CVBF - Earnings call transcript Q4 2021

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Operator

Good morning, ladies and gentlemen. And welcome to the Fourth Quarter and Year-ended 2021, CVB Financial Corporation and its subsidiary, Citizens Business Bank Earnings Conference Call. My name is Michelle and I'm the Operator for today. At this time, all participants are in listen-only mode. Later we will conduct a question and answer period. is call this note being recorded. Please now your host would like Carrabino. to to over presentation the for turn I today's Christina call,

You may proceed.

Christina Carrabino

joining Quarter and Thank Thank ended XXXX. our good And year results us for financial Xth you, review today the morning, for to Michelle. you everyone.

Joining morning Brager, are Chief Allen Officer, and me Executive Financial Vice Officer. this Nicholson, President Dave Executive and Chief

of copy, included please to The in will claim our the comments refer the To the Safe financial XXXX. the obtain that on yesterday. today provisions, protection the www. a earnings the speakers at Private contained was visit announcement website Act call click cbbank.com, in released Our Litigation information Securities of Harbor on and this tab. Investors Reform

discussion for uncertainties actual and December complete year more XA, see that from forward-looking risk risks XX-K the factors to therein. XX, results And set company's particular, statements, of Form the Item cause the on our the in please materially information differ in forth ended XXXX. report may annual For

please complete disclosure, company's call. version the company's in the with Safe of release Harbor this more connection earnings For issued see

will to over Now, the Dave Dave. Brager. turn I call

Dave Brager

shareholders January Business We and Citizens safe, acquisition pleased Business another Christina. the welcome since The the the its morning, X, The and maintained you, the to performance solid of has institution. years on two customers the Bank. Bank's confirmed of associates, to over Suncrest strong Bank last earnings everyone. as high Thank level company's were of XXXX Bank and onset quarter COVID-XX in XXXX Suncrest of sound, Bank position good full-year highest delivered and to and secure financial represented Citizens our pandemic, And earnings. earnings a history. the complete And

the of and our consecutive previously Fourth cents We to per well which about earnings million share quarter $XX.X net paying per XXXth $XX.X for excited opportunities earnings of and our dividend acquisition shareholders. Central of or reported profitability. position million $X.XX solidifying our are the Quarter Sacramento Valley. a as year-ago quarter our or as the $X.XX the Quarter $X.XX of of of declared compared share. fourth market, expansion fourth dividend XXXth in representing of quarter the share the cash quarter share $X.XX $X.XX for for $XX.X net cents represented $XX.X consecutive XXXX with into it share the per Third XXXX, Greater million million for XXXX, an provides for significant or or the per quarter We per We

ended with to XXXX. In credit per recapture pre-provision increase million were XXXX. Diluted $XXX XXXX. for we million compared $X.XX million our year for XXXX, compared losses. XXXX pre-tax prior the provision share for the a For the income million were $XX.X Quarter Fourth $XXX.X year-ago of earnings the million Quarter million was income for and compared $XXX million for earnings $XX.X $XX.X with pre-provision $XX.X Net XXXX, $X.XX million for compared had pre-tax Quarter. $XX.X for XXXX, XXXX, with was

for While in losses. million XXXX, $XX.X we provision had a credit

loans. discuss let's Now,

million or quarter. Our loan to grew the but XX, real quarter, $XX billion compared December XXXX flat quarter. at fourth-quarter $XX loans, from dairy increased grew or by loan to and seasonal third to forgiveness million the the After X% in growth quarter increase of of end in of the excluding $XX.X million all the growth was $XXX.X were loans, by increase the a million be excluding end approximately and PPP billion, $X.XX third XXXX. end $XXX.X production quarter PPP loans for continued fourth third C&I in From loan growth when Loan the year-end XXXX. end of led livestock essentially And XXXX, were by compared the commercial which compared X% quarter. with estate continued strong $XX or fourth with million annualized. the loans XXXX, X%. approximately loans, Total was by approximately quarter loans in

with quarter $XXX to from approximately $XX and from C&I loans. fourth Although $XX to PPP approximately many of and compared fourth and the XXXX. it and The livestock with $XX livestock of our million continued first and of defer grew quarter. line XX% million XX% non-PPP of the of XXXX be prepay for by as the our $XXX owners near increase the quarter XX% of quarter, of modestly Xth utilization chose forgiveness the credit end declined experience, of end the end and the the in utilization of following milk was seasonal loans the quarter. Non of due at third year million than or increased quarter their and dairy million C&I end feed the -pandemic million loan The was by third occurred line the loans into our from loans approximately the with these compared by dairy of compared third - million the by growth quarter to quarter much for from at pre quarter $XXX the the of continues loans expenses. lower from Dairy Dairy SBA loans end XXXX. Xrd the loans checks by XXXX. declined grew for majority third of the end livestock rate the their

our pace in XXXX We are a high-quality similar can that we optimistic grow loan continue to to growth. XXXX core loans at

and merger estate greater defined other anticipate further assets end, an our CVB's Bank capabilities, can non-accrual enhance non-performing geography million that growth. represented loans. in quarter. At Suncrest loans basis million compared quarter fourth $X.X the quarter $X.X the loans expanded nine end, year-ago owned $X.X of prior plus had properties the non-performing lending million $XX.X total as and were with OREO We for also the with no for and we points quarter At million real

acquired quarter, fourth the which a fourth was During $XXX,XXX. of sold OREO the property during we approximately quarter at gain an

with the million loans XX $XX XXXX, million compared than of million $X.X days XX with had million. for loan we for of $X.X had year charge-offs recoveries net quarter $XX.X quarter we delinquent XXXX. the compared XXXX. $XXX,XXX with $XX,XXX During the the XX, the We million XXXX Classified of of lower September to prior compared with of charge-offs year full and were loans fourth net by $X.X quarter, compared XXth, for $XXX,XXX for quarter, approximately million loan the third were At full fourth $XX.X at net XXXX year-end had loan XXXX. for December

losses Our total credit $XX allowance loans. of approximately for our million XXX% non-performing is classified and

repurchase our would bank compared the to agreements I ago. total quarter. XX, Now, discuss $X.X $XX.X XX, XXXX, same for non-interest were $X.X like our At deposits period $XX.XX the with billion at deposits and compared billion were December XXXX, At and year-ago for September the for and billion prior XXXX/XX/XX, customer billion our quarter with $XX.X deposits. year a $X.XX billion billion

quarter, the for portfolio. During greater billion than third non-interest the fourth level balance $X.X year bearing averaged XX% exceeded balance our at the in the the fourth bank's billion of deposits $X.X loan deposits increase Non-interest were end, bearing the key quarter, and non-interest A million our bearing the for average deposits. $XXX of bank $X.X differentiator is our from billion, quarter. deposits average a

billion bank's the I three cost points growth of quarter. funds the as points by with strong third XX%% of approximately total combined the million, see XXXX an investments of capital to and and to quarter point Allen. deposit continue four and in XX% of a allowance points Allen or customer cost core annualized in from approximately to call quarter average funding We basis three repurchase customer on over prior had for credit nine the quarter, will now The discuss losses levels. than for for basis basis the ago $XXX the agreements Nicholson just year deposits turn quarter. our deposits or and and which compared customer entirely $X.X higher average basis fourth repos, quarter. fourth total This year-ago rate is the increased

Allen Nicholson

Thanks, million more quarter by the deployed Good We during excess securities fourth liquidity $XXX securities. additional purchasing our everyone. mortgage-backed David. some morning, in than of into

HTM our $X.XX sale unrealized or for result, securities, XXst. end increased as of securities third $XXX totaled billion by securities from approximately securities, to to loss Investment December securities investment the quarter million maturity billion a million. available $X.X pretax XXXX. AFS $X.X totaled the inclusive net total of for a at As billion Investment $X.XX held December XX, of of

our expected assets investments million increasing and tax in growth During third expected average of in $XXX securities from investment of HTM $XXX the on securities The in X.XX%. the of XX% fourth new quarter, equivalent equivalent earning with fourth in new million in quarter, yield the in purchased XX% with an X.XX% yield an the tax AFS portfolio quarter. resulted we to

We maintain significant continue Federal at a of amount the Reserve. funds to

Our quarter. credit fourth for than the averaged more $X billion balance

XX, security mortgage-backed As yields able beginning interest pre compares XXXX. XX/XXXX, in at percentage of an to our X.XX%, If PPP XXXX, at December XXXX. loans X%. of purchases to continue new end our loans. exceeding At X.XX% -pandemic ending have rates of securities our a yield of total remaining or for in million the expect allowance which purchase year begun excluding rise, $XX we've to credit December the as in allowance was period X.XX% When rise loans, this losses been the increase that was we to security

we the year. value allowance the acquisitions for the to addition In credit from during discounts million remaining end $XX fair at of the had losses,

economic initial December first the recorded therefore, allowance losses to XXXX, credit recapture This million, macroeconomic XXXX, pandemic. the of losses downturn changes resulted reflect compares in $XX of economic our key of due resulting economy, $XX.X from variables the to The on stimulus, from both magnitude of allowance to provisions losses Which XXXX. a For the the for This forecast in forecast million. and XX, continued the the end we Based ended as on underlying impact for of was of change not for of losses We from quality to lower loan a loan the and $XX.X quarter of loan the of is projected onset government there credit forecast macroeconomic our in full the decrease did million. credit year attributes. significant improvements the limited in wide third estimated losses. economic the in availability the in a half and vaccines, recorded provision to COVID-XX variables,

Our by These continues forecast. be U.S. a forecast, forecasts [Indiscernible]. economic blend and a upside as well of to forecasts baseline downside forecast as include produced multiple economic

downside have With continue optimistic weighted baseline heavier We forecast. risks than on to the more the largest waiting forecasts.

by grow rate X% by assumes over XXXX. increase weighted to Our X% The XXXX to X.X% forecasted for and X.X% XXXX, unemployment in then in be in declining GDP X% and forecast XXXX, will XXXX, in then and XXXX. is

position. Now, to capital turning our

by end cash income, from tax the million dividends. earnings in decrease the year, billion $XX.X $X.XX comprehensive of securities, impact available The in and XXXX. For $X net of increase due to at market including equity other to for sale the was increased million, of value primarily $XX decrease in million $XXX.X the affected shareholder’s of million

overall Our be strong. continues very position capital to

equity Our was above total our above capital ratio December regulatory requirements, XX.X%. risk-based capital ratio capital and well our are of and XX.X% ratios be our tier majority peers. common the capitalized, regulatory At considered was well XXst, one

stock stock common quarter pending repurchased stock of acquisition approximately XXXX, in the our consideration and proxy plan, of Suncrest of third which of cash issuance due solicitation repurchase acquisition closed approximately and of X.X $XXX,XXX was to September million. million our Xth January XXbX-X the the Suncrest we the of The with shares associated resulted During under terminated a in common of shares Bank. late of customer $XX.X on

stock of common Dave back Directors bank fourth-quarter further now Our new repurchase Board to previous after earnings. for turn evaluate will of as we the the discussion call for authorization acquisitions. have I'll a the our company's of

Dave Brager

the for $XXX.X credit before $XXX.X losses Net for quarter. compared million quarter $XXX.X million for quarter, Thank income was the interest you, or recapture provision third (ph). with year-ago fourth for the and million Allen

than income net quarter, fourth more Although in by interest declined million. margin net $X our income declined to our X.XX%, total as net the core interest interest grew

decrease investment for loans. Fourth $X.X average portfolio at from the on third was discount offset interest reflected by the Reserve fourth $XX.X lower million which $XXX was in the the in earning by income and average by lower in the loans acquired primarily increased fee securities, a declined in quarter. and on net income increase on driven Federal fourth-quarter million grew average $XXX from increase by quarter-over-quarter $XXX partially quarter average million. interest on from PPP assets quarter, $X.X and in million interest million, increase as Our million accretion core loans, The income by funds deposit of the investment

quarter fourth with loans of average $XXX XXXX. $XXX of had for the the balance During million an of PPP million XXXX, quarter Xrd compared

asset the to in yield of lower To asset loan decreased earning prior by decline income our Our basis quarter. core the accretion. decline in earning result basis point yields, me. was six yield compared Excuse and lower discount XX points PPP fee our a

Our balance demonstrated rates either our interest by securities. of very rising cash earning XX% significant or well at investment as assets is year-end sheet positioned for approximately liquidity with in

and Quarter the of of loans, compared margin equivalent with Fourth tax the X.XX% XXXX. paid for for XXXX our When for Our Fourth quarter, impact down the is loans, the for excluded, for Quarter, net ago the discount fourth interest interest tax Quarter year margin interest for X.XX% prior accretion X.XX% Quarter, PPP Third on from was X.XX% adjusted acquired X.XX% of was quarter. net the non-accrual and and equivalent the X.XX%

interest excess our by liquidity. net margin negatively to impacted Our be continues

fourth Federal the quarter, $X approximately earning Reserve, XX average billion on the points. During at deposit basis on had we

million for in quarter. quarter Our and quarter XXXX at quarter the on Loan net loans of the were would $X with compared in the quarter. PPP been X.XX% XXXX, third $X.X million income deposit interest the for fourth yields Reserve. the for higher fourth the the X.XX% fourth margin without Federal XX On interest was compared billion approximately from $X.X quarter basis average of points in the and year-ago X.XX% Total with fee third have

third fourth Prepayment accretion income interest related quarter-over-quarter, Excluding the interest paid, ago the the of with X.XX% of purchase and to year fourth income quarter XXXX. X.XX% loans, $XXX,XXX by quarter discount for while the XXXX, quarter. impact of yields the of decreased decreasing XXXX, and PPP quarter loan in were $XX,XXX non-accrual compared penalty X.XX% by for

New X.X% average. loan production to yields from reflect on continues X.XX% to

customer deposits third by average well points. repos, was $XX expense and on the but deposits of quarter Interest for as interest of funds three and cost re-post, the million total declined. customer basis Our as increased cost quarter, our fourth bearing from

basis the the cost repurchase points of customer the quarter, to bearing points quarter. As and in decreased interest basis third agreements fourth in deposits from eight nine

one six prior the declined and with basis fourth Our basis points by cost XXXX. the quarter of compared funds point of from quarter,

where During points, funds through short-term basis our from relatively low if funds in that We X the cycle cost of increased points. the believe last XXX only rising short-term increased rates XXXX. stable Fed by XXXX cost of the will end of rise remain our by of rates XXXX, basis rates

the impact may quarter funding Although from of the the acquisition, costs the impact Suncrest small first XXXX. deposits Bank for a on have acquired our of

OREO and the $XX.X was for quarter Non-interest swaps. prior $XX.X Moving gain The non-interest for with quarter million the to of acquired year-ago had fourth a $XXX,XXX earlier, quarter. charged income. compared charges loans $XXX,XXX fourth an of on on Bank. compared included XXXX, collection off million acquisition $XX.X quarter with Joaquin of been not of was income did that curve five in interest of to a million and our of as interest were quarter. volume XXXX $XXX,XXX. the the $XXX,XXX the the fourth and for a service higher San mentioned Generally Deposit were than previously to the prior sale more a flat from swap of but property, shape were With the fourth quarter, comparison, higher curve. swaps fourth our of during We XXXX. impacted volume the have in of XX% quarter quarter conducive yield $XXX,XXX or by swaps relatively speaking, rate the yield by from fees rate fees the quarter third third any In

investment more customer the fee XX% $XXX or quarter. services XXX, approximately with income by Our increased than compared prior

year-ago quarter. when with compared While XX% higher being or approximately the $XXX,XXX,

relationship of customers impact under relocation state. Our trust our to in business the a out due The of will anticipates primarily management. be losing significant XXXX to assets

revenue. X% of of investment geographic we a customers extension grow However, array management and the are will of impact Suncrest and treasury services our than Suncrest, trust including the products. offered that wealth optimistic the addition less by represent will revenue Overall, through to sophisticated not products more management, wider investment us previously and fee allow of and income foreign footprint, services management, exchange,

expenses. Now

Non-interest consistent year. with over We expense expense to a million the expense XXXX quarter million of by Xth level reflected in $XX.X of average the was have year-ago with X% X.XX% and to XXXX, for as XXXX for $XX manner million quarter continued assets for Xrd compared of quarter. XXXX. manage compared past X the of our for the the the totaled Non-interest point for fourth $XX.X third X.XX% Xth quarter and quarter of the Non-interest quarter for of the expenses disciplined

Our efficiency XXXX. fourth quarter in in the $XXX,XXX quarter and for to ratio the fourth of and for regard XX.X% XXXX quarter. we XX.XX% compared with of merger, for quarter incurred expenses In prior Suncrest the quarter the fourth was in acquisition-related the $XXX,XXX XX.XX% third the

Suncrest of have the the savings. The see quarters and reflect have of expect in quarter. pre the in are to in levels. recovery economy various integration reports, pandemic their expense California sectors as of According and to strengthening, or recovered benefit consolidations will the of the is We quarter in the banking mid-February first the the process full third acquisition XXXX, centers second completed economic our many to we expense two will integration second and of will By we higher consolidate XXXX. Bank systems quarter, the occur end expect of second and to

the staffing beginning impact issues and impact to well. as disruptions we industries labor are supply labor chain to serve. However, the our negatively costs, These and shortages, businesses continue also

we we XXXX, greater a As to management. inflationary our challenge be these pressures anticipate start expense will that

be efficient maintain continue will and increased disciplined we through However, operations automation and digital to our to investments. efforts increase our

For sales XXXX, enhance efforts, our we total spend will productivity projects estimated our $X operational risk These with of and plan the and on at close investing million. management overall scale. in investments to numerous processes, our efficiency

As our grow integration operating low of and Furthermore, capital give growth asset interest year. In and of half the our liquidity work our second cost and advantage well-positioned in ability for in to their consolidation take will first as accomplishments position forward XXXX. our strong Bank of in funding, increases we we're generate positive the navigate this pandemic outstanding strong XXXX I XXXX, believe and the are levels, to we thank XXXX anticipated we to of of growth hard enhance dedication. us quality, core opportunities and the and loans a continued substantial rates. in look want associates for through COVID-XX the to leverage future proud half to have successfully continued our closing, in Suncrest

loyalty, for business support our presentation. and to Please successful XXXX. customers a for today's ongoing stay and safe. their Our shareholders healthy trust. forward concludes That continued We and and look their

any and take will that happy you be Now, I questions Allan to might have.

Operator

As to [Operator a question, reminder a Instructions]. ask

would [Operator yourself question queue in Instructions]. remove your If you been to has like answered, the

with from first Our Sandler. comes Matthew question Piper Clark,

is line Your open.

Matthew Clark

guys. morning, Good Hi.

Dave Brager

morning. Good

Matthew Clark

benefit portfolio might thinking that of the that the your think sounds the first I year, XXX over off thoughts $XXX cash but you pretty rate to to will side years. in million two loan this asset I the outlook. the But you force work what But know securities coming start what's need XXX like portfolio have deck and are over Wanted things? you you on year? your about deposit Betas on It any -- for for the more have of through? you up guys show expectation be up XX% the sensitivity negligible. disclosed

Dave Brager

what disclose be. that's big Yeah, in yield the the a of K consistent impact the a been and has do shape the pretty impact curve the for Obviously, might We impact on the Q ramp basis. on institution. the

roughly book have loan might that's Our XX% variable.

and the deploy mentioned but Obviously, very liquidity to curve, variable a the far base we very rise our of but mentioned, loans, in at a do you Yeah, but can end we have they have day, muted Allen street we rise as rate of have muted. our floor, based have if rate, floors now. or Matthew, relationship. to historically of around be concerned be mean, rates floors X% to floor. up, You a If the X.XX% are the the rate steep the as we the has floors can get will that are have on move that all that limited, somebody curve I X.X% situation. and a beneficial. great X.X% going it's rate and a -- to and it's the you higher that's have go Still is of most are as loans rates flat at it at somewhat. beneficial, been say many or across competitive But balance on

So I there is don't some some we before it's probably pretty of it's don't think benefit, very that see but -- movement significant. think I

Matthew Clark

do feel about liquidity find and if outlook, ex-rates? Suncrest terms exclude where purchase given the And NIM you you to more NIM Should lag accounting do you in just PPP with a mix online? then coming we and here how we bottom loans ex think earning down another shift? anticipate of Allen, the assets, near-term excess and Okay core in

Allen Nicholson

of Well, for Matthew. a I going XXXX, moving lot there's be parts think to

bit you on terms maybe little more at but deposits so liquidity also that a of little decrease Loan the very bit. big yields. mitigate on can near-term, attractive on see year, their are in anything the certainly, higher and the continue yields also that of yields at could margin. that get we'll our than changes short-end that. of of a interest in our the be direction could first securities don't If part ton down a obviously continue yields into of are the be of We to yields do benefit could have mix loan of higher, If is what tick we move, some asset look of we as a cost loan loan lot re-engineering Suncrest, the in in half a Their certainly second deploying we of average. the

moving what many, thereafter. So the market bond the does parts, and many Fed we'll how see performs

Matthew Clark

contribution expense from Okay. us run it us coming remind you We just where then or terms kind on stands And Suncrest? rate of expenses. update a couple Suncrest pressure of -- there contribution wage from expense your seeing. given that from any just charges growth quarter, last but update on in we're from have and then the Can of ex-merger the the outlook the underlying

Dave Brager

I'll can start jump and in. Allan then

as rate, will bit Suncrest executing little So as there. XX% far stated on and expense saves, a our we're to the run expense do probably better

We also a which the the will be consolidating will quarter, more there. offices in create little save two second

keep expense overall remainder the as we're and expense estimating that single-digit we'll a able still changed. of the year. The little be nothing's are people. low, and far out best have to that's I to Hopefully, experiencing that execute and talent growth, on low respect we're some and running that. there to going that the mean, issues, bit. through we're making As you those There labor your with headwinds rate, sure

are we're But from side. very in efficiencies think headwinds. the to I So We're both consistent. those the be technology organization investing in also going

having. mentioned some should I of able and some of be pressure in As the we're to comments, my that offset

plan. that's So the

Allen Nicholson

the first of leverage. that. magnitude certainly it half thing Dave pretty operating in only year, that the I we with get the in is be the as By the add once noise third we quarter, through rates mentioned And all getting confident positive could earlier, significantly, If move would Yeah. Suncrest we'll achieving be feel the better. then

Matthew Clark

Thank Okay. you.

Operator

next Raymond Our with question James. from comes David Feaster

Your open. line is

David Feaster

everybody. morning, Good

Dave Brager

Morning, David.

David Feaster

[Indiscernible] tremendous growth the start in even stronger, Loan it good. to seasonally that, loan growth. and excluding wanted obviously, just really I but on was quarter was is

in function what slowdown production improving 'XX is on loan new held into have color pay-offs seeing yields curious steady. and more of looking. of as like this Just then or you're the pay-downs? any Was head we the a market. just sounds pipeline It And how in a

you helpful. could any of would be give commentary kind Just there

Dave Brager

on Yes. a past, I the been mentioned mentioned that in XXXX Sure. in actually have loan bank. XX% and quarterly remains. on XXXX. was We -- I've year did call higher think every production I than in loan and, so side for over We the And production our the pipelines produced strong as record XXXX the we

teams that So or for contributed we was remained that people would were record our, time, the mean, we've people. have I business talking entire hired, I new were to to, and open a that open. our come the off obviously plus XXXX to for say bankers all the year bank the we and

And don't so I the changed loan quarters. production. think a has very XXXX had best-ever for good we anything previous

Our pipelines remain robust and strong.

cautiously slowdown more subject I perspective. optimistic on. things the But asset we're But would the think for that, grow if that quality still growth about from after, mean, than little quality macroeconomic rate. that in go I'm very going continuing I sometimes the kind reflective we mid-single-digit And that that to pipeline loan of the do than of to and a we all in going I concerned do being area the more be was more regarding prepayment I prepayment good XXXX we off, did refinanced either think or there we in to that sold. of paid is some into penalty did were year. have and our you a goal loans second see your slowdown last

think we're shape. good I pretty So in

David Feaster

details again, stabilized. That's it dynamics some sales deleveraging, like is could pricing just footprint. curious, just the standpoint competitive great. on and And us lot across you asset give but hear about sounds a your your maybe We then from

just that changes any structure some and or the seeing concern? irrationality in might competitive from You standpoint you be causing

Dave Brager

lender, or loan-to-value. guarantees we do extended loan-to-value, types loaning to things period We're about. something when so we time that that challenged without willing we of a That's properties normally would Yeah. loan higher interest-only always a lower disciplined get somebody's for talk a or they're of

much do it. just to P to us I wanted But the you we interest-only, on It's still XX-years of just than a and loan-to-value, was smaller loan We and we as a price-sensitive guarantee. that a bank for at we to X.X. than non-recourse wanted color, the not credit a want and it's a at world. higher aspect And X.X% that deal on think I payments lost underwriting give some fixed XX% & property. at rate XX% retail to real

are and remain there we are But to on that. chase irrational there. out So not still going disciplined going behaviors

David Feaster

-- then to And see just guys touching repurchasing just glad active. that's on And stock, capital you helpful. being then priorities,

franchise. of do your to probably invest kind guys Uno. organic obviously continuing the you think about you capital Just -- in But numero priorities, How are growth,

how do know And Suncrest. standpoint? you the how are just from M&A curious we of market But dividend I Just conversations? M&A think the just your about just continued growth, closed how repurchases? pulse

Dave Brager

still a going close There's next crafts and lot of to and on integrating systems. going we're month did we conversations be Yeah. on,

open if opportunity. conversations. it's there having right So we're are definitely the business We for

biggest nature think with realistic M&A the the I everybody's thing what stock the seller front and price the of is recently. rise their are and on the expectations

are nothing So we're of remain how Allan on. board those we all there as But management acquisition mentioned all our those yesterday, being going meeting have are are capital we had opportunities the evaluating true that the to in And obviously. comments, far a there There's we're things of presented time. imminent, conversations, that as we our rest, strategies lot his going are opportunities. time. still the but our as we discuss We guidelines, guidelines conversations and evaluate

if add you that. want So to I anything to don't know

Allen Nicholson

M&A. because -- million here of we can acquisitions put see deploy that hard €XX there's you it's that in Suncrest, with limited some through capital to cash, only about David, our with

above so certainly that board the well peers. -- ware And certainly aware levels our a are capital is

there. alternatives So we have to at look

minus do I been think man's rich so we or I XX% so foresee that yeah, think problem payout don't targeting has as said, have we're dividend plus right the that changing -- ratio but I consistently now.

David Feaster

bad. everybody, quarter. [Indiscernible]. Too That's Yeah. great Thanks great

Dave Brager

Thank you.

Operator

comes with question Davidson. next Our from Gary Tenner D.A.

Your line is open.

Gary Tenner

as lot positive morning. I of growth as looks Or wondering, ex does to utilization Good you commentary out Thanks. like additional look wanted a the That just rates? to I'm looks above rate, XXXX over assume C&I loan with relates it increase a that revisit just that lever like any the become back half potential the would PPP. year? mid-single-digit mid-single-digit XXXX.

Dave Brager

their include If That does utilizing people do opportunities. their and ultimately then the the and liquidity utilization not lines. excess start C&I

increase. So utilization any line that's ex

Gary Tenner

their Thank period you. or there book. time? Suncrest framework deal the any run-off to And posted part reducing portfolio that would some for in of then Is with loan a of regards be

Dave Brager

obviously first Yeah, due if about any that on, over look and part dollars know diligence might we there portfolio, structural to We XX% but loans, touch there. be XX% the what's them. we I there's we did close the some think as of their specific don't individual at touched impact could them deals feel I so that. the as of changes on time confident But of and

and there that's So to why on just deals those doing as really as us the them and ability done is sell of we're headwind our depends doing every to It as we're far what try acquisition. them convince strategy some happen. and part could that protecting there we're well what that we've as

we that growth their offset some to loan So there additional could anticipate. be

Gary Tenner

Thank you.

Operator

KBW. Our Motta with next comes question from Kelly

Your is open. line

Kelly Motta

Hi, question have thank of asked for already. been you the answered much and most so mine

a a good going the deposits of obviously I run-off, sense well really XXXX wondering, start potentially just do have of how may have funded franchise there, as, and think you you as we core to thanks. liquidity, just will after influx much I is transitory maybe just and look great as to

Dave Brager

love question. about been transitory. a word word Yeah. the That's time. I talking We've good some quite for that

and almost So to the topic we we been every talked our years Allen balances every and since continue up deposits and go pandemic for about talking time and began two this I it, this about it increase. the have last about talked day,

going over while. we've So of a pretty FED amount is portfolio investment here a And we things, (ph). invested be in maintain for the subject little overnight our continue to to I significantly at large to the months, money money, of the a XX couple think past and

some So starts of we're hopeful that get to utilized. that

little materials it's businesses, unfortunately, for both believe that money think front. be utilized I to and labor’s a But the on associated I going do for while. going the front costs to our is be here with the customers,

if maintain on I go as by our be bit could a more evidenced some pricing. deposit little more rates that opportunities out disciplined rates yielding we're rates our thing up there influence think past, discipline could the we is I that think to and and the rising that higher as money out increasing on one a our but little do the moves

but So question, part, see to we're going a most as liquidity I your around danced for the for longer. I think that excess little while

Kelly Motta

assumption And balance cash obviously to rate lot work Yeah, been a putting to that's Thanks. really assume [Indiscernible] those obviously with you've there. continuing money a have good of a What’s sheets? security then of helpful. bunch. purchases, some on the Thanks

Allen Nicholson

far over can As pretty But much X% claims your mortgage and are call moved over they seen mentioned two year. Certainly I will what basis over yields XX the markets so in securities. course one We as get would of consistent. I your month. just as points that we've earlier, this back

little in obviously was more than attractive it's So it XXXX, a

Dave Brager

mean I above that's Well our overall.

Allen Nicholson

fourth yielding Yeah, portfolio XX over was the little bit points. the quarter. a itself basis In

have to should go throughout So yes, XXXX. uplifted as it yields meet we overall

Kelly Motta

you so much. Got Thank it.

Operator

comes with from Instructions] question next Tim [Operator Our Coffey Janney.

is line Your open.

Tim Coffey

Great, thanks. guys. Morning,

Dave Brager

Good morning.

Tim Coffey

you clients to what of more credit? your it get do think start using than commercial Dave, lines to takes

Dave Brager

same I top bank. think as they're in mentioned and -- customers liquidity. sitting have XXX they're they before, deposit have a mean, a I deposit through I to we their experiencing lot excess balances thing first number of our but we bank the on are the have this and get just

the have those depositors, billion the the XXX since pandemic. increased top over relationships of of balances beginning the by So $X.X

as balances as So well. you next those down to go tier customers then are that have have, increased not we And guys necessarily of their borrowers. the

some could ultimately, then of to how and customers to borrow borrow, occur. don't liquidity, liquidity that they if just to are they going the that's they part but start think need I I believe rates some use starting that, feel excess of that what challenge I are doing to they the they're excess So with where I think as be rising, have that and like utilize of quickly and know feel confident, overall to again do

Tim Coffey

increase of accounts quarter? some Have in you seen this the within the last volatility deposit an

Dave Brager

bearing, very a for We that is basis, have normal. couple been non-interest XX% it's Not really. a volatility. but stable that's of a there and our I there of fantastic hasn't part base do deposit of mean, lot very most but deposits larger obviously the some our deposit clients fluctuation, with very,

past it's outside normally So in not what's years. of occurred

Tim Coffey

thanks. say? Okay. is a company, then now Got is you do I the sub inside But missed that rate do Sun think the what it is or going And Allen, to I I apologize should if crest company once tax this.

Allen Nicholson

were a I tax change tax really they that there acquisition we big have any a it's a have to don't impact. it's our preceding basis, to [Indiscernible], It's of and couple but -- deals, relative they on know not going significant rate. small some a credit have

Tim Coffey

Those Okay, are Thank you. great. questions. my

Dave Brager

Thanks, Tim.

Operator

At this call Brager. no questions, more time, back to like turn are Mr. so Instructions] I'd there [Operator the to

Dave Brager

this Have day you. have to Thank great want Bye we you questions. I thank April speaking in Please and for joining first I to forward bye. a look for We and everybody appreciate any or us let call. our earnings listening. your XXXX you Allan interest if with quarter. thanks for know quarter

Operator

program. concludes This the

have a You great may day. now disconnect. Everyone,

CVB Financial (CVBF) 27 Jan 222021 Q4 Earnings call transcript