Cvb Financial Corporation · NASDAQ:CVBF
Cvb Financial — Conference Presentation (February 2010)
58 slides from Cvb Financial's conference presentation, Feb 5, 2010
Slide 1: To Acquire or to be Acquired... that is the question
To Acquire or to be Acquired... that is the question Chris Myers
Slide 2: Largest financial institution headquartered in the Inland Empire
2 Largest financial institution headquartered in the Inland Empire region of Southern California Serves 41 cities with 45 business financial centers and 5 commercial banking centers throughout the Inland Empire, LA County, Orange County and the Central Valley of California Strong credit culture and
Slide 3: Existing Locations
3 Existing Locations Commercial Banking Centers Business Financial Centers New Business Financial Centers (SJB) 45 Business Financial Centers 5 Commercial Banking Centers
Slide 4: Forbes 2009 America's Best Banks
Forbes 2009 America’s Best Banks ($5 Billion )f Total —_NPLS/ Assets Loans Reserves/_ Tier 1 (SBIL) % NPLS% —— Ratio% Bank of Hawaii _UMG Financial Commerce Bancshares Prosperity Bancshares SVB Financial Community Bank System Central Bancompany NBT Bancorp International Bancshares
Slide 5: 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 6: Vision of CVB Financial Corp.
6 "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%."
Slide 7: Branch openings and assets
Branch Name Year Opened 12/31/09 Assets Chino 1974 $281,459 Corona 1977 $145,538 Upland 1980 $131,360 Ontario 1980 $94,620 Colton 1984 $36,639 Ontario Airport 1987 $250,386 Riverside 1990 $88,090 Tri-City 1990 $326,446 Glendale 1999 $106,661 Bakersfield 2001 $52,643 Fresno 2003 $162,020 Madera 2005
Slide 8: Bank acquisitions history
Bank Name Date Acquired Total Assets (Acquisition) Total Assets (12/31/09) # of Locations (Acquisition) # of Locations (Current) Lloyds Bank (Branch) 1983 $8,000 $130,881 1 1 El Dorado Bank (Branch) 1986 $25,000 $174,958 1 1 Independent National Bank 1986 $27,000 $130,740 1 1 Huntington Bank 1987 $3
Slide 9: Net Income After Tax and Total Assets
9 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 Net Income After Tax Total Assets
Slide 10: One dollar invested in 1975
10 One dollar invested on February 11, 1975, with dividends reinvested, would be valued at $554.35 as of December 31, 2006. $1 $1
Slide 11: Appointment of Christopher Myers as CEO
11 Ontario, California, June 2, 2006 George A. Borba, Chairman of the Board of CVB Financial Corp. (NASDAQ:CVBF), today announced the appointment of Christopher D. Myers as President and Chief Executive Officer of CVB Financial Corp. and its wholly owned subsidiary, Citizens Business Bank. The appoi
Slide 12: Positives
12 Positives Strong credit culture and underwriting Good geographic presence Customer-driven: 'service' oriented bank Board ownership over 20% Excellent earnings history Internal discipline: well-run organization Solid leadership team
Slide 13: Balance sheet at 12/31/06
13 (in millions) 12/31/06 Total Assets $6,094 Total Deposits includes REPO's $3,501 Securities $2,583 Borrowings $2,045 Loan Loss Reserves/Loans .90% Net Loan Charge-offs ($2) Tier 1 Tangible Ratio 5.8% Tier 1 Leverage Ratio 7.8% Total Risk Based Capital 13.0%
Slide 14: Areas of Concern
14 - --Areas of Concern-- Leveraged securities portfolio = 42% of assets (80% debt financed) Liability sensitive balance (securities, fixed rate CRE loans) Modest capital Low loan loss reserves Seasoned, but mature executive team Some 'transactional' lending: mortgage pools, CRE, construction loans,
Slide 15: Our New Strategy
Our New Strategy
Slide 16: Dominant financial services company in California
16 Citizens Business Bank will become the dominant financial services company operating throughout the state of California, servicing the comprehensive financial needs of the premiere businesses (and their principals) with annual sales/revenues of $1 million to $200 million.
Slide 17: Target customers
17 The best privately-held and/or family-owned businesses throughout California Annual revenues of $1-200 million Top 25% in their respective industry Full relationship banking Build 20-year relationships
Slide 18: Acquisitions
Acquisitions 18 - --Banks-- - --Trust- - -
Slide 19: Same Store Sales Growth
Same Store Sales Growth
Slide 20: Transforming Lenders into Relationship Bankers
Transforming Lenders into Relationship Bankers Training & Re-Training Firing & Hiring 20
Slide 21: Quarterback Strategy
21 21 Relationship Manager (Bank) Property Management Real Estate Banking International Treasury Services Specialty Banking Construction Lending CitizensTrus t Bankcard SBA Citizens Home Loans Mortgage Brokerage Title Escrow Marketing CFS Governmen t Services Deposit Services Wealth Management Trust
Slide 22: DeNovo Growth
DeNovo Growth
Slide 23: Commercial Banking Centers, Specialty Banking, CitizensTrust
23 Commercial Banking Centers Specialty Banking Group CitizensTrust
Slide 24: Commercial Banking Center criteria
24 Focus exclusively on businesses with annual revenues of $10 million or greater. Focus on seven-figure deposit and loan relationships (or higher). Located on an 'upstairs' floor of a mid-rise office building with other business professionals (CPA Firms, Law Firms, etc.). Office building location m
Slide 25: Specialty Banking Group
25 Focus on Deposit Rich Industries Exclusive sales force with specialists in each area (Property Management, Non-profit, etc) Value added: does not compete with branches
Slide 26: Team Acquisitions
‘Team’ Acquisitions Specialty Banking Group San Fernando Valley Inland Empire South Bay Orange County Downtown Los Angeles (000’s) January 2008 June 2008 July 2008 August 2008 December 2009 --in process-- Administration Total $116,240 $30,595 $13,427 $35,693 $1 $195,956} $392,833 As of 12/31/09
Slide 27: Strategy: CitizensTrust infrastructure
27 - --Strategy-- Build infrastructure via new hires Chris Walters, EVP Sean Kraus, SVP & Chief Investment Officer Six new 'sales' hires Build infrastructure via expanded product offerings Open architecture Life Insurance/Annuities, etc. Acquire RIA's
Slide 28: Acquisitions Growth
Acquisitions Growth
Slide 29: FDIC-Assisted, Trust/Wealth Management, Good Banks
FDIC - Assisted Trust/Wealth Management Good Banks?? 29
Slide 30: Recent bank acquisitions
Bank Name Date Acquired Geographic Market # of Locations Total Assets (12/31/09) First Coastal Bank June 2007 South Bay 4 /3 $120,814 San Joaquin Bank October 2009 Kern County 5/4 $666,521 (000's) Total: $787,335 Trust Acquisitions - --None--
Slide 31: CVBF Deposit Growth
CVBF Deposit Growth 12/31/2007 12/31/2009 % Inc/(Dec) interest C| g Savings/MMDA $868,123 $1,213,002 Time Deposits $790,355 $1,194,258 $4,438,654 31.9% Total Deposits| $3,364,349 \ Customer Repurchase Agreeme $ 309| $485,132 44, Total Deposits & % Customer Repurchases eee ici
Slide 32: Balance sheet comparison 2006 vs 2009
32 (in millions) 12/31/06 12/31/09 Total Assets $6,094 $6,740 Total Deposits includes REPO's $3,501 $4,924 Securities $2,583 $2,112 Borrowings $2,045 $1,003 Loan Loss Reserves/Loans .90% 3.02% Tier 1 Tangible Ratio 5.8% 8.3% Tier 1 Leverage Ratio 7.8% 9.5% Total Risk Based Capital 13.0% 16.3%
Slide 33: Net Income and Provision for Loan Losses
33 (000's) Net Income After Taxes Provision For Loan Losses
Slide 34: Weathering the Financial Storm
2008 & 2009 “Weathering the Financial Storm”
Slide 35: TARP and capital raise timeline
December 2008 $130MM TARP July 2009 $132MM Capital Raise September 2009 TARP Repayment & Warrant Repurchase October 2009 Acquired San Joaquin Bank 35
Slide 36: Major Failures in 2008
Major Failures in 2008 Closure Date Bear Stearns March 2008 IndyMac Bank July 2008 Washington Mutual September 2008 Lehman Brothers September 2008 Wachovia December 2008
Slide 37: Inland Empire Banks
Inland Empire Banks Asset Size Asset Size 12/31/07 12/31/09 {in millions) Temecula Valley Bank $1,319 Closed July 2009 First Centennial $689 Closed Jan. 2009
Slide 38: TARP advantages and disadvantages
38 Advantages Most inexpensive means of acquiring capital (i.e. least dilutive to shareholders) Strengthen Capital Ratios: 'Fortress' Balance Sheet Provides additional capital to be used for expansion purposes Public Perception Disadvantages CVBF cannot repurchase its own stock (without government p
Slide 39: TARP and capital raise timeline
December 2008 $130MM TARP July 2009 $132MM Capital Raise September 2009 TARP Repayment & Warrant Repurchase October 2009 Acquired San Joaquin Bank 39
Slide 40: Rationale for capital raise
Strengthens CVBF's tangible common equity position Gives CVBF flexibility to redeem its TARP and eliminate 50% of associated warrants Eliminates strategic restriction and negative stigma of government ownership Positions CVBF to be opportunistic Support organic growth Attract talented employees from
Slide 41: Follow-on common equity offering terms
Issuer CVB Financial Corp. (NASDAQ:CVBF) Type of Security Follow - on Common Equity Transaction Size $132.5 Million # of Shares Issued 22.7 Million Offering Price $5.85 Use of Proceeds Redemption of TARP (Sept. 2, 2009) Co-Bookrunner Keefe, Bruyette & Woods, Inc. Co-Bookrunner Sandler O'Neill + Part
Slide 42: Share price and offering price
42 $9.95 01/22/10 $9.84 01/2/08 $11.68 TARP 12/2008 $5.85 Offering Price 07/21/09 $15.01 09/19/08 $6.14 07/20/09
Slide 43: TARP dividend and warrant elimination
43 Elimination of $6.5MM annual dividend requirement Elimination of 50% of warrants
Slide 44: Treasury warrant fair value estimates
44 Source: United States Department of the Treasury CVB paid $1.307 million for the warrant held by Treasury which entitled the holder of the warrant to purchase 834,761 shares of CVBF at a strike price of $11.68 per share. The warrant had an expiration date of December 5, 2018. CVB Financial Corp F
Slide 45: Warrant repurchase discount versus peers
(86.59) (82.54) % Discount to Face Value* CVB Financial Corp. Peer Median Source: United States Department of the Treasury Group median represents Banks who repurchased warrants in 2009 and completed a qualified equity offering *Warrants outstanding are cut in half following a qualified equity offer
Slide 46: Capital ratios September 2009
CVBF --September 2009-- September 30, 2008 September 30, 2009 er 1 Leverage Ra’ 7.77% 0% 16. Total Risk Based Capital NPAs to Total Loan and OREO Co} Loan Loss Reserve as Total Loans 46
Slide 47: TARP and capital raise timeline
December 2008 $130MM TARP July 2009 $132MM Capital Raise September 2009 TARP Repayment & Warrant Repurchase October 2009 Acquired San Joaquin Bank 47
Slide 48: San Joaquin Bank FDIC Assisted Transaction
San Joaquin Bank FDIC Assisted Transaction
Slide 49: San Joaquin Bank
San Joaquin Bank Acquired: 10/16/09 FDIC Assisted Transaction Headquarters Bakersfield, CA Origin December 1980 Branch Locations 5 Assets $736 Million Deposits $530 Million Loans $689 Million
Slide 50: San Joaquin Bank Deposits
San Joaquin Bank Deposits fees 10/16/09 % 12/31/09 % National CD’s
Slide 51: How we Graded Them Since Acquisition
How we Graded Them Since Acquisition 51
Slide 52: San Joaquin Bank: Then & Now
San Joaquin Bank: Then & Now 10/16/09 12/31/09 Business F | Cent 5 4 Assets | $736 Million $667 Million Loans (as marked) canal $455 Million 52
Slide 53: FDIC loss sharing terms
Loss sharing threshold of $144 million FDIC reimburses 80% of losses up to $144 million and 95% of any losses over threshold SJB assets acquired at a $57.6 million discount (2x loss sharing) 53
Slide 54: California FDIC-assisted transaction bids
Source: KBW Research, SNL Financial and FDIC. Bid includes aggregate deposit premium netted against the asset discount. Includes all FDIC Assisted Transactions which had a California Based Acquirer
Slide 55: San Joaquin Bank Funding
San Joaquin Bank “Funding” {in thousands) 10/16/2009 12/31/2009 sa7056| $1146 Total Assets $735,975 $666,521 feorowings | Saztao0| $6 a ss72sa] $5530 he $ 9 $0 200 National CD’s $94,959 et 55
Slide 56: Lessons Learned
Lessons Learned
Slide 57: Lessons Learned
57 Capital and strong Loan Loss Reserves are paramount Strong, disciplined credit underwriting/credit culture Don't rely on wholesale funding; drive low-cost deposits Acquire the customers....don't depend on loss sharing Multiple forms of growth (don't depend on one) Same Store Sales DeNovo Acquisit
Slide 58: Thank you
Thank you Copy of Presentation: jcschaap@cbbank.com
CVB Financial — Conference Presentation (February 2010) on 6ix