CVB Financial outlines low single-digit loan growth outlook while expanding Southern California presence

Earnings Call Insights: CVB Financial Corp. (CVBF) Q3 2025

MANAGEMENT VIEW

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David Brager, President and CEO, highlighted "net earnings of $52.6 million, or $0.38 per share, representing our 194th consecutive quarter of profitability," and underscored the company's "$0.20 per share dividend for the third quarter of 2025, representing our 144th consecutive quarter of paying a cash dividend to our shareholders." He noted an increase in net interest income and strong return metrics, with a return on average tangible common equity of 14.11% and a return on average assets of 1.35%. Brager emphasized loan growth across nearly all categories and increased loan originations, stating that "loan originations in the third quarter of 2025 were approximately 55% higher than the third quarter of 2024."

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Brager announced the hiring of "a team of 4 bankers from City National Bank and are opening a de novo office in the Temecula, Murrieta area. They actually started yesterday."

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E. Nicholson, Executive VP & CFO, stated, "Net interest income was $115.6 million in the third quarter of 2025. This compares to $111.6 million in the second quarter of 2025 and $113.6 million in the third quarter Of 2024." Nicholson further added, "Our allowance for credit loss was $79 million at September 30, 2025, or 0.94% of gross loans."

OUTLOOK

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Management maintained its outlook for loan growth, with Brager indicating, "I've said kind of that low single-digit growth. And I think we can still hit that for the year. The pipelines are still strong. I feel pretty confident over the next quarter that, that should continue."

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Brager addressed pricing competition, stating, "we are definitely willing to compete on price as long as the credit quality is where we want it to be." He also reaffirmed the company's approach: "our plan is to continue to match whatever the Fed funds decreases with decreases in money market rates over 1%."

FINANCIAL RESULTS

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Net earnings were $52.6 million, or $0.38 per share, compared with $50.6 million, or $0.37 per share, in Q2 2025. Pretax, preprovision income was $70 million, an increase of $1.2 million from the prior quarter.

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Net interest income increased by $4 million over the prior quarter. Average earning assets grew by $315 million sequentially, and net interest margin improved to 3.33% from 3.31%.

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Total deposits and customer repurchase agreements rose to $12.6 billion, up $170 million from Q2 2025.

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Total loans at quarter-end were $8.47 billion, a $112 million increase from Q2, with growth attributed to higher line utilization in C&I and dairy and livestock lines.

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Noninterest expense was $58.6 million, $1 million higher than the previous quarter, with a $500,000 provision for off balance sheet reserves. The efficiency ratio remained at 45.6%.

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The sale of $65 million of low-yielding AFS securities resulted in an $8.2 million loss, offset by a $6 million legal settlement.

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Shareholders' equity was $2.28 billion at quarter-end, with 290,000 shares repurchased during the quarter at an average price of $20.30.

Q&A

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Matthew Clark, Piper Sandler: Asked about deposit beta and M&A activity. Brager responded that the company reduced rates after the Fed's move and plans to "continue to match whatever the Fed funds decreases with decreases in money market rates over 1%." On M&A, Brager commented, "A lot of dialogs. Not a lot has happened yet... we're continuing conversations... there’s not anything imminent."

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Andrew Terrell, Stephens: Asked about loan growth sustainability and pricing. Brager stated, "I think we can still hit that [low single-digit growth] for the year... The pipelines are still strong... The mid-single digits might be a little aggressive for the annualized."

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Gary Tenner, D.A. Davidson: Asked about dairy and livestock line utilization and interest rate swaps impact. Brager noted new dairy relationships contributed to growth and expects normal seasonal increases. Regarding swaps, he said, "it will probably become a negative drag on our net interest income next year," but no changes to the strategy are planned.

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Liam Coohill, Raymond James: Asked about competition on the lending and deposit side and the focus of the new banking team. Brager said, "deposit gathering has still been relatively strong," and competition comes mainly from larger regional banks. The new team will focus on operating companies and high net worth individuals.

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Charles Driscoll, KBW: Asked about cash deployment and expense outlook. Nicholson said the company may put cash to work in the bond market if yields are attractive, and expects "low single-digit type of growth" in expenses, with continued investment in technology.

SENTIMENT ANALYSIS

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Analysts' tone was neutral to slightly positive, with questions focusing on competitive dynamics, sustainability of loan growth, and strategic initiatives. No significant skepticism or negative sentiment was expressed.

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Management maintained a confident tone in both prepared remarks and responses, frequently expressing certainty about strategy and growth prospects. Brager used phrases such as "I feel pretty confident" and "we feel pretty good about it," indicating steady confidence across the call.

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Compared to the previous quarter, sentiment remained similarly constructive, with analysts and management continuing to focus on disciplined growth and operational consistency.

QUARTER-OVER-QUARTER COMPARISON

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Guidance language remained consistent, with management reiterating a "low single-digit growth" outlook for loans, unchanged from the previous quarter.

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Strategic focus continued on disciplined growth, maintaining profitability, and expense control, with new initiatives including expansion into Temecula, Murrieta markets via the new banking team.

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Key metrics saw incremental improvement: net earnings, net interest income, deposits, and loans all increased quarter-over-quarter, while the efficiency ratio remained stable.

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Analysts' and management's tone, focus, and confidence were similar to the prior quarter, with persistent emphasis on quality growth and risk management.

RISKS AND CONCERNS

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Management cited "rate competition for the quality of loans we focus on has continued to be intense."

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The outlook for interest rate swaps could pose a "negative drag on our net interest income next year," according to Brager.

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Seasonal factors impacting dairy and livestock loans and competition from larger regional banks were also noted as ongoing challenges.

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Expense management was highlighted, with ongoing investment in technology and automation as a key area of cost growth.

FINAL TAKEAWAY

CVB Financial Corp. delivered another quarter of profitability with steady improvement in key financial metrics and continued investment in long-term growth initiatives, such as expanding its banking team and opening a new office in Southern California. Management reiterated its commitment to disciplined loan growth, expense control, and navigating competitive challenges, while maintaining a positive outlook for the remainder of the year.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/cvbf/earnings/transcripts]

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