CVB Financial (CVBF)

Regional bank holding company CVB Financial (NASDAQ:CVBF) fell short of the market’s revenue expectations in Q3 CY2025 as sales only rose 1.7% year on year to $128.6 million. Its non-GAAP profit of $0.38 per share was 2.7% above analysts’ consensus estimates.

Company Overview

With roots dating back to 1974 and a focus on serving small and medium-sized businesses, CVB Financial (NASDAQ:CVBF) operates Citizens Business Bank, providing banking, lending, and trust services to businesses and individuals across California.

Regional banks, financial institutions operating within specific geographic areas, serve as intermediaries between local depositors and borrowers. They benefit from rising interest rates that improve net interest margins (the difference between loan yields and deposit costs), digital transformation reducing operational expenses, and local economic growth driving loan demand. However, these banks face headwinds from fintech competition, deposit outflows to higher-yielding alternatives, credit deterioration (increasing loan defaults) during economic slowdowns, and regulatory compliance costs. Recent concerns about regional bank stability following high-profile failures and significant commercial real estate exposure present additional challenges.

CVB Financial competes with other regional banks in California such as Pacific Premier Bancorp (NASDAQ:PPBI), Bank of Marin Bancorp (NASDAQ:BMRC), and larger institutions like Bank of America (NYSE:BAC) and Wells Fargo (NYSE:WFC) that operate in its markets.

From lending activities to service fees, most banks build their revenue model around two income sources. Interest rate spreads between loans and deposits create the first stream, with the second coming from charges on everything from basic bank accounts to complex investment banking transactions. Over the last five years, CVB Financial grew its revenue at a tepid 1.6% compounded annual growth rate. This was below our standards and is a tough starting point for our analysis.

We at StockStory place the most emphasis on long-term growth, but within financials, a half-decade historical view may miss recent interest rate changes, market returns, and industry trends. CVB Financial’s performance shows it grew in the past but relinquished its gains over the last two years, as its revenue fell by 4.9% annually. Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

This quarter, CVB Financial’s revenue grew by 1.7% year on year to $128.6 million, falling short of Wall Street’s estimates.

Net interest income made up 79.5% of the company’s total revenue during the last five years, meaning lending operations are CVB Financial’s largest source of revenue.

While banks generate revenue from multiple sources, investors view net interest income as the cornerstone - its predictable, recurring characteristics stand in sharp contrast to the volatility of non-interest income.

Topline growth is certainly important, but the overall profitability of this growth matters for the bottom line. For banks, we look at efficiency ratio, which is non-interest expense (salaries, rent, IT, marketing, excluding interest paid out to depositors) as a percentage of total revenue.

Investors place greater emphasis on efficiency ratio movements than absolute values, understanding that expense structures reflect revenue mix variations. Lower ratios represent better operational performance since they show banks generating more revenue per dollar of expense.

Over the last four years, CVB Financial’s efficiency ratio has increased by 5.1 percentage points, going from 40.9% to 45.9%. Said differently, the company’s expenses have increased at a faster rate than revenue, which usually raises questions unless the company is in high-growth mode and reinvesting its profits into attractive ventures.

CVB Financial’s efficiency ratio came in at 45.6% this quarter, falling short of analysts’ expectations by 74.2 basis points (100 basis points = 1 percentage point). This result was in line with the same quarter last year.

For the next 12 months, Wall Street expects CVB Financial to rein in some of its expenses as it anticipates an efficiency ratio of 44.6%.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

CVB Financial’s unimpressive 2.4% annual EPS growth over the last five years aligns with its revenue performance. On the bright side, this tells us its incremental sales were profitable.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For CVB Financial, its two-year annual EPS declines of 7.6% show it’s continued to underperform. These results were bad no matter how you slice the data.

In Q3, CVB Financial reported adjusted EPS of $0.38, up from $0.37 in the same quarter last year. This print beat analysts’ estimates by 2.7%. Over the next 12 months, Wall Street expects CVB Financial’s full-year EPS of $1.46 to grow 3.2%.

The balance sheet drives banking profitability since earnings flow from the spread between borrowing and lending rates. As such, valuations for these companies concentrate on capital strength and sustainable equity accumulation potential.

Because of this, tangible book value per share (TBVPS) emerges as the critical performance benchmark. By excluding intangible assets with uncertain liquidation values, this metric captures real, liquid net worth per share. Other (and more commonly known) per-share metrics like EPS can sometimes be murky due to M&A or accounting rules allowing for loan losses to be spread out.

CVB Financial’s TBVPS grew at a tepid 3% annual clip over the last five years. However, TBVPS growth has accelerated recently, growing by 14.4% annually over the last two years from $8.39 to $10.98 per share.

Over the next 12 months, Consensus estimates call for CVB Financial’s TBVPS to grow by 6.4% to $11.69, mediocre growth rate.

Leverage is core to a financial firm’s business model (loans funded by deposits). To ensure economic stability and avoid a repeat of the 2008 GFC, regulators require certain levels of capital and liquidity, focusing on the Tier 1 capital ratio.

Tier 1 capital is the highest-quality capital that a firm holds, consisting primarily of common stock and retained earnings, but also physical gold. It serves as the primary cushion against losses and is the first line of defense in times of financial distress.

This capital is divided by risk-weighted assets to derive the Tier 1 capital ratio. Risk-weighted means that cash and US treasury securities are assigned little risk while unsecured consumer loans and equity investments get much higher risk weights, for example.

New regulation after the 2008 financial crisis requires that all firms must maintain a Tier 1 capital ratio greater than 4.5%. On top of this, there are additional buffers based on scale, risk profile, and other regulatory classifications, so that at the end of the day, firms generally must maintain a 7-10% ratio at minimum.

Over the last two years, CVB Financial has averaged a Tier 1 capital ratio of 14.6%, which is considered safe and well capitalized in the event that macro or market conditions suddenly deteriorate.

Return on equity, or ROE, tells us how much profit a company generates for each dollar of shareholder equity, a key funding source for banks. Over a long period, banks with high ROE tend to compound shareholder wealth faster through retained earnings, buybacks, and dividends.

Over the last five years, CVB Financial has averaged an ROE of 10.4%, healthy for a company operating in a sector where the average shakes out around 7.5% and those putting up 15%+ are greatly admired. This is a bright spot for CVB Financial.

It was good to see CVB Financial narrowly top analysts’ tangible book value per share expectations this quarter. On the other hand, its revenue slightly missed and its EPS slightly exceeded Wall Street’s estimates. Overall, this was a softer quarter. The stock traded down 1.2% to $18.40 immediately after reporting.

Updated: December 4, 2025 at 11:45 PM EST

The latest quarterly earnings matters, sure, but we actually think longer-term fundamentals and valuation matter more. Investors should consider all these pieces before deciding whether or not to invest in CVB Financial.

We see the value of companies driving economic growth, but in the case of CVB Financial, we’re out. For starters, its revenue growth was weak over the last five years. And while its anticipated efficiency ratio over the next year signals it will gain leverage on its fixed costs, the downside is its weak EPS growth over the last five years shows it’s failed to produce meaningful profits for shareholders. On top of that, its net interest income growth was weak over the last five years.

CVB Financial’s P/B ratio based on the next 12 months is 1.2x. This multiple tells us a lot of good news is priced in - we think other companies feature superior fundamentals at the moment.

Wall Street analysts have a consensus one-year price target of $22.40 on the company (compared to the current share price of $19.82).