North Dakota-based Alerus Financial to acquire Phoenix-based MPB BHC

Grand Forks, N.D.-based Alerus Financial Corp. agreed to acquire Phoenix-based MPB BHC Inc., the holding company for Metro Phoenix Bank.

Under the terms of the deal, MPB BHC shareholders will receive 0.74 of an Alerus common share for each outstanding MPB BHC common share, or roughly 2.58 million Alerus shares in the aggregate. Using a price per share of Alerus common stock of $31.43 as of Dec. 7, the transaction has an implied purchase price of $23.26 per share, which equates to an aggregate value of $85.3 million, including $4.3 million in consideration for option holders.

At announcement, S&P Global Market Intelligence calculates the deal value to be 195.81% of common equity, 196.71% of tangible common equity, 20.74% of assets, 23.29% of deposits and 13.52x earnings. The tangible book premium-to-core deposits ratio is 13.61%.

Market Intelligence valuations for bank and thrift targets in the West region between Dec. 8, 2020, and Dec. 8, 2021, averaged 136.67% of book and 147.09% of tangible book and had a median of 14.66x last-12-months earnings, on an aggregate basis, and averaged 139.41% of book and 152.94% of tangible book and had a median of 13.63x LTM earnings, on a per-share basis.

Alerus expects the deal to be immediately accretive to its EPS, excluding one-time transaction-related expenses, and roughly 8.5% accretive in the first full year, according to a news release.

The acquisition is expected to close in the first quarter of 2022, and the data processing system conversion will occur in the first half of 2022 after closing. Alerus intends to merge Metro Phoenix Bank into Alerus Financial NA at that time.

Metro Phoenix Bank, which has one branch in Phoenix, has roughly $411 million in total assets, $283 million in total loans and $366 million in total deposits as of Sept. 30, according to a news release.

The acquisition will increase Alerus' presence in Arizona. On a pro forma basis, Alerus will operate three branch locations in the state. The combined company's Arizona operation will have about $439 million in total loans and about $483 million in total deposits, according to the news release.

Based on Market Intelligence data, with the completion of the transaction, Alerus will expand in Maricopa County, Ariz., by one branch to be ranked No. 24 with a 0.3% share of roughly $158 billion in total market deposits.

Metro Phoenix Bank President and CEO Steve Haggard will join Alerus as president of the Arizona market upon completion of the deal.

Alerus CFO Katie Lorenson, who will become president and CEO on Jan. 1, 2022, led negotiations for the acquisition.

D.A. Davidson & Co. was financial adviser and Barack Ferrazzano Kirschbaum & Nagelberg LLP acted as legal counsel to Alerus on the transaction. Raymond James & Associates Inc. was financial adviser and Spierer Woodward Corbalis & Goldberg acted as legal counsel to MPB BHC.