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First Interstate BancSystem buying 2 Idaho-based banks in $181.3M, $21.5M deals

Billings, Mont.-based First Interstate BancSystem Inc. agreed to acquire Idaho Independent Bank and Post Falls, Idaho-based Community 1st Bank in two separate deals.

First Interstate has total assets of approximately $12.24 billion as of June 30, according to SNL data.

The deal for Coeur d'Alene-based Idaho Independent is valued at $22.73 per share, based on the buyer's Oct. 5 closing price of $45.45. Under this deal valued at $181.3 million, Idaho Independent shareholders will receive 0.5 First Interstate class A common share for each Idaho Independent share held.

On a per-share basis, SNL calculates the deal value to be 250.9% of book and tangible book. It is 25.24% of assets and 30.01% of deposits. The tangible book premium-to-core deposits ratio is 18.92%.

The deal has a one-day premium of 56.56%, based on Idaho Independent's closing price of $14.659 as of Oct. 10, and a one-month premium of 51.98%, based on Idaho Independent's closing price of $15.10 as of Sept. 11.

SNL valuations for bank and thrift targets in the West region between Oct. 11, 2017, and Oct. 11, 2018, averaged 181.02% of book, 189.51% of tangible book and had a median of 24.82x last-12-months earnings, on a per-share basis.

First Interstate will expand in Idaho by 11 branches to be ranked sixth with a 4.88% share of approximately $25.93 billion in total market deposits.

Idaho Independent had approximately $725 million in assets, $362 million in loans, $610 million in deposits, and $69 million in shareholders' equity at June 30, as per the deal announcement.

The deal for Community 1st is valued at $17.20 per share, based on the buyer's Oct. 5 closing price of $45.45. Under the $21.5 million deal, Community 1st shareholders will receive 0.3784 First Interstate class A common share for each Community 1st share held.

On a per-share basis, SNL calculates the deal value to be 156.4% of book and tangible book. It is 16.65% of assets and 18.70% of deposits. The tangible book premium-to-core deposits ratio is 8.19%.

The deal has a one-day premium of 19.783%, based on Community 1st's closing price of $14.5 as of Oct. 10, and a one-month premium of 15.79%, based on Community 1st's closing price of $15 as of Sept. 11.

First Interstate will expand in Kootenai County, Idaho, by three branches to be ranked sixth with a 5.94% share of approximately $3.31 billion in total market deposits.

Community 1st had approximately $130 million in assets, $78 million in loans, $116 million in deposits, and $13 million in shareholders' equity at June 30, according to the merger release.

The transactions are expected to be about 3% accretive to earnings per share in the first full year after acquisition and beyond. First Interstate is expected to recover the "minimal" tangible book value dilution resulting from both transactions in less than two years.

The transactions are expected to close in the first half of 2019.

Piper Jaffray & Co. acts as financial adviser and Luse Gorman PC is legal counsel to First Interstate. Sandler O'Neill & Partners LP serves as financial adviser and Witherspoon Kelley serves as legal counsel to Idaho Independent. D.A. Davidson & Co. is financial adviser and Breyer & Associates PC is legal counsel to Community 1st.

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