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CVB Financial Corp (NASDAQ:CVBF)
Q4 2019 Earnings Call
Jan 23, 2020, 10:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning, ladies and gentlemen, and welcome to the Fourth Quarter and Year-ended 2019 CVB Financial Corporation and its subsidiary, Citizens Business Bank Earnings Conference Call. My name is Andrea and I am your operator for today.

[Operator Instructions]

I would now like to turn the presentation over to your host for today's call, Christina Carrabino. You may proceed.

Christina Carrabino -- Investor Relations

Thank you, Andrea, and good morning everyone. Thank you for joining us today to review our financial results for the fourth quarter and year-ended 2019. Joining me this morning are Chris Myers, President and Chief Executive Officer, and Allen Nicholson, 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 Investors 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, 2018, and in particular, the information set forth in Item 1A, risk factors therein.

Now, I will turn the call over to Chris Myers.

Christopher D. Myers -- President and Chief Executive Officer

Thank you, Christina. Before we get rolling today, I just want to do a special thanks for the last 10 years to Christina Carrabino and to Francene LaPoint, our Controller, for putting all this together and making that, hopefully you guys have found our communications very good. And there is a ton of information in the script and everything that goes into this and they've done a fantastic job. So, I want to thank them for their 10 years.

Back to business.

Good morning everyone and thank you for joining us again this quarter. Yesterday, we reported net earnings of $51.3 million for the fourth quarter of 2019, compared with $50.4 million for the third quarter of 2019 and $43.2 million for the year-ago quarter. Earnings per share were $0.37 for the fourth quarter, compared with $0.36 for the third quarter and $0.31 for the year-ago quarter. The fourth quarter of 2019 represented our 171st consecutive quarter of profitability and our 121st consecutive quarter of paying a cash dividend to shareholders.

I also want to mention that yesterday Forbes came out with the ranking in terms of financial performance of the 100 largest banks in the United States and CVBF was rated Number 1. This is the second time in five years, we've been rated Number 1 and it is a good way for me to go out, so to speak.

Net earnings were $207.8 million for the year-ended 2019, compared with $152 million for 2018 and $104.4 million for 2017. We have essentially doubled our earnings over the past two fiscal years. Diluted earnings per share were $1.48 for 2019, compared with $1.24 for 2018 and $0.95 for 2017. Our tax equivalent net interest margin was 4.24% for the fourth quarter, compared with 4.34% for the third quarter of 2019 and 4.40% for the year-ago quarter.

Total loans increased by $70.1 million for the fourth quarter or about 1% to $7.56 billion. The increase was primarily due to a $72.5 million increase in dairy & livestock and agricultural loans. Average loans for the quarter were essentially flat from the prior quarter. The majority of the increase in dairy & livestock loans was seasonal and occurred near the end of the quarter as many of our dairy owners choose to defer their milk checks into the first quarter of the following year and/or prepay their feed expenses.

Loan yields were 5.15% for the fourth quarter of 2019, compared with 5.23% for the third quarter of 2019 and 5.22% for the year-ago quarter. Excluding interest income related to purchase discount accretion and non-accrual interest paid, loan yields were 5 basis points lower than the third quarter of 2019. This decline was primarily due to the impact of the Federal Reserve's three rate decreases. After excluding interest income related to purchase discount accretion and non-accrual interest paid, our loan yields actually increased by 3 basis points over the fourth quarter of 2018.

At December 31, 2019, the allowance for loan and lease losses was $68.7 million or 0.91% of total loans, compared with $68.7 million or 0.92% of total loans at September 30, 2019. The allowance for loans losses, as a percentage of non-acquired loans, was 1.30% at December 31, 2019, compared with 1.37% at September 30, 2019 and 1.32% at the end of 2018. At quarter end, non-performing assets, defined as non-accrual loans plus other real estate owned, were $10.2 million, compared with $16.1 million for the prior quarter and $20.4 million at December 31, 2018.

Total non-performing assets included $5.8 million in non-performing loans and OREO originated by Community Bank. At December 31, 2019, we had loans delinquent 30 to 89 days of $1.7 million or 0.02%. Classified loans for the fourth quarter were $73.4 million, a $13.4 million increase from the prior quarter. The increase was primarily due to a $7 million increase in dairy & livestock loans and a $5.5 million increase in commercial real estate loans. Total classified loans included $27 million of loans acquired from Community Bank. We will have more detailed information on classified loans available in our year-end Form 10-K.

Now, I'd like to discuss deposits. Average non-interest bearing deposits were $5.30 billion for the fourth quarter of 2019, compared with $5.23 billion for the prior quarter and $5.31 billion for the year-ago quarter. At December 31, 2019, our non-interest bearing deposits totaled $5.25 billion, compared with $5.39 billion for the prior quarter and $5.20 billion for the year-ago quarter. Non-interest bearing deposits were 60.3% of total deposits at the end of the fourth quarter, compared with 61.2% for the prior quarter and 59% for the year-ago quarter.

Our average total deposits and customer repurchase agreements of $9.21 billion for the fourth quarter, grew by $109 million or 1.2% from the third quarter. At December 31, 2019, our total deposits and customer repurchase agreements were $9.13 billion, compared with $9.20 billion at September 30, 2019, and $9.27 billion for the same period a year ago. Our cost of deposits and customer repurchase agreements for the fourth quarter were 21 basis points and our total cost of funds were 22 basis points, both slightly down from the prior quarter.

Interest income. Interest income for the fourth quarter of 2019 totaled $112.2 million, compared with $113.6 million for the third quarter and $117.7 million for the same period a year ago. The decrease in interest income from the third quarter of 2019 was primarily due to $474,000 in lower discount accretion on acquired loans and non-accrual interest paid. We also experienced an additional 5 basis point decline in loan yields. The decline in loan yields was primarily due to the three Federal Reserve rate decreases during the third and fourth quarter. A $5.5 million year-over-year quarterly decrease in interest income was the result of $160 million in lower average earning assets and a decrease in yield on earning assets of 14 basis points.

The fourth quarter of 2019 reflected a $1.7 million decrease in loan discount accretion and non-accrual interest paid over the fourth quarter of 2018. The tax equivalent yield on earning assets for the fourth quarter was 4.44%, compared with 4.55% for the prior quarter and 4.58% for the year-ago quarter. When loan discount accretion and non-accrual interest paid are excluded, the tax equivalent yield on earning assets for the fourth quarter decreased by 10 basis points, compared to the prior quarter, and decreased by 8 basis points compared to the fourth quarter of 2018.

Interest expense. Interest expense for the fourth quarter of 2019 totaled $5.2 million, a $200,000 decrease over the third quarter and a $500,000 increase over the fourth quarter of 2018. Average interest-bearing liabilities increased by $31 million compared with the third quarter, while the cost of interest-bearing liabilities decreased by 3 basis points. A $500,000 increase in interest expense from the fourth quarter of 2018 can be attributed to a 12 basis point increase in the cost of interest-bearing deposits.

Net interest margin. Our tax equivalent net interest margin was 4.24% for the fourth quarter of 2019, compared with 4.34% for the third quarter. When the impact of discount accretion on acquired loans and non-accrual interest paid is excluded, the adjusted tax equivalent net interest margin was 3.95% for the fourth quarter, down from 4.02% for the prior quarter.

Non-interest income. Non-interest income was $12.6 million for the fourth quarter of 2019, compared with $11.9 million for the prior quarter and $10.8 million for the year-ago quarter. The $746,000 increase from the third quarter includes a $293,000 increase in fees from interest rate swaps. Non-interest income grew by $1.9 million compared to the fourth quarter of 2018. Fee income from trust and investment services grew by $525,000, bank service charges increased by $332,000, international services fee income grew by approximately $175,000 and interest rate swap fees increased by $671,000. Conversely, fourth quarter 2019 debit card interchange income declined by approximately $300,000 from the fourth quarter of 2018, due to the Durbin Amendment and us reaching the $10 billion mark in assets.

Now, expenses. Non-interest expense for the fourth quarter was $49.1 million, compared with $47.5 million for the third quarter of 2019 and $60.8 million for the year-ago quarter. Salary and benefit expense grew by $1.1 million compared to the third quarter, of which there was a $430,000 increase in bonus and profit-sharing expense. The $11.8 million decrease in expense for the fourth quarter of 2019 includes an $8 million decrease in acquisition expense related to the Community Bank merger and a $2.1 million decrease in occupancy and expense from the consolidation of 10 banking offices. Non-interest expense totaled 1.71% of average assets for the fourth quarter, compared with 1.68% for the third quarter and 2.10% for the fourth quarter of 2018. Our efficiency ratio was 41% for the fourth quarter of 2019, compared with 39.6% for the prior quarter and 49.2% for the fourth quarter of 2018.

Now, I'd like to turn the call over to Allen, our CFO, to discuss our effective tax rate, investment portfolio and overall capital position. Allen?

E. Allen Nicholson -- Executive Vice President and Chief Financial Officer

Thanks, Chris. Good morning everyone. Our effective tax rate was 27.4% for the fourth quarter and 28.6% for the full year. This compares to 28% for the fourth quarter of 2018 and the full-year 2018. The slight increase from the prior year was due to the greater relative increase in taxable income compared with the level of tax advantaged income.

Looking to our investment portfolio, at December 31, 2019, our combined available-for-sale and held-to-maturity investment securities totaled $2.4 billion, a $140 million increase from the third quarter and a $64 million decrease from December 31, 2018. At quarter-end, investment securities available-for-sale totaled $1.74 billion. The portfolio had a pre-tax unrealized gain of $22 million at December 31, 2019. In addition, we owned held-to-maturity investment securities totaling $674 million.

The tax equivalent yield on the total securities portfolio was 2.43% for the fourth quarter, compared with 2.47% for the third quarter and 2.55% for the fourth quarter of 2018. During the fourth quarter, we purchased $272 million of mortgage-backed securities with an average expected yield of approximately 2.52%.

Now, turning to our capital position. Shareholders' equity increased by $142.9 million to $1.99 billion at the end of 2019. The increase was primarily due to $207.8 million in net earnings and a $31 million increase in other comprehensive income from the tax-effected impact of the increase in market value of available-for-sale securities. Partially offsetting these increases to equity were $101 million in cash dividends.

And I'll now turn the call back to Chris for some closing remarks.

Christopher D. Myers -- President and Chief Executive Officer

Thanks, Allen. Now let's talk about economic conditions.

Turning to the California economy, according to various economic reports, California's unemployment rate was 3.9% for November 2019, 3.9% in October, 2019, and 4.1% a year ago in November 2018. The California GDP grew by 2.6% in 2019. California's GDP growth is expected to outpace the U.S. GDP growth for 2020. Approximately 40% of California's job growth over the past year was concentrated in two sectors, healthcare and social assistance, and leisure and hospitality. Overall, the outlook for California's economy remains bright for 2020 as job gains have continued on a sustained basis and two job sectors are likely to grow faster than those in the rest of the nation, logistics, which is propelled by the giant Southern California ports, and technology.

In terms of the dairy industry, milk prices are predicted to be somewhat higher in 2020, due to the strong economy and an increased demand for non-fat dry milk exports. In closing, we are proud of our accomplishments and record earnings for 2019 and believe we are well-positioned for future efficiency and growth. We remain committed to growing the bank in a balanced way, utilizing all three of our growth initiatives: same-store sales, opening de novo centers and acquisitions.

Today is my last earnings conference call with the company. As we previously announced this past July, I am retiring effective March 15, 2020. After March 15, I will remain as a consultant through December 31, 2020, to help facilitate a smooth and orderly transition to the next Chief Executive Officer. As I look back in my 13.5 years as CEO of this great organization, I would like to thank our former Board members, George Borba Senior, Ron Kruse, Johnny Borba, Linn Wiley, Jim Seley, Bob Jacoby and San Vaccaro for giving me this opportunity.

I would also like to thank my four named executives, Dave Brager, Dave Harvey, Allen Nicholson and Dave Farnsworth for their relentless commitment to success. I would also like to thank my senior leadership team as a whole. And especially thank those that have been side by side with me over the past 10 years, executing on my "10-year vision", Dave Brager, Dave Harvey, Yamynn De Angelis, Elsa Zavala, Ted Dondanville, Tim Noone, Larry Zivelonghi, Mike Mulcahy, Bob Zeltner and Mark Richardson.

And I would like to thank all of my employees. They have consistently strived for excellence and take ownership and pride in our history and accomplishments. As you can tell, I'm proud of all we've accomplished over the past 13-plus years. I am proud of the fact that our net income has grown from $61 million in 2007 to $208 million for 2019. And I am further proud that we have done it, while taking only moderate risk, no shortcuts. We continue to focus our efforts on quality business that is repeatable, scalable and transparent.

In closing, I thank our customers for their business and ongoing loyalty. I thank you, our shareholders, for your continued support and trust and I thank our Board of Directors for their leadership and guidance.

Well, that concludes today's presentation. Now, Allen and I will be happy to take any questions that you might have.

Questions and Answers:

Operator

Thank you. We will now begin the question-and-answer session.

[Operator Instructions]

And our first question will come from Jackie Bohlen of KBW. Please go ahead.

Jackie Bohlen -- KBW -- Analyst

Hi. Good morning, everyone.

Christopher D. Myers -- President and Chief Executive Officer

Hi, Jackie.

Jackie Bohlen -- KBW -- Analyst

I wanted to touch base first on the decline in OREO that you had in the quarter. I know in the past we talked about the larger single-family residents that was added in the third quarter. And I'm wondering if that was sold during the quarter and that did that drop?

Christopher D. Myers -- President and Chief Executive Officer

Yes, we actually -- that OREO, the largest single-family resident was actually a Community Bank loan and it was secured by two pieces of property that are adjacent to each other. So, what we ended up doing is keeping the land piece of the property, which is marked at $1.8 million, and then we gave back the residents to the initial first trust deed holder. And so, that was the reduction in the OREO. So, we still hold the land and it's marked at $1.8 million. And we feel -- at this point in time, we feel confident that we will get our money back and hopefully a little more.

Jackie Bohlen -- KBW -- Analyst

Okay. So, there was no associated OREO gain or anything that was noticable with the transfer that took place?

Christopher D. Myers -- President and Chief Executive Officer

Not on that piece. No.

Jackie Bohlen -- KBW -- Analyst

Okay. And then, just looking at the provision expense in general, charge-offs haven't fluctuated much throughout the year and it's been de minimis charge-offs or de minimis recoveries. And there has been a positive expense associated with that, but then, you had a zero expense in the fourth quarter. Just wondering how you're thinking about that going forward, understanding, of course, that we're in a CECL world starting now basically?

Christopher D. Myers -- President and Chief Executive Officer

Yeah, that's a good question. We've had net recoveries for the last five or six years in a row. Now, the good news is that over that period of time for the most part, gross charge-offs have trended down. Actually gross charge-offs were a little bit up year-over-year in 2019 from '18, but our recoveries still exceeded the gross charge-offs. Both of them were around $0.5 million, I think. I think net recoveries were about $500,000 and gross charge-offs were about $450,000 or $460,000, somewhere in there. So, as we're going into 2020, I do think that's going to start reversing itself. We actually will have a net charge-off that is not a negative number, or if you don't, I mean, we'll have a real net charge-off as we go forward. But credit is running very well for us right now. If you look at our 30 to 89 days past due, I think was $1.7 million or something low like that. I mean, that sounds a lot for $7.5 billion of loans. So, we feel good about it, but credit is not perfect and we are seeing a little choppiness. If you look at our classified loans, they are up quarter-over-quarter and some of that's due to dairy, in particular one dairy, and then some of that's due to commercial real estate, which was a former Community Bank loan, but we're not seeing a lot of loss content potential in that classified loan pool at least at this time.

So, the good news is those classified loans that are performing, where -- I mean we're not marketing, but we're reserving for. So, we're feeling good about where we stand right now, but I do think, Jackie, that credit is starting to slowly inch, I mean, it can't get better, right. Where is it going to go? So, it's going to get a little worse and we're starting to see just very small signs of that, but nothing major.

Jackie Bohlen -- KBW -- Analyst

Okay. And do you have any guidance on when you might provide any sort of an update on CECL's impact?

Christopher D. Myers -- President and Chief Executive Officer

I'm going to let Alan answer that question.

E. Allen Nicholson -- Executive Vice President and Chief Financial Officer

Hey Jackie. At this point, our day one adjustment equity proceed is always expected to be immaterial, but we will provide a lot more information, obviously, in our 10-K.

Jackie Bohlen -- KBW -- Analyst

Okay, great. Thank you. I'll step back now. And congratulations on everything, Chris.

Christopher D. Myers -- President and Chief Executive Officer

Yeah. Thanks so much. Jackie, when it comes to CECL, I'm sure, Allen will like me saying this, it is that we've got to go through that process, but I think that Chris Myers has just set the loan loss reserve and we should go on from there. But they don't let me do that.

E. Allen Nicholson -- Executive Vice President and Chief Financial Officer

Chris will join the FASB Board, when he's retiring.

Jackie Bohlen -- KBW -- Analyst

Thank you.

Operator

[Operator Instructions]And our next question will come from Aaron Deer of Sandler O'Neill & Partners. Please go ahead.

Aaron Deer -- Sandler O'Neill & Partners LP -- Analyst

Hey, good morning everyone.

Christopher D. Myers -- President and Chief Executive Officer

Good morning, Aaron.

Aaron Deer -- Sandler O'Neill & Partners LP -- Analyst

Just come to maybe at the exact amount of discount accretion in the quarter, if you have that handy?

E. Allen Nicholson -- Executive Vice President and Chief Financial Officer

Yeah, Aaron, it was $6.5 million.

Aaron Deer -- Sandler O'Neill & Partners LP -- Analyst

Okay. And what is the remaining on accretive discount that you had at year-end?

E. Allen Nicholson -- Executive Vice President and Chief Financial Officer

The total remaining discount, I think is about $30 million.

Aaron Deer -- Sandler O'Neill & Partners LP -- Analyst

Okay. And the accelerated restricted stock expense, is that running at about the same level and should that end after this quarter?

E. Allen Nicholson -- Executive Vice President and Chief Financial Officer

Yeah. This quarter was very similar to last quarter. And as it relates to particularly to Chris's situation, that it will decline a bit into the third quarter. However, obviously, we will have a new CEO. So, we'll probably have some additional stock issued for that person.

Aaron Deer -- Sandler O'Neill & Partners LP -- Analyst

Okay. And then, it looked like there was small amount of share repurchases. What are your thoughts on that front, at this point?

Christopher D. Myers -- President and Chief Executive Officer

Well, we have a 10b5-1 plan in place. And so, that is kind of like an automatic thing at a certain level and it kicked in during the quarter. I think the average price that we bought stock, it wasn't a lot of stock, but it was at somewhere about 45,000 shares -- about 45,000 shares away in October[Phonetic] and it was, I think, in the high $19s, $19.99 or $20 or something like that. So, really amazing[Phonetic].

Aaron Deer -- Sandler O'Neill & Partners LP -- Analyst

Okay. So, it really depends on where that threshold is, that's going to trigger that?

Christopher D. Myers -- President and Chief Executive Officer

Yeah and we don't disclose that threshold.

Aaron Deer -- Sandler O'Neill & Partners LP -- Analyst

All right. Okay. And then, -- was there any FDIC assessment credit utilized in the quarter?

E. Allen Nicholson -- Executive Vice President and Chief Financial Officer

Yes, there was. It was $750,000 and we have remaining $1.5 million.

Aaron Deer -- Sandler O'Neill & Partners LP -- Analyst

Okay, all right. That is, are all my questions. And Chris, congratulations again on your retirement and hopefully we'll get a chance to see again before you ride off into the sunset. So, take care. Thanks so much.

Christopher D. Myers -- President and Chief Executive Officer

Thanks Aaron.

E. Allen Nicholson -- Executive Vice President and Chief Financial Officer

Thanks Aaron.

Operator

Our next question will come from Gary Tenner of D.A. Davidson. Please go ahead.

Jackson -- D.A. Davidson -- Analyst

Hey, good morning, everyone. This is Jackson on[Phonetic] for Gary Tenner.

E. Allen Nicholson -- Executive Vice President and Chief Financial Officer

Hey, Gary[Phonetic].

Jackson -- D.A. Davidson -- Analyst

So, thinking about NIM, does the core loan yields for the quarter capture the majority of loan repricing from the most recent rate cuts and moves in LIBOR or is there another quarter or more of repricing still to come?

Christopher D. Myers -- President and Chief Executive Officer

Can you repeat the question? We didn't hear you very well.

Jackson -- D.A. Davidson -- Analyst

Yeah, yeah, of course. Just thinking about NIM, does the core loan yield for the quarter capture the majority of loan repricing from the most recent rate cuts and moves in LIBOR or is there another quarter or more of repricing still to come?

E. Allen Nicholson -- Executive Vice President and Chief Financial Officer

No, I mean, in terms of the actions by the Fed, in terms of prime and LIBOR, I think the quarter had most of that reflected.

Jackson -- D.A. Davidson -- Analyst

Okay. Okay, great. And just referring to loan growth, it seems that's been a challenge for some time. With the backdrop of a slowing sector growth, where do you project loan growth for 2020?

Christopher D. Myers -- President and Chief Executive Officer

Yeah, some of this recycling of our -- through our acquisition -- is really I'd say, 95% done. So, if you looked at the fourth quarter, loans are really flat, we're down. I think, if you take out the dairy, we're down about $3 million or something like that. So, loans were flat quarter-over-quarter. We have positive loan growth budgeted in for 2020 for the bank. I think that loan growth -- the goal is certainly mid-single digits. And if we could do a little better than that, it'd be great. But that's kind of where we are right now in terms of what we're trying to achieve and what we think is realistic, given the economy, and given the pricing competition. I've been a little bit surprised at some of the banks and the margin that they're willing to take on some of these loans and we're very much relationship bank-oriented. So, if we don't have a good deposit relation so forth, we're not going to give them the A pricing that we might give those clients that do have a lot of deposits with us. And I think that's the right way to run your business because the funding aspect is still credit growth.

Jackson -- D.A. Davidson -- Analyst

Okay. Okay. Wonderful. Thank you for answering that. And just to kind of follow-up on that, are you guys through the run-off of Community Bank loans that have been a headwind for the net loan growth in recent quarters?

Christopher D. Myers -- President and Chief Executive Officer

Yes. Well, you know what, we still have -- again, there's still a lot of pricing repressure because of the flat yield curve. So, we still are having to retain a lot of loans, but those are both Community Bank and Citizens Business Bank loans, just normal competition. But yeah, we're through kind of the -- I think we're through the acquisition stages. We're all one team now. I mean, I'm not even thinking and I think our team is not even thinking, whether if somebody was an ex-Community employee or Citizens, we're all one. So, and I think that's pretty true.

And as I said before, 95%-plus true on the financial side as well.

Jackson -- D.A. Davidson -- Analyst

Wonderful. Appreciate it. Thank you very much.

Operator

[Operator Instructions] And our next question will come from Tim Coffey of Janney. Please go ahead.

Tim Coffey -- Janney -- Analyst

Thank you. Good morning, gentlemen.

Christopher D. Myers -- President and Chief Executive Officer

Hey, Tim.

Tim Coffey -- Janney -- Analyst

Chris, I just had a question about the competition for your deposit customers. You've done a great job building this and maintain the strong deposit portfolio, but you are surrounded by a lot of competitors that are willing to weigh fees on the deposits to retain those customers or attract them. So, I'm wondering have you seen the pressure from the competition on the deposit side intensify or has it been kind of a steady state?

Christopher D. Myers -- President and Chief Executive Officer

Yeah. It's interesting because if you asked me that question six months ago or maybe eight months ago, I'd say, yeah, it's pretty intense and we're really having to make decision by decision. That deposit pricing pressure has moderated tremendously with the three Fed funds rate drops. So, right now, we feel confident that we can grow deposits in 2020 and with the same kind of ratios that we're showing right now, that 60%ish non-interest bearing deposits and that's our goal. It's that kind of mid-single digit, maybe a little bit better growth for deposits as well, and then, the same ratio of non-interest bearing to interest bearing.

So, actually it's moderated. We're feeling really good on the deposit side. And we have a great mousetrap here, we built here. We provide a lot of technology to our clients and a lot of individual personal support from our service team, who does a fabulous job. One of the things I want to remind all of you is the average checking account balance in Citizens Business Bank checking account, right now, at least last month was over $140,000 per account. So, think about the extra service we can provide to each client with that kind of scale, if you will. And I think that's a real benefit to our clients that we're not there dealing with the masses. We're not a retail consumer bank. We're business bank that banks the principles and key executives of the companies that we provide financing for, and provide deposit services for. So, small- to medium-sized businesses, the business owners and principles, that's what we do.

Tim Coffey -- Janney -- Analyst

All right, thanks. There is no other question.

Operator

Our next question is a follow-up from Jackie Bohlen of KBW. Please go ahead.

Jackie Bohlen -- KBW -- Analyst

Hi, thanks for letting me back in queue. Just a quick question on the tax rate, Allen, I understand, there were some moving points surrounding compensation in the quarter and stock vesting and all that. Do you expect a normalized rate outside of that activity in 2020, get back to historic norms?

E. Allen Nicholson -- Executive Vice President and Chief Financial Officer

I'm sorry. Were you asking about our tax rate?

Jackie Bohlen -- KBW -- Analyst

Yeah. That is the tax rate in the quarter, I'm assuming, that was impacted by stock vesting and stuff that caused a positive benefit in the quarter. So, I'm wondering it will go back to the regular level in 2020, absent more of that activity?

E. Allen Nicholson -- Executive Vice President and Chief Financial Officer

Yeah, I think our full-year tax vector rate of 28.6% is really reflective of run rate.

Jackie Bohlen -- KBW -- Analyst

Okay. And then, just one other one..

Christopher D. Myers -- President and Chief Executive Officer

Hey Jackie, a lot of the year, we were running at 29%, and then, in the fourth quarter, we were able to balance that out to what we think now is the run rate, which is 28.6%. So, that 28.6% is our best judgment for 2020, but it could go up to 29%. I think that's kind of where we peak, right?

E. Allen Nicholson -- Executive Vice President and Chief Financial Officer

Yeah, I mean it will range from 29% to 28.5%.

Christopher D. Myers -- President and Chief Executive Officer

Yeah.

Jackie Bohlen -- KBW -- Analyst

Okay. Okay, that's helpful. Thank you. And then, just if you had, -- as we sit less than two months from your retirement, Chris, if you had any update on how the search for your replacement is going? And when we might hear an announcement about that?

Christopher D. Myers -- President and Chief Executive Officer

Yeah, I think the Board is doing a very thoughtful and thorough job of looking exactly for the right person to lead this company or right persons. In that regard, there has been an extensive process to go out there and look for that across the United States. And I think that it's narrowing down. I think we're getting closer, but I have nothing to announce for you guys at this time.

Jackie Bohlen -- KBW -- Analyst

Okay. All right, thank you.

Operator

[Operator Instructions]

At this time, there are no more questions. So, I would like to turn the call back to Mr. Myers.

Christopher D. Myers -- President and Chief Executive Officer

Thank you very much. I want to thank everybody for joining us again this quarter. We appreciate your interest. Have a great day. Thanks for listening and god bless CVBF.

Operator

[Operator Closing Remarks]

Duration: 33 minutes

Call participants:

Christina Carrabino -- Investor Relations

Christopher D. Myers -- President and Chief Executive Officer

E. Allen Nicholson -- Executive Vice President and Chief Financial Officer

Jackie Bohlen -- KBW -- Analyst

Aaron Deer -- Sandler O'Neill & Partners LP -- Analyst

Jackson -- D.A. Davidson -- Analyst

Tim Coffey -- Janney -- Analyst

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