In a pair of transactions, Illinois-based First Mid Bancshares is acquiring Delta Bancshares Company in St. Louis, Mo., as well as a loan and deposit portfolio in the city.
Delta is the parent company of Jefferson Bank and Trust, which has five branches in the St. Louis area. It has $697 million in assets, $484 million in loans and $546 million in deposits. The cash-and-stock deal, set to close in the fourth quarter, is worth $106.3 million.
“The geographic synergies and financial metrics of these transactions are compelling and consistent with our strategy of deepening our presence in the attractive St. Louis market,” said Joe Dively, chair and CEO of the $5.8 billion First Mid. “This combination will move us to 11th in market share with $1.8 billion of deposits within the St. Louis MSA.”
In a separate deal, First Mid is acquiring $225 million in loans and $280 million in deposits. It includes four commercial lenders who have the primary relationships with the acquired customers and two support personnel. That deal is set set to close in September.
“The proposed loan and deposit acquisition is similar to the one we completed in April of last year,” Dively said. “We reviewed nearly all the loans and have extensive knowledge with both the borrowers and the commercial lenders. I anticipate this being a smooth transition and I couldn’t be more excited about the team that will be joining First Mid.”
On a combined basis, the two transactions are estimated to be approximately 14 percent accretive to earnings per share in 2022 (excluding nonrecurring transaction expenses). Estimated tangible book value per share dilution to First Mid is expected to be earned back in 1.8 years under the crossover method. The company expects to achieve cost savings of 30 percent of the combined noninterest expense. While revenue synergies are anticipated, they have not been included in the estimates.
Upon closing, First Mid expects to remain above well-capitalized standards on all regulatory capital ratios with a Tier 1 Leverage Ratio of approximately 8.8 percent, a Total Risk-Based Capital Ratio of approximately 13.0 percent and a Tangible Common Equity Ratio of approximately 8.4 percent, the company said.
For the Delta transaction, Stephens Inc., served as financial advisor and Schiff Hardin LLP served as legal advisor to First Mid. Piper Sandler & Co., served as financial advisor and Armstrong Teasdale LLP served as legal advisor to Delta.
Mattoon-based First Mid has more than 60 offices in Illinois, Missouri and Texas, as well as an LPO in the Indianapolis area.