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Heritage Bank of Commerce to Acquire Bay View Funding

October 09, 2014, 08:04 AM
Filed Under: Mergers & Acquisitions

Heritage Bank of Commerce has signed a definitive stock purchase agreement to acquire BVF/CSNK Acquisition Corp. ("BVF") for $22.5 million in cash. Based in Santa Clara, California, BVF is the parent company of CSNK Working Capital Finance Corp. dba Bay View Funding, which provides business-essential working capital factoring financing to various industries throughout the United States.

Bay View Funding had total assets of $43.8 million as of August 31, 2014. Upon completion of the acquisition, will become a subsidiary of Heritage Bank of Commerce, reporting directly to Keith Wilton, EVP and Chief Operating Officer of Heritage Bank of Commerce.

"Combining BVF's talented staff and national reach with Heritage Bank of Commerce's funding further diversifies Heritage's commercial product offerings," said Keith Wilton. "The platform is scalable and is aligned with recent key product initiatives designed to deliver a full spectrum of commercial lending products to our markets. From commercial and industrial; to asset-based; to factoring, Heritage now serves a wide range of commercial clients in our Bay Area footprint and beyond."

"Bay View Funding is very excited to be joining the Heritage Bank family of talented and dedicated bankers. Heritage's commitment to their clients and local communities complements our 30 year history of servicing our clients locally and across the country," said Glen Shu, President and Chief Executive Officer of Bay View Funding. "The many strengths of the Bank, combined with BVF's expertise in the factoring industry, will make us an even stronger market leader as we move forward."

"This transaction, along with the recently announced dividend increase, represents another effective use of our capital," said Walter Kaczmarek, President, and CEO of Heritage Bank of Commerce. "This represents a disciplined acquisition which leverages excess capital, deploys excess liquidity into significantly higher yielding assets and increases profitability."

The boards of both companies and shareholders of BVF have approved the transaction. Completion of the acquisition is expected as soon as possible after receipt of any regulatory approvals required.

Heritage Bank of Commerce expects to incur pre-tax acquisition and integration costs of approximately $1.0 million to $1.3 million in the 3rd and 4th quarters of 2014.

Upon completion and full integration of the acquisition of BVF by Heritage Bank of Commerce, management anticipates the following pro-forma financial impact on Heritage Commerce Corp:

  • EPS accretion in excess of 20% in 2015
  • Reduction of the overall efficiency ratio to the low 60% range in 2015
  • Internal rate of return in excess of 25%
  • Tangible book value dilution earn back of less than 4.5 years
  • Cost savings, other than funding and directors' compensation costs, are expected to be minor
  • The operational integration of the combined institutions is expected to be minimal and completed relatively soon after closing

Heritage Commerce Corp and Heritage Bank of Commerce were represented by Buchalter Nemer, a professional corporation, and Keefe, Bruyette & Woods, A Stifel Company, provided advisory services to the Heritage Commerce Corp and Heritage Bank of Commerce Boards of Directors.

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