US bank First Hawaiian bets on California growth with $2 billion TriCo buy

First Hawaiian shares have historically represented a "safe haven" and the risk profile is changing with this deal, which may lead to the transaction being a tougher sell for investors, Barclays analyst Jared Shaw said.

The deal will give First Hawaiian greater scale in California, the largest state economy in the U.S. where it began lending in 1995. Nearly a quarter of its loan portfolio is based in mainland U.S.

But since its separation from Bank of the West in 2016, First Hawaiian has lacked a branch network in mainland U.S. to expand client relationships.

TriCo, which manages roughly $10 billion in assets, has a strong presence across Northern and Central California. The combined company will have about $34 billion in total assets and become the sixth-largest bank headquartered in the Western U.S. by deposits.

The transaction is expected to close by the end of 2026. Four TriCo directors, including CEO Rick Smith, will join First Hawaiian's board.

First Hawaiian and TriCo shareholders are expected to own roughly 65% and 35%, respectively, of the combined bank.

Evercore advised First Hawaiian, while Keefe, Bruyette & Woods advised TriCo on the deal.

July 13 (Reuters) - First Hawaiian FHB.O will buy California-based lender TriCo Bancshares TCBK.O in a $2 billion all-stock deal, as it seeks to expand beyond Hawaii and boost its mainland U.S. presence.

Dealmaking among U.S. banks has accelerated over the past year as boardrooms take advantage of a more relaxed regulatory environment and consolidate to better compete against bigger rivals.