Enterprise Financial Services (EFSC) to Acquire Jefferson County Bancshares for About $130M

October 11, 2016 8:09 AM EDT
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Enterprise Financial Services Corp (NASDAQ: EFSC) announced today that it has entered into a definitive merger agreement to acquire Jefferson County Bancshares, Inc. (“JCB”). JCB and its wholly-owned subsidiary, Eagle Bank and Trust Company of Missouri, have approximately $935 million in assets, $670 million in loans, and $763 million in deposits as of June 30, 2016. JCB operates 13 full service retail and commercial banking offices in metropolitan St. Louis and Perry County, Missouri.

JCB shareholders will receive, based on their election, cash consideration in an amount of $85.39 per share of JCB common stock or 2.75 shares of EFSC common stock per share of JCB common stock. Aggregate consideration at the closing will be 3,300,000 shares of EFSC common stock and approximately $26.6 million in cash, subject to adjustment for any JCB stock option exercises. Based on EFSC’s 15-day volume weighted average closing stock price of $31.52 as of October 10, 2016, the overall transaction has an estimated value of $130.6 million, including JCB’s common stock and stock options.

In connection with the transaction, one JCB director will be appointed to EFSC’s Board of Directors. Additionally, Michael Walsh, Chairman and Chief Executive Officer of JCB, will join the Board of Directors of Enterprise Bank & Trust ("EB&T"), the Company's banking subsidiary, and will join EB&T as Executive Vice President and Chairman of the St. Louis Region.

Peter Benoist, Chief Executive Officer of EFSC, commented, "This is clearly a winning combination. Mike and his Eagle Bank and Trust team have built an enviable franchise that will very nicely complement our organization. Eagle's solid real estate loan portfolio will add further diversity to our C&I oriented loan book. Moreover, the bank's sizable consumer deposit base will supplement our more business related core deposits, accelerating our capacity to efficiently fund future growth."

"Bringing Eagle into the Enterprise family will propel us into a nearly $5 billion banking company," noted Benoist, "with robust earning power, ample scale and a materially stronger position in the St. Louis market."

“In Enterprise Bank, we found the ideal partner we have been seeking,” said Michael Walsh, “We are pleased to join the Enterprise family and have long admired its approach to serving their clients. We believe the complementary strengths of this combined organization will provide a stronger future for our customers, associates and the communities we serve.”

Pro Forma Financial Impact

EFSC expects to realize fully phased-in cost savings of approximately $8.0 million pre-tax, or 29.9% of JCB’s 2015 noninterest expense. In addition, the anticipated credit mark for JCB’s loan portfolio is estimated at 4%, while transaction related one-time charges of approximately $10 million pre-tax are anticipated. The Company expects the transaction to be accretive to its 2017 diluted earnings per share, excluding the impact of the one-time charges, with full year 2018 EPS accretion of $0.19 per diluted share, or approximately 7.4%, based on analyst consensus estimates. The transaction is expected to result in tangible book value per share dilution of approximately 3.6%, and an anticipated tangible book value per share dilution earn-back period of less than 3.25 years.

Conditions to Closing

The transaction, which has been approved by both JCB’s and EFSC’s board of directors, is subject to normal and customary conditions, including but not limited to, regulatory approval and the approval of JCB shareholders. The transaction is expected to close in early 2017, subject to these required approvals.

Advisors to Transaction

Sandler O’Neill & Partners, L.P. served as financial advisor and Reed Smith LLP served as legal counsel to EFSC. Keefe, Bruyette and Woods, Inc., served as financial advisor and Lewis Rice LLC served as legal counsel to JCB.

Other Information

EFSC will post the presentation slides that accompany the conference call described below to the Investor Relations section of its website.

Conference Call

The Company will host a conference call and webcast at 10:00 a.m. Central time on October 11, 2016 to discuss the transaction and related matters. This press release as well as a related slide presentation will be accessible on the Company’s website at www.enterprisebank.com under “Investor Relations” beginning prior to the scheduled broadcast of the conference call. The call can be accessed via this same website page, or via telephone at 1-800-723-6751 (Conference ID #9303786). A recorded replay of the conference call will be available approximately two hours after the call completion. Go to http://bit.ly/EFSCinvestors and register to hear a replay of the call. The replay will be available for approximately two weeks following the conference call.

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