CVB Financial Corp. Reports Third Quarter Operating Results.Business Editors ONTARIO Ontario, city, United States Ontario, city (1990 pop. 133,179), San Bernardino co., S Calif., near Los Angeles, in a region of vineyards; inc. 1891. , Calif.--(BUSINESS WIRE)--Oct. 16, 2003 CVB CVB Convention and Visitors Bureau CVB College Van Bestuur (Dutch: Managing Council) CVB Camper Van Beethoven (band) CVB Common Vision Blox CVB Center for Veterinary Biologics Financial Corp. (Nasdaq:CVBF CVBF Central Valley Business Forms CVBF Carrier Battle Force ) and its subsidiary, Citizens Business Bank, announced record results for the third quarter of 2003. This included record deposits, record loans, record assets and record earnings. It was the 46th consecutive quarter of record results for the company. CVB Financial Corp. reported net income of $13.5 million for the third quarter ending Sept. 30, 2003. This represents an increase of $306,000, or 2.32%, when compared with the $13.2 million in net income reported for the third quarter of 2002. Diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of were $0.30 for the third quarter of 2003. This is up $0.01, or 3.45%, when compared with earnings per share of $0.29 for the third quarter of 2002. Earnings results for the third quarter of 2003 produced a return on beginning equity of 19.71%, a return on average equity of 18.99% and a return on average assets of 1.55%. The efficiency ratio for the third quarter was 51.20%. During the third quarter of 2003, the company prepaid pre·pay tr.v. pre·paid, pre·pay·ing, pre·pays To pay or pay for beforehand. pre·pay  ment n. $25.0 million
in borrowing from the Federal Home Loan Bank. This resulted in a
prepayment penalty Prepayment penaltyA fee a borrower pays a lender when the borrower repays a loan before its scheduled time of maturity. of $2.2 million. The prepayment penalty was recorded as an operating expense Operating Expense The essential things that a company must purchase in order to maintain business. Notes: For example, the payment of employees wages are an operating expense. Also known as OPEX. . This prepayment Prepayment 1. The payment of a debt obligation prior to its due date. 2. The excess payment over a scheduled debt repayment amount. Notes: 1. Examples include deferred expenses such as rent and early loan repayments. 2. will reduce interest costs, and provide for a corresponding increase in the net interest margin. The efficiency ratio would have been 45.89% without this prepayment expense. In addition, the company realized a net gain after taxes from the sale of securities of $2.2 million in the third quarter of 2003. This compares with a net gain after taxes from the sale of securities of $1.2 million for the third quarter of 2002. Net income, excluding the gains on the sale of securities and the prepayment penalty, was $12.7 million for the third quarter of 2003. This compares with net operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. , excluding the gains on the sale of securities, of $12.0 million for the third quarter of 2002. Net income on this basis was up $747,000, or 6.23%, from the third quarter of 2002 to the third quarter of 2003. Net income for the nine months ending Sept. 30, 2003 was $38.7 million. This represents an increase of $1.6 million, or 4.23%, when compared with net earnings of $37.2 million for the same period of 2002. Diluted earnings per share was $0.87. This was up $0.04, or 4.82%, from diluted earnings per share of $0.83 for the same period last year. Net income for the nine months ending Sept. 30, 2003 produced a return on beginning equity of 19.93%, a return on average equity of 18.99% and a return on average assets of 1.55%. The efficiency ratio for the nine-month period was 48.73%. During the nine months ending Sept. 30, 2003, the company prepaid $75.0 million in advances from the Federal Home Loan Bank. This resulted in aggregate prepayment penalties of $5.3 million. The company also reversed an excess accrual accrual, n continually recurring short-term liabilities. Examples are accrued wages, taxes, and interest. of legal fees of $3.3 million as a result of the settlement of a lawsuit lawsuit: see procedure; tort. . In addition, the company had a net gain after taxes from the sale of securities of $2.7 million for the first nine months of 2003. This compares with a net gain after taxes from the sale of securities of $3.2 million during the first nine months of 2002. Net income, excluding the gains on the sale of securities, prepayment penalties and the reversal reversal n. the decision of a court of appeal ruling that the judgment of a lower court was incorrect and is reversed. The result is that the lower court which tried the case is instructed to dismiss the original action, retry the case, or is ordered to change its of litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. accruals Accruals Accounts on a balance sheet that represent liabilities and non-cash-based assets used in accrual-based accounting. These accounts include, among many others, accounts payable, accounts receivable, goodwill, future tax liability and future interest expense. , was $37.3 million for the nine months ending Sept. 30, 2003. Net income, excluding the gains on the sale of securities, was $34.0 million for the first nine months of 2002. This represents an increase of $3.3 million, or 9.76%, for the first nine months of 2003 when compared with the first nine months of 2002. The net interest margin continues to be under pressure as a result of the low interest rate environment. It declined from 4.81% for the third quarter of 2002 to 3.95% for the third quarter of 2003. It declined from 4.63% for the first nine months of 2002 to 4.18% for the first nine months of 2003. Asset yields have declined from 6.26% for the first nine months of 2002 to 5.38% for the first nine months of 2003. This has been mitigated mit·i·gate v. mit·i·gat·ed, mit·i·gat·ing, mit·i·gates v.tr. To moderate (a quality or condition) in force or intensity; alleviate. See Synonyms at relieve. v.intr. To become milder. by the strong growth in the balance sheet, and the decline in the cost of funds Cost of Funds The interest rate paid on an outstanding loan. Notes: Money isn't free! Cost of funds is the cost of borrowing money. See also: Interest Rate Cost of funds Interest rate associated with borrowing money. from 2.52% to 1.80% for the same periods. Asset yields for the third quarter of 2003 were 5.06%, compared with asset yields of 6.42% for the third quarter last year. The cost of funds was 1.58% and 2.60% for the same periods. The margin compression compression, external stress applied to an object or substance, tending to cause a decrease in volume (see pressure). Gases can be compressed easily, solids and liquids to a very small degree if at all. appears to be moderating with the recent stability of interest rates. The company has approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $1.1 billion, or 42.85% of its deposits, in interest free demand deposits. This should position it well for a rising rate environment. Total assets were $3.67 billion as of Sept. 30, 2003. This represents an increase of $818.8 million, or 28.75%, over the $2.85 billion in total assets reported on Sept. 30, 2002. Total deposits rose to $2.61 billion. This is up $416.8 million, or 18.97%, from $2.20 billion last year. Gross loans and leases grew to $1.63 billion as of Sept. 30, 2003. This is an increase of $296.9 million, or 22.28%, from $1.33 billion in gross loans and leases on Sept. 30, 2002. The Wealth Management Group has approximately $1.1 billion in assets under administration. CVB Financial Corp. reported non-performing assets of $1.6 million as of Sept. 30, 2003. This represents a ratio of non-performing assets to total assets of 0.04%, and it represents 0.10% of gross loans and leases. The allowance for loan and lease losses was $23.8 million as of Sept. 30, 2003. This represents 1.46% of gross loans and leases, and it compares with 1.70% on Sept. 30, 2002. Non-performing loans A non-performing loan is a loan that is in default or close to being in default. Many loans become non-performing after being in default for 3 months, but this can depend on the contract terms. and leases represented 6.87% of the allowance for loan and lease losses. On Sept. 19, 2003, the company completed its acquisition of Kaweah National Bank. Kaweah National Bank had four branches located in Visalia Visalia (vəsāl`yə), city (1990 pop. 75,636), seat of Tulare co., S central Calif., in the San Joaquin Valley; founded 1852, inc. 1874. Its economy is centered around agriculture (cotton, grapes, olives) and livestock. , Tulare Tulare (təlâr`, t  lâr`ē), city (1990 pop. 33,249), Tulare co., S central Calif., in the San Joaquin valley; inc. 1888. , Porterville Porterville, city (1990 pop. 29,563), Tulare co., S central Calif., on the Tule River; founded 1859 on the old Los Angeles–San Francisco stage route, inc. 1902. and McFarland McFarland may refer to:In places:
Calif., California, Golden State, CA - a state in the western United States on the Pacific; the 3rd largest state; known for earthquakes with $140.3 million in deposits and $103.0 million in loans. Citizens Business Bank is the largest financial institution with headquarters in the Inland Empire In·land Empire A region of the northwest United States between the Cascade Range and the Rocky Mountains, comprising eastern Washington, eastern Oregon, northern Idaho, and western Montana. Farming, lumbering, and mining are important to the area. Region of Southern California Southern California, also colloquially known as SoCal, is the southern portion of the U.S. state of California. Centered on the cities of Los Angeles and San Diego, Southern California is home to nearly 24 million people and is the nation's second most populated region, . It serves 30 cities with 37 business financial centers in the Inland Empire, Los Angeles Los Angeles (lôs ăn`jələs, lŏs, ăn`jəlēz'), city (1990 pop. 3,485,398), seat of Los Angeles co., S Calif.; inc. 1850. County, Orange County and the Central Valley areas of California California (kăl'ĭfôr`nyə), most populous state in the United States, located in the Far West; bordered by Oregon (N), Nevada and, across the Colorado River, Arizona (E), Mexico (S), and the Pacific Ocean (W). . Its subsidiary, Golden West Financial Services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. , provides vehicle leasing Vehicle leasing refers to leasing the use of a motor vehicle for a fixed or indefinite period of time. It is commonly offered by dealers as an alternative to vehicle purchase. , equipment leasing Equipment Leasing is a financing option to lease equipment for a certain amount of time. Leasing Benefits
An arrangement of characters (usually letters) representing a particular security listed on an exchange or otherwise traded publicly. When a company issues securities to the public marketplace, it selects an available ticker symbol for its securities which investors of CVBF. For investor information on CVB Financial Corp., visit its Citizens Business Bank Web site at www.cbbank.com and click on the CVB Investor tab. Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. This document may contain forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. that are subject to risks and uncertainties that could cause actual results to differ materially from the projected. For a discussion of factors that could cause actual results to differ, please see the publicly available Securities and Exchange Commission filings of CVB Financial Corp., including its Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended Dec. 31, 2002, and particularly the discussion on risk factors within that document.
CVB FINANCIAL CORP.
CONSOLIDATED BALANCE SHEET
(unaudited)
dollars in thousands
Sept. 30
2003 2002
Assets:
Federal funds sold and
reverse repos $ 0 $ 99,202
Investment Securities
available-for-sale 1,818,199 1,239,653
Loans and lease finance
receivables 1,629,775 1,332,835
Less allowance for credit
losses (23,787) (22,644)
Net loans and lease
finance receivables 1,605,988 1,310,191
Total earning assets 3,424,187 2,649,046
Cash and due from banks 126,018 124,469
Premises and equipment, net 31,683 28,786
Goodwill and intangibles 26,699 12,536
Other assets 58,566 33,479
TOTAL $3,667,153 $2,848,316
Liabilities and Stockholders'
Equity
Liabilities:
Deposits:
Demand
Deposits(noninterest-
bearing) $1,120,037 $ 882,785
Investment Checking 200,572 171,029
Savings/MMDA 715,557 634,655
Time Deposits 577,692 508,621
Total Deposits 2,613,858 2,197,090
Demand Note to U.S.
Treasury 10,251 9,878
Borrowings 729,000 344,700
Other liabilities 36,222 41,088
Total Liabilities 3,389,331 2,592,756
Stockholders' equity:
Stockholders' equity 263,990 226,621
Accumulated other
comprehensive income
(loss), net of tax 13,832 28,939
277,822 255,560
TOTAL $3,667,153 $2,848,316
CVB FINANCIAL CORP.
CONSOLIDATED AVERAGE BALANCE SHEET
(unaudited)
dollars in thousands
Three months ended Nine months ended
Sept. 30 Sept. 30
2003 2002 2003 2002
Assets:
Federal funds sold and
reverse repos $ 210 $ 32,628 $ 3,257 $ 44,158
Investment securities
available-for-sale 1,797,096 1,332,299 1,654,602 1,258,104
Loans and lease
finance receivables 1,522,765 1,230,454 1,479,676 1,234,762
Less allowance for
credit losses (21,179) (22,083) (21,406) (21,971)
Net loans and lease
finance
receivables 1,501,586 1,208,371 1,458,270 1,212,791
Total earning
assets 3,298,892 2,573,298 3,116,129 2,515,053
Cash and due from
banks 111,655 100,558 110,726 106,154
Premises and
equipment, net 31,713 28,883 30,882 30,340
Other real estate
owned, net 0 0 0 0
Goodwill and
intangibles 19,503 6,235 15,544 6,358
Other assets 88,469 41,787 72,033 64,241
TOTAL $3,550,232 $2,750,761 $3,345,314 $2,722,146
Liabilities and
Stockholders' Equity
Liabilities:
Deposits:
Noninterest-
bearing $1,008,109 $ 809,625 $ 939,725 $ 802,589
Interest-
bearing 1,475,017 1,260,634 1,432,392 1,247,559
Total
Deposits 2,483,126 2,070,259 2,372,117 2,050,148
Other borrowings 741,774 401,206 641,263 393,739
Other liabilities 47,149 32,031 59,354 35,196
Total
Liabilities 3,272,049 2,503,496 3,072,734 2,479,083
Stockholders' equity:
Stockholders'
equity 255,682 226,156 248,722 227,886
Accumulated other
comprehensive
income
(loss), net of
tax 22,501 21,109 23,858 15,177
278,183 247,265 272,580 243,063
TOTAL $3,550,232 $2,750,761 $3,345,314 $2,722,146
CVB FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited)
dollar amounts in thousands, except per share
For the Three For the Nine
Months Months
Ended Sept. 30, Ended Sept. 30,
2003 2002 2003 2002
Interest Income:
Loans, including fees $24,629 $24,030 $ 72,262 $ 66,337
Investment
securities:
Taxable 11,780 12,073 36,966 35,609
Tax-advantaged 3,938 4,071 12,088 12,127
Total
investment
income 15,718 16,144 49,054 47,736
Federal funds sold 1 157 41 478
Total
interest
income 40,348 40,331 121,357 114,551
Interest Expense:
Deposits 3,723 5,938 12,505 16,545
Borrowings 5,191 5,022 15,632 14,552
Total
interest
expense 8,914 10,960 28,137 31,097
Net interest income
before provision
for credit losses 31,434 29,371 93,220 83,454
Provision for credit
losses 0 0 0 0
Net interest income
after
provision for
credit losses 31,434 29,371 93,220 83,454
Other Operating Income:
Service charges on
deposit accounts 3,835 3,580 11,280 10,335
Wealth Management
services 932 924 2,903 2,894
Gain(Loss) on sale
of securities 3,387 1,844 4,210 4,940
Other 1,986 1,492 5,116 4,456
Total other
operating
income 10,140 7,840 23,509 22,625
Other operating
expenses:
Salaries and
employee benefits 10,498 9,617 30,393 26,766
Occupancy 1,771 1,602 4,944 4,731
Equipment 1,833 1,538 4,904 4,431
Professional
services 1,037 947 3,020 3,011
Goodwill
Amortization 203 268 518 325
Other 5,945 3,222 13,105 9,448
Total other
operating
expenses 21,287 17,194 56,884 48,712
Earnings before income
taxes 20,287 20,017 59,845 57,367
Income taxes 6,785 6,821 21,119 20,214
Net earnings $13,502 $13,196 $ 38,726 $ 37,153
Basic earnings per
common share (a) $0.31 $ 0.30 $ 0.89 $ 0.85
Diluted earnings per
common share (a) $0.30 $ 0.29 $ 0.87 $ 0.83
Cash dividends per
common share (a) $0.12 $ 0.14 $ 0.36 $ 0.42
note (a): All per share information has been retroactively
adjusted to reflect the 5-for-4 stock split declared on Dec. 19, 2002.
Three months ended Nine months ended
Sept. 30 Sept. 30
2003 2002 2003 2002
Interest income
-- (Tax
Effective)(te) 41,726 41,756 125,588 118,795
Interest Expense 8,914 10,960 28,137 31,097
Net Interest
income -- (te) 32,812 30,796 97,451 87,698
Net Earnings
Reconciliation
(non-GAAP
disclosure):
Net operating
income without net
gain on sale of
securities, the
prepayment
penalty, and
reversal of excess
accrual on legal
expense 12,730 11,983 37,267 33,954
Net gain on
sale of
securities,
net of tax 2,222 1,213 2,724 3,199
Prepayment
penalty,
net of tax (1,450) 0 (3,401) 0
Reversal of
excess
legal
accrual,
net of tax 0 0 2,136 0
Reported net
earnings 13,502 13,196 38,726 37,153
Gain(Loss) on
sale of
securities 3,387 1,844 4,210 4,940
Gain on sale of
OREO 0 0 0 0
Return on average
assets 1.55% 1.82% 1.55% 1.82%
Return on average
equity 18.99% 20.44% 18.99% 20.44%
Efficiency ratio 51.20% 46.21% 48.73% 45.92%
Net interest
margin (te) 3.95% 4.81% 4.18% 4.63%
Weighted average
shares
outstanding
Diluted 44,548,671 44,564,810 44,609,640 44,546,380
Basic 43,746,984 43,632,036 43,751,716 43,612,010
Dividend payout
ratio 38.56% 37.04% 40.69% 41.96%
Number of shares
outstanding-EOP 44,077,664 43,513,420
Book value per
share 6.30 5.87
Sept. 30
2003 2002
Non-performing
Assets (dollar
amount in
thousands):
Non-accrual
loans $ 1,633 $ 192
Loans past due
90 days or
more
and still
accruing
interest 0 49
Restructured
loans 0 577
Other real
estate owned
(OREO), net 0 0
Total non-
performing
assets $ 1,633 $ 818
Percentage of
non-performing
assets
to total
loans
outstanding
and OREO 0.10% 0.06%
Percentage of
non-performing
assets to
total assets 0.04% 0.03%
Non-performing
assets to
allowance for
loan losses 6.87% 3.61%
Net loan losses
to Average
loans 0.06% 0.02%
Allowance for
Credit Losses
at Beginning
of Period:
Citizens
Business
Bank $21,666 $20,469
Acquisition
of Western
Security
Bank 2,325
Acquisition
of Kaweah
National
Bank 2,770
Total Loans
Charged-
Off 1,673 1,287
Total Loans
Recovered (1,024) (1,137)
Net Loans
Charged-Off 649 150
Provision
Charged to
Operating
Expense 0 0
Allowance for
Credit Losses
at End of
period $23,787 $22,644
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