CVB Financial and Suncrest Bank entered into an agreement and plan of reorganization and merger pursuant to which Suncrest Bank will merge with and into Citizens Business Bank in a stock and cash transaction valued at approximately $204 million in aggregate or $16.18 per Suncrest share based on CVB Financial’s closing stock price of $19.36 on July 26, 2021. The merger will increase Citizens Business Bank’s total assets to approximately $17 billion on a pro forma basis.
CVB Financial expects the merger to result in approximately 3.5% earnings per share accretion in 2023, excluding one-time transaction costs and assuming full realization of cost savings. CVB Financial anticipates the merger to be approximately 0.8% dilutive to tangible book value per share at closing with an earn-back period of fewer than 1.75 years (using the cross-over method) and an internal rate of return of approximately 20%.
Suncrest Bank, headquartered in Visalia, CA, had approximately $1.3 billion in total assets, $0.9 billion in gross loans and $1.2 billion in total deposits as of March 31, 2021. Suncrest Bank has seven branch locations and two loan production offices throughout California’s Central Valley.
“As the second largest acquisition in our history, the acquisition of Suncrest will deliver important benefits to our combined customers through our increased presence in the Central Valley and expansion into Sacramento, a sizable and important new market for Citizens Business Bank that presents significant growth opportunities going forward,” David A. Brager, CEO of CVB Financial and Citizens Business Bank, said. “On behalf of all of us at Citizens Business Bank, I want to welcome Suncrest Bank’s talented employees and loyal customers. We look forward to a swift closing and smooth integration.”
“I couldn’t be more proud of the Suncrest team and what we have achieved together,” Ciaran McMullan, president and CEO of Suncrest Bank, said. “This merger is a testament to the hard work of our employees in providing exceptional products and services to our customers. Citizens Business Bank is one of the top performing banks in the country and this combination rewards our shareholders, creates opportunities for our employees and expands the resources available to our customers.”
Pursuant to the agreement, at closing, each share of Suncrest Bank common stock will receive consideration consisting of 0.6970 shares of CVB Financial common stock and $2.69 per share in cash. CVB Financial will pay aggregate consideration of approximately 8.5 million shares of CVB Financial common stock and $39 million in cash, subject to purchase price adjustment provisions and other terms set forth in the agreement. Giving effect to the merger, Suncrest Bank shareholders would hold, in aggregate, approximately 6% of CVB Financial’s outstanding common stock following the merger. Suncrest Bank stock options that are in-the-money at the time of closing will receive cash consideration based on the difference between the per share merger consideration and their strike price.
Upon completion of the merger, Suncrest Bank’s operations will be combined with Citizens Business Bank.
The boards of directors of Suncrest Bank, CVB Financial and Citizens Business Bank unanimously approved the proposed merger. The closing of the merger is subject to customary regulatory approvals, satisfaction of certain closing conditions and the approval of Suncrest Bank shareholders and is anticipated to occur in Q4/21 or Q1/22. Directors, officers and certain shareholders holding 23.4% of the shares of Suncrest Bank signed an agreement to vote their shares in favor of the proposed transaction with CVB Financial.
Piper Sandler served as financial advisor and Manatt, Phelps & Phillips served as legal counsel to CVB Financial. MJC Partners served as financial advisor and Sheppard, Mullin, Richter & Hampton served as legal counsel to Suncrest Bank.
