Dutch Bank to Buy California-Based VIB
A major Dutch bank founded as a farmers cooperative said Wednesday that it agreed to pay $212.5 million for VIB Corp., a 20-year-old El Centro bank with branches in rural California communities from Fresno to Calexico.
The buyer, Rabobank Group, also has focused on farm towns during its 100-year history and makes 80% of all agricultural loans in the Netherlands. With assets topping $350 billion, the Utrecht-based company is the 25th-largest bank in the world, having expanded in the last eight years by buying rural banks in Australia, New Zealand and Ireland.
VIB’s managers, led by Chief Executive Dennis Kern, would stay on, continuing to operate the bank’s retail subsidiaries as Valley Independent Bank, Bank of Stockdale and Kings River State Bank.
Rabobank said it planned to rapidly increase agricultural and consumer mortgage lending at VIB, which has 24 branches and assets of $1.3 billion and specializes in financing commercial real estate deals. The new owners also would provide wealth management, insurance and other specialty services to VIB customers.
Executives at both banks said they expected Rabobank, which has corporate banking offices in New York and other U.S. cities, to continue its retail expansion in California and other states.
“We wanted to start in California, which after all is the biggest banking market in the country,” said Cor Broekhuyse, an executive vice president at the Dutch bank who heads its U.S. operations from New York. “But in the end we’d like to be a player all over the United States.”
Rabobank would pay $15.10 a share in cash for VIB common stock, a premium of 9.4% over VIB’s $13.80 Tuesday close on Nasdaq. Shares rose $1.02, or 7.4%, to $14.82 on Wednesday.
The acquisition is expected to close late this year or early next year, pending shareholder and regulatory approval, said Harry Gooding III, VIB’s chief financial officer. He said VIB began exploring the possibility of a sale early this year and talked with several potential acquirers before Rabobank came forward. The companies were so similar and the strategic fit was so good that the deal was “basically a no-brainer,” he said.
The only other foreign buyer of California banks in recent years has been BNP Paribas, a French bank that is merging Los Angeles-based United California Bank with Bank of the West in San Francisco.
The dearth of foreign deals in part reflects the declining number of institutions: a consolidation wave reduced the number of California banks from 472 in 1991 to 275 at the end of 2001, a 42% drop, said Edward J. Carpenter of investment bank Carpenter & Co. in Irvine.
He said the price paid for VIB is about 1.9 times the bank’s net worth, compared with an average of 1.75 times for the six other bank acquisitions in California this year.
The deal with Rabobank proves that “unusual business plans can work if you stick to your knitting,” Carpenter said. VIB “grew nicely in non-coastal areas, places that a lot of banks would consider less desirable.”
