Ontario, Calif.-based CVB Financial Corp. ($8.31 billion) will Visalia, Calif.-basedValley CommerceBancorp ($416.1 million) in a cash-and-stock transaction.
CVB is the holding company of ; ValleyCommerce is the parent of ValleyBusiness Bank. Following deal completion, Valley Business Bank willoperate as Citizens Business Bank.
CVB will pay $23.4 million in cash and 1,942,673 shares ofits stock, placing the aggregate deal value at $57.5 million, based on itsSept. 22 closing price of $17.56.
Valley Commerce is also paying a special dividend to itsshareholders, if its equity exceeds a certain minimum before the deal's close.If all outstanding stock options are exercised, and calculating the amountbased on common equity as of June 30, the special dividend comes to about $12.8million.
That brings the aggregate deal value to $70.3 million, or$23.43 per share. The transaction gives the acquired company's shareholders anaggregate 1.8% stake in CVB post-merger.
On anaggregate basis, SNL calculates the deal value to be 159.5% of book andtangible book, and 11.5x last-12-months earnings. The price is 15.68% ofdeposits and 14.11% of assets, and the tangible book premium-to-core depositsratio is 6.61%.
Forcomparison, SNL valuations for bank and thrift targets in the West regionbetween Sept. 22, 2015, and Sept. 22, 2016, averaged 140.62% of book, 142.81%of tangible book and had a median of 20.60x LTM earnings, on an aggregate basis.
The deal, which is still subject to regulatory andshareholder approvals, is expected to result in modest earnings accretion forCVB in 2017, excluding one-time transaction costs. CVB further estimatestangible book value dilution of about 1% at close, to be earned back withinthree years.
Datacompiled by SNL shows that CVB will expand in Tulare County, Calif., by threebranches to be ranked fourth with a 9.73% share of around $4.51 billion intotal market deposits, and it will expand in Fresno County, Calif., by onebranch to be ranked No. 16 with a 1.30% share of approximately $12.70 billionin total market deposits.
Keefe Bruyette and Woods Inc. served as financial adviser toCVB, and Manatt Phelps & Phillips LLP, represented by Craig Miller and David Gershon, servedas legal counsel.
Vining Sparks IBG LP rendered a fairness opinion to ValleyCommerce. Gary Steven Findley & Associates advised Valley Commerce on thedeal, represented by Gary Findley.