There are a lot of meaningful positives that come up when evaluating CVB Financial (NASDAQ:CVBF). Not only is this the largest independent commercial-oriented bank left in Southern California, and just inside the top 20 for California banks in overall deposit share, it's a well-run bank with a conservative business plan centered around sticking to its knitting and driving continuous improvement in execution.
The "but", the issue for so many banks now, is valuation. Even if I try to model as many positives as I can reasonably think of now (a lower corporate tax rate, stronger economic growth, lower expenses from lower compliance burdens, lower deposit betas, etc.), it's still a challenge to get to a $25 fair value from discounted earnings. So while I think CVB Financial will continue to gain share in its core markets and leverage its remarkable high-quality deposit base, there's just only so much I could ever be comfortable paying for that, and I can't see how the numbers work out now.
CVB Financial's Valuation Looks Hard To Live Up To