The number of Valley-based community banks will likely diminish by one next year as Valley Commerce Bancorp, headquartered in Visalia, plans to merge with CVB Financial Corp. of Ontario.
Valley Commerce Bancorp is the parent company of Valley Business Bank, which operates branches in Fresno, Visalia, Tulare and Woodlake. CVB Financial is the holding company for Citizens Business Bank. Most of Citizens Business Bank’s 53 offices are in Southern California, but it has branches in Fresno, Visalia, Tulare and Madera.
The merger is the result of months of courtship between the two companies, Valley Commerce President-CEO Allan W. Stone said Tuesday.
“We’ve been contacted by numerous banks over the past few years as far as people interested in acquiring us, and we’ve contacted numerous banks looking for potential acquisitions,” Stone said. “We initiated conversations just to get to know them a little better and see if there was a possible fit.”
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Stone said it quickly became apparent to his board “that their philosophies and integrity really align with what ours are.”
The deal is valued at $57.5 million – a combination of $23.4 million in cash and the balance in more than 1.9 million shares of CVB Financial stock, based on the Ontario company’s stock price as of Sept. 22. Additionally, Valley Commerce shareholders are in line to receive a special dividend estimated at a total payout of about $12.8 million depending on the bank’s performance through the closure of the deal, bringing the total value to Valley Commerce shareholders to about $70.3 million.
We’ve been contacted by numerous banks over the past few years as far as people interested in acquiring us, and we’ve contacted numerous banks looking for potential acquisitions.
Allan W. Stone, Valley Commerce Bancorp president/CEO
By the time the merger is completed, which Stone estimated will happen in the first quarter of 2017, Valley Commerce shareholders will hold about 1.8 percent of CVB Financial’s outstanding common stock.
Valley Business Bank reported total assets of $415.3 million as of June 30, and is celebrating its 20th anniversary this year. Stone has been with the company for 18 years. Citizens Business Bank was established in 1974 and reported assets of $8.3 billion as of June 30.
Stone said the merger was attractive to the Valley Commerce board because CVB Financial enjoys more economies of scale to absorb increasing regulatory and compliance costs. “We’re also looking down the road at succession issues on our management team and our board of directors, so the timing worked out well for both institutions,” Stone added.
CVB Financial Chief Financial Officer Allen Nicholson said Tuesday that the deal made a lot of sense for his company as well. “We compete with (Valley Business Bank) and view them as a strong competitor in the market,” Nicholson said. “They have a good base of quality customers, and they are a good fit culturally with our bank.”
“Together we’re going to have a very substantial presence in the Valley, in particular in Visalia but also Fresno and Tulare,” Nicholson said. One of CVB’s executives is from Fresno, and one of its board members is in Bakersfield. The Valley is “an area we’ve had lots of success in … and we feel like we know the area very well.”
Together we’re going to have a very substantial presence in the Valley, in particular in Visalia but also Fresno and Tulare.
Allen Nicholson, CVB Financial Corp. chief financial officer
Valley Business Bank employs between 80 and 90 people across its corporate and banking offices, Stone said. Because both banks have offices in Visalia, Fresno and Tulare, the potential exists for some consolidation. “There haven’t been any decisions made (on consolidating offices), but that’s something that will be evaluated” depending on factors such as whether properties are leased or owned, Stone said. “In all likelihood, there may be some efficiencies by bringing some of these locations together.”
Stone said he expects that aside from a name change of the bank, Valley Business Bank customers will likely see a smooth transition through the merger “because of the similarities within the banks.” In a written statement announcing the merger, he added that shareholders will also benefit by receiving stock in a company traded on the Nasdaq exchange “with 108 quarters of consecutive cash dividend payments.”
The boards of both companies unanimously approved the merger. The deal remains subject to regulatory scrutiny as well as approval by Valley Commerce shareholders.