The lengthy and costly process for starting a de novo bank made Savile Capital Group LLC's planned acquisition of Farmers State Bankshares Inc. and its subsidiary Wyoming Bank & Trust the preferable alternative.
Currently offering services such as wealth management, securities brokerage, and disability and property insurance, Savile has been looking to add banking services to its repertoire for two years so that it could have a fuller relationship with its customers. The company looked at taking the de novo route, but decided an acquisition was more attractive because the process is much faster and cost-effective, COO David Wasitowski said in an interview.
With its planned acquisition of a Wyoming-based community bank, the company will surpass the hurdles of standing up the technology required for a de novo bank and building up the bank's talent and culture from scratch, Wasitowski said.
"Here, we wind up with a bank that has a pristine reputation in the state, a management team at the bank that's well respected in the state and with clients across the nation," Wasitowski said. "We're not going to spend years of training staff, getting staff to work together."
Wyoming Bank & Trust had $294.7 million in total assets with $122.3 million in total loans and $244.8 million in total deposits as of June 30. The transaction is the latest example of a rising trend in the industry as investor groups increasingly see bank acquisitions as a cheaper, faster alternative to the de novo process. As S&P Global Market Intelligence previously reported, current depressed bank valuations also make bank acquisitions attractive to investor groups, but pricing and environmental factors were not major motivators for this transaction, according to Wasitowski.
The main motivator for this transaction was the ability to add banking services, such as mortgage lending, to Savile's product lineup in order to have a fuller relationship with the company's customers that currently use its wealth management and insurance products.
"We're not looking to become a super large financial services organization," the COO said. "We have a selective group of clients, and we like to provide a high level of service and be that client's trusted adviser for as many financial services as we can."
The transaction was a natural fit, said Brian Palmer, president of Olsen Palmer and adviser on the deal.
"There are certainly synergies there," Palmer said. "Wyoming Bank & Trust currently offers traditional banking services plus trust services and it just seemed like a good natural extension to add to those services with insurance and asset management."
Savile, which has locations in Miami and Puerto Rico, considered buying a bank in other states, but the company ultimately decided on Wyoming because Wasitowski — who was tasked with finding the company a bank partner — lives in the state, according to the executive. Wasitowski will serve as chairman of Farmers State Bankshares.
Washington Bank & Trust has two branches in the Cheyenne, Wyo., area. Following the deal's close, which is expected in 2024, Savile does not plan to expand through additional M&A but could open another branch where Wasitowski lives in Sheridan for additional lending opportunities, and the company will look to build out its wealth management business by hiring more investment advisers, he said.
Over the course of a two-year search for banks, Savile held discussions with five different institutions.
"In some cases, the board of directors considered selling and then decided in the end, they didn't want to sell," Wasitowski said. "There were organizations we felt were just too small and disjointed. There were some transactions where we just came too late."
In contrast, the compatibility between Savile and Wyoming Bank & Trust quickly became apparent, executives said.
From Wyoming Bank & Trust's perspective, the deal was attractive because it allows the family-owned company to continue operating under the same name, Vice Chairman and CEO Jeff Wallace said in an interview. Under the agreement, Wyoming Bank & Trust will retain its current management and employees without any need for layoffs, Wallace said.
"The most important thing to us is that all the management, the employees of Wyoming Bank & Trust remains the same," Wallace said. "We've got over 100 years of history with Wyoming Bank & Trust, so we hated to see the bank just get merged with another bank."