CVB FINANCIAL CORP Q4 FY2024 earnings call

• Wildfire response: Over 50 associates impacted by evacuations, 114 loans totaling ~$105 million in fire zones (14 properties damaged, 7 destroyed, $7.4 million loss, all insured), 6 centers temporarily closed then reopened, $200k donated to relief agencies. • Financial results: 191st consecutive quarter of profitability, $0.36 per share earnings, $0.20 per share dividend declared, return on average tangible common equity 14.31%, return on average assets 1.3%. • Balance sheet: Early redemption of $1.3 billion bank term funding program, average assets declined ~$1 billion, net interest margin expanded from 3.05% to 3.18%, recaptured $3 million in allowance for credit losses. • Deposits: Total deposits $12.2 billion, $505 million increase from prior year, nonmaturity deposits grew $315 million. • Loans: Total loans $8.54 billion, decrease from prior quarter, commercial real estate loans down $111 million, classified loans $89.5 million, $19.3 million OREO assets.

For the fourth quarter of 2024, CVB Financial Corporation reported net earnings of $51 million or $0.36 per share. Net interest income decreased quarter-over-quarter by $3.2 million or 2.8% due to balance sheet deleveraging. Noninterest income was $13.1 million, noninterest expense was $58.5 million. Total deposits and customer repurchase agreements totaled $12.2 billion, a $505 million increase from December 31, 2023. Total loans at December 31, 2024, were $8.54 billion, a $36 million decrease from the end of the third quarter.

• Board authorized a new $10 million share repurchase program. • Optimistic about continuing to grow low-cost deposits. • Active in M&A discussions, disciplined in capital use for M&A, buybacks, etc. • Expecting potential for loan growth as client optimism increases in 2025.

• Wildfire impact on loans and operations. • M&A challenges due to seller expectations being too optimistic and rate movements affecting OCI. • Regulatory considerations and potential headwinds in M&A due to rate dynamics.

Q: Any early read on client optimism and loan pipeline?

A: David Brager says there's optimism, pipelines improving but not where desired, clients looking to start shelved plans.

Q: Thoughts on deploying capital, M&A, buybacks?

A: David Brager mentions active M&A discussions, disconnect between buyer and seller prices, 10b5-1 share repurchase plan. Allen Nicholson adds M&A sellers' expectations too optimistic and rate impact on acquisitions.

Q: Margin and deposit cost timing?

A: Allen Nicholson says time deposits (cash flow hedge CDs) unlikely to change soon, nonmaturity deposits may slowly decline, Fed rate cuts lagged. David Brager adds matching rate cuts on money market rates.

Q: Sale-leaseback and securities transactions?

A: David Brager says mini balance sheet restructuring mostly done, no contemplated sale-leaseback transactions.

Q: Outlook on California and wildfires?

A: David Brager says California has diversified economy, 2% market share, opportunities to acquire market share, not huge impact from wildfires on bank business.

Q: Loan opportunities post-wildfire and expense on occupancy?

A: David Brager says construction balances could rise, disciplined on credit quality, Allen Nicholson says occupancy expense has other components to manage.

Q: Fire impact on balance sheet and deposit/loan opportunities?

A: David Brager says fire impact limited, $7.5 million loans affected, potential deposit and borrowing upside from rebuilding efforts, disciplined on construction loan credit quality.