425: CVBF CEO Reassures Heritage Bank Employees on Merger

CVB Financial Corp.'s CEO, David A. Brager, sent a letter to Heritage Bank of Commerce associates expressing excitement and outlining plans for the upcoming merger, expected to close in Q2 2026.

Summary

• CVB Financial Corp. (CVBF) and Heritage Commerce Corp (HTBK) are proceeding with their proposed merger, based on an Agreement and Plan of Reorganization and Merger dated December 17, 2025.
• David A. Brager, President and CEO of CVBF and Citizens Business Bank, communicated directly with Heritage Bank of Commerce associates on December 26, 2025.
• The letter expressed excitement about the planned combination of Citizens Business Bank, N.A. and Heritage Bank of Commerce.
• The merger is expected to enhance the combined entity's presence and reputation in the communities served.
• CVBF's five core values are Financial Strength, Superior People, Customer Focus, Cost Effective Operation, and Having Fun, with a particular emphasis on 'Superior People' for the integration.
• Leadership teams from CVBF will meet with each Heritage Bank of Commerce associate during the next month to discuss current roles and future opportunities.
• Associates are encouraged to continue providing outstanding customer service during the integration period.
• The merger is expected to close during the second quarter of 2026.
• Regular communications, including a 'Frequently Asked Questions' document ('In the Know'), will be provided throughout the integration process.
• Clay Jones of Heritage Bank of Commerce will coordinate with Joyce Kwon (CVBF Director of Human Resources) and David A. Brager on associate questions.

Sentiment

Score: 8

Explanation: The communication is highly positive and reassuring, focusing on the benefits of the merger, commitment to employees, and a clear path forward. While it includes standard cautionary language about risks, the tone of the direct communication to employees is optimistic and supportive.

Positives

• The merger is anticipated to enhance the combined bank's presence and reputation in the communities it serves.
• CVBF is committed to maintaining an outstanding environment for all associates, providing a positive work environment, challenging and rewarding job opportunities, and comprehensive benefit plans.
• Leadership teams will conduct individual meetings with Heritage Bank of Commerce associates to discuss future opportunities, indicating a structured integration approach for personnel.
• The communication emphasizes shared core values, particularly 'Superior People,' suggesting a focus on human capital during the integration.

Risks

• Difficulties and delays in integrating Heritage's business, key personnel, and customers into CVBF's operations, and achieving anticipated synergies, cost savings, and other benefits.
• Higher than anticipated transaction costs associated with the merger.
• Potential deposit attrition, increased operating costs, customer loss, and other business disruption following the merger, including difficulties in maintaining employee relationships.
• Fluctuations in CVBF's or Heritage's share price before closing, impacting CVBF's ability to raise capital or make acquisitions.
• Failure to obtain required governmental or shareholder approvals on a timely basis or at all, or the imposition of adverse conditions by regulators.
• Dilution caused by the issuance of CVBF common stock in the transaction.
• Possible impairment charges to goodwill, potentially from increased stock price volatility.
• Possible credit-related impairments or declines in the fair value of loans and securities.
• Volatility in credit and equity markets, and its effect on general economic, local, regional, national, and international conditions.
• Changes in commercial or consumer spending, borrowing, and savings patterns, preferences, or behaviors.
• Technological changes and the expanding use of technology in banking and financial services.
• Changes in the financial performance and/or condition of borrowers or depositors.
• Ability to recruit and retain key executives, board members, and other employees.
• Ability to attract deposits and other sources of funding or liquidity.
• Catastrophic events or natural disasters, including climate change, affecting assets, services, customers, or vendors.
• Public health crises and pandemics and their economic impacts.
• Changes in the competitive environment among financial service providers.
• Changes in immigration, trade, tariff, monetary, and fiscal policies and laws, including Federal Reserve interest rate policies.
• Inflation/deflation, interest rate, market, and monetary fluctuations.
• Impact of changes in financial services policies, laws, regulations, and ongoing or unanticipated regulatory or legal proceedings.
• Effectiveness of risk management framework, quantitative models, and ability to manage risks from regulatory changes.
• Risks associated with loan portfolios, including geographic and industry concentrations.
• Impact of systemic or non-systemic failures at other banks on investor sentiment regarding bank stability and liquidity.
• Cybersecurity threats and fraud, and associated defense and compliance costs.
• Costs and effects of legal, compliance, and regulatory actions, including litigation related to the merger.
• Regulatory or other governmental inquiries or investigations, and results of examinations or reviews.
• Ongoing relations with various federal and state regulators (SEC, Federal Reserve Board, FDIC, OCC, California DFPI).

Future Outlook

The proposed merger between CVB Financial Corp. and Heritage Commerce Corp is expected to close during the second quarter of 2026. The combined entity anticipates enhancing its market presence and reputation. Management is committed to a positive work environment, challenging job opportunities, and comprehensive benefits for all associates, with leadership meetings planned to discuss future roles.

Management Comments

• "We are very excited about the planned combination of Citizens Business Bank, N.A. and Heritage Bank of Commerce, and we hope you feel the same way."
• "We believe the combination of our two Banks will further enhance our presence and reputation in the communities we serve."
• "As the CEO of Citizens Business Bank, I am committed to delivering on all five of these core values and I am counting on you to help us deepen our commitment, especially around Superior People."
• "We are focused on maintaining an outstanding environment for all our associates and providing them with a positive work environment, challenging and rewarding job opportunities, and comprehensive benefit plans."
• "During this time, it should be business as usual at Heritage Bank of Commerce. We are counting on each of you to continue to provide the outstanding service that your customers have come to expect."
• "We are expecting the merger will close during the second quarter of 2026."
• "We will keep the lines of communication open between our Citizens Business Bank teams and you throughout the process."

Industry Context

This announcement reflects ongoing consolidation within the U.S. banking sector, particularly among regional banks seeking to expand their geographic footprint, enhance market share, and achieve operational efficiencies. The focus on employee integration and maintaining customer service during the transition is a common theme in such mergers, aiming to mitigate disruption and retain talent and client relationships in a competitive financial services landscape.

Legal Proceedings

• The filing mentions a risk of 'legal proceedings relating to the proposed merger (including any securities, shareholder class actions, lender liability, bank operations, check or wire fraud, financial product or service, data privacy, health and safety, consumer or employee class action litigation)' as a potential future challenge, but does not disclose any current or ongoing legal proceedings.

Stakeholder Impact

• **Employees:** Reassurance regarding job security and future opportunities, commitment to a positive work environment, challenging roles, and comprehensive benefits. Individual meetings are planned to discuss transitions.
• **Customers:** Emphasis on continuing to provide outstanding service during the transition period.
• **Shareholders:** The merger is expected to enhance presence and reputation, with forward-looking statements mentioning potential impacts on CVBF's earnings and tangible book value per share, subject to various risks.

Next Steps

• CVBF leadership team members will meet with Heritage Bank of Commerce associates over the next month to discuss roles and opportunities.
• Regular communications, including 'In the Know' FAQs, will be provided throughout the integration.
• Obtain required governmental and shareholder approvals for the merger.
• Close the merger during the second quarter of 2026.

Key Dates

Recommendation

This filing is a communication to employees regarding an already announced merger, not a financial results report. It provides reassurance and operational details for the integration but does not introduce new financial data or strategic shifts that would warrant a change in investment thesis. The expected closing in Q2 2026 is consistent with prior announcements. Investors should 'hold' as they await the completion of the merger and subsequent financial reporting from the combined entity, while being mindful of the extensive list of integration and market risks outlined.

Keywords

Merger, Acquisition, Banking, Financial Services, CVB Financial Corp, Heritage Commerce Corp, Citizens Business Bank, Heritage Bank of Commerce, Corporate Integration, Employee Relations