Local banks Citizens Business, Community to combine into $12-billion institution
Ontario’s Citizens Business Bank is buying Pasadena lender Community Bank, a deal that will create a $12-billion institution that lends to small and mid-size businesses in Southern and Central California.
The deal, announced Tuesday, will make Citizens the eighth-largest independent bank headquartered in California, leapfrogging Santa Ana lender Banc of California. Citizens will buy Community, which is privately held, for $878 million in cash and stock.
The deal still must be approved by shareholders of both banks, as well as by regulators. Executives said they expect the acquisition to close in this year’s third quarter, though analysts suggested that regulators could delay the deal.
Because the combination would create an institution with more than $10 billion in assets, it is subject to stricter scrutiny. Also, analysts noted that Community Bank was giving a rating of “needs to improve” on its compliance with the Community Reinvestment Act, a federal law that requires banks to lend in low-income communities.
A poor CRA rating can hold up bank mergers and acquisitions, but David Misch, Community Bank’s chief executive, said in a call with analysts that the bank has been working to improve its rating.
Christopher Myers, CEO of Citizens’ parent, CVB Financial Corp., said during the call he thinks the deal will be approved on time.
Citizens Business Bank, founded in 1974 as Chino Valley Bank, started out serving the Inland Empire and since has grown to cover much of Los Angeles and Orange counties.
Over the past few years, it has continued to expand, buying small banks headquartered in Ventura and Visalia. It has 54 branches, stretching from Madera to San Diego.
Community Bank, founded in 1945, has a smaller footprint, with 17 offices in L.A., Orange and Riverside counties.
Most of the areas served by Community Bank already are within Citizens’ territory, and executives said this deal is more about combining balance sheets as well as acquiring Community’s bankers and customers — and offering more products and services to those customers.
Both institutions focus on lending to small and mid-size businesses, but Myers said Citizens offers several services, such as home lending, equipment financing and trust management services, that Community does not.
Unlike Citizens’ last few acquisitions, this one will lead to the closure of several bank branches. Community Bank has nine branches within a few miles of a Citizens branch, including locations in Glendale, Pasadena, Corona and Ontario.
Myers said all of those overlapping locations will be consolidated, though he said it’s not clear whether it will be the Citizens or Community branches that are shuttered.
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