CVB Financial Q4 2023 Earnings Call Transcript

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Provided by Quartr
January 25, 2024

There are 7 speakers on the call.

Operator

Good morning, ladies and gentlemen, and welcome to the 4th Quarter and Year Ended 2023 CVB Financial Corporation and its subsidiary Citizens Business Bank Earnings Conference Call. My name is Sherry, and I'm your operator for today. Please be advised that today's call is being recorded. I would now like to turn the presentation over to your host for today's call, Christina Carabino. You may proceed.

Speaker 1

Thank you, Sherry, and good morning, everyone. Thank you for joining us today to review our financial results for the 4th quarter and year ended 2023. Joining me this morning are Dave Reagor, President and Chief Executive Officer and Alan Nicholson, Executive Vice President and Chief Financial Officer. Our comments today will refer to the financial information that was included in the earnings announcement released yesterday. To obtain a copy, please visit our website at www.cbbank.com and click on the Investors tab.

Speaker 1

The speakers on this call claim the protection of the Safe Harbor provisions contained in the Private Securities Litigation Reform Act of 1995. For a more complete discussion of the risks and uncertainties that may cause actual results to differ materially from our forward looking statements, Please see the company's annual report on Form 10 ks for the year ended December 31, 2022, and in particular, the information set forth and Item 1A Risk Factors therein. For a more complete version of the company's Safe Harbor disclosure, please see the company's earnings release issued in connection with this call. Now I will turn the call over to Dave Breger. Dave?

Speaker 2

Thank you, Christina, and good morning, everyone. For the Q4 of 2023, We reported net earnings of $48,500,000 or $0.35 per share, representing our 187th consecutive quarter of profitability. We previously declared a $0.20 per share dividend for the Q4 of 2023, representing our 137th consecutive quarter of paying a cash dividend to our shareholders. Our net earnings $48,500,000 or $0.35 per share compared to $57,900,000 for the Q3 of 2023 or $0.42 per share and $66,200,000 for the year ago quarter or $0.47 per share. 4th quarter earnings would have been $0.39 Per share, excluding the $9,000,000 expense related to the FDIC special assessment, we produced a return on average tangible common equity of 16.21 percent and a return on average assets of 1.19% for the 4th quarter.

Speaker 2

Net income was $221,400,000 for the year ended 2023, a $14,000,000 decrease compared to 2022. When excluding the $9,200,000 FDIC special assessment, the decrease would have been $7,600,000 Diluted earnings per share were $1.59 for 2023 compared to $1.67 for 2022. Our 4th quarter pretax pre provision income decreased $10,000,000 from the Q3 of 2023, primarily due to the expense accrual for the FDIC special assessment. We continue to be among the industry leaders with respect to expense control As our efficiency ratio for the Q4 and full year 2023 was 40.98% 40.3% respectively after excluding the FDIC special assessment. Our net interest margin declined by 5 basis points from the Q3 of 2023 to 3.26 percent for the 4th quarter.

Speaker 2

The decrease in our net interest margin was the net result of 17 basis point increase in our cost of funds, which offset a 12 basis point increase in our earning assets yield. Our net interest margin for all of 2023 was 3.31%, essentially the same as our 2022 net interest margin of 3.3%. Total loans outstanding at the end of 2023 increased from the end of the Q3 of 2023 by approximately $30,000,000 to $8,900,000,000 Our allowance for credit losses decreased to approximately $87,000,000 on December 31, based on net charge offs of 153 dollars and a $2,000,000 recapture provision for credit losses in the Q4 of 2023. Average total deposits for the 4th quarter decreased by approximately $429,000,000 compared to the Q3 of 2023. Our average non interest bearing deposits continued to be greater than 61% of our average total deposits.

Speaker 2

At December 31, 2023, our total deposits were $11,400,000,000 a 9.25 $1,000,000 decrease from September 30, 2023. During the latter half of the fourth quarter, we experienced both the normal year end seasonal deposit outflows as well as some unexpected deposit withdrawals that were directed to an external trust company for estate planning. Although non interest bearing deposits declined by $380,000,000 from the end of the 3rd quarter. Non interest bearing deposits represented 63% of total deposits. Customer repos were $271,000,000 at the end of the 4th quarter, which was consistent with the balance at September 30, 2023.

Speaker 2

We have experienced a $1,700,000,000 decline in deposits and customer repos from the end of 20 $800,000,000 that was moved to Citizens Trust, where these funds were invested in higher yielding assets such as treasury notes. Overall, we have experienced a decline in deposit levels due to the cash burn on customer accounts resulting from inflationary pressures as well as the impact of higher interest rates that has led to deposits moving to higher yielding alternatives such as money market funds and short term treasury notes. Our cost of deposits was 62 basis points on average for the Q4 of 2023, which compares to 52 basis points for the Q3 of 20 23 and 8 basis points for the Q4 of 2022. From the Q1 of 2022 through the Q4 of 2023, Our cost of deposits has increased by 59 basis points, representing a deposit beta of less than 12% compared to the recent Federal Reserve tightening cycle of increasing the Fed funds rate by 5 25 basis points. Now let's discuss Total loans at December 31, 2023 were $8,900,000,000 a $27,000,000 increase from September 30, 2023 and a $174,000,000 or 1.9 percent decrease from the end of 2022.

Speaker 2

The quarter over quarter increase included 70 $3,000,000 increase in dairy and livestock loans. Utilization on dairy and livestock loans was at 80% at December 31, 2023, which compares to 73% at the end of the 3rd quarter. C and I loans also increased by $32,000,000 As line utilization increased from 27% at the end of 3rd quarter to 29% at the end of December 2023. These increases were partially offset by a $58,000,000 decline in commercial real estate loans. In comparison to December 31, 2022 loans declined by $168,000,000 after excluding PPP loans.

Speaker 2

The majority of the decline was in commercial real estate loans, which decreased by $100,000,000 from the end of 2022 to December 31, 2023. We saw a decline in both construction and consumer loans of $22,000,000 $23,000,000 respectively. C and I loans increased by approximately $21,000,000 over the same period, although line utilization decreased from 33% to 29%. This aligns with our strategy of making the best small to medium sized businesses and their owners. Loan growth continues to be impacted by a slowdown in loan demand.

Speaker 2

Our new loan production decreased throughout the second half of twenty twenty three and new loan production for the Q4 of 2023 was generated at average yields exceeding 7%. Although loans modestly increased at quarter end from the end of 3rd quarter, we recorded a $2,000,000 recapture provision for credit losses for the Q4 of 2023 due to an improving economic forecast. Asset quality remains strong. At the end of the quarter, non performing assets defined as non accrual loans plus other real estate owned were $21,000,000 or 13 basis points of total assets. The $21,000,000 in non performing loans compares with $10,000,000 from the prior quarter and $4,900,000 for the year ago quarter.

Speaker 2

The increase from the prior quarter was primarily due to a CRE loan That is a loan participation acquired in the SunCrest merger that was placed on non accrual at the end of the 4th quarter. During the Q4, we experienced credit charge offs of $181,000 and total recoveries of $28,000 resulting in net charge offs of $153,000 compared with net recoveries of $28,000 for the Q3 of 2023. Year to date net charge offs were $275,000 Classified loans for the 3rd quarter were $102,000,000 compared with $92,000,000 for the prior quarter $79,000,000 for the year ago quarter. Classified loans as a percentage of total loans was 1.15% at quarter end. The $10,000,000 increase in classified loans quarter over quarter was primarily due to a $9,800,000 increase in classified commercial real estate loans.

Speaker 2

I will now turn the call over to Alan to discuss the allowance for credit losses and additional aspects of our balance sheet. Alan? Thanks, Dave.

Speaker 3

Good morning, everyone. As of December 31, 2023, Our allowance for credit losses was $86,800,000 or 0.98 percent of total loans, which compares to $89,000,000 or 1 percent of total loans at September 30, 2023 and $85,100,000 or 0.94 percent of total loans at December 31, 2022.

Speaker 4

From the end of 2022 to the end of 2023,

Speaker 3

our allowance for credit losses increased by $1,700,000 while loans declined by $174,000,000 over that same period. The changes in our allowance over the last few quarters have been primarily due to changes in our economic forecast. For the quarter ended December 31, 2023, we recorded a $2,000,000 recapture provision for credit losses. This compares to $2,000,000 in provision for the Q3 of 2023 $2,500,000 in provision for the Q4 2022. Our economic forecast continues to be a blend of multiple forecasts produced by Moody's.

Speaker 3

We continue to have the largest individual scenario waiting on Moody's baseline forecast with downside risk weighted among multiple forecasts. The resulting economic forecast reflects a modest decline in GDP for the 1st 3 quarters of 2024 with a return to positive GDP growth in the Q4 of 2024. GDP is forecasted to increase by 0.92% in 2025 before reaching a more robust growth rate of 2.6% in 2026. Commercial real estate values are forecasted to continue their decline until reaching their lowest level in the Q3 of 2024. Unemployment is forecasted to rise in 2024 and throughout 2025.

Speaker 3

The unemployment rate is forecasted to exceed 5% in 2024 and then peak at 5.7% in the Q1 of 2025. The unemployment rate is forecasted to then decline to less than 5% by the Q3 of 2026. Total borrowings at the end of the Q4 were approximately $2,000,000,000 including $1,900,000,000 of advances from the bank term funding program. Our borrowings increased by $950,000,000 from September 30, 2023 and by approximately $1,100,000,000 the end of 2022. The $1,900,000,000 of bank term funding program borrowings, which had a weighted average borrowing rate 4.78 percent at the end of 2023 will mature in May December of 2024.

Speaker 3

Our total investment portfolio declined by $389,000,000 from December 31, 2022 to $5,400,000,000 as of December 31, 2023, as the majority of our cash flows generated from the portfolio were not reinvested during the year. The overall decrease in our investment portfolio from December 31, 2022 was primarily due to a $299,000,000 decline in investment securities available for sale or AFS securities. ASS securities totaled $2,960,000,000 at the end of the 4th quarter, inclusive of a pre tax net unrealized loss of $450,000,000 A decrease in the unrealized loss from September 30 to December 31, 2023 of $179,000,000 resulted in a net increase in AFS securities of $58,000,000 Investment Securities held to maturity or HCM securities totaled approximately $2,460,000,000 at December 31, 2023. The HCM portfolio declined by approximately $25,000,000 from September 30 and by $90,000,000 from the end of 2022, as cash flows were not reinvested throughout 2023. The tax equivalent yield on the entire investment portfolio was 2.71% for the Q4 of 2023 compared to 2.64% for the prior quarter and 2.36% for the Q4 of 2022.

Speaker 3

The increase in the yield has been the result of the positive carry on

Speaker 4

fair value hedges we executed on in late June

Speaker 3

of 2023. On in late June of 2023. The Q4 of 2023 when compared to the year ago quarter at $4,000,000 of interest income from the positive carry on the swaps. We received daily silver on these pay fix swaps, which has a weighted average fixed rate of approximately 3.8%. At the end of the 4th quarter, we on a partial restructuring of our bank owned life insurance or BOLA portfolio.

Speaker 3

We surrendered $68,000,000 of policies, which resulted in a $4,500,000 market value write down of the cash surrender value of these policies and approximately 6 $500,000 in additional tax expense. The purchase of $109,000,000 of new BOLI policies at the end of December included an increase of cash render value of approximately $10,000,000 On a net basis, non interest income was positively impacted by $500,000 offsetting the $6,500,000 increase in tax expense. The new policies will have an initial crediting rate That is approximately 300 basis points higher than the policies we surrendered. Now turning to our capital position. The company's tangible common equity ratio at December 31, 2023 was 8.51% compared with the prior quarter's ratio of 7.73% 7.4% at December 31, 2022.

Speaker 3

At year end, our shareholders' equity increased from the Q3 of 2023 by $126,600,000 to $2,080,000,000 That increase reflects an increase in our OCI of 103 point $6,000,000 due to the impact of lower interest rates that decreased the unrealized loss on our AFS portfolio. Equity increased for the 12 months of 2023 by $129,500,000 Retained earnings increased in 2023 as year to date income of $221,000,000 was offset by $112,000,000 in dividends. The resulting year to date dividend payout ratio was 50.4%. Our OCI increased by $31,000,000 from the end of 2022. The 10b5-1 stock repurchase plan we initiated in 2022 Expired on March 2, 2023.

Speaker 3

During the Q1 of 2023, we repurchased approximately 792,000 shares common stock at an average price of $23.43 totaling $18,500,000 in stock repurchases. There were no shares purchased during the remaining quarters of 2023. Our regulatory capital ratios are well above regulatory requirements considered well capitalized and above the majority of our peers. At December 31, 2023, our common equity Tier 1 capital ratio was 14.6% And our total risk based capital ratio was 15.5%. I'll now turn the call back to Dave for a further discussion of our 4th quarter earnings.

Speaker 2

Thank you, Alan. Net interest income before provision for credit losses was $119,400,000 for the 4th quarter compared with $123,400,000 for the 3rd quarter and $137,400,000 for the year ago quarter. Our tax equivalent net interest margin was 3.26 percent for the Q4 of 2023 compared with 3.31% for the Q3 of 2020 3. Our net interest margin has trended within a somewhat narrow range over the past 3 quarters with the 2nd quarter at 3.22% and our full year at 3.31%. Interest income grew by nearly $2,000,000 over the prior quarter As interest income on loans grew by $2,500,000 as a result of an 11 basis point increase in loan yields.

Speaker 2

Offsetting the growth in loan interest income was a $500,000 decline in interest on investment due to a $214,000,000 decline in the average balance of the investment portfolio. Interest income from our PayPIC swaps increased by approximately $200,000 from the prior quarter. Interest expense increased by $5,900,000 over the prior quarter as our cost of funds decreased by 17 basis points from the Q3 of 2023. Interest expense on deposits by $2,400,000 due to a 22 basis point increase in the cost of interest bearing deposits, while average interest bearing deposits declined by $7,000,000 quarter over quarter. The cost of interest bearing deposits was 1.59% in the 4th quarter compared to 1.37% in the prior quarter.

Speaker 2

Interest expense on borrowings increased by $3,500,000 As average borrowings in the 4th quarter increased by $267,000,000 compared to the prior quarter and the cost of borrowings rose by approximately 25 basis points. The $18,000,000 decline in net interest income from the year ago quarter resulted from a 43 basis point decrease in net interest margin and a $217,000,000 decline in average earning assets. The year over year net interest margin decline was due to a 96 basis point increase in our cost of funds, offsetting a 49 basis point increase in earning asset yields. The increase in earning asset yields was a result of Higher loan and investment yields in the Q4 of 2023 compared to the Q4 of 2022, as well as an improved asset mix in which average loans grew from approximately 59.7 percent of earning assets in the Q4 of 2022 to 60.5% in the Q4 of 2023. Loan yields were 5.18% for the Q4 of 2023 compared with 4.78% for the year ago quarter.

Speaker 2

Investment security yields increased by 35 basis points from a yield of 2.36% in the prior year quarter to 2.71% in the Q4 of 2023, including the positive carry on the Payfix swaps. The $17,500,000 decline in net interest income from 20 22 was driven by a $600,000,000 average decline in interest earning assets as our net interest margin of 3.31% for 2023 was essentially the same as the 3.3% margin in 2022. Moving on to non interest income. Non interest income was $19,200,000 for the Q4 of 2023 compared with $14,300,000 for the prior quarter $12,500,000 for the year ago quarter. Our customer related banking fees, Including Deposit Services, International and Merchant Bank Card decreased by $87,000 compared to the 3rd quarter declined by $782,000 when compared to the Q4 of 2022.

Speaker 2

Although our trust and wealth management decreased by $165,000 compared to the prior quarter. Year over year, DCs grew by $214,000 4th quarter BOLI income increased by $6,400,000 compared to the 3rd quarter and increased by $6,500,000 compared to the Q4 of 2022, primarily due to the surrender and redeployment of BOLI policies Alan just described. 4th quarter CRA investment income increased by $1,100,000 over the Q3 of 2023 and by approximately $700,000 over the Q4 of 2022, primarily due to underlying asset valuation increases. The 3rd quarter also included $2,600,000 of from an equity fund distribution related to one of our CRA investments. For the entire year of 2023, Non interest income grew by $9,300,000 over 2022, including $7,400,000 of higher BOLI income.

Speaker 2

A $1,200,000 decline in deposit service charges was offset by a $1,000,000 increase in higher trust fees and more than $600,000 of swap fees in 2023. CRA related investment income was $5,400,000 higher in 2023, while 2022 included a $2,400,000 gain on the sale of a banking center building. Now expenses. Non interest expense for the Q4 was $66,000,000 compared with $55,000,000 for the Q3 of 2023 and $54,000,000 for the year ago quarter. The $10,900,000 quarter over quarter increase was primarily due to the Q4 expense of $9,200,000 resulting from the FDIC special assessment.

Speaker 2

Regulatory assessment expense was $11,300,000 in the Q4 of 2023, a $10,000,000 increase from the Q4 of 2022. The Q4 of 2023 included $500,000 in recapture provision for unfunded loan commitments compared to a $900,000 in recapture for the Q3 of 2023. There was no provision for the Q4 of 2022. Salaries and employee benefit Costs increased $908,000 quarter over quarter. This increase includes approximately $400,000 associated with year end employee awards.

Speaker 2

Salary expense increased by 1.3 percent or approximately $300,000 and bonus and profit sharing increased by another $300,000 based on full year earnings. The $11,500,000 increase in non interest expense year over year includes the $10,000,000 increase in assessment expense and an increase of $1,500,000 in total salaries and employee benefits compared with the prior year quarter. Salary expense grew by $1,100,000 or 4.8 percent over the Q4 of 2022. Deferred loan origination costs were also lower than the prior year quarter, resulting in additional employee expense of $550,000 Marketing and promotion expense increased over 2022 by approximately $380,000 as these expenses returned to pre pandemic levels. As we continue to invest in new technology, software expense increased by more than $300,000 or 9.5%.

Speaker 2

The increase in technology demonstrates our commitment to improving efficiencies and providing an excellent customer experience. Non interest expense totaled 1.62 percent of average assets or 1.39% excluding the FDIC special assessment for the Q4 of 2023. This compares with 1.33 percent for the 3rd quarter and 1.32% for the Q4 of 2022. Our efficiency ratio is 47.6 percent or 40.98 percent excluding the FDIC special assessment for the Q4 of 2023. This compares with 39.99 percent for the prior quarter and 36.31 percent for the Q4 of 2022.

Speaker 2

This concludes today's presentation. Now, Alan and I will be happy to take any questions that you might have.

Operator

Thank And our first question will come from the line of Matthew Clark with Piper Sandler. Your line is open.

Speaker 5

Hey, good morning, guys. Good morning. If we could just start with the BOLI restructuring. Can you give us a sense for how we should think about that run rate going forward?

Speaker 3

Well, Matthew, I think in the prepared remarks, I noted how much we invested in New BOLI and the fact that it generates Initial crediting rates are going to be 300 basis points higher than the prior income. So I mean, I think we bought $109,000,000

Speaker 5

Okay. $109,000,000 is total now?

Speaker 4

Yes.

Speaker 5

Okay. Thanks. And then just some a couple of questions around the margin. Can you give us the spot rate on deposits at the end of December and if you had the average margin in the month of December?

Speaker 3

I can tell you what we published. So if you look at our IP deck, the cost of deposits for the month of December was 4 basis points, which compares to I think 62 for the quarter. And we also noted that the Our borrowings had an average rate at the end of the period of time of $4.78 and so those are that would give you some good starting points.

Speaker 5

Okay. And then just on deposits, The outflow in non interest bearing, anything unusual there? And how is the overall kind of deposit pipeline given all the disruption?

Speaker 2

Yes. So as you know, we have normally and maybe 2020 being the exception, but normally we have about a 4% to 6% Deposit outflow in the Q4 due to taxes, bonuses, other things that happened. We did call out in the prepared remarks, We did have one large relationship that moved some money to an external trust company that was unexpected. But outside of that, everything has been pretty stable. And normally we start See those deposits start to come back to us towards the end of the Q1.

Speaker 2

And the deposit pipelines are strong. They remain strong. It's just the sales cycle on operating companies is a little bit longer, Both from an implementation perspective, but yes, we continue to open new relationships and we haven't lost any relationships, the relationship that moved the money is still a very large depositor of the bank.

Speaker 5

Okay. And then just on the hiring side of things, what's that activity like Again, with all the consolidation and banks kind of going away?

Speaker 2

Yes. It's actually it's interesting. I think it's been very good. We've been able to pick up some very good talent, I believe. They're newer, but they're coming sort of from who you would expect them to come from.

Speaker 2

We have some people from Western Alliance. We have some people from First Republic. We have some people from City National. So we have there is some disruption there and I do think it's going to be an advantage for us as we continue get through this cycle.

Speaker 5

Okay. And then last one for me, just around M and A, any change in the conversations you're having with potential targets?

Speaker 2

Yes, not really any change. I think it has maybe intensified a little bit, but there's still some Obviously with marks and other things, but we are definitely having conversations. There's nothing imminent, but We are definitely looking for opportunities there.

Speaker 5

Okay. Thank you.

Speaker 3

You're welcome.

Operator

Thank you. One moment for our next question. And that will come from the line of Tim Coffey with Janney Montgomery Scott. Your line is open.

Speaker 4

Thank you. Good morning, gentlemen. Dave, just looking out to 2024, When do you expect that with the balance sheet? Do you think we can see some additional shrinkage this year?

Speaker 2

Look, we anticipate that we're going to be growing the balance sheet both from a deposit acquisition perspective and continue to move the mix, but it will continue. I mean, just based on loan demand and based on pipelines, I think it's going to be slow just like it has been in 2023. I mean the only change to that and Alan can jump in here if he wants to, would be just How we manage the borrowings and how we reinvest the cash flows and if we just pay down debt visavis invest in other opportunities. I don't know, Alan, if there's anything you want to add to that.

Speaker 3

Yes. I mean, Tim, we do anticipate the Securities portfolio continue to roll down and that will fund potentially loan growth or paying down debt And that will really I think be really predicated on loan demand as 2024 continues.

Speaker 4

Okay. And then Alan, if the Fed does nothing, what happens to loan yields on a say quarterly basis?

Speaker 3

They would most likely increase modestly. We do have a large book of adjustable loans. And as those adjust, almost all

Speaker 2

of those will adjust upwards As well as

Speaker 3

the fact that, as Dave alluded to in comments, new business comes on well over 7%, which is a couple of 100 basis points more than the portfolio. So, it won't be significant, but we would expect modest improvements in loan yields If everything is sort of stable.

Speaker 4

Okay. And do you have just how much of the book reprises this quarter?

Speaker 3

We don't get that specific. We've tried to point out on our IP deck because we give a lot of clarity around the office CRE portfolio and that would tell you it's probably 20%, 25% of maturities and repricing As an example, it's generally in line with most of the portfolio on the CRE side.

Speaker 2

Yes, it's a good proxy for the rest of the commercial real estate portfolio.

Speaker 4

Okay. Okay. That's very helpful. Those are my questions. Thank you very much for your time.

Speaker 2

Thank you.

Operator

Thank you. And that will come from the line of Matt Fodor Jaka with KBW. Your line is open.

Speaker 6

Hey, good morning guys.

Speaker 2

Good morning, Matt.

Speaker 6

Just wanted to kind of touch on credit a little bit. I appreciate the commentary you gave on that NPL moving. But maybe you could just talk a little bit about GRE portfolio as a whole, how it's holding up and what you guys are seeing in your markets?

Speaker 2

Yes. So I think generally speaking, it's holding up Very well. We do put some good detail in our investor presentation related to classified loans in the commercial real estate area. And I think just generally Speaking, we did have a little bit of movement in classified loans. We did have a little uptick in non performing.

Speaker 2

The one uptick in non performing is the loan I've discussed before, which is the senior living facility. That loan just matured. We moved it to non accrual. We're still working With the borrower, we believe that we'll get out of that fine. Just overall though, I think the portfolio has been extremely resilient And we continue to have a lot of early warning signs.

Speaker 2

We do annual term loan reviews. We review Our stress testing on the commercial real estate side as well as on the C and I side, there's failed loans in that or out in front of them, but you get updated information on any loan over $1,000,000 in our portfolio annually at least. And then if it fails the stress test, we have More frequent conversations with the borrower if there's something that we should be worried about. But overall, it's been very, very stable and I feel pretty good about where we are there.

Speaker 6

Awesome. Appreciate the color on that. And then if I could just One more in here. I know you said growth for balance sheet is probably pretty slow. If we were to get a decent amount of Cuts this year in the back half of the year, would you expect loan demand to pick up pretty heavily?

Speaker 6

And what do you guys maybe seeing if rates start to come down there in the pipeline?

Speaker 2

Yes, it's interesting. We generally base the pricing on our loans on treasuries. If it's a term loan, if it's a C and I loan, obviously it's based on prime or sober, but primarily. But as far as commercial real estate is going. I think that we're starting to see a little pickup in the pipeline.

Speaker 2

It's not really material, but I think people are maybe just getting a little more accustomed 2 rates starting with 7s 8s in front of them versus the shock that occurred in the last 15, 18 months as rates started going up. So people still want to do stuff. People still are looking for opportunities. I think they were sort of waiting a little bit just to see if the world broke. And now that it hasn't, it appears pretty stable, at least today, the economy seems pretty stable.

Speaker 2

I think we'll start to see a little pickup on the loan demand side and we'll see how it plays out through the year depending on rates. But I think rates are becoming Less of a deterrent for people doing things as they get more used to the current environment.

Speaker 6

Yes. Appreciate the color on that. Thanks for taking the questions guys.

Speaker 2

Of course.

Operator

Thank you. I'm showing no further questions in the queue at this time. I would now like turn the call back over to Mr. David Brager for any closing remarks.

Speaker 2

Great. Thank you. During the course of 2023, Citizens Business Bank not only remained safe and sound, but also produced earnings that were the 2nd highest in company's history despite the difficult operating environment. We remain committed to our strategy of banking the best small to medium sized businesses and their owners. We work hard to earn and maintain the trust of our customers and business partners.

Speaker 2

And we want to thank all of our customers and associates for their loyalty and over the past year. I want to thank everybody for joining us this quarter. We appreciate your interest and look forward to speaking with you in April for our Q1 2024 earnings call. And as always, you can let Alan and I know if you have any questions. Have a great day and thank you for listening.

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Earnings Conference Call
CVB Financial Q4 2023
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