CVB Financial's Heritage Deal Delivers a Full Quarter

The Tip Desk · October 24, 2026 · 3 min read

Net interest income reached $179.1 million and tax-equivalent net interest margin expanded to 3.89% as Heritage operations filled the period.

CVB Financial Corp. (CVBF), the California-headquartered holding company for Citizens Business Bank, National Association, reported net earnings of $78.1 million, or $0.44 a share, for the quarter ended September 30, 2026, up from $48.3 million, or $0.29 a share, in the second quarter. Annualized return on average assets recovered to 1.48% from 0.97%, and annualized return on average tangible common equity rose to 16.22% from 10.85%.

The swing tracked the Heritage Commerce Corp. deal, which closed April 17, 2026 and contributed 74 days of operations in the second quarter. In the third quarter the combined franchise ran a full period. Net interest income rose $16.7 million, or 10.3%, to $179.1 million. Average interest-earning assets increased $891.9 million, and average loans rose $476.7 million, or 4.13%, to $12.02 billion. Average total deposits and customer repurchase agreements increased $577.9 million, or 3.59%.

Tax-equivalent net interest margin expanded 17 basis points to 3.89%, after a 28 basis point expansion in the second quarter. Average earning-asset yields rose 16 basis points, driven by a 23 basis point increase in the average investment-securities yield and a 13 basis point increase in the average loan yield. The company said the securities-yield gain reflected post-merger optimization, including repositioning Heritage’s investment portfolio and deploying proceeds from sales of Heritage mortgage pools into higher-yielding securities. Average loan yields also reflected a full quarter of acquired assets, including $103.4 million of average factored receivables that generated a 17.21% average yield. Discount accretion on acquired loans was about $3.3 million.

Cost of funds held at 0.96%. Deposit cost fell 4 basis points to 0.79%, offset by higher FHLB borrowings and cash-flow hedge costs on brokered time deposits. Noninterest-bearing deposits were 52.6% of average total deposits.

Noninterest expense fell to $90.5 million as acquisition-related expenses declined to $8.1 million from $31.4 million. The efficiency ratio improved to 46.27% from 63.75%. Excluding acquisition expense and the second quarter’s $4.3 million provision for unfunded loan commitments, the adjusted efficiency ratio was 42.10%. The company said that, on that adjusted basis, noninterest expense rose $3.6 million from the second quarter, primarily from a full quarter of Heritage operating costs. Noninterest income was $16.5 million.

Credit costs were light. The company recorded a $1.0 million recapture of credit losses after no provision in the second quarter. Net charge-offs were $20,000. The allowance for credit losses was $125.6 million, or 1.04% of loans. Nonperforming loans were $18.7 million, or 0.15% of loans. Classified loans were $113.9 million.

Period-end loans and leases at amortized cost were $12.12 billion, up $105.0 million, or 0.87%, from June 30. Increases in dairy and livestock and agribusiness, commercial real estate, SBA and construction loans were partly offset by lower commercial and industrial loans. Deposits and customer repurchase agreements totaled $16.30 billion, down $550.0 million, or 3.26%, from June 30. Noninterest-bearing deposits were $8.42 billion, or 53.50% of total deposits. Total assets were $20.52 billion.

CitizensTrust managed and administered about $4.94 billion. The company repurchased $17.5 million of common stock in the third quarter, bringing year-to-date 2026 buybacks to $22.6 million, or 1.0 million shares. Common equity Tier 1 capital was 14.8%. Tangible book value was $10.92 a share. Chief Executive Officer David Brager said the quarter was the 198th consecutive period of profitability and that the company remains focused on integration across California’s major economic centers.