Sunday, May 30, 2021

Series of big bank mergers gives lift to overall deal value

A wave of large bank mergers has lifted aggregate deal value for 2021 above last year's levels.

The overall value for transactions announced through June 1 was $28.9 billion, or more than triple the amount for deals struck over the same period a year earlier, based on data compiled by S&P Global Market Intelligence. 

The value for all deals announced in 2020 was $27.9 billion.

Five proposed sellers in 2021 — People's United Financial, Sterling Bancorp, Flagstar Bancorp, First Midwest Bancorp and Cadence Bancorp. — have at least $18.7 billion of assets. Fifteen others have at least $1 billion of assets.

There were nine deals announced in early 2020 where sellers had more than $1 billion of assets; all announced before the pandemic. One of those deals, Ally Financial's proposed purchase of Merrick Bank, was eventually called off.

Other than the merger of BB&T and SunTrust Banks, only six deals announced between January and May in 2019 had sellers with at least $1 billion of assets.

While the sellers are bigger, the overall pace of bank consolidation remains tepid compared to pre-pandemic activity.

Banks announced 70 mergers through June 1. While that is 62% more than a year earlier, it was 27% lower than the first five months of 2019. But deal flow has been steadier this year compared to 2020, when most transactions were announced before the pandemic hit the United States. 

Four merger agreements reached early last year were eventually terminated.

Premiums remain lower than they were before the pandemic, based on deals where terms were fully disclosed. The average seller commanded a price equal to 162% of its common equity during the first five months of 2021, higher than a year earlier but flat compared to 2019.

Friday, May 28, 2021

People's Bank of Commerce looking to form BHC

People's Bank of Commerce in Medford, Ore., is one step closer to forming a holding company.

Shareholders of the $808 million-asset bank voted on May 19 to create PBCO Financial. People's Bank would become a PBCO subsidiary.

"The bank has considered the formation of a bank holding company for several years," Ken Trautman, People's Bank's CEO, said in a Wednesday press release.

"In light of the recent merger with Williamette Community Bank and asset growth achieved over the past year, the bank holding company will provide ... additional growth opportunities and provide for alternatives in management of bank operations," Trautman said.

People's Bank, which bought Williamette Community in March, said it is working on its application with the Federal Reserve in hopes of securing approval early in the third quarter.

Shareholders also approved a plan to increase the bank's authorized common stock from 6 million shares to 10 million. 

The bank had exhausted more than half of its authorized shares as part of the Williamette Community acquisition, which would have limited its ability to consider stock dividends and other strategic initiatives.

Thursday, May 27, 2021

United Community adding to N.C. ops with Aquesta deal

United Community Banks in Blairsville, Ga., has agreed to buy Aquesta Financial Holdings in Cornelius, N.C.

The $18.6 billion-asset United said in a press release Thursday that it will pay $131 million in cash and stock for the $752 million-asset Aquesta, which is one of the few remaining banks based around Charlotte, N.C. The deal, which is expected to close in the fourth quarter, priced Aquesta at 216.8% of its tangible book value.

Aquesta, founded in 2006, has nine branches, three loan-production offices, $576 million of loans and $637 million of deposits. United already has a loan-production office in the Charlotte area. 

“This transaction is consistent with our desire to expand into attractive and fast-growing markets that we know well,” Lynn Harton, United’s chairman and CEO, said in the release. 

“We have been investing in Charlotte over the past several years and have commercial banking and mortgage teams already in place,” Harton added. “Aquesta is an exciting opportunity for us to increase our presence and accelerate our growth with a high-quality company that shares our values of customer service, employee engagement and community development.”

United said the deal should be accretive to its earnings per share by 6 cents to 9 cents in 2022, depending upon the final mix of consideration. The company said it expects "manageable" dilution to its tangible book value.

United plans to cut 38% of Aquesta's annual noninterest expenses, or roughly $7.3 million. The company expects to incur $11.1 million of merger-related expenses.

"At a high level, we like the [transaction for United] as it is acquiring the largest remaining community bank headquartered in the" Charlotte area, Brad Milsaps, an analyst at Piper Sandler, said in a note to clients.

Charlotte "is a market highly sought after by a number of banks," Milsaps added. "Moreover, the deal helps accelerate [United's} future expansion plans in Charlotte by building upon its existing infrastructure of lenders already in the market."


Hovde Group and Nelson Mullins Riley & Scarborough advised United. Piper Sandler and Wyrick Robbins Yates & Ponton advised Aquesta.

Wednesday, May 26, 2021

HSBC selling most U.S. branches to Citizens, Cathay

HSBC Holdings is selling a majority of its U.S. branches to Citizens Financial Group in Providence, R.I., and Cathay General Bancorp in Los Angeles.

The $187.2 billion-asset Citizens agreed to buy 80 branches along the East Coast, along with HSBC's national online deposit business. Citizens said in a press release Wednesday that the deal includes $9 billion of deposits and $2.2 billion of loans. 

Citizens said it should gain about 800,000 customers from the deal, which is expected to close in the first quarter of 2022. Citizens will pick up 66 branches around New York, nine around Washington and five in southeast Florida. 

Citizens, which will pay a 2% premium for the deposits at closing, said the deal should be immediately accretive to its earnings per share. 

“With a sizable customer base and a solid deposit franchise, this acquisition will serve as a springboard for our consumer national expansion strategy,” Bruce Van Saun, Citizens’ chairman and CEO, said in the release. “The $7 billion net deposit position provides us significant long-term funding flexibility in support of our attractive loan growth opportunities.” 

HSBC said in a separate press release that it will sell 10 branches along the West Coast with about 50,000 customer relationships to the $19.2 billion-asset Cathay General. That deal will include $1 billion of deposits and $800 million of loans.

HSBC said it will retain 20 to 25 branches that will repurposed into international wealth centers. Its remaining 35 to 40 branches will be closed.

Cathay expects the acquisition to be 2% accretive to its 2022 operating earnings per share.

Morgan Stanley and Debevoise & Plimpton advised Citizens.

GreenState Credit Union plans to buy two banks

GreenState Credit Union in North Liberty, Iowa, has agreed to buy banks in Illinois and Nebraska. 

The $7.5 billion-asset credit union said in a press release Tuesday that it has purchase-and-assumption agreements to acquire the $730.8 million-asset Oxford Bank & Trust in Oak Brook, Ill., and the $344.6 million-asset Premier Bank in Omaha, Neb. 

Oxford Bank has $405 million of loans and $635 million of deposits. Premier Bank had $253 million of loans and $294.2 million of deposits on Dec. 31, based on call report data. 

If completed, the purchase of Oxford Bank would be the second-largest for a credit union, based on the seller’s asset size. The biggest deal lined up is VyStar Credit Union’s planned purchase of the $1.6 billion-asset Heritage Southeast Bank.

The deals would expand GreenState’s branch network beyond Iowa, though the credit union has more than 15,000 members in Illinois and Nebraska. 

“We are excited about the opportunity to expand GreenState’s footprint and serve people in these two, key markets,” Jeff Disterhoft, the credit union’s president and CEO, said in the release. “Both banks have a strong legacy of providing quality service and demonstrating community involvement, and we are pleased to welcome them – and their customers – into the GreenState family.” 

GreenState would gain six branches near Chicago as part of the Oxford deal and four locations after buying Premier Bank. The deals are expected to close by the fourth quarter. 

The announcement comes at a time when the Independent Community Bankers of America has stepped up its opposition to credit union-bank mergers in the wake of the proposed VyStar-Heritage Southeast deal.

Hovde Group advised Oxford Bank.

RBB in Los Angeles splits chairman, CEO roles

RBB Bancorp in Los Angeles has separated its chairman and CEO positions.

The $3.7 billion-asset company said in a press release Tuesday that James Kao had become its chairman, succeeding President and CEO Alan Thian.

Kao has been a director at RBB since 2015. Thian, who has been RBB’s chairman since the company’s formation in 2011, will remain on the board.

Kao “is an experienced member of the board and has a wealth of experience and success as a businessman and investor," Thian said in the release.

"The board and I elected to separate the chairman and [CEO] roles in anticipation of the continued growth of the bank and to reflect best corporate governance practices,” Thian said.

Tuesday, May 25, 2021

Horizon in Michigan to buy divested TCF branches

Horizon Bancorp in Michigan City has agreed to buy 14 Michigan branches from TCF Financial in Detroit. 

TCF will sell the branches, along with $975.7 million of deposits and $278 million of loans, as part of its pending sale to Huntington Bancshares in Columbus, Ohio. The branch sale is expected to close in the third quarter. 

TCF is selling the branches as part of securing regulatory approval from the Department of Justice and the Federal Reserve. 

“This financially and strategically attractive transaction is a logical extension of our efficient retail franchise, which is designed to further enhance our low-cost core deposit and funding capability to support loan growth in a recovering economy,” Craig Dwight, Horizon’s chairman and CEO, said in a Tuesday press release. 

Horizon said it expects to add more than 50,000 customer accounts, primarily retail and small-business related, as part of the deal. Horizon will pay a 1.75% premium on deposits acquired at closing, or $17.1 million based on deposits outstanding on March 31. 

Keefe, Bruyette & Woods estimated that Horizon would pay $17.1 million for the branches.

Horizon said the deal should be at least 17% accretive to its 2022 earnings per share, excluding merger-related expenses. It should take about two years for Horizon to earn back the projected 5% dilution to its tangible book value. 

The 0.08% average cost of acquired deposits is expected to reduce Horizon’s total deposit cost, which averaged 0.21% in the first quarter. 

Horizon said it is acquiring performing residential mortgage, consumer and small-business loans at a 3.5% discount. More than 86% of the outstanding loans are associated with deposit accounts at the branches. The loans have an average yield of 4.22%, which compares to 4.39% for loans in Horizon’s current portfolio. 

Donnelly Penman & Partners and Warner Norcross & Judd advised Horizon.

NorthWest Indiana Bancorp rebrands as Finward

NorthWest Indiana Bancorp in Munster, Ind., has taken on a new identity. 

The $1.6 billion-asset company said in a press release Monday that it had rebranded as Finward Bancorp in a move that took place last month. The company changed its stock symbol to “FNWD” as part of the rebranding. 

The company said the new name "reflects its “growth and evolution … in recent years” while conveying the “dynamic forward movement” in its business and strategic direction.

The change also acknowledges that the company’s geographic footprint has grown beyond northwest Indiana to include southern Chicago suburbs.

Sunday, May 23, 2021

Former TexasCapital, CrossFirst CEO George Jones dies

Veteran banker George Jones passed away on Friday.

Jones, 77, had been dealing with a “long illness,” according to an obituary in the Dallas Morning News. 

Jones helped found Texas Capital Bancshares in Dallas in 1998, serving as its CEO from 2008 to 2013. 

He became CEO of CrossFirst Bancshares in Leawood, Kan., in May 2018 before retiring last June. He was succeeded by Mike Maddox, who had been the president and CEO of CrossFirst Bank. 

Jones had been CrossFirst’s vice chairman following his retirement as CEO.

“George was an outstanding mentor, adviser and an integral member of our board," Rod Brenneman, CrossFirst's chairman, said in a press release. "With more than four decades of experience in the banking industry, he brought incredible insight and significant experience to our company. Working alongside George has been a privilege for me and the other members of the CrossFirst board and executive leadership team."

“Over the past five years, George’s leadership and guidance have played a critical role in our company’s success," Maddox said in the release. "We will continue to honor George and his legacy of incredible business acumen and passion for extraordinary service across our entire company and throughout our industry for years to come."

Friday, May 21, 2021

Customers Bancorp creating blockchain payments platform

Customers Bancorp in Wyomissing, Pa., is planning to launch a closed-loop real-time payments platform.

The $18.8 billion-asset company said in a press release Thursday that its bank will work with Tassat, a company that provides blockchain technologies for digital payments, to create the platform. Customers said the effort should enhance payments functionality for its business clients while bringing in more low-cost core deposits.

The platform should benefit customers that deal in financial exchanges, commercial real estate, health care, hospitality, insurance, accounting, alternative energy and manufacturing. The plan is to work with clients to address specific payments challenges and to form payments ecosystems with their trading partners.

“B2B payments have lagged behind consumer payments in innovation, presenting a huge opportunity for digital transformation,” Sam Sidhu, vice chairman and chief operating officer of Customers Bank, said in the release. We expect our clients in key verticals will invite their important trading partners to join TassatPay, bringing us new clients and low-cost deposits.”

Customers recently announced plans to open offices in Orlando, Fla., and Dallas, while increasing its operations in Chicago.

First Community in S.C. adds former banker to its board

First Community in Lexington, S.C., has added a veteran banker to its board. 

The $1.5 billion-asset company said in a press release Thursday that it had recruited Jan Hollar to become one of its directors.

Hollar recently served as interim CEO of the Myrtle Beach Area Chamber of Commerce. 

She has 40 years of experience in banking, most recently serving as CEO of HCSB Financial and unit Horry County State Bank. Under her leadership, the company was freed from a preexisting regulatory order, then sold to United Community Banks in Blairsville, Ga. 

Before that, she was chief financial officer at Yadkin Financial in Statesville, N.C. 

“The board is extremely pleased to have Jan joining us,” Jimmy Chao, First Community’s chairman, said in the release. “Her extensive knowledge and diverse background make her a wonderful addition, and I believe she will serve the company, our customers, our employees and our shareholders very well.”

Wednesday, May 19, 2021

How Enterprise tapped connections to land California deal

Enterprise Financial Services in Clayton, Mo., had an advocate when it decided to pursue First Choice Bancorp in Cerritos, Calif., earlier this year.

The $10.2 billion-asset Enterprise agreed on April 26 to buy the $2.5 billion-asset First Choice for $398 million in cash and stock. The deal is expected to close in the third quarter.

The conversations began on Jan. 19, when Richard Sanborn introduced Jim Lally, Enterprise’s CEO, and Keene Turner, the company’s chief financial officer, to Peter Hui, First Choice’s chairman. Sanborn had joined Enterprise’s board in November after it bought Seacoast Commerce Banc Holdings, where he had been CEO.

Hui, who knew Sanborn professionally, had already asked him about Seacoast’s experience selling to Enterprise, according to a regulatory filing tied to the proposed Enterprise-First Choice merger. 

“Sanborn’s favorable response culminated in the” introduction to Lally and Turner, the filing said.

First Choice, the filing disclosed, was aggressively pursued by another company for more a year before its introduction to Enterprise.

The company first expressed an interest in August 2019, but First Choice's board determined that it didn't need to sell due to the company's "positive performance and ... its prospects for continuing this trend in the future."

The unnamed company, which had at least $7.7 billion of assets based on details shared in the filing, tried again a year later, pitching an all-stock acquisition and seeking a nondisclosure and exclusivity agreement. First Choice again passed, noting that the overture lacked specifics about the consideration. Uncertainty tied to the coronavirus pandemic was another factor.

First Choice’s board, during a Sept. 24 meeting, took a hard look at the operating environment as it considered the company’s future. While there were plenty of challenges, including the pandemic and pressure from bigger banks, First Choice was on pace to produce record earnings in 2020.

The board “determined that it was not an appropriate time to solicit potential interest in a business combination from potential acquirers,” the filing said.

The unnamed company tried once again to woo First Choice, sending President and CEO Robert Franko a written offer on Jan. 19 that proposed a price of $262 million, or a roughly 15% premium over the company’s stock price at the time.

That was also the day that Sanborn introduced Lally and Turner to Hui.

First Choice’s board decided on Jan. 25 to invite the other company’s president to make a presentation to clarity the terms of the offer, along with perceived risks and benefits.

Lally contacted Franko and Hui on Jan. 26 to seek a meeting to discuss the companies’ businesses and strategic opportunities.

Senior management of the unnamed company made a presentation to First Choice’s board on Jan. 27. While the board decided that the offer was “simply too low in light of First Choice’s positive earnings trends going into 2021,” it decided to form a special committee to evaluate potential mergers.

Hui, Franko, Lally and Turner met on Feb. 2 where they discussed their banks, organizational histories and strategic focuses. While they did not discuss the specifics of a merger, each side expressed interest in continuing to talk.

The filing noted that, around that time, Franko and Hui had spoken with two other companies “to gauge their interest” in a deal, though “neither financial institution appeared particularly receptive to continuing a dialogue."

Enterprise and First Choice entered into a confidentiality agreement on March 1 that allowed each company to conduct more due diligence. The companies negotiated the terms of a non-binding letter of interest from Enterprise during the second half of March.

Through its investment bank, Enterprise proposed an exchange ratio of 0.655 shares of common stock for each share of First Choice common stock. First Choice counted with a minimum 0.6603 ratio that would give its shareholders a 20% stake in the combined company.

Enterprise on March 22 agreed to the ratio, which translated into a 28% premium over First Choice’s stock price at the time. The letter of intent included a 45-day exclusivity period, which First Choice accepted. 

Enterprise sent an initial draft of the merger agreement to First Choice on April 8. Both companies hoped to complete negotiations in order to time an announcement with the release of their first-quarter earnings. 

First Choice, as part of its due diligence, received information about Enterprise’s executive management team and history of recent acquisitions. Enterprise also provided information on its prospects, loan quality, regulatory compliance, IT and pending litigation. 

First Choice’s board unanimously approved the merger agreement on April 25. Enterprise’s directors unanimously signed off on it the next day. 

The deal is expected to be 8% accretive to Enterprise’s 2022 earnings per share, excluding merger-related expenses. It should take about three years for Enterprise to earn back any dilution to its tangible book value.

Peter Hui will join the Enterprise board. 

The acquisition would strengthen "our commercial banking foundation in the largest economy in the country,” Lally said in a press release announcing the deal.

“I have tremendous respect for the associates of First Choice and the company they have built since its founding in 2005,” Lally added. “They have successfully created a commercially-focused community bank with a demonstrated ability to generate organic growth.”

Tuesday, May 18, 2021

Glacier to buy Altabancorp in Utah in largest-ever acquisition

Glacier Bancorp in Kalispell, Mont., has agreed to buy Altabancorp in American Fork, Utah. 

The $19.8 billion-asset Glacier said in a press release Tuesday that it will pay $933.5 million in stock for the $3.5 billion-asset parent of Altabank. The deal, which is expected to close in the fourth quarter, priced Altabancorp at 290.1% of its tangible book value, or one of the highest premiums for a bank in 2021. 

Altabancorp has 25 branches in Utah and southern Idaho, along with $1.8 billion of loans and $3.2 billion of deposits.  Altabank will operate under its existing name as Glacier’s 17th bank division once the deal closes. 

"This is an exceptional opportunity to solidify Glacier’s presence in the booming Utah market by partnering with the largest community bank in the state,” Randy Chesler, Glacier's president and CEO, said in the release. 

“We have been keenly focused on building our presence in Utah and this opportunity checks all the boxes,” Chesler added.

Glacier said the deal will be immediately accretive to its tangible book value per share and 5.2% accretive to its 2022 earnings per share, excluding merger-related expenses. 

Glacier said it expects to cut about 17.5% of Altabancorp's annual noninterest expenses. The company said it will likely incur $33 million of merger-related expenses.

The acquisition will be the biggest ever for Glacier and will make Utah its second-largest state.

"The deal is not a surprise to us given [Glacier's] existing presence and desire to build a larger foothold in Utah's attractive markets," Matthew Clark, an analyst at Piper Sandler, wrote in a client note. "But the size and pricing is on the higher end of our expectations."

Once known at People’s Utah Bancorp, Altabancorp had been facing calls from members of the Gunther family, who own nearly a third of the company's stock, to consider selling. The family had recently disclosed plans to oppose the reelection of several Altabancorp directors.

"The announcement comes sooner than we would have expected given [Altabancorp's] strong profitability and favorable growth outlook," Andrew Liesch, an analyst at Piper Sandler, wrote in a note to clients. "That said, we think the deal price is rewarding to ... shareholders and believe the combination with Glacier should provide long-term value."

Glacier said it had received voting commitments from members of the Gunther family.

Glacier was advised by D.A. Davidson and Miller Nash Graham & Dunn. Altabancorp was advised by Keefe Bruyette & Woods and Jones Day.

Legacy Bank in Florida delayed talks to sell during pandemic

Legacy Bank of Florida in Boca Raton delayed plans to sell itself for nearly a year as it responded to borrowers' needs created by the coronavirus pandemic.

The $533 million-asset bank agreed to be sold to Seacoast Banking Corp. of Florida in Stuart in March for $102 million. The deal is expected to close in the third quarter. 

Legacy’s investment bank first approached the $8.3 billion-asset Seacoast to discuss a potential deal in January 2020, according to a regulatory filing tied to the pending merger. Seacoast signed a non-disclosure agreement with Legacy the following month and began looking at nonpublic data.

The investment bank contacted 25 potential acquirers in late February and early March. Eight expressed interest and five, including Seacoast, were given access to a virtual data room. 

“Management meetings were set up with several prospective buyers” in March 2020, the filing said. 

Then the pandemic hit. 

Legacy decided to focus its attention on the Paycheck Protection Program, an effort that allowed the bank to “cautiously” expand its balance sheet, the filing said. The bank’s management team waited until December to ask the investment bank to revisit conversations with Seacoast. 

Charles Shaffer, Seacoast’s CEO, and Dennis Bedley, Legacy’s chairman and CEO, met in West Palm Beach, Fla., in January. A confidentiality agreement was reached on Jan. 5, allowing Seacoast to resume its due diligence. 

Seacoast and Legacy agreed to a proposed exchange ratio of 0.1703 shares of Seacoast common stock for each Legacy share, which valued the seller at $5.50 a share. During the third week of March, the parties negotiated the merger agreement, voting agreements for directors and noncompetition agreements for directors and officers, among other things. 

Legacy’s board unanimously approved the merger on March 22. Seacoast’s directors approved the deal the next day and an announcement was released. The deal priced Legacy at 167% of its tangible book value. 

Legacy “is a customer-focused franchise with an outstanding reputation for service excellence and deep customer relationships in this important market,” Shaffer said in the release announcing the deal. “We see great opportunity in complementing its strengths with Seacoast’s innovation and breadth of offerings to grow our presence and expand our position in South Florida.” 

The deal is expected to be 2% accretive to Seacoast’s 2021 earnings, excluding merger-related expenses. It should take the company three months to earn back any dilution to its tangible book value. 

Seacoast plans to cut about 45% of Legacy annual noninterest expenses.

Berkshire to close more branches, centralize ops under three-year plan

Berkshire Hills Bancorp in Boston has created a three-year plan to improve investor returns.

The $12.8 billion-asset company, in a presentation shared on Tuesday, said it will continue to close branches, centralize more operations and take other steps to become more efficient. 

The moves should increase return on tangible common equity by 680 to 880 basis points, to 10% to 12%, while boosting return on assets by 76 to 81 basis points, to 1% to 1.05%. The initiative is expected to add $71 million to $91 million in pre-provision net revenue and lower the efficiency ratio to 60% at the end of three years.

“Berkshire has a strong core … and many talented bankers who know their markets well,” Nitin Mhatre, Berkshire’s CEO, said during a conference call to discuss the plan. “We share a sense of urgency to enhance shareholder value.”

The company wants to increase the amount of commercial loans on its books from 47% of earning assets to 55%, with plans to boost consumer loans from 5% to 10%. The goal is to reduce investments and HFS from 33% to 20%.

Berkshire wants to increase noninterest-bearing deposits from 23% to 28% of its funding mix.

Berkshire CEO Nitin Mhatre
Mhatre said Berkshire sees opportunities in areas such as Small Business Administration lending, asset-based lending, mortgages and wealth management. The company plans to run off high-cost CDs and offer programs to bring in more low-cost deposits. 

Berkshire also plans to pursue partnerships with fintechs.

“We will get better before we get bigger,” Mhatre said during the call.

Berkshire is looking to take advantage of recently announced bank mergers by hiring more commercial lenders. The company recently added some business bankers in Boston.

Berkshire said in December that it would close or sell about a fifth of its branches. It has an agreement to sell eight locations in New Jersey and Pennsylvania to Investors Bancorp in Short Hills, N.J. The company plans to close another 16 locations across New England and New York.

Berkshire, which has retained more than 95% of the deposits at the branches it has closed in recent years, will keep looking at opportunities to shutter locations.

Berkshire could close another 5% to 10% of its 106 remaining branches, depending on consumer preferences. "We believe there will be fewer and smaller branches … in better locations," Mhatre said.

Analysts were divided over the scope of the plan.

"The plan was logical, detailed and reasonable," Mark Fitzgibbon, an analyst at Piper Sandler, wrote in a note to clients.

"It does not rely on the company making any radical departures in strategy or swinging for the fences in any new lines of business," Fitzgibbon added. "The financial projections represent a meaningful increase from [Berkshire's] current profitability levels. These projections represent about a doubling of core profitability over the next three years."

Jake Civiello, an analyst at Janney Montgomery Scott, said he wished Berkshire had provided more details.

"We believe the outlined three-year process improvements are common sense efforts that not only have been in various stages of implementation for years, but also do not go far enough into detail for investors to understand shorter-term targets/plans for accomplishing stated longer-term goals," Civiello said in a client note.

Berkshire, under former CEO Michael Daly, grew quickly after the 2008 financial crisis, largely through bank acquisitions. Those deals included Rome Bancorp in 2011, 20 branches from Bank of America in 2014 and First Choice Bancorp in 2016. Daly abruptly stepped down in late 2018; he was succeeded by Richard Marotta.

Berkshire lost $549 million in the second quarter of 2020 after recording a large goodwill impairment charge tied to the deteriorated market value of its acquisitions. Marotta resigned last August.

Mhatre joined Berkshire from Webster Financial earlier this year.

Berkshire's annual meeting is scheduled for May 20.

Bank analyst shuffle

Several bank analysts have changed jobs in recent weeks.

Matthew Kelley shared on his LinkedIn profile that he had been hired as a director at JAM FINTOP Bank Network, a collaboration between Jacobs Asset Management and FINTOP Capital. Kelley recently served as a managing director and bank analyst at Stephens. Kelley will manage the network of community banks that participate in projects with JAM FINTOP.

Jacobs and FINTOP recently created JAM FINTOP Banktech, a $150 million fund that will invest in fintechs. More than 65 banks make of the fund's roster of limited partners. Dan O'Malley, CEO of Numerated, and Lisa Shields, CEO of FISPAN, are the fund's special advisers.

Keefe, Bruyette & Woods announced that David Konrad had returned to the company as a managing director responsible for covering large U.S. banks. Konrad, who had a similar role at KBW from 2002 to 2013, recently was a managing director at D.A. Davidson, where he led bank product efforts.

David Bishop just disclosed on his LinkedIn profile that he had joined Seaport Research Partners as a senior analyst. Bishop has been a bank analyst at D.A. Davidson and FIG Partners in recent years.

Monday, May 17, 2021

Equity Bancshares beefing up in Kansas with latest deal

Equity Bancshares in Wichita, Kan., is bolstering operations in its home state with an agreement to buy American State Bancshares in Wichita. 

The $4.2 billion-asset Equity said in a press release Monday that it will pay $73.6 million in stock for the parent of the $779 million-asset American State Bank. About $6.6 million of American State preferred stock will be redeemed when the deal closes. 

The deal, which is expected to close in early October, priced American State at 111% of its tangible book value. American State has 17 branches in Kansas, along with $653 million of deposits and $479 million of loans. 

American State “is an excellent community bank, and its leadership and customer bases share a like mind with ours, valuing customized personal service, and entrepreneurial spirit,” Brad Elliott, Equity’s chairman and CEO, said in the release. 

“Kansas is home to numerous, thriving communities with customers who desire a community banking approach, and our institutions match up well in terms of mindset and geographic fit,” Elliott added. 

Doug Thurman, American State’s president and CEO, and the bank’s leaders will remain at Equity. Lee Borck, American State’s chairman, will join Equity’s board. 

The deal would be Equity’s 10th bank acquisition since its 2015 initial public offering. 

The transaction is expected to be 15.9% accretive to Equity’s 2022 earnings per share, excluding merger-related expenses. It should take less than three years for Equity to earn back an expected 3.7% dilution to its tangible book value. 

Equity plans to cut about 34% of American State’s annual operating expenses, or roughly $5.8 million. The company said it expects to incur $11.2 million of merger-related expenses. 

Equity was advised by Stephens and Norton Rose Fulbright US. American State was advised by D.A. Davidson and Stinson.

Business First to raise $47M through stock offering

Business First Bancshares in Baton Rouge, La., plans to raise about $46.8 million from selling common stock.  The $5.5 billion-asset company...