Key Highlights

  • Net Earnings were USD 78.1 million, or USD 0.44 per diluted share.
  • Net interest Margin widened to 3.89% from 3.72%.
  • Adjusted Return on Assets was 1.59% and efficiency ratio 42.1%.
  • Acquisition expenses fell to USD 8.1 million from USD 31.4 million.

Earnings and Returns

CVB Financial (NASDAQ:CVBF) reported third-quarter 2026 results on Thursday. Net earnings were USD 78.1 million, or USD 0.44 per diluted share, a 16% increase from USD 0.38 a year earlier. Adjusted return on average assets, which excludes Acquisition expenses, was 1.59%, above the company's 2027 target of 1.50%. The adjusted efficiency ratio was 42.1% against 43.9% in the second quarter.

Acquisition expenses were USD 8.1 million against USD 31.4 million in the second quarter, after the completion of systems integration for Heritage Bank of Commerce. Non-interest income was USD 16.5 million, down USD 0.5 million on lower trust fees and valuation declines in a Community Reinvestment Act bond fund.

Margin and Yields

The tax equivalent net interest margin was 3.89%, up from 3.72% in the second quarter and 3.33% a year earlier. Net interest income rose USD 63.5 million from the third quarter of 2025, as interest income grew USD 70.5 million on USD 4.58 billion more average earning assets and a 47 basis point higher asset yield. Interest expense rose USD 7.0 million.

The average Loan Yield was 5.66% against 5.53% in the second quarter and 5.25% a year earlier. New loan origination yields were 6.25%, about 20 basis points higher than in the second quarter. Discount accretion on acquired loans was about USD 3.3 million against USD 3.0 million. Management said the Investment portfolio rolls off at about USD 160 million per quarter at yields near 2%, against a portfolio yield of 3%.

Loans and Deposits

Total loans were USD 12.1 billion, up USD 105 million. Dairy and livestock line utilization was 66% against 53% at the end of June. Total deposits and customer repurchase agreements were USD 16.3 billion, down USD 550 million, including a USD 360 million decline in interest-bearing deposits and repurchase agreements. Noninterest-bearing deposits were USD 8.42 billion, or 53.5% of total deposits, against 52.8%. The cost of deposits and repurchase agreements was 83 basis points against 86.

Total assets were USD 20.5 billion against USD 21.2 billion, reflecting an USD 815.8 million decrease in balances due from the Federal Reserve.

Credit, Capital and Demand Comments

Net charge-offs were USD 20,000 against USD 137,000. Non-Performing Assets were USD 18.7 million, or 9 basis points of assets, against USD 16.8 million. Classified loans were USD 113.9 million, or 94 basis points of loans, after the addition of two Commercial Real Estate loans totaling USD 5 million. The allowance for Credit losses was USD 125.6 million, or 1.04% of loans, after a USD 1 million recapture.

The common Equity tier 1 ratio was 14.8% against 14.7%. The company repurchased 775,000 shares for about USD 17.5 million at an average of USD 22.58. Tangible Book Value per share was USD 10.92 against USD 11.07, on declines in accumulated other comprehensive income.

President Clay Jones said demand is slowing among customers and prospects as higher interest rates lead some to rethink transactions or use internal cash. He said the company sees continued deposit pressure from Federal Reserve rate increases. Chief Financial Officer Allen Nicholson cited projections that commercial real estate prices continue to decline through the end of 2027 before returning to growth in 2028.

Reference Points

Net Earnings Per Share rose 16% while the margin widened 56 basis points from a year earlier. Reference points include deposit and repurchase agreement balances after a USD 550 million decline, the 53.5% share of noninterest-bearing deposits, classified loans at 94 basis points of loans, and tangible book value per share at USD 10.92.