Wichita, Kan.-based Equity Bancshares Inc. agreed to buy Guymon, Okla.-based City Bank and Trust Co. from parent Docking Bancshares Inc.
Under the terms of the deal, Docking will receive cash consideration of roughly $18.9 million, subject to adjustments based on the equity capital of City Bank and Trust at closing.
Equity expects the merger to be about 14 cents accretive to diluted EPS in 2019 and 17 cents accretive to EPS in 2020, with transaction-related and one-time costs of roughly $2.2 million.
Equity anticipates the deal to be about 2.8% dilutive to tangible book value per share at closing, inclusive of the estimated purchase accounting adjustments. It also expects the tangible book value earn back to be 2.75 years using the cross-over method.
On an aggregate basis, the deal value represents 102.5% of book and 103.8% of tangible book. The deal value is 13.0x earnings, 10.96% of assets, 13.56% of deposits and has a tangible book premium-to-core deposits ratio of 0.59%. For comparison, SNL valuations for bank and thrift targets in the Southwest region between June 12, 2017, and June 12, 2018, averaged 179.52% of book, 189.25% of tangible book and had a median of 20.36x last-12-months earnings, on an aggregate basis.
The deal is subject to regulatory approvals and is expected to close in the fourth quarter.
Equity will enter Texas County, Okla., with one branch to be ranked first with a share of 27.38% of approximately $489.8 million in total market deposits.
Equity reported consolidated total assets of $3.6 billion, loans of $2.4 billion and deposits of $2.8 billion following completion of its mergers with Kansas Bank Corp. and Adams Dairy Bancshares Inc. on May 4, according to the merger release. City Bank and Trust had total assets of $172.5 million, loans of $76.7 million and deposits of $139.4 million as of March 31.
After deal completion, Equity expects to have about $3.9 billion in consolidated total assets, and the combined institution is expected to have roughly $2.5 billion in loans and $3.0 billion in deposits.
Equity was advised by Sandler O'Neill & Partners LP and was represented by Norton Rose Fulbright US LLP as legal counsel, while Docking was advised by The Capital Corp. and was represented by Stinson Leonard Street LLP as legal counsel.
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