CVBF - Earnings call transcript Q2 2022

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Operator

Good morning, ladies and gentlemen, and welcome to the Second Quarter of 2022 CVB Financial Corporation and its subsidiary, Citizens Business Bank, Earnings Conference Call. My name is Liz, and I will be your operator for today. [Operator Instructions]. Please note, this call is being recorded. I would now like to turn the presentation over to your host for today's call, Christina Carrabino.

proceed. may You

Christina Carrabino

and us Liz, the everyone. you Thank quarter Thank to good review joining today XXXX. for our for of you, morning, financial second results

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

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

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

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

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

David Brager

Thank you, everyone. Christina. Good morning,

quarter quarter dividend For this profitability. a of second It we reported consecutive or $X.XX paying of year. of the shareholders. previously net cash of We XXXX, consecutive XXXX, for a share represented X% per the share, increase dividend quarter second $X.XX quarter to our an XXXst of per $XX.X declared representing our to first earnings our of million of quarter XXXst compared

or year-ago $X.XX share $XX.X quarter share. share of for $X.XX first compared per per net with and million XXXX, million earnings the the per quarter or for Second $XX.X quarter million or $XX.X of $X.XX

the million of and Suncrest full XXXX the earned of X Suncrest previously February. of second of or banking was financial the $X.XX acquired of the compared with integration X, with Through in two represents first centers Bank first for from quarter liabilities we quarter. completed We of share XXXX, consolidation the XXXX. including quarter $X.XX $XXX The during January XXXX. or second $XXX.X X completed the months The a per results, on share months million conversion systems per assets

For excluding operating same the XXXX, year-ago record with first the leverage XX% provision and our the quarter X% $XX.X $XX prior quarter. of this a million level $XX.X of was and pre quarter income generated at After of million year. compared year acquisition quarter over last XXXX pretax the the expense, leverage million our of operating for second second quarter over quarter for

margin quarter. compared XX interest by the points grew basis to first net Our

Although securities, had our when and investments earning loans assets first compared the benefited rates, loans also interest growing from million in with and in growth on investment million $XXX on the by to general quarter. $XXX growing increase average average by strong we

shares repurchase the quarter. year-ago accelerated first XXXX. losses through of of in yield earning quarter. million a repurchase cost $XX As second points date In recapture quarter termination the an second a for X.XX% from February, June the to $X.X our grew funds in basis quarter in a in initiated of X losses asset program credit our approximately while provision in in $X.X million quarter which experiencing of recorded in credit second X point overall quarter $X increase the X.X% X, the basis a program, compared for X We the first provision the result, to the in resulted of million to million we of and share only million

of effective repurchase March. the In a beginning at program that addition, almost shares we under X.X XX, repurchased June million share XXXX, became through XXbX-X

in more Now detail. let's discuss loans

in loan strong quarter. second very new the Our production was

XX%. of than quarter end the PPP generated billion, from same period loans $XXX PPP $XXX.X -- first commitments at loan the loans XXXX. excluding approximately were in a in which generated is million, loans New by increase last or greater quarter. higher excluding the X.X% end than $X.X Total When sorry, were year XXXX of when million

loan million The quarter or C&I increased million $XXX led X% when grew second rate in compared XX% However, The end annualized. by end million the PPP X% $XX decreased $XX first loan quarter the and and $XXX of for line the loans, growth declined the estate first with the or loan was after loan approximately utilizations loans year-ago the growth forgiveness, with end loans of core continued XX% prior quarter the real quarter. first by excluding the commercial was of quarter annualized. from for by second or XX% growth in quarter approximately XX% second quarter. loans Dairy quarter approximately in annualized. the at for from XX% the at utilization quarter livestock as XX% the million was to which second C&I compared by

million with points At million end, quarter. non-performing X represented $XX the forgiveness resulted as for other had quarter estate in total the prior $XX.X comparison loans the of the a we quarter compared were defined plus in million no At of in OREO assets, and owned, basis loan million $XX quarter million $XX quarter. non-performing loans for for loans end, PPP and $X.X properties decline year-ago Continued first real non-accrual assets. to

we and the first the recoveries year-ago with we to million compared XXXX, loans XX for charge-offs prior XXXX. with $X.X at quarter, Classified quarter XX, the loan March compared loans $XX were for had $XXX,XXX quarter. $XXX,XXX XXXX. second June of million of of net quarter $XX second compared $XX the million for million quarter had XX, XX days with for delinquent During $X,XXX At of net the

XX, in As loans of classified acquired include million XXXX, $XX.X Suncrest. loans from June

billion our XX, customer repurchase March Now I XXXX, quarter. the billion $X.X were $X.X compared deposits. for XX, billion our and for $XX.X with same deposits the to agreements At June with our $X.X year billion year-ago compared for billion would noninterest-bearing billion period discuss like deposits ago. the total and and were XXXX, quarter June a $XX.X XXXX, XX, $XX.X prior At at

increase call billion, the quarter, the points the During year-ago the allowance for quarter. the second compared of our cost deposits quarter our deposits prior points which deposits credit quarter balance quarter XXXX both discuss quarter first of is X cost to Allen to funds in and and and funding point combined I in of just basis The to basis customer the approximately for from had average the Allen? core prior million second a investments, were quarter. noninterest-bearing now will averaged X quarter. for in This XX% deposits of $XXX with entirely the second the XX% bank's average basis for Noninterest-bearing a XXXX. $X.X total repos, of X compares points the the basis X losses and second over turn capital. customer

Allen Nicholson

Thanks, Dave. Good morning, everyone.

purchasing our million. new or during pretax securities yields billion, loss We the available X.XX%. into for Investment The now securities, last of $X.X by of XXXX to totaled million continue liquidity this the in assets XX% deploy $X.X securities to maturity, in quarter Investment to of in than or securities second growth totaled XX% AFS with sale, unrealized securities of first $XXX quarter net excess of second on additional a more quarter. approximately $XXX over some the held inclusive on average approximately quarter from earning most investments year billion in HTM the in our June and in XX% portfolio XXXX. average of XX, at XXXX average investment recent increasing of securities, resulted to

X.XX% on equivalent in XXXX quarter. In securities yield of to tax portfolio, the our X.X% in of the increase addition second size the first the to in the grew from the portfolio quarter

Although at we Federal significant investment to grew of Reserve. amount continue the portfolio, maintain the we a funds

loans. as percentage When than X.XX% losses compared billion which of PPP loans of second in XX, compares the at was million this the XXXX. first X.XX% excluding million allowance $XX.X for March for At XXXX, our loans, Our credit more our or approximately XX, X.XX%, Fed allowance $X.X balance a to averaged year. of was $XXX remaining ending June the quarter to quarter total

in fair allowance we credit recent end. In addition from losses, $XX most as value discounts acquisitions million quarter remaining credit the the to had for

For was loan for very real in losses to of million second of GDP, a and quarter credit provision increase the March the economic losses increase XXXX, recapture an XX, growth XXXX, June commercial $X.X in provision driven loss rates for provision year-ago in quarter. by life growth primarily that quarter as forecast million as million lower in ended compared the recorded the credit to for quarter XX, and we assumes well unemployment. modest $X our ended an values $X.X for the a estate credit losses projected loan deteriorating due in The

a by as baseline of blend downside a be U.S. to continues as forecast economic include multiple Moody's. produced These economic forecasts well forecasts. forecasts Our forecast

forecast weighting multiple have individual baseline to largest the forecasts. among continue with weighted downside scenario We the risk on

by of decline unemployment XXXX. is the in X% of in Our weighted XXXX. second XXXX and XXXX, by for forecasted will The forecast increase assumes X.X% to be second half in X.X% half XXXX, to then in rate and X.X% grow the X.X% XXXX X.X% then GDP in

of a comprehensive shares $XX.XX, February price authorized decrease XX% XX, common $XX to up our Now or million at issuance share equity offset in that ASR repurchase year-to-date million, an billion capital June million XXXX, by to the by due the associated through plan. and the was dividends, X.X stock million of plan other $XXX.X to end approximately accelerated Board XXXX. of the in at repurchase a of income. increase share due $XXX in which XXbX-X of a our repurchase shareholders' plan loss The increased repurchase execution million in equity turning the shares Directors on reduced resulted and by $XX Interest XX decreased resulting end repurchase increased million by also XXXX our our securities dividend shareholders quarter, announced payout of share Equity the equity X, the second ratio. Suncrest. to stock the in On From the from $XXX available-for-sale to of of company's stock to million $X million shares of combination, income an and a increased former position. million common the we a In of $XXX to rates the for of unrealized decline the in end average representing X.X $XX.X which ASR million.

capital position Our very strong. be continues overall to

Our discussion for well ratio considered on our majority XX, capital XXXX, capital our the ratio above requirements XX.X%. earnings. regulatory was I'll and well capitalized regulatory equity X Tier ratio quarter back common of June to Dave At our call our above further to be XX.X% turn the risk-based and now is total second peers. capital was

David Brager

quarter first income Net for Allen. $XXX.X the for million the credit was provision losses million second $XXX.X for you, quarter before quarter. million with the interest and year-ago Thank compared for $XXX.X

quarter an the on quarter earning Reserve, million a $XXX decreased average decrease assets $XXX the on deposit of $XXX from million increase outstanding. Federal average and offset by by increase at Second loans first a to due average investment million in million in securities of $XXX funds in

while and by XX% increase to in basis yield yield declined XX was amount assets and with to at of from earning result a yields funds points Fed earning of our point Our increased from XX% in in a loans asset XX% a XX% assets assets. X compared increase average asset basis shift growing quarter. to composition in prior earning XX yields, growing of earning from basis X% of point investments of earning the loan XX% average The the average the to increase investment our a

the sheet the Our and including interest rising approximately flows quarter deposit for rates quarterly our portfolio. investment $XXX second Fed of at liquidity, significant on to with positioned continues expected the be $XXX million of end well cash from balance million with

in for for X.XX% increase result and cost quarter X net maintaining quarter the net second Our with quarter a the of time first basis $X.X Total Fed of fee quarter during to million the of the was funds for quarter the of second interest X.XX% very XXXX first that margin tax points. X.XX% compared our of from XXX second the with XXXX quarter. the earning points a quarter XXXX. that The migrated in points while the year-ago in increase was basis our low margin and were income X quarter for the of basis equivalent asset X.XX% Federal compared second yield the interest for first the interest compared Loan X.XX% quarter for was increased funds by approximately our from XXXX in period Reserve the with and first loans of second quarter. PPP million in $X in X.XX% yields

first for PPP XXXX, loan for yields XXXX related X.X% X.XX% Excluding purchase the quarter the the and accretion, of of income discount for were loans the quarter second impact of second interest XXXX. X.XX% of to and quarter

at quarter the yields loan end loan exceed average portfolio. New on began the production of second to the the

deposits $XXX Our cost grew average by and cost To increases -- rates. noninterest-bearing second quarter, while of the repos average. deposits cost an points. to as experienced date, X approximately deposit repos of deposits was total quarter basis customer customer million million our first despite we funds well increase from of pressure the have interest by recent rates as for $XXX our limited in market on Interest-bearing decreased the and

rate during may rate However, the aggressive Fed's impact aggressive Fed's hiking customer -- expectations. however, future the hiking

increased to pace points same period. our funds a at XXXX During the only rate X that XXXX, by points rising XXX and last grew basis of rates from by cost basis during short-term cycle, gradual

to on million compared was quarter $XX.X the $XX.X quarter prior of for income Non-interest $XX.X million million year-ago and non-interest with quarter. the second Moving for income. for XXXX the

second net gains with properties of the The million associated centers. in XXXX sale on banking quarter $X.X included of

million were our quarter increase related XXXX investments, the including second quarter was our income million. a distribution XX% reflects a $X.X million investments. quarter, million compared to these higher $X.X Deposit or the second by of with $X.X addition, from increase of $X in XXXX In $XXX,XXX first in the gain of CRE one a charges and quarter service on which were a than second

our increased income. fee compared being quarter lower services X% when approximately or while compared with investment quarter. negatively $XXX,XXX management year-ago impacted assets with income by and approximately and the trust prior have trust the Our conditions $XXX,XXX fee Market under

million expense second first the quarter the Non-interest $XX.X quarter million quarter. year-ago expenses. for XXXX Now, and of compared the million was $XX.X for $XX.X for with

in Staff-related over first $X.X expense, second by to and of of the non-interest million compared of merger. of additional quarter to XXXX, expense million by quarter and in expenses lower peaks which associates acquisition $X.X every the primarily is million Excluding due decreased first XXXX to attributable increased the increase primarily XXXX. $X the the over by expense, million year-over-year the $X banking Suncrest acquired payroll quarter tax first year. centers The quarter declined

consolidations completed have with and integration We the associated the acquisition. Suncrest

reflect the of benefit full savings. quarter third will of The XXXX

X.X% the the totaled minimal. compares for from quarter second This quarter quarter XXXX. X.XX% However, the third of will and assets second of the impact first be for second with XXXX. expense to the Non-interest XXXX of average quarter for X.XX% of

XX.X% compares for Our second of quarter quarter was quarter XXXX. for efficiency of and XX% first for the ratio XX.X% the with This prior XXXX. the

previously pretax which loan margin bank. in pre-provision committed times. our despite economy approximately labor expansion first second is to and remain. headwinds, the economy. the mentioned income to XX% market chain California million increase of the the quarter. these the levels The continuing challenges have from closing, our recently quarter, We of inflationary to remain $XX efforts a during customers strong produced to growth, interest net and and shareholders continue approximately combination our our challenging and closely This customers expenses uncertain and growth in dividend increased environment. but resulted our payout XX%. manage create The level In business continue pretax ratio tight supported increase a of represents to Supply an associates, X% improve, quarterly we Now California issues, to impact which a dividend, a a in COVID income. pressures pre-provision quarterly of in record during transmission continues

I for our commitment executing their times We customers That these supporting on stay through and concludes Please presentation. and today's our safe. core customers to and healthy shareholders associates, strategies like would on and thank support. unpredictable continue our to focus and

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

Operator

[Operator Instructions].

Sandler. first question from comes Our Matthew Piper with Clark

Matthew Clark

on cycle? what first over beta, from deposit bit here. here? are at on I from know least But up, And updated growth points Maybe around that deposit on down X noninterest-bearing. and take under a on last deposits, thoughts or what basis your you they're the average, thoughts your the are little

David Brager

Yes.

Fed, wouldn't on for acquisition, identified the we obviously the although our that say, seeing that had relationships point-to-point of more that during higher rates. would happening. is it number Suncrest thing diligence we're on Some total and much like normally they continuing how raise deposits, aggressive said, say depends hot I one and rates, I The Fed the relationships rates of after But well money we're to the I'd requests a how we due earning that is pay. -- limited

or on And quarter to the optimistic in go little that individual them. first deposits. And numbers, keep going. some them or you decision of so the -- as was optimistic between the we the as can each relatively quarter second to I'm saw a well. seasonality of made and let those you as There's on

I think are we accounts, which do stable grew by average. was of that noninterest-bearing, percentage have million primarily higher on operating $XXX and and

to the cost not So depositors let hot our for funds compete to we're of We're money relationships. drive going up. going sort of

we'll rate think basis months raise to to time. mean more It cycle XXX different is a took might last this I pressure. this I points. points rising take So basis years raise than X cycle. XXX see It X the little

total on good you know, have look, that optimistic. out see out. the higher deposit we're plays relationships relatively But how But paying rates. So winning we deposits marketplace. growing not to and we'll total relationship by And in very the still focus as just

Matthew Clark

bit little rate shifting it the drift cost assume before And Suncrest. grow is to that full from XQ saves you're could here run the in the of again? run starting rate lower I realization a to mean, fair to then expense get Great. going to

Allen Nicholson

do most wanted quarter. what we Matthew, to of I in the we second pushed think

QX it's QX. to be standpoint, acquisition going material, an from think not to I So

last some well, of terms in talked expense, quarter vendor staff we think there as inflationary I expenses. are pressures

more we rest year. the I modestly see don't think the likely, may I foresee growing of So than and throughout going down. expenses pressure them

Matthew Clark

then in discuss I hyper-focused classified, And how everybody know can the that uptick given credit, in you is just it low CRE-related? a it's what But relatively Okay. I think was increase classified? number. still on drove

David Brager

There there's than that that maybe properties we increase. are uptick, no that secured it it I loan know one We don't loan-to-value, credit pretty the well of just And I and remain very overall. to any one low any really are and sub-XX%. there's wanted secured, metrics drove at was but related very little create there. issue confident most was cautiously better still We big was during loan than pre-pandemic much but others, very the that bank. by movement time. today credit of loan, a that -- really Yes. The more in candidly, very they were little two feel a one we to always -- overall were there's that

Matthew Clark

then despite we Okay. last me, And you uncertainty one growing remain Should repurchase share kind here? just activity. on assume for of active economic

Allen Nicholson

Board earlier back $XX million year. announced a share this the Well,

quite that, a of up So that. is which big did part not ASR we've make of -- XX% But close.

We by have an it's active price. dictated XXbX-X to be going but share

you $X.X than what so. that half know that rest of the happen that fact the back, don't accomplished what issued million amount fair as the about think of we of more But we year. I and So we think bought a Suncrest was will for wanted really the

Operator

Kelly with Our next question Motta KBW. from comes

Eleanor Yuan

This today. on Eleanor is for Kelly

you've than function solid, was or growth. seems in growth that reserve to pretty I market little to like But solid be always like more your of start, had Is of guess steady activity So a conservatism/competition? others. kind and a loan it loan

David Brager

XX% doing X grown I And I industries. maintain are even as bank quarters had credit level and more think the go want of to quality, the -- grown. in go respective important us, mean We've top loan X% so consecutive their Well, want big growth. clients we kind to at can't which X than, we've that by pristine is else. basics factor. I where of the an as isn't quarters just And that, X% annualized back for we've of the of pie we to we to everybody last

us, strong, still softened is still our economic hard I we X% what pipeline kind there to be is the where here, and X% normally Our due rates but was of some pipeline say remain don't or and the remains the strong, could and with of back but would was pretty from X in probably range. slowdown depending give they for the I'll there. our that which X% happens X% last do I think, a have X% But teams. trending quarters be, think guidance And goal although first and pretty picture, we're on to little I our And mid-single-digit. X% of work kind that bit robust that do to quarter. we think, that

Eleanor Yuan

right it. on is also Got players you acting about helpful. just sort of see in growth, loan to starting then And Are compromise thinking people competition the on how now? are market terms That's or your Or standards? rationally?

David Brager

our guess I irrationally. they're perspective, think we it's acting always

just very we're in how Just we underwrite. joking, but disciplined

will And we on not we're on compete We're not going structure. into price. -- so to compete

it's to so hasn't maybe for it to I would was been ago. And say more quarters as competition X maintain generally, it bad the X that. as important us,

we are that time, so the be to still seeing into going they're a able plus significantly increases for might -- in that part, that exceptions. kind as for But than But we've make previous people in X.X% think we're with less irrationality rates. range, most some recent -- is pricing we we part, there challenging I seeing economic where originate willing the better more been of to the quarters. loans mentioned, most plus which

Operator

with from comes James. question Feaster next Our David Raymond

David Feaster

given on is prepared just any the credit at mean, economic into clients How I just your more some But credit? bit. demand slower -- And your more a challenges the here, we've of of to I talked competition Are hear here? what's expected the maybe remarks, for growth about versus question. the into slow in we for still just in much your touched client appetite Or color the have digging they I pretty strategic pulse mean your optimistic? deceleration for obviously, point? you of -- the much economy. this growth tone? are starting you cautious how appetite your Maybe of is bit a of mean kind a What backdrop? of some little this the

David Brager

I'll So And question right. take second the first. you're I think

You're spot on.

more our clients definitely think I are cautious.

you the As customer I And banking we we've myself the regional and had and different have been. division have say and in discussed much manager along the do with our couple manager past, I last locations. luncheons customers definitely would centers more been the and cautious, different have

make during today had So to I we're because And some think our not that's say really the of growth, We to I move David. I willing policy. have that do impact credit our look, mean, the mix guidelines one going to forward. to never we is impact going that The the balance think do to sheet. to pandemic underwriting pre-pandemic, there growth more want is thing I same would going underwriting them loans, want and of but just the we're -- that, guidelines. exceptions continue some our to We've going under the I of and remained credit to to mean

if look criteria, try deals. to it it in So how we're at And doesn't going we're fit. going remain not our consistent and meet we to make

I the want people just some where one, growth on there'll not track the is due as to they will So be of their some number cautious on fact, same not the that going origination underwrite going nature. based credit like side I would concerned. headwinds far the are to think to to allow right you're -- maybe manner on be as invest in We're quality for and degradation think

where there's we work one I that solid but history the just of some loan differentiated that's quarters think to pretty and the to more growth things quality. still do want And had of feel that's few going headwinds, that. So us over hard bank quality to last during and definitely recently, the relationships, is high we we've the get we're

David Feaster

a of of Again, That's changes I taking high economy. helpful. really in maybe a kind quality. client about tone the pulse like the then said, the good mean talked on about And you just asset base. at the got just some challenges, you've of some that on of we your talked level

talk cautious there see as any I we more look you strategically on? Just heading, mean signs out, we're where you segments some concern Or Just be to are maybe we're about are early that are mean that starting when helpful. high-level asset on might be you would we just curious, guys I avoid? Obviously, starting quality. pristine, -- comments any I you to about but thoughts talked mean, any

David Brager

Yes. No, I'm of that a there's areas I concerned I -- think a again, more couple little about.

narrow those it One is C&I just but general, I'll down. of in

With think the of Fed that's things. lines I operating And way. that, that's companies one increases, impacting those the smaller specifically for in a greater

loans that our right X(a) to X(a). SBA we ankle little but relatively say lot that. A like say would type things and of I'm those underwrite Many don't be but are -- very quarterly. prime. lot think -- the I SBA we we closely. I that with way, loans, lot loans adjust most the estate an it issue, have is of, of feel office. they're of on it one a X(a) a feel collateral people adjust of which number I them based those of biter a problems monitor be smaller have SBA and we would very, could very deal that lines on there real think credit in Commercial I shouldn't I -- confident

lot a especially beginning that, start really to those this experienced they'll after in haven't see of July. So yet, loans increase in rate and

of kind I'd So at say it, to if C&I, third. X(a) size, I with loan office think just I rank had company, smaller smaller distant SBA

David Feaster

a one makes got thoughts on Okay. just currency. I That you've me. sense. And Any then M&A.? obviously strong all for mean, last

You're a disciplined acquirer.

where any the Just some what and going, conversations given whether uncertainty on spectrum? about expectations the hasn't economy color And Obviously, M&A on in? smaller are, all? of the don't environment. that we've focused how appetite in seller the interested Just talked the of the level your know, are we curious, stuff curious be changes changed. any more end the high and be M&A you'd at commentary I would on we But for

David Brager

a which billion banks make no similar level overall, opportunities as to one's it's like we about on looking they most able And them No, within CBB Bank, think hasn't adjacent can great or their their I $XX kind to bit. than Yes. more question. Citizens of billion part, can for want make make as be the we whoever mentioned, be to for we market. range us those It's possible, high we're in something talking customers. We $X them, that quite to We're on as changed. to money want Business talk still our customers and exactly the the you to turn to think into We us. a

So narrowing of kind level, Conversations still there, but are that's slowed. it conversations sort of the down. definitely have high

don't of think the for don't think they're And when point, is down worth to most the right? more. bought, get they generally I thing prices think prices banks, sold. banks credit And at And I they -- especially is it. they get a low part sell share want what happens a are all

tight we have been get labor from other lot that perspective. what we I think a also talking the with is about people right now thing markets the a can

pretty do people have multiple. have traded that we PE you But might more make cost-save cost-save or high might to high deal. might sure it of be generally a because so team and not we our deal we XX% the It keep at a to typical book need. -- pretty people kind be And multiples we XX% and the just that a multiple, XX% few speaking,

those pay mean for pay But are will we So because just can more. more, advantages we us. doesn't

about diligence So do sort And that. cautious is, we're that always enormous be we credit be might would be going economic an part. going the to bigger would It but and even quality now. due any forward, it that slowdown of

Operator

Group. Ben Our Hovde next from with question comes Gerlinger

Benjamin Gerlinger

nature. mean this high question at kind is So the in philosophical of all-time today. are more I stocks

that initiatives newfound I pretty is table one that? granular uptick are are juxtapose priorities you little managing can loan kind was What the manage moving done get revenue, and which now and X costs, You just on With pretty fully revenue priorities. any but is there X of interest X, with thing have notable more new years? coming. on kind growth against of mean, job a a rates this kind of good you've a and the obviously

David Brager

Yes.

evaluate something So I and kind X. X in always medium-sized to priority that we number to which businesses same-store that. grow I'll We revenue inspect optimization sales, single do That's side. -- call to and are question how on things We lot. the want upticks, small- do number the bank I the our look mean, what disciplined. side investment We continue look, looking with is the of always is remain best to every that your month. say, we investing about are about talked that or to our priority some at California. we we think, going We of a

right efficient I more us to been organization. be there's things have in And and of the do opportunity going us And can opportunity. right the the to that's make nothing along, imminent, to to would we're that so along, continue to came And look, a capacity our and do if came hallmark if that, for opportunity create just think more. that do to ready we're invest but right open

of think key. in do history. quarter we So our, I consistency best the I think not had one if And really is our we what -- the in look,

to we array. But way. looking deliver customers product a can looking to of always always And to that better at looking always We're we so how that's improve anything that do. our there's efficiency. not off looking in are our our We're path sort we're at

to are different. our the into going The we August. with session honing end those nothing that that's in things think again just planning there's our do Board continuing management evaluate. how We're we those go of preparing It's I day, strategic presentations. on all the And to at and is of So team really for things. improve

very it's but kind it's consistent. of boring, So

Allen Nicholson

may be has the near bit more some part in Ben, but be that. little de term of more on focused things opportunities a we our on consistently novo, strategy, been like which there might

David Brager

point, we the for teams, find Allen. sure, And can good a right

Benjamin Gerlinger

now itself. the hot it sight you safe think to And moving to seat in But question, the Fed Obviously, be on Do going in a get whether for so, XX line almost quarter. feel XX say XX very weight entirety of fair. second margin lack to No, points clearly of throughout you're you. another on the final here in with XXX asking margin the do another and to more and or guys then term, third catbird you're likely quarter, for you the the money rates. effect basis Got to towards of or in going of of for optionality. -- will my July, very kind XX which the quarter better have It's people early it's higher that's be clear that expansion? the

Allen Nicholson

a don't of give on benefit would some also One, of quarter guidance of is quarter as I day asset that the actually think off know, certainly we things. the yield table. of I compare Ben. of averages. we you took of the delayed our Well, a versus a you prior last as when couple little the to side liquidity say bit But the the

so And in it's think past. standpoint, won't on. it's from what we've continue is sensitivity maybe transactional little And still the asset course, money still through our the a focus and disclosed of hot grow the but robust. probably think to bit, modeling we But to from deposits, XX% -- has a diminished fairly question, going to I be we're going big relationships we

David Brager

change noninterest-bearing, mix that a relationship. But for most XX% based funds, when is and that. the focus and going to real can't as at rates this It look add of mean deposits we your zero we're before little where possible. you just relationships beta bit, operating have I'll part, fast, doesn't But and which the you on and well. talked the that on to increase on there's Ben, I Yes, have a about

if that money XX% in and market, has noninterest-bearing $X $X million have customer zero. remain million at $XX So in million you that a relationship is to going

other if rates overall to relationship. increase the bit, a be still even going a we low-cost very The to XX%, have it's

at -- by it, look relationship it and how we and relationship. we it's that's evaluate that's how So we

going I will other not I a didn't think I think with in but just there cash inflationary pressures, to pressure spot. costing but as be asked right, little they mention be Everything have, banks is our the and more. there's is think well. just more we're really everybody's we burden that on has more So bank, point And a thing very your is the nobody good one

that but happen. going in basis we're of I going that that, our point it a didn't but to We next quarters. think be of don't burn So XXX on factor over, X also the couple some able to in increase, going best. is see at going do think deposits, our operating is here to do basis I least a maintain point to a we're forward

Benjamin Gerlinger

Yes, that sense. makes

pretty I luck quarter So me, for the it's of and of best congrats think much great on for half other a year.

Operator

[Operator Instructions].

question D.A. comes Clark Davidson. Our from next Wright with

Clark Wright

This is Gary Wright Tenner. right for Clark

First Slide off, XX on a clarification just here.

are the looks X%, at loans it Suncrest You growth but have flat like core acquired the loan quarter-to-quarter.

runoff quarter So net by acquired on then loan all is constrained loans? Suncrest this any the the growth at

David Brager

new Slide the loans you're been have separated Suncrest But about We one is are there million, the included Yes. shrinking. Well, PPP PPP -- the impact, $XXX just centers XX, And can loans the a loans. that Suncrest loans, you yes, if on thing also well. the looking as bit. little see generating but

that was close. shown So the net-net was there very the numbers

Clark Wright

we be, perceive quarters? Appreciate that. few the economic next given sizable space that of in then could last for Or next it. demand and been production And driver the warehouse a industrial pulling seeing space? CRE here are are would given the looking you you X it's back that in at over my years, item shift any Got in slowdown that

David Brager

feel the we're specifically hub distribution where We strongest and Southern located is one of industrial a in that mature. very infrastructure California primarily No. is

it's and down million can build another warehouse. So they just X not square go like the street foot

feel that loan an of is that concentration. us origination very you when average loan-to-value. about with is the about we pretty CRE look underwrote strong billion, It XX% of at And and of at it of size our at for largest it's we $X.XXX that. million. granular owner-occupied, $X.X So And XX%

if we could, we that do in we especially So would want more markets to industrial the serve.

Clark Wright

then at with million you that it's for And just me, now assets. level equivalents, or that cash holding under comfortable for X% earning the foreseeable look the a cash Is lastly of $XXX or future? if you're

Allen Nicholson

to we're balance the as said flexibility lower. on some maintaining to as deploying like And trying of we'd Ultimately, balance see that quarter, every we've that well sheet.

decline could rest it out through we year. So of as the the go

we in historically, the more say, also like. would than But I we're environment, So normally still current it's cautious. would probably

Operator

no there At are questions. this time, more

turn to So Mr. like Brager. the to I'd back call

David Brager

forward third a call. this Liz. we'll you, to speaking with in I thank questions. let you soon. for Please everybody your talk to Have have Thank joining day, and quarter. our want great if and I We us you earnings interest know October you look appreciate and quarter to XXXX for Allen

Operator

today's concludes Thank participating. you This for call. conference

disconnect. may You now

CVB Financial (CVBF) 21 Jul 222022 Q2 Earnings call transcript