Note 10 - Business Combination	9 Months Ended
Sep. 30, 2018
Notes to Financial Statements
Mergers, Acquisitions and Dispositions Disclosures [Text Block]	NOTE 10. BUSINESS COMBINATION Proposed Merger with Merchants Holding Company On October 4, 2018, the Company and Merchants Holding Company, a California corporation (“Merchants”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) pursuant to which Merchants will be merged with and into the Company, with the Company as the surviving corporation (the “Merger”). Management expects the acquisition to close in the first quarter of 2019, subject to the satisfaction of customary closing conditions, including regulatory and shareholder approvals. The Merger Agreement provides that immediately after the Merger, Merchant’s bank subsidiary, The Merchants National Bank of Sacramento (“Merchants National Bank”), will merge with and into the Company’s bank subsidiary, Redding Bank of Commerce, with Redding Bank of Commerce as the surviving bank (the “Bank Merger”). The Merger and Bank Merger are collectively referred to as the “Proposed Transaction.” Under the terms of the Merger Agreement, and subject to certain adjustments, Merchants shareholders may for each share of common stock held, elect to receive 3.8703 shares of the Company, or a cash amount of $48.43, or a combination of 2.3223 shares of the Company and a cash amount of $19.37. The Merger Agreement further provides that the shareholder elections are subject to adjustment, and the Company will issue no more than 1,834,173 shares of common stock and $15.3 million in cash. Based on the closing price of the Company’s common stock of $11.80 on October 4, 2018, the consideration value was approximately $37.0 million in aggregate. The value of the merger consideration will fluctuate until closing based on the value of the Company’s stock. Upon consummation of the Merger, the shareholders of Merchants will own approximately 10% of the combined company. The Merger Agreement includes a provision that the merger consideration will be adjusted if stipulated minimum average core deposit totals are not maintained as of the closing date. Core deposit balances currently total approximately $151 million. If at the close, core deposit balances have declined no more than 7.50%, no adjustment will be made to the merger consideration previously described. If at the close, core deposit balances have declined more than 15%, the Company may unilaterally terminate the transaction. Between these two percentages, the merger consideration will be adjusted according to a contractual schedule. The consummation of the Merger is subject to a number of conditions, which include: (i) the approval of the Merger Agreement by Merchant’s shareholders; (ii) the receipt of all necessary regulatory approvals for the Proposed Transaction, without the imposition of conditions or requirements that the Company’s Board of Directors reasonably determines in good faith would, individually or in the aggregate, materially reduce the economic benefits of the Proposed Transaction; (iii) the absence of any regulation, judgment, decree, injunction or other order by a governmental authority which prohibits the consummation of the Proposed Transaction or which prohibits or makes illegal the consummation of the Proposed Transaction; (iv) all representations and warranties made by the Company and Merchants in the Merger Agreement must remain true and correct, except for certain inaccuracies that would not have, or would not reasonably be expected to have, a material adverse effect; and (v) the Company and Merchants have performed their respective obligations under the Merger Agreement in all material respects.

NOTE

10.

BUSINESS COMBINATION

Proposed Merger with Merchants Holding Company

October 4, 2018,

the Company and Merchants Holding Company, a California corporation (“Merchants”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) pursuant to which Merchants will be merged with and into the Company, with the Company as the surviving corporation (the “Merger”). Management expects the acquisition to close in the

first

quarter of

2019,

subject to the satisfaction of customary closing conditions, including regulatory and shareholder approvals. The Merger Agreement provides that immediately after the Merger, Merchant’s bank subsidiary, The Merchants National Bank of Sacramento (“Merchants National Bank”), will merge with and into the Company’s bank subsidiary, Redding Bank of Commerce, with Redding Bank of Commerce as the surviving bank (the “Bank Merger”). The Merger and Bank Merger are collectively referred to as the “Proposed Transaction.”

Under the terms of the Merger Agreement, and subject to certain adjustments, Merchants shareholders

may

for each share of common stock held, elect to receive

3.8703

shares of the Company, or a cash amount of

$48.43,

or a combination of

2.3223

shares of the Company and a cash amount of

$19.37.

The Merger Agreement further provides that the shareholder elections are subject to adjustment, and the Company will issue

more than

1,834,173

shares of common stock and

$15.3

million in cash.

Based on the closing price of the Company’s common stock of

$11.80

October 4, 2018,

the consideration value was approximately

$37.0

million in aggregate. The value of the merger consideration will fluctuate until closing based on the value of the Company’s stock. Upon consummation of the Merger, the shareholders of Merchants will own approximately

10%

of the combined company.

The Merger Agreement includes a provision that the merger consideration will be adjusted if stipulated minimum average core deposit totals are

not

maintained as of the closing date. Core deposit balances currently total approximately

$151

million. If at the close, core deposit balances have declined

more than

7.50%,

adjustment will be made to the merger consideration previously described. If at the close, core deposit balances have declined more than

15%,

the Company

may

unilaterally terminate the transaction. Between these

two

percentages, the merger consideration will be adjusted according to a contractual schedule.

The consummation of the Merger is subject to a number of conditions, which include: (i) the approval of the Merger Agreement by Merchant’s shareholders; (ii) the receipt of all necessary regulatory approvals for the Proposed Transaction, without the imposition of conditions or requirements that the Company’s Board of Directors reasonably determines in good faith would, individually or in the aggregate, materially reduce the economic benefits of the Proposed Transaction; (iii) the absence of any regulation, judgment, decree, injunction or other order by a governmental authority which prohibits the consummation of the Proposed Transaction or which prohibits or makes illegal the consummation of the Proposed Transaction; (iv) all representations and warranties made by the Company and Merchants in the Merger Agreement must remain true and correct, except for certain inaccuracies that would

not

have, or would

not

reasonably be expected to have, a material adverse effect; and (v) the Company and Merchants have performed their respective obligations under the Merger Agreement in all material respects.