David Farnsworth
CVB FINANCIALAbout David Farnsworth
David F. Farnsworth is Executive Vice President and Chief Credit Officer of Citizens Business Bank (CVB Financial Corp.) since July 18, 2016; he is 68 years old and previously held senior risk leadership roles at BBVA Compass, U.S. Bank, and AmSouth . CVBF delivered 2024 net income of $200.7 million with 1-, 3-, and 5-year annualized shareholder returns of 12%, 4%, and 4%, respectively, and maintained CET1 of 16.2% as of year-end 2024 . CVBF’s revenues and net income over the last three years are shown below.
| Metric | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| Revenues ($USD) | $46.389 million* | $58.395 million* | $54.474 million |
| Net Income ($USD) | $235.425 million | $221.435 million | $200.716 million |
*Values retrieved from S&P Global.
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| BBVA Compass Bank | EVP, Global Risk Management; National CRE Risk Executive | 2006–2015 | Led CRE risk management nationally; foundations for stress testing and credit governance later applied at CVBF |
| U.S. Bank | Senior credit management roles | Not disclosed | Portfolio credit leadership in large-bank environment |
| AmSouth | Senior credit management roles | Not disclosed | Regional credit oversight and underwriting leadership |
Fixed Compensation
Multi-year compensation paid (actuals):
| Component | 2022 | 2023 | 2024 |
|---|---|---|---|
| Base Salary ($) | $378,781 | $399,310 | $411,539 |
| All Other Compensation ($) | $45,521 | $44,091 | $44,183 |
Compensation plan parameters for NEOs (including Farnsworth):
| Parameter | Program Terms |
|---|---|
| Metrics-based Incentive Opportunity | 0%–60% of base salary annually under Executive Performance Compensation Plan (ECP) |
| Discretionary Bonus Opportunity | 0%–20% of base salary annually (plan-based discretionary bonus) |
| Long-term Equity Target | Expected annual grant date value ≈100% of prior-year base salary (mix of Time RSUs and PRSUs; no guaranteed minimum) |
Performance Compensation
2024 outcomes and structure:
| Metric | Weighting | Target | Actual | Payout ($) | Notes |
|---|---|---|---|---|---|
| Net profit after tax | Not disclosed | Not disclosed | Achieved Level 1 | — | 1 of 3 Level 1 metrics |
| Average total loans | Not disclosed | Not disclosed | Achieved Level 1 | — | 1 of 3 Level 1 metrics |
| Noninterest (operating) expenses | Not disclosed | Not disclosed | Achieved Level 1 | — | 1 of 3 Level 1 metrics |
| Average loan delinquencies | Not disclosed | Not disclosed | Below Level 1 | — | Credit-sensitive metric |
| NPLs+OREO / total loans | Not disclosed | Not disclosed | Below Level 1 | — | Credit-sensitive metric |
| Metrics-based Incentive Total | — | — | — | $57,680 | Based on 3 of 5 Level 1 metrics |
| Discretionary Bonus (plan-based) | — | Up to 20% | — | $82,400 (20% of base) | Recognized for electronic loan processing rollout and validated CRE/C&I stress testing adoption |
| Aggregate 2024 Incentive + Bonus | — | — | — | $140,080 | Equals 34% of base salary |
2024 vesting realized:
| Item | 2024 Vesting/Exercise | Value Realized ($) |
|---|---|---|
| RSU shares vested | 17,601 shares | $315,252 |
| Stock options | None | — |
Equity Ownership & Alignment
Beneficial ownership and unvested awards:
| Item | Details |
|---|---|
| Total beneficial ownership | 71,250 shares; ~0.1% of shares outstanding |
| Hedging/Pledging | Hedging, short-selling, derivatives prohibited; pledging prohibited absent GC pre-clearance. No known hedged or pledged positions; no known Rule 10b5-1 plans among Section 16 officers . |
Outstanding unvested awards at 12/31/2024 (market value uses $21.41/share):
| Award Type | Shares Unvested | Market Value ($) | Vesting Terms |
|---|---|---|---|
| Time RSUs (2024 grant) | 10,537 | $225,597 | One-third on Jan 24, 2025/2026/2027 |
| Time RSUs (2023 grant) | 5,239 | $112,167 | Half on Jan 25, 2025 and Jan 25, 2026 |
| Time RSUs (2022 grant) | 3,084 | $66,028 | Vests Jan 26, 2025 |
| PRSUs (2024 grant, target) | 10,537 | $225,597 | Scheduled to vest Jan 24, 2027 based on 2024–2026 performance |
| PRSUs (2023 grant, max level) | 7,858 | $168,240 | Scheduled to vest Jan 25, 2026; performance exceeded target on both measures |
| PRSUs (2022 grant, max level) | 11,563 | $247,564 | Vests Jan 26, 2025; performance exceeded maximum |
Ownership guidelines and dividends on equity:
- Directors must hold stock equal to 3x annual retainer; executive officer guidelines not specified in proxy .
- Dividend equivalents paid on Time RSUs; PRSU dividend equivalents paid after performance determination .
Employment Terms
| Term | Detail |
|---|---|
| Position | EVP, Chief Credit Officer of Citizens Business Bank |
| Employment Agreement | 2024 NEO Employment Agreement effective July 2, 2024; two-year term ending June 30, 2026, auto-renews for 1-year periods unless either party gives 6 months’ notice |
| Incentive Eligibility | ECP metrics-based (0%–60% of base) and discretionary (0%–20% of base) annually |
| Long-term Incentives | Annual equity grants (Time RSUs/PRSUs/options/restricted stock) targeted ≈100% of prior-year base salary (no guaranteed minimum); PRSUs have 3-year performance periods |
| Severance (no change-in-control) | Severance discretionary if terminated without “cause” (excluding death/disability), subject to release; amounts determined case-by-case |
| Change-in-control (double trigger) | If terminated without “cause” within 180 days before or 12 months after a change-in-control, or resigns for “good reason” within 12 months after: pays 2x base salary + 2x average bonus (prior two years) + lump sum equal to 24 months COBRA cost (grossed up for applicable payroll taxes); installments over 18 months |
| Illustrative CIC payout | Cash severance $1,220,802; acceleration of equity/incentive $1,087,243; total $2,308,045 (as if event on 12/31/2024) |
| Equity vesting on CIC | Immediate vesting of unvested options and Time RSUs; PRSUs vest at target if <2 years of performance are complete; if ≥2 years complete, vest based on actual performance |
| Post-termination obligations | General release; confidentiality; non-solicitation of customers/employees for one year |
| Clawback | Nasdaq-compliant incentive compensation recovery policy adopted; executive bonuses may be restricted under capital buffer rules |
Compensation Summary (Total Mix)
| Component | 2022 | 2023 | 2024 |
|---|---|---|---|
| Salary ($) | $378,781 | $399,310 | $411,539 |
| Stock Awards ($) | $415,695 | $380,013 | $399,985 |
| Non-Equity Incentive ($) | $212,800 | $56,000 | $82,400 |
| Bonus ($) | $64,600 | $138,000 | $57,680 |
| All Other Comp ($) | $45,521 | $44,091 | $44,183 |
| Total ($) | $1,117,397 | $1,017,414 | $995,786 |
Deferred compensation:
| Item | 2024 Contributions ($) | 2024 Earnings ($) | Aggregate Balance ($) |
|---|---|---|---|
| 2007/2020 DCP | $38,800 | $5,841 | $75,723 |
Governance, Say-on-Pay, and Shareholder Feedback
| Year | Say-on-Pay Votes For | Against | Abstained | Broker Non-Votes |
|---|---|---|---|---|
| 2023 (for FY 2022 comp) | 95,060,672 | 5,546,660 | 374,438 | 20,593,070 |
| 2024 (for FY 2023 comp) | 93,720,772 | 8,103,508 | 325,077 | 20,275,360 |
Compensation Committee noted 2024 Say-on-Pay support of ~91.75% and expects no significant changes for 2025 .
Company Performance Context
CVBF overview of operating and capital performance:
- 2024 net income: $200.7 million; period-end assets: $15.15 billion; CET1 16.2% .
- Peer-relative performance: top quartile on 4 of 6 key banking KPIs in 2024; median ROE; strong 3-year performance across metrics .
- Shareholder returns: one-, three-, five-year annualized returns of 12%, 4%, and 4% .
Investment Implications
- Pay-for-performance alignment: Farnsworth’s annual cash outcome (34% of base) reflected mixed metric attainment and targeted discretionary recognition for execution (loan processing rollout, validated stress tests), while equity remains the dominant long-term lever via PRSUs/RSUs vesting through 2025–2027 .
- Retention and change-in-control: The 2024 NEO agreement introduces a standard double-trigger CIC framework with 2x cash and 24 months COBRA; equity accelerates under CIC with performance-sensitive PRSU treatment—adequate retention but not excessive severance economics (2024 CIC illustration: $2.31 million total) .
- Trading signals and potential selling pressure: Material scheduled vesting dates—Jan 26, 2025 (PRSU max + Time RSU tranche), Jan 25, 2026 (PRSUs at max + Time RSUs), Jan 24, 2027 (PRSUs at target)—may create near-term liquidity events; 2024 vesting realized $315k suggests ongoing cadence but no options overhang; pledging/hedging and 10b5-1 activity not present, reducing alignment red flags .
- Governance quality and shareholder support: Strong say-on-pay outcomes (~92%–95%) and formal clawback policy lower governance risk; executive incentives fall within regulated banking safety-and-soundness guidelines .