TriCo to acquire FNB in transaction valued at roughly $315.3M
TriCo Bancshares and FNB Bancorp announced that they have entered into a definitive agreement under which TriCo, parent company of Tri Counties Bank, will acquire FNB, parent company of First National Bank of Northern California, in a stock transaction valued at approximately $315.3M in aggregate, or $40.81 per share based on the closing price of TriCo's common stock of $41.64 per share on December 8, 2017. The transaction extends Tri Counties Bank's meaningful presence throughout Northern California into the San Francisco peninsula adding key growth markets and opportunities to serve customers in and around the Bay Area. The combination provides customers on the peninsula with access to a premier community banking franchise committed to the businesses, consumers and the communities it serves. Based on financial information as of September 30, 2017, the combined company will have approximately $6.1B in assets, $5B in deposits, $3.7B in gross loans, and 78 branches throughout California -- spanning from Bakersfield in the south to near the Oregon border in the north. The transaction, which was unanimously approved by the boards of directors of TriCo and FNB, is subject to approval by the shareholders of both companies and federal and California banking regulatory agencies. Under the terms of the merger agreement, FNB shareholders will receive 0.980 shares of TriCo common stock in exchange for each share of FNB common stock they hold. The exchange ratio is fixed, subject to a trading collar. In total, FNB shareholders will own approximately 24% of the common stock of the combined company once the transaction is complete. The merger is expected to qualify as a tax-free reorganization. The merger agreement includes a trading collar that allows TriCo to terminate the merger agreement if the weighted average price of TriCo common stock, determined in accordance with the merger agreement, exceeds $49.78 and outperforms the KBW Regional Banking Index by more than 20%, unless FNB agrees to reduce the exchange ratio. Conversely, FNB has the right to terminate the merger agreement if the weighted average price of TriCo common stock is less than $33.18 and underperforms the KBW Regional Banking Index by more than 20%, unless TriCo agrees to increase the exchange ratio. The merger agreement provides for two directors of FNB to join TriCo's Board of Directors. TriCo expects the transaction to be 2% accretive to earnings in 2018, excluding transaction costs, and 8% accretive to earnings in 2019. The earnings per share accretion estimates are based on estimated cost savings of approximately 28% of FNB's non-interest expense, with an estimated 75% realized in 2018 and 100% phased-in during 2019. The earnings per share accretion estimates do not include any impact due to potential revenue synergies although opportunities have been identified. TriCo is expected to recover the tangible book value dilution resulting from this transaction in 4.7 years via the crossover method.