Good morning, ladies and gentlemen, and welcome to the Third Quarter 2014 CVB Financial Corp. and its subsidiary, Citizens Business Bank, Earnings Conference Call. My name is Mike, and I'm your operator for today. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference call over to your host for today's call, Ms. Christina Carrabino. Ms. Carrabino, you may proceed, ma'am.

Thank you, Mike, and good morning, everyone. Thank you for joining us today to review our financial results for the third quarter of 2014. Joining me this morning are Chris Myers, President and Chief Executive Officer; and Rich Thomas, Executive Vice President and Chief Financial Officer. Our comments today will refer to the financial information that was included in the earnings announcement released yesterday. To obtain a copy, please visit our website at www.cbbank.com and click on the Investor's tab. Before we get started, let me remind you that today's conference call 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 the company's future operating results and financial position. Such statements involve risks and uncertainties, and future activities and results may differ materially from these expectations. The speakers on this call claim the protection of the Safe Harbor provisions contained in the Private Securities Litigation Reform Act of 1995. For a more complete discussion of the risks and uncertainties that may cause actual results to differ materially from our forward-looking statements, please see the company's annual report on Form 10-K for the year ended December 31, 2013, and in particular, the information set forth in Item 1A, risk factors therein. Now I will turn the call over to Chris Myers.

Thank you, Christina. Good morning, everyone, and thank you for joining us again this quarter. Yesterday, we reported earnings of $24.3 million for the third quarter of 2014 compared with $25.5 million for the second quarter of 2014 and $24.2 million for the third quarter of 2013. Our third quarter earnings were positively impacted by increased net interest income, driven by both loan income and income from investment securities. Year-over-year, 2014 third quarter net interest income was up 13.5% or $7.3 million from 2013 third quarter results. Top line income is a big focus for Citizens Business Bank. As such, we are centered on growing assets, particularly loans. During the third quarter of 2014, we grew net loans by $85.3 million or about 2.4%, all organic. Earnings per share were $0.23 for the third quarter compared with $0.24 for the second quarter and $0.23 for the year-ago quarter. Through the first 9 months of 2014, we earned $78.4 million compared with $70.3 million for the first 9 months of 2013. Diluted earnings per share were $0.74 for the 9-month period ended September 30, 2014, compared with $0.67 for the same period in 2013. The third quarter represented our 150th consecutive quarter of profitability and 100th consecutive quarter of paying a cash dividend to our shareholders. Excluding the impact of the yield adjustment on covered loans, our tax exempt net interest margin was 3.53% for the third quarter compared with 3.46% for the second quarter and 3.48% for the year-ago quarter. Improvement in the net interest margin can be partially attributed to growth in loans and reduction in nonperforming assets. At September 30, 2014, we had $3.7 billion in total loans, net of deferred fees and discount on covered loans, compared with $3.6 billion in total loans at June 30, 2014.…

Thanks, Chris. Good morning, everyone. Our effective tax rate was 36.25% for the 9 months ended September 30, 2014, compared with 36.5% for the 6 months ended June 30, 2014. Our effective tax rate varies depending upon tax-advantaged income, as well as available tax credits. Now to our investment portfolio. During the third quarter of 2014, we sold an average of approximately $186.4 million in overnight funds to the Federal Reserve and received a yield of approximately 25 basis points on collective balances. We also maintained an average of $28.8 million in short-term CDs with other financial institutions, yielding approximately 75 basis points. At September 30, 2014, investment securities totaled $3.16 billion, up $142.5 million from the second quarter of 2014. Investment securities represented 42.59% of our total assets at quarter end. At September 30, 2014, we had an unrealized gain of $31.2 million in our total investment portfolio compared to an unrealized gain of $41.5 million for the prior quarter. Virtually all of our mortgage-backed securities are issued by Freddie Mac or Fannie Mae, which have the implied guarantee of the U.S. Government. We have been strategically reinvesting our cash flow runoff from our [ph] investment portfolio, carefully weighing current rates and overall interest rate risks. During the third quarter, we purchased $253.8 million in mortgage-backed securities with an average yield of 2.09% and an average duration of approximately 4 years. We also purchased $7.7 million in municipal securities during the third quarter, with an average tax equivalent yield of 3.79%. Prepayment speeds in our investment portfolio have somewhat stabilized. And based upon current interest rates, we anticipate receiving approximately $30 million in monthly cash flow from our portfolio. Now turning to our capital position. Our capital ratios are well above regulatory standards, and we believe they still remain above our peer group average. Our September 30, 2014, capital ratios will be released soon, concurrently with our quarter end Form 10-Q. Shareholders' equity increased $8.5 million to $849.2 million for the third quarter compared with the second quarter. The quarter-over-quarter increase was due to an increase of $24.3 million in net earnings, $727,000 of various stock-based compensation items. This was offset by $10.6 million in cash dividends and a decrease of $5.9 million in unrealized gain on available-for-sale investment securities. I will now turn the call back to Chris for some closing remarks.

Thanks, Rich. Now let's talk about economic conditions. In terms of the dairy industry, milk prices are still at elevated levels and should continue to provide profits for the dairy industry. According to the California Department of Food and Agriculture, or CDFA, feed costs in California represented 65.4% of total milk production costs for the second quarter of 2014 compared to 65.2% of total milk production costs for the first quarter, but down from 66.9% for the fourth quarter of 2013. According to data from the U.S. Department of Agriculture, October milk futures were approximately $24.19 for 100 pounds of Class 1 milk in October. This was up from $23.63 in September and significantly up from $19.20 in October 2013, a year ago. High milk prices and moderate commodity prices indicate that dairy farmers should continue to be profitable throughout the remainder of this year and even into early next year. There has been much discussion about the California drought. According to the U.S. Department of Agriculture, California dairy farms still lead the nation in dairy production, churning out about 21% of America's milk supply. California dairies with the capacity to grow their own roughages for feedstocks, and those located near aquifers, should fare better if the drought continues. According to various economic reports, California's Employment Development Division reported the unemployment rate was 7.4% in August 2014 compared with 7.9% in July and 8.9% back in August 2013. In June 2014, California finally surpassed its prerecession employment peak, recovering all of 1.3 million jobs lost during the downturn. California's budget continues to heal and the improvement is being felt by previously financially strapped local governments, as sales and property tax revenues rise across the state. Tourism continues to drive the state's economy forward with hotel occupancy at 73.4% statewide, 10…

[Operator Instructions] Our first question comes from Aaron Deer of Sandler O'Neill & Partners.

Unfortunately, Aaron had to step away for a second, this is his associate, Alex Morris. I just had a quick question for you guys. So it looks like the C&I balances over the past year have been relatively flat. Just wondering if there was a -- do you guys have seen any improvement from borrowers or if it's just been a kind of just general lack of demand? And then what kind of utilization are you seeing?

You said on commercial and industrial loans, C&I loans?

Yes.

Okay. It's been a little bit frustrating, in the sense that we have put on some good business in the C&I sector. But we're not seeing the borrowings. In fact, our utilization rates on our lines of credit are down from they were a year ago and down from the year before. But when you contrast that, when you talk to our customers, I mean, we've had bunch of customers luncheons, we do 1 or 2 of these a month, and assemble groups of customers and get feedback from how their businesses are doing. They're all pretty optimistic. They're all growing their businesses. Their sales are up. I mean, not everyone, but the vast majority. And so they're pretty optimistic. But they're not growing by 20% a year, they're growing by 10% a year. And I think a lot of their cash reserves and their profitability is able to fund that growth. So we're not seeing a lot of utilization on the lines of credit. But we have a big focus on that and we like that business because it helps us cross-sell into a whole myriad of financial products and services. And even helps our commercial real estate loan outstandings, as many of these business owners own properties, invest in properties and then they have their owner-occupied properties along the way too, which we love to finance.

The next question we have comes from Tim Coffey of FIG Partners.

Chris, with regards to the dairy livestock portfolio, do you see that trend of increasing balances continuing into 4Q?

Well, the fourth quarter, we should see a pretty significant increase in our dairy and livestock loans, because what happened is that dairies have been very profitable throughout the year. This is the most profitable year in the dairy business, according to some of the dairy farmers I've talked to, in the last 6, 7 years. And so because of that profit, what happens is a lot of the dairy farmers will choose to defer their income into 2015 to reduce their tax burden. And if they're not going to take any income, they let the income -- they let actually the milk checks go into the cooperative and they don't take the income this year. So what that causes them to do is have to borrow money on our lines of credit to be able to pay their expenses for the remainder of the year. And we're already seeing these deferral loans kick in and our dairy and livestock loans are going up. They're even up from the end of the quarter right now by over $10 million from where they were at September 30, 2014. So I think you're going to see some substantial borrowings in the fourth quarter in the dairy and livestock side, and it'll be a strong deferral year.

Okay. And what about the rest of the portfolio? What kind -- what's the pipeline looking there?

I think we had a pretty good third quarter. We grew by 2.4%, all of that was organic. We do have a good pipeline going into the fourth quarter. It is, obviously, it's week by week, month by month, but we feel pretty good about our pipeline and it has come back quite a bit from where it was earlier in the year.

Next we have Doug Johnson of Evercore.

My question relates to the core margin, you had 5, 6 or 7 basis points of expansion this quarter, and it looks like it was driven by higher loan yields. I'm just kind of wondering, was there anything unusual maybe on the discount accretion side from the deal or credit recovery? And just kind of wondering what your outlook is for the margin going forward?

You're right. What happened is we had a full quarter of American Security Bank loans in there. And American Security Bank loans, as a portfolio, have a higher yield than Citizens Business Bank loan. So that helped us there. We also saw some of our nonperforming loans that dropped as well. And as you see some of these nonperforming loans become performing loans, that adds to our interest income and helps our margin.

Any sense of how much that helped in terms of basis points?

I don't have an exact number for you. But I think, I would say the increase that we looked at is attributable to those factors that I just talked about.

Got it. And can the margin hold stable going forward? Is that a good way to think about it?

Yes. It is, I think -- obviously, the margin is about income and about expenses as well. And from an expense standpoint, I think we had expenses in the third quarter that will not recur as strong as they will in the fourth quarter. I think by the first quarter of 2015, a lot of these expenses will be out of the mix. But it's a challenging interest rate environment. Interest rates remain low, so that will put some headwinds against us on the spread. But I think we're running probably in the range of where we were last quarter to this quarter. I think that's probably a good range for us, but I just don't -- we don't predict the future on that.

Okay. Great. And just one last quick one on the -- in terms of the -- you mentioned $10 million, so far, in the dairy and livestock portfolio. What type of seasonality are you expecting if trends hold for the quarter?

I think we could see dairy loans -- dairy and livestock loans, it's hard to project that, but we do have some feel for it. I think you'll see dairy and livestock loans, probably increase quarter-over-quarter, somewhere between $50 million and $100 million. And that's just a guess. Because I don't know what these guys are going to do, but it just feels that way. We are seeing deferral loans requests coming in and it's starting to build.

[Operator Instructions] Our next question comes from Julian Balicka of KBW. Julianna Balicka - Keefe, Bruyette, & Woods, Inc., Research Division: I have a couple of questions to follow-up. One, with the recent movements in yields that we've seen, can you discuss your updated securities portfolio management strategies? What kind of purchases do you expect to be making from here on out? And what are the new -- the yields on the new securities you've purchased quarter-to-date, et cetera?

Julian, it's Rich. We continue to look at the market. As you well know, the market for -- the interest rate market has been down for the last couple of weeks. We look for opportunities to enter into the market, but right now with the 10-year at 2.22%, or somewhere around there, and our traditional purchase of mortgage-backs is in the 15-year mortgage-backs, the yield is not very attractive to us. So right now we're sort of holding off in purchases. We also continue to look for municipal securities, but those that meet our criteria are very difficult to find because we're looking for bank-qualified municipals. So it's very difficult. It's hard to tell where we're going to go for this next quarter as far as dollar volume, just because we're not certain of where the interest rate environment is going to go, generally.

And Julian, I would add to that, 2 things. First, I think a lot of our excess cash is going to be used up for loan growth in the fourth quarter. And some of that will be seasonal loan growth, due to the dairy and livestock loans. If we -- if they do advance $50 million to $100 million that will eat up a good chunk of it. And then, also, we're trying to drive our core growth as well. So we're hoping to have another good quarter-on-quarter loan growth as well. So I think those 2 things could -- are factors. Remember this, in the third quarter, we acquired American Security Bank late in the second quarter, in the latter half of the second quarter. So when we did that, we basically got $360 million, $370 million in deposits. And we got about $240 million in loans. So we got a lot of cash when we did that. And we used -- we bought a lot of securities in the third quarter to use up that cash. So we've already accomplished that, if you will. So we won't have that same accomplishment in the fourth quarter. We'll be -- we're hoping to use it. I'd love to see every dollar go into loans if possible. Julianna Balicka - Keefe, Bruyette, & Woods, Inc., Research Division: Okay. Makes sense. And speaking of dollars into loans, I mean, what kind of loan-to-deposit ratio would you like to get to? And kind of given the trajectory of your loan growth and the strength of your deposit growth, I mean, how long do you think that could take absent any rise in rates?

I would say thousands of years, probably. No. We've love to be an 80% loan-to-deposit ratio, I think that's a good core number for us. We're not there now. I think we're somewhere around 66% or something like that. But clearly, our objective is to build that up. But we want to do in a way that we feel comfortable with the loans that we're putting on the books. And we focused on organic loan growth and we focused on our core lending areas, where we feel like we have good subject matter expertise in our geographic markets that we understand. And so we're sticking to that strategy. We're not deviating from that strategy. If we wanted to get to 80%, we can buy loans. We're looking -- we do look at loan portfolios to buy from time to time. But every time we look at these things, we just -- there's something there we don't like about it, that doesn't sit well with us. So we'd rather build it organically. And in the third quarter, if you look at our loan growth, we had a strong loan growth quarter, but we also had a strong noninterest bearing deposit growth quarter. So that's a good problem for us to have. If we can fund things at 0% cost-to-deposits and -- I want to build those deposits all day long, even if I have to put some of those into securities. Julianna Balicka - Keefe, Bruyette, & Woods, Inc., Research Division: Okay. So it sounds like you'll just take -- the timing will come with what the market will give you. So if it takes you 3 years, that's fine, and if you takes you 2 or 4, that's fine too?

Yes. And I think some of this will come -- when interest rates rise, I do think that's going to help -- that's going to probably absorb some of those deposits. And some of those higher-priced deposits or -- may go elsewhere. But we got good cushion there. So I think our funding is very solid and as long as interest rates stay low here, I think it's going to be a challenge to get for us organically to that 80%. But at least, we've had a couple of months in a row that we have been able to increase our loan-to-deposit ratio. So maybe it's only a streak of 2 months in a row, but I'd like to see to get 3 months and then 4 months and keep going from there. Julianna Balicka - Keefe, Bruyette, & Woods, Inc., Research Division: That sounds good. And then speaking of deposits into a rising rate environment. I mean, you've addressed some of it before, but can you give us some updated thoughts as to outflows, if any that you're thinking about or remix between your classes. I mean, you guys have a very sticky deposit base. So how should we think about deposit behavior?

I think, it's hard to -- we look at that and try to apply as much science to that as we can, and we've done deposit studies and so forth and so on. But really, the market is going to evolve and change and we have to be able to react to that. I think, if you said what is the #1 core strength of this organization, I would say it's our ability to generate quality deposit growth. That is the #1 strength of this company. And we do that through a lot of service, a lot of relationship banking, we have niches in nonprofit. So I feel very confident that, that we will retain a strong deposit base as rates rise. And I think proportionally stronger to a lot of our competition, because of our expertise in deposit gathering, our high level of service. And the niches we have in government services, nonprofits, title escrow property management, unions, et cetera. Those are all great depositors for us. And those niches help us a lot. I don't think when rates go up, that we'll stay at 52.7% non-interest-bearing deposits. I think that will go down. But if you look at the last 20 years of this company, we've never been below 35% of our deposits in noninterest bearing. In the vast majority of years, we've been over 40% noninterest bearing deposits. So we look at that as kind of a -- if rates popped up 3% or 4%, we look at that as probably where somewhere from that 52% dropping down to 40%-ish on noninterest-bearing deposits would go. Julianna Balicka - Keefe, Bruyette, & Woods, Inc., Research Division: So if the DDAs drop like that, do you think that your total deposit balances will still stay stable and/or move upwards? Or will you -- should we think about negative balances?

No. I think we'll manage our deposit growth in that respect. Because I think that we, right now, if anything, we're suppressing some of our deposit growth based on what potentially we could do in the marketplace. We're really sticking to what we think is core, is sticky and is not going to be as subject to fluctuation when rates rise. I mean, I really feel very strongly that if we wanted to grow deposits year-over-year by 10%, 15% in the next year, if rates stay where they are. I think we do that very easily with still very low cost deposit growth. I just want to make sure the deposits we're bringing in now are going to materially stick with us when rates go back up. So our teams are very focused on that as well. It's -- I would expect that our aggregate deposits would be sufficient to fund the loans, like they've always have been. I just think the mix would change to a little bit more interest bearing and a little less noninterest-bearing, just due to people wanting to trace -- the customers wanting to chase yields a little bit. Julianna Balicka - Keefe, Bruyette, & Woods, Inc., Research Division: Okay. That makes sense. And then just switching gears to asset quality, and I'll step back now. With the negative provisions, when do you reckon you will start to shift to positive provisions, I guess, if ever? And your reserve to loans are down to 1.67%. And I know there's been a decrease in classifieds in dairy over time, but kind of thinking out in front of -- about the ongoing drought situation kind of where are you pegging where the reserve coverage could come down to if any further?

Yes. We don't really peg that number and there's not -- we really have a pretty sophisticated formula and we look at reserves based on reserves in different loan categories, based on performance. And we use a rolling 20 quarter -- that's right, rolling 20-quarter analysis. And look at losses going back over the last 20 quarters, that's part of our methodology in the different loan categories. So it goes into a whole formula. And through that formula, it kind of spits out, "Hey, this is what your reserve should be." And then we have to make business decisions around that as well. So there's a lot of factors that go into that. I think the vast majority of our reserve release is done. I mean if you look at the past 6 or 7 quarters, we only released $1 million this quarter. And I think we have released $5 million or more in the last 5 or 6 quarters before that. So I think the reserve release is materially done. I'm hoping that, over time, we will have to add to our loan -- our reserve, because that means we're growing loans. But we still are having improvement and declining our substandard loans/classified loans. And as those things continue to improve [ph], that will free up reserves to some extent. And hopefully, we're using those reserves to provide support to our loan growth. And then, over time, we will have to add to our reserves. I agree with you.

[Operator Instructions] And it looks like we have a follow-up from Julianna Balicka of KBW. Julianna Balicka - Keefe, Bruyette, & Woods, Inc., Research Division: I guess, I'm the last one in the queue, apologies. Final question then. Capital management, any updated thoughts as to buybacks, special dividends, M&A pipeline, lack thereof, et cetera? Every analyst's favorite question.

Yes. Our strategy hasn't changed. We certainly are -- want to make sure that we use our earnings to pay good dividend, a good cash dividend. We just paid our 100th consecutive cash dividend, 100th consecutive quarters in a row. And from there, we do have about $7.5 million, I think $7.6 million in shares available to buy back. There are times during the quarter we're in blackout periods, so we can't buy that stock back. And usually, that's the last month of the quarter. So if you're really -- our last month -- maybe, for instance, I think from about September 15 to maybe 3 days from now, we're in a blackout period. So we can't buy back stock during those periods of time. And buyback is still something that we're actively looking at. But have provided no plan of -- no direct plan of buyback or any direct guidance on that, but we want to be opportunistic. And you're absolutely right, we want to keep our powder dry for M&A. We have -- we are looking at deals here and there, but we've got to make sure they're at the right price and the right strategic fit for us. And we just are finishing up acclimating American Security Bank and integrating American Security Bank into Citizens Business Bank. And our teams have done a really good job. I'm very proud of the way that they've handled this. And they've handled the people issues and the technology issues. So we got a really solid team. So I think we did a good job executing this acquisition. And our powder is dry and we're out looking. But we're going to make sure we make a good decision and not just make a decision to make a decision to buy someone.

Well, at this time, we're showing no further questions. We'll go ahead and conclude our question-and-answer session. I would now like to turn the conference back over to Mr. Chris Myers for any closing remarks. Sir?

Sure. Thank you very much for joining us today in our call. We appreciate your interest and always look forward to speaking with you again in our fourth quarter and year-end 2014 earnings conference call in January. In the meantime, feel free to call me or Rich Thomas or contact either one of us. Have a great day. And thank you very much for joining us on the call. Bye-bye.

And we thank you, sir, and to the rest of the management team for your time. The conference call has now concluded. At this time, you may disconnect your lines. Thank you, and have a great day.