Heritage Southeast finds another buyer, a month after VyStar deal collapsed
- The Mississippi-based First Bank has agreed to acquire Georgia-based Heritage Southeast Bank in a deal worth approximately $207 million expected to close by the first quarter of 2023, the banks announced on Wednesday.
- Last month, Heritage Southeast ended a merger deal that would have seen it acquired by the Jacksonville, Florida-based company. VyStar Box. That deal, proposed in March 2021 at a price of $195.7 million, faced three delays before the parties called off the combination, citing “the lack of a clear path to obtain the necessary regulatory approvals to close.”
- The acquisition of Heritage Southeast would give The First Bank an entry point to serve the Atlanta, Jacksonville and Savannah markets and expand the lender’s footprint to encompass more than 100 branches in five states, the bank said. based in Mississippi. (Heritage had 23 in two states in June.)
Overview of the dive:
The Heritage Southeast deal follows the announcement in April that The First Bank would acquire Fort Walton Beach, Fla.-based Beach Bank for $116.7 million in stock. The addition of Beach, a $620 million asset, would give The First Bank seven new branches across the Florida Panhandle and the Tampa market. This agreement should be concluded by the end of this year.
“Individually, each transaction is extremely attractive and enhances the franchise value of our organizations,” First Bank CEO Ray Cole said in a press release Wednesday. “Collectively, they are transformative for our business by providing significant market share in some of the most dynamic and fastest growing markets in the South.
At the end of the combination with VyStar, Heritage Southeast seemed to signal that it was ready to test the market again.
“The termination of the purchase agreement allows HSBI to benefit from a better post-COVID-19 economic climate, a stronger capital position and to focus on the steady growth and value creation we have achieved. over the years,” CEO Leonard Moreland said in June. “Additional strategic initiatives that were delayed and designed to improve efficiency can now be pursued with strategic partnerships that will enhance shareholder value.”
Adding Heritage Southeast’s $1.7 billion in assets, $1.1 billion in loans and $1.5 billion in deposits would give The First Bank approximately $8 billion in assets, $7 billion in deposits, $5 billion in loans after the close, the Mississippi-based bank said.
“We are proud to join The First, which has a similar business culture and approach to Heritage Southeast Bank,” said Moreland. “This partnership will build on the momentum the two banks are already experiencing in Georgia and Florida.”
Heritage Southeast shareholders will receive 0.965 shares of First Bancshares common stock for each HSBI share they hold, according to Wednesday’s press release. That brings the value of the transaction to $28.64 per share, or about $207 million, based on First Bancshares’ closing price of $29.68 on Tuesday.
Certain Heritage Southeast shareholders who are expected to own more than 4.9% of First Bancshares common stock after the merger will not be able to sell their First Bancshares shares for 90 days after the deal closes, the banks said.
The end of the Heritage Southeast-VyStar merger sparked an outcry from community bank advocates who said the nonprofit credit unions‘ tax-exempt status gave them greater buying power and an edge. unfair compared to community banks.
“VyStar has either closed, moved, sold or consolidated half of the acquired branches” following a bank acquisition the credit union undertook in 2019, wrote the Independent Community Bankers of America (ICBA) and the Community Bankers Association of Georgia in a joint letter last year to the Federal Deposit Insurance Corp. urging the regulator to reject the Heritage Southeast deal.