CVB Financial (CVBF) - 2025 Q1 - Quarterly Results

Q1 2025 Earnings Overview CVB Financial Corp. reported Q1 2025 net income of $51.1 million and diluted EPS of $0.36, driven by an expanded net interest margin and strong asset quality Performance Summary and Highlights CVB Financial Corp. reported stable net income of $51.1 million for Q1 2025, with diluted EPS of $0.36, consistent with the prior quarter and up from $0.35 year-over-year. Key performance metrics were strong, with a 1.37% ROAA and a 14.51% ROATCE. The net interest margin expanded by 13 basis points quarter-over-quarter to 3.31%, driven by a lower cost of funds. The company highlighted its 192nd consecutive quarter of profitability Q1 2025 Key Financial Results | Metric | Q1 2025 ($) | Q4 2024 ($) | Q1 2024 ($) | | :--- | :--- | :--- | :--- | | Net Income | $51.1 million | $50.9 million | $48.6 million | | Diluted EPS | $0.36 | $0.36 | $0.35 | | ROAE (annualized) | 9.31% | 9.14% | 9.31% | | ROATCE (annualized) | 14.51% | 14.31% | 15.13% | | ROAA (annualized) | 1.37% | 1.30% | 1.21% | - Management highlighted the company's 192 consecutive quarters (48 years) of profitability and 142 consecutive quarters of paying cash dividends, attributing success to its focus on small to medium-sized businesses[5] - Key operational highlights for the quarter include: * Net interest margin increased 13 basis point QoQ increase in NIM to 3.31% * Cost of funds decreased to 1.04% from 1.13% in Q4 2024 * A net gain of $2.2 million was realized on the sale of $19.3 million of OREO assets * Noninterest-bearing deposits grew by $147 million from the end of 2024[7][12] Income Statement Analysis Analysis of net interest income, credit loss provisions, noninterest income, and expenses reveals key drivers of the company's Q1 2025 earnings performance Net Interest Income and Margin Net interest income was essentially flat at $110.4 million compared to the prior quarter, as a 13-basis point expansion in net interest margin (NIM) to 3.31% was offset by a $405.6 million decline in average earning assets. The NIM improvement was driven by a 9-basis point decrease in cost of funds and a 4-basis point increase in earning asset yields. Year-over-year, NII decreased by $2.0 million due to a $1.09 billion decline in earning assets resulting from a deleveraging strategy Net Interest Income and Margin Performance | Metric | Q1 2025 ($) | Q4 2024 ($) | Q1 2024 ($) | | :--- | :--- | :--- | :--- | | Net Interest Income | $110.4M | $110.4M | $112.5M | | Net Interest Margin (TE) | 3.31% | 3.18% | 3.10% | | Cost of Funds | 1.04% | 1.13% | 1.31% | - The 13 basis point QoQ increase in NIM was a result of a 4 basis point increase in earning asset yields and a 9 basis point decrease in cost of funds[11] - The $2.0 million YoY decrease in NII was primarily caused by a $1.09 billion decline in earning assets, which was part of a deleveraging strategy that reduced borrowings by $1.48 billion[10] Provision for Credit Losses The company recorded a $2.0 million recapture of provision for credit losses in Q1 2025, compared to a $3.0 million recapture in Q4 2024 and no provision in Q1 2024. This was supported by net recoveries of $130,000 during the quarter, and the allowance for credit losses remained stable at 0.94% of gross loans - A $2.0 million recapture of provision for credit losses was recorded in Q1 2025, with net recoveries of $130,000[16] - The allowance for credit losses as a percentage of gross loans was 0.94% at March 31, 2025, unchanged from the prior quarter[16] Noninterest Income Noninterest income increased to $16.2 million in Q1 2025, up from $13.1 million in Q4 2024 and $14.1 million in Q1 2024. The quarter-over-quarter increase was primarily driven by a $2.2 million net gain from the sale of four OREO properties Noninterest Income Comparison | Period | Noninterest Income ($) | | :--- | :--- | | Q1 2025 | $16.2 million | | Q4 2024 | $13.1 million | | Q1 2024 | $14.1 million | - The Bank sold four OREO properties during the quarter, resulting in a gain of $2.2 million[17] - Income from BOLI increased by $445,000 QoQ, while income from various equity investments increased by $750,000 QoQ[18] Noninterest Expense Noninterest expense was $59.1 million, a slight increase from $58.5 million in Q4 2024, mainly due to higher seasonal payroll taxes and a $500,000 provision for unfunded loan commitments. The efficiency ratio improved to 46.69% from 47.34% in the prior quarter Noninterest Expense and Efficiency Ratio | Metric | Q1 2025 ($) | Q4 2024 ($) | Q1 2024 ($) | | :--- | :--- | :--- | :--- | | Noninterest Expense | $59.1 million | $58.5 million | $59.8 million | | Efficiency Ratio | 46.69% | 47.34% | 47.22% | - The $664,000 quarter-over-quarter increase was primarily due to a $500,000 provision for unfunded loan commitments and a $479,000 increase in salaries and benefits from higher payroll taxes[19] - The year-over-year decrease was impacted by a $2.3 million FDIC special assessment in Q1 2024, which was partially offset by higher software and occupancy expenses in Q1 2025[20] Income Taxes The effective tax rate for Q1 2025 was 26.50%, compared to 25.25% in Q4 2024 and 27.25% in Q1 2024. The rate can vary based on the level of tax-advantaged income Effective Tax Rate Comparison | Period | Effective Tax Rate (%) | | :--- | :--- | | Q1 2025 | 26.50% | | Q4 2024 | 25.25% | | Q1 2024 | 27.25% | Balance Sheet Analysis Review of assets, asset quality, deposits, borrowings, and capital provides insight into the company's financial position and strategic deleveraging efforts Assets Total assets were $15.26 billion at March 31, 2025, a slight increase of $102.9 million from the prior quarter but a decrease of $1.2 billion from the prior year. The year-over-year decline reflects strategic decreases in loans, investment securities, and cash balances Total Assets Comparison | Date | Total Assets ($) | | :--- | :--- | | Mar 31, 2025 | $15.26 billion | | Dec 31, 2024 | $15.15 billion | | Mar 31, 2024 | $16.47 billion | - The quarter-over-quarter asset increase was driven by a $290.3 million rise in balances at the Federal Reserve, offset by decreases in net loans (-$170.9M) and investment securities (-$27.6M)[22] Investment Securities Total investment securities were $4.89 billion, down $397.5 million year-over-year. The portfolio consists of $2.36 billion in Held-to-Maturity (HTM) and $2.54 billion in Available-for-Sale (AFS) securities. The pre-tax net unrealized loss on AFS securities improved, decreasing by $58.9 million during the quarter to $338.4 million Investment Securities Portfolio (Mar 31, 2025) | Category | Balance ($) | Change from Dec 31, 2024 ($) | | :--- | :--- | :--- | | Total Investment Securities | $4.89 billion | -$27.6 million | | Held-to-Maturity (HTM) | $2.36 billion | -$20.5 million | | Available-for-Sale (AFS) | $2.54 billion | -$7.0 million | - The pre-tax unrealized loss on AFS securities decreased by $58.9 million from December 31, 2024[25] Loans Total loans decreased by $172.8 million (2.02%) from Q4 2024 to $8.36 billion. The decline was primarily driven by a $167.8 million reduction in dairy & livestock loans. Year-over-year, loans decreased by $407.1 million, led by a drop in commercial real estate loans Loan Portfolio Changes | Period | Total Loans (at amortized cost) ($) | Change ($) | | :--- | :--- | :--- | | Mar 31, 2025 | $8.36 billion | -$172.8 million (QoQ) | | Dec 31, 2024 | $8.53 billion | - | | Mar 31, 2024 | $8.77 billion | -$407.1 million (YoY) | - The quarter-over-quarter loan decrease was led by a $167.8 million drop in dairy & livestock loans and a $16.8 million drop in commercial real estate loans[26] Asset Quality Asset quality improved significantly, with nonperforming assets decreasing to $26.1 million (0.17% of total assets) from $47.1 million in Q4 2024. This was largely due to the sale of $19.3 million in OREO. The Allowance for Credit Losses (ACL) remained stable at 0.94% of total loans Asset Quality Metrics | Metric | Mar 31, 2025 ($) | Dec 31, 2024 ($) | Mar 31, 2024 ($) | | :--- | :--- | :--- | :--- | | Nonperforming Loans | $25.6 million | $27.8 million | $13.8 million | | OREO | $0.5 million | $19.3 million | $0.6 million | | Total Nonperforming Assets | $26.1 million | $47.1 million | $14.5 million | | NPA / Total Assets | 0.17% | 0.31% | 0.09% | | ACL / Total Loans | 0.94% | 0.94% | 0.94% | - The $21.0 million decrease in nonperforming assets from the prior quarter was primarily due to the sale of $19.3 million of OREO at a net gain of $2.2 million[30] Deposits & Customer Repurchase Agreements Total deposits and customer repos increased slightly by $55.8 million from the prior quarter to $12.27 billion. A key positive trend was the $147.2 million growth in noninterest-bearing deposits, which now constitute 59.92% of total deposits, up from 58.90% at year-end 2024 Deposit Composition (Mar 31, 2025) | Category | Balance ($) | Change from Dec 31, 2024 ($) | | :--- | :--- | :--- | | Total Deposits & Repos | $12.27 billion | +$55.8 million | | Noninterest-bearing Deposits | $7.18 billion | +$147.2 million | | % of Noninterest-bearing | 59.92% | 58.90% (at Dec 31, 2024) | Borrowings Total borrowings were stable at $500 million in FHLB advances. This represents a significant $1.5 billion decrease from March 31, 2024, as the company redeemed all advances from the Federal Reserve's Bank Term Funding Program (BTFP) before the end of 2024 - As of March 31, 2025, total borrowings consisted solely of $500 million of FHLB advances[33] - Borrowings decreased by $1.5 billion from March 31, 2024, following the redemption of advances from the Federal Reserve's Bank Term Funding Program (BTFP)[33] Capital Total equity increased by $42.1 million to $2.23 billion, driven by net earnings. All regulatory capital ratios remain well-above required minimums, with the CET1 ratio at 16.5% and the Tangible Common Equity ratio improving to 10.0%. The company repurchased $15.3 million of common stock during the quarter Regulatory Capital Ratios (Consolidated) | Ratio | Mar 31, 2025 (%) | Dec 31, 2024 (%) | Minimum + Buffer (%) | | :--- | :--- | :--- | :--- | | CET1 Capital Ratio | 16.5% | 16.2% | 7.0% | | Tier 1 Risk-Based Capital | 16.5% | 16.2% | 8.5% | | Total Risk-Based Capital | 17.3% | 17.1% | 10.5% | | Tangible Common Equity | 10.0% | 9.8% | N/A | - Tangible book value per share increased to $10.45 at March 31, 2025, from $10.10 at December 31, 2024[34] - The company repurchased 782,063 shares of common stock for a total of $15.3 million during the first quarter of 2025[34] Other Information and Disclosures This section covers wealth management performance, corporate overview, and important legal and financial disclosures regarding forward-looking statements and non-GAAP measures CitizensTrust CitizensTrust, the company's wealth management division, had approximately $4.7 billion in assets under management and administration as of March 31, 2025. It generated revenues of $3.4 million for the quarter, a slight decrease from the prior quarter but an increase from the prior year - As of March 31, 2025, CitizensTrust had approximately $4.7 billion in assets under management and administration, including $3.38 billion in assets under management[37] CitizensTrust Revenue | Period | Revenue ($) | | :--- | :--- | | Q1 2025 | $3.4 million | | Q4 2024 | $3.5 million | | Q1 2024 | $3.2 million | Corporate Overview and Disclosures CVB Financial Corp. is one of the 10 largest bank holding companies headquartered in California, with over $15 billion in assets. The report includes standard Safe Harbor language regarding forward-looking statements and notes the use of non-GAAP financial measures, for which reconciliations are provided - CVBF is one of the 10 largest bank holding companies headquartered in California with more than $15 billion in total assets[38] - The report contains forward-looking statements involving risks and uncertainties, and the company disclaims any obligation to update them[41][45] - Certain non-GAAP financial measures are used to provide supplemental information. Investors should refer to the reconciliations included in the release[46] Detailed Financial Tables Comprehensive unaudited financial statements and supplementary data are provided, including balance sheets, income statements, and reconciliations of non-GAAP measures Condensed Consolidated Balance Sheets Detailed period-end consolidated balance sheets provide a snapshot of the company's assets, liabilities, and equity at key reporting dates Condensed Consolidated Balance Sheets (Unaudited) | (Dollars in thousands) | March 31, 2025 | December 31, 2024 | March 31, 2024 | | :--- | :--- | :--- | :--- | | Total Assets | $15,256,591 | $15,153,655 | $16,468,146 | | Net loans and lease finance receivables | $8,285,380 | $8,456,310 | $8,687,896 | | Total investment securities | $4,894,207 | $4,921,783 | $5,291,686 | | Total deposits | $11,989,921 | $11,948,381 | $11,894,921 | | Other borrowings | $500,000 | $500,000 | $1,995,000 | | Total Liabilities | $13,028,172 | $12,967,339 | $14,381,321 | | Total Stockholders' Equity | $2,228,419 | $2,186,316 | $2,086,825 | Condensed Consolidated Average Balance Sheets Average balance sheets offer insights into the company's asset and liability structure over the reporting periods, aiding in financial ratio analysis Condensed Consolidated Average Balance Sheets (Unaudited, Three Months Ended) | (Dollars in thousands) | March 31, 2025 | December 31, 2024 | March 31, 2024 | | :--- | :--- | :--- | :--- | | Total Assets | $15,169,306 | $15,562,489 | $16,205,413 | | Loans and lease finance receivables | $8,467,465 | $8,522,587 | $8,824,579 | | Total investment securities | $4,908,718 | $4,936,514 | $5,357,708 | | Total deposits | $11,872,675 | $12,114,474 | $11,636,853 | | Other borrowings | $513,078 | $500,000 | $1,991,978 | | Total Liabilities | $12,942,358 | $13,348,933 | $14,106,545 | | Total Stockholders' Equity | $2,226,948 | $2,213,556 | $2,098,868 | Condensed Consolidated Statements of Earnings Detailed statements of earnings present the company's revenues, expenses, and net income for the reported quarters, highlighting profitability trends Condensed Consolidated Statements of Earnings (Unaudited, Three Months Ended) | (Dollars in thousands) | March 31, 2025 | December 31, 2024 | March 31, 2024 | | :--- | :--- | :--- | :--- | | Net interest income | $110,444 | $110,418 | $112,461 | | (Recapture of) provision for credit losses | ($2,000) | ($3,000) | $0 | | Noninterest income | $16,229 | $13,103 | $14,113 | | Noninterest expense | $59,144 | $58,480 | $59,771 | | Earnings before income taxes | $69,529 | $68,041 | $66,803 | | Net Earnings | $51,104 | $50,858 | $48,599 | | Diluted EPS | $0.36 | $0.36 | $0.35 | Selected Financial Highlights Key financial metrics and breakdowns of the loan portfolio and deposit composition are presented, offering a concise overview of performance and structure Loan Portfolio by Type (Gross, at amortized cost) | (Dollars in thousands) | Mar 31, 2025 | Dec 31, 2024 | Mar 31, 2024 | | :--- | :--- | :--- | :--- | | Commercial real estate | $6,490,604 | $6,507,452 | $6,720,538 | | Commercial and industrial | $942,301 | $925,178 | $963,120 | | Dairy & livestock and agribusiness | $252,532 | $419,904 | $351,624 | | Other | $677,095 | $683,298 | $735,431 | | Gross loans | $8,363,632 | $8,536,432 | $8,770,713 | Deposit Composition by Type | (Dollars in thousands) | Mar 31, 2025 | Dec 31, 2024 | Mar 31, 2024 | | :--- | :--- | :--- | :--- | | Noninterest-bearing | $7,184,267 | $7,037,096 | $7,112,789 | | Savings and money market | $3,710,612 | $3,786,387 | $3,561,512 | | Time deposits | $561,822 | $573,593 | $675,554 | | Investment checking | $533,220 | $551,305 | $545,066 | | Total deposits | $11,989,921 | $11,948,381 | $11,894,921 | Non-GAAP Reconciliations Reconciliations of non-GAAP financial measures, such as tangible book value and return on average tangible common equity, are provided for investor clarity Tangible Book Value per Share (Non-GAAP) | (Dollars in thousands, except per share) | Mar 31, 2025 | Dec 31, 2024 | Mar 31, 2024 | | :--- | :--- | :--- | :--- | | Stockholders' equity | $2,228,419 | $2,186,316 | $2,086,825 | | Less: Goodwill & Intangibles | ($774,634) | ($775,789) | ($779,675) | | Tangible book value | $1,453,785 | $1,410,527 | $1,307,150 | | Tangible book value per share | $10.45 | $10.10 | $9.36 | Return on Average Tangible Common Equity (Non-GAAP) | (Dollars in thousands, annualized) | Q1 2025 | Q4 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | | Tangible net income | $51,918 | $51,677 | $49,612 | | Average tangible common equity | $1,451,608 | $1,437,084 | $1,318,461 | | Return on avg. tangible common equity | 14.51% | 14.31% | 15.13% |