CVB Financial (CVBF), Commerce Bancorp Enter $57.5M Merger Agreement

September 23, 2016 6:05 AM EDT

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CVB Financial Corp. (Nasdaq: CVBF) and Valley Commerce Bancorp (OTC: VCBP) announced that they have entered into a merger agreement, pursuant to which CVB Financial Corp. (“CVBF”) will acquire Valley Commerce Bancorp (“VCBP”) the holding company for Valley Business Bank, with $416 million in assets as of June 30, 2016. Valley Business Bank has four locations in Visalia, Tulare, Fresno, and Woodlake.

CVBF expects the transaction to result in modest earnings accretion in 2017, excluding one-time transaction costs. CVBF estimates tangible book value dilution at close of approximately 1% to be earned back within three years.

Christopher D. Myers, President and Chief Executive Officer of CVBF and Citizens Business Bank, remarked, “Valley Business Bank is a strong community bank and an excellent strategic and geographic fit for Citizens. We look forward to welcoming their customers, associates, and shareholders.”

“Citizens Business Bank is the perfect fit for Valley Business Bank, and most importantly, our customers and employees. We are excited to be partnering with them,” said Allan Stone, President and Chief Executive Officer of VCBP. “Citizens Business Bank will expand upon our reach, our capabilities and our product offerings while continuing our commitment to providing excellent service to our business and consumer customers. Our shareholders will benefit from the opportunity to own CVBF’s NASDAQ-listed stock with 108 quarters of consecutive cash dividend payments. Based on our similar cultures, we are looking forward to a smooth transition.”

In exchange for all of VCBP’s common stock and options, CVBF will pay aggregate consideration consisting of $23.4 million in cash and 1,942,673 shares of CVBF stock, currently valued at $57.5 million assuming CVBF’s current stock price of $17.56 as of September 22, 2016. In addition, the merger agreement provides for VCBP to pay a special dividend to its shareholders conditioned upon VCBP’s equity exceeding a minimum equity target prior to the close. Assuming the exercise of all outstanding stock options and based on common equity at June 30, 2016, VCBP stockholders would have received approximately $12.8 million as a special dividend. Based on VCBP’s current outstanding common shares and options and the estimated special dividend as of June 30, 2016, the aggregate value of the transaction to VCBP shareholders is $70.3 million or $23.43 per VCBP share. The amount of the special dividend to be paid by VCBP will change depending on VCBP’s net earnings and changes in equity through the month end prior to the close. Giving effect to the transaction, VCBP shareholders would hold, in aggregate, approximately 1.8% of CVBF’s outstanding common stock following the merger.

Upon completion of the merger, Valley Business Bank will operate as Citizens Business Bank and will continue to deliver the high-touch level of service that its customers expect, with an expanded branch and ATM network and a broad range of products and services, including expertise in personal, small business, private and corporate banking, as well as treasury management and trust services.

The boards of directors of Valley Commerce Bancorp and Valley Business Bank and the boards of directors of CVBF and Citizens Business Bank, respectively, have unanimously approved this transaction. Closing of the transaction is subject to customary regulatory approvals and the approval of VCBP shareholders.


Keefe, Bruyette, and Woods, Inc. served as financial advisor to CVBF, and Manatt, Phelps & Phillips, LLP served as legal counsel to CVBF. Gary S. Findley & Associates served as financial advisor to VCBP and Gary Findley,

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