CVB Financial (NASDAQ:CVBF) reported first-quarter 2026 net earnings of $51 million, or $0.38 per share, as the company highlighted year-over-year improvement in several core operating metrics and provided early commentary on the recently closed acquisition of Heritage Bank of Commerce.
Chief Executive Officer David Brager said the quarter marked the company’s “196th consecutive quarter of profitability,” and noted the company declared a $0.20 per share dividend, its “146th consecutive quarter of paying a cash dividend.” Brager said first-quarter return on average tangible common equity was 13.4%, and return on average assets was 1.33%.
Margin expansion and pre-tax, pre-provision income growth
Chief Financial Officer Allen Nicholson reported pre-tax, pre-provision income of $71.6 million, compared to $67.5 million in the first quarter of last year. After adjusting for acquisition expense and gains on other real estate owned (OREO), Nicholson said operating income grew by $8 million year over year, reflecting “positive operating leverage of 6%.”
Net interest income totaled $117.8 million, up from $110.4 million in the year-ago quarter but down from $122.7 million in the fourth quarter of 2025. Nicholson attributed the linked-quarter decline in interest income to “two fewer calendar days in the first quarter,” a $134 million decrease in earning assets, and the absence of $3.2 million of non-accrued interest paid in the prior quarter.
Interest expense declined to $31.3 million from $33.3 million in the fourth quarter of 2025 and $32.6 million a year earlier. Nicholson said the cost of funds decreased to 97 basis points from 1.01% in the prior quarter.
Loan growth led by commercial real estate and agribusiness; originations accelerate
Total loans were $8.64 billion at March 31, 2026, a $280 million, or 3.3%, increase from the end of the first quarter of 2025, Brager said. He attributed the year-over-year rise primarily to:
- $141 million growth in commercial real estate loans
- $62 million increase in dairy and livestock and agribusiness loans
- $43 million increase in construction loans
- $34 million increase in SBA 504 loans
- $10 million increase in C&I loan outstandings
Quarter over quarter, total loans declined by $56 million from year-end 2025, driven by a $117 million seasonal decrease in dairy and livestock and agribusiness balances. Brager said the seasonal pattern is reflected in the agribusiness line utilization rate declining to 69% at March 31, 2026 from 78% at year-end. C&I balances decreased by $21 million as utilization moved to 30% from 32%.
Brager said loan originations “started off the year at a strong pace,” running approximately 90% higher than the first quarter of 2025 and 15% higher than the fourth quarter of 2025. He added that pipelines “remain relatively strong,” though “rate competition for high-quality loans continues to be intense.” In the Q&A, Brager said competitive pressure has contributed to slightly lower origination yields even as some rates moved higher.
Loan originations in the first quarter carried average yields of about 6%, roughly 25 basis points lower than the prior quarter. Brager said the company expects origination yields to remain “around that 6% range going forward,” depending on mix between real estate and C&I.
Deposits mix shifts; costs edge lower
Average total deposits and customer repurchase agreements were $12.5 billion in the first quarter of 2026, compared to $12.2 billion in the year-ago quarter and $12.6 billion in the fourth quarter of 2025, Brager said.
Non-interest-bearing deposits declined by $112 million on average from the first quarter of 2025 and by $107 million from the fourth quarter of 2025. Brager said non-interest-bearing balances represented 58% of total deposits in both the first quarter of 2026 and the fourth quarter of 2025, compared with 59% a year earlier. Interest-bearing non-maturity deposits and customer repurchase agreements increased by $400 million on average year over year.
The cost of deposits and repurchase agreements was 82 basis points, down from 86 basis points in the prior quarter and 87 basis points in the year-ago period, according to Brager.
Credit quality, reserves, and portfolio positioning
Credit metrics remained low, though management noted some migration within criticized assets. Brager said non-performing loans increased $1.5 million to $6.1 million, or 0.07% of total loans, primarily due to the downgrade of a $2.9 million C&I loan for which the company established a specific reserve.
Classified loans rose to $83.1 million at March 31, 2026 from $52.7 million at December 31, 2025; they were $94.2 million a year earlier. Brager noted classified loans remained “less than one%” of total loans. In response to analyst questions, Brager said the non-performing C&I credit was impacted by one of the borrower’s customers declaring bankruptcy, and that the bank had “shored up” collateral. He also said the increase in classified loans was “really centered in two relationships,” both C&I, with the bank in “very good collateral positions.”
The allowance for credit losses totaled $80.2 million at March 31, 2026, up from $77.0 million at year-end 2025. Nicholson said the increase was “primarily due to the establishment of a specific reserve totaling $3.2 million.” He also outlined key aspects of the company’s Moody’s-based economic forecast, including real GDP forecast below 1% in the second half of 2026, unemployment reaching 5% by mid-2026 and remaining above 5% through 2028, and commercial real estate prices projected to decline through 2026 before growing in the back half of 2027.
Investment securities totaled $4.8 billion, down $116 million from year-end. Nicholson said unrealized losses on available-for-sale securities increased to $310 million from $308 million. He also noted $700 million in fair value hedges generated negative carry in the quarter, reducing interest income by $1.1 million versus the first quarter of 2025 and $750,000 versus the fourth quarter of 2025.
Heritage integration, capital priorities, and expenses
Management spent much of the Q&A discussing the Heritage Bank of Commerce merger, which closed just days before the call. Brager said the initial focus is “acclimat[ing] all the new associates,” training on processes and relationship structuring, and integrating leadership. Clay Jones, now president, said priorities include staying close to customers and ensuring associates “are keeping pace with the integration and the training.”
Brager said the company had announced a sale of Heritage’s single-family mortgage pools and, in response to a question, said management expects those mortgages to be “off the balance sheet by the end of the quarter.” He added the company is still evaluating broader balance sheet optimization and expects to provide more clarity in future quarters.
On capital management, Brager said integration is the company’s “number one focus,” while also acknowledging “an enormous amount of capital.” He noted the company repurchased 4.2 million shares last year and said buybacks will be part of the strategy “going forward,” with management evaluating capital actions as the combined balance sheet becomes clearer.
Nicholson reported shareholders’ equity of $2.3 billion at March 31, 2026, up $93 million from a year earlier, including a $52 million increase in other comprehensive income. The tangible common equity ratio was 10.5% and the common equity tier 1 ratio was 16.3%. Tangible book value per share increased 9% over 12 months to $11.42 from $10.45, he said.
Non-interest expense was $60.6 million and included $1.1 million in one-time merger acquisition expense related to Heritage and $500,000 for off-balance sheet reserves, Brager said. Regulatory assessment expense declined $1.6 million due to the unwinding of the remaining accrual for the special FDIC assessment. Excluding acquisition expense and the off-balance sheet reserve provision, Brager said core operating expense was “essentially flat” compared with both the prior quarter and the year-ago quarter. The efficiency ratio improved to 45.8% from 46.7% a year earlier.
In closing remarks, Brager called the Heritage transaction “the most strategic and largest acquisition by asset size in our history,” and said it advances the bank’s objective of expanding in California by entering the Bay Area.
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.
