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Midland States acquiring Alpine Bancorp. for $181M in cash and stock


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Midland States acquiring Alpine Bancorp. for $181M in cash and stock

In Illinois, Effingham-based Midland States Bancorp Inc. will acquire Belvidere-based Alpine Bancorp. Inc. for approximately 4.5 million Midland shares and $33.3 million in cash. Based on Midland's Oct. 13 closing price of $33.10, the deal has an implied value of about $181.0 million.

Alpine, the parent company of Alpine Bank & Trust Co., had $1.3 billion in assets, $830 million in gross loans and $1.1 billion in deposits as of June 30, according to the press release. It had a cost of deposits of 19 basis points and a loan-to-deposit ratio of 73%. Its wealth management business had about $1.0 billion in assets under management at the end of the first half.

Midland, the parent company of Midland States Bank and of CedarPoint Investment Advisors Inc., had $4.49 billion in assets as of June 30, according to SNL data. The combined company is projected to have approximately $6.0 billion in assets and a wealth management business with almost $3.0 billion in assets under administration.

On an aggregate basis, SNL calculates that the deal value is 167.7% of book and tangible book and 18.1x earnings. The price is 16.01% of deposits, 14.20% of assets and the tangible book premium-to-core deposits ratio is 6.60%.

Midland expects the deal to be approximately 10% accretive to 2019 EPS. Tangible book value dilution is estimated at about 6%, to be earned back in approximately 3.5 years, based on the crossover method.

SNL valuations for bank and thrift targets in the Midwest region between Oct. 16, 2016, and Oct. 16, 2017, averaged 151.29% of book, 156.30% of tangible book and had a median of 21.56x last-12-months earnings, on an aggregate basis.

To fund the cash portion of the deal, Midland has completed a $40 million private placement of subordinated debt to institutional investors. Net proceeds are estimated at $39.4 million.

The merger, still subject to regulatory and shareholder approvals, is expected to close in the first quarter of 2018. Alpine Chairman R. Robert Funderburg Jr. will join the acquirer's board.

Midland will enter Winnebago County, Ill., with 12 branches to be ranked first with a 16.99% share of approximately $5.34 billion in total market deposits. It will enter Boone County, Ill., with six branches to be ranked first with a 37.06% share of approximately $562.4 million in total market deposits. It will also enter DeKalb County, Ill., with one branch to be ranked No. 11 with a 0.95% share of approximately $2.34 billion in total market deposits.

In the merger, Keefe Bruyette & Woods and Barack Ferrazzano Kirschbaum & Nagelberg LLP served as Midland's financial adviser and legal counsel, respectively. Sheshunoff & Co. served as financial adviser to Alpine, and Chapman & Cutler LLP served as Alpine's legal adviser.

For the private placement, Keefe Bruyette & Woods acted as the lead placement agent; U.S. Bancorp Investments Inc. was co-placement agent.

SNL is an offering of S&P Global Market Intelligence.

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