Tri Counties Bank to enter North Bay via North Valley Bank

The parent companies of Chico-based Tri Counties Bank and Redding-based North Valley Bank, which has three North Bay locations, have agreed to merge into a combined $3.5 billion-in-assets institution in mid-2014.

On Tuesday, TriCo Bancshares (Nasdaq: TCBK) said it would acquire North Valley Bancorp (Nasdaq: NOVB) for about $178.4 million. North Valley shareholders would receive a 94.33 percent exchange of TriCo common stock, owning 28.6 percent of the combined company's stock. The expected purchase price of $26.09 per North Valley share was based on closing prices on Jan. 17.

"This is a winning combination," said Richard Smith, president and chief executive of TriCo, in a statement. "Both banks are highly respected for their superior customer service, financial products and strong roots in their communities. Together we are even better."

It would be the third recent acquisition for TriCo, which added Nevada City-based Citizen's Bank in 2011 and Granite Bay-based Granite Community Bank in 2010.

In the North Bay, North Valley Bank has branch offices in Santa Rosa and Willits and a loan production office in Ukiah. Tri Counties Bank doesn't have a local presence.

North Valley Bank has made strides in the North Bay in recent years, attracting a number of well-known bankers to its team. Former chief executive of National Bank of the Redwoods, Patrick Kilkenny, now serves on the company's board of directors. Diane Berthinier, former vice president at National Bank of the Redwoods, joined the bank in 2011 as regional president. San Rafael-based Westamerica Bank acquired National Bank of the Redwoods in 2005.

Three members of North Valley's board of directors, who haven't been identified, will be invited to join a larger TriCo board, which will grow from nine to 12 seats.

North Valley Bank reported $912.5 million in net assets as of Sept. 30, 2013 -- its latest financial filing. The bank had $509 million in gross loans and $779.8 million in deposits at that time, and 303 employees.

Tri Counties Bank had $2.6 billion in assets as of Sept. 30, with $1.7 billion in loans and $2.3 billion in deposits.

The merger remains subjects to shareholder and regulatory approval, and has received unanimous approval by each company's board of directors.

TriCo was advised in finances by Keefe, Bruyette & Woods and in law by Bingham, McCutchen. North Valley was advised financially by Sandler O'Neill + Partners and legally by Dodd Mason George.

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