Thomas McGraw, CEO, FNB commented, "We have been impressed by TriCo and the cultural similarities with FNB. Strategically, TriCo intends to grow the franchise and our customers will benefit from becoming part of a larger banking franchise with an expanded array of products and services. I am confident our shared community banking philosophies and core technology platforms will ensure a successful transition and provide exciting opportunities for our employees and loyal customers."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.
Please see the section below titled "Investor Presentation" to access further details regarding the pro forma assumptions and anticipated financial merits of the transaction along with other information about the merger.TriCo was advised in this transaction by Stephens Inc., as financial advisor and Sheppard, Mullin, Richter & Hampton LLP, as legal counsel. FNB was advised by The Courtney Group, as financial advisor and Dodd Mason George LLP, as legal counsel. Investor Presentation An investor presentation has also been created for this announcement and can be accessed at TriCo's and FNB's respective websites:
- TriCo: https://www.tcbk.com/investor-relations
- FNB: https://www.fnbnorcal.com/investor-relations-overview
Cautionary Statements Regarding Forward-Looking InformationCertain statements contained in this communication which are not statements of historical fact constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, certain plans, expectations, goals, projections and benefits relating to the merger transaction between TriCo and FNB, which are subject to numerous assumptions, risks and uncertainties. Words such as ''believes,'' ''anticipates,'' "likely," "expected," "estimated," ''intends'' and other similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements. Please refer to each of TriCo's and FNB's Annual Reports on Form 10-K for the year ended December 31, 2016, as well as their other filings with the SEC, for a more detailed discussion of risks, uncertainties and factors that could cause actual results to differ from those discussed in the forward-looking statements. Forward-looking statements are not historical facts but instead express only management's beliefs regarding future results or events, many of which, by their nature, are inherently uncertain and outside of the management's control. It is possible that actual results and outcomes may differ, possibly materially, from the anticipated results or outcomes indicated in these forward-looking statements. In addition to factors previously disclosed in reports filed by TriCo and FNB with the SEC, risks and uncertainties for TriCo, FNB and the combined company include, but are not limited to: the possibility that any of the anticipated benefits of the proposed merger will not be realized or will not be realized within the expected time period; the risk that integration of FNB's operations with those of TriCo will be materially delayed or will be more costly or difficult than expected; the inability to complete the merger in a timely manner; the inability to complete the merger due to the failure of TriCo's or FNB's shareholders to adopt the merger agreement; diversion of management's attention from ongoing business operations and opportunities; the failure to satisfy any conditions to completion of the merger, including receipt of required regulatory and other approvals; the failure of the proposed merger to close for any other reason; the challenges of integrating and retaining key employees; the effect of the announcement of the merger on TriCo's, FNB's or the combined company's respective customer relationships and operating results; the possibility that the merger may be more expensive to complete than anticipated or that the combined company will not achieve anticipated earnings accretion or cost savings as a result of unexpected factors or events; the risks of expanding into a new market; and general competitive, economic, political and market conditions and fluctuations. All forward-looking statements included in this filing are made as of the date hereof and are based on information available at the time of the filing. Except as required by law, neither TriCo nor FNB assumes any obligation to update any forward-looking statement.
Proxy SolicitationTriCo, FNB, their directors, executive officers and certain other persons may be deemed to be participants in the solicitation of proxies from TriCo's and FNB's shareholders in favor of the approval of the merger. Information about the directors and executive officers of TriCo and their ownership of TriCo common stock is set forth in the proxy statement for TriCo's 2017 annual meeting of shareholders, as previously filed with the SEC on April 17, 2017. Information about the directors and executive officers of FNB and their ownership of FNB common stock is set forth in the proxy statement for FNB's 2017 annual meeting of shareholders, as previously filed with the SEC on May 12, 2017. Shareholders may obtain additional information regarding the interests of such participants by reading the registration statement and the joint proxy statement/prospectus when they become available. Free copies of this document may be obtained as described above.