First Hawaiian in Honolulu has agreed to buy TriCo Bancshares in Chico, Calif.
The $24 billion-asset First Hawaiian said in a press release that it will pay $2 billion in stock for the $9.9 billion-asset TriCo. The deal, which is expected to close by the end of this year, priced TriCo at 198% of its tangible book value.
The acquisition “creates a broader platform for long-term growth,” Bob Harrison, First Hawaiian’s chairman, president and CEO, said in the release. “TriCo is an ideal partner to execute this next phase of our growth: a well-managed, relationship-focused bank in California with a strong deposit franchise, disciplined credit culture, experienced local leadership and deep commitment to its communities.”
Four current TriCo directors, including Rick Smith, the company’s chairman, president and CEO, will join First Hawaiian’s board. There are no expected branch closings.
First Hawaiian plans to cut a quarter of TriCo’s annual earnings per share, or $61 million. The company expects to incur $125 million in merger-related expenses.
The deal should be 6% accretive to First Hawaiian’s earnings per share when cost savings are achieved. It should take less than three years to recoup any dilution of First Hawaiian’s tangible book value.
Evercore and Sullivan & Cromwell advised First Hawaiian. Keefe, Bruyette & Woods and Holland & Knight advised TriCo.