CVB Financial Corp. (CVBF) Earnings Call Transcript & Summary

Good morning, and welcome to the CVB Financial Corp. 2022 Annual Meeting of Shareholders. [Operator Instructions] Please be advised that today's call is being recorded. [Operator Instructions] I would now like to hand the call over to Christina Carrabino. Please go ahead.

Thank you, and good morning, everyone. Before we get started, let me remind you that today's meeting will include some forward-looking statements. These forward-looking statements relate to, among other things, current plans, expectations, events and industry trends that may affect CVB Financial Corp.'s future financial position and results of operations. Such statements involve risks and uncertainties, and future activities and results may differ materially from current expectations. Due to the continuing COVID-19 pandemic, this Annual Meeting is being conducted in a hybrid format with a smaller in-person meeting being held at CVB Financial Corp.'s headquarters, in addition to the opportunity to listen in remotely via this conference call facility. In this connection, we reiterate that the ongoing COVID-19 pandemic may significantly affect the overall economy, the banking industry and CVB Financial Corp.'s business prospects. The speakers on this call claim the protection of the safe harbor provisions in the Private Securities Litigation Reform Act of 1995. For a more complete discussion of the risks and uncertainties that may cause our actual results to differ materially from our forward-looking statements, please see CVB Financial's Annual Report on Form 10-K for the year ended December 31, 2021, and in particular, the information set forth in Item 1A, Risk Factors, therein. I would now like to turn the meeting over to David Brager, President and Chief Executive Officer of CVB Financial Corp. and Citizens Business Bank. Dave?

Thank you, Christina. Good morning, everyone, and welcome to the 47th Annual Meeting of Shareholders for CVBF. I am David Brager, the President and Chief Executive Officer of CVBF and Citizens Business Bank. I would like to announce that Raymond V. O'Brien III, Chairman of the Board, will preside over the meeting and that Myrna ViSanta will serve as Secretary of the meeting. Any shareholder attending this meeting in person who wishes to vote their shares in person or has not yet submitted their proxy, should please see Myrna ViSanta, who is seated to my right. I would now like to introduce Ray O'Brien to say a few words. Ray?

Thank you, Dave. Good morning, everyone. I'm pleased to welcome you to the 47th meeting of the shareholders of CVB Financial Corp. We will share some of the results from the shareholder voting for this year. As already mentioned, note the revised meeting format due to COVID-19 pandemic, including limited in-person attendance and conference call format. Note that the agenda will be generally limited to mandatory corporate and housekeeping matters, with the opportunity for shareholder questions but only at the end of the meeting. First, to start off, I'd like to ask you to join me in our Pledge of Allegiance. I pledge allegiance to the Flag of the United States of America, and to the Republic for which it stands, one nation under God, indivisible, with liberty and justice for all. For starters, I will announce the selection by the Board of Directors of Mark Cano of Computershare as Inspector of Election. Note that pursuant to Computershare's COVID policies, Mark Cano is not present in person this year but is participating by telephone on the conference call. Mark Cano to confirm that he is on the telephone call and can hear all the proceeding. Mark, are you there?

Yes, Mr. Chairman, I am on the call. Thank you.

Okay. May I have a motion to ratify the appointment of Mark Cano as Inspector of Election.

Moved.

May I have a second.

Second.

All those in favor say, Aye.

Aye.

Aye.

All those against, say nay. The ayes have it. Note that we believe all CVBF Directors up for reelection, besides myself and David Brager, are participating by telephone conference call. I hand it back to Dave Brager.

Thank you, Ray. Due to the mostly virtual nature of the meeting, I will not be presenting a formal presentation. But I would like to point you to our April 2022 investor presentation and Form 10-K for any information. I ask that all questions should be reserved until the end of the meeting. I would also request that anyone with questions, limit yourself to one question and one follow-up question, if needed, so that all participants are treated equally. I'd now like to introduce Richard Wohl, our General Counsel, to take us through the procedural matters of the meeting. Richard?

Thank you, Dave. Good morning, everybody. We'll now move through the official business and legal portion of our 2022 Annual Shareholder Meeting. Before we proceed to the business items for today's meeting, there are 2 procedural matters that we need to address. First is the reading of the legal notice of this Annual Meeting. Computershare, our transfer agent, has provided me with an affidavit of mailing of the notice of the meeting, which states that the notice of this Annual Meeting, with instructions on how to obtain copies of the proxy materials, was mailed on or about April 6, 2022 to all CVB Financial Corp. shareholders of record on March 28, 2022. This affidavit is available at our corporate headquarters. If any shareholder wishes to examine it, it will be filed with the annual minutes -- with the minutes of this annual meeting. To keep things moving along quickly, at this time, I would entertain a motion to waive the reading of the annual -- of the legal notice. Do I hear such a motion?

Motion.

Do I have a second?

Second.

All in favor, signify by saying yes.

Aye.

Oppose, nay. The motion carries. The second procedural item we need to address is the quorum report. I've confirmed with Mark Cano, our Inspector of Elections, who advises me that the number of shares of CVB Financial Corp. outstanding on the record date of March 28, 2022, for this Annual Meeting is 141,743,704 shares. The shareholders whose votes are present, either by proxy or in person, are 124,457,873 shares, which constitute 87.8% of our outstanding shares. The shares which are present in voting, in person or by proxy, constitute at least a majority of CVB Financial Corp.'s outstanding shares. So I'm pleased to report that we have a quorum of shares represented in voting for this Annual Meeting. Now let's move to the actual business items under the subject of today's Annual Meeting. As set forth in the Notice of Annual Meeting, there are 3 items of business to be conducted. They are as follows: one, election of 8 nominees for our Board of Directors; two, to approve on a nonbinding advisory basis the compensation of the company's named executive officers for 2021, that's called our say-on-pay resolution; and three, ratification of the appointment of KPMG LLP as the independent registered public accountants of CVB Financial Corp. for the year ending December 31, 2022. Let's go to the first item of business, which is the election of 8 persons to serve, in each case, a 1-year term on the company's Board of Directors and until their successors are duly elected or chosen. As set forth in the notice of the Annual Meeting, the Board of Directors has nominated the following 8 persons to serve as Directors of the company: George Borba, Jr.; David Brager, Stephen Del Guercio, Rodrigo Guerra, Jr., Anna Kan, Raymond O'Brien III, Jane Olvera; and Hal Oswalt. May I have a motion please to place a nomination of the Board's 8 nominees?

Motion.

May I have a second?

Second.

Thank you. The procedures for shareholders to nominate individuals to serve on the Board of Directors are set forth in our corporate bylaws, which were referenced in the notice of this Annual Meeting. I've been advised that no shareholder nominations were otherwise received by CVB Financial Corp., and therefore, the only nominees for director are the Board's 8 nominees. May I have a motion to close the nominations?

Motion.

May I have a second?

Second.

Thank you. So the motion on the floor has been resolved that the 8 nominees whom I announced be and they hereby are elected to serve as members of the Board of Directors of CVB Financial Corp. until our 2023 Annual Meeting of Shareholders and until their successors have been duly elected and are so qualified. I've conferred with Mr. Cano, our Inspector of Elections, who advises me that each of the Board's nominees has received at least 102,333,530 votes or 96.94% in favor of election, and no other person has received any votes. Since each nominee has received a plurality of the votes cast, they are elected for another 1-year term. So congratulations to our Directors. Our second item of business is a proposal to ratify the compensation of the company's named executive officers. We have 6 rather than 5 named executive officers for 2021 because one individual who's no longer employed by our bank and would otherwise qualify as a named Executive Officer under the terms of SEC's Regulation S-K is included in our proxy statement. This say-on-pay proposal is explained in further detail in the proxy statement and by a separate vote of our shareholders at our Annual Meeting in 2017, it's been established that this item shall be placed on the Annual Meeting agenda for a vote by our shareholders on an annual basis, so every single year. That being so, this resolution covers the compensation for our named executive officers for the most recent fiscal year of the company, which was ended on December 31, 2021. The component elements of our individual named executive officers compensation, the metrics for determining their performance, the amounts paid for each component element and the total amounts paid are all set forth in our annual proxy statement. Please note that this shareholder vote is advisory only and thus nonbinding on the company. Although our Board will, of course, consider the views of our shareholders and setting our compensation plans for our named executive officers. At this time, I would entertain a motion to ratify the compensation of our 6 named executive officers for the company's most recent fiscal year. Do I hear such a motion?

Motion.

Thank you. Do I have a second?

Second.

Thank you. The motion on the floor is be it resolved that the compensation paid to the company's named executive officers as disclosed in our proxy statement pursuant to the compensation rules of the Securities and Exchange Commission and Item 402 of Regulation S-K, including the compensation discussion and analysis, summary compensation tables and the related narrative discussion be hereby approved. I've conferred with Mr. Cano, our Inspector of Elections, who advises me that on this proposal in favor, we have 102,618,378 shares, 97.21%, against 2,252,308 shares, 2.13% and abstaining 692,514 shares or 0.66%. Since the number of shares voted in favor of the proposal well exceeds the majority of the shares represented in voting at the meeting, with the affirmative votes constituting a majority of the required quorum, this nonbinding advisory proposal passes. Our third and last item of business is a proposal to ratify the appointment of KPMG LLP as our independent public accountants for the company's 2022 fiscal year. This proposal is also explained in detail in our proxy statement for this Annual Meeting. At this time, I would entertain a motion to ratify the appointment of KPMG LLP as the company's independent public accountants for the company's 2022 fiscal year. Do I hear such a motion?

Motion.

Do I have a second?

Second.

Thank you. The motion on the floor is be it resolved that the appointment of KPMG LLP as the company's independent public accountants for the fiscal year ended December 31, 2022, be and hereby is ratified and approved. . Again, I've conferred with Mr. Cano, our Inspector of Elections, who advises me that on this proposal, we have 123,427,981 votes in favor, that's 99.17%, against 405,077, 0.33% and abstaining 624,815 votes, 0.5%. Since the number of shares voting in favor of the proposal exceeds the majority of the shares represented in voting at this meeting, with the affirmative votes constituting a majority of the required quorum, this proposal also passes. That concludes the portion -- the business portion of today's Annual Meeting. Thank you. I'll now turn the meeting back over to Dave Brager.

Thank you, Richard. Any shareholder questions from this room or via our conference call facility should be addressed to me and should relate to matters on the Annual Meeting agenda. We will address any questions from individuals who are present here in the room first, and then move to any questions by telephone. If there are any questions posed by persons here in the room, we will repeat them for the benefit of those of you participating by telephone. Questions should be asked only by shareholders and each person asking a question should identify themselves either in person or over the telephone by stating their name and affirming that they are a shareholder, so that we can be fair to all shareholders who may have questions. Each person is requested to limit himself or herself to one question plus a follow-up, only if needed, on the same topic and to limit his or her question to a maximum of 1 minute. Please allow for a complete response before seeking to ask any follow-up questions. I'll now turn the call over to the operator, as there are 0 questions in the room, I believe.

[Operator Instructions] I show no questions from the phone lines at this time.

Great. Thank you. Before we conclude our meeting today, I would like to take a moment to recognize Ray O'Brien. Ray has served commendably as our Chairman since 2014 . Ray has decided the time has come to pass his Chairman's gavel to a successor. He has agreed to remain on our Board so that we will continue to benefit from his tremendous expertise and knowledge. The Directors who are reelected today will be selecting a new chair at our annual organizational meeting following the conclusion of this meeting. But I want to take this opportunity on behalf of our management team, the Board and our shareholders to express our sincere and heartfelt gratitude to Ray for his exceptional service as our Chairman. Ray has guided us through a period of notable growth and expansion, including completion of the 2 largest acquisitions in our company's history. Thank you, Ray, we appreciate your commitment and stewardship as our Chairman and your willingness to continue to serve on our Board. Is there any other business to come before this meeting? If not, I'll turn the meeting back over to Ray O'Brien for closing.

Thank you, Dave. It certainly has been my honor to serve as Chairman of Citizens Business Bank over the past 8 years. Results have spoken for themselves. It's the attention to detail of all of the associates of the bank that have caused such success. Board of Directors is just there to support these key employees in creating this success. I'm sure we will continue to have great representation at the Chairman level by Hal Oswalt going forward. I want to thank everybody over the past 8 years for their tremendous support, which has helped make everybody success. In concluding this meeting, I hope to ask everybody to stay safe for our Directors, our associates. Our Directors and our shareholders, thank you for your continued support. Stay healthy, and hope that this pandemic continues to recceed. At this time, I would like to entertain a motion to adjourn the meeting.

Motion.

Is there a second?

Second.

All those in favor, say aye.

Aye.

Aye.

The Annual Meeting is hereby adjourned. Thank you for attending.

The Annual Meeting of Stockholders has now concluded. Thank you for participating.