Baton Rouge, La.-based Investar Holding Corp. and unit Investar Bank agreed to acquire Mainland Bank in a $19.9 million deal.
The deal value is $79.22 per share, based on the buyer's Oct. 10 closing price of $26.07. Under the deal, Mainland shareholders will receive 3.0389 common shares of Investar for each common share of Mainland Bank that they hold.
The deal is expected to be about 3% accretive to earnings in 2019 and 1% dilutive to tangible book value at closing.
Mainland Bank shareholders will receive an aggregate of approximately 764,000 Investar common shares. They will own approximately 7.4% of the combined company after the deal closes.
On an aggregate basis, SNL calculates that the deal value is 155.4% of common equity, 155.4% of tangible common equity and 15.9x earnings. Also, it is 15.01% of assets, 17.45% of deposits and the tangible book premium-to-core deposits ratio is 6.51%.
SNL valuations for bank and thrift targets in the Southwest region between Oct. 10, 2017, and Oct. 10, 2018, averaged 181.64% of book, 190.62% of tangible book and had a median of 21.33x last-12-months earnings, on an aggregate basis.
Investar has total assets of $1.70 billion as of June 30, according to SNL data. Mainland Bank had approximately $131.3 million in assets, $113.0 million in deposits, $12.7 million in stockholders' equity and $87.7 million in net loans at June 30, as per the deal announcement.
The deal is expected to close in the first quarter of 2019.
Investar Holding Corp. will enter Galveston County, Texas, with two branches to be ranked No. 12, with a 2.08% share of approximately $4.73 billion in total market deposits. It will enter Harris County, Texas, with one branch to be ranked No. 69, with a 0.01% share of approximately $206.32 billion in total market deposits.
The merger agreement includes a termination fee of $816,000, payable by Mainland Bank should the deal fall through under certain circumstances, according to a Form 8-K.
Sandler O'Neill & Partners LP acted as financial adviser to Investar Holding Corp., and Performance Trust Capital Partners acted as financial adviser to Mainland Bank. Fenimore Kay Harrison & Ford LLP served as legal counsel to Investar Holding Corp., and Larry Temple served as legal counsel to Mainland Bank.