Cvb Financial Corporation · NASDAQ:CVBF
Cvb Financial — Investor Presentation (October 2023)
53 slides from Cvb Financial's investor presentation, Oct 26, 2023
Slide 1: October 2023
Exhibit 99.1 October 2023 cbbank.com
Slide 2: Forward Looking Statements
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 manageme
Slide 3: CVB Financial Corp. (CVBF)
CVB Financial Corp. (CVBF) ▪ Total Assets: $15.9 Billion ▪ Gross Loans: $ 8.9 Billion ▪ Total Deposits (Including Repos): $12.6 Billion ▪ Total Equity: $ 2.0 Billion ➢ Largest financial institution headquartered in the Inland Empire region of Southern California. Founded in 1974. 3 cbbank.com
Slide 4: Bank Accomplishments & Ratings
Bank Accomplishments & Ratings ➢ 186 Consecutive Quarters of Profitability ➢ 136 Consecutive Quarters of Cash Dividends ➢ Ranked #1 Forbes, 2023 Best Banks in America (February 2023) ➢ Ranked #4 Forbes, 2022 Best Banks in America (January 2022) ➢ Ranked #1 Forbes, 2021 Best Banks in America (January
Slide 5: Business Financial Centers and CitizensTrust Locations
62 Business Financial Centers 3 CitizensTrust Locations Corporate Office Business Financial Centers CitizensTrust cbbank.com
Slide 6: Our Vision
Our Vision Citizens Business Bank will strive to become the premier financial services company operating throughout the state of California, servicing the comprehensive financial needs of successful small to medium sized businesses and their owners. cbbank.com 6
Slide 7: Target Customer
Target Customer The best privately-held and/or family-owned businesses throughout California ▪ Annual revenues of $1-300 million ▪ Top 25% in their respective industry ▪ Full relationship banking ▪ Build long-term relationships cbbank.com 7
Slide 8: Three Areas of Growth
Three Areas of Growth DeNovo Acquisitions San Diego (2014) American Security Bank (2014) Oxnard (2015) County Commerce Bank (2016) Santa Barbara (2015) Valley Business Bank (2017) San Diego (2017) Community Bank (2018) Stockton (2018) Suncrest Bank (2022) Modesto (2020) cbbank.com 8
Slide 9: Acquisition Strategy
Acquisition Strategy Banks: ➢ Target size: $1 billion to $10 billion in assets ➢ Financial & Strategic ➢ In-market and/or adjacent geographic market (California) Banking Teams: ➢ In-market ➢ New markets cbbank.com 9
Slide 10: Relationship Banking Model
Relationship Banking Model Customer Credit Relationship Marketing Management Manager Division (Bank) Citizens Home Agribusiness Lending Dairy & Asset Based Construction Livestock Lending Lending Real Estate Treasury SBA Government Management Services International Services CitizensTrust/ Specialty W
Slide 11: CVBF Balance Sheet Profile September 30, 2023
CVBF Balance Sheet Profile September 30, 2023 Deposits & Wholesale Securities Assets Loans Repos Funding Cash D&L & Agri Repos 1% Other 4% 2% Others Muni FHLB ST 9% 8% 9% borrowings Agency Interest- 22% C&I 11% bearing 11% Securities 38% $1.1B 34% $5.4B Loans MBS $8.9B $12.6B $15.9B 56% CMO Noninter
Slide 12: Q3 2023 Financial Highlights
Q3 2023 Financial Highlights • ROATCE = 18.82% • ROAA = 1.40% Profitability • NIM = 3.31% • Efficiency Ratio = 39.99% • Q3’23 Net Income = $57.9 million / EPS = $0.42 • 4% increase in Net Income vs. Q2‘23 Income Statement • Cost of funds increased sequentially from 0.83% to 0.92% • NIM increased seq
Slide 13: Selected Ratios
Selected Ratios 2020 2021 2022 Q3’22 Q2’23 Q3’23 ROATCE 14.25% 15.93% 18.85% 21.34% 18.39% 18.82% NIM 3.59% 2.97% 3.30% 3.46% 3.22% 3.31% Cost of Deposits 0.12% 0.04% 0.05% 0.05% 0.35% 0.52% Performance Cost of Funds 0.13% 0.05% 0.06% 0.05% 0.83% 0.92% Efficiency Ratio 41.40% 41.09% 38.98% 36.59% 40
Slide 14: Selected Highlights
Selected Highlights Q3’22 Q2’23 Q3’23 ($ in Thousands) Net Interest Income $ 133,338 $ 119,535 $ 123,371 Noninterest Income 11,590 12,656 14,309 Noninterest Expense 53,027 54,017 55,058 PTPP 91,901 78,174 82,622 Income Provision for Credit Losses 2,000 500 2,000 Statement Earnings before Income Taxe
Slide 15: Selected Highlights
Selected Highlights Q3’22 Q2’23 Q3’23 ($ in Thousands) Average Cash & Cash Equivalents $ 810,089 $ 525,566 $ 644,006 Average Loans 8,699,303 8,892,413 8,862,462 Average PPP Loans 38,198 5,461 3,910 Average Total Securities 6,033,696 5,689,606 5,542,590 Average Balance Average Noninterest-bearing Dep
Slide 16: Pretax-Pre Provision Income
Pretax-Pre Provision Income ($ in Millions) 2.31% 2.16% 2.09% 1.99% 1.91% $82.6 $95.4 $91.9 $84.0 $78.2 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 PTPP income (Non -GAAP*) PTPP ROAA (Non-GAAP*) * We use certain non-GAAP financial measures to provide supplemental information regarding our performance. c
Slide 17: Dividends – Consecutive Quarters
Dividends – 136 Consecutive Quarters 136 Consecutive Quarters $0.80 More than 30 years of cash $0.77 $0.72 $0.72 $0.72 dividends since 1989 $0.56 $0.54 $0.48 $0.48 48.40% 12/31/2015 12/31/2016 12/31/2017 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 Q3 2023 Dividends per Share Dividend Payo
Slide 18: Earnings Per Share
Earnings Per Share $1.68 186 Consecutive Quarters $1.67 $1.56 of Profitability $1.48 $1.30 $1.24 $0.95 $0.94 $0.93 12/31/2015 12/31/2016 12/31/2017 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 Q3 2023 cbbank.com 18 • Annualized based on Q3’23 EPS. Q3 ANNUALIZED*
Slide 19: Strong Capital Ratios
Strong Capital Ratios CVBF CET1 % KRX Avg CET1 % Regulatory Min. 14.9% 14.4% 14.1% 13.8% 13.6% 13.6% 13.4% 13.5% 12.5% 12.2% 11.9% 11.8% 11.8% 11.8% 11.7% 7.0% 7.0% 7.0% 7.0% 7.0% 7.0% 7.0% 7.0% Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Capital Ratios 15.3% As of Q3 2023 14.4%
Slide 20: CET1 Ratio Trend (%)
CET1 Ratio Trend (%) 17.1% CVBF KRX 16.9% 15.1% 14.9% 14.9% 14.9% 14.8% 14.8% Community Suncrest 14.6% 14.6% 14.5% Bank Q3’18 14.4% Q1’22 14.3% 14.1% 14.1% 13.8% 13.8% 13.6% 13.6% 13.5% 13.4% 13.0% 12.9% 12.8% 12.8% 12.8% 12.5% 12.5% 12.2% 12.1% 12.1% 12.0% 12.0% 12.0% 12.0% 12.0% 12.0% 12.0% 11.9%
Slide 21: TCE Ratio Trend (%)
TCE Ratio Trend (%) CVBF KRX 12.2% 12.1% 11.8% 11.7% 11.5% 11.3% 11.1% 10.5% 10.2% 9.8% 9.6% 9.6% 9.4% 9.2% 9.2% 9.7% 9.7% 8.9% 9.6% 9.4% 9.3% 9.2% 9.2% 9.1% 9.1% 9.0% 8.9% 8.8% 8.8% 8.7% 8.7% 7.9% 8.6% 7.8% 7.8% 7.7% 7.5% 7.4% 7.1% 7.7% 7.5% 7.5% 7.5% 7.4% 7.0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q
Slide 22: Credit Quality
Credit Quality NPA % Total Assets Classified Loans % Total Loans 0.12% 1.04% 0.94% 0.87% 0.71% 0.06% 0.04% 0.03% 2020 2021 2022 Q3'23 2020 2021 2022 Q3'23 Net Charge-Offs (Recoveries) to Average Loans Allowance for Credit Losses 1.12% 1.00% 0.94% 0.82% 0.04% 0.00% $93.7 $89.0 $85.1 (0.00%) (0.01%) $
Slide 23: Net Charge-Offs / Average Loans (%)
Net Charge-Offs / Average Loans (%) CVBF KRX 0.08% 0.06% 0.06% 0.05% 0.05% 0.05% 0.04% 0.04% 0.04% 0.04% 0.04% 0.04% 0.04% 0.03% 0.03% 0.03% 0.03% 0.03% 0.02% 0.02% 0.02% 0.01% 0.01% 0.01% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% -0.01% -0
Slide 24: NPA / Average Assets (%)
NPA / Average Assets (%) CVBF KRX 0.63% 0.61% 0.56% 0.51% 0.51% 0.51% 0.49% 0.49% 0.47% 0.47% 0.45% 0.45% 0.42% 0.37% 0.33% 0.30% 0.30% 0.29% 0.28% 0.28% 0.28% 0.27% 0.18% 0.17% 0.17% 0.14% 0.13% 0.12% 0.12% 0.12% 0.12% 0.10% 0.10% 0.09% 0.09% 0.08% 0.08% 0.06% 0.06% 0.06% 0.05% 0.04% 0.04% 0.04% 0.
Slide 25: Classified Loans / Total Loans (%)
Classified Loans / Total Loans (%) CVBF KRX 2.1% 2.1% 2.0% 1.9% 1.8% 1.8% 1.7% 1.6% 1.6% 1.6% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.4% 1.4% 1.3% 1.2% 1.2% 1.2% 1.1% 1.0% 1.0% 1.0% 0.9% 0.9% 0.9% 0.9% 0.9% 0.8% 0.8% 0.8% 0.8% 0.7% 0.7% 0.7% 0.7% 0.7% 0.7% 0.7% 0.6% 0.6% 0.6% * Source: S&P Capital IQ. Unwei
Slide 26: Classified Loan Trend
Classified Loan Trend ($ in Millions) $92.25 $3.34 $2.74 $5.20 $78.66 $77.83 $76.17 $1.74 $2.11 Other* $9.33 $66.98 $9.97 $12.94 $64.11 $63.65 $1.77 SFR mortgage $34.63 $12.26 $6.87 $5.09 $5.99 $12.05 $10.63 SBA $10.37 $11.57 $7.64 $17.34 $12.17 $20.75 $2.32 Dairy & livestock and $9.00 agribusiness
Slide 27: CECL Update Highlights
CECL Update Highlights Allowance for Credit Losses – by Loan Type 6/30/2023 9/30/2023 Variance ($ in Millions) ✓ Provision for credit loss of $2.0mm in Q3 2023 ACL % of ACL % of ACL % of ✓ Lifetime historical loss models - Macroeconomic Segmentation Balance Loans Balance Loans Balance Loans variable
Slide 28: Loans by Type
Loans by Type C&I CRE Owner $0.94B 27.9% Commercial and industrial 10.6% Dairy & livestock and agribusiness 4.0% CRE $6.84B SBA 3.2% SFR mortgage 3.0% Construction 0.7% CRE Non-Owner Municipal lease 49.2% finance receivable 0.8% Consumer and other Other loans $1.10B 0.6% cbbank.com 28
Slide 29: Loan Trends
Loan Trends ($ in Millions) Q3 2023 vs Q3 2022 $9,079 $8,942 $8,907 $8,878 $8,774 Total +$104 1% growth $6,950 $6,904 CRE +$158 $6,885 $6,843 $6,685 2% growth C&I ($14) $956 $952 $949 $938 $898 Other($55) $521 $517 $503 $470 $462 $323 D&L and Agribus. $298 $308 $351 $434 +$28 $297 $291 $283 $283 $27
Slide 30: Commercial Real Estate Loans
Commercial Real Estate Loans Collateral Type Owner/Non-Owner Occupied Other RE Rental Non- Medical and Leasing Farmland Owner 5% 3% 7% 64% Industrial Other 33% 9% Multi- Family 12% Owner Retail 36% Office 14% 17% cbbank.com 30
Slide 31: CRE by Collateral Origination Year
CRE by Collateral Origination Year Balance % of Avg. Size Classified Collateral LTV at 2018 or ($ in Owner ($ in ($ in 2023 2022 2021 2020 2019 Type Origination earlier Millions) Occupied Millions) Millions) Industrial $ 2,283 49% 50% $ 1.63 $ 14.74 7% 21% 19% 11% 7% 35% 1,141 24% 55% 1.69 - 3% 23%
Slide 32: C&I by Industry
C&I by Industry % of Balance C&I Industry ($ in Millions) Manufacturing: 13% Wholesale Trade: 9% Total Real Estate Rental and Leasing $ 210 22% Manufacturing 122 13% Construction: 9% Wholesale Trade 84 9% Real Estate Rental and Leasing: 22% Construction 83 9% Arts, Entertainment, and Recreation 76 8
Slide 33: Line Utilization Trends
Line Utilization Trends 81% 78% 73% 71% 68% 69% 69% 67% 68% 66% 53% 53% 52% 50% 49% 52% 51% 47% 45% 49% 48% 47% 47% 45% 46% 46% 45% 41% 43% 41% 39% 33% 32% 31% 32% 29% 29% 31% 27% 31% 28% 28% 27% 27% 26% Total D&L C&I cbbank.com 33 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2
Slide 34: Relationship-Centered Deposit Base
Relationship-Centered Deposit Base 100% Core Deposits - 0% Brokered Deposits September 30, 2023 September 30, 2022 Total Deposits & Customer Repos Total Deposits & Customer Repos Repos Repos 3% 2% Interest-bearing Interest-bearing 36% 38% Noninterest-bearing 60% Noninterest-bearing 61% Cost of Inter
Slide 35: Diverse Deposit Base
Diverse Deposit Base Consumer 25% Manufacturing 11% Other Real Estate Rental and Leasing 7% Other Industries 11% Construction 7% Agriculture, Forestry, Fishing and Hunting 2% Transportation and Warehousing Property Management 2% 5% Retail Trade 3% Educational Professional, Scientific, and Services T
Slide 36: Business vs Consumer Deposits
Business vs Consumer Deposits Q1 2022 Q3 2023 Non- Non- Analyzed Analyzed Business Business Accounts Consumer Accounts Consumer 36% 35% 25% 25% Analyzed Analyzed Business Business Accounts Accounts 39% 40% cbbank.com 36
Slide 37: Deposit Relationship Tenure
Deposit Relationship Tenure Q1 2022 Q4 2022 Q3 2023 Over 10 Years Over 10 Over 10 46% Years Years 3 to 10 3 to 10 40% 42% Years Years 34% 3 to 10 36% Years 31% Less than 3 Less than 3 Less than 3 Years Years Years 23% 24% 24% > 75% of our customer deposit relationships have banked with CBB for 3 yea
Slide 38: Brokered Deposits / Total Deposits (%)
Brokered Deposits / Total Deposits (%) CVBF KRX 6.56% 4.99% 4.94% 4.64% 4.63% 4.58% 4.47% 4.43% 4.38% 4.31% 4.10% 3.98% 3.73% 3.43% 3.37% 2.89% 2.76% 2.34% 2.21% 2.20% 2.11% 1.96% 1.94% 1.09% 0.76% 0.76% 0.74% 0.74% 0.75% 0.72% 0.60% 0.59% 0.27% 0.27% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Slide 39: Cost of Deposits
Cost of Deposits 6.00% 5.50% CVBF KRX Fed Funds Rate 5.00% Current rate cycle to For the Last 5 Years CVBF Ranked Among the 5 Lowest Cost of Deposits date*: 4.00% of the 50 Banks in the KRX Index CVBF deposit beta = 6.4% 3.00% 2.50% 1.75% 2.00% 1.56% 0.82% 1.00% 0.52% 0.35% 0.15% 0.25% 0.21% 0.03% 0
Slide 40: Cost of Deposits: Monthly Trends
Cost of Deposits: Monthly Trends Cost of Deposits MoM Growth in Cost of Deposit vs. Effective vs. Effective Federal Funds Rate Federal Funds Rate 5.08% CVBF EFFR CVBF .68% .68% EFFR 0.56% Jan-22 Mar-22 May-22 Jul-22 Sep-22 Nov-22 Jan-23 Mar-23 May-23 Jul-23 Sep-23 .50% .47% .43% .43% .34% .25% .24%
Slide 41: Net Interest Income and NIM
Net Interest Income and NIM ($ in Millions) $137.4 $133.3 4.18% $2.0 $3.4 $125.7 $123.4 4.01% $1.2 $119.5 3.91% $0.9 $1.0 3.82% 3.51% 3.69% 3.46% 3.45% 3.31% 3.22% $135.4 $129.9 $124.6 $122.5 $118.6 0.92% 0.83% 0.49% 0.13% 0.05% Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Earning Asset Yield Q3'22 Q4'22 Q1'23 Q2'
Slide 42: Net Interest Margin Trend
Net Interest Margin Trend CVBF KRX 4.49% 4.40% 4.39% 4.34% 4.24% 4.08% 4.06% 3.82% 3.70% 3.69% 3.78% 3.74% 3.73% 3.50% 3.69% 3.69% 3.45% 3.64% 3.63% 3.58% 3.34% 3.33% 3.31% 3.29% 3.49% 3.46% 3.45% 3.18% 3.16% 3.06% 3.22% 3.20% 3.17% 2.96% 3.16% 2.92% 3.12% 2.90% 3.04% 2.98% 2.89% 2.89% 2.79% Q2 Q3 Q
Slide 43: Appendix Non-GAAP Reconciliation
Appendix Non-GAAP Reconciliation cbbank.com
Slide 44: CRE Office by Loan Amount
CRE Office by Loan Amount Balance Rate Resets Next % of Maturing Next 24 Avg. Balance Classified Balance Loan Amount 24 Months ($ in Millions) ($ in Millions) Owner Occupied ($ in Millions) months ($ in Millions) ($ in Millions) Greater than $20M $ 23 0% $ 23 $ 0 $ 0 $ 0 $10M to $20M 125 25% 14 0 12
Slide 45: CRE Office Loans by Major MSA
CRE Office Loans by Major MSA San Francisco County • Total Balance of $426,000 (1 loan) Los Angeles County • Total Balance of $420mm (205 loans) San Diego County • Total Balance of $93mm (25 loans) Note: Only shows the office loans that are in the major MSA. cbbank.com 45
Slide 46: Greater LA Business Density Distribution
Greater LA Business Density Distribution % of Market Description $ Loan LTV at Avg. Owner Classified Origination ($ in Thousands) Balance Loan Size Occupied West LA $ 96,563 16% 51% $ 4,828 $ 0 (HBD) Other West LA 68,789 20% 52% 2,150 0 North LA (HBD) 48,691 14% 45% 1,475 0 42,676 17% 46% 1,293 0 Ot
Slide 47: Greater SD Business Density Distribution
Greater SD Business Density Distribution % of Area $ Loan LTV at Owner Avg. Size Classified Balance Origination ($ in thousands) Occupied Downtown SD (HBD) $ 3,842 41% 54% $ 1,281 $ 0 Other SD 89,274 0% 52% 4,058 0 • Darker shaded areas represent Higher Business Density (HBD) Total $ 93,116 2% 52% $
Slide 48: Greater SF Business Density Distribution
Greater SF Business Density Distribution % of Area $ Loan LTV at Owner Avg. Size Classified Origination ($ in thousands) Balance Occupied Downtown SF (HBD) $ 426 0% 3% $ 426 $ 0 Other SF 0 0% 0% 0 0 • Darker shaded areas represent Higher Business Density (HBD) Total $ 426 0% 3% $ 426 $ 0 cbbank.com
Slide 49: Loans by Region
Loans by Region # of Average Center Total Loans Loans per % Locations (9/30/23) Location ($ in Thousands) (9/30/23) Los Angeles County 21 $ 157,076 $ 3,298,588 37.2% Central Valley and Sacramento 15 142,112 2,131,675 24.0% Orange County 10 112,317 1,123,168 12.7% Inland Empire 9 111,015 999,132 11.2
Slide 50: Deposits by Region
Deposits by Region Average # of Center Total Deposits Total Deposits Deposits per Locations (6/30/23) (9/30/23) Center (9/30/23) (9/30/23) ($ in Thousands) Los Angeles County 21 $5,216,235 $5,169,528 $246,168 Inland Empire 9 3,484,676 (Riverside & San Bernardino 3,268,712 363,190 Counties) Central V
Slide 51: Reconciliation of Return on Average Tangible Common Equity (Non-GAAP)
Reconciliation of Return on Average Tangible Common Equity (Non-GAAP) The return on average tangible common equity is a non-GAAP disclosure. We use certain non-GAAP financial measures to provide supplemental information regarding our performance. We believe that presenting the return on average tang
Slide 52: Reconciliation of PTPP Return on Average Assets (Non-GAAP)
Reconciliation of PTPP Return on Average Assets (Non-GAAP) The Pretax-pre provision income (“PTPP”) return on average assets is a non-GAAP disclosure. We use certain non- GAAP financial measures to provide supplemental information regarding our performance. We believe that presenting the return on a
Slide 53: Copy of presentation at www.cbbank.com
Copy of presentation at www.cbbank.com cbbank.com