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Business Combinations | 12 Months Ended
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Dec. 31, 2019
Business Combinations [Abstract] |
Business Combinations |
4. | BUSINESS COMBINATIONS
Community Bank Acquisition On August 10, 2018, the Company completed the acquisition of CB, headquartered in Pasadena, California. The Company acquired all of the assets and assumed all of the liabilities of CB for $180.7 million in cash and $722.8 million in stock. As a result, CB was merged with the Bank, the principal subsidiary of CVB. The primary reason for the acquisition was to further strengthen the Company’s presence in Southern California. At close, CB had 16 banking centers located throughout the greater Los Angeles and Orange County areas. The systems integration of CB and CBB was completed in November 2018. The consolidation of banking centers was completed during the second quarter of 2019, in which four additional banking centers that were in close proximity were consolidated. For the first six months of 2019, a total of 10 banking centers were consolidated, including nine former CB centers. The assets acquired and liabilities assumed have been accounted for under the acquisition method of accounting. The assets and liabilities, both tangible and intangible, were recorded at their estimated fair values as of the August 10, 2018 acquisition date. The purchase price allocation was finalized in the second quarter of 2019. The change in goodwill resulted from finalizing the fair value of impaired loans. The application of the acquisition method of accounting resulted in the recognition of goodwill of $ 547.1 million and a core deposit intangible (“CDI”) of $ 52.2 million, or 2.26 % of core deposits. Goodwill represents the excess purchase price over the fair value of the net assets acquired. Goodwill is not deductible for income tax purposes. The table below summarizes the amounts recognized for the estimated fair value of assets acquired and the liabilities assumed as of the acquisition date.
|  | August 10, 2018 |
|  | (Dollars in thousands) |
Merger Consideration |  |  |  |  |  |  |  |
Cash paid |  | $ | 180,719 |  |  |  |  |
CVBF common stock issued |  |  | 722,767 |  |  |  |  |
Total merger consideration |  |  |  |  |  | $ | 903,486 |
Identifiable net assets acquired, at fair value |  |  |  |  |  |  |  |
Assets Acquired |  |  |  |  |  |  |  |
Cash and cash equivalents |  |  | 47,802 |  |  |  |  |
Investment securities |  |  | 716,996 |  |  |  |  |
FHLB stock |  |  | 17,250 |  |  |  |  |
Loans |  |  | 2,738,100 |  |  |  |  |
Accrued interest receivable |  |  | 7,916 |  |  |  |  |
Premises and equipment |  |  | 14,632 |  |  |  |  |
BOLI |  |  | 70,904 |  |  |  |  |
Core deposit intangible |  |  | 52,200 |  |  |  |  |
Other assets |  |  | 53,291 |  |  |  |  |
Total assets acquired |  |  |  |  |  |  | 3,719,091 |
Liabilities assumed |  |  |  |  |  |  |  |
Deposits |  |  | 2,869,986 |  |  |  |  |
FHLB advances |  |  | 297,571 |  |  |  |  |
Other borrowings |  |  | 166,000 |  |  |  |  |
Other liabilities |  |  | 29,192 |  |  |  |  |
Total liabilities assumed |  |  |  |  |  |  | 3,362,749 |
Total fair value of identifiable net assets, at fair value |  |  |  |  |  |  | 356,342 |
Goodwill |  |  |  |  |  | $ | 547,144 |
At the date of acquisition, the gross contractual loan amounts receivable, inclusive of all principal and interest, was approximately $3 billion. The Company’s best estimate of the contractual principal cash flows for loans not expected to be collected at the date of acquisition was approximately $4.5 million. We have included the financial results of the business combination in the consolidated statement of earnings and comprehensive income beginning on the acquisition date. For the year ended December 31, 2019, the Company incurred merger related expenses associated with the CB acquisition of $6.4 million, compared to $16.4 million for the year ended December 31, 2018. For illustrative purposes only, the following table presents certain unaudited pro forma information for the years ended December 31, 201 8 and 201 7 . This unaudited estimated pro forma financial information was calculated as if CB had been acquired as of the beginning of the year prior to the date of acquisition. This unaudited pro forma information combines the historical results of CB with the Company’s consolidated historical results and includes certain adjustments reflecting the estimated impact of certain fair value adjustments for the respective periods. The pro forma information is not indicative of what would have occurred had the acquisition occurred as of the beginning of the year prior to the acquisition. The unaudited pro forma information does not consider any changes to the provision for credit losses resulting from recording loan assets at fair value, cost savings, or business synergies. As a result, actual amounts would have differed from the unaudited pro forma information presented.
|  | Unaudited Pro Forma Year Ended December 31, |
|  | 2018 |  |  | 2017 |
|  | (Dollars in thousands, except per share amounts) |
Total revenues (net interest income plus noninterest income) |  | $ | 488,620 |  |  | $ | 477,235 |
Net income |  | $ | 181,433 |  |  | $ | 139,129 |
Earnings per share - basic |  | $ | 1.30 |  |  | $ | 1.00 |
Earnings per share - diluted |  | $ | 1.29 |  |  | $ | 0.99 |
Valley Commerce Bancorp Acquisition On March 10, 2017, the Company completed the acquisition of VCBP, the holding company for VBB, headquartered in the Central Valley area of California. The Company acquired all of the assets and assumed all of the liabilities of VCBP for $23.2 million in cash and $37.6 million in stock. As a result, VBB was merged with the Bank, the principal subsidiary of CVB. The Company believes this transaction serves to further strengthen its presence in the Central Valley area of California. At close, VBB had four branches located in Visalia, Tulare, Fresno, and Woodlake. The systems integration of VCBP and CBB was completed in May 2017. Three of these center locations were consolidated with nearby CBB locations in the third quarter of 2017 and the Company sold the Woodlake branch in the fourth quarter of 2017. Goodwill of $27.0 million from the acquisition represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired. The total fair value of assets acquired approximated $405.9 million, which included $28.3 million in cash and cash equivalents net of cash paid, $2.0 million in FHLB stock, $309.7 million in loans and lease finance receivables, $5.3 million in fixed assets, $9.4 million in Bank Owned Life Insurance (“BOLI”), $3.2 million in core deposit intangible assets acquired and $21.0 million in other assets. The total fair value of liabilities assumed was $368.3 million, which included $361.8 million in deposits, and $6.5 million in other liabilities. The assets and liabilities, both tangible and intangible, were recorded at their estimated fair values as of March 10, 2017. The assets acquired and liabilities assumed have been accounted for under the acquisition method accounting. The purchase price allocation was finalized in the third quarter of 2017. We have included the financial results of the business combination in the condensed consolidated statement of earnings and comprehensive income beginning on the acquisition date. For the year ended December 31, 2018, the Company did not incur any merger related expenses associated with the VCBP acquisition, compared to $2.1 million for the year ended December 31, 2017.

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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