CVB Financial and Heritage Commerce Merge to Create Citizens Business Bank
CVB Financial Corp. (Nasdaq: CVBF) has announced a strategic merger with Heritage Commerce Corp. (Nasdaq: HTBK), combining operations into Citizens Business Bank in a transaction valued at approximately $811 million. This merger aims to enhance Citizens' presence in California, particularly in the Bay Area, cementing its position with assets totaling around $22 billion and a robust network of over 75 branches. The strategic expansion underlines the ongoing trend of consolidation in the banking industry, aiming to optimize competitive leverage and reach in the market.
Post-merger, Heritage shareholders will receive 0.6500 shares of CVBF stock per HTBK share, resulting in CVBF shareholders owning approximately 77% of the merged entity, while HTBK shareholders retain around 23%. The merger is expected to provide immediate earnings per share (EPS) accretion for Citizens, projected at 13.2% by 2027, with a total return of approximately 20%. Although the transaction may cause a 7.7% dilution in tangible book value per share, it is anticipated to recover in about 2.5 years, factoring in current interest rate conditions.
Leadership and Governance
David Brager will remain CEO of Citizens, with Heritage's CEO, Clay Jones, stepping into the role of President within the newly unified organization. Two directors from Heritage will join Citizens' board, ensuring continuity and representation in the governance structure. All necessary board approvals are secured from both companies, with the merger expected to conclude by the second quarter of 2026, subject to regulatory and shareholder approvals.
Advisors and Conference Call
J.P. Morgan is advising Citizens, while Piper Sandler & Co. serves as the advisor for Heritage. Legal counsel includes Manatt, Phelps & Phillips, LLP for Citizens and Wachtell, Lipton, Rosen & Katz for Heritage. A conference call is scheduled to provide investors and stakeholders with an in-depth understanding of the merger's strategic intentions and projected benefits. This merger marks a significant development in California’s banking landscape, emphasizing industry consolidation to enhance market dynamics and regulatory compliance.