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First Mid-Illinois Bancshares, First Clover Leaf Financial strike $90M cash-and-stock deal

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First Mid-Illinois Bancshares, First Clover Leaf Financial strike $90M cash-and-stock deal

Mattoon, Ill.-based First Mid-Illinois Bancshares Inc. ($2.11 billion as ofDec. 31, 2015) and Edwardsville, Ill.-based First Clover Leaf Financial Corp. agreed to merge in adeal valued at roughly $90 million.

First Mid-Illinois will be the surviving entity when themerger closes, which is expected to occur during the second half of the year.

First Mid-Illinois will acquire 100% of the issued and outstandingFirst Clover Leaf shares. Immediately before the merger is effective, eachFirst Clover Leaf share, par value 10 cents, will be converted into the rightto receive either $12.87 or 0.495 of a share of First Mid-Illinois commonstock, par value $4.00; this is subject to certain potential adjustments.Overall elections are subject to proration such that 25% of the First CloverLeaf shares will be exchanged for cash and 75% for First Mid-Illinois stock.

The deal is expected to be accretive to EPS in the firstyear, with a tangible book value dilution earnback period of four years. Thecompanies calculate the price at 131.1% of tangible book value and 19.4xlast-12-months earnings. On a per-share basis, SNL calculates thedeal value to be 111.5% of book and 130.2% of tangible book. The price is16.79% of deposits and 13.67% of assets, and the tangible book premium to coredeposits is 4.46%, based on SNL calculations.

The one-day premium is 33.10% based on First Clover Leaf'sApril 25 closing price of $9.60. The one-month premium is 35.93% based on FirstClover Leaf's March 28 closing price of $9.40.

SNL valuations for bank and thrift targets in the Midwestregion between April 26, 2015, and April 26, 2016, averaged 139.26% of book,147.90% of tangible book and had a median of 19.65x LTM earnings, on aper-share basis.                     

At closing, First Clover Leaf Bank NA will merge into , with offices of the former becoming branches of the latter.

As of Dec. 31, 2015, First Clover Leaf Financial had totalconsolidated assets of $654.9 million, net loans of $420.5 million and totaldeposits of $533.2 million. First Clover Leaf Bank currently operates sevenfull-service banking centers in Illinois and Missouri.

The combined institution is expected to have approximately$2.8 billion in assets, total loans of $1.7 billion and total deposits of $2.3billion, as well as 53 full-service locations in Illinois and Missouri.

The transaction is expected to provide expansionopportunities to First Mid-Illinois' wealth management, trust and insurancebusinesses. Operating synergies are projected to result in cost savings, phasedin over two years. Estimated cost savings are 20% of First Clover LeafFinancial's last-12-months noninterest expense over the first 12 months,increasing to 27.5% in subsequent years.

Shareholders of the companies and regulators have yet toapprove the pending merger.

"The acquisition of First Clover Leaf Bank expands ourpresence in the attractive St. Louis metro east market area and for the firsttime, establishes a presence outside the state of Illinois," FirstMid-Illinois Chairman, President and CEO Joseph Dively stated in a mergerrelease included in the filing.

First Mid-Illinois was advised by FIG Partners LLC and thelaw firm of Schiff Hardin LLP, represented by Jason Zgliniec. First Clover Leafwas advised by Raymond James & Associates Inc. and the law firm of BarackFerrazzano Kirschbaum & Nagelberg LLP, represented by Robert Fleetwood.

To use SNL's branch analytics tools to compare marketoverlap, click here.To use SNL Maps to create custom maps, click here.