In California, Fresno-based ($1.27billion) agreed to acquire Folsom-based Sierra Vista Bank ($156.1 million).
The transaction is valued at $24.0 million, or $5.22 pershare, based on Central Valley's closing price on April 28, and includingredemption of certain outstanding Sierra Vista Bank options and warrants. Accordingto an investor presentation, the transaction structure is approximately 54%stock and 46% cash.
On a per-share basis, SNL calculates the value to be 122.5% of bookand tangible book and 30.7x earnings. The price is 17.81% of deposits and15.37% of assets.
For comparison, SNL valuations for bank and thrift targetsin the West region between April 29, 2015, and April 29, 2016, averaged 141.04%of book, 144.48% of tangible book and had a median of 23.56x last-12-monthsearnings, on a per-share basis.
The one-day premium is 22.82%, based on Sierra Vista Bank'sApril 28 closing price of $4.25. The one-month premium is 30.50%, based onSierra Vista Bank's April 29 closing price of $4.00.
The deal — which is expected to close in the fourth quarter— will be immediately accretive to Central Valley's earnings in 2016, with anestimated 6.8% boost to EPS in 2017 and a greater than 20% internal rate ofreturn. The acquirer expects $2.6 million in transaction costs, pretax.
Central Valley expects to record a gross loan mark of 1.54%,or $1.9 million, and projects a tangible book value earnback period of aboutfour and a half years.
Gary Gall, president, CEO and a director of Sierra VistaBank, will join Central Valley's board.
Central Valley received a fairness opinion from KeefeBruyette & Woods Inc., and Downey Brand LLP served as legal adviser. SierraVista Bank received advisory service and a fairness opinion from Sandler O'Neill& Partners LP, with Peter Buck as lead banker, and its legal counsel wasManatt Phelps & Phillips LLP.
Following the addition of Sierra Vista's three full-servicebranches in Folsom, Fair Oaks and Cameron Park, Calif., Central Valley willhave a total of 23 branches throughout California's San Joaquin Valley.