Wichita, Kan.-based EquityBancshares Inc. agreed to buy Harrison, Ark.-based ,entering Arkansas with its first transaction since its in late 2015.
The aggregate value of the cash-and-stock merger wasestimated at $68.8 million based on Equity's closing price July 12, according toa press release. Under the agreement, Equity will pay 7.261 shares of its classA common stock and $27.30 in cash for each Community First common share,resulting in an estimated payment of $58.7 million worth of stock and $10.1million in cash.
The price is about 129% of Community First's stated tangiblecommon equity and approximately 153% of its adjusted tangible common equity,when excluding an approximate $8.2 million investment in to bedistributed to shareholders before the deal closes.
Equity expects the deal to be 26% accretive to diluted EPSin 2017 and 25% accretive in 2018. It projects transaction-related and one-timecosts of $6.6 million. It expects the deal to be about 9.0% dilutive totangible book value per share with an earnback period of 3.5 years.
On an aggregate basis, SNL calculates the value to be 131.4% of bookand tangible book and 10.7x earnings. The price is 17.26% of deposits and14.34% of assets, and has a tangible book premium-to-core deposits ratio of4.57%.
SNL valuations for bank and thrift targets in the Southeastregion between July 14, 2015, and July 14, 2016, averaged 139.55% of book,141.87% of tangible book and had a median of 18.05x last-12-months earnings, onan aggregate basis.
CommunityFirst Bank has five total branches in the Arkansas cities ofHarrison, Berryville, Eureka Springs and Pea Ridge.
SNL data shows that Equity Bancshares will enter BooneCounty, Ark., with two branches to be ranked first with a 31.28% share ofapproximately $867.64 million in total market deposits; Carroll County, Ark.,with two branches to be ranked fourth with a 16.50% share of approximately$574.86 million in total market deposits; and Benton County, Ark., with onebranch to be ranked No. 18 with a 0.65% share of approximately $4.24 billion intotal market deposits.
After completion, two directors from Community First will joinEquity's board, and all Community First's directors will become Arkansascommunity board members of the company. Community First Bank CFO and COO AnnMain will become Arkansas market leader, CEO David Morton will become ArkansasCEO and Danny Criner will become Arkansas chief credit officer.
Keefe Bruyette & Woods was financial adviser to EquityBancshares, and Norton Rose Fulbright US LLP was its legal counsel. StephensInc. was financial adviser to Community First, and Bryan Cave LLP was its legalcounsel.