CVB Financial (CVBF) M&A Announcement summary

Deal rationale and strategic fit

• Merger creates a leading relationship-focused business bank with expanded reach into the Bay Area, achieving comprehensive geographic coverage and a top-5 mid-sized bank position in California by deposits.

• Both organizations share a similar culture, client focus, and credit discipline, enhancing compatibility and integration while reducing execution risk.

• The combination accelerates product and service expansion for clients, improves long-term positioning, and increases competitive positioning against larger banks.

• Aims to preserve local focus, stability, and trust while leveraging a larger, diversified platform.

• Entry into a top-5 mid-sized bank position in California by deposits, leveraging strong local demographics and business banking focus.

Financial terms and conditions

• All-stock transaction with a fixed exchange ratio of 0.6500 CVBF shares for each Heritage share, valuing the deal at approximately $811 million, or $13.00 per Heritage share.

• Pro forma ownership: 77% CVBF shareholders, 23% Heritage shareholders.

• Pricing multiples: 12.6x 2027 EPS and 1.51x tangible book value.

• Two Heritage Commerce directors to join the board; Heritage CEO to become President of the combined entity.

Synergies and expected cost savings

• Projected cost savings of approximately 35% of Heritage Commerce's 2027E operating noninterest expense (~$43 million), with 75% phased in during the second half of 2026 and 100% thereafter.

• Transaction expected to be immediately accretive to earnings per share, with 13.2% projected EPS accretion by 2027.

• Internal rate of return estimated at 20%.

• Tangible book value per share dilution of 7.7%, with an earn-back period of approximately 2.5 years.

• Revenue synergies not modeled, but opportunities exist to deepen client relationships with expanded services.