CVB FINANCIAL CORP Segments Disclosure

21.	BUSINESS SEGMENTS

The Company has identified two principal reportable segments: Banking Centers (“Centers”) and Dairy & Livestock and Agribusiness. All other operations have been aggregated in “Other”. The Bank has 50 Banking Centers organized in geographic regions, which are the focal points for customer sales and services. The Company utilizes an internal reporting system to measure the performance of various operating departments within the Bank which is the basis for determining the Bank’s reportable segments. The chief operating decision maker (currently our CEO) regularly reviews the financial information of these two segments in deciding how to allocate resources and to assess performance. Our two principal reporting segments, Centers and Dairy & Livestock and Agribusiness, are aggregated into separate operating segments as their products and services are similar and are sold to similar types of customers, have similar production and distribution processes, have similar economic characteristics, and have similar reporting and organizational structures. All other operating departments have been aggregated and included in “Other” for reporting purposes. Recapture of provision for loan losses was allocated by segment based on loan type. In addition, the Company allocates internal funds to the segments using a methodology that charges users of funds interest expense and credits providers of funds interest income with the net effect of this allocation being recorded in the ”Other” category.

The following tables present the selected financial information for these two business segments. GAAP does not have an authoritative body of knowledge regarding the management accounting used in presenting segment financial information. The accounting policies for each of the business units is the same as those policies identified for the consolidated Company and disclosed in Note 3 — Summary of Significant Accounting Policies, included herein. The income numbers represent the actual income and expenses of each business unit. In addition, each segment has allocated income and expenses based on management’s internal reporting system, which allows management to determine the performance of each of its business units. Loan fees included in the “Centers” category are the actual loan fees paid to the Company by its customers. These fees are eliminated and deferred in the “Other” category, resulting in deferred loan fees for the condensed consolidated financial statements. All income and expense items not directly associated with the Centers’ business segment are grouped in the “Other” category. Future changes in the Company’s management structure or reporting methodologies may result in changes in the measurement of operating segment results.

The following tables present the operating results and other key financial measures for the individual operating segments for the periods presented.

 

		For the Year Ended December 31, 2017
		Centers				Dairy & livestock and agribusiness				Other (1)				Total
		(Dollars in thousands)
Net interest income		$	195,377			$	10,798			$	72,755			$	278,930
(Recapture of) provision for loan losses			1,712				(3,913)				(6,299)				(8,500)
Net interest income after (recapture of) provision for loan losses			193,665				14,711				79,054				287,430
Noninterest income			21,674				232				20,212				42,118
Noninterest expense			51,337				1,963				87,453				140,753
Segment pre-tax profit		$	164,002			$	12,980			$	11,813			$	188,795
Goodwill		$	116,564			$	-			$	-			$	116,564
Segment assets as of December 31, 2017		$	7,235,549			$	474,292			$	560,745			$	8,270,586

 

(1)

Includes the elimination of certain items that are included in more than one department, most of which represents products and services for Centers’ customers.

 

		For the Year Ended December 31, 2016
		Centers				Dairy & livestock and agribusiness				Other (1)				Total
		(Dollars in thousands)
Net interest income		$	178,183			$	7,973			$	70,918			$	257,074
(Recapture of) provision for loan losses			(172)				2,296				(8,524)				(6,400)
Net interest income after (recapture of) provision for loan losses			178,355				5,677				79,442				263,474
Noninterest income			20,179				223				15,150				35,552
Noninterest expense			50,110				1,958				84,656				136,724
Debt termination expense			-				-				16				16
Segment pre-tax profit		$	148,424			$	3,942			$	9,920			$	162,286
Goodwill		$	89,533			$	-			$	-			$	89,533
Segment assets as of December 31, 2016		$	7,024,986			$	473,670			$	575,051			$	8,073,707

 

(1)

Includes the elimination of certain items that are included in more than one department, most of which represents products and services for Centers’ customers.

 

		For the Year Ended December 31, 2015
		Centers				Dairy & livestock and agribusiness				Other (1)				Total
		(Dollars in thousands)
Net interest income		$	167,633			$	7,558			$	77,751			$	252,942
(Recapture of) provision for loan losses			(6,711)				143				968				(5,600)
Net interest income after (recapture of) provision for loan losses			174,344				7,415				76,783				258,542
Noninterest income			20,677				261				12,545				33,483
Noninterest expense			48,568				1,844				76,377				126,789
Debt termination expense			-				-				13,870				13,870
Segment pre-tax profit (loss)		$	146,453			$	5,832			$	(919)			$	151,366
Goodwill		$	74,244			$	-			$	-			$	74,244
Segment assets as of December 31, 2015		$	6,441,751			$	458,214			$	771,235			$	7,671,200

 

(1)

Includes the elimination of certain items that are included in more than one department, most of which represents products and services for Centers’ customers.