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Calif.-based Suncrest Bank to merge with Citizens Business Bank in $204M deal
Posted: 07/27/2021 |
Ontario, Calif.-based CVB Financial Corp. and Visalia, Calif.-based Suncrest Bank signed an agreement under which Suncrest will merge with and into CVB unit Citizens Business Bank in a stock and cash transaction valued at roughly $204 million in aggregate, or $16.18 per Suncrest share, based on CVB's closing stock price of $19.36 on July 26.
The merger is anticipated to close in the fourth quarter of 2021 or the first quarter of 2022.
At announcement, S&P Global Market Intelligence calculates the deal value to be 120.79% of common equity, 161.52% of tangible common equity, 15.27% of assets, 17.52% of deposits and 14.07x earnings. The tangible book premium to core deposits ratio is 7.38%.
S&P Global Market Intelligence valuations for bank and thrift targets in the West region between July 27, 2020, and July 27, 2021, averaged 133.43% of book and 146.21% of tangible book and had a median of 15.61x last-12-months earnings, on an aggregate basis, and averaged 132.49% of book and 150.03% of tangible book and had a median of 16.72x LTM earnings, on a per-share basis.
Upon completion of the merger, Suncrest's operations will be combined with Citizens'. The merger will increase Citizens' total assets to roughly $17 billion on a pro forma basis, based on the most recent publicly available information for Suncrest and CVB.
Suncrest had approximately $1.3 billion in total assets, $900 million in gross loans and $1.2 billion in total deposits as of March 31. The bank has seven branch locations and two loan production offices across California's Central Valley.
Based on S&P Global Market Intelligence data, CVB will expand in California by eight branches to be ranked No. 20 with a 0.67% share of approximately $1.81 trillion in total market deposits.
At the closing of the transaction, each share of Suncrest common stock will receive consideration consisting of 0.6970 share of CVB common stock and $2.69 per share in cash. CVB will pay an aggregate consideration of approximately 8.5 million shares of its common stock and $39.0 million in cash, subject to purchase price adjustment provisions and other terms.
Suncrest shareholders would hold, in aggregate, about 6% of CVB's outstanding common stock following the merger. Suncrest 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.
CVB anticipates the merger to result in about 3.5% EPS accretion in 2023, excluding one-time transaction costs and assuming full realization of cost savings. The company also expects the transaction to be approximately 0.8% dilutive to tangible book value per share at closing, with an earnback period of less than 1.75 years using the crossover method and an internal rate of return of roughly 20%.
Piper Sandler & Co. acted as financial adviser and Manatt Phelps & Phillips LLP served as legal counsel to CVB. MJC Partners LLC worked as financial adviser, while Sheppard Mullin Richter & Hampton was legal counsel to Suncrest.