CVB Financial Corp. Q4 FY2025 earnings call

• Reported net earnings of $55 million or $0.40 per share, 195th consecutive quarter of profitability. - Net interest income grew due to growth in loan balances. - Loans saw growth in nearly all categories, including dairy, C&I, CRE, and SBA 504 loans. - Deposits had average total deposits of $12.6 billion, with changes in noninterest-bearing and interest-bearing deposits. - Incurred $1.6 million of acquisition expense related to the pending merger with Heritage Bank of Commerce. - Allowance for credit losses decreased, impacting pretax income.

For the fourth quarter of 2025, CVB Financial Corporation reported net earnings of $55 million or $0.40 per share. Net interest income grew by $7 million (6%) quarter-over-quarter and $12.2 million (11%) year-over-year. Total loans at December 31, 2025, were $8.7 billion, a $228 million (2.7%) increase from the end of the third quarter and a $163 million (2%) increase from the end of 2024. Average total deposits and customer repurchase agreements were $12.6 billion during the fourth quarter, with noninterest-bearing deposits declining and interest-bearing nonmaturity deposits and customer repos growing. The cost of deposits and repos was 86 basis points for the fourth quarter.

• Loan pipelines remain strong going into 2026, though rate competition for quality loans is intense. - Anticipates second quarter close and second quarter systems conversion for the merger with Heritage Bank of Commerce. - Economic forecast includes modest changes with loss rate assumptions for C&I loans affected.

• Economic forecast uncertainties with real GDP below 1.5% through 2027 and unemployment rate above 5% through 2028. - Rate competition for quality loans. - Integration risks related to the pending merger with Heritage Bank of Commerce.

Q: Comment on interest-bearing deposits seasonality and mix change?

A: David Brager said it was standard seasonality, no major behavioral change. E. Nicholson noted quarterly averages are more important.

Q: Thoughts on nondairy and livestock loan growth sustainability?

A: David Brager said loan pipelines are strong, utilization is normalizing, and optimistic about 2026.

Q: Update on Heritage deal progress?

A: David Brager said everything is going well, anticipating second quarter close and systems conversion.

Q: Competitive landscape for deposits and beta expectations?

A: David Brager said winning relationships with operating companies, majority noninterest-bearing; discussed Fed rate cuts and competition using earnings credit.

Q: Expenses and organic growth expectations?

A: E. Nicholson mentioned adjustments to bonus accruals and technology investment; David Brager talked about onetime transactions and singles approach.

Q: Loan yields and margin normalization?

A: E. Nicholson and David Brager discussed loan yield increase, securities book impact, and need for time to reprice to normalized margin.

Q: Loan modifications and Heritage deal impact on loan growth?

A: E. Nicholson said no abnormal loan modifications; David Brager discussed potential tailwinds from Heritage deal in loan growth.