TriCo Bancshares in Chico, Calif., has agreed to buy Valley Republic Bancorp in Bakersfield, Calif.
The $8 billion-asset TriCo said in a press release Monday that it will pay $165.6 million in stock for the $1.4 billion parent of Valley Republic Bank. The deal, which is expected to close in the fourth quarter, priced Valley at 157% of its tangible book value.
Valley has four branches, $988 million of loans and $1.2 billion of deposits.
“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, TriCo’s chairman, president and CEO, said in the release.
“We look forward to joining together to grow Tri Counties Bank into the leading community bank throughout the San Joaquin Valley,” Smith added.
Geraud Smith, Valley’s president and CEO, will lead TriCo’s operations in Fresno and Bakersfield. A Valley director will join TriCo’s board.
The deal is expected to be 5.5% accretive to TriCo’s 2022 earnings per share. It should take about two years for TriCo to earn back an estimated 1.6% dilution to its tangible book value per share.
TriCo plans to cut about 17% of Valley’s annual noninterest expenses. The company expects to incur $10.4 million in merger-related expenses.
TriCo was advised by Keefe, Bruyette & Woods and Sheppard, Mullin, Richter & Hampton. Valley was advised by Stephens and Duane Morris.