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Actionable news in CVBF: CVB Financial Corporation,

CVB Financial: 701 North Haven Ave., Suite 350

The following excerpt is from the company's SEC filing.

Ontario, CA 91764

(909) 980-4030

Press Release

For Immediate Release

Contact:

Christopher D. Myers

President and CEO

CVB Financial Corp. Reports Strong Third Quarter Earnings for 2015

Net earnings were $27.9 million for the third quarter of 2015, or $0.26 per diluted share, the second highest quarter on record.

Total loans and leases, net of deferred fees and discounts, increased by $38.0 million for the quarter, or 1.00%.

Noninterest-bearing deposits increased by $54.4 million, or 1.67%, for the quarter and totaled $3.30 billion, or 55.46% of total deposits.

CVB Financial Corp. and County Commerce Bank announced a merger agreement.

Ontario, CA, October 21, 2015-

CVB Financial Corp. (NASDAQ:CVBF) and its subsidiary, Citizens Business Bank (the Company), announced earnings for the quarter ended September 30, 2015.

CVB Financial Corp. reported net income of $27.9 million for the third quarter of 2015, compared with $24.3 million for the third quarter of 2014. This represents a year-over-year increase of $3.6 million, or 14.78%. Diluted earnings per share were $0.26 for the third quarter of 2015, compared to $0.23 for the same period last year.

On October 14, 2015, we announced that we have entered into a merger agreement with County Commerce Bank, pursuant to which County Commerce Bank will merge into Citizens Business Bank. County Commerce Bank is headquartered in Ventura County with four branch locations and total assets of approximately $250 million. This acquisition extends our geographic footprint northward into the central coast of California. We expect to close in the first quarter of 2016, subject to regulatory and County Commerce Bank shareholders approvals.

Chris Myers, President and CEO of Citizens Business Bank, commented, We are pleased with our financial results for the third quarter of 2015. We experienced strong new business productivity for both loans and deposits but overall loan growth was slowed by higher prepayment volume. The low interest rate environment continued to put pressure on both profit margins and loan retention. However, strong loan recoveries and prepayment fees offset the margin pressure, resulting in solid earnings performance. Myers continued, This is a good economic environment for our bank to expand geographically and our announced acquisition of County Commerce Bank is an exciting strategic move into a new marketplace. County Commerce operates in a similar manner to our Bank and should be easily integrated after the transaction closes.

Net income of $27.9 million for the third quarter of 2015 produced a return on beginning equity of 12.38%, a return on average equity of 12.11%, and a return on average assets of 1.45%. The efficiency ratio for the third quarter of 2015 was 44.05%, compared to 46.91% for the third quarter of 2014.

Net income totaled $70.5 million for the nine months ended September 30, 2015. This represented a decrease of $7.9 million, or 10.08%, when compared with net income of $78.4 million for the same period of 2014. The first quarter of 2015 included pre-tax debt termination expense of $13.9 million, related to the redemption of $200.0 million of fixed rate debt from the Federal Home Loan Bank (FHLB). Diluted earnings per share were $0.66 for the nine months ended September 30, 2015, compared to $0.74 for the same period of 2014. Net income for the nine months ended September 30, 2015 produced a return on beginning equity of 10.74%, a return on average equity of 10.42% and a return on average assets of 1.25%. The efficiency ratio for the nine months ended September 30, 2015 was 50.71%, compared to 47.04% for the nine months ended September 30, 2014. Excluding the impact of the debt termination expense, the efficiency ratio was 44.24%.

Total interest income and fees on loans for the third quarter of 2015 of $48.8 million increased $1.9 million, or 4.05%, from the third quarter of 2014. Total investment income of $18.2 million for the third quarter increased $483,000, or 2.73%, from 2014.

Noninterest income was $8.4 million for the third quarter of 2015, an increase of $68,000 from the second quarter of 2015 and a $404,000 increase from the third quarter of 2014. The year-over-year increase was due to a $479,000 net decrease in the FDIC loss sharing asset reflected in the third quarter of 2014.

Noninterest expense for the third quarter of 2015 was $32.7 million, compared with $31.5 million for the second quarter of 2015 and $32.5 million for the third quarter of 2014. The quarter-over-quarter increase of $1.2 million was primarily due to an increase in salaries and employee benefits due to growth and expansion efforts in Los Angeles, Ventura and Santa Barbara Counties. As a percentage of average assets, noninterest expense, excluding the impact of debt termination expense, was 1.71%, compared to 1.69% for the second quarter of 2015 and 1.75% for the third quarter of 2014.

Net Interest Income and Net Interest Margin

Net interest income, before provision for loan losses, was $65.9 million for the third quarter of 2015. This represented an increase of $3.2 million from $62.8 million for the second quarter of 2015 and an increase of $4.7 million from $61.2 million for the third quarter of 2014. Our net interest margin (tax equivalent) was 3.72% for the third quarter of 2015, compared to 3.65% for the second quarter of 2015 and 3.61% for the third quarter of 2014. Total average earning asset yields (TE) were 3.82% for the third quarter of 2015, compared to 3.74% for the second quarter of 2015 and 3.84% for the third quarter of 2014. Total cost of funds was 0.11% for the third quarter of 2015, compared to 0.11% for the second quarter of 2015 and 0.25% for the third quarter of 2014. During the third quarter of 2015, we had one non-performing commercial real estate loan that was paid in full resulting in a $2.8 million increase to interest income.

Income Taxes

Our effective tax rate for the nine months ended September 30, 2015 was 36.0% compared with 36.25% for 2014. Our estimated annual effective tax rate varies depending upon tax-advantaged income as well as available tax credits.

Assets

The Company reported total assets of $7.63 billion at September 30, 2015. This represents an increase of $248.5 million, or 3.37%, from total assets of $7.38 billion at December 31, 2014. Earning assets of $7.26 billion at September 30, 2015 increased $244.3 million, or 3.48%, when compared with $7.02 billion at December 31, 2014. The increase in earning assets was primarily due to a $197.2 million increase in interest-earning balances due from the Federal Reserve and a $43.7 million increase in total investment securities.

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Total assets of $7.63 billion at September 30, 2015 increased $203.6 million, or 2.74%, from total assets of $7.42 billion at September 30, 2014. Earning assets totaled $7.26 billion at September 30, 2015, an increase of $217.6 million, or 3.09%, when compared with earning assets of $7.05 billion at September 30, 2014. The increase in earning assets was primarily due to a $115.9 million increase in total loans, a $73.8 million increase in interest-earning balances due from the Federal Reserve and a $20.7 million increase in total investment securities.

Investment Securities

Total investment securities were $3.18 billion at September 30, 2015, an increase of $43.7 million from $3.14 billion at December 31, 2014 and an increase of $20.7 million from $3.16 billion at September 30, 2014.

During the third quarter of 2015, we transferred $886 million of investment securities from our available-for-sale security portfolio to held-to-maturity. These securities were transferred at fair value at the date of transfer. The unrealized holding gain or loss at the date of transfer will continue to be reported in accumulated other comprehensive income, but shall be amortized over the remaining life of the security as a yield adjustment. At September 30, 2015, investment securities held-to-maturity totaled $869.7 million. After-tax unrealized gain on our investment securities held-to-maturity (HTM) was $3.7 million at September 30, 2015.

At September 30, 2015, investment securities available-for-sale (AFS) totaled $2.31 billion, inclusive of a pre-tax unrealized gain of $53.2 million.

Combined, the AFS and HTM investments in mortgage backed securities (MBS) and collateralized mortgage obligations (CMOs) totaled $2.34 billion at September 30, 2015, compared to $2.22 billion at December 31, 2014 and $2.24 billion at September 30, 2014. Virtually all of our MBS and CMOs are issued by Freddie Mac or Fannie Mae, which have the implied guarantee of the U.S. Government. We have one private-label mortgage-backed security that has impairment. This Alt-A bond, with a carrying value of $1.3 million as of September 30, 2015, has had $1.9 million in net other-than-temporary impairment (OTTI) loss to date since it was purchased in early 2008. No additional OTTI impairment was recorded for the quarter ended September 30, 2015.

Our combined AFS and HTM municipal securities totaled $519.0 million as of September 30, 2015. These securities are located in 28 states with $20.7 million, or 3.98%, within the state of California. Our largest concentrations of holdings are located in Michigan at 12.86%, Minnesota at 12.18%, New Jersey at 9.13%, Texas at 8.70%, and Illinois at 8.05%. All municipal bond securities are performing.

In the third quarter of 2015, we purchased $170.0 million of MBS available-for-sale with an average yield of approximately 2.17%. Our new purchases of MBS have an average duration of approximately four years. We also purchased $2.7 million in municipal securities with an average tax-equivalent yield of approximately 3.64%.

Loans

Total loans and leases, net of deferred fees and discounts, increased $38.0 million, or 1.00%, from June 30, 2015. The quarter-over-quarter increase was principally due to increases of approximately $28.9 million in dairy & livestock and agribusiness loans, $10.7 million in construction loans, and $7.2 million in SFR mortgage loans. The overall increase in loans and leases was partially offset by decreases of $6.5 million in commercial real estate loans, $4.5 million in SBA loans, and $4.2 million in consumer loans.

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Total loans and leases, net of deferred fees and discounts, of $3.82 billion at September 30, 2015 increased $5.1 million, or 0.13%, from December 31, 2014. The increase in loans was principally due to approximately $59.5 million in commercial real estate loans, $17.2 million in commercial and industrial loans, and $16.6 million in SFR mortgage...


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