Two small Central California banks plan to merge in a bid for scale.
Central Valley Community Bancorp in Fresno and Community West Bancshares in Goleta agreed to combine in an all-stock transaction valued at $99.4 million, the companies said in a press release Tuesday. Central Valley would acquire Community West in a deal expected to close in the second quarter of 2024.
The combined company would retain the branches of both banks, and executives said they do not plan to close any locations in connection with the deal. Community West's seven offices in Santa Barbara, Ventura and San Luis Obispo counties will combine with Central Valley's 20 branches in eight counties around Fresno and the Greater Sacramento area.
The merged bank would assume the name of Community West Bancshares, according to the release, and Central Valley Community Bank would adopt the Community West Bank moniker. The combined company's board would have 15 directors, consisting of nine current directors from Central Valley and six current directors from Community West.
James Kim, president and CEO of Central Valley and its bank, would lead the combined company's management team as chief executive. Martin Plourd, CEO of Community West and its banking unit, would serve as president of the merged company. Daniel Doyle, Central Valley chairman, would assume that position on the board of the combined company, and Robert Bartlein, Community West Bank chairman, would serve as vice chairman.
Central Valley Community "has steadily and profitably grown for over 43 years, building a highly attractive franchise in California's San Joaquin Valley and Greater Sacramento region," Kim said in the release.
"The complementary culture, client service model and Central Coast presence of Community West Bank further the opportunity for company growth in well-recognized Central California communities, creating a combined franchise whose strength and size continue to serve clients and communities with integrity, offering enhanced professional employee development opportunities and greater earnings power for shareholders," Kim added.
The Community West acquisition would mark the
Upon closing, the combined company would have approximately $3.6 billion of assets. Existing Central Valley shareholders would own about 63% of the outstanding shares following the merger and Community West Bancshares shareholders would own the rest.
"By operating as a single, united company, I believe the new Community West Bank will bring unprecedented value to the stakeholders of both companies, who will benefit from the strengthened leadership, enhanced products and services, and an expanded branch network that will give the bank tremendous visibility throughout Central California, from the Sierra Nevada to the sea," Plourd said in the release.
Bank M&A activity proved slow through the first half of 2023 amid
But deal volume has picked up recently. Eighteen banks announced plans to sell themselves in August, the busiest month since July 2022, according to S&P Global Market Intelligence data. These transactions were the bulk of the 26 deals unveiled in the first two months of the third quarter. There were 20 deals involving bank targets in the first quarter and 25 in the second quarter.
D.A. Davidson analyst Manuel Navas said "the benefits of scale," notably including greater resources to invest in technology, are motivating buyers.
