Community West, Central Valley Banks are “better together”
About 18 months ago, Marty Plourd, CEO of Community West Bank at the time met James Kim, CEO of Central Valley Community Bank, and after a successful first meeting, the two kept in touch, building “a bond of trust.”
On Oct. 10, that bond of trust came full circle when it was announced that Goleta-based Community West Bank would be merging with Central Valley Community Bank with the signing of an all-stock merger agreement.
The deal, which is expected to close in the second quarter of 2024, is valued at $99.4 million based on Central Valley Community Bank’s stock price at market close Tuesday.
Upon closing, the combined company would have approximately $3.6 billion of assets.
Shares of Community West Bank closed at $12.18 on Oct. 12.
“This really started with the idea that we are better together as a new company, taking the best of both and the residual company would be a superior company,” Plourd told the Business Times on Oct. 16.
“And it is not just about making money. We have better technology for our customers. We have a better ability to serve our nonprofits and our communities and we just saw this as a move with great potential.”
Central Valley Community Bancorp received financial advisory services and a fairness opinion from Janney Montgomery Scott LLC, and Buchalter, a professional corporation, served as legal counsel.
Community West Bancshares received financial advisory services and a fairness opinion from Piper Sandler & Co., and Husch Blackwell LLP served as legal counsel.
Plourd noted that Community West had no interest in selling, but when his talks with Kim kept going, he noticed that the two banks simply complimented each other.
“We got to talking about each other’s balance sheets and there were some things we noticed. They have a large bond portfolio and we don’t and we have a lot more loans and deposits and they have a lot of deposits but not that many loans and it kept going,” Plourd said.
“We just said, ‘Gosh, what if we put these two companies together?’”
Under terms of the agreement of the merger, existing Central Valley shareholders would own about 63% of the outstanding shares following the merger and Community West Bancshares shareholders would own the rest.
Community West Bancshares shareholders will be entitled to receive 0.79 shares of Central Valley Community Bancorp common stock for each share of Community West Bancshares common stock.
But, the name Community West Bank will keep living on as the agreement states that Central Valley Community Bank will adopt the Community West brand and trade under the ticker “CWBC” upon closing of the deal.
Plourd said Central Valley had been wanting to change their name for a while anyway, as the bank has locations in Sacramento and beyond just the Central Valley.
“The name is kind of our legacy. It started here in Goleta as Goleta National and so the name means a lot to us and as a brand, we think it carries a lot of value, here on the Central Coast and beyond,” Plourd said.
In a note to investors, Raymond James analysts said the changing of the ticker symbol for Central Valley Community Bank is “appropriate as CVCY expands its presence in California.”
The combined bank will also not be closing any of its branches.
Currently, Community West Bank has seven offices across Santa Barbara, Ventura and San Luis Obispo counties and will combine with Central Valley Community Bank’s 20 branches across eight counties around Fresno and the Greater Sacramento area with more to come, according to Plourd.
While he could not get into specifics, he said the company’s strategy is to have a location “approximately 30 miles apart” from each other adding that they want to fill the gaps they see here on the Central Coast.
The merger also comes with a title change as Plourd will become the president and director of the combined company.
Kim will lead the combined bank’s team of executives and professional bankers as CEO.
He noted that he will serve as that for the next two years and then decide if he would like to continue in that role as he will be 68 at that time.
“But I will always be on the bank’s board and I will always be active in the bank and in the community,” he said.
In terms of the national economy, Plourd said it looks as though we are heading into a “soft landing” or at least “not a hard landing” but other international unrest from the fighting in the Middle East and Russia’s invasion of Ukraine still leave things unpredictable.
Plourd also noted that while other regional banks have suffered due to the banking crisis this year brought on by Silicon Valley Bank’s falling apart in March, Community West held strong, adding that the crisis had no impact on the decision to merge.
“We just looked at it this way. We are better, stronger, more resilient, more profitable, safer and sounder together to face any of these economic headwinds that might be coming our way, recession, or otherwise. As a $3.6 billion bank, we have more staying power, we can do things more independently, and we can reinvest in the communities,” Plourd said.
“We are just better together.”