Honolulu-based First Hawaiian Bank is returning to the mainland with a roughly $2 billion acquisition of Tri Counties Bank, headquartered north of Sacramento, California.<\/p>\n
The deal, expected to close by year-end, would more than double First Hawaiian\u2019s branch count and create a financial institution with about $34 billion in assets and $29 billion in deposits, the companies announced Monday<\/a>.<\/p>\n In a statement Monday, First Hawaiian CEO Bob Harrison said the tie-up \u201ccreates a broader platform for long-term growth.\u201d<\/p>\n \u201cTriCo 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,\u201d Harrison said. \u201cTogether, we will preserve what has made both companies successful while creating a stronger and more diversified bank.\u201d<\/p>\n First Hawaiian said it will retain Tri Counties Bank branding on the mainland and keep open all of the Chico, California-based bank\u2019s branches.<\/p>\n TriCo CEO Rick Smith, on a conference call regarding the acquisition, called the branch consideration crucial to the deal.\u00a0<\/p>\n “Those things really matter when you talk about retention of key people to make the organization go forward,” Smith said.\u00a0<\/p>\n First Hawaiian became part of BNP Paribas\u2019 network in 1998. But the French bank divested its stake in the Hawaiian lender<\/a> in 2019, shortly before selling its U.S. retail franchise<\/a>, Bank of the West, to BMO.<\/p>\n “What we’ve lacked since our separation from Bank of the West is a branch network to expand client relationships and offer a full suite of product offerings,” Harrison said on the conference call.<\/p>\n As part of Monday\u2019s deal, TriCo\u2019s shareholders will receive 2.095 First Hawaiian shares for each share they own. That comes out to $63.12 per share, based on First Hawaiian\u2019s closing stock price from Friday.<\/p>\n Once the transaction closes, First Hawaiian is expected to own roughly 65% of the combined company, and TriCo will own about 35%, the banks said.<\/p>\n Four TriCo directors will join the boards of First Hawaiian Bank and its parent company. Smith will be one of them; the other three will be mutually agreed upon before the deal closes, the banks said.<\/p>\n “TriCo has built its franchise around long-term customer relationships, local decision-making and a commitment to the communities we serve,\u201d Smith said in a statement Monday. \u201cFirst Hawaiian shares those values and brings the scale, capital strength and broader product capabilities to help us do even more for our customers and communities.<\/p>\n First Hawaiian projects cost savings of 25% as part of the deal, according to a presentation to investors<\/a>.<\/p>\n And while on the subject of bottom line, the Hawaiian lender on Monday previewed a handful of metrics it intends to announce July 24 as part of second-quarter earnings.<\/p>\n The bank will report net income of $73.4 million, up from $67.8 million the previous quarter. First Hawaiian also listed its return on average tangible common equity at 16.3%, up from 15.3% the previous quarter.<\/p>\n Buying TriCo would give First Hawaiian an extra 75 or so<\/a> branches in California, on top of the Hawaiian lender\u2019s existing 53-location presence<\/a>.<\/p>\n Harrison, however, emphasized that just because the majority of First Hawaiian\u2019s footprint would soon be on the mainland, that doesn\u2019t mean the bank would shift focus completely.<\/p>\n “Hawaii is still home. It is still the core of what we’re doing on a combined basis,” he said on the conference call, adding that the bank would \u201ccontinue to grow and build capital and invest now in two places.\u201d<\/p>\n