Core Insights - CVB Financial Corp. has been recognized by Forbes in its seventeenth annual America's Best Banks list, marking the ninth inclusion in the past decade [1][2] - The company has demonstrated strong financial performance and community engagement, being ranked among the Top 50 Public Banks and Top Three Large U.S. Banks by Deposit Franchise in 2025 [2] - Forbes evaluated ten metrics related to credit quality, growth, and profitability for the rankings of the 200 largest publicly-traded banks and thrifts [3] Company Overview - CVB Financial Corp. is the holding company for Citizens Business Bank, with over $15 billion in total assets, making it one of the 10 largest bank holding companies headquartered in California [4] - Citizens Business Bank offers a wide range of banking, lending, and investing services through more than 60 banking centers and three trust office locations in California [4] - The company maintains a Five-Star Superior rating from BauerFinancial and a BBB+ rating from Fitch Ratings, reflecting its financial strength [2]

Core Viewpoint - The proposed sale of Heritage Commerce Corp to CVB Financial Corp is under investigation to assess whether the transaction adequately values Heritage and the process leading to this valuation is appropriate [1]. Group 1: Transaction Details - Heritage Commerce Corp shareholders will receive 0.6500 shares of CVB common stock for each share of Heritage they own as part of the proposed transaction [1]. Group 2: Legal Investigation - Kahn Swick & Foti, LLC is investigating the proposed sale to determine if the consideration offered undervalues Heritage Commerce Corp [1]. - The firm is inviting shareholders who believe the transaction undervalues the company to discuss their legal rights regarding the proposed sale [2].

Core Insights - Heritage Commerce Corp reported a 62% year-over-year increase in adjusted fourth-quarter earnings, driven by balance-sheet growth, net interest margin (NIM) expansion, and positive operating leverage [1][4] - The company announced a strategic merger with Citizens Business Bank to enhance market presence and long-term growth opportunities [1][5] Financial Performance Highlights - For the fourth quarter of 2025, reported net income was $15.1 million, with diluted earnings per share (EPS) of $0.25, reflecting a 3% and 4% increase from the previous year, respectively [3][12] - Adjusted net income for the fourth quarter was $17.2 million, with adjusted EPS of $0.28, both up 17% from the previous year [3][12] - Full-year 2025 reported net income reached $47.8 million, with reported EPS of $0.78, an 18% increase from $40.5 million and $0.66 in 2024 [3][12] - Adjusted full-year net income was $56.4 million, with adjusted EPS of $0.91, marking a 39% increase from the previous year [3][12] Key Metrics - The return on average assets (ROAA) for the fourth quarter was 1.04%, while the adjusted ROAA was 1.18%, reflecting a 12% increase over the previous year [3][12] - The return on average tangible common equity (ROATCE) was 11.29%, with an adjusted ROATCE of 12.83%, both showing significant year-over-year improvements [3][12] - The efficiency ratio improved to 57.89% in the fourth quarter, with an adjusted efficiency ratio of 54.04%, a decrease of 7% from the previous year [3][12] Merger Details - The merger with Citizens Business Bank is valued at approximately $811 million, or $13.00 per share, and is expected to create a bank with around $22 billion in assets and over 75 branches [11][13] - The merger has been unanimously approved by the boards of both companies and is anticipated to close in the second quarter of 2026, pending regulatory and shareholder approvals [11][13]

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Financial Data and Key Metrics Changes - For Q4 2025, the company reported net earnings of $55 million or $0.40 per share, an increase from $52.6 million or $0.38 per share in Q3 2025 and $50.9 million or $0.36 per share in Q4 2024 [3][4] - Return on average tangible common equity was 14.4% and return on average assets was 1.40% for Q4 2025 [3] - Pre-tax income increased by $5.4 million quarter-over-quarter and $6.3 million year-over-year [4] Business Line Data and Key Metrics Changes - Net interest income grew by $7 million or 6% from Q3 2025 and by $12.2 million or 11% from Q4 2024 [4] - Non-interest income was $11.2 million in Q4 2025, which was $1.8 million lower than Q3 2025 and $1.9 million lower than Q4 2024 [6] - Total loans increased to $8.7 billion, a $228 million or 2.7% increase from Q3 2025 and a $163 million or 2% increase from the end of 2024 [7][8] Market Data and Key Metrics Changes - Average total deposits were $12.6 billion in Q4 2025, compared to $12.5 billion in Q3 2025 [10] - Non-interest-bearing deposits declined by $122 million on average compared to Q3 2025, while interest-bearing non-maturity deposits grew by $234 million [10][11] - The cost of deposits and repos was 86 basis points in Q4 2025, down from 90 basis points in Q3 2025 [11] Company Strategy and Development Direction - The company is focused on maintaining profitability and has a strong commitment to small to medium-sized businesses [95] - The pending merger with Heritage Bank of Commerce is expected to close in Q2 2026, with integration plans already underway [27][87] - The company aims to continue growing its loan portfolio while maintaining credit quality [88] Management's Comments on Operating Environment and Future Outlook - The economic forecast indicates modest growth, with real GDP expected to remain below 1.5% through 2027 [14] - Management expressed cautious optimism for 2026, citing strong loan pipelines and positive customer sentiment [26] - The company is prepared for competitive pressures in the loan market but remains focused on maintaining underwriting standards [40] Other Important Information - The company incurred $1.6 million in one-time merger-related expenses in Q4 2025 [17] - The allowance for credit losses was $77 million at the end of Q4 2025, representing 0.89% of gross loans [13] - Shareholders' equity increased to $2.3 billion, a $109 million increase from the end of 2024 [16] Q&A Session Summary Question: Non-interest-bearing deposits and customer behavior - Management indicated that the decline in non-interest-bearing deposits was typical seasonal behavior and not due to significant customer attrition [23][72] Question: Non-dairy and livestock loan growth sustainability - Management noted that loan pipelines remain strong and expressed optimism about stable loan growth moving forward [25][26] Question: Update on the Heritage Bank merger - Management confirmed that the merger is progressing well and is on track for a Q2 2026 close [27] Question: Competitive landscape for deposits - Management stated that they are winning deposit relationships primarily from operating companies and are not focused on attracting customers with the highest rates [35] Question: Loan modifications and balances - Management explained that loan modifications can occur for various reasons, but the overall number remains small relative to the total loan portfolio [85] Question: Impact of the Heritage Bank merger on loan growth - Management anticipates potential benefits from the merger, including access to new markets and enhanced service capabilities for clients [88]

Financial Data and Key Metrics Changes - For Q4 2025, the company reported net earnings of $55 million or $0.40 per share, an increase from $52.6 million or $0.38 per share in Q3 2025 and $50.9 million or $0.36 per share in Q4 2024 [3][4] - Return on average tangible common equity was 14.4% and return on average assets was 1.40% for Q4 2025 [3] - Pre-tax income grew by $5.4 million quarter-over-quarter and $6.3 million year-over-year [4] Business Line Data and Key Metrics Changes - Net interest income increased by $7 million or 6% from Q3 2025 and by $12.2 million or 11% from Q4 2024 [4] - Non-interest income was $11.2 million in Q4 2025, which was $1.8 million lower than Q3 2025 and $1.9 million lower than Q4 2024 [6] - Total loans at December 31, 2025, were $8.7 billion, a $228 million or 2.7% increase from Q3 2025 and a $163 million or 2% increase from the end of 2024 [7][8] Market Data and Key Metrics Changes - Average total deposits and customer repurchase agreements were $12.6 billion during Q4 2025, compared to $12.5 billion for Q3 2025 [10] - Non-interest-bearing deposits declined by $122 million compared to Q3 2025, while interest-bearing non-maturity deposits grew by $234 million [10][11] - The cost of deposits and repos was 86 basis points for Q4 2025, down from 90 basis points in Q3 2025 [11] Company Strategy and Development Direction - The company is focused on maintaining profitability and has a strong commitment to its mission of banking small to medium-sized businesses [95] - The pending merger with Heritage Bank of Commerce is expected to close in Q2 2026, with integration plans already underway [27][87] - The company anticipates that the merger will provide growth opportunities in new markets and enhance service offerings to clients [87] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about loan growth in 2026, citing strong loan pipelines and positive customer sentiment [26] - The economic forecast indicates modest growth, with real GDP expected to remain below 1.5% through 2027 [14] - Management noted that competition for quality loans remains intense, but they are prepared to maintain credit quality standards [40] Other Important Information - The company incurred $1.6 million in one-time merger-related expenses during Q4 2025 [17] - The allowance for credit losses was $77 million at December 31, 2025, or 0.89% of gross loans, reflecting a decrease from the previous quarter [13] Q&A Session Summary Question: Non-interest-bearing deposits and customer behavior - Management indicated that the decline in non-interest-bearing deposits was due to normal seasonality and not a significant loss of relationships [23][72] Question: Loan growth sustainability - Management expressed optimism about loan growth, noting that pipelines remain strong and utilization rates are normalizing [25][26] Question: Update on Heritage Bank merger - Management confirmed that the merger is progressing well and is on track for a Q2 2026 close [27] Question: Competitive landscape for deposits - Management stated that they are winning deposit relationships primarily from operating companies, with a focus on non-interest-bearing deposits [34] Question: Loan modifications and outlook - Management clarified that loan modifications can occur for various reasons, but the overall number remains small relative to the total loan portfolio [85]

Financial Data and Key Metrics Changes - For Q4 2025, the company reported net earnings of $55 million or $0.40 per share, an increase from $52.6 million or $0.38 per share in Q3 2025 and $50.9 million or $0.36 per share in Q4 2024 [3][4] - The return on average tangible common equity was 14.4% and return on average assets was 1.40% for Q4 2025 [3] - Pre-tax income increased by $5.4 million quarter-over-quarter and $6.3 million year-over-year [4] Business Line Data and Key Metrics Changes - Net interest income grew by $7 million, or 6%, from Q3 2025 and by $12.2 million, or 11%, from Q4 2024 [4] - Non-interest income was $11.2 million in Q4 2025, which was $1.8 million lower than Q3 2025 and $1.9 million lower than Q4 2024 [5] - Total loans increased to $8.7 billion, a $228 million, or 2.7%, increase from Q3 2025 and a $163 million, or 2%, increase from the end of 2024 [6][7] Market Data and Key Metrics Changes - Average total deposits were $12.6 billion in Q4 2025, compared to $12.5 billion in Q3 2025 [9] - Non-interest-bearing deposits declined by $122 million compared to Q3 2025, while interest-bearing non-maturity deposits grew by $234 million [9][10] - The cost of deposits decreased to 86 basis points in Q4 2025 from 90 basis points in Q3 2025 [10] Company Strategy and Development Direction - The company is focused on maintaining profitability and has a strong commitment to its mission of serving small to medium-sized businesses [96] - The pending merger with Heritage Bank of Commerce is expected to close in Q2 2026, with integration plans already underway [27][66] - The company aims to leverage the merger to enhance its product offerings and expand into new markets [87] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism for 2026, citing strong loan pipelines and positive customer sentiment [26] - The economic forecast indicates modest growth, with real GDP expected to remain below 1.5% through 2027 [14] - The company is prepared for competitive pressures in the loan market but remains committed to maintaining credit quality [40] Other Important Information - The company incurred $1.6 million in one-time merger-related expenses during Q4 2025 [17] - The allowance for credit losses was $77 million, or 0.89% of gross loans, reflecting a decrease from the previous quarter [12] - The company repurchased 1.96 million shares at an average price of $18.80 during Q4 2025 [16] Q&A Session Summary Question: Non-interest-bearing deposits and customer behavior - Management indicated that the decline in non-interest-bearing deposits was due to normal seasonality and not a significant behavioral change among customers [22][23] Question: Non-dairy and livestock loan growth sustainability - Management noted that loan pipelines remain strong and expressed optimism about stable loan growth moving forward [24][26] Question: Update on the Heritage Bank deal - Management confirmed that the merger is progressing well and is on track for a Q2 2026 close [27] Question: Competitive landscape for deposits - Management stated that they are winning deposit business primarily from operating companies and are not focused on attracting customers with the highest rates [33][35] Question: Loan modifications and outlook for loan growth - Management explained that loan modifications can occur for various reasons, but the overall impact on the loan portfolio remains minimal [85]

Acquisition Strategy - CVBF plans to acquire Heritage Bank of Commerce, with an estimated closing in Q2 2026[22] - The acquisition is expected to result in a pro forma Return on Average Tangible Common Equity (ROATCE) of 168% in 2027[132] - The acquisition is projected to increase Earnings Per Share (EPS) by approximately 132% in 2027, excluding rate marks[132] - The transaction assumes cost savings of approximately 35% of Heritage Commerce's estimated 2027 operating noninterest expense, which is about $43 million[134] Financial Performance (Q4 2025) - Net income for Q4 2025 was $55044 thousand, with earnings per share (EPS) of $040[33] - The Net Interest Margin (NIM) for Q4 2025 was 349%[33] - The efficiency ratio for Q4 2025 was 463%[33] - The Return on Average Tangible Common Equity (ROATCE) for Q4 2025 was 1441%[33] Balance Sheet (December 31, 2025) - Total assets were $156 billion, with gross loans amounting to $87 billion[14,31] - Total deposits, including repurchase agreements (repos), were $126 billion[14,31] - Total equity was $23 billion[14] - Securities totaled $50 billion, representing 32% of assets[31] - Loans totaled $87 billion, representing 55% of assets[31] Capital Ratios (December 31, 2025) - The Common Equity Tier 1 (CET1) ratio was 159%[32,33] - The Tier 1 Leverage ratio was 116%[32] - The Tangible Common Equity (TCE) ratio was 103%[32,33] Loan Portfolio (December 31, 2025) - Commercial Real Estate (CRE) loans constituted 76% of the loan portfolio[31] - Commercial and Industrial (C&I) loans represented 11% of the loan portfolio[31] - Dairy & Livestock (D&L) and Agribusiness loans accounted for 5% of the loan portfolio[31]

Financial Performance - Net income for Q4 2025 was $55.0 million, up from $52.6 million in Q3 2025 and $50.9 million in Q4 2024, with diluted earnings per share at $0.40[4] - For the full year 2025, net income was $209.3 million, compared to $200.7 million in 2024, with diluted earnings per share at $1.52[6] - Net earnings for the year ended December 31, 2025, were $209,298 thousand, an increase from $200,716 thousand in 2024, reflecting a growth of 4.8%[56] - Net earnings for Q4 2025 reached $55,044,000, up 8.3% compared to $52,586,000 in Q3 2025[66] Income and Expenses - Net interest income for Q4 2025 was $122.7 million, a 6.1% increase from Q3 2025 and an 11.1% increase from Q4 2024[13] - Noninterest income for Q4 2025 was $11.2 million, down from $13.0 million in Q3 2025 and $13.1 million in Q4 2024, including a $2.8 million loss on sale of available-for-sale investments[20][21] - Noninterest expense for Q4 2025 was $62.0 million, an increase of $3.4 million from Q3 2025, with an efficiency ratio of 46.3%[22] - Total noninterest expense for the year ended December 31, 2025, was $237,265 thousand, up from $233,583 thousand in 2024, reflecting a rise of 1.2%[56] Asset and Liability Management - Total assets decreased by $35.2 million, or 0.22%, to $15.63 billion from September 30, 2025, but increased by $477.4 million, or 3.15%, from $15.15 billion at December 31, 2024[25][26] - Total loans and leases increased by $228.3 million, or 2.69%, to $8.70 billion from September 30, 2025, and increased by $162.8 million, or 1.91%, from December 31, 2024[29][30] - Total deposits totaled $12.07 billion at December 31, 2025, representing a net decrease of $12.9 million from September 30, 2025, but an increase of $352.3 million, or 2.89%, from December 31, 2024[35] - Average total deposits and customer repurchase agreements increased by $110 million from the prior quarter[12] Capital and Equity - Total equity increased to $2.30 billion at December 31, 2025, reflecting a rise of $108.9 million from $2.19 billion at December 31, 2024, driven by $209.3 million in net earnings[38] - The tangible book value per share was $11.24 as of December 31, 2025[38] - The book value per share increased to $16.93 as of December 31, 2025, compared to $16.60 in the previous quarter[60] Credit Quality - The allowance for credit losses totaled $77.2 million at December 31, 2025, representing 0.89% of gross loans, down from 0.94% at September 30, 2025[31] - Nonperforming assets decreased to $4.85 million, or 0.03% of total assets, from $28.47 million, or 0.18%, at September 30, 2025[33] - Nonperforming loans decreased to $4,685,000, representing only 0.05% of total loans as of December 31, 2025, down from 0.33% in September 2025[71] Ratios and Returns - Annualized return on average equity (ROAE) for Q4 2025 was 9.48%, while return on average tangible common equity (ROATCE) was 14.41%[5] - Return on average assets (annualized) improved to 1.40% for the quarter ended December 31, 2025, compared to 1.35% in the previous quarter[58] - The Tier 1 leverage capital ratio was 11.6% as of December 31, 2025, remaining well above the minimum required standard of 4.0%[40] Shareholder Actions - The company repurchased 4.3 million shares of common stock in 2025[12] - The company repurchased 4,321,777 shares of common stock at an average price of $18.60, totaling $80.4 million[38] - Cash dividends declared per common share remained stable at $0.20 for both the three months ended December 31, 2025, and September 30, 2025[56] Future Outlook - The company plans to hold a conference call on January 22, 2026, to discuss the fourth quarter 2025 financial results[44]

Core Viewpoint - CVB Financial reported quarterly earnings of $0.4 per share, matching the Zacks Consensus Estimate, and showing an increase from $0.36 per share a year ago, with an earnings surprise of +1.27% [1] Financial Performance - The company posted revenues of $133.85 million for the quarter ended December 2025, which was 1.54% below the Zacks Consensus Estimate, compared to $123.52 million in the same quarter last year [2] - Over the last four quarters, CVB Financial has surpassed consensus EPS estimates four times but has only topped consensus revenue estimates once [2] Stock Performance - CVB Financial shares have increased by approximately 6.2% since the beginning of the year, while the S&P 500 has declined by 0.7% [3] Future Outlook - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to these expectations [4] - The current consensus EPS estimate for the next quarter is $0.37 on revenues of $132.15 million, and for the current fiscal year, it is $1.48 on revenues of $683.5 million [7] Industry Context - The Zacks Industry Rank indicates that the Banks - West industry is currently in the top 31% of over 250 Zacks industries, suggesting that companies in the top 50% outperform those in the bottom 50% by more than 2 to 1 [8]