Wednesday, October 12, 2022

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 said in a press release that it intends to sell 2.5 million shares at $20 each.

Business First plans to use the offering’s net proceeds for general corporate purposes, which may include augmenting capital, supporting organic growth, funding potential acquisitions and redeeming certain subordinated debt. 

Stephens is the sole book-running manager. Raymond James is the lead manager. D.A. Davidson, Hovde Group, Janney Montgomery Scott and Piper Sandler are co-managers. 

Business First said it expects to close the offering around Oct. 17.

How First in Miss. got another shot at Heritage Southeast

First Bancshares in Hattiesburg, Miss., took advantage of a second window to buy Heritage Southeast Bancorp in Jonesboro, Ga. 

The $6 billion-asset First agreed on July 27 to buy the $1.7 billion-asset Heritage Southeast in a deal valued at $207 million. 

Hoppy Cole, First’s president and CEO, actually met with Leonard Moreland, Heritage Southeast’s CEO, in late January 2021 to discuss a deal, according to a regulatory filing associated with the pending merger. 

While they executives agreed to another meeting, it never happened because Heritage Southeast agreed on March 31, 2021, to sell to VyStar Credit Union. 

The filing provides a full assessment of how the VyStar and First deals came together for Heritage Southeast. 

VyStar initially reached out to Ken Lehman, a large Heritage Southeast investor, in October 2020 to indicate interest in buying the company’s bank. VyStar and Heritage Southeast began having more conversations.

While Cole and Moreland agreed to reconvene in April after each bank had completed their first quarter, the VyStar agreement derailed that talk. 

“Cole reached out to Moreland to congratulate him on the announcement, and both parties wished the other the best,” the filing said. 

As VyStar and Heritage Southeast struggled to gain regulatory approvals, they on several occasions agreed to extend the termination date for the deal. 

As delays persisted, various suitors, including First, approached Heritage Southeast to determine if the deal would receive regulatory approval and to indicate potential interest it did not close. Due to an exclusivity requirement with VyStar, Moreland indicated that his bank was continuing to work diligently to obtain the necessary regulatory approvals. 

By March 2022, VyStar and Heritage Southeast had reached an agreement to extend the deadline to June 30, allow either party to terminate the deal if regulatory approval didn’t happen by April 30, and let the bank seek interest in an alternative transaction. 

On April 1, Heritage Southeast contacted a few banks, including First. Heritage Southeast’s investment bank would subsequently reach out to 35 potential buyers in May. Eight, including First, signed non-disclosure agreements. 

Lehman and Cole met at First’s offices on May 18 to discuss an initial preliminary term sheet. 

Three banks submitted nonbinding indications of interest on June 6. First’s proposal valued Heritage Southeast at $206.9 million. A larger Southeastern bank proposed paying $178 million to $196 million, while a smaller suitor offered $202 million. Each proposal required an end to the VyStar agreement before executing an indication of interest. 

On June 8, Heritage Southeast’s board unanimously authorized management to terminate the VyStar agreement and negotiate with First. Heritage Southeast’s board asked First to submit its best and final proposal; First agreed to increase the fixed exchange ratio. 

Heritage Southeast and VyStar terminated their agreement on June 15. The next day, Heritage Southeast and First executed a non-binding indication of interest. 

From June 16 to July 27, Heritage Southeast and First prepared, exchanged drafts and negotiated the terms of the merger agreement. First’s board approved the merger on July 21, while Heritage Southeast’s special committee and board unanimously backed it on July 26. The deal was announced on July 27. 

The deal, which is expected to close in the fourth quarter or early next year, priced Heritage Southeast at 181% of its tangible book value. 

First said the deal should generate double-digit earnings accretion once cost savings kick in. It should take less than three years for First to earn back the less than 8% dilution to its tangible book value. 

First plans to cut about 30% of Heritage Southeast's annual noninterest expenses, or $48.5 million. The company expects to incur $26 million of merger-related expenses. 

Moreland will become First Bancshares' Georgia president. He will receive a $315,000 base salary and is eligible for a bonus of up to 10% of his base salary.

HomeStreet to buy three MUFG Union branches in Calif.

HomeStreet in Seattle has agreed to buy three branches in California from U.S. Bancorp and MUFG Union Bank. 

U.S. Bancorp and MUFG Union said in a press release that the $8.6 billion-asset HomeStreet will buy locations in Big Bear Lake, Hesperia and Yucca Valley. The branches include $490 million of deposits and $22 million of loans. 

The deal is expected to close in the first quarter. The price wasn’t disclosed. 

 U.S. Bancorp, which is looking to buy MUFG Union, is selling the branches under the director of the Justice Department. 

“The addition of these … branches will bring HomeStreet’s total number of branches in southern California to 20,” Mark K. Mason, the company’s chairman, president and CEO, said in the release. 

“This acquisition will increase our customer base by [about] 16,000 customer relationships, and the additional funding will support our strategic growth,” Mason added. “HomeStreet is committed to retaining all current Union Bank employees at the … branches upon the close of the transaction.”

Broadway Financial CEO joins Intrfi board

Intrafi, a fintech that provides cash and liquidity management services to financial institutions, has added the CEO of the nation’s biggest minority depository institution to its board. 

Brian Argrett, president and CEO of the $1.2 billion-asset Broadway Financial in Los Angeles, is one of two additions to the fintech’s 14-member board. 

Argrett was CEO of City First Bank of DC when it was acquired by Broadway in April 2021. 

Intrafi also added Erica Bovenzi, a former deputy counsel at the Federal Deposit Insurance Corp., to the board. Bovenzi also worked as the chief administrative officer for Promontory Financial Group.

Edward Jones scraps plan to open industrial bank

Edward Jones in St. Louis has abandoned a two-year quest to form an industrial bank. 

The company said in a regulatory filing that it had withdrawn its applications with the Federal Deposit Insurance Corp. and Utah Department of Financial Institutions. The broker/dealer referenced conversations with the FDIC and "the current environment." 

The company said it is exploring other ways to offer banking products to its clients. 

Edward Jones filed its applications for Edward Jones Bank in July 2020. Ray Dardano, who had been the CEO of Marlin Business Bank, was tapped to lead the effort with hopes of the bank opening by the end of 2021. 

"An affiliated bank would enable us to broaden our offerings for retail investors, while also supporting our approach to helping Edward Jones branch teams ensure our 7 million clients feel understood, informed, secure and in control," Ken Cella, an Edward Jones principal, said in a press release announcing plans for the industrial bank.

Second People's United exec leaves after sale to M&T

Another executive from People’s United Financial has found a new home following the company’s sale to M&T Bank.

Columbia Financial in Fair Lawn, N.J., said in a press release that it had hired Manesh Prabhu as its chief information officer. He is responsible for information systems and digital banking at the $9.8 billion-asset company. 

Prabhu recently served as chief technology officer at People’s United, where he led IT strategy and technology transformation. 

“Leveraging and investing in technology plays a critical role in improving processes, expanding services and ultimately, giving our team more time to do what they do best – servicing our clients,” Thomas Kemly, Columbia’s president and CEO, said in the release. 

The hiring comes weeks after Provident Financial Services in Iselin, N.J., hired Ravi Vakacherla, former chief transformation officer at People’s United, as its chief digital and innovation officer.

Proposed Colo. de novo gets conditional OCC approval

Battle Financial, the holding company for a proposed digital bank in Avon, Colo., has received conditional approval from the Office of the Comptroller of the Currency. 

Organizers said in a press release that they expect to open the bank early next year.

“I’m pleased to have accomplished this key milestone with the OCC and am excited to be even closer to the official launch of a brand-new digital bank that focuses on client experience, sophisticated solutions and better yields,” Frank Trotter, the proposed bank’s president, said in the release.

Trotter and Vincent Amato, former founders of Everbank, are behind the de novo effort. Everbank sold to TIAA in June 2017. 

Organizers said in their March 2022 application that their business plan includes dealing in precious metals and offering a deposit sweep service to registered investment advisers.

Tuesday, October 11, 2022

Capital Bank in Md. taps insider to oversee fintech business

Capital Bank in Rockville, Md., has tapped an insider to run its fintech business. 

The $2.2 billion-asset bank said in a press release that Karl Dicker had become president of OpenSky and fintech. OpenSky is the bank’s secured Visa credit card. 

“Karl has been instrumental in the development and growth of OpenSky,” Ed Barry, Capital’s CEO, said in the release. “Allowing him to narrow his attention to these lucrative growth opportunities is in parallel with our strategic plan.” 

Dicker previously served as the bank’s chief operating officer. 

Capital said that Steven Poynot had succeeded Dicker as COO. Poynot previously served as COO at F&M Trust. Before that, he was chief information officer at Howard Bank. 

“We are thrilled to have Steve join our senior management team,” Barry said. “His background and experience add to the depth and knowledge of our team and will serve our bank well as we continue executing on our strategic plan.”

Investment adviser team leaves Atlantic Union to form firm

Four investment advisers have left Atlantic Union Bankshares in Richmond, Va., to form their own firm.

Dover Advisors was launched in August after the adviser left the $19.7 billion-asset Atlantic Union’s wealth management division, according to Richmond BizSense

The firm’s president, Jess Ellington, had been the bank’s chief investment officer. He had led the bank’s registered investment adviser division, which was sold to Cary Street Partners. 

Ellington and the other investment advisers were at Middleburg Trust, which was sold to Access National Bank in 2017. Atlantic Union bought Access National two years later. 

Dover Advisers also said John Mason Antrim, who worked with the other advisers at Middleburg Trust, had also joined the team. 

The firm has around $100 million in assets under management.

State Street hires Google exec to handle global compliance

State Street in Boston has hired a former Google executive to serve as its global chief compliance officer.

The $300 billion-asset company said in a press release that Yvette Hollingsworth Clark will report to Brad Hu, its global head of risk. She will also be accountable to the board’s examining and audit committee.

Hollingsworth Clark will oversee compliance activities that include designing and implementing structures and processes to enhance governance and controls.

“Understanding and effectively managing risk in a dynamic environment is absolutely critical to achieving our business goals,” Hu said in the release. 

"Yvette is a respected professional in compliance risk management, with a strong record of building and leading effective AML and compliance frameworks at global financial institutions,” Hu added.

Hollingsworth Clark recently served as head of compliance in the consumer trust business at Google. She has also held leadership roles at Barclays Capital, Citigroup and Wells Fargo. She was also a bank regulator and supervisor at the Federal Reserve.

BNY Mellon forms platform to manage digital assets

Bank of New York Mellon has formed a platform to manage digital assets. 

The $438 billion-asset company said in a press release that its digital asset custody platform allows clients to hold and transfer bitcoin and ether. 

The move comes a year after BNY Mellon formed a unit to develop solutions for digital asset technology.

"Touching more than 20% of the world's investable assets, BNY Mellon has the scale to reimagine financial markets through blockchain technology and digital assets," Robin Vince, the company’s president and CEO, said in the release. 

BNY Mellon, which has been working closely with several fintechs, said it integrated technology from Fireblocks and Chainalysis to meet the security and compliance needs of the bank’s clients.

Prosperity Bancshares buying two Texas banks for $570M

David Zalman is back in the M&A game with two acquisitions.

Prosperity Bancshares in Houston has agreed to buy Lone Star State Bancshares in Lubbock, Texas, and First Bancshares of Texas in Midland, marking Prosperity’s first bank deals since it bought LegacyTexas Financial Group in 2019. 

The $37.4 billion-asset Prosperity will pay $228.7 million in cash and stock for the $1.3 billion-asset Lone Star. The deal, which is expected to close in the first quarter, priced Lone Star at 189% of its tangible book value.

Lone Star has five branches, $934 million of loans and $1.2 billion of deposits. 

Alan Lackey, Lone Star’s CEO, will join Prosperity as its west Texas area president. Melisa Roberts, Lone Star’s chief lending officer, will become west Texas area vice president. 

“We continue to look for opportunities to enhance our presence in the west Texas area,” Zalman, Prosperity’s senior chairman and CEO, said in a press release. Lone Star’s “locations in Lubbock, Midland/Odessa, Big Spring and surrounding areas are an excellent fit for us.”

Separately, Prosperity will pay $341.6 million for the $2.1 billion-asset First Bancshares. The deal, which is expected to close in the first quarter, priced First Bancshares at 162% of its tangible book value. First Bancshares has 16 branches, $1.6 billion of loans and $1.8 billion of deposits. 

Ken Burgess, First Bancshares’ CEO, along with Brad Burgess, Greg Burgess and Jeremy Bishop, will join Prosperity as regional presidents overseeing specific geographic markets in west Texas and central Texas. 

The acquisition “enables us to enter the desirable Wichita Falls and Amarillo markets and the Horseshoe Bay, Marble Falls and Fredericksburg markets in the high-growth central Texas area,” Zalman said in a separate release. 

Prosperity said it will cut about a quarter of each seller's annual noninterest expenses. It expects to incur about $27.1 million of merger-related expenses tied to both acquisitions.

About $1.5 million of aggregate annual interchange revenue from the selling banks will be lost due to the Durbin Amendment.

The deals should be about 5.9% accretive to Prosperity's 2023 earnings per share, and 8.9% the following year. It should take less than three years for Prosperity to earn back an expected 4.3% dilution to its tangible book value. 

Lone Star and First Bancshares were advised by Stephens and Fenimore Kay Harrison. Bracewell advised Prosperity.

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...