ICBK Stock Price Increases Over 40%: Why It Happened

By Amit Chowdhry ● Jun 22, 2021
  • The stock price of County Bancorp Inc (NASDAQ: ICBK) increased by over 40% during intraday trading. This is why it happened.

The stock price of County Bancorp Inc (NASDAQ: ICBK) increased by over 40% during intraday trading. Investors are responding to news that Nicolet Bankshares, Inc. (NASDAQ: NCBS) and County Bancorp today jointly announced the execution of a definitive merger agreement pursuant to which Nicolet will acquire County and its wholly-owned banking subsidiary Investors Community Bank.

And based on the financial results as of March 31, 2021, the combined company will have pro forma total assets of $7.5 billion, deposits of $6.3 billion, and loans of $4.9 billion, inclusive of Nicolet’s prior acquisition announcement of Mackinac Financial Corporation on April 12, 2021.

Under the terms of the deal, Nicolet will acquire County with Nicolet being the surviving corporation. And in the merger, County shareholders have the right to receive for each share of County common stock, at the election of each holder and subject to proration, either cash of $37.18 per share of County common stock or 0.48 shares of Nicolet common stock. The County shareholder elections will be prorated to ensure the total consideration will consist of approximately 20% cash and approximately 80% Nicolet common stock. And based on Nicolet’s closing price of $71.75 as of June 21, 2021, the merger consideration is valued at approximately $219 million.

The estimated transaction value is about a 1.38 multiple of County’s tangible book value as of March 31, 2021 and equates to approximately 16.6x County’s 2021 estimated earnings per share. The first full year earnings (2022) per share accretion is estimated in the mid-single digits and the tangible book value per share dilution of 1.2% is expected to be earned back in about 1.4 years under the crossover method including Current Expected Credit Loss (CECL) “Day 2” accounting treatment. 

Nicolet is going to appoint a member of County’s current board of directors to the boards of directors of Nicolet and Nicolet National Bank upon the completion of the transaction.

Following the merger, Tim Schneider will join the senior management team at Nicolet as Senior Vice President, Agriculture Lending Manager.

The deal was unanimously approved by the boards of directors of both companies. And it is subject to both County and Nicolet shareholder approval, regulatory approvals, and other closing conditions. The deal is expected to close in the fourth quarter of 2021. 

After the deal closes, Investors Community Bank’s existing branch at 960 Hansen Rd., Green Bay, WI is expected to close and consolidate with continued service out of the legacy Nicolet office at 2363 Holmgren Way, Green Bay, WI. And all other Investors’ branches are anticipated to become branches of Nicolet.

KEY QUOTES:

“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.

“One of the goals of every acquisition is to find better ways to serve communities. This partnership is an intentional, strategic move to become the premier agriculture lender throughout Wisconsin. 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. Long term, combining our operations will create a stronger community bank.”

— Mike Daniels, President and CEO of Nicolet

“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. Our similar cultures and values should lead to a smooth transition for our employees and customers. We remain committed to the markets and industries we serve, especially the dairy sector, and above all, keeping banking local.”

— Tim Schneider, President of County

“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.”

— Bob Atwell, Chairman of Nicolet

“This merger will create many exciting opportunities for the combined organization by expanding banking services to all customers. In Nicolet we have found a strategic partner with a shared vision and long history of supporting customers and communities. It is a transformational partnership for County that provides the scale and resources needed to drive increased long-term shareholder value.”

— Andy Steimle, Chairman of County

Disclaimer: This content is intended for informational purposes. Before making any investment, you should do your own analysis.