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Nicolet (NCBS) Signs Merger Deal With County Bancorp (ICBK)

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In an effort to become a premier agriculture lender in Wisconsin, Nicolet Bankshares, Inc. NCBS has entered a merger agreement to acquire County Bancorp, Inc. ICBK and its wholly-owned subsidiary, Investors Community Bank.

Closing of the deal, subject to shareholder and regulatory approvals, and other customary closing conditions, is expected in fourth-quarter 2021.

Based on Mar 31, 2021 results, the combined firm will have $7.5 billion worth of pro-forma total assets, deposits worth $6.3 billion and loans of $4.9 billion.

Terms of the Deal and Financial Impact

Per the deal, which is valued at $219 million, Nicolet will be the surviving corporation. Shareholders of County Bancorp can choose to receive, at the election of each holder and subject to proration, either $37.18 per share in cash or 0.48 shares of Nicolet’s common stock for each of their shares.

County Bancorp’s shareholder elections will be prorated in a way that will ensure that the total deal consideration consists of 20% cash and 80% of Nicolet’s common stock.

Upon deal closure, Nicolet will appoint a member of County Bancorp’s current board of directors to its board.

Notably, the deal value is 1.38 times County Bancorp’s tangible book value as of Mar 31, 2021, and is equal to 16.6X of the company’s current-year estimated earnings per share (“EPS”).

The transaction is expected to result in mid-single-digits earnings accretion in 2022. A 1.2% dilution to tangible book value per share is expected, which will be earned back in 1.4 years under the crossover method, including the current expected credit loss “Day 2” accounting treatment.

Management Comments

The president and CEO of Nicolet, Mike Daniels, stated, “We are excited about the potential of combining Nicolet and Investors to serve our customers and communities. Our collective founder-entrepreneurial mindset makes for a distinctive culture that resonates with our employees and customers. We are excited about adding the expertise and specialized knowledge of the banking team from Investors, who, like our current agriculture lenders, have boots in the driveways.”

Tim Schneider, the president of County Bancorp, said, “Nicolet is a like-minded partner who shares our focus on people, community, and serving the customer. With the added scale and capital of Nicolet, this partnership will rapidly accelerate our ability to serve existing customers and build new relationships. I am very optimistic about where we can go as a combined company.”

Nicolet’s chairman, Bob Atwell, commented, “While some could view this as merely a market infill deal that diversifies our lending revenue, we believe it is more accurate to say this transaction better aligns our lending portfolio with the economic structure of our region. Agricultural production lending has long been underweighted in our overall loan portfolio precisely because Investors has been so good at this core focus in agricultural lending.”

So far this year, shares of Nicolet have gained 7%, while that of County Bancorp has gained 56%. The industry to which the stocks belong has rallied 32.6%.

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Currently, both Nicolet and County Bancorp carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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First Midwest Bancorp, Inc. (FMBI) : Free Stock Analysis Report

Old National Bancorp (ONB) : Free Stock Analysis Report

County Bancorp, Inc. (ICBK) : Free Stock Analysis Report

Nicolet Bankshares Inc. (NCBS) : Free Stock Analysis Report

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