Unsolicited queries from would-be buyers and one takeover attempt in the last few months have convinced California Independent Bancorp in Yuba City, Calif., to fortify its defenses against unfriendly overtures.
The $339 million-asset parent of Feather River State Bank recently bought back scores of its shares and has instituted a poison-pill provision in an effort to stay independent.
The actions followed the board's late-October rejection of an unsolicited bid by Placer Capital Co. II, a unit of the investment group Belvedere Capital LLC, which owns the $993 million-asset Placer Sierra Bank in Auburn, Calif. The San Francisco outfit offered $30 a share, or about $63.4 million.
Industry observers say other Northern California banking companies have their eyes on California Independent. Western Sierra Bancorp of Cameron Park, North Valley Bancorp in Redding, and Humboldt Bancorp in Roseville all would consider buying California Independent at the right price, said Brett D. Rabatin, an analyst at First Tennessee National Corp.'s Midwest Research in Cleveland.
The reason for all this interest is location, he said. Yuba City is 40 miles north of Sacramento, one of the fastest-growing regions in the country. "Yuba City is also growing rapidly, and there are several banks that would really like to have branches there," Mr. Rabatin said.
Robert M. Daugherty, the president and chief executive officer at Humboldt, which has assets of $1 billion, said, "We've made it well known that Humboldt is interested in making acquisitions within our footprint," and Feather River's branches "are certainly within our footprint." But he added that Humboldt has not made an offer.
Apparently, the board at California Independent wants to go it alone - at least for now. Though Placer's offer in October represented a 50% premium on California Independent's $20 share price at the time, the company said in a Nov. 28 filing with the Securities and Exchange Commission that the board was rejecting it.
"Based upon our long-term corporate plans and objectives, shareholder value will be enhanced by remaining independent at this time," the filing said.
John I. Jelavich, California Independent's president and CEO, said in an interview Monday that it was important to consider how the community would react to losing its largest hometown community bank.
"We have local relationships that date back to our founding 25 years ago," Mr. Jelavich said. "It does boil down to what we can do to create the best value for our shareholders, but at this point, that's through our performance."
Would it ever sell?
"There is a price," Mr. Jelavich said, though he would not name it. "Our responsibility is to our shareholders." He confirmed that several banking companies have expressed an interest in buying his company.
Under the poison-pill provision adopted in November, prospective buyers would have to negotiate with California Independent's board. In a second move to ward off suitors, the company said it would buy back up to $5 million of its stock. The tender offer closed on Dec. 30, and California Independent said last week that it planned to buy more than 76,000 shares at $25 each. The stock has been trading at around $25 since the November announcement.
Another industry watcher privately said the suitors' timing was bad. When it received Placer Capital's bid, California Independent was just completing an offering for $10 million of trust-preferred securities.
Mr. Jelavich said it had been planning the offering for some time to fund expansion, either by opening new branches or even buying a bank of its own.
"We're only on the fringes of Sacramento, and we'd like to be in Sacramento proper," he added.
Meanwhile, Placer Capital is not actively looking to buy any other banks, said Ronald W. Bachli, its chairman. "We're always open to strategic alternatives, but right now we're concentrating on our operations. It just happens that California Independent was our next-door neighbor."
