CVB Financial's Q4 2024: Contradictions in Deposit Costs, Loan Growth, and Capital Strategy

Financial Performance and Profitability:
- Citizens Business Bank reported net earnings of $51 million for Q4 2024, representing their 191st consecutive quarter of profitability.
- The bank declared a $0.20 per share dividend for Q4 2024, marking their 141st consecutive quarter of paying cash dividends.
- The decline in net interest income by $3.2 million or 2.8% quarter-over-quarter was primarily due to deleveraging the balance sheet, which reduced earning assets.

Deposit Growth and Cost Management:
- Total deposits and customer repurchase agreements reached $12.2 billion at December 31, 2024, a $505 million increase from the prior year.
- The cost of deposits was 93 basis points for Q4 2024, compared to 98 basis points in the previous quarter, demonstrating effective cost management.
- The bank attributed this growth to strategies like focusing on low-cost deposits and new deposit relationships.

Loan Portfolio and Credit Quality:
- Total loans at December 31, 2024, were $8.54 billion, declining by $36 million from the end of Q3 and $368 million year-on-year.
- The decline was primarily led by a $111 million decrease in commercial real estate loans and a strategic focus on higher-quality borrowers.
- The bank maintained strong credit quality with nonperforming loans at $47.6 million and classified loans at $89.5 million, representing 1.05% of total loans.

Balance Sheet Repositioning:
- Citizens Business Bank redeemed $1.3 billion of debt through an early redemption, reducing average borrowings by $1.2 billion and average earning assets by almost $1 billion.
- This action resulted in a 13 basis point increase in the net interest margin and a 3.05% to 3.18% expansion in the net interest margin.
- The early redemption of debt was a strategic decision aimed at deleveraging the balance sheet.