CVB Financial Corp. (NASDAQ:CVBF) Q3 2018 Earnings Conference Call Transcript

Oct 25, 2018 • 10:30 am ET


CVB Financial Corp. (NASDAQ:CVBF) Q3 2018 Earnings Conference Call Transcript


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Good morning, ladies and gentlemen, and welcome to the Third Quarter 2018 CVB Financial Corporation and its subsidiary, Citizens Business Bank Earnings Conference Call. My name is William, and I'm your operator for today. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer period. And please note that today's event is being recorded.

I would now like to turn the conference over to your host for today's call, Christina Carrabino. You may proceed.

Christina Carrabino

Thank you for joining us today to review our financial results for the third quarter of 2018. Joining me this morning are Chris Myers, President and CEO; and Allen Nicholson, EVP and CFO. Our comments today will refer to the financial information that was included in the earnings announcement released yesterday. To obtain a copy, please visit our website at and click on the Investors tab.

(Forward-Looking Cautionary Statements)

Now I will turn the call over to Chris Myers.

Chris Myers

Good morning, everyone, and thank you for joining us again this quarter. Yesterday, we reported net earnings of $38.6 million for the third quarter compared with $35.4 million for the second quarter of 2018 and $29.7 million for the year-ago quarter. Earnings per share were $0.30 for the third quarter compared with $0.32 for the second quarter and $0.27 for the year-ago quarter. The third quarter represented our 166th consecutive quarter of profitability and 116th consecutive quarter of paying a cash dividend to our shareholders.

On August 10, we announced the completion of our acquisition of Community Bank. Our financials for the third quarter of 2018 included 51 days of Community Bank's operations. At close, Citizens Business Bank acquired $2.73 billion of loans, assumed $1.26 billion of non-interest-bearing deposits and $1.61 billion of interest-bearing deposits. Through the nine months of 2018, we earned $108.8 million compared with $86.6 million for the first nine months of 2017. Diluted earnings per share were $0.94 for the nine month period ended September 30, 2018 compared with $0.79 for the same period in 2017.

Our tax equivalent net interest margin was 4.06% for the third quarter compared with 3.82% for the second quarter of 2018 and 3.70% for the third quarter a year ago. The increase in our net interest margin was a result of loan growth from the acquisition of Community Bank and a higher level of discount accretion from the acquired loans. Excluding interest income related to purchase discount accretion and non-accrual interest paid, our third quarter net interest margin expanded by 17 basis points compared to the second quarter.

Total loans increased by $2.77 billion or 57% to $7.58 billion for the third quarter of 2018. The increase over the prior quarter included $2.73 billion of loans acquired from Community Bank. Excluding the loans acquired from Community Bank, loans grew by $31.4 million or 0.65%. Commercial real estate loans increased by $31 million for the third quarter, dairy and livestock and agribusiness loans increased by $24 million and commercial and industrial loans