CVB Financial shares stabilize after sinking on subpoena news
Shares of CVB Financial Corp. stabilized Wednesday after plunging on the lender's disclosure that federal regulators are investigating the company.
The Ontario-based operator of Citizens Business Bank reported late Monday that the Securities and Exchange Commission late last month had subpoenaed information about the firm’s lending practices and criteria for writing off bad loans, as well as what the company has told investors about the state of its business.
“The company believes it has not violated any laws and is fully complying with the SEC requests and looks forward to a speedy resolution,” CVB said in a statement.
CVB Chief Executive Chris Myers said Wednesday that he didn’t know why the SEC asked for the information. “This was a complete surprise to us,” he said in an interview. “It showed up on our doorstep.”
The stock ended down 3 cents at $7.97 on Wednesday after tumbling $2.30, or 22%, to $8 on Tuesday. The volume of shares traded receded Wednesday but still was four times the daily average over the last three months. After the price drop, CVB said it would buy back some of its shares.
Short sellers have targeted CVB in the belief that its financial condition isn't as strong as the company's reports indicate. Of the 85 million shares that are publicly traded, more than 20 million have been sold short -- borrowed and immediately sold by investors who hope to profit from a decline in the share price.
Myers said the company had high-quality business borrowers and no subprime loans and was cautious in its loan accounting. Short sellers are focusing on CVB, he said, because it’s in the Inland Empire, where a number of financial institutions have collapsed in the wake of the housing crash. CVB has reported a profit every quarter since before the mortgage meltdown.
“They look at us,” Myers said, “and say, ‘They must be hiding something. They can’t be doing this [well]. It’s impossible.’ ”
Citizens Business Bank has more than 50 locations, mostly in Los Angeles, San Bernardino and Orange counties.-- Walter Hamilton