Suncrest Bank and CBBC Bancorp agree to merge
Expanded footprint across the Greater Sacramento, Fresno and Central Valley markets
Suncrest Bank and CBBC Bancorp the parent company of Community Business Bank, Tuesday announced CBBC will merge into Suncrest. The merger is subject to customary closing conditions and is expected to close in the second quarter of 2018. Directors and executive officers of CBBC and directors of Suncrest have formally agreed to back the transaction.
CBBC shareholders will receive cash or shares of Suncrest common stock.
In addition, Suncrest also announced Tuesday a fully subscribed $25 million capital raise of Suncrest common stock at $10.50 per share, with the proceeds being used both to support the merger and for future organic growth.
The transaction is valued at approximately $62.5 million, based on a per share valuation of Suncrest's stock of $10.50 and includes the cash out of CBBC in-the-money options. The pro forma company will have 12.26 million shares issued and outstanding, representing a prospective market capitalization of approximately $129 million based on a per share valuation of Suncrest's stock of $10.50 or $142 million based on Suncrest's stock price of $11.59 as of Nov. 6, with the potential for significantly increased liquidity. Total pro forma assets at deal close are expected to be approximately $900 million.
CBBC is headquartered in West Sacramento, with $325 million in assets and two branches located in West Sacramento and Lodi, and a Loan Production Office in Roseville. Suncrest is headquartered in Visalia, with $529 million in assets and five branches located in Fresno, Kingsburg, Porterville, Visalia and Yuba City. The merger combines two profitable and growing franchises; CBBC has consistently delivered strong earnings performance while Suncrest's improving profitability has been supported by its low cost of funds and strong growth in core deposits.
Suncrest President and CEO, Ciaran Mcmullan will continue as president and CEO of the combined bank. CBBC CEO John A. Dimichele and CBBC President Chad Meyer will join the board of the combined bank as nonexecutive directors.
“I am very pleased with our decision to enter into this strategic partnership with Suncrest Bank. The combination of our two strong community banks will not only benefit our customers but also have a positive impact on our staff and communities, while rewarding our shareholders for the Bank's excellent performance,” said Dimichele. “I strongly believe we have found a partner in Suncrest, with the right merger experience, to ensure the process of integrating our two great banks will go as smoothly and efficiently as possible for both our staff and our customers.”
Following completion of the merger, the CBBC branches in West Sacramento and Lodi will continue to operate under the Community Business Bank name, as a division of Suncrest Bank.
“This is a truly transformational deal for Suncrest, with the potential to double our assets and double our market capitalization while significantly improving our earnings power,” said Mcmullan. “The completion of this transaction will make Suncrest a formidable competitor in the Central Valley banking marketplace, and positions us for continued profitable growth in key markets such as the Greater Sacramento area and the South Valley.”