CVB Financial Corp. (NASDAQ:CVBF) Q4 2022 Earnings Conference Call January 26, 2023 10:30 AM ET Company Participants Christina Carrabino - Investor Relations Dave Brager - President and Chief Executive Officer Allen Nicholson - Executive Vice President and Chief Financial Officer Conference Call Participants Matthew Clark - Piper Sandler Clark Wright - D.A. Davidson Kelly Motta - KBW Eric Spector - Raymond James Tim Coffey - Janney Montgomery Scott Operator Good morning, ladies and gentlemen, and welcome to ...

January 2023 cbbank.com Forward Looking Statements This presentation contains forward-looking statements that are intended to be covered by the safe harbor for such statements provided by the Private Securities Litigation Reform Act of 1995. These statements are based on the current beliefs and expectations of the management of CVB Financial Corp. and Citizens Business Bank (collectively, the "Company") and are subject to significant risks and uncertainties that could cause actual results or performance to ...

[PART I – FINANCIAL INFORMATION (UNAUDITED)](index=3&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION%20(UNAUDITED)) This section presents the unaudited financial information, including condensed consolidated financial statements and management's discussion and analysis [General Information](index=3&type=section&id=General%20Information) This section provides a cautionary note on forward-looking statements, highlighting risks from economic conditions, monetary policies, and regulatory changes - Forward-looking statements involve risks and uncertainties, including **economic conditions**, **monetary policies**, and **regulatory changes**, that could cause actual results to differ materially from projections[7](index=7&type=chunk)[9](index=9&type=chunk) - Key risks include the **strength of the U.S. economy**, **Federal Reserve interest rate policies**, **inflation/deflation**, **acquisition effects**, **financial services regulatory changes**, **CECL model credit loss estimation**, and **cybersecurity threats**[9](index=9&type=chunk) [ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS](index=5&type=section&id=ITEM%201.%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of earnings, and cash flows [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's financial position at specific dates, detailing assets, liabilities, and equity Condensed Consolidated Balance Sheets (Dollars in thousands) | Metric | September 30, 2022 | December 31, 2021 | |:--------------------------------------------------|--------------------|-------------------| | **Assets** | | | | Total cash and cash equivalents | $318,539 | $1,732,548 | | Total investment securities | $5,879,746 | $5,109,893 | | Loans and lease finance receivables | $8,774,136 | $7,887,713 | | Allowance for credit losses | ($82,601) | ($65,019) | | Net loans and lease finance receivables | $8,691,535 | $7,822,694 | | Goodwill | $765,822 | $663,707 | | Total assets | $16,349,276 | $15,883,697 | | **Liabilities** | | | | Total deposits | $13,872,399 | $12,976,442 | | Customer repurchase agreements | $467,844 | $642,388 | | Total liabilities | $14,470,390 | $13,802,194 | | **Stockholders' Equity** | | | | Total stockholders' equity | $1,878,886 | $2,081,503 | | Total liabilities and stockholders' equity | $16,349,276 | $15,883,697 | [Condensed Consolidated Statements of Earnings and Comprehensive Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Earnings%20and%20Comprehensive%20Income) This section presents the company's financial performance over specific periods, detailing revenues, expenses, and net earnings Condensed Consolidated Statements of Earnings and Comprehensive Income (Dollars in thousands, except per share amounts) | Metric | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | |:------------------------------------------------|:--------------------------------|:--------------------------------|:-------------------------------|:-------------------------------| | Total interest income | $135,188 | $104,547 | $372,550 | $317,099 | | Total interest expense | $1,850 | $1,248 | $4,432 | $4,944 | | Net interest income before provision for credit losses | $133,338 | $103,299 | $368,118 | $312,155 | | Provision for (recapture of) credit losses | $2,000 | ($4,000) | $8,100 | ($25,500) | | Net interest income after provision for credit losses | $131,338 | $107,299 | $360,018 | $337,655 | | Total noninterest income | $11,590 | $10,483 | $37,524 | $35,000 | | Total noninterest expense | $53,027 | $48,099 | $162,136 | $141,807 | | Earnings before income taxes | $89,901 | $69,683 | $235,406 | $230,848 | | Income taxes | $25,262 | $19,930 | $66,149 | $66,023 | | Net earnings | $64,639 | $49,753 | $169,257 | $164,825 | | Basic earnings per common share | $0.46 | $0.37 | $1.20 | $1.21 | | Diluted earnings per common share | $0.46 | $0.37 | $1.20 | $1.21 | [Condensed Consolidated Statements of Stockholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) This section details changes in stockholders' equity over specific periods, including net earnings, dividends, and stock transactions Condensed Consolidated Statements of Stockholders' Equity (Dollars and shares in thousands) | Metric | Sep 30, 2022 (3 Months) | Sep 30, 2021 (3 Months) | Sep 30, 2022 (9 Months) | Sep 30, 2021 (9 Months) | |:----------------------------------------|:------------------------|:------------------------|:------------------------|:------------------------| | Common Shares Outstanding (start) | 140,026 | 135,927 | 135,526 | 135,601 | | Common Stock (start) | $1,301,050 | $1,214,882 | $1,209,903 | $1,211,780 | | Retained Earnings (start) | $928,000 | $826,941 | $875,568 | $760,861 | | Accumulated Other Comprehensive Income (Loss) (start) | ($246,839) | $13,251 | ($3,968) | $35,349 | | Total (start) | $1,982,211 | $2,055,074 | $2,081,503 | $2,007,990 | | Issuance of common stock for acquisition of Suncrest Bank | - | - | 8,617 shares / $197,069 | - | | Repurchase of common stock | (239) shares / ($5,742) | (406) shares / ($7,712) | (1,971) shares / ($46,206) | (430) shares / ($8,246) | | Repurchase of common stock, ASR Plan | - | - | (2,994) shares / ($70,000) | - | | Cash dividends declared on common stock | ($27,965) | ($24,421) | ($80,151) | ($73,413) | | Net earnings | $64,639 | $49,753 | $169,257 | $164,825 | | Other comprehensive loss | ($136,658) | ($10,173) | ($379,529) | ($32,271) | | Common Shares Outstanding (end) | 139,805 | 135,517 | 139,805 | 135,517 | | Total (end) | $1,878,886 | $2,063,920 | $1,878,886 | $2,063,920 | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section summarizes cash inflows and outflows from operating, investing, and financing activities over specific periods Condensed Consolidated Statements of Cash Flows (Dollars in thousands) | Metric | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | |:----------------------------------------------|:-------------------------------|:-------------------------------| | Net cash provided by operating activities | $202,846 | $136,580 | | Net cash used in investing activities | ($962,037) | ($835,890) | | Net cash (used in) provided by financing activities | ($654,818) | $1,302,513 | | Net (decrease) in cash and cash equivalents | ($1,414,009) | $603,203 | | Cash and cash equivalents, beginning of period | $1,732,548 | $1,958,160 | | Cash and cash equivalents, end of period | $318,539 | $2,561,363 | [NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS](index=10&type=section&id=NOTES%20TO%20THE%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) This section provides detailed notes to the unaudited financial statements, covering business operations, accounting policies, and key financial instruments [1. BUSINESS](index=10&type=section&id=1.%20BUSINESS) This section describes the company's primary banking activities, geographic presence, and recent strategic acquisitions - CVB Financial Corp. and Citizens Business Bank primarily engage in **traditional banking activities**, including deposit acceptance, lending, and investment, also offering trust and investment services[23](index=23&type=chunk)[24](index=24&type=chunk) - The Bank serves **small to mid-sized businesses and individuals** across various California counties, operating **63 banking centers** and **four trust office locations**[24](index=24&type=chunk) - The **acquisition of Suncrest Bank** on January 7, 2022, added approximately **$1.4 billion in total assets**, including **$765.9 million in net loans** and **$102.1 million in goodwill**[25](index=25&type=chunk) [2. BASIS OF PRESENTATION](index=10&type=section&id=2.%20BASIS%20OF%20PRESENTATION) This section outlines the preparation of unaudited financial statements in accordance with SEC rules and GAAP for interim reporting - Unaudited condensed consolidated financial statements are prepared in accordance with **SEC rules for Form 10-Q** and **GAAP for interim financial reporting**[26](index=26&type=chunk) - Prior period amounts have been reclassified to conform to current presentation, with **no impact on previously reported net income or stockholders' equity**[27](index=27&type=chunk) [3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=10&type=section&id=3.%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This section highlights key accounting policies and the significant estimates and assumptions made in financial statement preparation - Financial statement preparation requires management estimates and assumptions, with the **allowance for credit losses** being particularly susceptible to significant change[29](index=29&type=chunk) - Other significant estimates include **fair value determinations**, **impairment of investments, goodwill, and loans**, and **valuation of deferred tax assets**[30](index=30&type=chunk) [4. BUSINESS COMBINATIONS](index=11&type=section&id=4.%20BUSINESS%20COMBINATIONS) This section details the acquisition of Suncrest Bank, including its strategic rationale, financial impact, and related expenses - On January 7, 2022, the Company acquired Suncrest Bank for **$39.6 million in cash** and **$197.1 million in stock**, strengthening its California geographic presence[31](index=31&type=chunk) - The acquisition added approximately **$1.38 billion in total assets**, including **$765.9 million in net loans**, and resulted in **$102.1 million of goodwill**[32](index=32&type=chunk) - Non-recurring merger-related expenses for the Suncrest acquisition totaled **$6.0 million** for the nine months ended September 30, 2022[34](index=34&type=chunk) [5. INVESTMENT SECURITIES](index=12&type=section&id=5.%20INVESTMENT%20SECURITIES) This section discusses the composition and fair value changes of the investment securities portfolio, particularly due to interest rate fluctuations - Rising interest rates led to **declines in the fair value of investment securities**, resulting in a total unrealized holding loss[36](index=36&type=chunk) Investment Securities at September 30, 2022 (Dollars in thousands) | Category | Amortized Cost | Gross Unrealized Holding Gain | Gross Unrealized Holding Loss | Fair Value | |:----------------------------------------|:---------------|:------------------------------|:------------------------------|:-------------| | **Available-for-sale securities:** | | | | | | Mortgage-backed securities | $3,288,484 | $30 | ($448,585) | $2,839,929 | | CMO/REMIC | $545,638 | - | ($89,248) | $456,390 | | Municipal bonds | $27,140 | $47 | ($2,636) | $24,551 | | Other securities | $954 | - | - | $954 | | **Total available-for-sale securities** | **$3,862,216** | **$77** | **($540,469)** | **$3,321,824** | | **Held-to-maturity securities:** | | | | | | Government agency/GSE | $555,777 | - | ($113,547) | $442,230 | | Mortgage-backed securities | $718,908 | - | ($111,359) | $607,549 | | CMO/REMIC | $839,971 | - | ($117,948) | $722,023 | | Municipal bonds | $443,266 | $8 | ($64,088) | $379,186 | | **Total held-to-maturity securities** | **$2,557,922** | **$8** | **($406,942)** | **$2,150,988** | - Approximately **92% of the investment securities portfolio** consists of **U.S. government or GSE-issued securities**, with the remainder being predominantly AA or better municipal bonds[40](index=40&type=chunk) - No credit losses were determined for securities in an unrealized loss position under the **CECL model** as of September 30, 2022, and December 31, 2021[41](index=41&type=chunk)[244](index=244&type=chunk) [6. LOANS AND LEASE FINANCE RECEIVABLES AND ALLOWANCE FOR CREDIT LOSSES](index=15&type=section&id=6.%20LOANS%20AND%20LEASE%20FINANCE%20RECEIVABLES%20AND%20ALLOWANCE%20FOR%20CREDIT%20LOSSES) This section details the loan portfolio composition, changes in the allowance for credit losses, and credit quality indicators Loans and Lease Finance Receivables (Dollars in thousands) | Loan Type | September 30, 2022 | December 31, 2021 | |:----------------------------------------|:-------------------|:------------------| | Commercial real estate | $6,685,245 | $5,789,730 | | Construction | $76,495 | $62,264 | | SBA | $296,664 | $288,600 | | SBA - Paycheck Protection Program (PPP) | $17,348 | $186,585 | | Commercial and industrial | $952,231 | $813,063 | | Dairy & livestock and agribusiness | $323,105 | $386,219 | | Municipal lease finance receivables | $76,656 | $45,933 | | SFR mortgage | $263,646 | $240,654 | | Consumer and other loans | $82,746 | $74,665 | | **Total loans, at amortized cost** | **$8,774,136** | **$7,887,713** | | Less: Allowance for credit losses | ($82,601) | ($65,019) | | **Total loans and lease finance receivables, net** | **$8,691,535** | **$7,822,694** | - As of September 30, 2022, **80.07% of the total loan portfolio** consisted of real estate loans, with **commercial real estate loans representing 76.19%**[50](index=50&type=chunk) - The **Allowance for Credit Losses (ACL) totaled $82.6 million** at September 30, 2022, an increase from **$65.0 million** at December 31, 2021, including **$8.6 million for acquired Suncrest PCD loans** and an **$8.1 million provision**[68](index=68&type=chunk)[74](index=74&type=chunk) - At September 30, 2022, the **ACL as a percentage of total loans and leases was 0.94%**, up from **0.82%** at December 31, 2021[68](index=68&type=chunk) Allowance for Credit Losses Activity (Nine Months Ended September 30, 2022, Dollars in thousands) | Metric | Amount | |:----------------------------------------|:---------| | Allowance for credit losses at beginning of period | $65,019 | | Total charge-offs | ($70) | | Total recoveries | $947 | | Net (charge-offs) recoveries | $877 | | Initial ACL for PCD loans at acquisition | $8,605 | | Provision recorded at acquisition | $4,932 | | Provision for credit losses | $3,168 | | **Allowance for credit losses at end of period** | **$82,601**| - **Nonaccrual loans were $10.1 million** at September 30, 2022, compared to **$6.9 million** at December 31, 2021, with total nonperforming assets also at **$10.1 million**[83](index=83&type=chunk)[259](index=259&type=chunk) - Total **Troubled Debt Restructurings (TDRs) were $5.8 million** at September 30, 2022, all performing and accruing interest, with **no ACL allocated**[91](index=91&type=chunk)[92](index=92&type=chunk)[260](index=260&type=chunk)[264](index=264&type=chunk) [7. EARNINGS PER SHARE RECONCILIATION](index=28&type=section&id=7.%20EARNINGS%20PER%20SHARE%20RECONCILIATION) This section provides a reconciliation of basic and diluted earnings per common share, including weighted average shares outstanding Earnings Per Common Share Reconciliation (In thousands, except per share amounts) | Metric | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | |:----------------------------------------|:--------------------------------|:--------------------------------|:-------------------------------|:-------------------------------| | Net earnings allocated to common shareholders | $64,205 | $49,526 | $168,177 | $164,052 | | Weighted average shares outstanding | 138,888 | 135,200 | 139,923 | 135,226 | | Basic earnings per common share | $0.46 | $0.37 | $1.20 | $1.21 | | Diluted weighted average shares outstanding | 139,347 | 135,384 | 140,223 | 135,441 | | Diluted earnings per common share | $0.46 | $0.37 | $1.20 | $1.21 | - Antidilutive common shares excluded from EPS calculation were **66,000** for the three months and **247,000** for the nine months ended September 30, 2022[106](index=106&type=chunk) [8. FAIR VALUE INFORMATION](index=29&type=section&id=8.%20FAIR%20VALUE%20INFORMATION) This section defines fair value and presents assets and liabilities measured at fair value on a recurring and non-recurring basis - Fair value is defined as the **exchange price in the principal or most advantageous market** for an asset or liability in an orderly transaction[112](index=112&type=chunk) Assets and Liabilities Measured at Fair Value on a Recurring Basis (September 30, 2022, Dollars in thousands) | Description of assets | Carrying Value | Level 1 | Level 2 | Level 3 | |:----------------------------------|:---------------|:--------|:-------------|:--------| | Investment securities - AFS: | | | | | | Mortgage-backed securities | $2,839,929 | - | $2,839,929 | - | | CMO/REMIC | $456,390 | - | $456,390 | - | | Municipal bonds | $24,551 | - | $24,551 | - | | Other securities | $954 | - | $954 | - | | Total investment securities - AFS | $3,321,824 | - | $3,321,824 | - | | Interest rate swaps | $83 | - | $83 | - | | **Total assets** | **$3,321,907** | **-** | **$3,321,907** | **-** | | Description of liability | | | | | | Interest rate swaps | $83 | - | $83 | - | | **Total liabilities** | **$83** | **-** | **$83** | **-** | - Total losses for assets measured at fair value on a non-recurring basis were **$551 thousand** for the nine months ended September 30, 2022, primarily from SBA, commercial and industrial, and dairy & livestock loans[119](index=119&type=chunk) [9. DERIVATIVE FINANCIAL INSTRUMENTS](index=32&type=section&id=9.%20DERIVATIVE%20FINANCIAL%20INSTRUMENTS) This section describes the company's use of interest rate swap agreements to manage interest rate risk and their financial impact - The Bank uses **interest rate swap agreements** to manage interest rate risk, entering into offsetting swaps with customers and counterparties, though these are not designated as hedging instruments[123](index=123&type=chunk)[124](index=124&type=chunk) - As of September 30, 2022, the total notional amount of the Company's swaps was **$436.9 million**, down from **$493.2 million** at December 31, 2021[127](index=127&type=chunk) - Changes in the fair value of offsetting swaps primarily cancel out, resulting in **no significant impact on results of operations**, though credit and counterparty risks exist[124](index=124&type=chunk)[125](index=125&type=chunk) [10. OTHER COMPREHENSIVE INCOME](index=34&type=section&id=10.%20OTHER%20COMPREHENSIVE%20INCOME) This section presents the components of other comprehensive income, including changes in fair value of available-for-sale securities Components of Other Comprehensive Income (Dollars in thousands) | Metric | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | |:--------------------------------------------------------------------|:--------------------------------|:--------------------------------|:-------------------------------|:-------------------------------| | Net change in fair value recorded in accumulated OCI (before-tax) | ($194,111) | ($14,515) | ($539,066) | ($45,989) | | Amortization of net unrealized losses on securities transferred (before-tax) | $95 | $72 | $242 | $173 | | **Net change (after-tax)** | **($136,658)** | **($10,173)** | **($379,529)** | **($32,271)** | [11. BALANCE SHEET OFFSETTING](index=35&type=section&id=11.%20BALANCE%20SHEET%20OFFSETTING) This section discusses the offsetting treatment of derivative instruments and customer repurchase agreements on the balance sheet - The Company's **interest rate swap derivatives** are subject to master netting arrangements, requiring collateral pledging if market value exceeds certain thresholds[135](index=135&type=chunk) - Customer repurchase agreements, offered through 'Citizens Sweep Manager,' are **collateralized by investment securities** and are not offset in the condensed consolidated balance sheets[135](index=135&type=chunk) [12. LEASES](index=36&type=section&id=12.%20LEASES) This section outlines the company's operating lease arrangements, primarily for real estate, and associated lease assets, liabilities, and costs - The Company's operating leases primarily include **real estate for office space and banking centers**, with lease expense recognized on a straight-line basis[139](index=139&type=chunk) Lease Assets and Liabilities (Dollars in thousands) | Metric | September 30, 2022 | December 31, 2021 | |:------------------------|:-------------------|:------------------| | ROU assets | $23,560 | $19,274 | | Total lease liabilities | $25,092 | $20,864 | Lease Cost (Dollars in thousands) | Metric | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | |:------------------------|:--------------------------------|:--------------------------------|:-------------------------------|:-------------------------------| | Operating lease expense | $1,846 | $1,634 | $5,541 | $4,977 | [13. REVENUE RECOGNITION](index=37&type=section&id=13.%20REVENUE%20RECOGNITION) This section details the breakdown of noninterest income by revenue stream, distinguishing between in-scope and out-of-scope items for Topic 606 Noninterest Income by Revenue Stream (Dollars in thousands) | Revenue Stream (In-scope of Topic 606) | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | |:---------------------------------------|:--------------------------------|:--------------------------------|:-------------------------------|:-------------------------------| | Service charges on deposit accounts | $5,233 | $4,513 | $15,625 | $12,667 | | Trust and investment services | $2,867 | $2,681 | $8,651 | $8,459 | | Bankcard services | $376 | $479 | $1,102 | $1,362 | | Gain on OREO, net | - | - | - | $477 | | Other | $1,127 | $1,581 | $8,207 | $4,753 | | **Total in-scope of Topic 606** | **$9,603** | **$9,254** | **$33,585** | **$27,718** | | Revenue Stream (Out-of-scope of Topic 606) | | | | | | BOLI income | $1,987 | $1,229 | $3,939 | $7,282 | | **Total noninterest income** | **$11,590** | **$10,483** | **$37,524** | **$35,000** | [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=38&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section provides management's discussion and analysis of financial condition and results, covering COVID-19 impact, accounting policies, and risk management [IMPACT OF COVID-19](index=38&type=section&id=IMPACT%20OF%20COVID-19) This section discusses the financial effects of the COVID-19 pandemic, including credit loss provisions and participation in the PPP program - The COVID-19 pandemic led to a **$23.5 million provision for credit losses in 2020**, followed by a **$19.5 million recapture in Q1 2021** due to improved economic forecasts[149](index=149&type=chunk) - The Company originated approximately **6,000 PPP loans totaling $1.52 billion**, with a remaining outstanding balance of **$17.3 million** as of September 30, 2022, and approximately **99% forgiven**[150](index=150&type=chunk) [CRITICAL ACCOUNTING POLICIES](index=39&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES) This section identifies critical accounting policies involving significant judgments and uncertainties, including recent accounting standard updates - Critical accounting policies involve significant judgments and uncertainties, including the **Allowance for Credit Losses (ACL)**, **Business Combinations**, **Goodwill Valuation**, and **Income Taxes**[154](index=154&type=chunk)[155](index=155&type=chunk) - ASU 2020-04 (Reference Rate Reform) provides guidance for the **LIBOR transition**, with the Company not expecting a material impact on financial statements after stopping LIBOR-indexed loan originations in late 2021[156](index=156&type=chunk) - ASU 2022-02 (Troubled Debt Restructurings and Disclosures) eliminates TDR recognition guidance, enhancing disclosure requirements, with adoption in Q1 2023 not expected to materially impact financial statements[157](index=157&type=chunk) [OVERVIEW](index=41&type=section&id=OVERVIEW) This section provides a high-level summary of key financial highlights, including net earnings, asset growth, deposit trends, and equity changes Key Financial Highlights (Q3 2022 vs. Q2 2022 vs. Q3 2021) | Metric | Q3 2022 | Q2 2022 | Q3 2021 | |:-------------------------------------|:------------|:------------|:------------| | Net earnings | $64.6 million | $59.1 million | $49.8 million | | Diluted earnings per share | $0.46 | $0.42 | $0.37 | | Pretax pre-provision income | $91.9 million | $85.7 million | $65.7 million | | Provision for credit losses | $2.0 million | $3.6 million | ($4.0 million) | | Annualized Return on Average Equity (ROAE) | 12.72% | 11.33% | 9.49% | | Annualized Return on Average Tangible Common Equity (ROATCE) | 21.34% | 18.67% | 14.62% | | Annualized Return on Average Assets (ROAA) | 1.52% | 1.39% | 1.26% | | Net Interest Margin (NIM), tax equivalent | 3.46% | - | - | | Efficiency ratio | 36.59% | 37.24% | 42.27% | - Total assets increased by **$465.6 million (2.93%) to $16.35 billion** at September 30, 2022, driven by increases in investment securities and total loans[166](index=166&type=chunk) - Total loans and leases increased by **$886.4 million (11.24%) to $8.77 billion**, including **$774.5 million from the Suncrest acquisition**, with core loans growing by **$407.8 million**[168](index=168&type=chunk) - Noninterest-bearing deposits increased by **$660.5 million (8.15%) to $8.76 billion**, representing **63.18% of total deposits**, with the average cost of total deposits increasing to **0.05%** in Q3 2022[169](index=169&type=chunk)[170](index=170&type=chunk) - Total equity decreased by **$202.6 million (9.73%) to $1.88 billion**, primarily due to a **$379.5 million decrease in other comprehensive income** from AFS securities' market value decline[173](index=173&type=chunk) [ANALYSIS OF THE RESULTS OF OPERATIONS](index=44&type=section&id=ANALYSIS%20OF%20THE%20RESULTS%20OF%20OPERATIONS) This section analyzes operating results, comparing net interest income, credit loss provisions, noninterest income, expenses, and income taxes across periods [Financial Performance](index=44&type=section&id=Financial%20Performance) This section presents a summary of key financial performance metrics, including net interest income, earnings, and efficiency ratios Financial Performance (Dollars in thousands, except per share amounts) | Metric | Q3 2022 | Q2 2022 | Q3 2021 | 9M 2022 | 9M 2021 | |:-------------------------------------|:------------|:------------|:------------|:------------|:------------| | Net interest income | $133,338 | $121,940 | $103,299 | $368,118 | $312,155 | | (Provision for) recapture of credit losses | ($2,000) | ($3,600) | $4,000 | ($8,100) | $25,500 | | Noninterest income | $11,590 | $14,670 | $10,483 | $37,524 | $35,000 | | Noninterest expense | ($53,027) | ($50,871) | ($48,099) | ($162,136) | ($141,807) | | Income taxes | ($25,262) | ($23,081) | ($19,930) | ($66,149) | ($66,023) | | Net earnings | $64,639 | $59,058 | $49,753 | $169,257 | $164,825 | | Diluted earnings per common share | $0.46 | $0.42 | $0.37 | $1.20 | $1.21 | | Return on average assets | 1.52% | 1.39% | 1.26% | 1.32% | 1.46% | | Return on average shareholders' equity | 12.72% | 11.33% | 9.49% | 10.69% | 10.73% | | Efficiency ratio | 36.59% | 37.24% | 42.27% | 39.97% | 40.85% | [Return on Average Tangible Common Equity Reconciliation (Non-GAAP)](index=45&type=section&id=Return%20on%20Average%20Tangible%20Common%20Equity%20Reconciliation%20(Non-GAAP)) This section reconciles net income to tangible net income and calculates return on average tangible common equity, a non-GAAP measure Return on Average Tangible Common Equity Reconciliation (Dollars in thousands) | Metric | Q3 2022 | Q2 2022 | Q3 2021 | 9M 2022 | 9M 2021 | |:----------------------------------------|:------------|:------------|:------------|:------------|:------------| | Net Income | $64,639 | $59,058 | $49,753 | $169,257 | $164,825 | | Tangible net income | $65,939 | $60,465 | $51,172 | $173,372 | $169,296 | | Average stockholders' equity | $2,016,198 | $2,091,454 | $2,080,238 | $2,116,164 | $2,054,132 | | Average tangible common equity | $1,225,980 | $1,299,251 | $1,388,291 | $1,326,278 | $1,360,048 | | Return on average tangible common equity, annualized | 21.34% | 18.67% | 14.62% | 17.48% | 16.64% | [Net Interest Income](index=45&type=section&id=Net%20Interest%20Income) This section analyzes changes in net interest income, driven by earning asset yields, loan growth, and the cost of funds - Net interest income, before provision for credit losses, increased by **$30.0 million (29.08%) to $133.3 million** in Q3 2022, driven by higher earning asset yields and a favorable asset mix[196](index=196&type=chunk) - The **net interest margin (tax equivalent) was 3.46%** in Q3 2022, up from **2.89%** in Q3 2021, due to a **59 basis point increase in earning asset yield** and a low cost of funds[196](index=196&type=chunk) - Total interest income and fees on loans increased by **$11.7 million (13.22%)** in Q3 2022, mainly due to a **$782.9 million increase in average loans**, with core loan yields growing by **28 basis points**[198](index=198&type=chunk) - Interest income from investment securities increased by **$16.4 million (109.17%)** in Q3 2022, due to higher investment levels and a **58 basis point increase in tax-equivalent yield**[199](index=199&type=chunk) - For the nine months ended September 30, 2022, net interest income increased by **$56.0 million (17.93%) to $368.1 million**, with a net interest margin (tax equivalent) of **3.17%**[202](index=202&type=chunk) [Provision for (Recapture of) Credit Losses](index=51&type=section&id=Provision%20for%20(Recapture%20of)%20Credit%20Losses) This section discusses the provision for credit losses, driven by loan growth and changes in economic forecasts, and its impact on the ACL - The Company recorded a **$2.0 million provision for credit losses** in Q3 2022, compared to a **$3.6 million provision** in Q2 2022 and a **$4.0 million recapture** in Q3 2021[209](index=209&type=chunk) - The Q3 2022 provision was driven by **$131.5 million in core loan growth** and increased projected loss rates due to a deteriorating economic forecast[209](index=209&type=chunk) - For the nine months ended September 30, 2022, the Company recorded an **$8.1 million provision for credit losses**, including a **$4.9 million provision for Suncrest non-PCD loans**, with net recoveries of **$877,000**[210](index=210&type=chunk) - The **ACL as a percentage of total loans was 0.94%** at September 30, 2022, up from **0.82%** at December 31, 2021, reflecting deteriorating macroeconomic forecasts[210](index=210&type=chunk) [Noninterest Income](index=51&type=section&id=Noninterest%20Income) This section analyzes the components of noninterest income, including service charges, trust fees, and BOLI income, and their period-over-period changes - Noninterest income increased by **$1.1 million (10.56%) to $11.6 million** in Q3 2022, primarily due to a **$758,000 increase in BOLI income** and **$720,000 higher service charges**[214](index=214&type=chunk) - CitizensTrust generated **$2.9 million in fees** for Q3 2022, up from **$2.7 million** in Q3 2021, despite negative market conditions impacting assets under management[215](index=215&type=chunk) - For the nine months ended September 30, 2022, noninterest income increased by **$2.5 million**, including a **$2.4 million net gain on property sale** and a **$2.1 million gain from a CRA investment distribution**[218](index=218&type=chunk) [Noninterest Expense](index=53&type=section&id=Noninterest%20Expense) This section examines changes in noninterest expense, including the impact of acquisitions, employee benefits, and the efficiency ratio - Noninterest expense increased by **$4.9 million (10.25%) to $53.0 million** in Q3 2022, mainly due to expense growth associated with the Suncrest acquisition[225](index=225&type=chunk) - Salaries and employee benefits increased by **$3.5 million**, reflecting new associates from Suncrest, salary increases, and increased stock grant expense[225](index=225&type=chunk) - The **efficiency ratio improved to 36.59%** in Q3 2022 from **42.27%** in Q3 2021, indicating better expense control relative to revenue[224](index=224&type=chunk) - For the nine months ended September 30, 2022, noninterest expense increased by **$20.3 million**, including a **$9.2 million increase in salaries and employee benefits** and **$6.0 million in acquisition-related expenses**[226](index=226&type=chunk)[227](index=227&type=chunk) [Income Taxes](index=54&type=section&id=Income%20Taxes) This section details the company's effective tax rate and the factors contributing to its deviation from the nominal combined federal and state rate - The Company's **effective tax rate was 28.10%** for the three and nine months ended September 30, 2022, slightly lower than **28.60%** for the same periods in 2021[228](index=228&type=chunk) - Effective tax rates are below the nominal combined Federal and State rate due to **tax-advantaged income** from municipal security investments, municipal loans, BOLI, and tax credits[229](index=229&type=chunk) [ANALYSIS OF FINANCIAL CONDITION](index=55&type=section&id=ANALYSIS%20OF%20FINANCIAL%20CONDITION) This section analyzes financial condition, focusing on assets, liabilities, and equity, with breakdowns of investments, loans, credit quality, and capital [Investment Securities](index=55&type=section&id=Investment%20Securities) This section details the growth and composition of the investment securities portfolio, including AFS and HTM categories and new purchases - Total investment securities increased by **$769.9 million (15.07%) to $5.88 billion** at September 30, 2022, primarily due to new purchases exceeding cash outflows[235](index=235&type=chunk) - At September 30, 2022, **available-for-sale (AFS) investment securities totaled $3.32 billion**, with a pre-tax net unrealized loss of **$540.4 million**, and **held-to-maturity (HTM) securities totaled $2.56 billion**[235](index=235&type=chunk) - The Company purchased **$1.72 billion in new investment securities** during the first nine months of 2022, with an average yield of approximately **2.92%**[235](index=235&type=chunk) [Loans](index=58&type=section&id=Loans) This section provides a detailed analysis of the loan portfolio's growth, composition, and geographic distribution, including acquisition impacts - Total loans and leases increased by **$886.4 million (11.24%) to $8.77 billion** at September 30, 2022, including **$774.5 million from the Suncrest acquisition**[246](index=246&type=chunk) - Core loans, adjusted for acquired loans, seasonality, and PPP forgiveness, grew by **$407.8 million (approximately 7% annualized)** from December 31, 2021[246](index=246&type=chunk) - The loan portfolio is geographically disbursed, with **Los Angeles County (37.8%)**, **Central Valley and Sacramento (23.7%)**, and **Orange County (12.0%)** as the largest regions[255](index=255&type=chunk) Commercial Real Estate Portfolio Breakdown (September 30, 2022, Dollars in thousands) | Commercial real estate: | Loan Balance | Percent | |:------------------------|:-------------|:--------| | Industrial | $2,210,181 | 33.1% | | Office | $1,109,426 | 16.6% | | Retail | $953,097 | 14.2% | | Multi-family | $767,651 | 11.5% | | Secured by farmland | $486,395 | 7.3% | | Medical | $344,057 | 5.1% | | Other | $814,438 | 12.2% | | **Total** | **$6,685,245** | **100.0%**| [Nonperforming Assets](index=60&type=section&id=Nonperforming%20Assets) This section details the levels and trends of nonperforming assets, including nonaccrual loans and their percentage of total assets Nonperforming Assets (Dollars in thousands) | Metric | September 30, 2022 | December 31, 2021 | |:------------------------------------------------|:-------------------|:------------------| | Nonaccrual loans | $10,117 | $6,893 | | Loans past due 90 days or more and still accruing interest | - | - | | Nonperforming troubled debt restructured loans (TDRs) | - | - | | **Total nonperforming loans** | **$10,117** | **$6,893** | | OREO, net | - | - | | **Total nonperforming assets** | **$10,117** | **$6,893** | | Performing TDRs | $5,828 | $5,293 | | Percentage of nonperforming assets to total assets | 0.06% | 0.04% | - Nonperforming loans increased to **$10.1 million (0.12% of total loans)** at September 30, 2022, from **$6.9 million (0.09% of total loans)** at December 31, 2021, including **$4.1 million in acquired commercial real estate loans**[266](index=266&type=chunk) [Troubled Debt Restructurings ("TDRs")](index=60&type=section&id=Troubled%20Debt%20Restructurings%20(%22TDRs%22)) This section provides an overview of Troubled Debt Restructurings (TDRs), their performing status, and ACL allocation - Total **TDRs were $5.8 million** at September 30, 2022, all performing and accruing interest, compared to **$5.3 million** at December 31, 2021[260](index=260&type=chunk) - Performing TDRs at September 30, 2022, included **four commercial and industrial loans ($4.8 million)** and **five SFR mortgage loans ($1.0 million)**[91](index=91&type=chunk)[262](index=262&type=chunk) - No ACL was allocated to TDRs at September 30, 2022, or December 31, 2021, as impairment amounts are typically charged off when deemed uncollectible[264](index=264&type=chunk) [Nonperforming Assets and Delinquencies](index=61&type=section&id=Nonperforming%20Assets%20and%20Delinquencies) This section provides a historical trend of nonperforming assets and delinquencies, including classified loans Nonperforming Assets and Delinquencies (Dollars in thousands) | Metric | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | |:-------------------------------------|:-------------|:-------------|:-------------|:-------------|:-------------| | Nonperforming loans | $10,117 | $12,964 | $13,265 | $6,893 | $8,446 | | % of Total loans | 0.12% | 0.15% | 0.15% | 0.09% | 0.11% | | Past due 30-89 days | - | $559 | $2,622 | $2,457 | $1,122 | | % of Total loans | 0.00% | 0.01% | 0.03% | 0.03% | 0.01% | | OREO | - | - | - | - | - | | Total nonperforming, past due, and OREO | $10,117 | $13,253 | $15,887 | $9,350 | $9,568 | | % of Total loans | 0.12% | 0.16% | 0.18% | 0.12% | 0.12% | | Classified Loans | $63,651 | $76,170 | $64,108 | $56,102 | $49,755 | - Classified loans increased by **$7.5 million to $63.7 million** at September 30, 2022, including **$14.4 million from acquired Suncrest loans**[266](index=266&type=chunk) [Allowance for Credit Losses](index=62&type=section&id=Allowance%20for%20Credit%20Losses) This section details the total allowance for credit losses, its drivers, and the methodology used for its determination - The **ACL totaled $82.6 million** at September 30, 2022, an increase from **$65.0 million** at December 31, 2021, and **$65.4 million** at September 30, 2021[269](index=269&type=chunk) - The ACL increase includes **$8.6 million for acquired Suncrest PCD loans** and an **$8.1 million provision for credit losses** for the first nine months of 2022, with net recoveries of **$877,000**[269](index=269&type=chunk) - The ACL is based on lifetime loss rate models using historical experiences and economic outlook, with a weighted forecast assuming **GDP growth of 0.4%** and an **unemployment rate of 5% in 2023**[270](index=270&type=chunk)[271](index=271&type=chunk) - The Bank's ACL methodology also produced an allowance of **$8.0 million for off-balance sheet credit exposures** as of September 30, 2022[275](index=275&type=chunk) [Deposits](index=64&type=section&id=Deposits) This section analyzes the growth and composition of total deposits, including noninterest-bearing, savings, and time deposits - Total deposits increased by **$896.0 million (6.90%) to $13.87 billion** at September 30, 2022, from **$12.98 billion** at December 31, 2021[279](index=279&type=chunk) - Noninterest-bearing deposits totaled **$8.76 billion**, representing **63.18% of total deposits** at September 30, 2022, an increase of **$660.5 million (8.15%)**[280](index=280&type=chunk) - Savings deposits increased by **$198.4 million (4.37%) to $4.74 billion**, while time deposits increased by **$37.0 million (11.30%) to $364.7 million**[281](index=281&type=chunk) [Borrowings](index=65&type=section&id=Borrowings) This section details the company's borrowings, including customer repurchase agreements and pledged assets for securing obligations - Customer repurchase agreements totaled **$467.8 million** at September 30, 2022, down from **$642.4 million** at December 31, 2021, with a weighted average interest rate of **0.09%**[283](index=283&type=chunk) - The Company redeemed **$25.8 million in junior subordinated debentures** on June 15, 2021, with a borrowing cost of approximately **1.60%**[284](index=284&type=chunk) - At September 30, 2022, **$4.33 billion of loans** and **$2.31 billion of investment securities** were pledged to secure public deposits, repurchase agreements, and lines of credit[285](index=285&type=chunk) [Aggregate Contractual Obligations](index=65&type=section&id=Aggregate%20Contractual%20Obligations) This section presents a table summarizing the company's aggregate contractual obligations, categorized by maturity periods Aggregate Contractual Obligations (September 30, 2022, Dollars in thousands) | Obligation | Total | Less Than One Year | One Year Through Three Years | Four Years Through Five Years | Over Five Years | |:---------------------------------|:-------------|:-------------------|:-----------------------------|:------------------------------|:----------------| | Deposits | $13,872,399 | $13,836,839 | $27,809 | $7,491 | $260 | | Customer repurchase agreements | $467,844 | $467,844 | - | - | - | | Deferred compensation | $21,898 | $757 | $1,149 | $1,152 | $18,840 | | Operating leases | $26,636 | $7,139 | $11,326 | $7,001 | $1,170 | | Affordable housing investment | $6,129 | $1,434 | $4,478 | $28 | $189 | | **Total** | **$14,394,906** | **$14,314,013** | **$44,762** | **$15,672** | **$20,459** | [Off-Balance Sheet Arrangements](index=66&type=section&id=Off-Balance%20Sheet%20Arrangements) This section describes the company's off-balance sheet arrangements, including commitments to extend credit and letters of credit - As of September 30, 2022, commitments to extend credit totaled approximately **$1.82 billion**, and obligations under letters of credit were **$47.4 million**[292](index=292&type=chunk) - Many commitments to extend credit are expected to expire undrawn, with the Company applying the same credit underwriting policies as for on-balance sheet instruments[292](index=292&type=chunk) - The reserve for unfunded loan commitments remained at **$8.0 million** at September 30, 2022[292](index=292&type=chunk) [Capital Resources](index=67&type=section&id=Capital%20Resources) This section discusses changes in total equity, share repurchase programs, and the company's compliance with capital adequacy ratios - Total equity decreased by **$202.6 million (9.73%) to $1.88 billion** at September 30, 2022, primarily due to a **$379.5 million decrease in other comprehensive income** from AFS securities' market value decline[296](index=296&type=chunk) - The Company executed a **$70 million accelerated stock repurchase program** and repurchased an additional **$44.9 million** under its 10b5-1 plan in 2022, retiring a total of **4,908,141 shares**[296](index=296&type=chunk)[298](index=298&type=chunk) - At September 30, 2022, the Company and the Bank exceeded all minimum risk-based capital and leverage ratios required to be considered **'well-capitalized' under Basel III**[299](index=299&type=chunk)[300](index=300&type=chunk) Capital Ratios (September 30, 2022) | Capital Ratios | Well Capitalized Ratios | CVB Financial Corp. Consolidated | |:-----------------------------------|:------------------------|:---------------------------------| | Tier 1 leverage capital ratio | 5.00% | 9.08% | | Common equity Tier 1 capital ratio | 6.50% | 13.49% | | Tier 1 risk-based capital ratio | 8.00% | 13.49% | | Total risk-based capital ratio | 10.00% | 14.31% | [ASSET/LIABILITY AND MARKET RISK MANAGEMENT](index=68&type=section&id=ASSET%2FLIABILITY%20AND%20MARKET%20RISK%20MANAGEMENT) This section details strategies for managing liquidity, cash flow, and market risk, particularly interest rate sensitivity, through assessments and models [Liquidity and Cash Flow](index=68&type=section&id=Liquidity%20and%20Cash%20Flow) This section describes the company's liquidity management practices, funding sources, and access to external lines of credit - The Company manages liquidity to ensure timely availability of funds for financial obligations, loan demand, and investments, assessing requirements through historical data and market conditions[305](index=305&type=chunk)[306](index=306&type=chunk) - Total deposits increased by **$896.0 million (6.90%) to $13.87 billion** at September 30, 2022, providing a primary source of funds[307](index=307&type=chunk) - The Company maintains significant liquidity, with assets funded by core deposits, and has access to **over $4 billion in available lines of credit** from correspondent banks, FHLB, and the Federal Reserve[308](index=308&type=chunk) - Average cash and cash equivalents decreased by **$840.0 million (41.07%) to $1.21 billion** for the nine months ended September 30, 2022, compared to the same period in 2021[312](index=312&type=chunk) [Interest Rate Sensitivity Management](index=69&type=section&id=Interest%20Rate%20Sensitivity%20Management) This section describes the company's approach to managing interest rate risk using simulation and valuation models to quantify exposures - The Company manages interest rate risk by controlling the spread between asset and liability rates, using simulation and valuation models to quantify exposures like **Net Interest Income at Risk** and **Economic Value of Equity at Risk**[314](index=314&type=chunk)[315](index=315&type=chunk) Net Interest Income Sensitivity Analysis (September 30, 2022) | Interest Rate Scenario | 12-month Period | 24-month Period (Cumulative) | |:-----------------------|:----------------|:-----------------------------| | + 200 basis points | 3.11% | 5.85% | | - 200 basis points | -5.64% | -10.75% | - Based on current models, the balance sheet is **asset sensitive** over one-year and two-year horizons, indicating net interest income is expected to increase with rising interest rates[321](index=321&type=chunk) Economic Value of Equity Sensitivity (September 30, 2022) | Instantaneous Rate Change | September 30, 2022 | |:--------------------------|:-------------------| | 200 bp decrease | -13.5% | | 100 bp decrease | -5.0% | | 100 bp increase | 0.8% | | 200 bp increase | 2.2% | | 300 bp increase | 4.6% | | 400 bp increase | 6.9% | [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=71&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) This section addresses the company's market risk exposures, including the absence of certain derivative contracts and the ongoing LIBOR transition assessment - The Company had not entered into any **futures, forwards, or option contracts** as of September 30, 2022[325](index=325&type=chunk) - The Company is assessing the impacts of the **LIBOR transition** and exploring alternative indices for variable/adjustable rate loans and interest rate swap derivatives[325](index=325&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=71&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) This section confirms the effectiveness of the company's disclosure controls and procedures and reports no material changes to internal controls - The Company's **disclosure controls and procedures were deemed effective** as of September 30, 2022, under the supervision of the CEO, CFO, and senior management[326](index=326&type=chunk) - No material changes to **internal controls over financial reporting** occurred during the quarter ended September 30, 2022[327](index=327&type=chunk) [PART II – OTHER INFORMATION](index=72&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) This section provides additional information not covered in the financial statements, including legal proceedings, risk factors, and equity sales [ITEM 1. LEGAL PROCEEDINGS](index=72&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) This section outlines the company's involvement in various lawsuits and investigations, with no current legal matters expected to have a material adverse effect - The Company is party to various lawsuits and investigations, including **securities-related claims**, **employment disputes**, **consumer claims**, and **regulatory compliance claims**[330](index=330&type=chunk) - Loss contingencies are accrued when probable and estimable, and disclosed if there is a reasonable possibility of an unfavorable outcome and potential materiality[331](index=331&type=chunk)[332](index=332&type=chunk) - Management does not believe the ultimate resolution of pending legal matters will have a **material adverse effect** on the Company's results of operations, financial condition, or cash flows[333](index=333&type=chunk) [ITEM 1A. RISK FACTORS](index=72&type=section&id=ITEM%201A.%20RISK%20FACTORS) This section updates risk factors, emphasizing adverse effects of changing economic, market, and political conditions, including inflation, interest rates, and cybersecurity threats - Changes in **economic, market, and political conditions**, including **high inflation** and **rising interest rates**, can adversely affect operating results and financial condition[335](index=335&type=chunk) - The **Federal Reserve's interest rate hikes (3.00% cumulative YTD)** and balance sheet reduction will impact interest income, fair market values of securities, deposit costs, and potentially loan/deposit growth and asset quality[335](index=335&type=chunk)[336](index=336&type=chunk) - The Company is susceptible to **fraudulent activity, information security breaches, and cybersecurity incidents**, which could lead to financial losses, data misuse, litigation, and reputational damage[337](index=337&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=73&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) This section details the company's share repurchase activities during the quarter ended September 30, 2022, under its 2022 Repurchase Program - The Board authorized a **2022 Repurchase Program for up to 10,000,000 shares**, including a **$70 million Accelerated Share Repurchase (ASR) Plan**[338](index=338&type=chunk) - During the first half of 2022, the Company completed the **$70 million ASR program**, retiring **2,993,551 shares** at an average price of **$23.38**[338](index=338&type=chunk) Common Stock Repurchases (Quarter Ended September 30, 2022) | Period | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Average Price Paid Per Share | |:-------------------|:-------------------------------------------------------------------|:-----------------------------| | July 1 - 31, 2022 | 232,053 | $23.88 | | August 1 - 31, 2022 | - | - | | September 1 - 30, 2022 | - | - | | **Total** | **232,053** | **$23.40** | - As of September 30, 2022, **5,091,859 shares remained available for repurchase** under the 2022 Repurchase Program[340](index=340&type=chunk) [ITEM 3. DEFAULTS UPON SENIOR SECURITIES](index=73&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) This item is marked 'Not Applicable,' indicating no defaults upon senior securities during the reporting period [ITEM 4. MINE SAFETY DISCLOSURES](index=73&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This item is marked 'Not Applicable,' indicating no mine safety disclosures are required for the reporting period [ITEM 5. OTHER INFORMATION](index=73&type=section&id=ITEM%205.%20OTHER%20INFORMATION) This item states 'None,' indicating no other information is being reported that is not covered elsewhere [ITEM 6. EXHIBITS](index=74&type=section&id=ITEM%206.%20EXHIBITS) This section lists exhibits filed with the Form 10-Q, including employment agreements, Sarbanes-Oxley Act certifications, and XBRL documents - Exhibits include an **Amended and Restated Employment Agreement for David A. Brager**, **CEO and CFO certifications under the Sarbanes-Oxley Act**, and various XBRL taxonomy documents[342](index=342&type=chunk) [SIGNATURES](index=75&type=section&id=SIGNATURES) This section contains the required signatures for the Form 10-Q, certifying its submission by the Executive Vice President and Chief Financial Officer - The report is signed by **E. Allen Nicholson, Executive Vice President and Chief Financial Officer**, on November 9, 2022[343](index=343&type=chunk)

CVB Financial Corp. October 2022 cbbank.com Forward Looking Statements This presentation contains forward-looking statements that are intended to be covered by the safe harbor for such statements provided by the Private Securities Litigation Reform Act of 1995. These statements are based on the current beliefs and expectations of the management of CVB Financial Corp. and Citizens Business Bank (collectively, the "Company") and are subject to significant risks and uncertainties that could cause actual result ...

CVB Financial Corp. (NASDAQ:CVBF) Q3 2022 Earnings Conference Call October 20, 2022 10:30 AM ET Company Participants Dave Brager – President and Chief Executive Officer Allen Nicholson – Executive Vice President and Chief Financial Officer Conference Call Participants Kelly Motta – KBW David Feaster – Raymond James Tim Coffey – Janney Montgomery Adam Butler – Piper Sandler Operator Good morning, ladies and gentlemen, and welcome to the Third Quarter of 2022 CVB Financial Corporation and its subsidiary Citiz ...

CVB Financial Corp. October 2022 cbbank.com Forward Looking Statements This presentation contains forward-looking statements that are intended to be covered by the safe harbor for such statements provided by the Private Securities Litigation Reform Act of 1995. These statements are based on the current beliefs and expectations of the management of CVB Financial Corp. and Citizens Business Bank (collectively, the "Company") and are subject to significant risks and uncertainties that could cause actual result ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q (Mark One) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 or TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____ to _____ Commission File Number: 000-10140 CVB FINANCIAL CORP. (Exact name of registrant as specified in its charter) California 95-3629339 (State or other ...

Financial Data and Key Metrics Changes - For Q2 2022, the company reported net earnings of $59.1 million or $0.42 per share, an increase from $45.6 million or $0.31 per share in Q1 2022 and $51.2 million or $0.38 per share in Q2 2021 [5][6] - The pretax pre-provision income reached a record level of $85.7 million, up from $65.9 million in the previous quarter and $70 million in the same quarter last year [8] - The net interest margin grew by 26 basis points from the first quarter to 3.2% in the second quarter [9] Business Line Data and Key Metrics Changes - Total loans at quarter end were $8.7 billion, a $100.5 million or 1.2% increase from the end of Q1 2022, with core loan growth led by commercial real estate loans, which grew by $173 million or 11% annualized [12][13] - New loan commitments were approximately $560 million, representing a growth of over 40% compared to the same period last year [12] - Non-interest income was $14.7 million for Q2 2022, compared to $11.3 million in the prior quarter and $10.8 million in the year-ago quarter [34] Market Data and Key Metrics Changes - Total deposits and customer repurchase agreements were $14.6 billion at June 30, 2022, down from $15.1 billion at March 31, 2022 [17] - Noninterest-bearing deposits averaged $8.9 billion, a $200 million increase from the first quarter [17] - The bank's funding cost was just 4 basis points in Q2 2022, compared to 3 basis points in the prior quarter [18] Company Strategy and Development Direction - The company aims to continue banking the top 25% of clients in their respective industries while maintaining high credit quality [52] - The focus remains on optimizing operations and investing in efficiency improvements, with no immediate plans for new initiatives despite revenue upticks [76] - The company is open to M&A opportunities in the $1 billion to $10 billion range, but is cautious due to current economic uncertainties [68] Management's Comments on Operating Environment and Future Outlook - Management noted that clients are becoming more cautious due to economic challenges, which may impact loan demand [59] - The economic forecast includes modest GDP growth of 0.5% in the second half of 2022 and 0.8% for 2023, with an unemployment rate projected at 4.6% in the second half of 2022 [23] - Despite headwinds, the company produced approximately $86 million in pretax pre-provision income during Q2 2022, a 30% increase from the previous quarter [40] Other Important Information - The company completed the integration of Suncrest Bank, which contributed to the increase in loan production and overall financial performance [7][37] - The allowance for credit losses was $80.2 million or 0.92% of total loans, reflecting a provision for credit losses of $3.6 million in Q2 2022 [21][22] Q&A Session Summary Question: Thoughts on deposit growth and deposit beta - Management indicated that deposit growth depends on the Fed's actions, with limited requests for higher rates currently [42][44] Question: Expense run rate expectations - Management expects expenses to grow modestly due to inflationary pressures, with no significant decrease anticipated [46][47] Question: Increase in classified loans - The increase was primarily driven by one well-secured loan, with overall credit metrics remaining strong [48][49] Question: Share repurchase activity - The company remains active in share repurchase, but future activity will depend on share price [50] Question: Loan growth and competition - Management noted that while loan growth has been strong, there is a cautious tone among clients, which may impact future growth [52][59] Question: Appetite for M&A - The company is still looking for M&A opportunities but is cautious due to economic uncertainties and seller expectations [68][70]

July 2022 cbbank.com Forward Looking Statements This presentation contains forward-looking statements that are intended to be covered by the safe harbor for such statements provided by the Private Securities Litigation Reform Act of 1995. These statements are based on the current beliefs and expectations of the management of CVB Financial Corp. and Citizens Business Bank (collectively, the "Company") and are subject to significant risks and uncertainties that could cause actual results or performance to dif ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q (Mark One) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2022 or TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____ to _____ Commission File Number: 000-10140 CVB FINANCIAL CORP. (Exact name of registrant as specified in its charter) California 95-3629339 (State or other ...