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Business First to buy Richland State in Louisiana for $50.8M


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Business First to buy Richland State in Louisiana for $50.8M

In Louisiana, Baton Rouge-based Business First Bancshares Inc. is acquiring Rayville-based Richland State Bancorp Inc. and unit Richland State Bank in a cash-and-stock deal valued at approximately $50.8 million, based on the buyer's June 1 closing price of $23.92.

Shareholders of Richland State will receive total cash consideration of about $10.6 million and 1,679,608 shares of Business First's common stock.

On an aggregate basis, SNL calculates that the deal value is 147.9% of common equity and tangible common equity, and 20.1x of earnings. It is 16.65% of assets, 18.81% of deposits and has a tangible book premium-to-core deposits ratio of 7.28%.

SNL valuations for bank and thrift targets in the Southwest region between June 4, 2017, and June 4, 2018, averaged 182.49% of book, 193.97% of tangible book and had a median of 19.96x last-12-months earnings, on an aggregate basis.

Business First will expand in Louisiana by 8 branches to be ranked No. 10 with a 1.41% share of approximately $104.70 billion in total market deposits.

Richland State President and CEO Jerome Vascocu will join the boards of Business First and unit Business First Bank after the deal closes.

As of March 31, Business First Bank had $1.59 billion in assets, while Richland State Bank had $305.0 million in assets, $188.7 million in loans, $270.0 million in deposits and $32.5 million in shareholders' equity. The combined company is expected to have about $2 billion in assets.

The deal, subject to approvals from regulators and Richland State shareholders, is expected to close in the fourth quarter.

Stephens Inc. served as financial adviser to Business First, while Fenimore Kay Harrison & Ford LLP served as its legal adviser. For Richland State, National Capital LLC served as financial adviser and rendered a fairness opinion, while Kantrow Spaht Weaver & Blitzer (APLC) served as its legal adviser.

Business First also launched an underwritten public offering of about 900,000 of its common shares. It intends to grant underwriters an option to purchase up to 135,000 additional shares of its common stock.

A portion of the net proceeds will be used to fund the cash consideration in the company's pending deal with Richland State, while the remaining proceeds will be used to strengthen its capital position and for general corporate purposes.

Stephens Inc. is lead book-running manager for the offering. Raymond James & Associates Inc. is lead manager and Hovde Group LLC is co-manager.

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