year decrease of $19.9 million. The decrease was primarily
attributable to decreases of $7.5 million in legal expenses, $4.6
million in OREO related expenses, $1.5 million in salaries and related
expenses, $1.4 million in regulatory assessments, $1.3 million in other
professional expenses, and $1.3 million in amortization of intangible
assets.
The Company reported net income of $22.1 million for the fourth quarter
ended December 31, 2012. This represents an increase of $424,000, or
1.95%, when compared with $21.7 million in net income reported for the
fourth quarter of 2011. Diluted earnings per share were $0.21 for the
fourth quarter of 2012 and 2011.
Net income for the fourth quarter of 2012 produced an annualized return
on beginning equity of 11.68%, an annualized return on average equity of
11.52% and an annualized return on average assets of 1.37%.
Interest income and fees on loans for the fourth quarter of 2012 totaled
$47.2 million, which included $3.3 million of discount accretion from
accelerated principal reductions, payoffs and improved credit loss
experienced on covered loans acquired from San Joaquin Bank ("SJB").
This represented a decrease of $1.1 million, or 2.24%, when compared to
interest income on loans of $48.3 million, which included $948,000 of
discount accretion from accelerated principal reductions, payoffs and
improved credit loss experienced on acquired loans, for 2011. Interest
income and fees on loans for 2012 totaled $205.8 million, which included
$22.6 million of discount accretion from accelerated principal
reductions, payoffs and improved credit loss experienced on covered
loans acquired from SJB. This compares to interest income and fees on
loans of $207.1 million, which included $12.6 million of discount
accretion for 2011.
Our credit loss experience on loans acquired from the SJB acquisition
continued to improve. At December 31, 2012, the remaining discount
associated with the SJB loans approximated $25.3 million. Based on the
current forecast of expected cash flows, approximately $16.4 million of
the discount is expected to accrete into interest income over the
remaining lives of the loans. The FDIC loss sharing asset totaled $18.5
million at December 31, 2012. The loss sharing asset will continue to be
reduced by loss claims submitted to the FDIC with the remaining balance
amortized on the same basis as the discount, not to exceed the remaining
life of the loss share contract of approximately 1.75 years.
Non-interest income was $5.7 million for the fourth quarter of 2012,
compared with $2.6 million for the third quarter. Non-interest income
for the fourth quarter was reduced by a $2.6 million net decrease in the
FDIC loss sharing asset, compared to a $7.1 million net decrease for the
third quarter.
Non-interest expense for the fourth quarter of 2012 was $29.0 million, a
decrease of $21.0 million over the third quarter of 2012 and $5.7
million over the fourth quarter of 2011. The quarter-over-quarter
decrease was primarily due to $20.4 million in FHLB debt termination
expense resulting from the repayment of $250.0 million of fixed rate
loans to the Federal Home Loan Bank in the third quarter of 2012. Our
efficiency ratio was 47.22% for the fourth quarter of 2012, compared
with 80.20% for the third quarter of 2012 (47.52% excluding the FHLB
debt termination), and 52.64% for the fourth quarter of 2011 (47.62%
excluding the FHLB debt termination).
Net Interest Income and Net Interest Margin
Net interest income, before the provision for credit losses, totaled
$237.0 million for the year ended December 31, 2012, compared to $234.7
million for 2011.
Excluding the impact of the yield adjustment on covered loans, our net
interest margin (tax equivalent) was 3.66% for 2012, compared to 3.78%
for 2011. Total average earning asset yields (excluding discount)
decreased to 4.06% for 2012 from 4.34% for 2011. Total cost of funds
decreased to 0.44% for 2012 from 0.60% for 2011.
Net interest income, before the provision for credit losses, of $55.6
million for the fourth quarter of 2012 increased $447,000, or 0.81%,
compared to the same period in 2011.
Excluding the impact of the yield adjustment on covered loans, our net
interest margin (tax equivalent) was 3.60% for the fourth quarter of
2012, compared to 3.60% for the third quarter of 2012 and 3.62% for the
fourth quarter of 2011. Total average earning asset yields decreased to
3.87% for the fourth quarter of 2012 from 3.99% for the third quarter of
2012 and 4.14% for the fourth quarter of 2011. Total cost of funds
decreased to 0.32% for the fourth quarter of 2012 from 0.43% for the
third quarter and 0.56% for the fourth quarter of 2011.
Assets
The Company reported total assets of $6.36 billion at December 31, 2012.
This represents an increase of $42.0 million, or 0.67%, from total
assets of $6.32 billion at September 30, 2012. Earning Assets of $6.04
billion at December 31, 2012 increased $60.7 million, or 1.02%, when
compared with $5.98 billion at September 30, 2012. The increase in
earning assets was primarily due to a $191.8 million increase in
investment securities and an $11.8 million increase in loans, partially
offset by a $137.1 million decrease in interest-earning cash.
Total assets of $6.36 billion at December 31, 2012 decreased $119.6
million, or 1.84%, from total assets of $6.48 billion at December 31,
2011. Earning assets totaled $6.04 billion at December 31, 2012, a
decrease of $92.4 million, or 1.51%, when compared with earning assets
of $6.13 billion at December 31, 2011. The decrease in earning assets
was primarily due to a decrease in interest-earning cash as a result of
prepaying $250.0 million of FHLB Advances and $48.0 million of Trust
Preferred Securities and a $35.1 million decrease in loans, partially
offset by a $247.5 million increase in investment securities.
Investment Securities
Investment securities totaled $2.45 billion at December 31, 2012 and
$2.26 billion at September 30, 2012, and were up from $2.20 billion at
December 31, 2011. As of December 31, 2012, we had a pretax unrealized
gain of $74.6 million of which $41.7 million is attributed to our
municipal securities portfolio and $32.9 million is attributed to the
remainder of the portfolio which is predominantly our mortgage-backed
securities ("MBS") portfolio.
MBS totaled $1.46 billion at December 31, 2012. Virtually all of our
mortgage-backed securities 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 has impairment. This Alt-A
bond, with a book value of $2.1 million as of December 31, 2012, has had
$1.8 million in net impairment loss to date since it was purchased in
early 2008 with no additional impairment recorded for the fourth quarter
of 2012.
Our municipal securities, totaling $625.4 million, are located in 27
states, with approximately $25.8 million, or 4.1%, located within the
state of California. Our largest holdings are in New Jersey at 14.3%,
Michigan at 12.4% and Illinois at 10.5%. All municipal bond securities
are performing.
During the fourth quarter of 2012, we purchased $110.4 million in MBS
with an average yield of 1.61%. MBS purchased during the fourth quarter
have a weighted average duration of about 3.98 years. There were zero
purchases of municipal securities during the fourth quarter of 2012.
Loans
Total loans and leases, net of deferred fees and discount, of $3.45
billion at December 31, 2012, increased by $11.8 million, or 0.34%, from
$3.44 billion at September 30, 2012. Quarter-over-quarter, non-covered
loans grew by $23.9 million, while covered loans declined by $12.1
million.
Total loans and leases, net of deferred fees and discount, of $3.45
billion at December 31, 2012, decreased by $35.1 million, or 1.01%, from
$3.48 billion at December 31, 2011. Non-covered loans grew by $32.2
million year-over-year, while covered loans declined by $67.3 million.
Deposits & Customer Repurchase Agreements
Total deposits of $4.78 billion and customer repurchase agreements of
$473.2 million totaled $5.25 billion at December 31, 2012. This
represents an increase of $133.3 million, or 2.61%, when compared with
total deposits and customer repurchase agreements of $5.11 billion at
December 31, 2011. Deposits and customer repurchase agreements increased
$17.3 million, or 0.33%, when compared with the prior quarter.
Non-interest bearing deposits were $2.42 billion at December 31, 2012,
an increase of $393.1 million, or 19.39%, compared to $2.03 billion at
December 31, 2011 and an increase of $96.6 million, or 4.16%, when
compared to the quarter ended September 30, 2012. At December 31, 2012,
non-interest bearing deposits were 50.71% of total deposits, up from
44.04% at December 31, 2011 and 48.62% at September 30, 2012.
Our average cost of total deposits was 0.11% for the three months ended
December 31, 2012, compared to our cost of total deposits of 0.15% for
the same period last year. Our cost of total deposits including customer
repurchase agreements was 0.12% for the three months ended December 31,
2012, compared to 0.17% for the same period last year.
FHLB Advances, Other Borrowings and Debentures
We had $198.9 million in FHLB Advances at December 31, 2012 and
September 30, 2012, compared to FHLB Advances of $448.7 million at
December 31, 2011.
On August 28, 2012, we redeemed five outstanding fixed rate loans from
the Federal Home Loan Bank, in an aggregate principal amount of $250
million, with an average coupon of 3.39%. The repayment of these
advances, which resulted in a $20.4 million termination expense on a
pre-tax basis, was funded from Citizens Business Bank deposits at the
Federal Reserve Bank of San Francisco. The Bank focused this set of
prepayments on five Federal Home Loan Bank loans, all maturing in 2015.
At December 31, 2012, we had $26.0 million of overnight borrowings at a
cost of 12 basis points.
At December 31, 2012, we had $67.0 million of junior subordinated
debentures, compared to $115.1 million at December 31, 2011.
On January 7, 2012, we redeemed the outstanding capital and common
securities issued by First Coastal Capital Trust II for total
consideration of $6.8 million.
We also redeemed 50% of the outstanding capital and common securities
issued by CVB Capital Trust I (the "Trust") on June 17, 2012 and
September 17, 2012, respectively. The Trust was redeemed in total for
$41.2 million.
We took these actions to deleverage the balance sheet and reduce ongoing
funding costs.
Subsequent to December 31, 2012, we redeemed an additional $20.6 million
of the outstanding capital and common securities issued by the Company's
trust subsidiary, CVB Statutory Trust II, on January 7, 2013.
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 SJB acquisition. The SJB loans are "covered" loans as defined in the
loss sharing agreement with the FDIC. These loans were marked to fair
value at the acquisition date.
Citizens Business Bank Asset Quality (Non-covered loans)
The allowance for credit losses was $92.4 million at December 31, 2012,
compared to $92.1 million at September 30, 2012 and $94.0 million at
December 31, 2011. The increase for the fourth quarter was due to
$374,000 in net loan recoveries for the fourth quarter 2012. The
decrease in the allowance for credit losses from December 31, 2011 was
due to $1.5 million in net charge-offs for the year ended December 31,
2012. The allowance for credit losses was 2.84%, 2.85%, 2.89%, 2.89% and
2.92% of total non-covered loans and leases outstanding at December 31,
2012, September 30, 2012, June 30, 2012, March 31, 2012 and December 31,
2011, respectively. There was zero provision for credit losses for the
year ended December 31, 2012, compared to a provision for credit losses
of $7.1 million for 2011.
Non-performing loans, defined as non-accrual loans and non-performing
troubled debt restructured loans ("TDR"), were $58.0 million at December
31, 2012, or 1.78% of total loans. This compares to non-performing loans
of $66.0 million at September 30, 2012 and $62.7 million at December 31,
2011. The $58.0 million in non-performing loans at December 31, 2012 are
summarized as follows: $10.7 million in commercial construction, $13.1
million in residential mortgages, $21.0 million in commercial real
estate, $3.1 million in commercial and industrial, $9.8 million in dairy
& livestock loans, and $215,000 in other loans. The $8.0 million
decrease in non-performing loans for the quarter was principally due to
a $7.0 million decrease in non-performing commercial construction, a
$760,000 decrease in commercial and industrial, and a $503,000 decrease
in non-performing dairy & livestock loans. These decreases were
partially offset by a $781,000 increase in non-performing residential
real estate loans.
At December 31, 2012, we had $14.8 million in Other Real Estate Owned
("OREO"), an increase of $4.3 million from the eight OREO properties
totaling $10.5 million at September 30, 2012 and $1.0 million from the
eleven OREO properties totaling $13.8 million at December 31, 2011.
During 2012, we added seven properties to OREO for a total of $8.5
million, which included one $5.6 million construction loan that went to
OREO in the fourth quarter. We sold eleven properties with an OREO value
of $7.0 million, realizing a net gain of $397,000. We now have seven
non-covered OREO properties.
At December 31, 2012, we had loans delinquent 30 to 89 days of $887,000.
This compares to delinquent loans of $1.7 million at September 30, 2012
and $5.5 million at December 31, 2011. As a percentage of total loans,
delinquencies, excluding non-accruals, were 0.03% at December 31, 2012,
0.05% at September 30, 2012, and 0.17% at December 31, 2011. All loans
delinquent 90 days or more were categorized as non-performing.
At December 31, 2012, we had $50.4 million in performing TDR loans, a
decrease of $1.2 million from performing TDR loans at September 30, 2012
and an increase of $11.8 million from performing TDR loans at December
31, 2011. In terms of number of loans, we had 34 performing TDR loans at
December 31, 2012, compared to 32 performing TDR's at September 30, 2012
and 16 performing TDR loans at December 31, 2011.
Non-performing assets, defined as non-covered non-accrual loans and
other real estate owned, totaled $72.8 million at December 31, 2012,
$76.5 million at September 30, 2012, and $76.5 million at December 31,
2011.
Classified loans are loans that are graded "substandard" or worse. At
December 31, 2012, classified loans totaled $314.0 million, compared to
$302.5 million at September 30, 2012. The $11.5 million increase was
primarily due to the downgrading of several dairy and livestock loans.
Classified loans decreased $45.2 million from $359.2 million at December
31, 2011.
San Joaquin Bank Asset Quality (Covered loans)
At December 31, 2012, we had $220.5 million of gross loans from SJB with
a carrying value of $195.2 million, compared to $235.9 million of gross
loans at September 30, 2012 with a carrying value of $207.3 million, and
$330.4 million of gross loans at December 31, 2011 and $262.5 million in
carrying value. Of the gross loans, we had $27.9 million in
non-performing loans as of December 31, 2012, or 12.67%, compared to
$83.7 million in non-performing loans at December 31, 2011, or 25.35%.
We had three properties in OREO totaling $1.1 million, compared to three
properties totaling $1.3 million at September 30, 2012, and 16
properties totaling $9.8 million at December 31, 2011.
CitizensTrust
CitizensTrust has approximately $2.10 billion in assets under management
and administration, including $1.58 billion in assets under management,
as of December 31, 2012. Revenues were $1.9 million for the fourth
quarter and $8.2 million for 2012, compared to $2.2 million and $8.7
million for the same periods in 2011. 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 with assets of $6.4 billion.
Citizens Business Bank serves 40 cities with 41 Business Financial
Centers, five Commercial Banking Centers and three trust office
locations serving 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 Our Investors tab.
Conference Call
Management will hold a conference call at 7:30 a.m. Pacific time/10:30
a.m. Eastern time tomorrow, January 17, 2013, to discuss the Company's
fourth quarter and year end 2012 financial results.
To listen to the conference call, please dial (888) 317-6016. A taped
replay will be made available approximately one hour after the
conclusion of the call and will remain available through January 28,
2013 at 6:00 a.m. Pacific time/9:00 a.m. Eastern time. To access the
replay, please dial (877) 344-7529, passcode 10022479.
The conference call will also be simultaneously webcast over the
Internet; please visit the Company's website at www.cbbank.com
and click on the Our 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 twelve months.
Disclosure
This press release contains certain non-GAAP financial disclosures for
tangible common equity, earnings before income taxes, which we refer to
as "pre-tax earnings", pre-tax debt termination expense, after-tax debt
termination expense, and earnings and efficiency ratios and noninterest
expense to average assets adjusted to exclude FHLB debt termination
expenses. The Company uses certain non-GAAP financial measures to
provide meaningful supplemental information regarding the Company's
operational performance and to enhance investors' overall understanding
of such financial performance. Please refer to the tables at the end of
this release for a presentation of performance ratios in accordance with
GAAP and a reconciliation of the non-GAAP financial measures to the GAAP
financial measures.
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 property inventory and periodic deterioration in values of
California real estate, both residential and commercial; a prolonged
slowdown or decline 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 cost or effect of
acquisitions we may make; the effect of changes in laws and regulations
(including laws, regulations and judicial decisions concerning financial
reform, taxes, banking, securities, employment, executive compensation,
insurance, and information security) with which we and our subsidiaries
must comply; changes in estimates of future reserve requirements and
minimum capital requirements based upon the periodic review thereof
under relevant regulatory and accounting requirements; inflation,
interest rate, securities market and monetary fluctuations;
cyber-security threats including loss of system functionality or theft
or loss of data; 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 and the expanding use of mobile banking
applications; the ability to retain and increase market share, retain
and grow customers 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 from
time-to-time 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, and our ability to retain or
expand our management team; the costs and effects of legal and
regulatory developments, including the resolution of legal proceedings
or regulatory or other governmental inquiries or investigations 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)
December 31,
September 30,
December 31,
2012
2012
2011
Assets
Cash and due from banks
$
87,274
$
99,881
$
35,407
Interest-earning balances due from Federal Reserve Bank
11,157
148,304
309,936
Total cash and cash equivalents
98,431
248,185
345,343
Interest-earning balances due from depository institutions
70,000
70,000
60,000
Investment securities available-for-sale
2,449,387
2,257,507
2,201,526
Investment securities held-to-maturity
2,050
2,122
2,383
Investment in stock of Federal Home Loan Bank (FHLB)
56,651
62,428
72,689
Non-covered loans held-for-sale
-
996
348
Covered loans held-for-sale
-
-
5,664
Non-covered loans and lease finance receivables
3,252,313
3,227,405
3,219,727
Allowance for credit losses
(92,441
)
(92,067
)
(93,964
)
Net non-covered loans and lease finance receivables
3,159,872
3,135,338
3,125,763
Covered loans and lease finance receivables, net
195,215
207,307
256,869
Premises and equipment, net
35,080
35,577
36,280
Intangibles
3,389
3,830
5,548
Goodwill
55,097
55,097
55,097
Bank owned life insurance
119,744
118,384
116,132
FDIC loss sharing asset
18,489
22,271
59,453
Other assets
99,959
102,299
139,820
TOTAL ASSETS
$
6,363,364
$
6,321,341
$
6,482,915
Liabilities and Stockholders' Equity
Liabilities:
Deposits:
Noninterest-bearing demand deposits
$
2,420,993
$
2,324,401
$
2,027,876
Investment checking
323,159
302,071
338,424
Savings and money market demand
1,315,668
1,416,035
1,401,098
Time deposits
714,167
738,609
837,150
Total deposits
4,773,987
4,781,116
4,604,548
Customer repurchase agreements
473,244
448,788
509,370
FHLB advances
198,934
198,866
448,662
Other borrowings
26,000
-
-
Junior subordinated debentures
67,012
67,012
115,055
Other liabilities
61,217
71,352
90,466
Total liabilities
5,600,394
5,567,134
5,768,101
Stockholders' Equity:
Stockholders' equity
719,719
705,742
673,345
Accumulated other comprehensive income, net of tax
43,251
48,465
41,469
Total stockholders' equity
762,970
754,207
714,814
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$
6,363,364
$
6,321,341
$
6,482,915
CVB FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED AVERAGE BALANCE SHEETS
(unaudited)
(dollars in thousands)
Three Months Ended December 31,
Twelve Months Ended December 31,
2012
2011
2012
2011
Assets:
Cash and due from banks
$
103,232
$
40,060
$
110,649
$
75,360
Interest-earning balances due from Federal Reserve Bank
120,334
473,856
212,136
380,462
Interest-earning balances due from depository institutions
-
-
-
30,588
Total cash and cash equivalents
223,566
513,916
322,785
486,410
Interest-earning balances due from depository institutions
70,000
52,558
64,617
50,787
Investment securities available-for-sale
2,345,642
2,128,703
2,295,194
1,980,984
Investment securities held-to-maturity
2,059
2,489
2,165
2,790
Investment in stock of Federal Home Loan Bank (FHLB)
59,477
74,410
65,792
80,091
Non-covered loans held-for-sale
991
1,135
1,466
3,052
Covered loans held-for-sale
-
5,692
2,289
1,419
Non-covered loans and lease finance receivables
3,243,173
3,180,872
3,199,629
3,222,450
Allowance for credit losses
(92,137
)
(94,842
)
(92,527
)
(101,080
)
Net non-covered loans and lease finance receivables
3,151,036
3,086,030
3,107,102
3,121,370
Covered loans and lease finance receivables, net
196,597
268,603
227,942
318,840
Premises and equipment, net
35,397
36,390
35,841
38,353
Intangibles
3,590
5,908
4,276
7,198
Goodwill
55,097
55,097
55,097
55,097
Bank owned life insurance
118,977
115,729
117,642
114,583
FDIC loss sharing asset
20,803
56,823
41,064
72,538
Other assets
133,980
177,414
142,670
171,996
TOTAL
$
6,417,212
$
6,580,897
$
6,485,942
$
6,505,508
Liabilities and Stockholders' Equity
Liabilities:
Deposits:
Noninterest-bearing demand deposits
$
2,379,209
$
2,039,670
$
2,220,714
$
1,905,605
Interest-bearing
2,406,499
2,587,155
2,482,684
2,652,093
Total deposits
4,785,708
4,626,825
4,703,398
4,557,698
Customer repurchase agreements
495,107
507,576
496,978
530,924
FHLB advances
198,909
546,463
362,741
547,987
Other borrowings
1,600
3,616
411
6,647
Junior subordinated debentures
67,012
115,055
90,935
115,055
Other liabilities
104,421
68,005
81,950
65,847
Total liabilities
5,652,757
5,867,540
5,736,413
5,824,158
Stockholders' equity:
Stockholders' equity
716,047
674,072
705,775
661,310
Accumulated other comprehensive income, net of tax
48,408
39,285
43,754
20,040
Total stockholders' equity
764,455
713,357
749,529
681,350
TOTAL
$
6,417,212
$
6,580,897
$
6,485,942
$
6,505,508
CVB FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited)
(dollars in thousands, except per share amounts)
For the Three Months
For the Twelve Months
Ended December 31,
Ended December 31,
2012
2011
2012
2011
Interest income:
Loans held-for-sale
$
5
$
10
$
21
$
56
Loans and leases, including fees
43,852
47,332
183,125
194,448
Accretion on acquired loans
3,349
948
22,607
12,586
Total loans and leases, including fees
47,206
48,290
205,753
207,090
Investment securities:
Taxable
6,823
8,913
32,025
37,310
Tax-advantaged
5,497
5,849
22,718
23,640
Total investment income
12,320
14,762
54,743
60,950
Dividends from FHLB stock and PCBB stock
408
59
671
242
Federal funds sold & interest-earning CDs
199
385
1,055
1,438
Total interest income
60,133
63,496
262,222
269,720
Interest expense:
Deposits
1,306
1,721
5,911
8,708
Borrowings and junior subordinated debentures
3,183
6,578
19,361
26,331
Total interest expense
4,489
8,299
25,272
35,039
Net interest income before provision for credit losses
55,644
55,197
236,950
234,681
Provision for credit losses
-
-
-
7,068
Net interest income after
provision for credit losses
55,644
55,197
236,950
227,613
Noninterest income:
Impairment loss on investment securities
-
(110
)
-
(656
)
Service charges on deposit accounts
3,874
3,995
16,106
15,768
Trust and investment services
1,905
2,215
8,169
8,683
Increase (decrease) in FDIC loss sharing asset
(2,577
)
1,289
(21,916
)
171
Other
2,527
3,341
13,544
10,250
Total noninterest income
5,729
10,730
15,903
34,216
Noninterest expense:
Salaries and employee benefits
17,640
16,534
68,496
69,993
Occupancy
2,714
2,912
10,822
11,261
Equipment
1,177
1,117
4,651
5,322
Professional services
1,034
2,666
6,249
15,031
Amortization of intangible assets
442
852
2,159
3,481
Provision for unfunded commitments
(1,000
)
-
(1,000
)
(918
)
Debt termination
-
3,310
20,379
3,310
OREO expense
688
1,706
2,146
6,729
Other
6,284
5,610
24,258
26,816
Total noninterest expense
28,979
34,707
138,160
141,025
Earnings before income taxes
32,394
31,220
114,693
120,804
Income taxes
10,258
9,508
37,413
39,071
Net earnings
$
22,136
$
21,712
$
77,280
$
81,733
Basic earnings per common share
$
0.21
$
0.21
$
0.74
$
0.77
Diluted earnings per common share
$
0.21
$
0.21
$
0.74
$
0.77
Dividends declared per common share
$
0.085
$
0.085
$
0.340
$
0.340
CVB FINANCIAL CORP. AND SUBSIDIARIES
SELECTED FINANCIAL HIGHLIGHTS
(unaudited)
(dollars in thousands, except per share amounts)
Three Months Ended
December 31,
Twelve Months Ended
December 31,
2012
2011
2012
2011
Interest income - (Tax-Effected) (te)
$
62,214
$
65,942
$
270,764
$
279,587
Interest expense
4,489
8,299
25,272
35,039
Net Interest income - (te)
$
57,725
$
57,643
$
245,492
$
244,548
Return on average assets, annualized
1.37
%
1.31
%
1.19
%
1.26
%
Return on average equity, annualized
11.52
%
12.08
%
10.31
%
12.00
%
Efficiency ratio [1]
47.22
%
52.64
%
54.64
%
52.45
%
Efficiency ratio excluding debt termination [1] [2]
47.22
%
47.62
%
46.58
%
51.21
%
Noninterest expense to average assets
1.80
%
2.09
%
2.13
%
2.17
%
Noninterest expense to average assets, excluding debt termination [2]
1.80
%
1.89
%
1.82
%
2.12
%
Yield on average earning assets (te)
4.13
%
4.24
%
4.47
%
4.61
%
Yield on average earning assets (te) excluding discount
3.87
%
4.14
%
4.06
%
4.34
%
Cost of deposits
0.11
%
0.15
%
0.13
%
0.19
%
Cost of deposits and customer repurchase agreements
0.12
%
0.17
%
0.14
%
0.21
%
Cost of funds
0.32
%
0.56
%
0.44
%
0.60
%
Net interest margin (te)
3.84
%
3.71
%
4.06
%
4.04
%
Net interest margin (te) excluding discount
3.60
%
3.62
%
3.66
%
3.78
%
[1] Noninterest expense divided by net interest income before
provision for credit losses plus noninterest income.
[2] See Non-GAAP table for efficiency ratio and noninterest expense
reconciliation.
Weighted average shares outstanding
Basic
104,536,089
104,159,966
104,418,905
105,142,650
Diluted
104,712,918
104,236,764
104,657,610
105,222,566
Dividends declared
$
8,917
$
8,858
$
35,642
$
33,805
Dividend payout ratio
40.28
%
40.80
%
46.12
%
43.81
%
Number of shares outstanding-EOP
104,889,586
104,482,271
Book value per share
$
7.28
$
6.84
Tangible book value per share
$
6.72
$
6.26
December 31,
(Non-covered loans)
2012
2011
Non-performing assets (dollar amount in thousands):
Non-accrual loans
$
26,688
$
38,828
Loans past due 90 days or more
and still accruing interest
-
-
Troubled debt restructured loans (non-performing)
31,309
23,844
Other real estate owned (OREO), net
14,832
13,820
Total non-performing assets
$
72,829
$
76,492
Troubled debt restructured performing loans
$
50,392
$
38,554
Percentage of non-performing assets
to total loans outstanding and OREO
2.23
%
2.37
%
Percentage of non-performing
assets to total assets
1.14
%
1.18
%
Allowance for loan losses to
non-performing assets
126.93
%
122.84
%
Net charge-offs to average loans
0.05
%
0.57
%
Allowance for credit losses:
Beginning balance
$
93,964
$
105,259
Total loans charged-off
(5,288
)
(20,521
)
Total loans recovered
3,765
2,158
Net loans charged-off
(1,523
)
(18,363
)
Provision charged to operating expense
-
7,068
Allowance for credit losses at end of period
$
92,441
$
93,964
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,
$
11.92
$
10.16
$
9.94
$
8.18
$
11.85
$
9.00
September 30,
$
12.95
$
11.35
$
10.00
$
7.41
$
10.99
$
6.61
December 31,
$
12.17
$
9.43
$
10.27
$
7.28
$
9.09
$
7.30
Quarterly Consolidated Statements of Earnings
4Q
3Q
2Q
1Q
4Q
2012
2012
2012
2012
2011
Interest income
Loans, including fees
$
47,206
$
52,604
$
55,219
$
50,724
$
48,290
Investment securities and other
12,927
13,241
14,960
15,341
15,206
60,133
65,845
70,179
66,065
63,496
Interest expense
Deposits
1,306
1,398
1,554
1,653
1,721
Other borrowings
3,183
4,703
5,665
5,810
6,578
4,489
6,101
7,219
7,463
8,299
Net interest income before
provision for credit losses
55,644
59,744
62,960
58,602
55,197
Provision for credit losses
-
-
-
-
-
Net interest income after
provision for credit losses
55,644
59,744
62,960
58,602
55,197
Non-interest income
5,729
2,626
2,292
5,256
10,730
Non-interest expense
28,979
29,641
28,949
30,212
34,707
Debt termination
-
20,379
-
-
-
Earnings before income taxes
32,394
12,350
36,303
33,646
31,220
Income taxes
10,258
3,093
12,684
11,378
9,508
Net earnings
$
22,136
$
9,257
$
23,619
$
22,268
$
21,712
Basic earning per common share
$
0.21
$
0.09
$
0.23
$
0.21
$
0.21
Diluted earnings per common share
$
0.21
$
0.09
$
0.23
$
0.21
$
0.21
Dividends declared per common share
$
0.085
$
0.085
$
0.085
$
0.085
$
0.085
Dividends Declared
$
8,917
$
8,909
$
8,913
$
8,903
$
8,858
CVB FINANCIAL CORP. AND SUBSIDIARIES
SELECTED FINANCIAL HIGHLIGHTS
(unaudited)
(dollars in thousands)
Distribution of Loan Portfolio
12/31/2012
9/30/2012
6/30/2012
3/31/2012
12/31/2011
Commercial and Industrial
$
573,571
$
554,000
$
546,730
$
521,779
$
523,950
Real Estate:
Construction
61,300
72,485
74,760
77,385
94,831
Commercial Real Estate
2,169,535
2,206,339
2,166,776
2,223,533
2,171,399
SFR Mortgage
160,703
159,730
161,524
167,465
179,731
Consumer
53,894
54,148
55,674
58,613
59,789
Municipal lease finance receivables
105,767
109,005
109,816
114,792
113,629
Auto and equipment leases
12,716
13,302
15,137
17,105
17,370
Dairy and Livestock
327,579
288,437
281,027
286,027
343,549
Agribusiness
14,732
12,193
15,820
12,216
28,523
Gross Loans
3,479,797
3,469,639
3,427,264
3,478,915
3,532,771
Less:
Purchase accounting discount
(25,344
)
(28,590
)
(36,502
)
(45,456
)
(50,780
)
Deferred net loan fees
(6,925
)
(6,337
)
(5,707
)
(5,503
)
(5,395
)
Allowance for credit losses
(92,441
)
(92,067
)
(91,892
)
(91,922
)
(93,964
)
Net Loans
$
3,355,087
$
3,342,645
$
3,293,163
$
3,336,034
$
3,382,632
Covered loans, net
$
195,215
$
207,307
$
210,147
$
241,943
$
256,869
Non-covered loans
3,159,872
3,135,338
3,083,016
3,094,091
3,125,763
Total Net Loans
$
3,355,087
$
3,342,645
$
3,293,163
$
3,336,034
$
3,382,632
CVB FINANCIAL CORP. AND SUBSIDIARIES
SELECTED FINANCIAL HIGHLIGHTS
(unaudited)
(dollars in thousands)
Non-Performing Assets & Delinquency Trends
(Non-Covered Loans)
December 31,
September 30,
June 30,
March 31,
December 31,
2012
2012
2012
2012
2011
Non-Performing Loans
Residential Construction and Land
$
-
$
-
$
-
$
920
$
920
Commercial Construction and Land
10,663
17,708
17,904
8,349
12,397
Residential Mortgage
13,102
12,321
12,469
13,129
16,970
Commercial Real Estate
21,039
21,354
23,084
27,238
25,992
Commercial and Industrial
3,136
3,896
4,622
4,082
3,432
Dairy & Livestock
9,842
10,345
3,394
1,200
2,475
Agribusiness
-
-
-
-
-
Consumer
215
364
388
308
382
Auto & Equipment Leases
-
-
4
86
104
Total
$
57,997
$
65,988
$
61,865
$
55,312
$
62,672
% of Total Loans
1.78
%
2.04
%
1.95
%
1.74
%
1.95
%
Past Due 30-89 Days
Residential Construction and Land
$
-
$
-
$
-
$
-
$
-
Commercial Construction and Land
-
-
-
-
-
Residential Mortgage
107
650
-
4,109
1,568
Commercial Real Estate
-
298
1,041
5,798
787
Commercial and Industrial
690
286
176
1,317
3,022
Dairy & Livestock
-
-
-
-
-
Agribusiness
-
170
-
-
-
Consumer
82
72
36
13
59
Auto & Equipment Leases
8
213
-
-
20
Total
$
887
$
1,689
$
1,253
$
11,237
$
5,456
% of Total Loans
0.03
%
0.05
%
0.04
%
0.35
%
0.17
%
OREO
Residential Construction and Land
$
-
$
-
$
-
$
-
$
-
Commercial Construction and Land
12,513
7,117
7,117
7,117
7,117
Commercial Real Estate
2,319
3,153
2,407
4,173
6,566
Commercial and Industrial
-
203
203
137
137
Residential Mortgage
-
-
667
-
-
Consumer
-
-
-
-
-
Auto & Equipment Leases
-
-
-
-
-
Total
$
14,832
$
10,473
$
10,394
$
11,427
$
13,820
Total Non-Performing, Past Due & OREO
$
73,716
$
78,150
$
73,512
$
77,976
$
81,948
% of Total Loans
2.27
%
2.42
%
2.32
%
2.45
%
2.55
%
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 three and twelve months
ended December 31, 2012 net interest income and net interest margin
include a yield adjustment of $3.3 million and $22.6 million,
respectively, 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
December 31,
(Dollars in thousands)
2012
2011
Average Balance
Interest
Yield
Average Balance
Interest
Yield
Total interest-earning assets (TE)
$
6,038,273
$
62,214
4.13
%
$
6,188,318
$
65,942
4.24
%
Discount on acquired loans
27,658
(3,349
)
50,613
(948
)
Total interest-earning assets, excluding SJB loan discount and yield
adjustment
$
6,065,931
$
58,865
3.87
%
$
6,238,931
$
64,994
4.14
%
Net interest income and net interest margin (TE)
$
57,725
3.84
%
$
57,643
3.71
%
Yield adjustment to interest income from discount accretion
(3,349
)
(948
)
Net interest income and net interest margin (TE), excluding yield
adjustment
$
54,376
3.60
%
$
56,695
3.62
%
Twelve Months Ended
December 31,
(Dollars in thousands)
2012
2011
Average Balance
Interest
Yield
Average Balance
Interest
Yield
Total interest-earning assets (TE)
$
6,071,230
$
270,764
4.47
%
$
6,071,463
$
279,587
4.61
%
Discount on acquired loans
38,713
(22,607
)
81,847
(12,586
)
Total interest-earning assets, excluding SJB loan discount and yield
adjustment
$
6,109,943
$
248,157
4.06
%
$
6,153,310
$
267,001
4.34
%
Net interest income and net interest margin (TE)
$
245,492
4.06
%
$
244,548
4.04
%
Yield adjustment to interest income from discount accretion
(22,607
)
(12,586
)
Net interest income and net interest margin (TE), excluding yield
adjustment
$
222,885
3.66
%
$
231,962
3.78
%
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 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, 2012.
As of December 31, 2012
(Dollars in thousands)
Stockholders' Equity
$
762,970
Less: Goodwill
(55,097
)
Less: Intangible Assets
(3,389
)
Tangible Book Value
$
704,484
Common shares issued and outstanding
104,889,586
Tangible Book Value Per Share
$
6.72
Noninterest Expense and Efficiency Ratio Reconciliation (Non-GAAP)
We use certain non-GAAP financial measures to provide supplemental
information regarding our performance. Noninterest expense for the
twelve months ended December 31, 2012, includes a debt termination
expense of $20.4 million. We believe that presenting the efficiency
ratio, and the ratio of noninterest expense to average assets,
excluding the impact of debt termination expense and related net
interest expense savings, provides additional clarity to the users
of financial statements regarding core financial performance.
Three Months Ended December 31,
Twelve Months Ended December 31,
2012
2011
2012
2011
(Dollars in thousands)
Net interest income
$
55,644
$
55,197
$
236,950
$
234,681
Noninterest income
5,729
10,730
15,903
34,216
Noninterest expense
28,979
34,707
138,160
141,025
Less: Termination expense on borrowings
-
(3,310
)
(20,379
)
(3,310
)
Adjusted noninterest expense
$
28,979
$
31,397
$
117,781
$
137,715
Efficiency ratio
47.22
%
52.64
%
54.64
%
52.45
%
Adjusted efficiency ratio
47.22
%
47.62
%
46.58
%
51.21
%
Adjusted noninterest expense
28,979
31,397
117,781
137,715
Average assets
6,417,212
6,580,897
6,485,942
6,505,508
Adjusted noninterest expense to average assets
1.80
%
[1]
1.89
%
[1]
1.82
%
2.12
%
[1] Annualized
CVB Financial Corp. Christopher D. Myers President
and CEO (909) 980-4030
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