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CVB FINANCIAL CORP (CVBF)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered stable profitability with net earnings of $51.1M and diluted EPS of $0.36; NIM expanded to 3.31% (+13 bps QoQ, +21 bps YoY) as cost of funds fell to 1.04% and deposit costs eased to 0.86% .
  • Reported EPS and revenue beat S&P Global consensus: $0.36 vs $0.332*, and $128.7M vs $125.0M*; noninterest income benefited from a $2.2M gain on OREO sales; efficiency improved to 46.7% .
  • Balance sheet quality improved: nonperforming assets fell to $26.1M (from $47.1M in Q4) primarily due to disposition of $19.3M OREO; TCE rose to 10.0%, CET1 to 16.5% .
  • Strategic deleveraging in 2H24 sustained margin tailwinds; end-of-period noninterest-bearing deposits increased $147M QoQ and reached ~60% of total; management continues buybacks (782K shares in Q1; additional repurchases in April) and signaled M&A optionality .

What Went Well and What Went Wrong

What Went Well

  • Net interest margin expansion driven by lower funding costs after 2024 deleveraging; NIM 3.31% (+13 bps QoQ), cost of funds 1.04% (-9 bps QoQ) .
  • Strong deposit mix and pipelines; end-of-period noninterest-bearing deposits up $147M QoQ to 59.92% of total; management emphasized strength in Specialty Banking and operating-company relationships (“pipelines are strong”) .
  • Asset quality improved with the sale of $19.3M OREO at a $2.2M net gain, reducing NPAs to $26.1M; net recoveries of $130K and a $2.0M provision recapture supported earnings .

What Went Wrong

  • Loan balances declined 2.02% QoQ and 4.64% YoY, led by dairy & livestock (-$168M QoQ; -$91M YoY) and CRE (-$17M QoQ; -$230M YoY), reflecting seasonal dynamics and competitive rate pressures .
  • Average earning assets fell $406M QoQ and $1.09B YoY, limiting net interest income ($110.4M vs $112.5M in Q1’24); loan and investment yields were modestly lower YoY .
  • Noninterest expense rose to 1.58% of average assets (from 1.49% in Q4’24), including higher payroll taxes seasonally and a $500K provision for unfunded commitments; software and occupancy expenses increased YoY .

Financial Results

Core P&L and Profitability (oldest → newest)

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)*$126.453*$126.841*$128.673*
Net Interest Income ($USD Millions)$113.619 $110.418 $110.444
Noninterest Income ($USD Millions)$12.834 $13.103 $16.229
Pre-tax Income ($USD Millions)$67.618 $68.041 $69.529
Net Earnings ($USD Millions)$51.224 $50.858 $51.104
Diluted EPS ($)$0.37 $0.36 $0.36
NIM (TE, %)3.05% 3.18% 3.31%
ROAA (%)1.23% 1.30% 1.37%
Efficiency Ratio (%)46.53% 47.34% 46.69%

Values with asterisks (*) retrieved from S&P Global.

Reported vs Consensus (S&P Global) — Beats/Misses

MetricQ3 2024Q4 2024Q1 2025
EPS: Actual vs Consensus ($)$0.37 vs $0.3457* → Bold beat$0.36 vs $0.34* → Bold beat$0.36 vs $0.3317* → Bold beat
Revenue: Actual vs Consensus ($USD Millions)$126.453 vs $126.884* → Slight miss*$126.841 vs $126.718* → Inline/slight beat*$128.673 vs $124.987* → Bold beat*

Values with asterisks (*) retrieved from S&P Global.

KPIs and Balance-Sheet Metrics (oldest → newest)

KPIQ3 2024Q4 2024Q1 2025
Cost of Funds (%)1.47% 1.13% 1.04%
Cost of Deposits (%)0.98% 0.93% 0.86%
Noninterest-Bearing Deposits (% of total, avg)59.10% 58.74% 59.01%
Noninterest-Bearing Deposits (% of total, EOP)59.12% 58.90% 59.92%
Borrowings (EOP, $USD Millions)$500 $500 $500
Nonperforming Assets (EOP, $USD Millions)$22.560 $47.098 $26.131
CET1 Ratio (%)15.8% 16.2% 16.5%
TCE Ratio (%)9.7% 9.8% 10.0%

Loan Portfolio by Type ($USD Millions; oldest → newest)

Loan TypeQ3 2024Q4 2024Q1 2025
Commercial Real Estate$6,618.6 $6,507.5 $6,490.6
Construction$14.8 $16.1 $15.7
C&I$936.5 $925.2 $942.3
Dairy & Livestock$342.4 $419.9 $252.5
SBA$272.0 $273.0 $271.8
Total Gross Loans$8,572.6 $8,536.4 $8,363.6

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Deposit Costs2025NoneExpect “a little room to go” for modest further reduction absent rate cuts Qualitative improvement
Loan GrowthFY 2025NoneManagement expects to outpace payoffs and reach low single-digit loan growth by year-end, barring disruptions New directional view
Capital Allocation (Buybacks)202510M 10b5-1 plan authorized (Nov’24) Continued repurchases (782K shares in Q1; ~1.3M additional in April); ample capital for continued buybacks and M&A Maintained/increased activity
Tax RateQ2–FY 2025NoneQ1 effective tax rate 26.5%; tax rate varies with tax-advantaged income and credits Informational (no formal guidance)
Dividend2025$0.20 per quarter$0.20 declared in Q1 Maintained

Note: Company did not issue formal quantitative guidance ranges; management provided directional commentary.

Earnings Call Themes & Trends

TopicQ3 2024 (Prior-2)Q4 2024 (Prior-1)Q1 2025 (Current)Trend
Net Interest Margin3.05%; cost of funds rose vs prior year; higher Fed balances 3.18%; deleveraging lowered funding cost 3.31%; further expansion from lower cost of funds and mix Improving
Funding & DepositsNIB avg 59.10%; brokered CDs introduced; deposits up QoQ NIB avg 58.74%; seasonality into Q1; end-of-period NIB 58.90% NIB avg 59.01%; end-of-period NIB up $147M to 59.92% Stable/Improving mix
Borrowings/DeleveragingRepaid $1.3B BTFP; FHLB $500M remains Borrowings steady at $500M Borrowings steady at $500M; lower cost of funds YoY Sustained
Asset Quality/OREONPAs $22.6M; OREO $0.65M NPAs $47.1M; OREO $19.3M (elevated) Sold $19.3M OREO; NPAs down to $26.1M; gain $2.2M Improved
CRE ActivityPayoffs elevated; pipelines building Margins rebuild; sale-leaseback impacts occupancy Elevated prepayment penalties; April closures highest in 14 months; investor CRE originations rising Improving production
Dairy & LivestockDown $8.1M QoQ Seasonal increase to $419.9M Down $168M QoQ; utilization fell to 64% (from 81% in Dec) Seasonal normalization
Macro/TariffsLimited commentary Rate dynamics affected hedges/yields Tariff impacts “too early to tell”; customers relatively okay; milk/powder prices steady Watching
Capital & M&ANo buybacks YTD; strong capital Authorized 10M buyback; CET1 16.2% Active buybacks; capital supports both buybacks and potential M&A; “acquirer of choice” aspiration Optionality rising

Management Commentary

  • “For the first quarter of 2025, we reported net earnings of $51.1 million or $0.36 per share… our 192nd consecutive quarter of profitability” .
  • “Our net interest margin expanded by 13 basis points… primarily due to… deleveraged our balance sheet by reducing borrowings and other wholesale funds” .
  • “We sold $19.3 million of OREO… generating a $2.2 million net gain on sale… recapture of allowance for credit losses of $2 million” .
  • “Our current deposit pipelines are strong and focused on operating companies… Specialty Banking… continues to be strong” .
  • “Capital levels will allow us to continue share repurchases while still having excess capital that can be deployed in an acquisition” .

Q&A Highlights

  • Tariffs/ag exposure: Too early to see material impact; customers “feel relatively okay”; milk/powder prices steady .
  • CRE payoffs vs production: Elevated prepayment penalties in Q1; April loan closures strongest in 14 months; management expects production to outpace payoffs and target low single-digit loan growth by YE .
  • Deposit costs outlook: Some room for modest reductions absent rate cuts; new money market accounts pricing below run-rate; granular relationship-based repricing .
  • Capital priorities: Continue buybacks at attractive valuations while maintaining capacity for M&A; confidence in announcing a deal this year (subject to market) .
  • Fee income “other”: CRA-related equity investments drove upside; recognized NAV volatility across markets; sustainability subject to market conditions .
  • Securities losses appetite: No near-term appetite; would only consider under unusual circumstances .

Estimates Context

  • Q1 2025 EPS and revenue beat S&P Global consensus: $0.36 vs $0.3317* and $128.673M vs $124.987M*; drivers included lower funding costs, OREO gain, and deposit mix improvement .
  • Prior quarters: Q4 2024 EPS beat ($0.36 vs $0.34*), revenue inline/slight beat; Q3 2024 EPS beat ($0.37 vs $0.3457*), revenue slight miss*; estimate revisions may modestly reflect improving NIM trajectory and deposit costs, balanced by lower average earning assets and loan declines .
    Values with asterisks (*) retrieved from S&P Global.

Reported vs Consensus (S&P Global) Table

MetricQ3 2024Q4 2024Q1 2025
EPS: Actual vs Consensus ($)$0.37 vs $0.3457*$0.36 vs $0.34*$0.36 vs $0.3317*
Revenue: Actual vs Consensus ($USD Millions)$126.453 vs $126.884*$126.841 vs $126.718*$128.673 vs $124.987*

Values with asterisks (*) retrieved from S&P Global.

Key Takeaways for Investors

  • Margin momentum is intact: NIM expanded to 3.31% as cost of funds fell; deposit costs have incremental relief potential absent rate cuts .
  • Quality improved and one-off gains helped: $19.3M OREO sale reduced NPAs and added $2.2M to noninterest income; net recoveries and provision recapture supported earnings .
  • Deposit franchise remains a core advantage: NIB deposits ~60% of total; pipelines strong across Specialty Banking; end-of-period NIB deposits rose $147M QoQ .
  • Loan growth likely to reaccelerate modestly: Management expects production to outpace payoffs and reach low single-digit growth by year-end, particularly in investor CRE, subject to rates and competition .
  • Capital optionality provides upside: Active buybacks and strong CET1 (16.5%)/TCE (10.0%) enable both shareholder returns and potential M&A; management positioning as acquirer of choice .
  • Watch rate/hedge dynamics and asset mix: Average earning assets declined QoQ; hedge carry reduced; continuation of deleveraging benefits vs yield headwinds will shape margin trajectory .
  • Macro/trade risks monitored but benign so far: Management sees limited tariff impact to date in ag/dairy; customer sentiment broadly constructive .