CVB Financial Corp. (NASDAQ:CVBF) Q1 2018 Earnings Conference Call - Preliminary Transcript

Apr 19, 2018 • 10:30 am ET

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CVB Financial Corp. (NASDAQ:CVBF) Q1 2018 Earnings Conference Call - Preliminary Transcript

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Presentation
Executive
Chris Myers

our 164th consecutive quarter of profitability and 114th consecutive quarter of paying a cash dividend to our shareholders. In February, we announced that we entered into a merger agreement with Community Bank, pursuant to which Community Bank will merge into Citizens Business Bank. We are excited to be joining forces with a successful business bank that it serves Southern California businesses and individuals for the past 74 years. The combination of our two companies will not only increase our customer market share in the greater Los Angeles and Orange County areas, but also add strong personnel depth to help fuel expansion in the future. The closing of the merger is anticipated to occur in the third quarter of 2018.

Moving back to some numbers. Our tax equivalent net interest margin was 3.68% for the first quarter compared with 3.68% for the fourth quarter and 3.51% for the first quarter a year ago. Excluding the impact of tax-exempt interest, our nominal net interest margin increased 3.63% in the fourth quarter to 3.66% in the first quarter of 2018, primarily due to the increase in our loan and investment yields. Total loans declined by $35.6 million to $4.79 billion for the first quarter of 2018, or about 0.74%. Our dairy and livestock and agribusiness loan portfolio declined by $71.7 million, primarily due to seasonal paydowns which historically occur in the first quarter of the calendar year.

If you take out the dairy loans -- dairy livestock and agribusiness loans quarter-over-quarter, our loans were up actually about 0.75% or about a 3% annual run rate, little below where we -- or significantly below where we want to be but at least positive growth. Commercial real estate loans increased by $31.3 million for the first quarter of 2018 while all other categories were relatively flat quarter-over-quarter. Average loans increased (ph) by $35.6 million over the prior quarter or about 0.75%. Loan yields were 4.67% for the first quarter of 2018, compared with 4.66% for the fourth quarter of 2017 and 4.50% for the year-ago quarter. At March 31, 2018, the allowance for loan and lease losses was $59.9 million or 1.25% of total loans compared with $59.6 million or 1.23% of total loans at December 31, 2017.

Net recoveries on loans were $1.35 million for the first quarter of 2018, compared with $454,000 for the fourth quarter 2017 and $2.2 million for the first quarter of 2017. When the loan loss allowances is combined with the remaining fair market value loan discounts from our acquisitions, the allowance for loan and lease loss ratio was 1.43% as of March 31, 2018, compared with 1.44% for the prior quarter and 1.54% for the year ago quarter.

At quarter-end, nonperforming assets defined as nonaccrual loans plus other real estate owned were $10.2 million or 0.12% of total assets compared with $15.2 million or 0.18% of total assets for the prior quarter and $14.9 million or 0.17% of total assets at March 31, 2017.

At March 31, 2018,