Michael Diana Comments: Money In The Bank

July 23, 2010, Inland Valley Daily Bulletin

Despite a still sluggish economy, Ontario-based CVB Financial Corp., the parent of Citizens Business Bank, posted record earnings for the second quarter, officials said Thursday. The Inland Empire company reported a net income of $19 million for the second quarter - the highest second quarter of earnings in the history of the bank, which has $6.5billion in assets and branches the I.E. and L.A. and Orange counties.

That income was a nearly 20 percent increase - $3.1 million - from last year, according to the bank.

In a note to investors, analyst Michael Diana of Cantor Fitzgerald noted that "the results reflected stable credit quality, implying to us that CVB's financial's bank regulatory exam that was completed in May was a 'clean' exam."

It didn't hurt that the bank didn't have much of an increase in non-performing assets, he said. Still, he pointed out in his note that CVB was still vulnerable to certain risks - two in particular," credit quality and interest rates.

"If housing prices in California continue to decline steeply in 2010, then the 10 percent of CVB Financial's loan portfolio related to housing could produce losses beyond what we have projected," he wrote.