Folsom Lake Bank of California was considering mergers with interested parties even in October 2015. One of the would-be buyers was Fresno-based Central Valley Community Bancorp. So, in January 2016 and armed with the bank's 2015 earnings, Folsom President and CEO Robert Flautt reached out to Central Valley President and CEO Jim Ford for further discussions.
In March of that year, Central Valley proposed a 60%-stock, 40%-cash deal valuing Folsom at $12.25 per share, or $20.6 million in total. But Folsom rejected the offer and placed a floor of $28.8 million for sale negotiations.
In June, another bank made a verbal offer of an all-stock transaction valued at $13.06 per share, or $22.3 million in cash. In September, this was revised to $24.9 million, which Folsom also rejected.
In December, Folsom officially engaged the services of Sandler O'Neill & Partners LP, which eventually identified 12 possible buyers. Of the 12, eight executed nondisclosure agreements. Six had access to an online dataroom for the conduct of preliminary due diligence.
In March 2017, Central Valley proposed an all-stock deal that would value Folsom at $16.15 per share, or $28.8 million in total, using a fixed exchange ratio of 0.76 Central Valley share for each Folsom share. The terms included the cashing out of Folsom's outstanding stock options at their intrinsic value and a required $1.4 million breakup fee should Folsom get a better offer. Central Valley later revised the exchange ratio from 0.76 to 0.80 Central Valley share for each Folsom share, implying a deal value of $17.00 per share. The breakup fee was reduced to $1.2 million.
The party which had made a $22.3 million cash offer in June 2016 also made another proposal — this time for an all-stock deal valued at $15.60 per share.
Folsom's board unanimously decided to continue talks with Central Valley. In April, Ford submitted the initial draft of the merger agreement, further lowering the breakup fee to over $1.1 million and providing for the assumption of Folsom's options instead of cashing them out.
Finally, on April 27, the boards of both companies voted in favor of the merger agreement, which by then was valued at $18.74 per share, or $33.6 million in total. The deal was announced the same day.