CVB Financial Q1 2026 Earnings Report

CVB Financial EPS Results

• Actual EPS: $0.38
• Consensus EPS: $0.38
• Beat/Miss: Met Expectations
• One Year Ago EPS: $0.36

CVB Financial Revenue Results

• Actual Revenue: $132.12 million
• Expected Revenue: $162.29 million
• Beat/Miss: Missed by -$30.18 million
• YoY Revenue Growth: N/A

CVB Financial Announcement Details

• Quarter: Q1 2026
• Date: 4/22/2026
• Time: After Market Closes
• Conference Call Date: Thursday, April 23, 2026
• Conference Call Time: 10:30AM ET

CVB Financial (NASDAQ:CVBF) 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. In addition to commercial and industrial lending, Citizens Business Bank offers deposit products such as checking, savings and money market accounts, as well as consumer mortgages. CVB Financial also provides treasury and cash management services designed to help businesses optimize liquidity, manage receivables and streamline payments.

Beyond traditional banking, CVB Financial delivers trust, wealth management and retirement planning services through a dedicated trust division. Its wealth platform offers investment advisory, fiduciary and estate settlement services tailored to both individual and institutional clients. Under the leadership of President and Chief Executive Officer Erik Ellingsen, CVB Financial has expanded its geographic footprint with branches across Southern California, the Central Valley, the San Francisco Bay Area and select markets in Arizona.

CVB Financial Q1 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Merger with Heritage Bank of Commerce closed, expanding Citizens into the Bay Area, adding scale and product capabilities, and management expects the Heritage single‑family mortgage pools to be sold off the balance sheet by quarter‑end.
• Positive Sentiment: Loan originations surged (roughly 90% higher YoY) with pipelines remaining solid; net interest margin widened 13 bps YoY to 3.44% while cost of funds fell, supporting pre‑tax, pre‑provision income growth.
• Negative Sentiment: Credit remains broadly healthy (non‑performing loans 0.07%), but classified loans rose to $83.1M and the company recorded a specific reserve of $3.2M, lifting the allowance for credit losses to $80.2M — a localized but tangible credit headwind.
• Neutral Sentiment: Capital is strong (Tangible Common Equity 10.5%, CET1 16.3%, tangible book value +9% YoY), though buybacks and broader capital deployment decisions are on hold while management completes integration and balance‑sheet optimization.

Presentation

[Operator]

Good morning, ladies and gentlemen, and welcome to the first quarter of 2026 earnings conference call for CVB Financial Corp. and its subsidiary, Citizens Business Bank. My name is Sheree and I'm your operator for today. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer period. Please note that this call is being recorded. I would now like to turn the presentation over to your host for today's call, Allen Nicholson, Executive Vice President and Chief Financial Officer. You may proceed.

[Allen Nicholson, EVP and CFO at CVB Financial Corp]

Thank you, Sheree, and good morning, everyone. Thank you for joining us today to review our financial results for the first quarter of 2026. Joining me this morning is our Chief Executive Officer, David Brager, and our President, Clay Jones. 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. The speakers on this call claim the protection of the safe harbor provisions contained in the Private Securities Litigation Reform Act of 1995.

[Allen Nicholson, EVP and CFO at CVB Financial Corp]

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-K for the year ended December 31st, 2025, and in particular, the information set forth in 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. I'll now turn the call over to David Brager. Dave?

[David Brager, CEO at CVB Financial Corp]

Thank you, Allen. Good morning, everyone. For the first quarter of 2026, we reported net earnings of $51 million or $0.38 per share, representing our 196th consecutive quarter of profitability, which is every quarter for 49 years. We previously declared a $0.20 per share dividend for the first quarter of 2026, representing our 146th consecutive quarter of paying a cash dividend to our shareholders. We produced a return on average tangible common equity of 13.4% and a return on average assets of 1.33% for the first quarter of 2026. Our net earnings of $51 million or $0.38 per share compares with $55 million for the fourth quarter of 2025 or $0.40 per share and $51.1 million or $0.36 per share for the prior year quarter.

[David Brager, CEO at CVB Financial Corp]

Results of the first quarter of 2026 reflect solid growth year-over-year across several financial metrics, including pre-tax, pre-provision income growth, net interest margin expansion, loan growth, and growth in deposits and customer repurchase agreements. Pre-tax, pre-provision income grew by $4 million or 6% over the first quarter of 2025. Our net interest margin expanded by 13 basis points over the prior year quarter to 3.44% as our earning asset yields increased by 7 basis points, while our cost of funds decreased by 7 basis points. Average loans grew by $157 million or approximately 2% from the first quarter of 2025.

[David Brager, CEO at CVB Financial Corp]

We also increased our average total deposits and customer repurchase agreements by $288 million or 2.4% from the first quarter of 2025. Now, let's discuss loans further. Total loans at March 31st, 2026, were $8.64 billion, a $280 million or 3.3% increase from the end of the first quarter of 2025. This increase was driven primarily by growth in commercial real estate loans of $141 million, a $62 million increase in dairy and livestock and agribusiness loans, and a $43 million increase in construction loans. We also had $34 million of growth in SBA 504 loans, and C&I loan outstandings increased by $10 million over the prior year.

[David Brager, CEO at CVB Financial Corp]

Total loans declined by $56 million from the end of 2025 as dairy and livestock and agribusiness loans declined by $117 million due to the seasonal peak in line usage that occurs every calendar year-end. This seasonal decline is evident by the decrease in line utilization rate from 78% at the end of 2025 to 69% at March 31st, 2026. C&I loans decreased quarter-over-quarter by $21 million as line utilization decreased from 32% at the end of 2025 to 30% at the end of the first quarter of 2026.

[David Brager, CEO at CVB Financial Corp]

Partially offsetting the decline in line usage from the end of 2025 was commercial real estate loan growth of $57 million, SBA 504 loan growth of $13 million, and construction loans increasing by $22 million. Loan originations have started off the year at a strong pace as originations for the first quarter of 2026 were approximately 90% higher than the first quarter of 2025 and 15% higher than the fourth quarter of 2025. Our loan pipelines remain relatively strong, although rate competition for high-quality loans continues to be intense. C&I loan originations have stayed relatively consistent over the past five quarters, but commercial real estate loan originations have been strengthening.

[David Brager, CEO at CVB Financial Corp]

Loan originations in the first quarter had average yields of approximately 6%, which was roughly 25 basis points lower than the prior quarter. Our average loan yield was 5.32% for the first quarter of 2026 compared to 5.47% for the fourth quarter of 2025 and 5.22% for the first quarter of 2025. During the fourth quarter of 2025, we collected $3.2 million of interest on a non-performing loan. Excluding this additional interest income, our loan yield would have been 5.32% for the fourth quarter of 2025. We experienced $9,000 of net recoveries during the first quarter of 2026, compared to $325,000 of net recoveries for the fourth quarter of 2025.

[David Brager, CEO at CVB Financial Corp]

Total non-performing loans increased by $1.5 million-$6.1 million at March 31st, 2026, which represents 0.07% of total loans. The increase is primarily due to the downgrade of a $2.9 million C&I loan, for which we established a specific reserve in our Allowance for Credit Losses. Classified loans were $83.1 million at March 31st, 2026, compared to $52.7 million at December 31st, 2025, and $94.2 million at March 31st, 2025. Classified loans as a percentage of total loans were less than one% at March 31st, 2026. Now, on to deposits.

[David Brager, CEO at CVB Financial Corp]

Our average total deposits and customer repurchase agreements for the first quarter of 2026 were $12.5 billion, which compares to $12.2 billion for the first quarter of 2025, and $12.6 billion during the fourth quarter of 2025. Our non-interest-bearing deposits declined on average by $112 million compared to the first quarter of 2025, and by $107 million compared to the fourth quarter of 2025. On average, non-interest-bearing deposits were 58% of total deposits for both the first quarter of 2026 and the fourth quarter of 2025, compared to 59% for the first quarter of 2025. Interest-bearing non-maturity deposits and customer repurchase agreements grew on average by $400 million from the first quarter of 2025.

[David Brager, CEO at CVB Financial Corp]

Our cost of deposits and repos was 82 basis points for the first quarter of 2026, compared to 86 basis points for the fourth quarter of 2025, and 87 basis points for the year ago quarter. I will now turn the call over to Allen to further discuss additional aspects of our balance sheet and income.

[Allen Nicholson, EVP and CFO at CVB Financial Corp]

Thanks, Dave. Pre-tax, pre-provision income was $71.6 million in the first quarter of 2026, compared to $71.9 million in the fourth quarter of 2025 and $67.5 million in the first quarter of last year. After adjusting for acquisition expense and gains on OREO, our operating income grew from the first quarter of 2025 by $8 million, reflecting positive operating leverage of 6%. The growth in operating income was driven by growth in net interest income of $7.4 million by 7% rate of growth. Net interest income was $117.8 million in the first quarter of 2026, compared to $122.7 million in the fourth quarter of 2025, and $110.4 million in the first quarter of 2025.

[Allen Nicholson, EVP and CFO at CVB Financial Corp]

Interest income decreased from the fourth quarter of 2025 by $6.9 million, due primarily to two fewer calendar days in the first quarter, a $134 million decrease in earning assets, and the $3.2 million of non-accrued interest paid during the fourth quarter. Interest income increased from the first quarter of 2025 by $6.1 million, as our earning asset yield increased by 7 basis points from 4.28% to 4.35%, and our average earning assets increased by $336 million. Interest expense declined from both the prior quarter and the prior year quarter. Interest expense was $31.3 million in the first quarter of 2026, compared to $33.3 million in the fourth quarter of 2025, and $32.6 million in the first quarter of 2025.

[Allen Nicholson, EVP and CFO at CVB Financial Corp]

Our cost of funds decreased from 1.01% in the fourth quarter of 2025 to 97 basis points in the first quarter of 2026. Our cost of funds was seven basis points lower than the first quarter of 2025, even though the average balance of interest-bearing deposits and repos increased by $400 million. Non-interest income was $14.3 million in the first quarter of 2026, compared to $11.2 million in the fourth quarter of 2025, and $16.2 million in the first quarter of 2025. The fourth quarter of 2025 included a $2.8 million loss on the sale of securities.

[Allen Nicholson, EVP and CFO at CVB Financial Corp]

While the first quarter of 2025 included a gain on sale of OREO of $2.2 million. The quarter-over-quarter increase in non-interest income also included a $1.1 million increase in the cash surrender value of bank-owned life insurance. Trust and investment services income grew by $313,000, or 9% from the first quarter of 2025, but decreased by $307,000 over the fourth quarter of 2025 due to lower brokerage fee income. Our allowance for credit losses was $80.2 million at March 31st, 2026. In comparison, our allowance for credit losses was $77 million at December 31st, 2025.

[Allen Nicholson, EVP and CFO at CVB Financial Corp]

The $3 million increase in the allowance was primarily due to the establishment of a specific reserve totaling $3.2 million. Our economic forecast continues to be a blend of multiple forecasts produced by Moody's. We continue to have the largest individual scenario weighting on Moody's baseline forecast, with both upside and downside risks weighted among multiple forecasts. The resulting economic forecast at March 31st, 2026 was modestly different than the forecast at the end of 2025. Real GDP is forecasted to be below 1% in the second half of 2026 and stay below 2% through 2027.

[Allen Nicholson, EVP and CFO at CVB Financial Corp]

The unemployment rate is forecasted to reach 5% by the middle of 2026 and remain above 5% through 2028. Commercial real estate prices are forecasted to continue their decline through the end of 2026 before experiencing growth in the back half of 2027. Switching to our investment portfolio. Investment securities totaled $4.8 billion at March 31st, 2026, a $116 million decrease from the end of 2025. Available for sale or AFS investment securities were $2.59 billion, and our held-to-maturity investments totaled $2.25 billion. The unrealized loss on AFS securities increased by $2 million from $308 million on December 31st, 2025 to $310 million.

[Allen Nicholson, EVP and CFO at CVB Financial Corp]

Our $700 million in fair value hedges generated negative carry in the first quarter of 2026, resulting in a $1.1 million and $750,000 decrease in interest income compared to the first and fourth quarters of 2025 respectively. Now turning to our capital position. At March 31st, 2026, our shareholders' equity was $2.3 billion, a $93 million increase from the first quarter of 2025, including the $52 million increase in other comprehensive income. The company's Tangible Common Equity Ratio was 10.5% at March 31st, 2026, while our Common Equity Tier 1 Capital Ratio was 16.3%. Our tangible book value per share increased over the last 12 months by 9% from $10.45 at March 31st, 2025 to $11.42. I'll now turn the call back to Dave for further discussion of our expenses.

[David Brager, CEO at CVB Financial Corp]

Thank you, Allen. Non-interest expense for the first quarter of 2026 was $60.6 million, which includes $1.1 million in one-time merger acquisition of Heritage Bank of Commerce and $500,000 in provision for off-balance sheet reserves. Regulatory assessment expense decreased by $1.6 million as a result of the unwinding of the remaining accrual for the special FDIC assessment. Excluding acquisition expense and the provision for off-balance sheet reserves, the level of core operating expense was essentially flat to both the prior quarter and the first quarter of 2025. Our efficiency ratio was 45.8% in the first quarter of 2026, compared to 46.3% in the fourth quarter of 2025 and 46.7% in the first quarter of 2025.

[David Brager, CEO at CVB Financial Corp]

Non-interest expense, excluding acquisition expense as a percentage of average assets totaled 1.55% for the first quarter of 2026, compared to 1.53% in the fourth quarter of 2025 and 1.58% for the first quarter of 2025. This concludes today's presentation. Now Allen and I and Clay will be happy to take any questions that you might have.

[Operator]

Our first question will come from the line of David Feaster with Raymond James. Your line is open.

[David Feaster, Managing Director at Raymond James]

Hi. Good morning everybody.

[David Brager, CEO at CVB Financial Corp]

Morning, Dave.

[Allen Nicholson, EVP and CFO at CVB Financial Corp]

Morning.

[David Feaster, Managing Director at Raymond James]

I wanted to start on the deal. Welcome to the call, Clay Jones. I know we're only a week into this, but I just wanted to get a sense of how it's gone.

[David Brager, CEO at CVB Financial Corp]

Four days.

[David Feaster, Managing Director at Raymond James]

Four days. Excuse me. How has it gone thus far? What are your top priorities just in these first few weeks after the deal's closed from an operational perspective? Dave, I know the goal is always to CVB the bank. Where are you focused initially, and you see the most opportunity to add value?

[David Brager, CEO at CVB Financial Corp]

Yeah. I think initially, David, obviously we're just trying to acclimate all the new associates that have joined us through the merger. Clay and his team, the former Heritage folks, have been drinking through a fire hose. There's a lot of training, a lot of information that's going on. We're looking at how we set up accounts, how we structure relationships. All of those things are part of that initial time frame. Clay and Julie, who joined our board, were at our first board meeting yesterday. They're getting acclimated. Clay is going to be spending a lot of time down here. We'll be spending a lot of time together. We've sort of restructured the organization.

[David Brager, CEO at CVB Financial Corp]

To involve the new senior leaders that are joining us, Clay and his former senior leadership team that are remaining. There's just a lot of education about the culture of our bank, the way we do things. That's not an event, it's a process. It's going to take some time to do that. All in all, things went very well on closed weekend. It'll continue to get easier and better as we go forward. Clay can give his perspective as well.

[Clay Jones, President at CVB Financial Corp]

Yeah. David, I think the integration is going just fine. As Dave said, the team is just getting acclimated to new reporting lines and new systems and reporting lines. It's all going just fine. I think the primary focus we have is, one, staying close to our customers and clients and making sure that they hear from us often, and also just keeping a close eye on our associates to make sure that they're keeping pace with the integration and the training.

[David Feaster, Managing Director at Raymond James]

Okay. That's great. I know we didn't include much in the way of optimization. Look, the deal gives you a ton of financial flexibility, right? Didn't really include any optimization and guidance outside of maybe some of the purchase mortgages that we'd talked about. With the deal closed and all this financial flexibility, has your thoughts changed at all about opportunities to optimize things or deploy excess liquidity, just given the fully marked balance sheet?

[David Brager, CEO at CVB Financial Corp]

David, you're right. We do have some ability to restructure the balance sheet a little bit. We have announced and do have a sale in place for the single-family mortgage pools of Heritage. Beyond that, we're still evaluating it. I think we'll come out of the quarter with a balance sheet and a plan that you'll be able to see on the next quarterly earnings. A lot of moving parts right now, and then because it does give us a fair amount of optionality.

[David Feaster, Managing Director at Raymond James]

Okay. Just last one from me. The commentary on the origination activity is extremely encouraging. I wanted to dig into that a bit. How much of the improvement that you're seeing is you gaining share at this point and your bankers being more productive versus improving demand? Just kind of curious, how do you think about the growth outlook just in light of the competitive landscape that you alluded to, which it sounds like is primarily on the pricing side, and then just again, the expansion in the Bay Area?

[David Brager, CEO at CVB Financial Corp]

Yeah. Well, obviously, we're not going to compete on the credit quality side. We're going to maintain that pristine credit quality. When you're fighting for those types of deals, you have to price them in a way that you can win them, assuming that you're monetizing the rest of the relationship as well. I think initially, I would say to answer your question more specifically, it was just that there was more opportunity out there. I think what's happened over the last couple quarters, for example, and with the increase in the opportunities that we're seeing, I think that we're in a very good position from a liquidity perspective, from a market perspective.

[David Brager, CEO at CVB Financial Corp]

Obviously, from the former Heritage perspective, there's some significant opportunity there just with the capacity of the combined organization relative to loan limits, in-house lending limits, those types of things. We view it as very positive. We need to get them integrated and understand how we look at it. From a credit perspective, very similar. From a pricing perspective on the lending side, very similar. On the deposit pricing side, that's probably a little more work that we're going to have to do ultimately. At the end of the day, we're going after the same types of relationships. We were going after the same types of relationships. I think it's our people recognizing that, hey, we're ready.

[David Brager, CEO at CVB Financial Corp]

There's a lot going on out there, but there's a lot of competition. That's primarily why even though in some ways the Treasury rates have gone up a little bit, and our loan origination yields have gone down slightly just because we're having to compete if we want to win.

[David Feaster, Managing Director at Raymond James]

Is our pipelines still holding up pretty solid? Do you think you can kind of hold new origination yields in this 6% realm?

[David Brager, CEO at CVB Financial Corp]

Yeah. I would say that it's going to be around that 6% range going forward. Obviously, it depends on the mix of real estate versus C&I and then the utilization of that, because we're actually getting better rates on the C&I stuff than on the real estate stuff. That was part of the reason, the net interest margin. Well, the Fed lowered rates in December. There was a number of things that happened, and our yields stayed the same, essentially the same if you exclude the NAIP. I think that was a big victory for us. If this loan demand remains and we're continuing to book what we've been booking, I think that's a big tailwind for us as we keep going through the year.

[David Brager, CEO at CVB Financial Corp]

Yes, pipelines are holding up and there's plenty of opportunities for us out there for the right relationships.

[David Feaster, Managing Director at Raymond James]

That's terrific. Thanks, everybody.

[David Brager, CEO at CVB Financial Corp]

Thank you.

[Operator]

One moment for our next question. That will come from the line of Kelly Motta with KBW. Your line is open.

[Kelly Motta, Director of Equity Research at KBW]

Hi. Good morning. Thanks for the question.

[David Brager, CEO at CVB Financial Corp]

Good morning.

[Kelly Motta, Director of Equity Research at KBW]

Maybe building upon David's question, I do appreciate the color on pipelines, and it's all quite encouraging. I'm wondering in your markets, if you're seeing any increased competitive dynamics. Notably, I think growth at Wells is a lot stronger with the asset cap coming off. I'm just wondering if there's been any notable shifts or change in dynamics in your markets. Thanks.

[David Brager, CEO at CVB Financial Corp]

Yeah, I don't know if I would say there's been any noticeable shift. It's always extremely competitive, especially for the types of relationships that we're looking for. There are some banks. You mentioned Wells Fargo. There's other banks. Pacific Premier was not as active for the last few years. Columbia is going to be much more active. There's a number of organizations, the Fifth Third, the regional banks, BMO. There's a number of banks that are coming into our market, and plus you always have the big guys. I think there is maybe some increase at the higher end of sort of our typical type relationship we go after. But it's not significantly different than before. I don't know, Clay, do you want to.

[Clay Jones, President at CVB Financial Corp]

Yeah, no, I echo Dave's comments here. The market continues to be very competitive. I don't think there's been any recent shifts in the competitive nature of the clients that we go after. In the Bay Area, it continues to be just as competitive as it is here.

[David Brager, CEO at CVB Financial Corp]

Yeah. Kelly, I would just say this. Where our bankers are most successful in their new customer origination, new relationship origination business, it's with the biggest banks. We provide a super high level of service that allows us to compete. We have the product array, and I think that's another sort of tailwind from the Heritage merger as far as both combined organizations being able to provide that wide array of products and services to our relationships and prospects. There are some very positive things that are occurring, and as we get everybody integrated and acclimated, it should improve.

[Kelly Motta, Director of Equity Research at KBW]

Got it. That's really helpful color. Thank you. Turning to capital, your levels should still be quite robust, pro forma for the merger just closed. You had been a bit active in the buyback prior to announcing the deal, which put that on hold. Wondering any updated thoughts on capital management, buybacks, future deals, the works? Thanks.

[David Brager, CEO at CVB Financial Corp]

Yeah. I'll sort of start with the tail end of your question first. Look, we want to make sure we integrate Heritage appropriately. That is our number one focus. Unless there's something that's really unique or an opportunity that's really unique and something we've been looking at, I would say we're more focused on the integration of Heritage than additional M&A. We do recognize that we have an enormous amount of capital, and prior to us getting in conversations with Clay and Heritage, that was something that we were very active in. We repurchased 4.2 million shares last year, and we'll continue to evaluate that. Obviously, the combined company's earnings, we'll be looking at the dividend, ultimately.

[David Brager, CEO at CVB Financial Corp]

This quarter's really where we're going to get all the, Allen can opine on this as well, but where we're going to get the balance sheet set up the way that we want it set up, and then we'll be working on those capital management things. Definitely, buybacks are going to be part of that strategy going forward. I don't know, Allen, do you have anything you want to add?

[Allen Nicholson, EVP and CFO at CVB Financial Corp]

Kelly, as Dave said, it'll be noisy in Q2. A little bit more noise in Q3, but as we get into Q3, I think we'll have a lot more visibility into our capital. Of course, as you pointed out, pro forma, it's already very strong, and historically, we've been able to generate a lot of organic capital, and we'll definitely have to evaluate all those things that Dave mentioned.

[Kelly Motta, Director of Equity Research at KBW]

Got it. If I could just slip it in as a follow-up. You mentioned the resi mortgage. It's held for sale right now. Do you anticipate that off the balance sheet by quarter end, or is there a possibility that could stick around a bit longer than perhaps we expected at announcement? Thanks.

[David Brager, CEO at CVB Financial Corp]

No, we do expect it to be off the balance sheet by the end of the quarter.

[Kelly Motta, Director of Equity Research at KBW]

Great. Thank you so much. I'll step back.

[David Brager, CEO at CVB Financial Corp]

Thanks.

[Operator]

One moment for our next question. That will come from the line of Matthew Clark with Piper Sandler. Your line is open.

[Matthew Clark, Senior Research Analyst at Piper Sandler]

Hey, good morning, guys.

[David Brager, CEO at CVB Financial Corp]

Good morning.

[Allen Nicholson, EVP and CFO at CVB Financial Corp]

Good morning.

[Matthew Clark, Senior Research Analyst at Piper Sandler]

I wanted to start on the C&I credit that you assigned some specific reserves to, and then the other classified credits that migrated. I know classified overall is still sub 1%, but just wanted to get some color on this. What happened there and plans for resolution and timing, if possible.

[David Brager, CEO at CVB Financial Corp]

Yeah. I'll start with the non-performer. That C&I loan was impacted by one of their customers who declared bankruptcy. We have shored up our collateral position. We did put a specific reserve because at the time we had not shored up the collateral position in the way that we wanted to. I don't really anticipate, there could be some challenges there, but we're very proactive when we grade things and when we look at things and how we classify them. Just being very transparent. For lack of a better term, they're a marketing company for a larger organization, and they sell agricultural products.

[David Brager, CEO at CVB Financial Corp]

It's something that we've been involved with since one of these customers, but we just wanted to make sure that we elevated it to that level. As far as the classified loans, it's really centered in two relationships. They both happen to be C&I. We're in very good collateral positions in both of those deals. That makes up the majority of the increase in the classified loans. One of the companies is in the midst of a sale, and that could happen. We're obviously prepared if it doesn't. They're both within their collateral guidelines, and we think one of them, it's just a situation with the operations, and they're working hard on that.

[David Brager, CEO at CVB Financial Corp]

Again, just being very proactive, and it's something that happens now and again, but nothing systematic or endemic of the rest of the portfolio. These are just two separate situations.

[Matthew Clark, Senior Research Analyst at Piper Sandler]

Okay, great. Just a few housekeeping items. Do you plan to do the CECL double count here in 2Q resulting in an outsized provision, or are you going to opt out of that?

[Allen Nicholson, EVP and CFO at CVB Financial Corp]

No. Matthew, we elected the new accounting, so there won't be a double count.

[Matthew Clark, Senior Research Analyst at Piper Sandler]

Okay, great. Accretion expectations. I know the marks can still move around a little bit, but I assume you'd have preliminary marks at this stage. Any guesstimate? I mean, we have our own, but I just wanted to check in to see what you thought maybe quarterly or normal accretion might be per quarter.

[Allen Nicholson, EVP and CFO at CVB Financial Corp]

Too early, Matt. Too early. Sorry. We'll be able to give you better answers next quarter.

[Matthew Clark, Senior Research Analyst at Piper Sandler]

Okay. I think there was a special FHLB dividend. Can you just quantify that this quarter?

[Allen Nicholson, EVP and CFO at CVB Financial Corp]

I think it was about $400,000.

[Matthew Clark, Senior Research Analyst at Piper Sandler]

Okay, great. Thank you.

[David Brager, CEO at CVB Financial Corp]

You're welcome.

[Operator]

One moment for our next question. That will come from the line of Andrew Terrell with Stephens. Your line is open.

[Andrew Terrell, Managing Director and Research Analyst at Stephens]

Hey, good morning.

[David Brager, CEO at CVB Financial Corp]

Good morning, Andrew.

[Andrew Terrell, Managing Director and Research Analyst at Stephens]

Hey, maybe just wanted to start off. I know you guys don't generally guide, but with the merger closing in the second quarter, the kind of range of forecasts for the margin for 2Q are pretty widespread. I was hoping you could maybe just help us out. I don't know if you have kind of day one pro forma margin, what the general kind of impact is to your reported margin when you layer in Heritage. Just any kind of guardrails you could put kind of around margin expectations for us?

[Allen Nicholson, EVP and CFO at CVB Financial Corp]

Andrew, once again, sorry, it's a little bit too early. As Dave said, we closed four days ago. We did include on page 31 of the investor presentation, the pro forma loans and deposits for the combined organization, excluding the mortgages we're selling. At least, you can look at that from a starting point, but we are still evaluating the balance sheet in terms of what we're going to do with repositioning the bond portfolio, repositioning some of our wholesale funds. Unfortunately, it's too preliminary for me to give you much more information.

[Andrew Terrell, Managing Director and Research Analyst at Stephens]

Okay. Does the yield on page 31 of the deck for HTBK loans, the 5.60, include the single-family yield? I'm assuming the 5.60 is pre any kind of mark.

[Allen Nicholson, EVP and CFO at CVB Financial Corp]

Yeah, there's no marks, and if you look at the pro forma yield of 547, that's excluding the single family. That's on a combined basis, of course.

[Andrew Terrell, Managing Director and Research Analyst at Stephens]

Got it. Okay. We talked some in the past just about maybe some of the opportunity to upsize some of the legacy Heritage relationships and maybe that some of that was already occurring pre-deal close. Just can you remind us general kind of opportunity set there, how that influences kind of how you're thinking about loan growth throughout the year?

[Clay Jones, President at CVB Financial Corp]

Yeah, Andrew, no question about it. At deal announcement, we gave a mantra out to the team to make sure that we captured all of those clients that were growing and that were reaching our upper limits at Heritage. We now have greatly expanded that capacity, and those clients obviously have extended their runway with Heritage significantly. There's great opportunities in terms of our largest clients that on the going forward basis. I would add to that, too, as Dave said, there's some additional synergies amongst the two firms as combined in terms of ag, dairy lending, mortgage origination, trust, wealth services, international services.

[Clay Jones, President at CVB Financial Corp]

There's just a wide variety of opportunities that our relationship management teams and calling officers are engaged in. Going forward, it looks good.

[David Brager, CEO at CVB Financial Corp]

Yeah, I would just say, I wanted Clay to answer that first just from the perspective of the former Heritage offices. From the overall perspective, Andrew, just to your question, a lot of this is four days in, they're drinking from the fire hose trying to figure out everything, and so we're working on it. Just overall, pipelines have remained strong. The relationships, we haven't had a lot of turnover in relationships. We're seeing opportunities for us to do maybe a little bit better than we did last year as far as loan growth. I do think that as we get through the second quarter, we'll have a much better idea. You're right. I've always said sort of low single digit growth.

[David Brager, CEO at CVB Financial Corp]

That could be mid-single digit growth, but we just need to make sure that we understand the relationships as we look at them, the opportunities that are out there. For now, we're sort of just sticking with what we've been doing and what's been done in the past. I don't know if that gives you a better answer, but we want quality stuff and we're having to price it aggressively, and so I think that's going to be somewhat of a limiting factor as well. On the positive side are definitely the things Clay said, not just on the loan side, but on the overall relationship side.

[Andrew Terrell, Managing Director and Research Analyst at Stephens]

Great. Thank you for taking the questions. I appreciate it.

[David Brager, CEO at CVB Financial Corp]

Of course.

[Operator]

Thank you. As a reminder, if you would like to ask a question, please press star one one. One moment for our next question, that will come from the line of Gary Tenner with D.A. Davidson. Your line is open.

[Gary Tenner, Managing Director and Senior Research Analyst at D.A. Davidson]

Thanks. Good morning.

[David Brager, CEO at CVB Financial Corp]

Good morning.

[Gary Tenner, Managing Director and Senior Research Analyst at D.A. Davidson]

I have one follow-up on the initial loan growth commentary. In terms of the strengthening of the commercial real estate segment from a demand and production perspective, can you kind of parse that a little bit in terms of is it more customer activity? Is it borrowers getting more comfortable with the rate environment we're in and moving forward on projects? Is it CBB getting more competitive on pricing? Just kind of parse out kind of the moving parts that's attributed to that strengthening.

[David Brager, CEO at CVB Financial Corp]

Yeah. Well, I definitely think it starts with the potential borrowers out there. It's our existing customers, it's our bankers' ability to go and attract new relationships to the bank. I think that's driving some of it. I think also, Gary, I'd say our average size of new loan origination has creeped up a little bit as well. There are a number of things that are sort of assisting us in reaching that low single-digit growth that we had last year. I think that's part of it. I don't know that we're getting more aggressive on pricing than we have been in the past. We were always aggressive for the right relationships.

[David Brager, CEO at CVB Financial Corp]

Obviously, the loan pricing is just one component of the overall relationship. We have to look at the deposit side, we look at the fee income side, we look at how we monetize the entire relationship. I don't know that we're getting more aggressive, but I definitely think customers are more used to the rate environment, and money can't sit on the sidelines for that long. There are people that are doing things, and we're seeing some of that activity and capturing a good part of it. Yeah, I think it's all of those things that are sort of contributing to those opportunities.

[David Brager, CEO at CVB Financial Corp]

90% new loan originations in the first quarter over the first quarter of last year, it's basically double what we did last year. I think that speaks to just the opportunities that we're seeing and the opportunities that we're winning.

[Gary Tenner, Managing Director and Senior Research Analyst at D.A. Davidson]

Appreciate that. Actually as a follow-up there, any particular asset class within CRE that you're seeing more activity in or maybe is driving more of the activity?

[David Brager, CEO at CVB Financial Corp]

Yeah, I don't know that there's a specific asset class. It's pretty well balanced between all asset classes. I will say it's probably easier to parse it out by owner or non-owner. We were doing a lot of owner-occupied in the past. The thing that was really missing was investor commercial real estate, really across all classes. Multifamily, industrial, retail. We are seeing much more investor commercial real estate than we have in the past. Over the last year has been pretty steady in that area, but before that, we weren't really seeing any investor commercial real estate. Nobody was doing anything. I think it's just more investor real estate across all asset classes and those opportunities we've been doing pretty well with.

[Gary Tenner, Managing Director and Senior Research Analyst at D.A. Davidson]

Interesting. All right. Thanks, Dave.

[David Brager, CEO at CVB Financial Corp]

You're welcome.

[Operator]

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

[David Brager, CEO at CVB Financial Corp]

Great. Thank you, Sheree. First, I would like to welcome Heritage Bank of Commerce customers, associates, and shareholders to Citizens Business Bank. The merger with Heritage Bank of Commerce marks the most strategic and largest acquisition by asset size in our history, bringing together two premier relationship-focused business banks and advancing our long-standing objective of expanding Citizens throughout California by entering the Bay Area. Our team is eager to build on the strong customer and community relationships that Heritage has established, and our performance in the first quarter demonstrates our continued financial strength and focus on our vision of serving the comprehensive financial needs of small to medium-sized businesses and their owners.

[David Brager, CEO at CVB Financial Corp]

Our consistent financial performance is highlighted by our 196 consecutive quarters of profitability and our 146 consecutive quarters of paying cash dividends. I would like to thank our customers and associates for their continuing commitment and loyalty. Thank you for joining us this quarter. We appreciate your interest and look forward to speaking with you in July for our second quarter 2026 earnings call. Please let Allen or I know if you have any questions. Have a great day.

[Operator]

This concludes today's program. Thank you all for participating. You may now disconnect.

Participants

Executives

• Allen Nicholson, EVP and CFO
• Clay Jones, President
• David Brager, CEO

Analysts

• Andrew Terrell, Managing Director and Research Analyst at Stephens
• David Feaster, Managing Director at Raymond James
• Gary Tenner, Managing Director and Senior Research Analyst at D.A. Davidson
• Kelly Motta, Director of Equity Research at KBW
• Matthew Clark, Senior Research Analyst at Piper Sandler