TriCo Bancshares to Merge with Valley Republic Bancorp, Transaction Valued at $165.6MM



TriCo Bancshares, the parent company for Tri Counties Bank, and Valley Republic Bancorp, the parent company for Valley Republic Bank, entered into a definitive agreement under which Valley Republic will merge with and into TriCo in a stock transaction valued at approximately $165.6 million or $38.15 per share based on TriCo’s stock price of $40.16 on July 26, 2021.

When completed, the combined company will have more than $9 billion in assets, $8 billion in deposits and nearly $6 billion in loans, serving business and consumer customers with locations throughout California.

“We have great respect for the Valley franchise, its history of successful growth and its long-term commitment to its customers and local community,” Rick Smith, chairman, president and CEO of TriCo Bancshares, said. “Geraud [Smith] and the Valley team have achieved unparalleled growth in the Bakersfield market, and we look forward to joining together to grow Tri Counties Bank into the leading community bank throughout the San Joaquin Valley. We have a proven track record of successful acquisitions, having most recently completed the integration of FNB Bancorp in 2018. We’re excited to welcome Valley employees and customers and we are prepared to work together for a smooth transition process.”

“We are delighted to join a bank that shares our cultural values, commitment to its customers and has a local community banking focus,” Geraud Smith, president and CEO of Valley Republic Bancorp, said. “Valley has built a leading franchise in its communities and this partnership will provide our clients with the full breadth of Tri Counties Bank’s comprehensive set of products and services. I look forward to my continuing leadership role in the combined organization and this next chapter for Valley as part of the TriCo franchise.”

Under the terms of the agreement, Valley Republic shareholders will receive 0.95 of a share of TriCo’s common stock in exchange for each share of Valley Republic’s common stock they own, subject to certain potential adjustments. The aggregate merger consideration of $165.6 million includes $164.7 million in TriCo stock to be issued to Valley Republic shareholders and $0.9 million to be paid in cash to Valley Republic option holders. The value of the merger consideration will fluctuate until closing based on the value of TriCo’s stock. The merger is expected to qualify as a tax-free reorganization.

The boards of directors of each company unanimously approved the transaction agreement, which provides for one director of Valley Republic to join TriCo’s board of directors. Upon the close of the transaction, Valley Republic’s shareholders will own approximately 12% of the combined company. The transaction is expected to close in Q4/21, contingent upon approval from Valley Republic’s shareholders and other customary regulatory approvals.

The transaction is expected to be 5.5% accretive to TriCo’s earnings per share in 2022, with 1.6% dilution to tangible book value per share and a tangible book value earn-back of two years. The earnings per share accretion estimates are based on anticipated cost savings of approximately 17% of Valley Republic’s non-interest expense and does not include any benefits from potential revenue synergies which may result, although opportunities have been identified.

Keefe, Bruyette & Woods served as financial advisor and Sheppard, Mullin, Richter & Hampton served as legal counsel to TriCo. Stephens served as financial advisor and Duane Morris served as legal counsel to Valley Republic.

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