Announcement • Apr 02
Central Valley Community Bancorp (NasdaqCM:CVCY) completed the acquisition of Community West Bancshares (NasdaqGM:CWBC).
Central Valley Community Bancorp (NasdaqCM:CVCY) entered into a letter of intent to acquire Community West Bancshares (NasdaqGM:CWBC) for $99.4 million on August 15, 2023. Central Valley Community Bancorp (NasdaqCM:CVCY) entered into an agreement to acquire Community West Bancshares (NasdaqGM:CWBC) for $99.4 million on October 10, 2023. Upon consummation of the Merger, each share of Community West common stock, no par value per share (“Community West Common Stock”), outstanding immediately prior to the effective time of the Merger will be canceled and converted into the right to receive 0.79 of a share of Central Valley common stock, no par value (“Central Valley Common Stock”) (the “per share exchange ratio”). Any fractional shares will be paid in cash equal to the product of (i) such fraction, multiplied by the closing price of Central Valley’s Common Stock reported on NASDAQ on the last trading day preceding the closing date. Based on the closing price of Central Valley’s Common Stock on October 10, 2023, the aggregate merger consideration would be approximately $99.4 million, or $11.15 per share of Community West Common Stock. Pursuant to which Community West will merge with and into Central Valley in an all stock merger (the “Merger”), with Central Valley as the surviving corporation. Promptly following the completion of the Merger, Community West Bank, N.A. a national banking association chartered by the Office of the Comptroller of the Currency and a wholly owned subsidiary of Community West (“CWB”) will merge with and into Central Valley Community Bank. Prior to the closing of the merger, Central Valley and CVCB will take all action necessary to expand the size of their respective boards of directors to fifteen (15) members and appoint six (6) current members of the Community West and CWB board of directors to the Central Valley and CVCB board of directors, effective upon the closing of the merger. Subject to its fiduciary duty, the Central Valley board of directors also will recommend that these six new members be included as director candidates for election in the Central Valley proxy statement for the 2024 annual meeting of Central Valley shareholders. Three (3) current members of the Central Valley and CVCB board of directors will retire from their positions effective upon the closing of the merger. Prior to the closing of the merger, the board of directors of Central Valley will take all action necessary to establish an executive committee of the board of directors effective on the closing of the merger. The executive committee will be initially comprised of five (5) members. The initial members of the executive committee will be Daniel Doyle (current Chairman of the Board of Central Valley), Robert H. Bartlein, and James W. Lokey (current members of the Community West board of directors), and two (2) other current members of the Central Valley board of directors. James J. Kim, President and Chief Executive Officer of Central Valley and CVCB and Martin E. Plourd, the current President and Chief Executive Officer of Community West and Chief Executive Officer of CWB will serve as the initial advisors to the executive committee. Following the merger, Martin E. Plourd will assume the position of President of Central Valley. James J. Kim will continue as Chief Executive Officer of Central Valley and President and Chief Executive Officer of CVCB. Pursuant to the terms of the Merger Agreement, Central Valley has agreed to enter into an employment agreement with Martin E. Plourd which will become effective on the closing of the Merger. Plourd will join Central Valley as President of Central Valley. Upon closing, the combined company will have approximately $3.6 billion in total assets. Existing Central Valley Community Bancorp shareholders will own approximately 63% of the outstanding shares following the merger, and Community West Bancshares shareholders will own approximately 37%. Both Central Valley and Community West may mutually agree to terminate the Merger Agreement without further liability to the other. Community West must pay Central Valley a termination fee in the amount of $4 million if the Merger Agreement is terminated under certain circumstances. Completion of the Merger is subject to certain customary conditions, including (i) approval by Central Valley and Community West shareholders, (ii) regulatory approval, (iii) the absence of any governmental order or law prohibiting the consummation of the Merger, (iv) effectiveness of the Securities and Exchange Commission (“SEC”) registration statement for the Central Valley Common Stock to be issued as consideration in the Merger, and (v) the approval of such shares for listing on the Nasdaq Global Market. The obligation of each party to consummate the Merger is also conditioned upon (a) subject to certain exceptions, the accuracy of the representations and warranties of the other party, (b) performance in all material respects by the other party of its obligations under the Merger Agreement, (c) receipt by each party of a tax opinion to the effect that the Merger will qualify as a reorganization within the meaning of Section 368(a) of the Code, and (d) the absence of a material adverse effect with respect to the other party since the date of the Merger Agreement. The Central Valley Community Bancorp and Community West Bancshares boards of directors have unanimously approved the transaction, which is expected to close in the second quarter of 2024. As of February 8, 2024, the transaction has been approved by the shareholders of both Central Valley Community and Community West. Additionally, all required regulatory approvals have been received for the merger and the closing of the transaction is expected to be completed as of April 1, 2024.Central Valley Community Bancorp received financial advisory services and a fairness opinion from Janney Montgomery Scott LLC and will receive a fee in the amount of 1.25% of total merger consideration for its services as financial advisor to Central Valley. Janney also received a fee in the amount of $200,000 from Central Valley upon rendering its fairness opinion; and James K. Dyer and Mark A. Bonenfant of Buchalter, a professional corporation, served as legal counsels. Community West Bancshares received financial advisory services and a fairness opinion from Piper Sandler & Co. and will receive a fee for such services in an amount equal to 1.50% of the aggregate purchase price, which fee is contingent upon the closing of the merger. At the time of announcement of the merger, Piper Sandler’s fee was approximately $1,495,000. Piper Sandler also received a $300,000 fee from Community West upon rendering its opinion, which opinion fee will be credited in full towards the transaction fee which will become payable to Piper Sandler upon closing of the merger.; and Arthur C. Coren of Husch Blackwell LLP served as legal counsel. Computershare acted as transfer agent to Community West.Central Valley Community Bancorp (NasdaqCM:CVCY) completed the acquisition of Community West Bancshares (NasdaqGM:CWBC) on April 1, 2024. The value of the merger consideration is approximately $143 million.