CVB Financial Corp. Issues Important Supplemental Disclosures on Merger with Heritage Financial Corporation

Key Points Investors Need to Know

• Supplemental Disclosures Issued: CVB Financial Corp. (“CVBF”) and Heritage Financial Corporation (“Heritage”) have issued a supplement to their joint proxy statement/prospectus regarding their pending merger. This move is in response to legal claims and to provide additional, clarifying information to shareholders.
• Purpose of the Supplement: While CVBF and Heritage believe the legal claims (including lawsuits and demand letters) are without merit, they are issuing supplemental disclosures to moot certain disclosure claims, avoid delays, minimize litigation risks and costs, and ensure shareholders have all material information before voting on the merger.
• Updated and Amended Disclosures: The supplement amends or adds to multiple sections of the joint proxy statement/prospectus, including the number of shares outstanding, executive officer interests, peer group tables used in financial analyses, and quantification of payments to Heritage executives upon completion of the merger.
• Material Information for Shareholders: The document provides revised numbers, clarifies certain executive arrangements, and adds details to comparative analyses used in the board’s evaluation of the merger. It also provides specific discount rate calculations used by the financial advisor, Piper Sandler, in its fairness opinion.
• Effect on Share Value: These supplemental disclosures could influence shareholder votes and potentially impact the perceived value of the transaction, given the enhanced transparency regarding executive compensation, peer comparables, and process details. These disclosures may be considered price-sensitive.
• CVBF and Heritage Deny Legal Liability: Both companies explicitly deny any wrongdoing or legal necessity for these supplemental disclosures, emphasizing they are made solely to avoid potential legal delays and costs.

Detailed Supplemental Disclosures and Amendments

1. Revised Share Counts and Voting Power

• The number of Heritage shares outstanding as of the record date is corrected to 61,552,260 (down from 61,559,560), with approximately 1.7% owned and entitled to vote by Heritage directors, executive officers, and affiliates (previously stated as 1.9%).
• There were 711 holders of record of Heritage common stock as of the record date.

2. Heritage Executive Arrangements

• The supplement clarifies that Heritage’s executive officers are party to employment agreements that provide for severance payments and benefits if terminated in connection with the merger.
• In a notable update, Seth Fonti (EVP & CFO of Heritage) is now explicitly treated as a named executive officer for the purposes of merger-related benefits.
• Heritage is deemed to have four executive officers who are not named executive officers: Messrs. Edmonds-Waters and Shu, and Mses. Sabnani and Tam.
• The supplement restates and updates the tables quantifying potential payments to Heritage named executive officers upon completion of the merger, so that shareholders can clearly assess management incentives.

3. Peer Group and Financial Advisor Analysis Updates

• The tables listing the “Heritage Peer Group” and “CVBF Peer Group” used in the fairness opinion are deleted and replaced with updated lists and financial metrics as of September 30, 2025. These changes impact the companies used as comparables for valuation, which could affect shareholder perception of the fairness of the merger consideration.
• The “Nationwide Precedent Transactions” table is also replaced with updated transactions, including acquirer, target, deal value, and relevant financial multiples.

4. Key Methodological Details from Piper Sandler

• Piper Sandler’s valuation and fairness analyses are clarified with explicit disclosure of the discount rate calculations for both Heritage and CVBF. For example, the discount rate for Heritage is calculated as 10.01% and for CVBF as 10.18%, using a risk-free rate of 4.77%, equity risk premium of 5.00%, and size premium of 1.02%, with a beta of 84.4% for Heritage and 87.7% for CVBF.
• These details provide greater transparency on the key financial inputs used to assess the merger’s value and fairness for shareholders.

5. Pro Forma Financial Impact

• The supplement provides additional tables describing the estimated earnings per share and tangible book value accretion/dilution for CVBF as a result of the merger, allowing shareholders to better evaluate the transaction’s financial impact.
• Reference is made to an investor presentation filed as an exhibit to CVBF’s 8-K dated December 17, 2025, for further details on deal assumptions.

Investor Takeaways

Why This Matters: These supplemental disclosures are intended to ensure that all CVBF and Heritage shareholders have the most current, accurate and comprehensive information before voting on the merger. The updates to executive compensation disclosures, peer group composition, and fairness opinion calculations may influence shareholder support for the deal and, by extension, could impact the share price.

Shareholder Action: All shareholders are encouraged to thoroughly review the new disclosures, especially those relating to management compensation, valuation methodologies, and updated financial comparisons, as these may affect their voting decisions and the long-term value received from the merger.

Disclaimer

This article is for informational purposes only and does not constitute investment advice. Shareholders should read all official filings and consult their financial advisors before making any investment or voting decisions regarding the proposed merger.

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