HERITAGE COMMERCE CORP 8-K

What Happened
Heritage Commerce Corp (HTBK) filed an 8-K reporting that on December 17, 2025 it entered into a definitive Agreement and Plan of Reorganization and Merger with CVB Financial Corp. (CVBF). Under the agreement, Heritage will merge into CVBF (CVBF is the surviving company) and Heritage Bank will merge into Citizens Business Bank. Each outstanding share of Heritage common stock will be cancelled and converted into the right to receive 0.65 shares of CVBF common stock (the Exchange Ratio). The boards of both companies unanimously approved the Reorganization Agreement.

Key Details

• Agreement date: December 17, 2025; Outside Date to close: January 15, 2027.
• Exchange Ratio: 0.65 shares of CVBF common stock per Heritage common share.
• Treatment of equity awards:
  • Stock options will be cashed out at closing for the positive excess of (cashout price less exercise price); cashout price uses the 20-day VWAP of CVBF as of the 5th business day prior to closing, multiplied by the Exchange Ratio.
  • Outstanding restricted stock and performance RSUs accelerate and convert into Merger Consideration (CVBF shares) at target levels.
  • RSUs granted after Dec 17, 2025 (Interim Period RSUs) convert into CVBF RSUs at the Exchange Ratio (rounded down) with similar vesting terms but governed by CVBF plan rules.
• Governance and management changes: CVBF agreed to appoint two mutually agreed Heritage directors to its boards at closing and to appoint Clay Jones as President of CVBF and Citizens.
• Closing conditions include shareholder approvals, required regulatory approvals without materially burdensome conditions, effectiveness of CVBF’s registration statement, a tax opinion concluding the merger qualifies under IRC §368(a), accuracy of reps & warranties, and certain Heritage minimum capital and deposit/loan metrics.
• Termination fee: $32,450,000 payable in certain termination scenarios. Boards’ members of each company entered Voting & Support Agreements to vote in favor of the transaction.

Why It Matters
The merger will convert Heritage shareholders into owners of CVBF stock at a fixed exchange ratio (0.65), so Heritage investors should evaluate the implied value per HTBK share and the combined company’s prospects once the S-4/Joint Proxy Statement is filed. The deal requires regulatory and shareholder approvals and other closing conditions, so timing and completion are not guaranteed. The agreement also accelerates and converts employee equity awards and includes a substantial termination fee and specific financial conditions for closing — items that can affect near-term financial statements and shareholder dilution. Separately, Heritage accelerated certain executive compensation payments and vesting (approved Dec 18, 2025) for four executives to mitigate potential excise tax issues under IRC Sections 280G/4999; these payments are subject to clawback if employment ends for certain reasons before the original payout/vesting dates.

Keywords: merger, acquisition, exchange ratio, shareholder vote, regulatory approval, proxy, executive compensation.