Dive Overview:
Tupelo, Mississippi-based Renasant Corp. will buy smaller rival First Bancshares Inc., based in Hattiesburg, Mississippi, for about $1.2 billion in an all-stock transaction, the two banks announced Monday.
Through the partnership, the combined company will have a presence in six southeastern states and approximately $25 billion in assets, $18 billion in loans and $21 billion in deposits. Monday’s News ReleaseRenesant has been looking at a number of acquisition opportunities, but “this is the deal we’ve been looking for.” Renasant CEO Mitch Wecaster said on a conference call with analysts on Tuesday.
merger, The investment, which has been approved by the boards of directors of both companies, is expected to close in the first half of 2025, the banks said in a statement on Monday. Renesant also announced the pricing of its public offering of 6.25 million shares on Monday. Raise $200 million in capital.
Dive Insights:
First Bank currently operates 111 branches in Mississippi, Louisiana, Alabama, Florida and Georgia, and had approximately $8 billion in assets, $5.3 billion in loans and $6.6 billion in deposits as of the end of June.
Renasant has approximately 185 locations in Mississippi, Tennessee, Alabama, Florida, Georgia, North Carolina and South Carolina with approximately $17.5 billion in assets. The merger will give Renasant a presence in Louisiana and strengthen its presence in Florida and the Gulf Coast. Renaissance President Kevin Chapman Said.
Renesant aims to reduce The First’s non-interest expenses by 30% in 2025. Presentation Regarding the Proposed Transaction“Together we will create a more valuable company with the scale necessary to compete in today’s business environment,” Waycaster said in a news release.
In connection with the deal, which marks Renesant’s largest transaction to date, the company announced a $10.3 billion, five-year community contribution plan to “drive economic growth, access to financial services and inclusion within Renesant’s and The First’s combined footprint,” the release said.
Asked whether executives were confident they could get regulatory approval, Wecaster noted that the banks have good relationships with their respective regulators and that the approval process was well-intended. The bank has reached out to regulators for input and they have “been very helpful in providing guidance as we think about the application process and how to proceed,” he told analysts on a conference call Tuesday.
M. Ray “Hoppy” Cole, president and CEO of The First, will become senior executive vice president and join Renasant’s board of directors. The merger will “create a leading regional bank in the southeast with the scale and capabilities of a larger bank, while maintaining the community banking experience customers expect,” Cole said in a news release.
The combined lender will have a commercial real estate concentration of 278%, according to the presentation.
The appetite for lending to the CRE market “is a core strength of The First and Renesant. We understand it, we underwrite it properly and we manage it properly,” Renesant’s chief credit officer, David Meredith, told analysts who asked about the bank’s plans to reduce its CRE ratio after the deal closes. “So I don’t think those dollars will go down significantly or they won’t go up significantly, but we’ll probably continue to operate within that range.”
Meredith also defended both lenders’ exposure to CRE office space, saying, “This is different than what you’re seeing in the market today. We’re talking small, single-story office properties in cities like Hattiesburg, Mississippi, Valdosta, Georgia and Decatur, Alabama.”
Under the merger agreement, The First shareholders will receive one share of Renesant common stock for each share of The First common stock, and all of The First’s options will be cashed at in-the-money value upon closing of the transaction. Based on Renesant’s closing price on Friday, the transaction value per The First share would be approximately $37.09.
The terms of the agreement state that First will pay a $40 million termination fee if the deal is terminated under certain circumstances. According to the securities filing:.
The Renesant-The First deal was announced last week by West Virginia-based WesBanco. Plans to acquire Ohio-based Premier Financial In a deal valued at $959 million.
