CVB Financial in Ontario, Calif., has agreed to buy Heritage Commerce in San Jose, Calif.
The $15 billion-asset CVB said in a press release that it will pay $811 million in stock for the $5.6 billion-asset Heritage. The deal, which is expected to close in the second quarter, priced Heritage at 151% of its tangible book value.
“This will be the most strategic and the largest acquisition by assets in our history,” David Brager, CVB’s president and CEO, said in the release. “This merger will provide us with comprehensive geographic coverage of all the major business banking markets in California, while ensuring the preservation of the local focus, stability, and deep trust inherent in our relationship banking model.”
The deal is expected to be 13.2% accretive to CVB’s 2027 earnings per share. It should take a little more than two years to earn back an estimated 7.7% dilution to CVB’s tangible book value.
CVB plans to cut about 35% of Heritage’s annual noninterest expenses. CVB expects to incur $75 million in merger-related expenses.
Clay Jones, Heritage’s president and CEO, will become CVB’s president. Two Heritage directors will join CVB’s board.
J.P. Morgan and Manatt, Phelps & Phillips advised CVB. Piper Sandler and Wachtell, Lipton, Rosen & Katz advised Heritage.