First Mid Bancshares Inc. (NASDAQ: FMBH) and LINCO Bancshares Inc. announced Sept. 28 that First Mid will acquire LINCO, the holding company for Providence Bank, which is a Missouri state-chartered depository trust company with approximately $1.2 billion in assets.
Under the terms of the agreement, LINCO shareholders will receive an aggregate of $116.5 million in cash and 1,262,246 shares of FMBH stock. Based on First Mid’s price per share at the closing on September 25, 2020 of $22.50, the aggregate consideration to be paid by First Mid is approximately $144.9 million. One Board member from LINCO will be added to the First Mid Board of Directors.
Providence is a family-owned institution with a 132-year legacy of successful community banking primarily engaged in providing a full range of banking and financial services to individual and business customers in the surrounding communities of its banking centers in Columbia, Jefferson City, Osage Beach, Elsberry, Winfield and Greater St. Louis, Missouri; Fairview Heights, Illinois; and Grapevine, where it has maintained the Premier Bank Texas brand since it was acquired in 2010.
In addition to its full-service banking centers, Providence has a loan production office based in Indianapolis, Indiana.
The transaction is expected to be approximately 20% accretive to earnings per share in the first full year after close (excluding the impact of one-time transaction expenses). Estimated tangible book value per share dilution to First Mid is expected to be earned back in 2.25 years under the crossover method, including CECL “Day 2” accounting treatment.
“Providence has a long history of providing excellent service to the communities it serves and we are looking forward to combining forces and providing even more financial solutions for customers and communities,” said Joe Dively, Chairman and Chief Executive Officer of First Mid. “We have consistently shared our strategic intent to diversify our geographic footprint and this merger expands our presence in the Mid-Missouri and St. Louis Metro markets. In addition to St. Louis, Providence has deep relationships in Columbia, where it is headquartered, and in the Jefferson City and Osage Beach markets. It has also successfully operated outside of Missouri in the high performing and growth markets of Grapevine, Texas and through its loan production office in Indianapolis, Indiana.”
Bill Laurie, Chairman of LINCO and Providence Bank, said, “Our family is excited to partner with First Mid to achieve our goal of creating a larger banking organization that will broaden and strengthen the products and services available to our customers. Providence Bank and First Mid share a like-minded focus on commitment to the communities we serve and First Mid is a perfect fit culturally and strategically for our customers, employees and shareholders.”
Kit Stolen, President and Chief Executive Officer of Providence Bank, said, “As we deepened the relationship with the First Mid team over the last year, the similarities of our two organizations were evident and such alignment will provide great value to all our stakeholders. This combination expands the products and services available to our customers, particularly both wealth management and insurance. Our Providence banking centers in the Metro West St. Louis align perfectly with First Mid’s existing Metro St. Louis presence, which will greatly enhance access for our combined client base. Along with First Mid’s strong deposit platform, a larger lending limit from the combined organization will provide significant growth and enhanced opportunities for the customers and communities we serve.”
Following completion of the transaction, First Mid is expected to have approximately $5.3 billion in total assets (excluding PPP loans). Combined the Company will have increased its St. Louis Metro market presence to approximately $1.1 billion in loans. As of June 30, 2020, First Mid’s wealth and farm management business had approximately $4.1 billion in assets under management and an insurance business that produced over $16.0 million in 2019 revenue.
The transaction has been unanimously approved by each company’s board of directors and is expected to close in the first quarter of 2021, subject to regulatory approvals and the satisfaction of customary closing conditions.
Piper Sandler & Co. acted as financial advisor and Schiff Hardin LLP served as legal advisor to First Mid. Keefe, Bruyette & Woods, A Stifel Company, acted as financial advisor and Stinson LLP served as legal advisor to LINCO.
A slide presentation relating to the transaction can be accessed under the investor relations section of First Mid’s website at www.firstmid.com. In addition, the presentation is included as an exhibit to the Form 8-K filed with the Securities and Exchange Commission announcing the transaction.