701 North Haven Ave., Suite 350
Ontario, CA 91764
(909) 980-4030
Press Release
For Immediate Release
Contact: D. Linn Wiley
President and CEO
(909) 980-4030
CVB Financial Corp. Reports First Quarter Earnings
Ontario, CA, April 20, 2006-CVB Financial Corp. (NASDAQ:CVBF) and its subsidiary, Citizens Business Bank (“the Company”), announced record results for the first quarter of 2006. This included record deposits, record loans, record assets and record earnings. It was the strongest first quarter in the history of the Company.
Net Income
CVB Financial Corp. reported net income of $18.2 million for the first quarter ending March 31, 2006. This represents an increase of $539,000, or 3.05%, when compared with the $17.7 million in net earnings reported for the first quarter of 2005. Diluted earnings per share were $0.24 for the first quarter of 2006. This was up $0.01, or 4.35%, when compared with earnings per share of $0.23 for the first quarter of 2005.
Net income for the first quarter of 2006 produced a return on beginning equity of 21.57%, a return on average equity of 20.82% and a return on average assets of 1.35%. The efficiency ratio for the first quarter was 45.75%, and operating expenses as a percentage of average assets were 1.74%.
As previously reported, the Company recorded income of $2.6 million from the settlement of a robbery loss in the first quarter of 2005. This added $1.7 million to net income after taxes for the period. Without this item, the net income for the first quarter of 2005 would have been $16.0 million. The first quarter 2006 net earnings of $18.2 million represents an increase of $2.2 million, or 13.89%, when compared to the $16.0 million for the same period in 2005.
Net Interest Income and Net Interest Margin
Net interest income totaled $43.6 million for the first quarter of 2006. This represented an increase of $3.0 million, or 7.26%, over net interest income of $40.6 million for the first quarter of 2005. This increase resulted from a $16.4 million increase in interest income, partially offset by a $13.2 million increase in interest expense and a $250,000 increase in the provision for credit losses. The increases in interest income were primarily due to the growth in average earning assets and an increase in interest rates. The increases in interest expense were due to the increases in deposits and borrowed funds and the increase in interest rates on these funding instruments.
Net interest margin (tax equivalent) declined from 3.96% for the first quarter of 2005 to 3.62% for the first quarter of 2006. Total average earning asset yields have increased from 5.37% for the first quarter of 2005 to 5.86%, or 49 basis points, for the first quarter of 2006. The cost of funds has increased from 2.11% for the first quarter of 2005 to 3.10%, or 99 basis points, for the first quarter of 2006. The higher increase in cost of funds is due to the short-term liability sensitivity of the Company. This decline in net interest margin has been mitigated by the strong growth in the balance sheet, which has allowed the Company’s net interest income to increase as mentioned above. The Company has approximately $1.36 billion, or 39.18%, of its deposits in interest free demand deposits.
The credit quality of the loan portfolio continues to be strong. The allowance for credit losses decreased slightly from $23.9 million at the end of the first quarter 2005 to $23.6 million at the end of the first quarter 2006. During the first quarter of 2006, the Company experienced net recoveries of $130,000, and we made a provision for credit losses of $250,000. During the first quarter of 2005, we had net recoveries of $682,000, and we added $756,000 to the allowance from the acquisition of Granite State Bank. The allowance for credit losses is 0.87% of the total loans outstanding. Although the allowance for credit losses is justified by the strong credit quality of the loan portfolio, it is relatively low when compared with peer banks. We believe that making appropriate levels of provisions to compensate for the growth of the loan portfolio is justified.
Balance Sheet
The Company reported total assets of $5.53 billion at March 31, 2006. This represented an increase of $695.9 million, or 14.40%, over total assets of $4.83 billion on March 31, 2005. Earning assets totaling $5.17 billion were up $670.3 million, or 14.88%, when compared with earning assets of $4.50 billion as of March 31, 2005. Deposits of $3.48 billion grew $458.9 million, or 15.21%, from $3.02 billion for the same period of the prior year. Gross loans and leases of $2.72 billion on March 31, 2006 rose $533.1 million, or 24.41%, from $2.18 billion on March 31, 2005.
Total assets of $5.53 billion as of March 31, 2006 reflect an increase of $104.9 million, or 1.94%, over total assets of $5.42 billion on December 31, 2005. Earning assets of $5.17 billion were up $91.5 million, or 1.80%, over the total earning assets of $5.08 billion on December 31, 2005. Deposits of $3.48 billion on March 31, 2006 grew $52.0 million, or 1.52%, from $3.42 billion as of December 31, 2005. Gross loans and leases of $2.71 billion increased $53.3 million, or 2.00%, from $2.66 billion on December 31, 2005. Total equity of $339.6 million on March 31, 2006 was down by $3.3 million, or 0.97%, from $342.9 million as of December 31, 2005. This decline was the result of a $15.2 million increase in the unrealized loss in the investment portfolio.
Investment Securities
Investment securities totaled $2.41 billion as of March 31, 2006. This represents an increase of $136.5 million, or 6.01%, when compared with the $2.27 billion as of March 31, 2005. It represents an increase of $37.1 million, or 1.57%, when compared with $2.37 billion in investment securities as of December 31, 2005.
Financial Advisory Services
The Financial Advisory Services Group has over $2.9 billion in assets under administration. They provide trust, investment and brokerage related services.
Loan and Lease Quality
CVB Financial Corp reported no non-performing assets as of March 31, 2006 and December 31, 2005. The allowance for credit losses was $23.5 million as of March 31, 2006. This represents 0.87% of gross loans and leases. It compares with an allowance for credit losses of $23.2 million, or 0.87% of gross loans and leases on December 31, 2005. The increase was primarily due to a provision for credit losses of $250,000 recorded in first quarter of 2006 and recoveries of $150,000 during the first quarter of 2006, offset by loan losses of $20,000.
Other Items in 2006
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. It serves 33 cities with 40 business financial centers in the Inland Empire, Los Angeles County, Orange County and the Central Valley areas of California. Its leasing division, Golden West Financial Services, provides vehicle leasing, equipment leasing and real estate loan services.
For the third consecutive year, CVB Financial Corp. received the KBW Honor Roll award at the Annual Community Bank Investor Conference hosted by Keefe, Bruyette & Woods, Inc. in New York on July 25, 26, and 27, 2005. The Company was also recognized as a SmAll-Star by Sandler O’Neill and named on the FPK Honor Roll by Fox-Pitt, Kelton.
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
This document contains forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from the projected. In addition, these forward-looking statements relate to the Company’s current expectations regarding future operating results. Such issues and uncertainties include impact of changes in interest rates, a decline in economic conditions and increased competition among financial services providers. For a discussion of other factors that could cause actual results to differ, please see the publicly available Securities and Exchange Commission filings of CVB Financial Corp., including its Annual Report on Form 10-K for the year ended December 31, 2005, and particularly the discussion on risk factors within that document. The Company does not undertake any, 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.
_________________
CVB FINANCIAL CORP.
CONSOLIDATED BALANCE SHEET
(unaudited)
dollars in thousands |
|---|
| | | | | | | | | | | | |
| March 31,
| December 31,
|
| | | | | 2006 | | | 2005 | | | 2005 | |
|
| |
| |
| |
| Assets: | | |
| Investment Securities available-for-sale | | | $ | 2,406,986 | | $ | 2,270,450 | | $ | 2,369,892 | |
| Interest-bearing balances due from depository institutions | | | | 1,784 | | | 15,737 | | | 1,883 | |
| Investment in stock of Federal Home Loan Bank (FHLB) | | | | 72,362 | | | 58,092 | | | 70,770 | |
| Loans and lease finance receivables | | | | 2,717,127 | | | 2,184,021 | | | 2,663,863 | |
| Less allowance for credit losses | | | | (23,584 | ) | | (23,932 | ) | | (23,204 | ) |
|
| |
| |
| |
| Net loans and lease finance receivables | | | | 2,693,543 | | | 2,160,089 | | | 2,640,659 | |
|
| |
| |
| |
| Total earning assets | | | | 5,174,675 | | | 4,504,368 | | | 5,083,204 | |
| Cash and due from banks | | | | 131,453 | | | 127,113 | | | 130,141 | |
| Premises and equipment, net | | | | 41,258 | | | 35,755 | | | 40,020 | |
| Intangibles | | | | 11,886 | | | 14,817 | | | 12,474 | |
| Goodwill | | | | 31,531 | | | 28,755 | | | 32,357 | |
| Cash value of life insurance | | | | 72,633 | | | 70,512 | | | 71,811 | |
| Other assets | | | | 64,478 | | | 50,673 | | | 52,964 | |
|
| |
| |
| |
| TOTAL | | | $ | 5,527,914 | | $ | 4,831,993 | | $ | 5,422,971 | |
|
| |
| |
| |
| Liabilities and Stockholders' Equity | | |
| Liabilities: | | |
| Deposits: | | |
| Demand Deposits (noninterest-bearing) | | | $ | 1,362,022 | | $ | 1,388,942 | | | 1,490,613 | |
| Investment Checking | | | | 298,278 | | | 274,312 | | | 298,067 | |
| Savings/MMDA | | | | 924,402 | | | 843,553 | | | 852,189 | |
| Time Deposits | | | | 891,379 | | | 510,387 | | | 783,177 | |
|
| |
| |
| |
| Total Deposits | | | | 3,476,081 | | | 3,017,194 | | | 3,424,046 | |
| Demand Note to U.S. Treasury | | | | 936 | | | 2,136 | | | 6,433 | |
| Borrowings | | | | 1,550,000 | | | 1,361,000 | | | 1,496,000 | |
| Junior Subordinated Debentures | | | | 108,250 | | | 82,476 | | | 82,476 | |
| Other liabilities | | | | 53,082 | | | 44,956 | | | 71,139 | |
|
| |
| |
| |
| Total Liabilities | | | | 5,188,349 | | | 4,507,762 | | | 5,080,094 | |
| Stockholders' equity: | | |
| Stockholders' equity | | | | 368,152 | | | 334,378 | | | 356,263 | |
| Accumulated other comprehensive income | | |
| (loss), net of tax | | | | (28,587 | ) | | (10,147 | ) | | (13,386 | ) |
|
| |
| |
| |
| | | | | 339,565 | | | 324,231 | | | 342,877 | |
|
| |
| |
| |
| TOTAL | | | $ | 5,527,914 | | $ | 4,831,993 | | $ | 5,422,971 | |
|
| |
| |
| |
CVB FINANCIAL CORP.
CONSOLIDATED AVERAGE BALANCE SHEET
(unaudited)
dollars in thousands | | |
|---|
| Three months ended March 31, |
|---|
| 2006
| 2005
|
|---|
| Assets: | | | | | | | | |
| Investment securities available-for-sale | | | $ | 2,390,040 | | $ | 2,126,851 | |
| Interest-bearing balances due from depository institutions | | | | 4,667 | | | 5,614 | |
| Investment in stock of Federal Home Loan Bank (FHLB) | | | | 71,299 | | | 55,245 | |
| Loans and lease finance receivables | | | | 2,652,493 | | | 2,099,312 | |
| Less allowance for credit losses | | | | (23,299 | ) | | (23,154 | ) |
|
| |
| |
| Net loans and lease finance receivables | | | | 2,629,194 | | | 2,076,158 | |
|
| |
| |
| Total earning assets | | | | 5,095,200 | | | 4,263,868 | |
| Cash and due from banks | | | | 130,321 | | | 118,011 | |
| Premises and equipment, net | | | | 40,657 | | | 34,392 | |
| Intangibles | | | | 12,116 | | | 5,961 | |
| Goodwill | | | | 31,816 | | | 19,580 | |
| Cash value of life insurance | | | | 72,037 | | | 69,014 | |
| Other assets | | | | 84,965 | | | 38,878 | |
|
| |
| |
| TOTAL | | | $ | 5,467,112 | | $ | 4,549,704 | |
|
| |
| |
| Liabilities and Stockholders' Equity | | |
| Liabilities: | | |
| Deposits: | | |
| Noninterest-bearing | | | $ | 1,386,972 | | $ | 1,336,937 | |
| Interest-bearing | | | | 2,060,971 | | | 1,591,087 | |
|
| |
| |
| Total Deposits | | | | 3,447,943 | | | 2,928,024 | |
| Other borrowings | | | | 1,510,960 | | | 1,197,290 | |
| Junior Subordinated Debentures | | | | 99,659 | | | 82,476 | |
| Other liabilities | | | | 53,179 | | | 13,495 | |
|
| |
| |
| Total Liabilities | | | | 5,111,741 | | | 4,221,285 | |
| Stockholders' equity: | | |
| Stockholders' equity | | | | 368,926 | | | 319,739 | |
| Accumulated other comprehensive income | | |
| (loss), net of tax | | | | (13,555 | ) | | 8,680 | |
|
| |
| |
| | | | | 355,371 | | | 328,419 | |
|
| |
| |
| TOTAL | | | $ | 5,467,112 | | $ | 4,549,704 | |
|
| |
| |
CVB FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited)
dollar amounts in thousands, except per share |
|---|
| For the Three Months |
|---|
| Ended March 31, |
|---|
| 2006
| 2005
|
|---|
| Interest Income: | | | | | | | | |
| Loans, including fees | | | $ | 44,292 | | $ | 32,380 | |
| Investment securities: | | |
| Taxable | | | | 20,737 | | | 18,703 | |
| Tax-advantaged | | | | 6,245 | | | 4,087 | |
|
| |
| |
| Total investment income | | | | 26,982 | | | 22,790 | |
| Dividends from FHLB Stock | | | | 800 | | | 475 | |
| Federal funds sold | | | | 32 | | | 4 | |
| Interest-bearing CDs with other institutions | | | | 26 | | | 34 | |
|
| |
| |
| Total interest income | | | | 72,132 | | | 55,683 | |
| Interest Expense: | | |
| Deposits | | | | 13,201 | | | 5,061 | |
| Borrowings and junior subordinated debentures | | | | 15,106 | | | 9,998 | |
|
| |
| |
| Total interest expense | | | | 28,307 | | | 15,059 | |
|
| |
| |
| Net interest income before provision for credit losses | | | | 43,825 | | | 40,624 | |
| Provision for credit losses | | | | 250 | | | -- | |
|
| |
| |
| Net interest income after | | |
| provision for credit losses | | | | 43,575 | | | 40,624 | |
| Other Operating Income: | | |
| Service charges on deposit accounts | | | | 3,291 | | | 3,042 | |
| Financial Advisory Services | | | | 1,845 | | | 1,678 | |
| Other | | | | 2,593 | | | 2,359 | |
|
| |
| |
| Total other operating income | | | | 7,729 | | | 7,079 | |
| Other operating expenses: | | |
| Salaries and employee benefits | | | | 12,720 | | | 12,833 | |
| Occupancy | | | | 2,029 | | | 1,998 | |
| Equipment | | | | 1,745 | | | 1,744 | |
| Professional services | | | | 1,273 | | | 1,025 | |
| Amortization of intangible assets | | | | 588 | | | 296 | |
| Other | | | | 5,115 | | | 2,488 | |
|
| |
| |
| Total other operating expenses | | | | 23,470 | | | 20,384 | |
|
| |
| |
| Earnings before income taxes | | | | 27,834 | | | 27,319 | |
| Income taxes | | | | 9,594 | | | 9,618 | |
|
| |
| |
| Net earnings | | | $ | 18,240 | | $ | 17,701 | |
|
| |
| |
| Basic earnings per common share | | | $ | 0.24 | | $ | 0.23 | |
|
| |
| |
| Diluted earnings per common share | | | $ | 0.24 | | $ | 0.23 | |
|
| |
| |
| | |
| Cash dividends per common share | | | $ | 0.09 | | $ | 0.11 | |
|
| |
| |
| | |
| All | per share information has been retroactively adjusted to reflect
the 5 for 4 stock split declared on December 21, 2005. |
CVB FINANCIAL CORP. AND SUBSIDIARIES
SELECTED FINANCIAL HIGHLIGHTS
(unaudited) |
|---|
| Three months ended March 31, |
|---|
| 2006
| 2005
|
|---|
| Interest income - (Tax Effective)(te) | | | $ | 74,152 | | $ | 57,000 | |
| Interest Expense | | | | 28,307 | | | 15,059 | |
|
| |
| |
| Net Interest income - (te) | | | $ | 45,845 | | $ | 41,941 | |
|
| |
| |
Return on average assets | | | | 1.35% | | | 1.58% | |
| Return on average equity | | | | 20.82% | | | 21.86% | |
| Efficiency ratio | | | | 45.75% | | | 42.73% | |
| Net interest margin (te) | | | | 3.62% | | | 3.96% | |
Weighted average shares outstanding | | |
| Basic | | | | 76,460,288 | | | 76,393,381 | |
| Diluted | | | | 76,997,334 | | | 77,163,021 | |
| Dividends declared | | | $ | 6,883 | | $ | 6,775 | |
| Dividend payout ratio | | | | 37.74% | | | 38.27% | |
Number of shares outstanding-EOP | | | | 76,479,277 | | | 77,083,741 | |
| Book value per share | | | $ | 4.44 | | $ | 4.21 | |
| March 31, |
|---|
| 2006
| 2005
|
|---|
| Non-performing Assets (dollar amount in thousands): | | | | | | | | |
| Non-accrual loans | | | $ | 0 | | $ | 9 | |
| Loans past due 90 days or more | | |
| and still accruing interest | | | | -- | | | -- | |
| Restructured loans | | | | -- | | | -- | |
| Other real estate owned (OREO), net | | | | -- | | | -- | |
|
| |
| |
| Total non-performing assets | | | $ | 0 | | $ | 9 | |
|
| |
| |
Percentage of non-performing assets | | |
| to total loans outstanding and OREO | | | | 0.00% | | | 0.00% | |
| Percentage of non-performing | | |
| assets to total assets | | | | 0.00% | | | 0.00% | |
| Non-performing assets to | | |
| allowance for loan losses | | | | 0.00% | | | 0.04% | |
| Net Charge-off (Recovered) to Average loans | | | | 0.00% | | | -0.07% | |
Allowance for Credit Losses: | | |
| Beginning Balance | | | $ | 23,204 | | $ | 22,494 | |
| Total Loans Charged-Off | | | | (20 | ) | | (89 | ) |
| Total Loans Recovered | | | | 150 | | | 771 | |
| Acquisition of Granite State Bank | | | | 0 | | | 756 | |
|
| |
| |
| Net Loans Recovery (Charged-Off) | | | | 130 | | | 1,438 | |
| Provision Charged to Operating Expense | | | | 250 | | | -- | |
|
| |
| |
| Allowance for Credit Losses at End of period | | | $ | 23,584 | | $ | 23,932 | |
|
| |
| |
CVB FINANCIAL CORP. AND SUBSIDIARIES
SELECTED FINANCIAL HIGHLIGHTS
(in thousands, except per share data)
(unaudited) |
|---|
| Quarterly Common Stock Price | | | | | | |
|---|
| 2006
| 2005
| 2004
|
|---|
| Quarter End | High
| Low
| High
| Low
| High
| Low
|
|---|
| March 31, | | | $ | 17.16 | | $ | 16.18 | | $ | 17.04 | | $ | 14.08 | | $ | 13.63 | | $ | 12.10 | |
| June 30, | | | | | | | | | $ | 16.10 | | $ | 13.60 | | $ | 14.05 | | $ | 12.58 | |
| September 30, | | | | | | | | | $ | 17.52 | | $ | 14.43 | | $ | 14.96 | | $ | 12.93 | |
| December 31, | | | | | | | | | $ | 16.72 | | $ | 13.90 | | $ | 17.87 | | $ | 14.24 | |
| Quarterly Consolidated Statements of Income | | | | | | |
|---|
| | 1Q
2006
| 4Q
2005
| 3Q
2005
| 2Q
2005
| 1Q
2005
|
|---|
| Interest income | | | | | | | | | | | | | | | | | | | | |
| �� Loans, including fees | | | | | | $ | 44,292 | | $ | 42,432 | | $ | 38,341 | | $ | 35,268 | | $ | 32,380 | |
| Investment securities and federal funds sold | | | | | | | 27,840 | | | 26,039 | | | 24,732 | | | 24,454 | | | 23,303 | |
| |
| |
| |
| |
| |
| |
| | | | | | | | 72,132 | | | 68,471 | | | 63,509 | | | 60,073 | | | 55,996 | |
| Interest expense | | |
| Deposits | | | | | | | 13,201 | | | 10,060 | | | 7,539 | | | 6,247 | | | 5,061 | |
| Other borrowings | | | | | | | 15,106 | | | 13,991 | | | 12,950 | | | 11,589 | | | 9,998 | |
| |
| |
| |
| |
| |
| |
| | | | | | | | 28,307 | | | 24,051 | | | 20,489 | | | 17,836 | | | 15,059 | |
| Net interest income before | | |
| provision for credit losses | | | | | | | 43,825 | | | 44,420 | | | 43,020 | | | 42,237 | | | 40,937 | |
| Provision for credit losses | | | | | | | 250 | | | -- | | | -- | | | -- | | | -- | |
| |
| |
| |
| |
| |
| |
| Net interest income after | | | | | |
| provision for credit losses | | | | | | | 43,575 | | | 44,420 | | | 43,020 | | | 42,237 | | | 40,937 | |
| Non-interest income | | | | | | | 7,729 | | | 5,273 | | | 7,861 | | | 7,293 | | | 7,079 | |
| Non-interest expenses | | | | | | | 23,470 | | | 23,926 | | | 22,679 | | | 23,064 | | | 20,384 | |
| |
| |
| |
| |
| |
| |
| Earnings before income taxes | | | | | | | 27,834 | | | 25,767 | | | 27,766 | | | 26,115 | | | 27,319 | |
| Income taxes | | | | | | | 9,594 | | | 8,593 | | | 9,499 | | | 8,637 | | | 9,618 | |
| |
| |
| |
| |
| |
| |
| Net earnings | | | | | | $ | 18,240 | | $ | 17,174 | | $ | 18,267 | | | 17,478 | | $ | 17,701 | |
| |
| |
| |
| |
| |
| |
| Basic earnings per common share | | | | | | $ | 0.24 | | $ | 0.22 | | $ | 0.24 | | $ | 0.23 | | $ | 0.23 | |
| Diluted earnings per common share | | | | | | $ | 0.24 | | $ | 0.22 | | $ | 0.23 | | $ | 0.22 | | $ | 0.23 | |
| Cash dividends per common share | | | | | | $ | 0.09 | | $ | 0.09 | | $ | 0.11 | | $ | 0.11 | | $ | 0.11 | |
| Dividends Declared | | | | | | $ | 6,883 | | $ | 6,877 | | $ | 6,722 | | $ | 6,716 | | $ | 6,775 | |
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 presentation with non-GAAP presentation.
The following table reconciles the differences in net earnings with and without the settlement of robbery loss in conformity with GAAP.
| Net Earnings Reconciliation (non-GAAP disclosure): | Three months ended |
|---|
| March 31, |
|---|
| 2006
| 2005
|
|---|
| Net earnings without the settlement of robbery loss | | | $ | 18,240 | | $ | 16,016 | |
| Settlement of robbery loss, net of tax | | | | --- | | | 1,685 | | |
| Reported net earnings | | | $ | 18,240 | | $ | 17,701 | |
|
| |
| |
| Settlement of robbery loss | | | $ | 0 | | | 2,600 | |
| Tax effect | | | | --- | | | (915 | ) |
|
| |
| |
| Net of taxes | | | $ | 0 | | | 1,685 | |
|
| |
| |
We have presented net earnings without the settlement of robbery loss to show shareholders the earnings from operations 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.
