First Mid Bancshares to acquire Jefferson Bank and Trust parent

Matoon, Ill.-based First Mid Bancshares Inc. has entered into two separate agreements under which the company will acquire Delta Bancshares Co. as well as a loan and deposit portfolio, along with the relationship team, in the St. Louis market.

Delta is the parent company of Jefferson Bank and Trust and is headquartered in St. Louis, operating five branches throughout the metro area.

As of June 30, Delta had approximately $697 million in total assets, $484 million in loans and $546 million in deposits. Delta is a private company with a 129-year history of providing financial services to the St. Louis market.

Under the terms of the agreement with Delta, its shareholders and option holders will receive an aggregate of approximately $15.2 million in cash and 2,282,512 shares of First Mid stock. Delta’s outstanding stock options will be fully vested upon consummation of the merger, and all outstanding Delta options that are unexercised prior to the closing will be cashed out. Based on First Mid’s price per share at the closing on July 28 of $39.90, the aggregate consideration to be paid by First Mid is approximately $106.3 million, subject to certain conditions and adjustments.

In addition, the company said it entered into an agreement to acquire approximately $225 million in loans and $280 million in deposits from a separate financial institution in the St. Louis market. The acquisition will include four commercial lenders who have the primary relationships with the acquired customers and two support personnel.

On a combined basis, the two transactions are estimated to be approximately 14 percent accretive to earnings per share in 2022 (excluding nonrecurring transaction expenses). Estimated tangible book value per share dilution to First Mid is expected to be earned back in 1.8 years under the crossover method. The Company expects to achieve cost savings of 30 percent of the combined noninterest expense. While revenue synergies are anticipated, they have not been included in the estimates. Upon closing of the transactions, the company expects to remain above well-capitalized standards on all regulatory capital ratios with a Tier 1 Leverage Ratio of approximately 8.8 percent, a Total Risk-Based Capital Ratio of approximately 13.0 percent and a Tangible Common Equity Ratio of approximately 8.4 percent.

“The geographic synergies and financial metrics of these transactions are compelling and consistent with our strategy of deepening our presence in the attractive St. Louis market,” said Joe Dively, chairman and chief executive officer of First Mid. “This combination will move us to 11th in market share with $1.8 billion of deposits within the St. Louis MSA. (Delta Chairman) Mike Ross and his family have built a strong franchise in Delta Bancshares Company and we are excited they selected us to continue that legacy as part of First Mid. Since 1892, Jefferson has been dedicated to the St. Louis area communities providing a significant commitment to its customers and we are excited about building upon that success with additional products and services to offer. We look forward to welcoming Delta’s shareholders, employees and customers to the First Mid team.”

“The proposed loan and deposit acquisition is similar to the one we completed in April of last year. We reviewed nearly all the loans and have extensive knowledge with both the borrowers and the commercial lenders. I anticipate this being a smooth transition and I couldn’t be more excited about the team that will be joining First Mid,” Dively concluded.

“First Mid is a like-minded partner that shares our culture of supporting communities by focusing on building strong relationships and excellent service to our customers,” said Ross, chairman of Delta. “The merger provides customers access to a larger banking network and an expanded array of services. Our shared community banking philosophies will provide significant value for our shareholders, employees and customers.”

John Dulle, president and chief executive officer of Jefferson and executive vice president of Delta commented, “We are excited to join forces with such a strong and growing organization in the St. Louis market. Our customers, employees and shareholders will benefit from the larger organization and an enhanced product set, including wealth management and insurance. First Mid’s commitment to the community banking model and the St. Louis market make it a great fit.”

The transaction with Delta has been unanimously approved by both Delta’s and First Mid’s board of directors and is expected to close in the fourth quarter of 2021, subject to regulatory approvals and the satisfaction of customary closing conditions.

The loan and deposit acquisition requires regulatory approval for the assumption of the deposits. This transaction is expected to close in September 2021.

For the Delta transaction, Stephens Inc. served as financial advisor and Schiff Hardin LLP served as legal advisor to First Mid. Piper Sandler & Co. served as financial advisor and Armstrong Teasdale LLP served as legal advisor to Delta.

A slide presentation relating to the transactions 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.

First Mid Bancshares Inc. is the parent company of First Mid Bank & Trust, N.A., First Mid Insurance Group, Inc. and First Mid Wealth Management Co. First Mid is a $5.8 billion community-focused organization that provides a full-suite of financial services including banking, wealth management, brokerage, Ag services, and insurance through a sizeable network of locations throughout Illinois, Missouri and Texas, and a loan production office in the greater Indianapolis area.

 

First Mid will file a registration statement on Form S-4 with the SEC in connection with the proposed transaction. The registration statement will include a proxy statement of Delta that also constitutes a prospectus of First Mid, which will be sent to the shareholders of Delta. Investors in Delta are urged to read the proxy statement/prospectus, which will contain important information, including detailed risk factors, when it becomes available. The proxy statement/prospectus and other documents which will be filed by First Mid with the SEC will be available free of charge at the SEC’s website, www.sec.gov, or by directing a request when such a filing is made to First Mid Bancshares, P.O. Box 499, Mattoon, IL 61938, Attention: Investor Relations; or to Delta Bancshares Company, 2301 Market Street, Saint Louis, MO 63103, Attention: John Dulle, Executive Vice President. A final proxy statement/prospectus will be mailed to the shareholders of Delta.

Participants in the Solicitation

First Mid and Delta, and certain of their respective directors, executive officers and other members of management and employees, are participants in the solicitation of proxies in connection with the proposed transactions. Information about the directors and executive officers of First Mid is set forth in the proxy statement for its 2021 annual meeting of stockholders, which was filed with the SEC on March 19, 2021. These documents can be obtained free of charge from the sources provided above. Investors may obtain additional information regarding the interests of such participants in the proposed transactions by reading the proxy statement/prospectus for such proposed transactions when it becomes available.

No Offer or Solicitation

This communication shall not constitute an offer to sell or the solicitation of an offer to buy securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction.