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Means First NBC ticker symbol will change to “FNBC”
First NBC Bank Holding Company (Nasdaq:NBCB), the holding company for First NBC Bank, and State Investors Bancorp, Inc. (Nasdaq:SIBC), the holding company of State-Investors Bank, jointly announced today the signing of a definitive agreement for First NBC to acquire State Investors by means of a merger.
“This transaction enables us to further expand our presence within the New Orleans metropolitan area, our primary market,” stated President and Chief Executive Officer Ashton J. Ryan, Jr. “We believe that our strong record for serving the small and mid-sized businesses and individuals in our market area will resonate with the customers served by State-Investors Bank. We look forward to providing the bank’s customers with the high level of customer service for which we are known, in addition to a broader range of products and services than are currently available to them. We also believe that the significant cost savings expected to result from the merger will enhance shareholder value.”
Tony Sciortino, President and Chief Executive Officer of State Investors and State-Investors Bank, said, “We are very pleased to be joining our organization with First NBC, a premier banking franchise in the New Orleans metropolitan area and Mississippi Gulf Coast. We are excited about the expanded products and services that this combination will bring to our customers and the communities we serve.”
State Investors operates four full service banking offices, all of which are located in the New Orleans metropolitan area. As of September 30, 2014, State Investors, on a consolidated basis, reported total assets of $269 million, total loans of $213 million and total deposits of $158 million.
– Entry into new section of the New Orleans metropolitan area with very strong demographic make-up
– Attractive opportunity to acquire 120 year old bank with deep community roots, a strong and proven credit history and a similar commitment toward customer service
– Provides liquidity to allow First NBC to fund loan growth inherent in $890 million loan pipeline
– Acquisition adds approximately $158 million in deposits in the New Orleans MSA
– Allows First NBC to effectively deploy capital
– Accretive to First NBC’s EPS in 2015, 2.3% and 2016, 4.4%, IRR greater than 17%
Under the terms of the merger agreement, shareholders of State Investors will receive $21.25 in cash for each share of State Investors stock owned by them at the effective time of the merger. Based on 2,308,019 shares of common stock issued and outstanding as of December 30, 2014, the aggregate cash consideration payable to shareholders of State Investors is expected to equate to approximately $49.0 million. The merger agreement also provides that holders of stock options to purchase shares of State Investors common stock will receive, in exchange for their stock options, cash consideration equal to the difference between $21.25 and the exercise price of the option. Based on 221,626 stock options outstanding as of December 30, 2014 with a weighted average exercise price of $12.20 per share, First NBC expects to pay approximately $2.0 million in consideration for the outstanding stock options.
First NBC currently estimates annual pre-tax expense reductions associated with the transaction will be approximately 55% of the annual operating expenses of State Investors. The expense savings are estimated to be fully achieved on an after-tax basis during the first full year of operations following the merger. Acquisition and conversion related costs are estimated to be approximately $3.4 million on an after-tax basis. The transaction is expected to be accretive to First NBC’s fully diluted earnings per share by approximately 4.4% in 2016. The proposed merger is expected to result in tangible book value dilution of approximately 2.1%, which is expected to be earned back in 3.0 years.
The estimated internal rate of return for the transaction is expected to be greater than 17%, and, therefore, in excess of First NBC’s cost of capital.
The merger agreement has been approved by the boards of directors of First NBC and State Investors, and the merger is expected to close in the second quarter of 2015. Completion of the transaction is subject to customary closing conditions, including the receipt of required regulatory approvals and the approval of the shareholders of State Investors. Promptly following the holding company merger, First NBC expects to merge the subsidiary banks under the charter of First NBC Bank.
First NBC was advised by Keefe Bruyette & Woods, a Stifel Company, as financial advisor, and Fenimore, Kay, Harrison & Ford, LLP, as legal counsel. State Investors was advised by Sterne Agee & Leach, Inc., as financial advisor, and Silver, Freedman, Taff & Tiernan LLP, as legal counsel.
