Hattiesburg, Miss.-based First Bancshares Inc. is acquiring Sunshine Financial Inc. of Tallahassee, Fla., in a 25% cash-75% stock deal valued at $32.1 million, based on the buyer's Dec. 6 stock price of $33.35 per share.
Under the merger agreement, each Sunshine common share may be exchanged for either $27.00 in cash or 0.93 of a First Bancshares common share, subject to prorationing and reallocation procedures. Sunshine shareholders will own 5.5% of the combined company.
SNL calculates the deal value to be 143.8% of book, 144.4% of tangible book and 54.1x earnings, on an aggregate basis. It is 22.56% of deposits and 16.47% of assets and carries a tangible book premium that is 7.21% of core deposits. It has a one-day premium of 34.72%, based on Sunshine Financial's closing price of $22.20 on Dec. 5 and a one-month premium of 34.11%, based on the closing price of $22.30 on Nov. 6.
Meanwhile, SNL valuations for bank and thrift targets in the Southeast region between Dec. 6, 2016, and Dec. 6, 2017, averaged 158.56% of book, 169.31% of tangible book and had a median of 23.43x last-12-months earnings, on an aggregate basis.
The agreement also requires Sunshine to pay a $1.2 million termination fee, should the deal fall through under certain conditions.
But if the deal closes, which is expected to occur in the second quarter of 2018, pending regulatory and shareholder approvals, First Bancshares will enter the Tallahassee market. The resulting entity, including assets from the pending acquisition of Southwest Banc Shares Inc., will have approximately $2.4 billion in total assets, $2.0 billion in total deposits and $1.6 billion in total loans.
As of Sept. 30, Sunshine, the parent company of Sunshine Community Bank, had about $194 million in assets, $161 million in loans, $142 million in deposits and $22.2 million in stockholder's equity.
First Bancshares expects to record $5.5 million, after tax, in one-time transaction costs. It also projects that the deal will be immediately accretive to EPS and bring noninterest expense saves of 45%.
Keefe Bruyette and Woods Inc. and Alston & Bird LLP served as First Bancshares' financial adviser and legal counsel, respectively. For Sunshine, it was Banks Street Partners LLC and Silver Freedman Taff & Tiernan LLP.