CVB Financial (NASDAQ:CVBF) reported fourth-quarter 2025 net earnings of $55 million, or $0.40 per share, extending what management said was the company’s 195th consecutive quarter of profitability. The company also previously declared a $0.20 per share dividend for the quarter, marking its 145th consecutive quarter of paying a cash dividend.
President and CEO Dave Brager said results reflected a return on average tangible common equity of 14.4% and a return on average assets of 1.40% for the quarter. Net earnings increased from $52.6 million, or $0.38 per share, in the third quarter of 2025 and from $50.9 million, or $0.36 per share, in the year-ago quarter.
Earnings drivers: net interest income up, noninterest income down
For the fourth quarter, the company reported net interest income of $122.7 million, compared with $115.6 million in the third quarter of 2025 and $110.4 million in the fourth quarter of 2024. CFO Allen Nicholson said average earning assets increased by $153 million from the prior quarter and the earning asset yield rose 11 basis points to 4.43%.
Loan yields increased in the quarter. Nicholson said the fourth-quarter loan yield was 5.47%, up from 5.25% in the prior quarter. Excluding $3.2 million of interest collected on a non-performing loan that paid off during the quarter, management said the yield on loans would have increased 7 basis points quarter over quarter.
Interest expense declined to $33.3 million from $34.5 million in the third quarter, as cost of funds decreased to 1.01% from 1.05%. Nicholson attributed the lower expense to declines in interest-bearing deposit costs (down 17 basis points) and customer repurchase agreement costs (down 24 basis points), even as average interest-bearing balances rose $232 million.
Noninterest income totaled $11.2 million, down $1.8 million sequentially and down $1.9 million from the year-ago quarter. Brager said trust and investment services income grew $156,000, or 4%, from the third quarter and rose $519,000, or 15%, year over year. However, bank-owned life insurance income fell $1.1 million from the third quarter due to annual amortization of revenue enhancements, and “other income” declined by $800,000 from the prior quarter. Management pointed to the quarter’s $2.8 million loss on sale of investment securities, compared to an $8.0 million loss on sale in the third quarter, as well as $6.0 million of other income in the third quarter from a legal settlement.
Loan growth accelerated; credit metrics improved
Total loans were $8.7 billion at Dec. 31, 2025, up $228 million, or 2.7%, from the end of the third quarter and up $163 million, or 2%, from the end of 2024. Management said growth was broad-based across categories, with seasonal increases in dairy and livestock borrowings a notable contributor.
- Dairy and livestock loans increased $139 million from the end of the third quarter, driven by higher line utilization that rose from 64% to 78%.
- C&I line utilization increased from 28% to 32%, and C&I loans rose $34 million from the end of the third quarter.
- Commercial real estate loans increased by more than $39 million quarter over quarter.
- SBA 504 loans increased by $17 million from the third quarter.
Brager said loan originations in 2025 were about 70% higher than in 2024, and fourth-quarter production was about 15% higher than the third quarter. He added that loan pipelines remained strong heading into 2026, though rate competition for high-quality loans “continues to be intense.” Fourth-quarter loan originations carried average yields of about 6.25%, consistent with the prior quarter, management said.
On asset quality, Brager said total non-performing and delinquent loans decreased by $20 million to $8 million at Dec. 31, 2025. A $20 million non-performing loan was paid in full early in the quarter, and the sale of the underlying building collateral resulted in the bank receiving all principal plus $3.2 million of interest income. Classified loans declined to $52.7 million at year-end, down from $78.2 million at Sept. 30, 2025 and $89.5 million at Dec. 31, 2024. Classified loans represented 0.6% of total loans at year-end.
The allowance for credit losses (ACL) was $77 million at Dec. 31, or 0.89% of gross loans, down from $79 million, or 0.94%, at Sept. 30. Nicholson said the decline reflected a $2.5 million recapture of credit losses and net recoveries of $325,000 in the quarter. He added that the ACL equaled 133% of combined non-performing assets and classified loans.
Management also discussed its economic forecast inputs, noting the company uses a blend of Moody’s forecasts with the largest weighting on the baseline scenario. Nicholson said the unemployment rate is forecast to reach 5% by early 2026 and remain above 5% through 2028, while commercial real estate prices are forecast to continue declining through the third quarter of 2026 before growing through 2029.
Deposits: seasonal shifts, costs moved lower
Average total deposits and customer repurchase agreements were $12.6 billion in the fourth quarter, compared with $12.5 billion in the third quarter. Brager said average non-interest-bearing deposits declined $122 million sequentially, while interest-bearing non-maturity deposits and customer repurchase agreements grew $234 million. Non-interest-bearing deposits averaged 58% of total deposits in the fourth quarter, compared with 59% in both the third quarter of 2025 and the fourth quarter of 2024.
At Dec. 31, total deposits and customer repurchase agreements were $12.6 billion. Management said non-interest-bearing deposits declined about $440 million from the end of the third quarter due to typical year-end seasonality, while interest-bearing deposits and customer repurchase agreements increased about $430 million.
In the Q&A, Brager said the company did not see a behavioral shift of customers moving large relationships from non-interest-bearing to interest-bearing accounts, attributing the change primarily to normal seasonality tied to items like bonuses and tax payments. He and Nicholson emphasized that quarterly average balances are more informative than period-end figures because customers move “fairly large amounts of money” throughout a quarter.
The cost of deposits and repos was 86 basis points in the fourth quarter, down from 90 basis points in the third quarter and 97 basis points in the year-ago quarter.
Expenses, securities repositioning, and capital actions
Noninterest expense was $62.0 million in the fourth quarter, up from $58.6 million in the third quarter and $58.5 million in the fourth quarter of 2024. Brager said expenses included $1.6 million of one-time merger-related costs tied to the pending merger with Heritage Bank of Commerce and a $1.0 million provision for off-balance sheet reserves, compared with a $500,000 provision in the third quarter. Excluding acquisition expense and the off-balance sheet reserve provision, management said operating expenses increased 2.3% from the third quarter and 1.6% from the year-ago quarter, and the company achieved positive operating leverage of 2% versus the prior quarter and 6% versus the year-ago period.
On the securities portfolio, Nicholson said available-for-sale investment securities totaled $2.68 billion at Dec. 31. During the quarter, the bank sold $30 million of securities with an average book yield of 1.5%, realizing a $2.8 million loss, and purchased $239 million of new securities at an average book value yield of about 4.75%. The unrealized loss on AFS securities decreased to $308 million at Dec. 31 from $334 million at Sept. 30. Nicholson said the net after-tax impact of fair value changes in AFS securities and derivatives drove a $20 million increase in other comprehensive income during the quarter. Held-to-maturity investments totaled $2.27 billion at year-end, $109 million lower than Dec. 31, 2024.
Shareholders’ equity was $2.3 billion at Dec. 31, up $109 million from the end of 2024, including an $84 million increase in other comprehensive income. The company repurchased 1.96 million shares during the fourth quarter at an average price of $18.80, bringing full-year repurchases to 4.3 million shares at an average price of $18.60. During the Q&A, management said it has been out of the market since early December due to the upcoming S-4 prospectus, and the board will reevaluate repurchases after the merger closes.
At Dec. 31, the tangible common equity ratio was 10.3%, the common equity tier-one capital ratio was 15.9%, and the total risk-based capital ratio was 16.7%.
Regarding the pending merger with Heritage Bank of Commerce, Brager said preparations were proceeding as planned, with management still anticipating a second-quarter closing and second-quarter systems conversion. In response to an analyst question about potential day-one balance sheet restructuring, Brager reiterated that the company plans to sell approximately $400 million of Heritage single-family loans that were purchased and carry long duration; management said it intends to reinvest proceeds into shorter-duration investments. Beyond that, the company did not discuss additional day-one balance sheet actions.
About CVB Financial (NASDAQ:CVBF)
CVB Financial Corp is the bank holding company for Citizens Business Bank, a California-based commercial bank whose operations trace back to 1974. Headquartered in Ontario, California, the company provides a broad range of banking and financial services through its community-focused branch network. As a publicly traded company on the NASDAQ under the symbol CVBF, CVB Financial oversees strategic planning, corporate governance and long-term growth initiatives for its subsidiary.
The company’s core business activities include commercial lending, real estate financing, equipment leasing and Small Business Administration (SBA) loan programs.
