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First Mid-Illinois Bancshares acquiring SCB Bancorp in Illinois

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First Mid-Illinois Bancshares acquiring SCB Bancorp in Illinois

Mattoon, Ill.-based First Mid-Illinois Bancshares Inc. has agreed to acquire Decatur, Ill.-based SCB Bancorp Inc. in a stock-and-cash deal valued at about $70.4 million.

SCB shareholders can opt to receive either 8.0228 First Mid-Illinois shares or $307.93 in cash for each SCB share, subject to potential adjustments. SCB's outstanding stock options will be fully vested, and outstanding options unexercised before the deal closes will be cashed out. Based on an average price of $38.38 per First Mid-Illinois share over the past 10 days, the aggregate deal consideration is about $70.4 million. SCB also plans to issue $25 million of its cash as a special dividend to shareholders and as a corresponding reduction to the exercise price of outstanding options immediately before the deal closes.

On an aggregate basis, the deal value represents 157.3% of book and 191.8% of tangible book and 17.6x earnings. It is 17.05% of assets, 22.11% of deposits and has a tangible book premium-to-core deposits ratio of 11.15%.

For comparison, SNL valuations for bank and thrift targets in the Midwest region between June 12, 2017, and June 12, 2018, averaged 160.95% of book, 168.41% of tangible book and had a median of 20.50x last-12-months earnings, on an aggregate basis.

First Mid-Illinois Bancshares will expand in Illinois by 10 branches to be ranked No. 21 with a share of 0.62% of approximately $479.48 billion in total market deposits.

SCB, which has $437 million in assets, operates in the Bloomington, Champaign, Decatur, Kankakee, Peoria and Springfield areas of the state. Unit Soy Capital Bank and Trust Co. has 10 branches providing full banking services, along with two other lines of business in insurance services and agricultural management services. J.L. Hubbard Insurance and Bonds, SCB's other subsidiary, is the largest bank-owned insurer in Illinois with gross revenue of about $10.1 million in 2017, according to the company.

First Mid-Illinois' assets would grow to about $3.8 billion with the deal, and its wealth and farm management business would have about $3.9 billion in assets under management. The combined insurance business will have about $14.0 million in annual revenue.

The deal is expected to close late in 2018.

FIG Partners LLC was financial adviser to First Mid-Illinois, while Schiff Hardin LLP was its legal adviser. SCB's financial adviser was Piper Jaffray & Co., and its legal adviser was Thomas M. Shade.

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