CVB Financial (CVBF) - 2020 Q3 - Quarterly Report

Part I – Financial Information (Unaudited) General This section provides a cautionary note regarding forward-looking statements, highlighting risks and uncertainties that could cause actual results to differ materially from projections - Forward-looking statements are subject to uncertainties including economic conditions, real estate market, borrower performance, regulatory changes, and catastrophic events[5][6] - The ongoing COVID-19 pandemic may significantly affect the banking industry and the Company's business prospects, with the ultimate impact being highly uncertain[7] Item 1. Condensed Consolidated Financial Statements This section presents the unaudited condensed consolidated financial statements for CVB Financial Corp. and its subsidiaries, detailing financial position and performance for interim periods Condensed Consolidated Balance Sheets The condensed consolidated balance sheets show a significant increase in total assets, primarily driven by a surge in cash and loans, largely due to PPP loans, with liabilities also increasing substantially from deposit growth Condensed Consolidated Balance Sheet Highlights (Dollars in thousands) | Metric | Sep 30, 2020 | Dec 31, 2019 | | :--------------------------- | :----------- | :----------- | | Total assets | $13,818,711 | $11,282,450 | | Total cash and cash equivalents | $1,484,953 | $185,518 | | Total investment securities | $2,783,340 | $2,414,709 | | Loans and lease finance receivables | $8,407,872 | $7,564,577 | | Allowance for credit losses | $(93,869) | $(68,660) | | Total deposits | $11,168,834 | $8,704,928 | | Noninterest-bearing deposits | $6,919,423 | $5,245,517 | | Total liabilities | $11,836,754 | $9,288,352 | | Total stockholders' equity | $1,981,957 | $1,994,098 | - Total assets increased by $2.54 billion (22.48%) from December 31, 2019, to September 30, 2020[12] - Noninterest-bearing deposits increased by $1.67 billion (31.91%) from December 31, 2019, to September 30, 2020[12] Condensed Consolidated Statements of Earnings and Comprehensive Income The condensed consolidated statements of earnings show a decrease in net earnings for both the three and nine months ended September 30, 2020, primarily due to lower net interest income and increased provision for credit losses Condensed Consolidated Statements of Earnings Highlights (Dollars in thousands, except per share amounts) | Metric (3 Months Ended Sep 30) | 2020 | 2019 | Change ($) | Change (%) | | :----------------------------- | :------ | :------ | :--------- | :--------- | | Total interest income | $106,626 | $113,563 | $(6,937) | -6.11% | | Total interest expense | $3,301 | $5,404 | $(2,103) | -38.92% | | Net interest income | $103,325 | $108,159 | $(4,834) | -4.47% | | Provision for credit losses | $- | $1,500 | $(1,500) | -100.00% | | Total noninterest income | $13,153 | $11,894 | $1,259 | 10.59% | | Total noninterest expense | $49,588 | $47,535 | $2,053 | 4.32% | | Net earnings | $47,492 | $50,423 | $(2,931) | -5.81% | | Basic earnings per common share | $0.35 | $0.36 | $(0.01) | -2.78% | | Diluted earnings per common share | $0.35 | $0.36 | $(0.01) | -2.78% | Condensed Consolidated Statements of Earnings Highlights (9 Months Ended Sep 30) | Metric (9 Months Ended Sep 30) | 2020 | 2019 | Change ($) | Change (%) | | :----------------------------- | :------ | :------ | :--------- | :--------- | | Total interest income | $321,693 | $345,631 | $(23,938) | -6.93% | | Total interest expense | $11,493 | $16,879 | $(5,386) | -31.91% | | Net interest income | $310,200 | $328,752 | $(18,552) | -5.64% | | Provision for credit losses | $23,500 | $5,000 | $18,500 | 370.00% | | Total noninterest income | $36,945 | $46,402 | $(9,457) | -20.38% | | Total noninterest expense | $144,627 | $149,667 | $(5,040) | -3.37% | | Net earnings | $127,103 | $156,546 | $(29,443) | -18.81% | | Basic earnings per common share | $0.93 | $1.12 | $(0.19) | -16.96% | | Diluted earnings per common share | $0.93 | $1.12 | $(0.19) | -16.96% | Condensed Consolidated Statements of Stockholders' Equity The condensed consolidated statements of stockholders' equity show a slight decrease in total equity for the nine months ended September 30, 2020, primarily due to common stock repurchases and cash dividends Stockholders' Equity Changes (Nine Months Ended Sep 30, 2020) (Dollars in thousands) | Item | Amount | | :--------------------------------------- | :---------- | | Balance, January 1, 2020 | $1,994,098 | | Cumulative adjustment upon adoption of ASU 2016-13 | $(1,325) | | Repurchase of common stock | $(92,687) | | Cash dividends declared on common stock | $(73,252) | | Net earnings | $127,103 | | Other comprehensive income | $23,479 | | Balance, September 30, 2020 | $1,981,957 | - Total stockholders' equity decreased by $12.1 million from December 31, 2019, to September 30, 2020[17] Condensed Consolidated Statements of Cash Flows The condensed consolidated statements of cash flows indicate a significant net increase in cash and cash equivalents for the nine months ended September 30, 2020, primarily driven by financing activities Condensed Consolidated Statements of Cash Flows Highlights (Nine Months Ended Sep 30) (Dollars in thousands) | Cash Flow Activity | 2020 | 2019 | | :--------------------------------- | :------------ | :------------ | | Net cash provided by operating activities | $138,019 | $147,410 | | Net cash (used in) provided by investing activities | $(1,200,664) | $538,256 | | Net cash provided by (used in) financing activities | $2,362,080 | $(412,066) | | Net increase in cash and cash equivalents | $1,299,435 | $273,600 | | Cash and cash equivalents, end of period | $1,484,953 | $437,548 | - Net cash provided by financing activities increased significantly in 2020, primarily due to a $2.47 billion net increase in other deposits[21] - Net cash used in investing activities increased substantially in 2020, mainly due to increased purchases of available-for-sale investment securities and a net increase in loan and lease finance receivables[21] Notes to the Condensed Consolidated Financial Statements 1. Business CVB Financial Corp. operates primarily through Citizens Business Bank, focusing on traditional banking activities and trust services for businesses and individuals across California - CVB Financial Corp.'s primary operations are traditional banking activities through Citizens Business Bank,