CVB Financial (CVBF) - 2025 Q2 - Quarterly Results

Earnings Release Overview Second Quarter 2025 Financial Highlights CVB Financial Corp. reported stable Q2 2025 earnings with net income of $50.6 million and diluted EPS of $0.36, maintaining strong ROAA of 1.34% and ROATCE of 14.08% Net Income and Diluted EPS (Millions USD) | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Net Income | $50.6 million | $51.1 million | $50.0 million | | Diluted EPS | $0.36 | $0.36 | $0.36 | Key Performance Ratios (Annualized %) | Performance Ratio | Q2 2025 | | :--- | :--- | | Return on Average Equity (ROAE) | 9.06% | | Return on Average Tangible Common Equity (ROATCE) | 14.08% | | Return on Average Assets (ROAA) | 1.34% | - The company highlighted its consistent financial performance, marking 193 consecutive quarters of profitability (over 48 years) and 143 consecutive quarters of paying cash dividends[5] Financial Performance Analysis Net Interest Income and Margin Net interest income increased to $111.6 million, with NIM expanding to 3.31% year-over-year due to a 35-basis point reduction in the cost of funds Net Interest Income (Millions USD) | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Net Interest Income | $111.6 million | $110.4 million | $110.8 million | - The year-over-year increase in net interest income was due to a $15.6 million decline in interest expense, which more than offset a $14.9 million decrease in interest income, a direct result of reducing average interest-bearing liabilities by $1.19 billion[9] Net Interest Margin and Cost of Funds (%) | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Net Interest Margin (TE) | 3.31% | 3.31% | 3.05% | | Yield on Earning Assets (TE) | 4.28% | 4.28% | 4.37% | | Cost of Funds | 1.03% | 1.04% | 1.38% | - The 26-basis point year-over-year increase in NIM was primarily caused by a 35-basis point decrease in the cost of funds, largely due to a $1.34 billion decline in average borrowings which had a higher cost[12] Provision for Credit Losses No provision for credit losses was recorded in Q2 2025, with minimal net charge-offs of $249,000 and ACL at 0.93% of total loans - There was no provision for credit losses in Q2 2025, compared to a $2.0 million recapture in Q1 2025 and no provision in Q2 2024[15] - Net charge-offs for Q2 2025 were $249,000, a shift from net recoveries of $130,000 in the prior quarter[15] Noninterest Income Noninterest income decreased to $14.7 million, primarily due to a one-time $2.2 million gain on OREO property sales in Q1 2025 Noninterest Income (Millions USD) | Period | Noninterest Income | | :--- | :--- | | Q2 2025 | $14.7 million | | Q1 2025 | $16.2 million | | Q2 2024 | $14.4 million | - The sequential decrease was mainly due to a $2.2 million gain on the sale of four OREO properties in Q1 2025, excluding this, income grew by approximately $700,000[16] Noninterest Expense Noninterest expense decreased to $57.6 million, mainly due to a $1.5 million reduction in salaries and benefits, improving the efficiency ratio to 45.6% Noninterest Expense and Efficiency Ratio (Millions USD, %) | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Noninterest Expense | $57.6 million | $59.1 million | $56.5 million | | Efficiency Ratio | 45.6% | 46.7% | 45.1% | - The quarter-over-quarter decrease was mainly driven by a $1.5 million decline in salaries and benefits, of which $1.2 million was due to higher payroll taxes in the first quarter[17] Income Taxes The effective tax rate for Q2 2025 was 26.50%, unchanged sequentially but lower than Q2 2024 Effective Tax Rate (%) | Period | Effective Tax Rate | | :--- | :--- | | Q2 2025 | 26.50% | | Q1 2025 | 26.50% | | Q2 2024 | 27.25% | Balance Sheet Analysis Asset Composition Total assets increased by 1.03% to $15.41 billion, driven by a $202.5 million rise in cash, partially offset by declines in investments and loans Total Assets (Billions USD) | Date | Total Assets | | :--- | :--- | | June 30, 2025 | $15.41 billion | | March 31, 2025 | $15.26 billion | | June 30, 2024 | $16.15 billion | Investment Securities The investment securities portfolio decreased to $4.81 billion, with the pre-tax net unrealized loss on AFS improving by $24.7 million Investment Securities Portfolio (Billions USD) | Security Type | June 30, 2025 Balance | | :--- | :--- | | Total Investment Securities | $4.81 billion | | Held-to-Maturity (HTM) | $2.33 billion | | Available-for-Sale (AFS) | $2.49 billion | - The pre-tax net unrealized loss on AFS securities decreased by $24.7 million from the end of Q1 2025[25] Loans and Leases Total loans and leases remained stable at $8.36 billion, with a marginal $5.1 million decrease offset by growth in commercial real estate and single-family loans Total Loans and Leases (Billions USD) | Date | Total Loans & Leases | | :--- | :--- | | June 30, 2025 | $8.36 billion | | March 31, 2025 | $8.36 billion | | June 30, 2024 | $8.68 billion | - Quarter-over-quarter loan changes included decreases of $29.9 million in commercial and industrial loans and $18.1 million in dairy loans, offset by increases of $26.8 million in commercial real estate and $18.9 million in single-family residential loans[26] Asset Quality Asset quality remained strong with ACL at 0.93% of loans and nonperforming assets at 0.17% of total assets, as classified loans decreased by $20.7 million Asset Quality Metrics (%) | Metric | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :--- | :--- | :--- | :--- | | ACL / Total Loans | 0.93% | 0.94% | 0.95% | | Nonperforming Assets / Total Assets | 0.17% | 0.17% | 0.16% | Classified Loans (Millions USD) | Metric | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :--- | :--- | :--- | :--- | | Classified Loans | $73.4 million | $94.2 million | $124.7 million | - Classified loans decreased by $20.7 million quarter-over-quarter, driven by a $19.9 million reduction in classified commercial real estate loans[31] Deposits and Funding Total deposits and customer repurchase agreements increased by $122.9 million to $12.39 billion, with noninterest-bearing deposits at 60.47% and borrowings reduced to $500 million Deposits and Customer Repurchase Agreements (Billions USD) | Metric | June 30, 2025 | March 31, 2025 | | :--- | :--- | :--- | | Total Deposits & Customer Repos | $12.39 billion | $12.27 billion | | Noninterest-bearing Deposits | $7.25 billion | $7.18 billion | - Noninterest-bearing deposits constituted 60.47% of total deposits at the end of Q2 2025, up from 59.92% at the end of Q1 2025[33] - Total borrowings were $500 million in FHLB advances, a decrease of $1.3 billion from June 30, 2024, after the company redeemed all its borrowings from the Federal Reserve's Bank Term Funding Program[34] Capital Adequacy The company's capital position remains robust, with CET1 at 16.5% and Tangible Common Equity at 10.0%, supported by $37.5 million in H1 2025 share repurchases Capital Ratios (%) | Capital Ratio | June 30, 2025 | Minimum Required + Buffer | | :--- | :--- | :--- | | Tier 1 Leverage | 11.8% | 4.0% | | Common Equity Tier 1 (CET1) | 16.5% | 7.0% | | Total Risk-Based Capital | 17.3% | 10.5% | | Tangible Common Equity | 10.0% | N/A | - In the first half of 2025, the company repurchased 2,063,564 shares of common stock for a total of $37.5 million[35] - Tangible book value per share increased to $10.64 at June 30, 2025[35] Other Corporate Information CitizensTrust Performance CitizensTrust reported strong results with $5.0 billion in assets under management and administration, and Q2 revenues increasing to $3.7 million - As of June 30, 2025, CitizensTrust had approximately $5.0 billion in assets under management and administration[38] CitizensTrust Revenue (Millions USD) | Period | CitizensTrust Revenue | | :--- | :--- | | Q2 2025 | $3.7 million | | Q1 2025 | $3.4 million | | Q2 2024 | $3.4 million | Corporate Overview and Conference Call CVB Financial Corp., a top 10 California bank holding company with over $15 billion in assets, will host a conference call on July 24, 2025 - CVBF is one of the 10 largest bank holding companies headquartered in California with over $15 billion in total assets[39] - A conference call to discuss Q2 2025 results is scheduled for 7:30 a.m. PDT/10:30 a.m. EDT on Thursday, July 24, 2025[41] Financial Statements and Supplementary Data Consolidated Financial Statements This section contains unaudited Condensed Consolidated Balance Sheets, Average Balance Sheets, and Statements of Earnings for recent periods Selected Financial Highlights and Trends This section provides detailed tables covering key performance ratios, earnings trends, asset quality, loan portfolio, and deposit composition Regulatory Capital and Non-GAAP Reconciliations This section presents regulatory capital ratios under Basel III and detailed reconciliations of non-GAAP financial measures to GAAP