CVB Financial is in a flat base with a buy point of 28.24. Bank stocks are well-positioned to gain from rising interest rates if the recessionary headwinds do not deflate consumer sentiment too quickly.
CVB Financial is ranked a ninth in the West/Southwest Banks industry group, which ranks a strong 13th among IBD's 197 groups. Its strong Composite Rating of 95 matches its Relative Strength Rating.
The RS Rating means the stock's price strength is higher than 95% of stocks in the IBD universe. Its EPS Rating of 70, however, indicates the stock's lackluster earnings in the recent quarter and year. Earnings per share saw declines for all four quarters in 2021, according to FactSet. It has shown signs of recovery in the two most recent quarters.
CVB's relative strength line, which measures the bank stock's performance vs. that of the S&P 500, is at a 52-week high. Additionally, shares are holding above their 50-day moving average.
CVB is a recent addition to the IBD 50: a carefully screened stock list that filters growth stocks based on their earnings in recent quarters, other fundamentals and price-performance metrics. The IBD 50 has a strong track record of outperforming the S&P 500.
Bank Stock Shows Strong 2022 Earnings
For the second quarter ended June 30, net income increased from $116.2 million in the previous year to $136.6 million. Earnings per share also increased from 38 cents to 42 cents.
Average loans increased by $385.1 million and included $775 million from Suncrest Bank acquired on Jan. 2 and a $742.3 million decrease in small business loans. Total deposits and customer repurchase agreements grew 14.1% to $1.84 billion. Deposits were $14.07 billion.
An expanded interest margin from 2.9% to 3.16% resulted in a 15.7% increase in interest income to $121.9 million. Earning assets grew $1.6 billion from the previous year. The company also announced a cash dividend of 20 cents per share for the second quarter payable to shareholders on record as of Oct. 5.
The bank's third quarter earnings are due Wednesday. According to FactSet, the company is expected to see net income of $142.3 million and earnings of 44 cents per share.
CVB Financial is the holding company for Citizens Business Bank, headquartered in California. It has more than 60 locations around California and provides banking, lending and investment services.
Mutual funds own 52% of total shares outstanding. The bank stock's Accumulation/Distribution Rating of B also shows a moderate rate of institutional purchases. Greater institutional ownership indicates a stock's strength, according to IBD's CAN SLIM best practices in stock picking.
