CVB Financial Corp. (NASDAQ:CVBF) Q1 2018 Earnings Conference Call - Preliminary Transcript
Apr 19, 2018 • 10:30 am ET
(Operator Instructions) First question comes from Aaron Deer with Sandler O'Neill. Please go ahead.
Chris, I would like to start just talking a little bit about the loan trends, obviously, the headwind from the seasonal dairy paydowns this quarter. Is that mostly done at this point or could we see a little more of that in the second quarter here?
It's pretty much done. We actually expected a little bit more. But, because the dairies are having kind of a tough quarter because of lower milk prices, I think that the borrowings are little bit -- we expected about $10 million or $15 million more in decline in the dairy. And I think that $10 million $15 million is a result of the tougher operating environment in the first quarter. So, I don't see much more, no.
And then, absent that, I guess the growth was a little weaker than you'd hope for, you said, and that seems to be pretty common across the industry here this first quarter of the year. But, as you look out to the remainder of the year, what are -- how are your expectations shaping up, and any particular areas that you're looking to focus on as you look to grow that book?
Yes. Let me give you just some perspective, I think. When we look year-over-year from 3/31/17 to 3/31/18, we grew loans 3.87%. That's not where we want to be. We want to be closer to 8%. But it is what it is. That was our organic growth rate. In the first quarter, our real organic growth rate, if we take out dairy and livestock and agribusiness, we look at it as being 0.75%, which is annualized as 3%. First quarter is always a slow loan growth and also the first quarter January, February deposits are very tough because of a lot of year-end taxes and things like that. So, the average deposits in the first quarter were a little bit soft but at the end of the quarter, they rebounded nicely.
So, in looking forward on loan growth, our aspiration is that kind of 6 to 8% annual organic growth rate. We are a little distracted with the acquisition; there is no question about it. We've got lot of work to do. We interview all 430 of their employees. We're treating this like it was $500 million acquisition. We're doing the same thing because we want to make sure we get the best people with the best results. So, loan growth may be impacted for that in the first half of the year.
Do I think loan growth will be negative? No. I think, it will be positive. It may not be an 8% annualized run rate, it may stick closer to that 4% we're kind of running right now. I just don't know. Our pipeline is pretty good for April, so that's good. But, are -- a lot of my resources, my regional managers, my -- head of my sales division,