Business Overview and History CVB Financial Corp. (CVBF) is a bank holding company that has demonstrated remarkable resilience and consistent performance throughout its storied history. Established in 1974, the company has grown to become one of the largest bank holding companies headquartered in California, with over $15 billion in assets as of the latest reporting period.
CVB Financial Corp. is the parent company of Citizens Business Bank, a full-service commercial bank that caters to small- and medium-sized businesses, as well as individual customers, across California. The bank's origins can be traced back to 1974 when it was founded as Chino Valley Bank. Over the decades, the company has undergone strategic expansions, including the acquisition of Suncrest Bank in 2022, which further strengthened its presence in the state.
CVB's growth strategy has been marked by several key acquisitions throughout its history. In 1998, the company expanded its footprint through the acquisition of Chino Valley Bank, establishing a strong presence in the Inland Empire region of Southern California. The company continued its expansion in 2010 with the acquisition of San Bernardino-based County Commerce Bank, further solidifying its position in the Southern California market. In 2012, CVB acquired San Diego National Bank, extending its reach within California.
Despite facing challenges such as the 2008 financial crisis, CVB managed to maintain its financial stability and continue its growth trajectory. The company's resilience was further tested in 2019 when it experienced a data breach that exposed some customer information. However, CVB responded swiftly by implementing enhanced security measures to protect its customers and reaffirming its commitment to providing high-quality banking services.
Throughout its history, CVB has remained focused on financial stability, customer service, and community involvement, which have been key factors in its success over the past four decades. The company's dedication to these principles has helped it become a leading regional bank in California.
One of the hallmarks of CVB Financial Corp. is its unwavering commitment to consistent profitability. The company has reported net income for 191 consecutive quarters, a remarkable feat that underscores its ability to navigate various economic environments. Additionally, the company has paid cash dividends to its shareholders for 141 consecutive quarters, demonstrating its dedication to rewarding its investor base.
Financial Snapshot As of the latest reporting period, CVB Financial Corp. boasted a strong financial position. The company reported net earnings of $201 million, or $1.44 per share, for the full year 2024. Its return on average tangible common equity stood at an impressive 14.95%, while its return on average assets was a robust 1.30%.
The company's balance sheet remains rock-solid, with a common equity Tier 1 capital ratio of 16.2% and a tangible common equity ratio of 9.8% as of December 31, 2024. These capital ratios not only exceed regulatory requirements but also provide the company with the flexibility to pursue strategic initiatives and navigate potential challenges.
For the most recent fiscal year, CVB Financial Corp. reported revenue of $501.8 million and net income of $200.7 million. In the most recent quarter, the company generated revenue of $123.5 million and net income of $50.9 million. The revenue and net income for the most recent quarter decreased year-over-year by 10.8% and 5.6% respectively. The decrease in revenue was primarily due to a decline in interest income as a result of the bank's balance sheet deleveraging actions. Net income remained relatively stable compared to the prior year period.
The company's operations are primarily focused within the state of California, with 97% of its loan portfolio concentrated in California as of December 31, 2024. The bank has a diverse customer base across various industries, with no single industry accounting for more than 8% of total deposits as of the end of 2024.
Liquidity CVB Financial Corp. maintains a strong liquidity position, which is crucial for its ability to meet customer needs and regulatory requirements. The company's liquidity management strategy focuses on maintaining a diverse funding base and ample liquid assets to ensure it can withstand various market conditions.
As of December 31, 2024, the company reported a debt-to-equity ratio of 0.22869521148818378, indicating a conservative approach to leverage. The company held $453.5 million in cash and had a current ratio and quick ratio of 5.33809724639489, demonstrating strong short-term liquidity.
Furthermore, CVBF had $3.9 billion of secured and unused borrowing capacity with the Federal Home Loan Bank and $1.1 billion of secured unused borrowing capacity at the Federal Reserve's discount window as of September 30, 2024. This additional borrowing capacity provides the company with significant financial flexibility.
Navigating Challenges with Resilience Despite the ongoing economic uncertainties, CVB Financial Corp. has demonstrated its ability to adapt and thrive. The company's management team has proactively addressed potential headwinds, such as the recent wildfires that impacted its Southern California footprint.
In response to the devastating wildfires, the bank organized a comprehensive response plan, focusing on supporting its associates, customers, and local communities. The bank provided direct assistance to over 50 associates affected by the mandatory evacuation orders and donated $200,000 to relief agencies working on the front lines.
Furthermore, the bank identified 114 loans totaling approximately $105 million located in the fire zones, with 14 properties experiencing some level of damage. However, the bank's proactive measures, including the borrowers' insurance coverage, have mitigated the overall impact on its financial performance.
Business Segments and Operations CVB Financial Corp. operates two main business segments: Commercial Banking and Wealth Management.
The Commercial Banking segment is the primary driver of CVBF's business, providing a wide range of lending, deposit, and treasury management services to small and mid-sized businesses throughout California. As of September 30, 2024, the commercial loan portfolio totaled $6.62 billion, comprising 77.21% of the total loan portfolio. This segment includes commercial real estate loans, construction loans, SBA loans, commercial and industrial loans, and dairy livestock and agribusiness loans. The commercial real estate loan portfolio, which makes up the largest portion of the commercial loan book at $6.62 billion, is diversified across property types including industrial, office, retail, multi-family, and farmland. Dairy livestock and agribusiness loans, which totaled $342.44 million, serve the financing needs of wholesale dairy farm operations, cattle feeders, livestock raisers, and farmers.
The Wealth Management segment, operated through the Company's CitizensTrust division, provides asset management, financial planning, trust, and investment services. As of September 30, 2024, CitizensTrust had approximately $4.70 billion in assets under management and administration, including $3.30 billion in assets under management. This segment generated fee income of $3.56 million in the third quarter of 2024, up 9.83% from the prior year quarter, driven by growth in assets under management.
CVBF maintained strong capital ratios, with a Tier 1 leverage ratio of 10.60%, a common equity Tier 1 ratio of 15.77%, a Tier 1 risk-based capital ratio of 15.77%, and a total risk-based capital ratio of 16.59% as of September 30, 2024. These ratios exceeded regulatory "well-capitalized" minimums, positioning the Company to continue supporting loan growth and weather potential economic headwinds. The company's tangible book value per share was $10.17 as of the end of the third quarter.
Outlook and Growth Opportunities Looking ahead, CVB Financial Corp. remains optimistic about its growth prospects. The company's management has expressed confidence in the improving loan demand, with the pipeline of commercial real estate and other lending opportunities gradually strengthening.
Additionally, the bank's focus on expanding its deposit base, particularly in its Specialty Banking and Government Services groups, has been a key driver of its success. Over the past five years, the company's core deposits and repurchase agreements, excluding the deposits acquired from Suncrest Bank and brokered CDs, have grown at a cumulative average rate of 3.3%.
The banking industry in California has seen moderate loan growth, with a 5-year compound annual growth rate (CAGR) of 3.3% for CVBF's core deposits and repos, excluding acquired deposits and brokered CDs, from December 31, 2019 to December 31, 2024.
CVBF is optimistic about their ability to continue to grow low-cost deposits, noting that their specialty deposit group generated 75% more in new business in 2025 than the average for the prior 2 years. The company's loan pipelines are improving, though still not where management would want them to be overall. They are seeing more optimism from clients and expect to be able to execute on loan growth in 2025.
Regarding expenses, CVBF aims to keep controllable expense growth below 4% going forward, with a focus on continued investment in technology to drive efficiency improvements. The company does not have any contemplated sale-leaseback transactions or securities transactions at this time, indicating their recent balance sheet restructuring is mostly complete.
Conclusion CVB Financial Corp. has established itself as a consistent performer in the banking industry, weathering various challenges and delivering stable financial results for its shareholders. The company's robust capital position, disciplined risk management, and adaptability to changing market conditions position it well to capitalize on future growth opportunities. As the company continues to navigate the evolving landscape, investors can take comfort in its longstanding track record of profitability and shareholder value creation.