CVB Financial
Annual Report 2018

Plain-text annual report

2018 A N N U A L R E P O R T OUR VISION Citizens Business Bank will strive to become the premier financial services company operating throughout the state of California, serving the comprehensive financial needs of successful small to medium-sized businesses and their owners. ©2019, Forbes Media LLC. Used with permission #1 BEST BANK IN CALIFORNIA on Forbes America’s Best Banks* $152 Million Net Income Highest in Company History 167 Consecutive Quarters of Profitability Over 41 Years 117 Consecutive Quarters of Cash Dividends Paid Over 29 Years Five-Star “SUPERIOR” Rating - BauerFinancial 39 Consecutive Quarters Super Premier Performing Bank - Findley Reports Over 25 Years * Ranked #4 in the Nation. #1 is derived from California State filter of all rankings nationwide provided by forbes.com Since 1974, Citizens Business Bank has been creating banking relationships by focusing on our customer and helping them achieve more for their business, their employees, and the communities they serve. Our founder, George A. Borba Sr., was an enterprising dairy farmer and small business owner from Southern California. George saw a need to support other business owners in his community by helping them preserve and enhance the value of their companies. He shared his vision with a group of local business leaders who cared deeply about their community, and together they set out to design a new banking experience. Chino Valley Bank was established in August of 1974. More than 40 years later, Citizens Business Bank has grown to $11.5 billion in assets with 3 trust offices and more than 60 banking locations throughout California. We changed our name to Citizens Business Bank along the way, but we still hold true to our original vision. We are proud to be in the position to assist entrepreneurs with opportunities to foster and grow their businesses. Our customers’ success is our success. We are able to build long-standing relationships with each customer by treating them the same way we would want to be treated. In fact, many of our customers have banked with us for decades. Our unwavering commitment to personal service is the reason we are consistently recognized as one of the top-performing banks in the nation. 2018 in Review Board of Directors Financial Highlights Valued Customers Services Community Commitment Leadership Team Financial Summary Locations Corporate Information 4 5 7 11 25 28 30 33 38 40 33 TO OUR SHAREHOLDERS, CUSTOMERS, AND ASSOCIATES 2018 was a transformational year for Citizens and received a Five Star rating by BauerFinancial, Business Bank. In August 2018, we purchased once again. Citizens Business Bank recorded an Community Bank, formerly a $3.7 billion in assets amazing 167 consecutive quarters of profitability bank headquartered in Pasadena, CA. This is, by and 117 consecutive quarters of paying a cash dividend far, the largest acquisition in our Bank’s history. to our shareholders. And, we are still counting. Community Bank was formed in 1945 and grew steadily over the years throughout the Los Angeles, Orange County, and Inland Empire markets. Many of their 16 branches are in close proximity to our center locations, creating both deeper market penetration and potential cost synergies. In addition to bringing on many talented bankers and a seasoned customer base, we added three new executives to our Senior Leadership team and also named Marshall V. Laitsch, the former Chairman of the Community Bank Board, From a strategic perspective, we do not strive to be the biggest, but we do want to be the best. We aspire to build long-term relationships with our customers, associates, and shareholders. We value relationships that are based on trust, consistency, and mutual respect. Our vision is to be the premier financial services company operating throughout the state of California, servicing the comprehensive financial needs of small to medium-sized businesses and their owners. to the CVB Financial Corp. and Citizens Business As we look forward into the future, we remain Bank boards. 2018 was a record setting year in terms of financial benchmarks. We produced $152.0 million in total earnings, an incredible 46% increase over 2017. committed to the integrity of our business model. We are driven by our five core values: financial strength, superior people, customer focus, cost- effective operation, and having fun. Total assets grew to $11.5 billion, total loans On behalf of our Board of Directors, we thank our grew to $7.8 billion, and total deposits grew to customers for their ongoing loyalty, our associates $9.1 billion. All record levels. We ended the year for their dedication and hard work, and our with 68 business financial centers stretching from shareholders for their continued support and trust. San Diego in the south to Stockton in the north. Our plan for 2019 is to consolidate several of these centers as many are in close proximity, mostly due to the acquisition. 2018 was also a year of recognition from our Raymond V. O’Brien III Chairman of the Board industry. We were ranked as the #1 Bank in California by Forbes 2019 Best Banks in America Christopher D. Myers President and Chief Executive Officer 4 BOARD OF DIRECTORS Raymond V. O’Brien III Chairman Christopher D. Myers President & CEO George A. Borba Vice Chairman Kristina M. Leslie Director Stephen A. Del Guercio Director Hal W. Oswalt Director Anna Kan Director Rodrigo Guerra Jr. Director Marshall V. Laitsch Director 5 6 FINANCIAL HIGHLIGHTS Citizens Business Bank produced record profitability and growth for 2018. At year end, we reported our 167th consecutive quarter of profitability and paid our 117th consecutive quarterly cash dividend to shareholders. Our focus on improving key financial metrics, including profitability and asset quality, is paramount. 77 Total Assets (Dollars in Billions) 2018 2017 2016 2015 2014 $11.5 $7.4 $70.2 $1.9 $1.24 $0.98 $42.4 $0.9 2014 15 16 17 18 2014 15 16 17 18 2014 15 16 17 18 Dividends Declared (Dollars in Millions) Shareholders’ Equity (Dollars in Billions) Diluted Earnings Per Share Total Deposits1 (Dollars in Billions) $6.2 $9.3 2014 2015 2016 2017 2018 8 1Includes customer repurchase agreements. $5.2 $34.0 $2.9 $43.5 $7.8 $3.8 2014 15 16 17 18 2014 15 16 17 18 2014 15 16 17 18 Noninterest Bearing Deposits (Dollars in Billions) Noninterest Income 2 (Dollars in Millions) Total Loans (Dollars in Billions) Efficiency Ratio 3 44.27% 46.72% 43.84% 45.83% 2015 2016 2017 2018 Net Earnings (Dollars in Millions) 2018 2017 2016 2015 2014 $152.0 $104.0 2 Excludes gain on sale of loans, securities, branches, and gain on eminent domain, as well as FDIC loss sharing asset changes. 3 Noninterest expense, excluding debt termination expense, divided by net interest income before provision for loan losses plus noninterest income. 99 10 VALUED CUSTOMERS Our customers are always our top priority. We strive to build long-term relationships by providing businesses and professionals with the personal service of a small bank, while delivering all the capabilities of a big bank. Our customer-focused model helps our customers achieve their financial goals. Our approach to relationship banking continues to captivate new and old customers alike, many of whom have banked with us for more than 20 years. 1111 Camarena Health Camarena Health has been serving the Madera County community with affordable healthcare services since opening their first center in 1980. The community-based healthcare provider originally started as a health center for farmworkers and their families in Madera County, and they’ve established themselves as an influential organization among local residents. “We aim to be extremely accessible to people in the community, regardless of insurance,” explains Paulo Soares, Chief Executive Officer. Last year, their collection of health practices saw over 42,000 patients, or approximately one-in-four residents of the county. As a healthcare provider, Camarena Health’s mission is to continue their growth in order to meet the needs of the community. In 2008, Camarena Health began the search for a new banking relationship with the goal of propelling their business forward and serving more patients. They felt “The Bank has been responsive and moved alongside us as we’ve grown.” the national bank they were using at the time was too impersonal for their business needs. The team knew they required the expertise of a local bank that could understand their business goals and help health services spread throughout Madera County. They chose Citizens Business Bank. In the first 30 years of existence, Camarena Health only operated two health centers in the county. However, growth has been exponential over the last decade. Since beginning their relationship with Citizens Business Bank, Camarena Health has expanded their network with 12 new centers. Valued Partner since 2008 12 12 12 Left to right: Paulo Soares, Chief Executive Officer and Dr. Joel Ramirez, Chief Medical Officer Paulo expresses his appreciation for Camarena Health’s relationship with Citizens Business Bank, and he eagerly shares how the services are “great assets to have available to us.” A Revolving Line of Credit provides the health system with the flexibility to purchase essential equipment. Real Estate Loans were vital to the addition of a new administration building and also crucial for constructing a new medical campus with a variety of health services for patients and their families. Paulo’s team also worked with the Bank to establish investment accounts through CitizensTrust, which will help to grow and build the organization’s cash reserves. Their objective is to maximize investment returns to ensure the long-term sustainability of the valuable health services they provide. With steadfast support from the Bank, Camarena Health will continue to serve the health needs of Madera County residents well into the future. 13 13 13 West Coast Sand & Gravel West Coast Sand & Gravel’s iconic turquoise trucks have been a fixture of California roads for more than 50 years. In the early days of the business, their customers were limited to construction industry contractors, and the fleet consisted of two trucks. Today, West Coast Sand & Gravel has more than 300 turquoise trucks in their fleet, spread out over 13 locations in California and Arizona. They now serve a wide range of customers from a variety of industries. Marv Struiksma, the Chairman of West Coast Sand & Gravel, has been involved in operations since his uncles first started the business in 1968. As the patriarch of the enterprise, he is a long- time proponent of West Coast’s relationship with Citizens Business Bank. He enthusiastically declares that the Bank is “the easiest bank we’ve had to work with for Equipment Financing. They are the one we go to.” In addition to the various loans they’ve obtained through the Bank, West Coast has also utilized a myriad of other financial services. “The Bank has allowed us to expand Left to right: Marvin Struiksma, Mike Struiksma, into mining and upgrade the trucking and supply Dale Struiksma, Dan Reyneveld, Ed de Boer, side,” says Dan Reyneveld, CEO of West Coast John Struiksma, Jeff Struiksma, and Klint Korver Sand & Gravel. Online Banking services have “It’s all about personal relationships.” 14 14 14 been convenient for their business needs, as these are the products the team at West Coast uses most often. They have also integrated Merchant Services into their company, which Dan contends is a useful complement to their Resource Building Materials retail business. Much like Citizens Business Bank, West Coast Sand & Gravel was built upon a customer-focused approach to business. The key to developing long-lasting business relationships comes from prioritizing customers above all else. “It’s all about personal relationships. Vince Gottuso, the Bank’s Center Manager, has done an excellent job. He has a very strong team that backs him up. The customer is king for sure,” asserts Dan. “Vince will say, I’m going to go to work here for you. I’m going to get a solution for you, and it makes me feel special as a customer.” Marv, Dan, and their team regularly involve Citizens Business Bank in major decisions relating to the growth of their company. West Coast Sand & Gravel has witnessed steady growth through more than 50 years of business, and they’ve been a loyal customer of the Bank for more than 20 of those years. The company continues to grow and diversify their business model, and they take comfort in knowing Citizens Business Bank is there to support them with a full suite of financial products and services. 15 15 15 Valued Partner since 1995 Bakersfield Veterinary Hospital Residents of Kern County have been bringing their pets to Bakersfield Veterinary Hospital since the doors first opened in 1923. The hospital’s relationship with the Bank started a decade ago, when a group of medical professionals sought to establish a relationship with a premier business bank that could understand their needs. “Citizens Business Bank has helped us develop into what we are today,” says Dr. Adam Landry, a partner at the hospital. With assistance from the Bank’s associates and services, Bakersfield Veterinary Hospital was able to grow from a small clinic into one of the largest veterinary groups in the region. “Citizens Business Bank has helped us develop into what we are today.” Bakersfield Veterinary Hospital had outgrown their smaller, separate practices, and were ready to move to a larger, centralized building that could handle an influx of new patients. With bank financing provided for the expansion, the partners reached their long-term goal of building and owning a veterinary hospital. “They’ve made this goal possible. Possible to purchase the land. Possible to make the business grow,” said Dr. Landry. An SBA 504 Loan and Equipment Term Loan were essential in laying the groundwork for the new hospital. The state-of-the-art 13,000 square- foot facility in Bakersfield is now home to modern surgical and exam rooms, luxury boarding suites, a complete laboratory, and a veterinary pharmacy. In addition to providing financing throughout the 10-year relationship, the Bank also provided loans for individual professionals, like Dr. Landry, which allowed them to become partners in the practice. 16 16 16 Left to right: Dr. Adam Landry, Dr. Irene Takata, Dr. Jennifer McGraw Aguirre, and Dr. Michael D. Keese Different generations of veterinarians have entered and left the firm since they first began the relationship, but the hospital continues to remain a loyal customer of the Bank. “There has always been that personal experience, a local feel,” said Dr. Landry, in reference to his own exchanges with the Bank. Strategically combining their smaller practices into a full-service veterinary hospital has been a successful long-term move for the team. As a result, they’ve experienced a 35 percent increase in revenue over the last five years. The veterinarians have had such a satisfying relationship with the Bank that they’re eager to share the experience with other businesses in Kern County. Valued Partner since 2009 17 17 17 Armorcast Products Company Paul Boghossian When H.P. Boghossian first started Armorcast Products Company in 1966, he didn’t set out to create an innovative leader in the utilities industry, but that’s exactly what they’re known for today. The early years of Armorcast involved selling and installing reinforced fiberglass architectural elements for retail construction, movie studios, and Las Vegas hotels. It wasn’t until 1972 that Armorcast introduced their signature product line of durable underground protective enclosures for utility companies. Around this time, Armorcast established a partnership with Community Bank. When Citizens Business Bank acquired Community Bank in August of 2018, the team at Armorcast were initially concerned about what changes might be in store for them. 18 18 18 “When your bank of 40 years is acquired, you worry you’re just going to be another number to them. That hasn’t been the case,” says Paul Boghossian, Mr. Boghossian’s son, and the current President of Armorcast. Within the first few weeks of the acquisition, the President & CEO of Citizens Business Bank, Chris Myers, was visiting with Paul and his team at Armorcast Products headquarters. Chris was there to reassure the team that they could expect the same level of personal attention that they’d grown accustomed to with their previous bank. Despite an abundance of banks persistently trying to convert Armorcast as a new customer, Paul and his team chose to continue their banking with Citizens Business Bank. “We’re a good example of a satisfied transition customer. We had a lot of options, but we gave the Bank a chance and I’m glad we did.” “We gave the Bank a chance and I’m glad we did.” Armorcast Products has plans to relocate to a larger facility in the summer of 2019, and according to Paul, “Citizens Business Bank was critical in us being able to do that.” To facilitate their transition, Armorcast implemented a Bridge Loan to purchase the new building, which allowed them the time to find a buyer and exchange their current facility as part of a 1031 Reverse Exchange transaction. Paul relied heavily on the expertise of the Bank’s Relationship Management team, and their ability to provide the necessary financing to make the purchase a reality. Valued Partner since 1971 19 19 19 California Custom Fruits and Flavors, Inc. Terry and Rose Ann Hall were ambitious entrepreneurs who recognized a need for a reliable large- scale supplier of processed fruit bases for yogurts. In 1984, they embarked on a new business venture in Irwindale, CA. The Halls named their company California Custom Fruits and Flavors, and as the business expanded in the 1990s, they branched out into other markets, including flavor bases for ice creams and fruit fillings for industrial bakeries. Today, the fruit processing and flavorings from California Custom Fruits and Flavors can be found in a multitude of products at major grocery chains and retail stores throughout the country. Rose Ann became the sole owner of the company in 2003, and she still has an active role in day- to-day operations. At her request, California Custom Fruits and Flavors entered into a banking relationship with Citizens Business Bank in 2014. Not long after, they began implementing Treasury Management Services to protect and manage their assets. The company has also obtained Term Loans to help finance the growth and needs of their business. Despite utilizing a multitude of other financial solutions, they speak most highly about the personal service provided by the Bank. “Other banks just do not have the same personal touch as Citizens Business Bank,” says Jim Fragnoli, who joined California Custom Fruits and Flavors in 2008 as their first Chief Financial Officer. “Other banks just do not have the same personal touch.” Jim describes the company’s current relationship with Citizens Business Bank as a partnership, and he emphasizes how genuinely connecting with a customer can make all the difference. “Services are the same everywhere, but the personal service is the number one factor for our relationship,” says Jim. “Even though the Bank is large, I’m treated like they’re a small bank,” he adds. If there is ever a business or banking roadblock, a Relationship Manager from the Bank is always standing by, ready to help out. “Rose Ann will pick up the phone and call, and it gets resolved. She knows she has that with Citizens Business Bank.” 20 20 20 Left to right: Rose Ann Hall and Mike Mulhausen In the four years since California Custom Fruits and Flavors began a banking relationship with Citizens Business Bank, they’ve had remarkable growth. In the past year alone, their revenue increased more than seven percent. Operations are already outgrowing their 86,000 square- foot headquarters facility in Irwindale, and the company has plans to expand to the Midwest to better handle their ever-increasing base of national customers. Partnerships like these are shining examples of the level of service the Bank strives for with every valued customer. Valued Partner since 2014 21 21 21 Veldhuis Dairies LLC In the early 1980s, Jacob and Anna Veldhuis packed up their life in the Netherlands and brought their family to the United States. They arrived in California in pursuit of the American dream, pouring everything they had into starting a dairy farm. Over the next two decades, their family grew, and so did their business. Left to right: Mark & Fransisca Vander Meulen, Ruurd & Tabitha Veldhuis, Jacob & Anna Veldhuis, and Hessel Veldhuis Valued Partner since 2001 22 22 22 In 1984, Jacob and Anna had moved to Washington, where they were running a single dairy facility. In 2000, Veldhuis Dairies began on a path of significant expansion, and they eventually reached a point that they were unable to keep up with their ongoing success. They started looking for a lender who would understand their needs and recognize the value of a long-term banking relationship. Their accountant suggested one bank in particular: one founded by a fellow dairy farmer, with a solid reputation amongst dairy and livestock businesses. “They’ve always taken care of us.” They chose Citizens Business Bank to accommodate their business expansion. The Bank was able to work closely with the family to offer customized solutions tailored to their unique business needs. “They’ve always taken care of us,” the whole family agrees, “they processed loans quickly, and whenever we started a project they came through.” With the help of Commercial Lending solutions, Veldhuis Dairies was able to acquire additional dairy facilities for their growing business. Today, Veldhuis Dairies is truly a family-owned and family-run business. “We don’t believe in titles,” says Fransisca. Instead of having individual titles, Jacob and Anna, along with their daughter Fransisca and her husband Mark, their son Ruurd and his wife Tabitha, and their son Hessel, all consider themselves owner/operators of Veldhuis Dairies. In the seven years since becoming a customer of the Bank’s Dairy & Livestock Industries Group, Veldhuis Dairies has more than doubled in size. The family employs approximately 225 workers to tend to 19,000 cows across their six facilities in Washington. They’ve added three new dairies in the last five years alone, and with the Bank’s support they plan to open another soon. 23 2323 24 SERVICES The Power of Relationship Banking Our founders believed in the power of building long-lasting and genuine relationships with our customers. This belief is what still drives our success today. In fact, our financial experts devote considerable time to learning about our customers and their business goals. When we get to know our customers, we are able to offer them the products and services they need to successfully grow their business. Throughout the years, we have learned that a one-size-fits-all approach to banking rarely produces the best result. Each business has their own unique set of needs. In response, we have assembled an extensive array of banking, lending, and investment services for a wide range of industries. This way we are able to determine the best path for our customers. We offer a personalized banking experience tailored to their individual business needs. 2525 FRAUD PREVENTION Check Positive Pay Payee Positive Pay Reverse Positive Pay ACH Positive Pay CardValet® Safe Deposit Box DATA MANAGEMENT Business Online Banking Mobile Banking eStatements Image Services Electronic Data Interchange Account Reconcilement Services Custom Information Reporting Disbursement Reporting LIQUIDITY Business Checking Investment Checking Analysis Business Checking Business Savings Premium Money Market Certificate of Deposit Zero Balance Account CDARS® Attorney Client Trust Sweep to Investment* INTERNATIONAL Letter of Credit Foreign Exchange Services Documentary Collections Wire Transfer BUSINESS BANKING PERSONAL PAYABLES Business Bill Pay Debit Card ACH Origination - Credit Wire Transfer Business Credit Card Tax Payment Services Commercial Card Apple Pay® RECEIVABLES Remote Deposit Capture ACH Origination - Debit Merchant Services Bill Pay Consolidation Smart Safe Advanced Credit Lockbox Image Cash Letter Cash Vault Services ONLINE, CARD & MORE Online Banking & Bill Pay Mobile Banking/Mobile App Popmoney® Debit Card Moneypass® Credit Card CardValet® Safe Deposit Box CHECKING Personal Checking 55 Checking Investment Checking DEPOSIT Premium Money Market Personal Savings Minor Trust Savings Certificate of Deposit Individual Retirement Account Health Savings Account Preferred Choice Checking CDARS® CDARS is a registered service mark of Promontory Interfinancial Network, LLC. Popmoney is a registered trademark of Fiserv, Inc. MoneyPass is a registered trademark of Elan Financial Services. CardValet is a registered trademark of Fiserv, Inc. 26 Member FDIC COMMERCIAL Real Estate Commercial Construction Equipment Revolving Lines of Credit Asset-Based SPECIALTY Dairy & Livestock Agricultural Small Business Administration PERSONAL Home Purchase Home Refinance Home Equity Line of Credit Equal Housing Lender NMLS# 417441 LENDING INVESTING CITIZENSTRUST INVESTMENT SERVICES* Business & Succession Planning Financial Planning Personal Investing Retirement Planning CITIZENSTRUST WEALTH MANAGEMENT* Asset Management Charitable Services Estate Planning Securities and advisory services offered through LPL Financial, a registered investment advisor, Member FINRA/SIPC. Insurance products offered through LPL Financial or its licensed affiliates. Citizens Business Bank and CitizensTrust Investment Services are not registered broker/dealers and are not affiliated with LPL Financial. Citizens Business Bank is not a registered broker/dealer. Trust and Wealth Management are provided by CitizensTrust Wealth Management. * 272727 Not FDIC InsuredNot Bank GuaranteedMay Lose ValueCOMMUNITY COMMITMENT Making a Positive Difference Citizens Business Bank has been serving the people and businesses of California since our founding more than 40 years ago. Along the way we’ve learned a lot, and our bank has grown exponentially, but we will never forget our roots in community banking. To us, a community goes beyond the group of people who happen to share a hometown. We believe that community is about improving the quality of life for our neighbors. BIG BROTHERS BIG SISTERS OF THE INLAND EMPIRE One of the many ways we support our communities is through an ongoing partnership with the oldest volunteer mentoring agency in the nation. Associates from the Bank work together with Big Brothers Big Sisters of the Inland Empire to mentor young women from Ontario High School, where 86.4% of the students qualify for the Free or Reduced Price Meal Program. Together, we are helping them develop invaluable life skills, such as starting and maintaining a responsible financial lifestyle. These mentoring sessions provide career development and financial education, creating our region’s strong future workforce. The Citizens Experience is the difference between simply meeting our customers’ needs and ensuring we have exceeded their expectations. It is our way of recognizing the associates who go above and beyond to deliver exceptional service. As part of the Citizens Experience program, the prestigious 28 At Citizens Business Bank, we are passionate about the communities we serve, and it shows. We are committed to strengthening our communities by offering superior financial services, establishing partnerships with local organizations, and consistently encouraging volunteerism at every level of the Bank. Each year, our associates dedicate thousands of hours of their own time to local organizations and charitable causes. Our goal is to make a positive difference in the places we live and work, so current generations can experience a higher quality of life, and future generations can inherit a better world. AMPAC TRI-STATE CDC AmPac Tri-State CDC is a Certified Community Development Financial Institution, and also the only faith-based Certified Development Company in the country. They work with the Small Business Administration (SBA) and financial institutions to provide funding for businesses in their region. As a community leader and integral part of the local economy, this nonprofit organization facilitates business growth by providing SBA 504 loans, which small businesses can use to acquire land, buildings, and equipment. Our partnership with AmPac provides the nonprofit with a revolving line of credit, enabling them to fund approved loans more efficiently. We also provide grant support for small business technical assistance programs and term loans for funding loans retained in AmPac’s portfolio. Borba Cup is awarded annually to an associate who exemplifies our core values and demonstrates a deep commitment to high-quality customer service. For 2018, the Borba Cup was awarded to Bryan Ward, Vice President & Credit Officer in our Real Estate Banking Group. Bryan Ward Vice President Credit Officer Real Estate Banking Group 2929 LEADERSHIP TEAM With an average banking experience of more than 33 years, Citizens Business Bank’s leaders form the foundations of success for the entire company. As individuals, each member of the leadership team contributes distinct perspectives and decades of Christopher D. Myers President Chief Executive Officer E. Allen Nicholson Executive Vice President Chief Financial Officer David A. Brager Executive Vice President Sales Division David C. Harvey Executive Vice President Chief Operations Officer David F. Farnsworth Executive Vice President Chief Credit Officer R. Daniel Banis Executive Vice President CitizensTrust Yamynn De Angelis Executive Vice President Chief Risk Officer Ted J. Dondanville Executive Vice President Senior Lender Hector G. Gutierrez, Esq. Executive Vice President Deputy Chief Credit Officer Timothy B. Noone Executive Vice President Specialty Banking Richard H. Wohl Executive Vice President General Counsel Elsa I. Zavala Executive Vice President Chief Information Security Officer G. Larry Zivelonghi Executive Vice President Dairy & Livestock Industries 30 30 unmatched business and financial experience to the Bank. As a team, they’re at the forefront of driving organizational growth, and their focus is on the long-term success of the Bank, our customers, our associates, and the communities we serve. Jeffrey S. Boyer Senior Vice President Los Angeles Region-North Gilbert W. Estrada Senior Vice President Inland Empire Region Donald E. Evenson Senior Vice President Chief Investment Officer CitizensTrust Richard M. Favor Senior Vice President Central Coast Region Deborah G. Gallagher Senior Vice President Small Business Administration David R. Klatt Senior Vice President Chief Information Officer Joyce Y. Kwon Senior Vice President Director of Human Resources Daniel Limon Senior Vice President Real Estate Banking Michael B. Mulcahy Senior Vice President Los Angeles Region-Metro Mark C. Richardson Senior Vice President Real Estate Banking LaVon Short Senior Vice President Sales and Marketing Michael D. Stain Senior Vice President Central Valley Region David S. Stong Senior Vice President San Diego Region Robert E. Zeltner Senior Vice President Orange County Region 31 31 32 FINANCIAL SUMMARY 3333 CONSOLIDATED BALANCE SHEETS CVB FINANCIAL CORP. AND SUBSIDIARIES (Dollars in thousands, except share amounts) DECEMBER 31, 2018 2017 Assets Cash and due from banks $ 144,008 $ 119,841 Interest-earning balances due from Federal Reserve Total cash and cash equivalents Interest-earning balances due from depository institutions Investment securities available-for-sale, at fair value (with amortized cost of $1,757,666 at December 31, 2018, and 19,940 163,948 7,670 24,536 144,377 17,952 $2,078,131 at December 31, 2017) 1,734,085 2,080,985 Investment securities held-to-maturity (with fair value of $721,537 at December 31, 2018, and $819,215 at December 31, 2017) Total investment securities Investment in stock of Federal Home Loan Bank (FHLB) 744,440 2,478,525 17,688 829,890 2,910,875 17,688 Loans and lease finance receivables 7,764,611 4,830,631 Allowance for loan losses Net loans and lease finance receivables Premises and equipment, net Bank owned life insurance (BOLI) Accrued interest receivable Intangibles Goodwill Other real estate owned (OREO) Income taxes Other assets (63,613) 7,700,998 58,193 220,758 30,649 53,784 666,539 420 62,174 67,807 (59,585) 4,771,046 46,166 146,486 22,704 6,838 116,564 4,527 40,046 25,317 Total assets $ 11,529,153 $ 8,270,586 34 Liabilities and Stockholders’ Equity Liabilities: Deposits: Noninterest-bearing Interest-bearing Total deposits Customer repurchase agreements Other borrowings Deferred compensation Junior subordinated debentures Other liabilities Total liabilities Commitments and Contingencies Stockholders’ Equity DECEMBER 31, 2018 2017 $ 5,204,787 $ 3,846,436 3,622,703 2,700,417 8,827,490 6,546,853 442,255 280,000 20,033 25,774 82,411 553,773 - 18,223 25,774 56,697 9,677,963 7,201,320 Common stock, authorized, 225,000,000 shares without par; issued and outstanding 140,000,017 at December 31, 2018, and 110,184,922 at December 31, 2017 Retained earnings Accumulated other comprehensive (loss) income, net of tax 1,293,669 575,805 (18,284) 573,453 494,361 1,452 Total stockholders’ equity 1,851,190 1,069,266 Total liabilities and stockholders’ equity $ 11,529,153 $ 8,270,586 35 CONSOLIDATED STATEMENTS OF EARNINGS CVB FINANCIAL CORP. AND SUBSIDIARIES (Dollars in thousands, except per share amounts) Interest income: Loans and leases, including fees $ 293,284 $ 214,126 FOR THE YEAR ENDED DECEMBER 31, 2018 2017 Investment securities: Investment securities available-for-sale Investment securities held-to-maturity Total investment income Dividends from FHLB stock Interest-earning deposits with other institutions and federal funds sold Total interest income Interest expense: Deposits Borrowings and customer repurchase agreements Junior subordinated debentures Total interest expense 45,988 18,901 64,889 2,045 1,642 361,860 9,825 2,067 923 12,815 Net interest income before provision for (recapture of) loan losses 349,045 Provision for (recapture of) loan losses 1,500 Net interest income after provision for (recapture of) loan losses 347,545 Noninterest income: Service charges on deposit accounts Trust and investment services Bankcard services BOLI income Gain (loss) on OREO, net Other Total noninterest income 17,070 8,774 3,485 4,018 3,546 6,588 43,481 49,778 21,015 70,793 1,375 932 287,226 6,044 1,579 673 8,296 278,930 (8,500) 287,430 15,809 9,845 3,406 3,420 6 9,632 42,118 36 Noninterest expense: Salaries and employee benefits Occupancy and equipment Professional services Software licenses and maintenance Marketing and promotion Recapture of provision for unfunded loan commitments Amortization of intangible assets Acquisition related expenses Other Total noninterest expense Earnings before income taxes Income taxes Net earnings Basic earnings per common share Diluted earnings per common share Cash dividends declared per common share FOR THE YEAR ENDED DECEMBER 31, 2018 2017 100,601 20,841 6,477 8,655 5,302 (250) 5,254 16,404 16,627 179,911 21 1 ,1 1 5 59,1 1 2 87,065 16,756 5,940 6,385 4,839 (400) 1,329 2, 2 5 1 16,588 140,753 188,795 84,384 $ 152,003 $ 104, 4 1 1 $1.25 $1.24 $0.56 $0.95 $0.95 $0.54 37 LOCATIONS Citizens Business Bank has 61 business financial centers serving the Inland Empire, Los Angeles County, Orange County, San Diego County, Ventura County, Santa Barbara County, and the Central Valley area of California. RIVERSIDE COUNTY Corona 951.734.6120 Riverside 951.683.2112 SAN BERNARDINO COUNTY Apple Valley 760.961.6900 Chino 909.627.7316 Fontana 909.350.8080 Ontario Airport 909.980.1080 Redlands 909.307.8100 San Bernardino 909.381.5561 San Bernardino (Tri-City) 909.888.6363 Upland 909.946.6921 LOS ANGELES COUNTY Arcadia 626.445.7350 Burbank (Airport) 818.295.3200 Burbank (Toluca Lake) 818.843.0707 Century City 310.436.3480 Commerce 323.832.1820 Covina 626.915.8931 El Segundo 310.322.2222 Glendale 818.550.0400 38 La Cañada Flintridge 818.952.6085 Lancaster 661.723.2000 Los Angeles 213.542.3760 Manhattan Beach 310.802.4015 Monrovia 626.303.4661 Pasadena 626.405.4915 Pomona 909.629.4151 San Gabriel 626.286.3166 San Marino 626.281.0083 Santa Clarita 661.295.2840 Santa Fe Springs 562.903.8120 South Bay (Torrance) 310.217.6000 South El Monte 626.442.4470 South Pasadena 626.403.5900 San Fernando Valley (Encino) 818.905.5760 Warner Center (Woodland Hills) 818.466.6700 ORANGE COUNTY Anaheim 714.634.2265 Brea 714.996.8150 Fullerton 714.773.0600 Huntington Beach 714.622.6060 Laguna Beach 949.494.9474 Laguna Hills (Spectrum) 949.581.4444 Laguna Niguel 949.249.0740 Newport Beach 949.440.5200 Orange (Katella) 714.288.5203 Orange (Plaza) 714.288.5300 Santa Ana 714.967.7222 SAN DIEGO COUNTY VENTURA COUNTY San Diego (Carmel Valley) 858.847.6500 San Diego (Downtown) 858.350.8650 Camarillo 805.482.7600 Oxnard 805.485.7600 Ventura 805.477.7600 Westlake Village 805.557.7600 SANTA BARBARA COUNTY KERN COUNTY Santa Barbara 805.324.5920 Bakersfield (Downtown) 661.281.0300 Bakersfield (Stockdale) 661.281.0325 Bakersfield (Rosedale) 661.589.9040 Delano 661.725.8888 TULARE COUNTY MADERA COUNTY Tulare 559.687.3350 Visalia 559.622.9000 Madera 559.664.9222 SAN JOAQUIN COUNTY FRESNO COUNTY Stockton 209.851.3740 Fresno 559.261.0222 CITIZENSTRUST Newport Beach 949.440.5231 Ontario 909.483.4342 Pasadena 626.564.6263 Visit cbbank.com/locations for more information. 393939 CORPORATE INFORMATION Transfer Agent Computershare 250 Royall Street Canton, MA 02021 866.280.0564 computershare.com/investor NASDAQ Listing CVB Financial Corp. stock is listed on the NASDAQ under the symbol of CVBF. The securities listed consist of one class of common stock. As of December 31, 2018, there were 140,000,017 shares of common stock outstanding to approximately 12,938 shareholders. Stockholder Information Stockholders may obtain, without charge, Form 10-K of CVB Financial Corp. on written request to Myrna DiSanto, Corporate Secretary. Mailing Address CVB Financial Corp. P. O. Box 51000 Ontario, CA 91761 Street Address 701 N Haven Avenue, Suite 350 Ontario, CA 91764 909.980.4030 Phone: 877.422.2265 Fax: 909.481.2130 cbbank.com Copies of this annual report and interim reports are available upon written request, or by visiting our website at cbbank.com/investors. Equal Housing Lender Member FDIC 40 OUR MISSION The mission of Citizens Business Bank is to achieve superior performance and rank in the top ten percent of all financial institutions in the nation in return on equity and return on assets. This will be achieved by delivering the finest in financial products and services through relationship banking commitments with businesses and professionals in the Inland Empire, Los Angeles County, Orange County, San Diego County, Ventura County, Santa Barbara County, and the Central Valley area of California. It will be supported by an unqualified commitment to our five core values of financial strength, superior people, customer focus, cost-effective operation, and having fun. 701 N Haven Avenue | Ontario, CA 91764 | 909.980.4030 | cbbank.com

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