CVBF - Earnings call transcript Q4 2017

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Operator

Good morning, ladies and gentlemen, and welcome to the Conference Call this morning to discuss CVB Financial Corporation and Community Bank's agreement to merge. My name is Anita and I'm your operator for today. At this time, all participants are in listen-only mode. [Operator Instructions] I will now like to turn the presentation over to your host for today's call, Christina Carrabino.

You may proceed.

Christina Carrabino

Anita. you, Thank everyone. morning, And good Thank you today. joining us for Chief With Financial and Corporation the Community call Bank. President Chief CEO Dave from CVB this morning and Vice are Executive Officer, Allen me Officer; of and And Misch, on Executive Nicholson, Financial Chris Myers, President

the included visit and obtain Our of a will was the the tab. our announcement www.cbbank.com merger Investors press information to today the on released please website copy click at comments that release, refer in yesterday. To

We please investor presentation listen to our also download a this on slide to presentation. and will be go showing a call and the copy to website section participate the webcast the of to of

forward-looking started we the Litigation let the our on speakers of presentation Safe Harbor with of me disclosures the Securities get includes contained include call Act slide the The presentation. of conference conjunction statements on read Before in some this XXXX. Private be Reform Page claim in that statements. this should forward-looking that X you today's remind call provisions will protection

other solicitation to or and sell the securities you solicitation a of or In include wish vote SX relevant CVBF, the joint proposed offer not to offer will buy transaction. with any information any of as statement documents well concerning on advise a and or does we of and an Accordingly this that constitute Form presentation that of to approval. file CVB a statement an proxy the Community addition, Bank SEC CVBF will registration as prospectus

over call the Myers. will Now I Chris turn to

Chris Myers

join appreciate call. I Welcome to Christina. you, you our taking everyone. the on Thank us time

turn XXXXXand been of combination community so by X through presentation, XX built deposit years. Community have billion. back years and a to to back have bank the combination customer now of Banks. and banks. by presentation that say to that's primarily top deposit been it of going in it's the to slide is; and Southern historic are Bank privately Business Citizens two held go this it's Community if almost If past the goes Bank in primarily you'll on we Together loan Bank, Page And left what --we're Community history. banks Valley organically customer, over should Chino one of slide you'll the is of CVB, by existence two California $X XX asset loan that goes have size over XXX for XXXX. years historic

you went factor call both will scarcity of stood XXs want We in time. the XXs recession recession test recession So whatever of you the is acquisition, merger, if that. XXXX-XX to very this the historic. We this through the and

other. We but customers each each big we against have times, cultures. each the We hire compete similar at against We times. other's We take at banks. people other's compete mostly

a And bank Southern few select someone-- a they'll doing they'll Business banks Citizens other Bank looks California, maybe but big so of at some a Community Bank when look customer lot an or alternative in at as business the or look with competitors. times a at of

ago. by of team see in to going anymore. XX this employees, is the great able All a marketplace we --probably a much world programs build years So is the my training be The deeper from quite to favorite find They acquisition today. the bench. banking I'm about each the exist wayside an bit. other don't Skilled this part part hard gone to labor in my have all-star about

Bank offering have trust offers Bank deepen management wealth be trust, Bank able to bench clients, team clients. especially Community an Citizens our very services. we all-star and us build we Community is investment to have an for product important custody, us So to expanded for Business

products those leasing equipment offer today. All not offer Bank Community home home lending. its also We does and to customers citizen's loans,

those did based mix. to the of able And to have build enjoy at enhanced products those sells. cross these to any asset and Community on we those going services. be into going revenue not model synergies So We're customers synergies are Bank on these

you the the of great One fact to loan has Community about things Bank this that deposit know is where XX% ratio. is

I'll deposits later to going Angeles strong geographic the our County is So And presentation. in we're Orange their overlap, be are Community able in to And fund tremendous to geographic loans. Los and Bank overlap. County. finally get going which to strong have primarily

cost so anticipate And we strong synergies. some

Los ratios. XX%, to reach mentioned Orange capital our CVBF. we'll values more long-standing to to we'll models been forward market turn key two X deposit our love I going still build which separate going banking the this we as corporate of least excess we're going please And that through scale that to be capital billion that And This be able presentation. geographic a is back be Angeles We two regulatory similar families in We're assets cultures to through the believe long structure. started strong power page want have of where We're We to fact core and total were ago. dollar cross have group, in is going put organic long-term and the the to value two is capital. as excess our of peer maintaining We're we at to capital. increasing to Southern ratios Citizens our entities pro-forma. enhance in be. were Now XX share with about middle at organizations earning get combination XX% right efficiency to rationale. billion shareholder Complimentary deploy both over have the lot going cycles before. capital $XX business threshold. of $XX able be our and through strong California and years greater County. going transaction The by markets primarily we And

and company, Many in XXXX, I Financial this of have but page consecutive detail. CVD won't X of proud Citizens of through our to founded Corporation, very go we that Turning Bank in The overview we're know we're XXX the fact you the presentation. a both Business of California. owners, the I focus businesses stand try that throughout Southern you point relationships profitability, will time. small highlights. We're to the of and business we California. long-term medium-sized Central quarters the of test to and and financial form XX in And locations on

Our running return on ratios adjusted revaluation the deferred average taxes XX%-XX%. end year for at the our XXXX. assets, And X.XX% if of we for efficiency the about was

to of going Community to ratio If the Bank at Dave? about coming for Bank. Misch, efficiency Two opportunity I'd presentation turn that's over look X and talk great who's together. you the us. turn to Dave good a page to like now banks Community

Dave Misch

morning, are just And four we like financed to and owned good Actually Howard the first Chris. to by transaction founded is Bank you which sale mixers Community of XXXX Thanks I Cooke. think cement I'd points Charlie or that everybody. that in as mentioned this relevant about I'm then. they were know five Chris key highlight back

largely years founded ever we've similar Bank closely there by things held so our of as the business So and many having ago. that Business is been are Citizens as that's that that cultural to lot family point, been well way. about a since are bank And a board oriented our

accomplish serving we Second point with businesses, very value since things. time that's that what adding doesn't. on systems that focused relevant well those in I and Again, have and and bank small business medium-sized is businesses fits is think helping

from see almost and our can footings owner-occupied You XX% here you real are that know our statistics of estate. C&I

Community Bank years. Third managed point conservatively is very has been over

credit going momentum some don't stuff a get years. on, last historical you are it - service. had in loans, lot both quality good good past of make if other think and points, we And this We then last our we year have look we And back. of I take the shows deposits, very we've and this few

In loans grew last fact, grewXX X.X%, DDAs %. year

loan So deposit you and fast with enough in our we can from with haven't that the helps loan That And ratio grown merger DDAs see our to up XX%. us keep was deposits regard. Citizens and growth.

Chris, back to So, you. thank you,

Chris Myers

be for well. Dave the the Q&A And as end available to is Yes. call of here going at

it full-service we've is next is back Business ever loan the we've year-over-year. locations. have And about is, locations. in that difference Barbara. for create $X.X big opened February big teams that then and right we a in past a done novo if Los in bank. San office it's their can acquisition plan in in assisted we'll for that XXXX. grow our transaction, We one will Oxnard, five largest The scale, three see its up branch fee Same go in call the XX us of Bakersfield strategy. we objective centers. acquisitions in through a and one This we you to hiring we branches backyard, assets them to acquisitions, deposits through by in five they de a if is assets, also we Stockton you see Diego in at slide San financial and So had within business turn then where XXXX here you over an half doesn't And two a in And since goes the growth three is in page convert then those their new Citizens are. the at of new finally store our and And Bank Santa will the four grow was change beauty months. income what loans right five in bottom, all to we've to based Their strategy growth ways. $XXX before. the our look size, can and Bank X which you markets sales, is with grow really FDIC as of But production to was done we've one from million it XXXX. one is continue Angeles, to our done deal and to And that the Joaquin in billion years, offices

of and similar to comfort that able us being execute are gives cultures. plus a level, So this lot

of Turning you to will, we guess will at over the the or day the assets. I in largest California headquartered page with billion in at X, least time merger, bank end of at $XX eighth be if the

LA, excited of about in a lot and is page Through of City are Clarita, Community which to need now. XX-XX a already clients City trying of merger, of hiring been seven Orange long this that Fe be the which extremely right we're prospects Turning new east is that. Santa north team this that Commerce Angeles, market in locations; get in I'm We a I've are is these get County. to have to XX. LA. east to is Bank Santa another Century Huntington just that Los North which miles existing Springs time. downtown all going West Beach, West of and within locations market, we for market.

much going we're fabulous we're Burbank, it's from but keep because we're of a Inland Empire. our of offices, east with that's and and about we both be very think then for to to community miles about to is Burbank I way three easternmost their finally, to on kind Desert, have location, office Redlands, which one affluent too deal locations those in miles of just simply it's the us. loans your one of deposits office. half Palm so market away it's up a in the XX-XX in their going And and in biggest

Bank added going locations new Citizens to Business form seven these So XX locations total. locations in the that be to are XX to

page branch If have a you XX, overlap. we turn substantial to

forth, X consolidations potential the offices We locations first as you same looked both of -- a these have we each you list, X this that and and align those actually are if X they're within identified them other, four two locations and the at miles on and on of back street. half have

right. So from each we're just the down street other,

So it these. really makes sense to consolidate

making we're We but going over and particular their have versa, the office decisions into our them communicating decided on next be consolidate or office those not whether accordingly. office vice any couple months to we'll

adding very, teams important. in turn map very we're depth So together nine a and you of the and go really synergy locations these map. the about page locations the we mean have blending two are. page locations eventually I all to and a excited kind also X side show will locations On this in. to where of believe go and XX, still really talented that will personnel to XX. all Please these we XX I'll

and just north stretches You south locations Orange And downtown to far dots in is can you is can XXX Financial density new as what's a not San the CVB our there. from --those about. the seven Bank, within which But new in see as up We're as our markets. that. shown Stockton, miles Citizens excited County which I as just north Fresno here is that loan Madera, about see of represent another called Diego production far north talked blue office LA Business of the town really

to a lot Turning give to over who's Nicholson, you page XX. transaction summary bring our to a talk I'm about going CFO going Allen of this and numbers. Allen? to

Allen Nicholson

for $XX.XX, will Board million issued for or Bank consideration cash Merger on XX.X% Community Financial fixed shares anticipate CBB of Financials close total. on appointed is of approvals. cash in XX/XX the in shareholders. Friday's X.XXXX the $XX Based third merger be XX the closing stock Chris. in price of the Directors after of quarter Financial aggregate Thanks, a split Financial transaction Community per and stock based and closed. early ratio be approximately value to exchange consisting ownership to would director upon million merger would shareholder based One upon a for XX.X% of of million. CBB from CVB after closing an on of for share and transaction Pro be a CVB customary $XXX.X XXXX shareholders Community forma regulatory $XXX.X of We

expenses discount to page a interest portfolio based our assumptions. and the Bank's opportunities. of savings Now a of $X and also X.XX%. expenses. deposits, projections be an estimated no some loan is or financial The $XX.X A non core Community rate terms is million X% on assumed potential looking assume includes but approximately transaction approximately Community's XX Xmillion. We've merger estimates finally or $XX million. impact interest million of moving an credit identified estimated in transaction XX% to revenue non-maturity to of at initial have of discount are enhancements Initial X.X% total $XX deposit intangible discount at market fair the X.X% estimated which cost of And

and at from premium. transaction page based Financial book $XX.XX, CVB XX% core on stock a Community's multiples X.XXx the deposit ratio Looking closing and share XX, on per price the of tangible valuation a value fixed exchange Friday represents

with XXXX In terms X.X XX% XX%. the And when exceed Based of revaluation is earn deferred XXx an book expected approximately XX% earnings charge. financing tax earnings rate back internal to to of approximately be the merger, Community's EPS cash value stock, multiple, the their price tangible The XX%. of return initial accretion on is XXXX expected years. dilution the excluding is is XX%

combined combined are we elected to As XX% ratios in pay to will been CVB a capital, have with If have value and going XXX% merger pro earned has year forward. capital been the Financial that have consideration has approximately On book back. a potential of tangible significant excess of a deal, stock their cash. merger company forma generate X.X internal amount X% consistent would earnings dilution will peers basis, capital a with a the

generate and of average profitability at XXXX common X.X%. looking on fourth to assets tangible And Profitability return XX%. a return the annualized XX, consolidation by page of to estimated quarter capital. average is forma equity of pro merger post Moving and on

see capital levels it levels On the within here forma our total capital with and turn of you of X.X%, leverage that continue peer Chris. I'll estimated ratio also to closed be bottom a a pro risk-based to back capital ratio XX%. now well

Chris Myers

Allen. Thanks,

of the they compelling When that's of and doing They're a talk things been one look here, for organically long for saw due at through So let's don't XX we long-term page us. about a and opportunity. has business diligence we go business customers. the integration to very time, They're lot that --Community grown.

but was multiple, a mergers ago multiple culture formed and different that is an Bank together. organically had story They to it by a develop years XX This is This and bank last five the looking It's share little won't in did time. have we story. to I overlap donations culture. and we both communities capital those, over maybe funny they strong because any and do is the think been And some mention nonprofit's we've as grown at for the both that lending it's and years. be this of both on. marketplace, I'll be had the going some they've that then were the to years; such a I it able last of haven't long we lending put think raising names a so-- our a nice I different give seven stuff a C&I this

build Balance about the our want kind our transactions. sheet strong when and We've -- XX% just is of got see our we'll So earnings, along talk Capital to of want X.X%. just forma relationships We assets. gets synergies continued. we you lot maybe average a based to strength on core return to strength; objectives deposit about their way, into I that company. relationship a not pro loan lending long-term And mean the capital.

need rates and come organic an and because I paying there's make $XX somewhere and a That created XX% in year room over $XX have shares now. So X% X.X% growth we'll out little if about we're assets dividend earnings. year. think organic in in dividend, a $XXX it's capital every later would company. If dividends, coming $XX and million a between billion their And and our year million total to assets is XXXX. billion Well, we annual coming pro million XXX growth simply That's increase to are the let's organic into does return paying probably $X.XX for a $XXX is asset million some a at X%. million-ish of we out I little into year over quick to million that's us math what right $XXX fund mean do don't XXXX, a in forma dividend be going can $XX on average over

dividend dividend to going our we all think Certainly board up comfortable an So that's get be that very deal ratio. increase think with put at to and together do historically I XX% XX% time. there's I that this once payout we're to the to opportunity

no really in that of a I do personnel talked So the operations Business associates. of compelling believe promises think just about all-star a is really a future I future. Citizens Community time We've long-term not Bank dividend at part that's this deal and and the team and same potential Bank there's but increased

The other both same core thing is is Pfizer. which systems We're the integration. on processor

we'll to systems. than and a subtleties little but have different on two being lot adjust those that runs are there it's Now how for better to

going new great sheet this optimize ratio, be that's lot terms sheet less opportunity and distribution a in So new to Community and Business Bank and loan balance et for really terms for be will Community's expanded a our products in customers Bank in to and locations rigorous disconnects. XX case our enjoy people is our it'll our service and right-size to of and for of Citizens locations the seven balance deposit any capabilities capital, cetera. funding to which

$XX Turning to page XX, crossing threshold. billion the

And what $XX know, crossing going do a less team so you for prepare a the year to formed billion are threshold. about saying, ago I little we

been working to already. be this million expected on about to accelerate So are one-time we've going our $X This costs million. deal plan; is to $X

these of the is only the that small are areas requirements And to is recurring will the identified the of over expect amendment can focus $X see $X.X Most some and Bank, expected a that to that million Business We've per $X a $X year. We revenue this. Citizens to on you have lost million expenses And is between Bank. to Durbin below Community regulatory of to be million to supervision. portion year. million as

committee we leading not internal threshold July billion the scheduled running be $XX correct bank close We of the quarter billion. will our We to requirements in we have within XXXX, as that of until of the first anticipate XXXX. some August will Is and Many if subject of now? we're executives $XX us of that on $XX in that. and billion senior off a

Dave Misch

XXXX. reporting be will DFAS The

Chris Myers

XXXX, okay.

Dave Misch

of a becoming third bank quarter on second XXXX. Based in the covered and somewhere

Chris Myers

got Okay, all right. it,

bank. Citizens Inland Turning always loans to you Empire the that see or this Inland bit of through DM four in basically emphasis stretching some right us strongly million, more to look and of loans side as go more not County's Empire, represented that lot our but the in geography are XX% can emphasis been we'll But page $X.X because very at little Orange XX. X there's billion billion puts loans or total in strong, any you $ loans really the the here. from have a LA on County want a LA by the I markets County in $XXX if of the in

goes for repos cost page us for deposits of agreements sweep geography. is us customer by have the XX our XX, overnight Turning us. about the investment, a are repurchase and which we to we that basis of that basically repos really two Between an is those here as include points funding into average

customer we few might commercial large So everything then those a and we that are have deposit commercial balance where we put they're into a usually deposits overnight, sweep agreement. peg million a dollars and we repurchase sweep and

truly of it borrowing but $XXX us deposit. a deposit it's is a million, So our about shows

between and percent the those represented in Valley by County, about Orange we XX% then of XX.X% Inland LA Central are XX.X%. XX% which of two in Empire billion deposits and $XX in So County

almost deposit concentrations each bank counties within those a of and strong So locations. very based and

XX% will will and asset Turning billion before. way by assets X% all at and the is securities was to in the CVB chart to page you other $XX be and composition focus the at this right pie XX XX%, projecting assets. here, XX, I there itself we're XX

commercial owner-occupied to XX, at estate. of loans CVB And real estate if here it see in of loans. we really helps XX% the composition, look chart, you and left the our XX% left chart, have between pie page that commercial real yet is you us C&I loan can Turning our is

the let's way can the So forma you you middle. Community pro look a right, Bank the in but all the to go see take at

XX% and real owner-occupied in at commercial too you have the their If look C&I they of XX% they're estate. is yes, and loans owner-occupied, C&I

it greater loans same pro in XX% real have share estate. similar have or They in amount a On both gross do, they we commercial out C&I were and in our at a we close loans XX/XX/XXXX. at way the both higher proportionally $X.X of lot the C&I. concentration basis, projected really and than comes in Total at owner-occupied. XX% a we our forma about where just loans same we owner-occupied of have So except billion concentrations of

In I terms the is Bank the where deposits XX% kind market deposits, reverse helped occupied. another on true Community the deposits the a with savings, us of C&I money X%. will owner and XX% CVB think helps non-interest Community bearing portion in funding non-interest in of of consolidated side Bank still basis now stronger will a bearing have lot be our

are deposits. and you our core Don't that deposits, agreements. we billion this deposits, XX% so non repurchase strong are -time $X.X million shows have in really So about in forget deposits of very until customer here those you up $XXX

money So market. a really like

and third couldn't At down those week did team sure shareholders, teams buying comes our we're point grow beyond potential Community our to of view. now own acquisition prevention. I last out my But everything for because which execute and then big together, customers' on name on the there. we deposits, here our And it talk day to Leadership integration, acquisitions XX. of in our banking core objective and I to backside consolidated to we our expenses bank, changed say is making Bank. our make backside. Bank about come that put smoothly. rolled word loans critical Community an think you watching want the our our the leadership were and $XX of I But bullet the together our company execute Prepare and relationship one the tell our to Turning Conference fraud grow strategy, we is sure billion view I to through I page need is at I've that bank critical the

hard up. I our before communicate and due a following files to so outstanding. of totaling for like worked both this loan of reviewed We I'd on just side. on wrap the total deposit diligence questions, the acquisition kind And We to loan XX% get credit

and are deposit We profitability. $X relationships more. totaled system deposit into deposits the new return approach. in It on also than to interview basis am assets analyzed truly total all no my we because presence. depth merger locations million make is sub a this to funding that reviewed will strength will deposit excited about business achieve banking best where billion threshold add about products lending team. X.XX cross plan to integration. and team CVB personal with average around with merger some CVB's I reiterate on no have all-star to seven associates later or quarter analyze allow I strong will mapped XXXX scale Community again. have as This personnel pro the XXX case-by-case forma markets as our of and $XX and refer total a physical of the account to assets $XX decision I post billion. merger my talent to their services Again, This deposit fourth again, our relationships. combine business all it Bank also And goal enhanced a capabilities. and adds This We We this

and I to might Dave Allen, are you that Now any happy answer have. questions

Operator

[Operator O'Neill. Instructions] The question today Sandler from Aaron ahead. Please comes go with Deer

Aaron Deer

the Guys Hi, morning. and deal. good congratulations on

some you revenue possible, suggested So metrics. enhancements included are I revenue starting if the in on side, your not guess with but

in you've lending to same of so Just do year company. you could growth better growth annualized pace is this your wondering about Do that combined kind leasing wealth you terms do see past you be the or outlook trust or in could or of as going you sense going kind does guess a -- little opportunity of the at give growth X% expect And that greater where it where a run us affect I or -- see ? you're capacity, that management, best a if it's you talked over where all? of of that about maybe see kind on it that front?

Chris Myers

growth deposit loan organic about X% to combined there. objective, is X% --and that I'm more talking think of I of question, kind a growth good but lot and think the of I

institutions things. that focus take what don't of our are execute both continue market markets. in and to various on new lot We get We into do. and a on focus, focus continue we is we're our to share really We good at what

So people management, loan train and how are synergies us services, their them, I able and our in sell things in or Bank custody more them help mentioned selling about right it's cross there program have sell these train quiver products. going do and those. leasing. assist think to and to all be home wealth for to equipment trust more team their new you the those on These Community arrows really all to trust, get to there revenue to the investment we're And in

of but And the we service. think something small of business We strategy it's of not to some time but take medium-sized synergies we're businesses, first of but have the economic built put to owners. going in those providing a are capturing those, in whole through not overtime, deal. that going six It's lot be our our clients revenue be and get here able do there'll about the to months wallet to it's substantial that and the

Dave Misch

There's their Community of people to the If that us the very Bank, a off prospects be children, for us that base, network our couple to to thing I client that trustee and for way times our Misch pass sell distribution mortgages. successfully. demand people down We've very could very specific. I would tried our for a that be other which from there. big There's first and our add This transitioning factor. not that, areas Dave pull could trust among two helpful us think that's to is very well, a business, and just appealing a businesses, from as custody that lot would that helpful

Operator

The Clark ahead. with next Matthew Please Piper question go from comes Jaffray.

Matthew Clark

need of there's you good if if are with rework it sheet Hi, there's morning. attrition kind to again assumptions need anything if around balance do Community to Bank's any the what you if Wondering any? anything and underlying

Chris Myers

Yes.

look our lot looking I'll want their at organic And way. to deposits, on business going their to a after I higher with We strong also think that and and price that at certainly making our of we will begin -- the along quickly growth. organic funding depend our decisions borrowings are be growth.

Community board XXXX, loan Bank in think I at to we'll firing And fantastic going through than And XX% take things were a metrics CVB leader think had Bank's can loan company. right be funding and at all hoping are was that growth once rates an now. stronger I I on partially the case, And dollars executives. or and CVB's settled investments things I very into which that get CVBF Community look how financial strong They I this of I in forth. deposits or we're cylinders. fantastic them our this to But a They felt some today. one were XXXX joined had When back joined I I'm XXXX, need the home always as about story told we the industry a that. we in personally that's Community they that, billion then. XXXX, company. get through be late funding I've and don't. $X.X were I were the bank those and deposit to was debt story that the ratio vulnerable look federal $X.X billion much Bank marketplace going And if tell But there. and so

assets is positive billion do operating we buy company, and can't today and so leverage. from when in the billion securities. borrow really Bank Loan I And billion Home you but have positive because Well, Federal margin joined $X did we $X were that and the really assets all we're $X.X

of a company. I in mission on that the time. So strengthen federal that and XX%-XX% we've growing by really our non-interest loan then bank increased $X.X about to bearing that. We core this debt of XX back deposits over was deposits. our We all And embarked billion year period of from back XX%-XX% done to home deposits paid

being firing tremendous start word can an today at They're great Community I take I our at strength is at funding. analogy strong too strengths and their side, the their in weakness will. customers, area I good but all if but that look credit a look Bank look their I you And cylinders. almost funding we on a so at similar as look

go grow and mobilizing And in so ahead after we're deposits to strong I'm getting my and our going deposit we're a way. teams, it

$X.X replacement you The growth. pretty So I our Community about funding know think that of is funding objective core core some And I want anything exists that don't Allen Bank. to think I in is news here of is deposits Community my core - call deposit billion with core good at get I'm expectations will that. the billion tempering is add I to to to what deposit but non to to investors The make sure subject good it and from I $X.X the back on really train replace rest have here drive Bank.

Allen Nicholson

No, replace few last over cost exactly lower debt business we've that I is watch what with And they Again, if the three you replace or low-cost we including it's time to Home I embark four we've days, to tried this journey. have just borrowings done deposits. on Federal think be able Loan that think that's funding. a we'll Bank with done years,

So we same the direction. didn't are but make we headed in quite it

Chris Myers

organic has And liked had of than we last did CVB and over And that. half in about loan year Community also growth side. X% organic your we was growth

Matthew Clark

talk I confidence can have of the Great will on you million quickly crossing the $XX step anticipate guess you those numbers what's expenses, in expense embedded up for $XX and to and billion? recurring what billion, guess you're I enough continue million $X crossing now then of $X that that's the level to

Allen Nicholson

Yes.

planning in this confidence done those of lot level estimates. a of high point. a at have We've We

to as well For new needed. of of software, people support we related will on from as the going we as -- the going incur some some well those a need vendors most do potentially sort but work we to people part outside expenses perspective, third-party you're are people be that to as certainly vendors to certain

Matthew Clark

like bit needs little Bank assume a kind to just want rating done needs then me and CRA looks last double one just the to to Okay that but remedy Community regulatory and be only for of what check. issue of improvement. that's guess I

Chris Myers

with obviously about much going agencies together meet that with the last Community for already are that have them. on pretty last and with that the know our this comprehensive been to of CRA Bank And now and very And a year plan and in Community's week go for been aware and and let almost I discussed a with down about Chairman sat that the but working and year. the on We Citizens Misch putting right. do regulatory know we're hard at and to I'm Chairman guys want and address a you Dave Yes. instead I this up we talk have I of Dave's Dave very regulators second, issues. working And know did Business I that

So we're happy since here last year.

Dave Misch

while our we've to with that forward. after loans review So than in companies making it terms last set a that aggressive so that we've improvement go you can that objectives $X created where less of and getting got terms proactive area we plan to area a year bulked very there it it's been with million. up out there's we've kind lend of revenues target -- less and very to We've our and special up we going needs staffed products of know area up to sure you public that some than to in of

Chris Myers

together and $ XX make regulators. We're suitable we're for and our have sure billion with plan that going one we balancing that to and that and plan comprehensive asset plan company checking think an a our take put their is and them

Dave Misch

critical And Bank I of Community are does terms would few exactly implicit it in the say in integrating show.

Operator

with comes Please ahead. go The from next question Jackie KBW. Bohlen

Jackie Bohlen

with change at Community? of everyone. addition Does morning, good Hi, the the all tax outlook rate

Allen Nicholson

to to some fully we in call. think earnings about Modestly we we're same I self consolidated still see last in the our opportunities but our range once have talked

Jackie Bohlen

Okay.

So still XX% and XX%.

Allen Nicholson

mean with XX% the merger. probably I to Yes. it's to XX%

Jackie Bohlen

$XX Okay in else been relative the presentation? new it's were and small expenses, incrementally incurred those ongoing has of are already very the laid those costs everything to that billion I any or but out are expenses know

Allen Nicholson

of Those marginal top started generally spend. what are already increases on we've to

Jackie Bohlen

composition shifting book about as think towards deposit everything How the think Okay five you LA to and lastly and the you the book like the see geographically years? else. in yourself three then next and where you'd loan just in do to about more

Chris Myers

Yes.

is an clients the Inland Empire look, and XXX we here great a foundation and Bank LA based started of lot County and great we think, here I in have bank. have a Community

to change on just now to think that time look right mind our but I feel So the we really way going headquarters for any form, shape but not under And like in is have and an is or at Pasadena will Orange which we'll it's being forward got which is. down we've tremendous is also almost you area. Newport in if where Ontario, Empire hubs Beach Inland that County Community South

a lot down there of resources We have as well.

for we've or Empire LA us. Orange those all the Southern three we like greater a area of feel we got County, at it's So California hubs County there least Inland so triangle that got and

So we locations. all key kind of on you know have some those really people

Jackie Bohlen

you see will you you gaps as within footprint novo might in the the mentioned branch LPO do into had up infill time think up about Stockton de change there? any have you then and Okay that a that between

Chris Myers

bank think what we will, can give we were eventually that of LPO, that hire I out been said in some to some and will Yes, so I pretty an an think people it opportunity we see we got and kind you alright thought major pretty bring of good they've strong cranking a business. you prove

two. we've then number And business Center pass center so So financial they number test deposit-taking -- into one. is a test go

hands places and Merced like Fresno but California, think main that close with area for So to full to Modesto for Stockton. think And the hope as ultimately Sacramento that's get up or our look XXXX I of that Bank to do maybe our I be and objective. do Community Northern we gap integrating between eventually that to then in going we that Madera we kind got would backfill now and we and

Operator

next The Zabora Group. go with Hovde from question comes Brian ahead. Please

Brian Zabora

also of estimate potential that assuming for of a dollars you for morning, of are any accretion including the you that some any on Is question maybe Good that in the as or crossing and talked that $XX you there in billion remixing the about well? estimate for XXXX. cost? part accretion funding additional that Are number XX% cost of

Allen Nicholson

what including revenue billion of will including mix be that not synergies I $XX any incur the regardless. any over since funding opportunities of are expense nor we or of income would Brian, going call both would additional we from perspective

Brian Zabora

to closing an upgrade just the and Understood will rating. you impact at need branches be timing branch Will those question a the all? that to then or on close CRA

Chris Myers

that that to Obviously don't don't believe know that and put addressed specifically program been there's wasn't a it question execute on know question, to together program and reason going we right that no why answer be we're in we'll able and to execute but offices we stick that have plan consolidate late But the very we're XXXX. is schedule. that believe wouldn't early and going plan and XXXX we a to the to plan that to our in and

Brian Zabora

capital want road? levels kind on be? up. Ultimately then maybe where lastly would and like just down great more focused where you levels you to be ratio of the which guess like and to capital Do those Okay, about capital stay would mention building and you're to you I you

Chris Myers

some level. let and -X.XX this ratios well. that Allen very feel look and our for of capital We back operating at leverage comfortable percent-ish We in tier deal. low here kind I'll ratio and come X time that one now. the over at on running we've as into the Well We'll jump been through XX%

I has conservatively profitability accomplishment. that plenty company like think of run; and kind ours a that's think of is great of same a same culture Community and capital shares for I that tradition

As far Allen? capital, to XX down total and Is like for XX or going right quarter-ish. down risk-based that XX as we're

Allen Nicholson

Correct.

Chris Myers

that we're think well. as so level I And comfortable

be to an I capital is going where basis. levels these on were meant to ongoing think probably we're So

million XXXX tarp I raised we So when repay would that tarp. any be $XXX million capital $XXX when all to in this took build goes to especially up think capital to back we excess

it. cash bank Allen? and us run million excess decrease want did we in in million I it. levels. capital deal We didn't why capital so capital, that's XXXXj. that we've building our as and able a decided to long we to were and more to of because do be as to levels United use up we - we our And go been XX% company doing in And States if of we put that took cash the to to you're raise want late third now think basis this it to $XXX been And need the normal $XXX average repaid time that right -- embedded see has Is I capital projections million tarp the put think profitability. $XXX we for on that equity going in coming on forma return pro XX right over that the by through

Allen Nicholson

correct. That's

Operator

from comes question Chiaverini go next The David Wedbush.Please with ahead.

David Chiaverini

any Hi, you thanks. as deal as reluctant the Question but closing on about approve $XX normally timing, early as quickly possibly being they July, crossing to more as mentioned regulators billion? you concern over transaction do you'll be would have the since so

Chris Myers

always don't but I know would. have they you about concerns that why Well,

talking organizations are safety strong soundness from and about very You're perspective. the two that

the economy out them lending all our these and and finally, Southern thing California. of back here a then same when in profitable one market, that that few strategy taking size you're the that's of And markets driving CRA our You're lend markets in. say in talking deposit same not relationship XX% national doing long And we're going is deposits the California. with right really of deposits in a can history. true them the is. take for to here be in. of time. they're a organizations our and have about of at are loans Central a And many about you Look, look that and think concepts We're putting Southern home two their our years two I two XXX that geographic one that, bank Over not been loans country. things banks talking that big in you're we're our lending that organizations that organizations about these in like we're the into that's talking that have and the over deploying into it We're the

resonates hoping that's the and in I'm on time we August so were and plan. July And that for

David Chiaverini

X.X value then and Great. value dilution, XX% CVBF cash have stock? have shifting tangible stock. portion over back the stock a been cash to wanted book and earn would book to wanted dilution a XX% on not level? of XXX% it as was the consideration X% that And cash Was looking higher showing the or the slide XX when Bank it XXX% at Community Why accretion the a under years Board do a

Allen Nicholson

longer about How and analysis to talked you earned buying that shares had carrying is Well of for as back. shares, view we much some a earlier, would back we how know buyback time have deploy capital deploy we've excess been would our we what else that.

view they the for back financially best we to as So us levels an from acquisition capital bringing like And capital really where appropriate use this. our we that thought were.

Dave Misch

is Dave. this stock between I were not but Citizens And indifferent indifferent great a those hold. options. would is Bank say think that we totally We to fairly

actual that's why was optimization. think I this real reason it way, done the a capital So it's

David Chiaverini

one me margin post-closing? last for at Great then all net change does sensitivity interest and your

Allen Nicholson

probably of are more change overall little assets a I more expect composition assets probably once little a also significantly, occurs, significant sensitive to Not and the sensitivity. the asset than liabilities their are but consolidation Citizens our sensitive don't Community's

Operator

D.A. comes question from Davidson. next ahead. Tenner with The go Please Gary

Gary Tenner

year. I been by you loan talked X% about ask kind Chris number Dave to mentioned that X% long you just rate of about about X.X% loans again think growth I wanted here --and that you morning. for to the X% a an Good of Community outlook a would grew that the have result you of Is in in terms growth at franchise from pace further? years or anything think in Community or perspective. in bit the as the you a go Bank the lending, aspirational organic recent there anything underwriting in slowdown portfolio us last

Chris Myers

along to the but to sure the of got want into lot be in but of is Dave's billion I of Bank help that's think I $XX We've on that to the to and on uses a going and us I not, Dave, everything going you? able loans their think way. know keep We're and processes credit. I can't look home and those completely opinion the producing I if to at And forth. fray, product flowing anything mine get under new should the get pipeline keep credit the especially Citizens the integrate so to that we coming Bank so into some they Business anything Community can we of think that way make process of terms side Citizens the with don't

Dave Misch

mean not I'm to all the due sure joking much diligence. extremely go. I I'm you not billion Citizens how I'm more did thorough from need and $XX

looked exposure and million you every significant. at above think half, pretty I

So pleased saw. with they I were they very what think

to. So we kind And shouldn't forward. that's alluded stuff similar think I I processes I Chris which mean the you want and an of think if using look implement issue going We have growth.

Gary Tenner

capacity? in this you had at I what you but don't be and Great, remaining will buying know if the Dave mentioned company

Dave Misch

but of the at be care personal remaining really be a forward so. of that's that's some have family to elderly existing company need of more thing. going won't take I I I focus kind and and No. my Honestly,

Gary Tenner

terms method? the on Okay, quick thanks. of the amortization CVI, the And in just years question there number what one be last then and would of

Allen Nicholson

don't It fingertips have you. will be I acquisitions. I in similar we've past my follow to our don't I know Gary. that up - so. can with what in done

Operator

comes James. Please The go Don ahead. with from next question Raymond Worthington

Don Worthington

guess for costs billion that $X $XX merger own one-time clarification of is I above and terms Thank you, one-time a related costs? million, good my the and over in the couple morning. $X really There's things to million to the

Allen Nicholson

not would That those it's costs. correct, be in included merger

Don Worthington

maybe Durbin the would XXXX? mid Okay the be more on and just then timing that clarification impact

Allen Nicholson

this the third year. occurs in the close quarter assuming Approximately of

Don Worthington

the year. you'd at this the Yes have $XX so end billion of

Okay goodwill and but I didn't any then see expectation of being the slides it booked? in

Allen Nicholson

be what mean? the would terms you In of total goodwill

Don Worthington

Yes.

Allen Nicholson

certainly my up Yes, with can well that on as Don well don't at that. fingertips. you exact have I follow I number now

Operator

follow-up next KBW. from question comes with is Please Bohlen ahead. Jackie a go The

Jackie Bohlen

there and at one quick dividend how if all? banks, might converge different one just the the just until last those thought schedules at close, two any is on given Hi,

Chris Myers

close? I'm pre is dividend or a closed sorry after question is

Jackie Bohlen

closed closed both CVB I be are potentially after handled? different and how might that declaration and dividend guess so pre schedule since both Community on

Chris Myers

is paying we But any of the paying to going a not now share goes meetings at and would would XXXX that Yes. after. Community every we're that Citizens and there anticipate $X.XX board CBBF dividend $X.XX any a know obviously subject any between between I change dividend again close. board I right? and forward I Is and think that that. in But I quarter share. a first about and talk quarter the paying they're that anticipate not dividends is don't change before based

Allen Nicholson

$X.XX share think I -- is we what

Chris Myers

Yes. are the of to $X.XX close. increase shareholders assuming Bank a so dividend all significant to $X.XX a going share share and post receive go we that Community a

Jackie Bohlen

pause you with the call? the spoke close then on in and point get other language the dividend schedule and until XQ current earlier they'll a all having so the at CVBF the that Okay dividend then about the then

Chris Myers

correct. That’s

Operator

to would Myers be conference I question over to questions, answer like no concludes any our appears there remarks. this turn session. And the Chris for closing and to back

Chris Myers

a geographic very for We and have today. a talent, strong depth great excited about Thank Community And forces for base, combined agreement terms Bank. and diverse everyone opportunity overlap. with We're Hey, us merger with of thank us a tremendous provide participating. will financial you this day. you customer of joining significant in our believe

Operator

This today's conference you has now attending concluded. presentation. for Thank

disconnect. You may now

CVB Financial (CVBF) 28 Feb 182017 Q4 Earnings call transcript