UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
October 4, 1999
CVB Financial Corp.
(Exact name of registrant as specified in its charter)
CALIFORNIA
(State or other jurisdiction of incorporation)
1-10394
(Commission File Number)
95-3629339
(IRS Employer Identification No.)
701 North Haven Avenue, Suite 350, Ontario, California 91764
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (909) 980-4030
Not Applicable
(Former name or former address, if changed since last report)
This report includes a total of 11 pages
Exhibit Index on page 3
Item 1. Changes in Control of Registrant.
None.
Item 2. Acquisition or Disposition of Assets.
On October 4, 1999, Orange National Bancorp, a California
corporation ("ONB") merged (the "Merger") with and into CVB
Financial Corp. ("CVB"). The Merger was immediately followed by
the merger (the "Bank Merger") of Orange National Bank ("Orange")
with and into Citizens Business Bank ("CBB"). At September 30,
1999 ONB had, on a consolidated basis, six branches operating in
Orange County, California, with total deposits of $246.7 million,
total loans of $152.9 million and shareholders' equity of $25.1
million. CVB currently intends to continue to conduct CBB banking
operations at all of the Orange branches. Each outstanding share
of ONB common stock was converted into 1.5 shares of common stock
of CVB. Based on the closing price of CVB common stock on October
1, 1999, the value of the total consideration paid in the Merger
was $88.8 million. No fractional shares of CVB common stock were
issued in the Merger. In lieu thereof, each half of a share of
ONB common stock will be converted into cash in the amount of
$13.44. The Merger and the Bank Merger are being accounted for
under the pooling of interests method of accounting treatment.
CVB expects to issue 3,003,107 additional shares of Common
Stock (subject to reduction to the extent cash is paid in lieu of
fractional shares) to shareholders of record as of the close of
business on October 1, 1999, and 340,500 additional shares of
Common Stock to the 1993 and the 1997 Stock Option Plans pursuant
to the exercise of options to purchase Orange National Bancorp
stock which were assumed as options to purchase CVB Financial
Corp.'s common stock.
In connection with the Merger and the Bank Merger, Mr. San
Vaccaro, former Chairman of the Board of ONB and Orange has
joined the boards of directors of CVB and CBB.
Please see Item 7, Financial Statements and Exhibits, for
financial information related to this merger.
Item 3. Bankruptcy or Receivership.
None.
2
Item 4. Changes in Registrant's Certifying Accountant.
None.
Item 5. Other Events.
None.
Item 6. Resignations of Registrant's Directors.
None.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired.
Orange National Bancorp Annual Report on Form 10-K,
Commission file number 000-15365, filed on March 19, 1999, is
incorporated herein by this reference.
Orange National Bancorp Quarterly Report on Form 10-Q, Commission
file number 000-15365, filed on August 13, 1999, is incorporated
herein by this reference.
(b) Pro forma financial information
Page
Index to Pro forma financial information
Pro forma Combined Balance Sheet
June 30, 1999 6
Pro forma Combined Statements of Earnings
December 31, 1998, and June 30, 1999 7
(c) Exhibits Page
23 Consent of Independent Auditors 11
3
Item 8. Change in Fiscal Year.
None.
Item 9. Sales of Equity Securities Pursuant to Regulation S.
None.
4
Unaudited Pro Forma Condensed
Combined Financial Information
The following Unaudited Pro Forma Combined Condensed Balance Sheet as of
June 30, 1999, combines the historical consolidated balance sheets of CVB
Financial Corp. and Orange National Bancorp as if the merger had been effective
on June 30, 1999. The Unaudited Pro Forma Combined Condensed Statements of
Income for the period ended June 30, 1999 and the year ended December 31, 1998,
present the combined results of operations of CVB Financial Corp. and Orange
National Bancorp as if the merger had been effective at the beginning of each
period. Dollars are in thousands except for per share data.
The Unaudited Pro Forma Combined Condensed Financial Information and
accompanying notes reflect the application of the pooling of interests method
of accounting for the merger. Under this method of accounting, the recorded
assets, liabilities, shareholders' equity, income and expenses of CVB Financial
Corp. and Orange National Bancorp are combined and reflected at their historical
amounts except that the balance sheet for June 30, 1999 reflects the estimated
merger related charges of $4.9 million, after income taxes and assuming a 41%
effective tax rate. The pro forma combined figures shown in the Unaudited Pro
Forma Combined Condensed Financial Information are simply arithmetical
combinations of CVB Financial Corp. and Orange National Bancorp's separate
financial results; you should not assume that CVB Financial Corp. and Orange
National Bancorp would have achieved the pro forma combined results if they had
actually been combined during the periods presented.
The combined company expects to achieve merger benefits in the form of
operating cost savings. The pro forma earnings, which do not reflect any merger
costs or potential savings which are expected to result from the consolidation
of the operations of CVB Financial Corp. and Orange National Bancorp, are not
indivative of the results of future operations. No assurances can be given with
respect to the ultimate level of expense savings.
CVB Financial Corp. and Orange National Bancorp consolidated financial
statements are prepared in conformity with generally accepted accounting
principles. In the opinion of CVB Financial Corp. and Orange National Bancorp,
the unaudited pro forma condensed combined financial statements include all
adjustments necessary to present fairly the results of the periods presented.
5
Unaudited Pro Forma Condensed
Combined Balance Sheet
June 30, 1999
(dollars in thousands except per share amounts)
CVB Financial Corp. Orange National Bancorp Pro Forma CVB Financial Corp. and
Adjustments Orange National Bancorp
Combined
------------------- ----------------------- ------------ -----------------------
Assets
Federal funds sold $ 0 $ 49,300 $ $ 49,300
Investment securities held to maturity 53,178 13,418 66,596
Investment securities available for sale 679,268 48,084 727,352
Loans and lease finance receivables, net 701,914 145,420 847,334
------------------ ----------------------- ------------ ----------------------
Total earning assets 1,434,360 256,222 1,690,582
Cash and due from banks 88,963 16,105 105,068
Premises and equipment, net 22,079 5,386 27,465
Other real estate owned, net 1,891 0 1,891
Goodwill and intangibles 9,043 0 9,043
Other assets 46,250 7,922 1,991 56,163
------------------ ----------------------- ------------- ---------------------
TOTAL $ 1,602,586 $ 285,635 $ 1,991 $ 1,890,212
================== ======================= ============= =====================
Liabilities:
Liabilities:
Deposits:
Noninterest-bearing $ 517,798 $ 94,050 $ $ 611,848
Interest-bearing 688,988 164,941 853,929
------------------ ----------------------- ------------- ---------------------
Total deposits 1,206,786 258,991 1,465,777
Demand note issued to U.S. Treasury 11,816 0 11,816
Federal funds purchased 21,000 0 21,000
Repurchase Agreement 190,000 0 190,000
Securities purchased not settled 36,028 0 36,028
Other liabilities 18,853 2,133 4,856 25,842
------------------ ----------------------- ------------ ---------------------
Total liabilities 1,484,483 261,124 4,856 1,750,463
Stockholders' Equity
Common Stock 94,735 8,081 102,816
Retained Earnings 27,392 16,837 (2,865) 41,364
Accumulated other comprehensive
income (losses) (4,024) (407) (4,431)
------------------ ----------------------- ------------ ---------------------
Total Stockholders' equity 118,103 24,511 (2,865) 139,749
------------------ ----------------------- ------------ ---------------------
TOTAL $ 1,602,586 $ 285,635 $ 1,991 $ 1,890,212
================== ======================= ============ =====================
See accompanying notes to unaudited pro forma combined financial data.
6
UNAUDITED PRO FORMA CONDENSED
COMBINED STATEMENTS OF EARNINGS
For the Year Ended December 31, 1998
(dollars in thousands except per share amounts)
CVB Financial Corp. and
Orange National Bancorp
CVB Financial Corp. Orange National Bancorp Combined
------------------- ----------------------- -----------------------
Interest income:
Loans, including fees $ 60,207 $ 14,633 $ 74,840
Investment securities:
Taxable 31,783 1,602 33,385
Tax-advantaged 4,370 0 4,370
----------------- ---------------------- -----------------------
36,153 1,602 37,755
Federal funds sold and interest bearing
deposits with other financial 479 2,881 3,360
institutions
----------------- ---------------------- -----------------------
Total interest income 96,839 19,116 115,955
Interest expense:
Deposits 23,786 4,165 27,951
Other borrowings 7,462 0 7,462
----------------- ---------------------- -----------------------
31,248 4,165 35,413
----------------- ---------------------- -----------------------
Net interest income 65,591 14,951 80,542
Provision for credit losses 2,500 100 2,600
----------------- ---------------------- -----------------------
Net interest income after
provision for credit losses 63,091 14,851 77,942
Other operating income:
Service charges on deposit accounts 7,616 1,194 8,810
Trust services 3,472 0 3,472
Other 3,888 1,589 5,477
----------------- ---------------------- -----------------------
14,976 2,783 17,759
Other operating expenses:
Salaries, wages and employee benefits 22,700 6,138 28,838
Occupancy 3,779 1,330 5,109
Equipment 3,891 754 4,645
Stationery and supplies 2,703 671 3,374
Professional services 3,802 603 4,405
Promotion 2,012 485 2,497
Data processing 951 977 1,928
Deposit insurance premiums 123 97 220
Other real estate owned expense 1,194 17 1,211
Other 3,869 1,085 4,954
----------------- ---------------------- -----------------------
45,024 12,157 57,181
----------------- ---------------------- ----------------------
Earnings before income taxes 33,043 5,477 38,520
Income taxes 12,256 2,147 14,403
----------------- ---------------------- ----------------------
Net earnings $ 20,787 $ 3,330 $ 24,117
================= ====================== ======================
Basic earnings per common share $ 1.26 $ 1.67 $ 1.23
================= ====================== ======================
Diluted earnings per common share $ 1.21 $ 1.64 $ 1.19
================= ====================== ======================
Weighted Average Shares Outstanding
Basic 16,556 1,989 19,540
Diluted 17,221 2,036 20,275
See accompanying notes to unaudited pro forma combined financial data.
7
UNAUDITED PRO FORMA CONDENSED
COMBINED STATEMENTS OF EARNINGS
For the Six Months Ended June 30, 1999
(dollars in thousands except per share amounts)
CVB Financial Corp. and
Orange National Bancorp
CVB Financial Corp. Orange National Bancorp Combined
------------------- ----------------------- -----------------------
Interest income:
Loans, including fees $ 30,884 $ 6,757 $ 37,641
Investment securities:
Taxable 18,662 1,851 20,513
Tax-advantaged 2,613 0 2,613
------------------ ---------------------- ------------------------
21,275 1,851 23,126
Federal funds sold and interest bearing
deposits with other financial 113 877 990
institutions
------------------ ---------------------- -----------------------
Total interest income 52,272 9,485 61,757
Interest expense:
Deposits 10,483 2,073 12,556
Other borrowings 5,746 0 5,746
------------------ ---------------------- -----------------------
16,229 2,073 18,302
------------------ ---------------------- -----------------------
Net interest income 36,043 7,412 43,455
Provision for credit losses 1,100 90 1,190
------------------ ---------------------- -----------------------
Net interest income after
provision for credit losses 34,943 7,322 42,265
Other operating income:
Service charges on deposit accounts 4,504 740 5,244
Trust services 1,925 0 1,925
Other 1,677 833 2,510
------------------ ---------------------- -----------------------
8,106 1,573 9,679
Other operating expenses:
Salaries, wages and employee benefits 12,095 3,032 15,127
Occupancy 1,926 638 2,564
Equipment 2,243 388 2,631
Stationery and supplies 1,534 326 1,860
Professional services 2,619 387 3,006
Promotion 1,296 268 1,564
Data processing 555 481 1,036
Deposit insurance premiums 65 51 116
Other real estate owned expense 361 5 366
Other 2,002 489 2,491
------------------ ---------------------- -----------------------
24,696 6,065 30,761
------------------ ---------------------- -----------------------
Earnings before income taxes 18,353 2,830 21,183
Income taxes 6,782 1,111 7,893
------------------ ---------------------- -----------------------
Net earnings $ 11,571 $ 1,719 $ 13,290
================== ====================== =======================
Basic earnings per common share $ 0.70 $ 0.86 $ 0.68
================== ====================== =======================
Diluted earnings per common share $ 0.67 $ 0.83 $ 0.66
================== ====================== =======================
Weighted Average Shares Outstanding
Basic 16,560 2,000 19,560
Diluted 17,142 2,078 20,259
See accompanying notes to unaudited pro forma combined financial data.
8
Notes to Unaudited Pro Forma Condensed
Combined Financial Statements
1. Basis of Presentation
CVB Financial Corp. ("CVB") acquired Orange National Bancorp ("ONB") for a fixed
exchange ratio of 1.5 CVB shares of common stock for each ONB share of common
stock plus cash for any fractional shares. Since these are pro forma statements,
no assurance can be given as to the amounts reflected in these financial
statements as to whether they would have been representative of the actual
amounts presented had the companies been combined at that time.
Certain information presented in the historical information of ONB has been
reclassified to aid in the presentation of these pro forma condensed combined
financial statements.
2. Pro Forma Adjustments
Shareholders' equity has been adjusted to reflect the number of shares
outstanding for the issuance of 1.5 shares of CVB common stock for each share of
ONB common stock. In addition, the merger calls for the stock options of ONB to
be converted into stock options of CVB at the same ratio of 1.5 CVB common stock
option for each ONB common stock option. Shares outstanding for each period
presented have been adjusted to reflect the exchange ratio.
Basic pro forma combined net income per share is based on net income and the
weighted average number of outstanding common shares. Diluted net income per
common share includes the dilutive effect of stock options. The weighted average
number of outstanding common shares has been adjusted to reflect the conversion
of each share of ONB common stock into 1.5 shares of CVB common stock and the
conversion of each ONB into CVB options.
3. Merger Related Charges
These charges are accrued in the Balance Sheet only due to the non-recurring
nature of these charges. While we cannot accurately determine the total merger
related charges at this time, we estimate that we will incur the following
charges:
Employee Costs $2,282,000
Investment Bankers 880,000
Professional Fees 1,067,000
Data Processing 627,000
----------
$4,856,000
==========
9
Our cost estimates are forward-looking. While most of the costs represent costs
incurred to the date of this Form 8-K, the ultimate level and timing of the
recognition of such costs will be based on the final completion of the
integration plan.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has dully caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CVB Financial Corp.
(Registrant)
Date: October 18, 1999 /s/ Edward J. Biebrich, Jr.
---------------------------
Edward J. Biebrich, Jr.
Chief Financial Officer
10
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation of our report for Orange National Bancorp
dated January 22, 1999, except for the last paragraph of Note 10, as to which
the date is February 11, 1999, incorporated by reference in this Form 8-K in the
previously file Registration Statements of CVB Financial Corp. on Form S-8 (No.
333-88519, No. 33-50442 and No. 33-41318).
/s/McGladrey & Pullen, LLP
- --------------------------
McGLADREY & PULLEN, LLP
Anaheim, California
October 18, 1999
11