Cvb Financial Corporation · NASDAQ:CVBF
Cvb Financial — Investor Presentation (March 2008)
49 slides from Cvb Financial's investor presentation, Mar 25, 2008
Slide 1: CVB Financial Corp.
CVB Financial Corp. a March 2008
Slide 2: Safe Harbor
Safe Harbor Certain matters set forth herein constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including forward-looking statements relating to the Company's current business plan and expectations regarding future operating results. The
Slide 3: Company history timeline
1974 Chino Valley Bank formed 1981 CVB Financial Corp. (holding company formed) 1996 Chino Valley Bank becomes Citizens Business Bank 2001 CVB Financial listed on NASDAQ ("CVBF") 5
Slide 4: Company profile at a glance
Headquarters Ontario, California Origin August 9, 1974 Business Financial Centers 45 (as of February 2008) Assets $6.29 Billion Deposits $3.364 Billion Loans $3.495 Billion Market Capitalization $860 Million 7
Slide 5: Management team
Edward J. Biebrich Jr. Executive Vice President 26 Years 10 Years Finance Division Jay W. Coleman Executive Vice President 44 Years 20 Years Sales Division Edward J. Mylett Jr. Executive Vice President 34 Years 12 Years Credit Management Division Christopher D. Myers President 24 Years 1.5 Years Chi
Slide 6: Management team: regional managers
Nancy A. Sinclair Senior Vice President 39 Years 11 Years The Marketing Group James E. Mead Senior Vice President 33 Years 15 Years Regional Manager - Region 1 Vince L. Gottuso Senior Vice President 22 Years 15 Years Regional Manager - Region 2 Mark Richardson Senior Vice President 19 Years 15 Years
Slide 7: Vision of CVB Financial Corp.
"The vision of CVB Financial Corp. is to be recognized as the premier relationship financial institution for businesses and professionals in California with earnings growth of 15.0% a year, a return on equity of 20.0% and a return on assets of 1.35%" 13
Slide 8: Mission of CVB Financial Corp.
"The Mission of CVB Financial Corp. is to achieve superior performance and rank in the top 10% of all financial institutions in the nation in return on equity and return on assets. This will be achieved by delivering the finest in financial products and services through relationship banking commitme
Slide 9: US Banker 2007 All-Star Banking Team
usBaNnKEr 2007 ALL-STAR BANKING TEAM
Slide 10: Awards and rankings
U.S. Banker Magazine (2008) 6th Ranked Bank in the Nation (3-year ROE) U.S. Banker Magazine (2007) Top Business Bank in the Nation 15th Ranked Bank in the Nation America's Finest Companies investment directory # 318 out of 19,000 U.S. public companies. Bank Director Magazine (December 2006) 14th Ran
Slide 11: Balance sheet changes 2006 to 2007
(000s) 12/31/06 12/31/07 Change % Demand Deposits $1,363,411 $1,295,959 ($67,452) (4.95) Total Deposits (including REPOs) 3,501,208 3,700,649 199,500 5.70 Total Loans 3,070,196 3,495,144 424,948 13.84 Total Investments 2,582,902 2,365,513 (217,389) (8.42) Capital 387,325 424,948 37,623 9.71 Assets 6
Slide 12: Balance sheet growth 2000 to 2007
(000s) 12/31/00 12/31/07 Change Annual Increase % Demand Deposits $665,290 $1,295,959 $630,669 10.0 Total Deposits (including REPOs) 1,595,030 3,700,658 2,105,628 12.8 Total Loans 1,051,493 3,495,144 2,443,651 18.7 Capital 188,630 424,948 236,318 12.3 Assets 2,307,996 6,293,963 3,985,967 15.4 25
Slide 13: Earnings 2006 vs 2007
(000s) 2006 2007 Change % Operating Earnings* $105,004 $87,063 (17,941) (17.09) Earnings Before Taxes 103,061 83,063 (19,998) (19.40) Taxes 32,481 22,479 (10,002) (30.79) Net Earnings After Taxes 70,580 60,584 (9,996) (14.16) Diluted EPS 0.83 0.72 (0.11) (13.25) *Earnings before securities gains & l
Slide 14: Earnings 2000 vs 2007
(000s) 2000 2007 Change Annual % Increase Operating Earnings* $57,091 $87,063 29,972 6.21 Earnings Before Taxes 53,985 83,063 29,078 6.35 Taxes 19,302 22,479 3,177 2.20 Net Earnings After Taxes 34,683 60,584 25,901 8.29 Diluted EPS 0.42 0.72 0.30 8.15 *Earnings before securities gains & losses, OREO
Slide 15: Growth versus U.S. banks
CVBF U.S. Banks Deposits 95% 75% Loans 232% 74% Capital 126% 116% Assets 173% 79% Source: Federal Deposit Insurance Corporation 31
Slide 16: Return on equity and assets versus peers
CVBF California Banks U.S. Banks Return on Average Equity 15.00% 6.35% 9.29% Return on Average Assets 1.00% 0.76% 0.95% Source: Federal Deposit Insurance Corporation 33
Slide 17: Asset quality
12/31/07 * $1.4 Million in Non-Performing Loans *0.10% Delinquency (over 30 days Past Due) “ ” ° “Zero” Real Estate Owned
Slide 18: Stock performance versus indexes
CVB Financial Corp. NASDAQ Market Index S & P 500 Index HemScott Bank Index 01/01/2000 $100.00 $100.00 $100.00 $100.00 12/31/2007 $221.51 $70.57 $99.94 $184.75 37
Slide 19: Long-term return with dividends reinvested
One dollar invested on February 11, 1975, with dividends reinvested, would be valued at $405.80 as of December 31, 2007. 1 39
Slide 20: California peer bank ranking by asset size
41 *Assets in millions as of December 31, 2007 Rank Peer Bank Asset Size * 1 Wells Fargo Bank $575,000 2 Bank of the West $61,830 3 Union Bank of California $55,157 4 City National Bank $15,394 5 East-West Bank $11,833 6 United Commercial Bank $11,783 7 Cathay Bank $10,388 8 California Bank & Trust
Slide 21: 2007 balance sheet changes and market capitalization
(000s) 12/31/06 12/31/07 Decrease % Demand Deposits $1,363,411 $1,295,959 (67,452) (4.95) Total Deposits (including customer REPOs) 3,501,158 3,700,658 199,500 5.70 Gross Loans 3,070,196 3,495,144 424,948 13.84 Capital 387,325 424,948 37,623 9.71 Assets 6,092,248 6,293,963 201,715 3.31 Earnings 70,5
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Slide 23: 2007 challenges
Flat or inverted yield curve Increasing cost of borrowings Competition for Deposits (Countrywide, etc.) Lack of demand deposit growth $4 million provision for loan losses in 2007 Q4 47
Slide 24: Balance sheet composition versus California peers
California Peer Banks % CVBF % Assets Loans 4,924,453 74.3 3,495,144 55.5 Investments 1,024,551 15.5 2,390,566 38.0 Other Assets 675,048 10.2 408,253 6.5 Total Assets 6,624,052 100.0 6,293,963 100.0 Liabilities & Equity Non-Interest Bearing Deposits 736,501 11.1 1,297,671 20.6 Total Deposits 4,654,0
Slide 25: Yields, costs and spreads
2005 2006 2007 Q4 2007 Yield on Investments 4.64% 5.06% 5.24% 5.20% Cost of Borrowings 3.39% 4.40% 4.94% 4.75% Spread 1.25% .66% .30% .45% Yield on Loans 6.52% 6.92% 6.88% 6.68% Cost of Deposits .94% 1.91% 2.03% 1.85% Spread 5.58% 5.01% 4.85% 4.83% 51
Slide 26: Loan portfolio by rate type
Fixed Rate Loans $1,621,997 46.3 Fixed with Reset 870,226 24.8 Variable Rate Loans 1,014,778 28.9 53 Amount % 3,507,001 100.0%
Slide 27: Rate sensitivity of assets and liabilities
Assets Amount 12/31/07 (000s) Average Yield 12/31/07 Variable Rate Loans (Less than one year) 1,553,686 6.93% Variable Rate Investments (Less than one year) 443,403 4.85% Total Variable 1,997,089 6.47% 55 Liabilities Interest Bearing Deposits (One year or less) 2,063,724 3.00 Borrowing (One year or
Slide 28: 2008 & Beyond: The Game Plan
57 2008 & Beyond THE GAME PLAN
Slide 29: Strategic priorities
59 Grow Core Deposits Grow Business Loans Grow Fee Income Cost Effective Operation Recruit, Retain and Reward Superior People Expand our Geographic Footprint
Slide 30: Technology and Specialty Banking Group
61 Technology On-line Banking Product Enhancement Lock-Box Enhancement Citizens Automated Deposit Mobile Banking SPECIALTY BANKING GROUP (NEW)
Slide 31: Specialty banking services
Group Manager Profession al Services Non-Profit Services Healthcare /Medical Services Property Managemen t & HOA Services Title/Escro w Services Governme nt Services Services Services Services
Slide 32: New commercial banking groups
65 Business Financial Centers Dairy & Livestock Industries Group Asset Based Lending SBA Lending Real Estate Lending Construction Loans Citizens Financial Services Municipal Leasing Small Business Lending (Credit Scoring) COMMERCIAL BANKING GROUPS (NEW)
Slide 33: Commercial Banking Group establishment timeline
67 Establish a fully-staffed Commercial Banking Group in Encino by 3/31/08 Establish one other Commercial Banking Group in either Torrance, Newport Beach or City of Commerce by 9/30/08
Slide 34: Commercial Banking Group structure
CBG Manager Business Development Officer Relationship Manager Relationship Manager Credit Officer Portfolio Manager 69
Slide 35: Growing fee income
71 Account Analysis Rates declining: Fees should increase Citizens Trust Key New Hires Open Architecture Strategic Alliances Monetize client relationship (the whole wallet)
Slide 36: Business customer relationship model
73 Business Customer Relationship Manager (Bank) Financial Services Specialist Technolog y SBA Internationa l Cash Management Specialty Banking Constructio n Lending Trust/Wealth Management Capital Markets (SWAPS) ABL Personal Banking Mortgage Lending Brokerage Equipment/ Vehicle Leasing Specialty B
Slide 37: Efficiency ratio
Efficiency Ratio = Non-Interest Expense Net Interest Income + Non-Interest Income 75 55.93%
Slide 38: Recruit, retain and reward superior people
Business Financial Center Managers Commercial Banking Group Managers Relationship Managers Business Development Officers Portfolio Managers Service Managers Assistant Service Managers New Sales incentive plan 79
Slide 39: Expand our Geographic Footprint
Expand our Geographic Footprint 81
Slide 40: Business Financial Centers: acquisition and de novo branches
45 Business Financial Centers Acquisition: 31 Branch Locations DeNovo: 14 Branch Locations 83
Slide 41: Acquisition history
Bank Name Date Acquired # of Locations Lloyds Bank (Branch) El Dorado Bank (Branch) Independent National Bank Huntington Beach Bank Fontana National Bank Mid-City Bank Western Industrial National Bank Pioneer Bank Vineyard Bank (Branch) Citizens Bank of Pasadena Orange National Bank Kaweah National
Slide 42: De novo branch openings
Date Opened Chino Corona Upland Ontario Colton Ontario Airport Riverside Tri City Glendale Bakersfield Fresno Madera Stockton Encino 12/31/07 Assets 1974 1977 1980 1980 1984 1987 1990 1990 1999 2001 2003 2005 2007 2008 Branch Name $273,558 $132,137 $112,121 $89,847 $37,158 $187,936 $84,494 $264,051
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Slide 44: Central Valley locations map
‘Modesto @ Merced @ @ Fresno (@ McFarland @ Bakersfield
Slide 45: Strategic priorities
93 Grow Core Deposits Grow Business Loans Grow Fee Income Cost Effective Operation Recruit, Retain and Reward Superior People Expand our Geographic Footprint
Slide 46: Vision to be the dominant financial services company in California
Citizens Business Bank will become the dominant financial services company operating throughout the State of California, servicing the comprehensive financial needs of privately-held businesses (and their owners) with annual sales revenues of $1 to $100 million dollars. 95
Slide 47: Opportunities and balance sheet positioning
Opportunity for inexpensive longer term funding rates Gains in investment portfolio Opportunity to deleverage Liability sensitive 97
Slide 48: Share price and asset quality
Share price as of December 31, 2007 for CVBF was $10.34, 36% below its all-time high of $16.24. Strong asset quality. CVBF: liability sensitive balance sheet. 99
Slide 49: Investment summary
101 • The dominant community bank in its markets • The fastest growing markets in California & Nation • Strong capital position • Strong credit quality • Attractive dividends • Recognized locally and nationally for superior business and financial performance