Baton Rouge, La.-based Business First Bancshares Inc., the holding company for b1BANK, signed a definitive agreement to acquire Pasadena, Texas-based Texas Citizens Bancorp Inc. and its wholly owned bank subsidiary, Texas Citizens Bank NA.
Based on Business First's closing stock price of $25.30 as of Oct. 19, the transaction is valued at approximately $52.9 million in the aggregate.
According to the agreement, Texas Citizens shareholders will receive 0.7038 share of Business First stock for each share of Texas Citizens common stock, with cash paid in lieu of fractional shares, or approximately 2.1 million shares of Business First's common stock. Following the completion of the transaction, former Texas Citizens shareholders will own approximately 9.7% of the combined company.
At announcement, S&P Global Market Intelligence calculates that the deal value is 155.46% of common equity and tangible common equity, 9.87% of assets, 11.69% of deposits and 16.41x earnings. The tangible book premium to core deposits ratio is 4.68%.
S&P Global Market Intelligence valuations for bank and thrift targets in the Southwest region between Oct. 20, 2020, and Oct. 20, 2021, averaged 188.64% of book and 199.77% of tangible book and had a median of 14.18x last-12-months earnings, on an aggregate basis.
The transaction is expected to close during the first quarter of 2022.
As of Sept. 30, Business First had total assets of $4.4 billion, total loans of $3.1 billion, total deposits of $3.8 billion and total shareholders' equity of $430.2 million, compared to Texas Citizens' estimated $516.9 million in total assets, $365.7 million in total loans, $452.0 million in total deposits and $34.6 million in common shareholders' equity.
Upon completion of the deal, the combined entity is expected to have total consolidated assets of approximately $4.9 billion.
Based on S&P Global Market Intelligence data, with the closing of the deal, Business First will enter Harris County, Texas, with five branches to be ranked No. 38 with a 0.14% share of about $281.13 billion in total market deposits and will enter Fort Bend County, Texas, with one branch to be ranked No. 28 with a 0.29% share of roughly $18.98 billion in total market deposits.
Texas Citizens' Chairman and CEO Duncan Stewart will join b1BANK as chairman for the Houston region. President Mike Cornett will also join the b1BANK team as vice chair for Houston.
The current b1BANK executive vice president and director of market expansion, Don Hingle, will relocate to Houston as regional president.
The terms of the merger agreement have been approved by boards of both companies. The transaction provides for a $2.0 million termination fee payable by Texas Citizens if the deal is terminated under certain circumstances, according to a regulatory filing.
Stephens Inc. acted as financial adviser, and Fenimore Kay Harrison LLP acted as legal adviser, to Business First. Piper Sandler Cos. acted as financial adviser, and Bracewell LLP acted as legal adviser, to Texas Citizens.
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