Fort Wayne, Ind.-based Three Rivers FCU agreed to acquire the assets and assume substantially all the liabilities of Richmond, Ind.-based West End Indiana Bancshares Inc.'s West End Bank SB in an all-cash deal.
West End Indiana Bancshares estimates its shareholders will receive $34.91 to $36.81 in cash for each common share they own, under the terms of the purchase and assumption agreement. However, the company said there is a possibility the cash consideration might not be in the given range due to a number of factors, such as the treatment of, and costs associated with, its liquidation account, corporate taxes and West End's equity at closing.
Based on West End Indiana Bancshares' outstanding share count of 992,167 as of July 17, S&P Global Market Intelligence calculates that the deal value could be as high as $36.5 million, based on the high end of West End Indiana Bancshares' estimate.
West End Indiana Bancshares and West End Bank will both dissolve after the deal closes. A liquidation account for certain depositors of West End Bank was made when West End Indiana Bancshares was created in 2012 with the conversion of the bank.
The deal, expected to close in the first quarter of 2020, carries a $2.0 million termination fee that West End would be obligated to pay Three Rivers under certain circumstances.
S&P Global Market Intelligence valuations for bank and thrift targets in the Midwest region between July 31, 2018, and July 31, 2019, averaged 155.58% of book and 157.04% of tangible book and had a median of 18.34x last-12-months earnings on an aggregate basis.
Three Rivers is being represented by Howard and Howard PLLC. West End Indiana Bancshares and West End Bank are being represented by Keefe Bruyette and Woods and by Luse Gorman PC.
Three Rivers had total assets of $1.14 billion as of March 31, and West End had total assets of $299.1 million, according to S&P Global Market Intelligence data. The deal will increase Three Rivers' branches to 20, its members to 106,000 and its employee headcount to 400, according to a news release.
Three Rivers will enter Wayne County, Ind., with four branches to be ranked third with a 12.86% share of approximately $1.53 billion in total market deposits. It will also enter Union County, Ind., with one branch to be ranked second with a 29.94% share of approximately $113.3 million in total market deposits.
West End shares closed 20.37% higher at $32.50 on Aug. 1.
The deal is one of several recent transactions in which credit unions have agreed to acquire banks. A June report by S&P Global Market Intelligence indicated that less than halfway through 2019, the number of deals involving credit unions acquiring banks is reaching the same level seen in the entirety of 2018.
On July 23, Bartlett, Tenn.-based First South Financial CU said it will acquire Winchester, Ky.-based WinFirst Bank for an undisclosed amount.