North Valley Bancorp (NOVB) Skyrockets as Pacific Banks Consolidate

Jacob Harper |

After the bell on Jan 21 the Northern California-based regional bank chain North Valley Bancorp (NOVB) announced a merger with competitor TriCo Bancshares (TCBK) at a premium, sending shares of North Valley skyward. The deal values North Valley at a reported $178 million.

The merger, which is expected to close in mid-2014, tightens TriCo’s hold on the region’s banking market. TriCo has been on an acquisition spree as of late, previously having snatched up Citizens Bank and Granite Community Bank. TriCo’s reach in California now extends from Bakersfield to Crescent City near the Oregon border.

After the merger announcement, TriCo CEO Richard P. Smith touted the savings expected from lack of competition, saying “Together we are even better. The merger provides for even greater customer convenience through an expanded branch network with improved cost efficiencies to maintain our competitive self-service channels and enhance financial performance.”

TriCo is not the only regional bank chain aggressively expanding their position in the Pacific region. In September Umpqua Holdings Corp (UMPQ) announced the acquisition of Sterling Financial, establishing their company as the major regional bank presence in Oregon and Western Nevada.

The deal will be financed in cash and stock. While the news of the merger was welcome for North Valley stakeholders, TriCo share’s sunk on the expected dilution.

North Valley shares took off, gaining 28.09 percent to hit $24.53 a share by midday and flattening out. Conversely, TriCo shares shed 4.28 percent to hit $26.85 a share.

TriCo has been an otherwise stellar play, notching impressive gains as they expand their reach. Prior to the loss after the merger, TriCo’s shares had gained 64.13 percent from the same date the year prior. North Valey ahd been far flatter, only gainign 16.48 percent prior to the Jan 22 market run.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
UMPQ Umpqua Holdings Corporation 18.52 0.43 2.35 1,486,598
TCBK TriCo Bancshares 31.76 0.49 1.57 24,666
JPAPZ JPMorgan Chase Bank London Branch Indian Low Exerc n/a n/a n/a 0

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