HBT Financial, Inc. (NASDAQ: HBT) (“HBT” or “HBT Financial”), the holding company for Heartland Bank and Trust Company (“Heartland Bank”), and Town and Country Financial Corporation (OTC: TWCF) (“Town and Country”), the holding company for Town and Country Bank, jointly announced in late August the signing of a definitive agreement pursuant to which HBT Financial will merge with Town and Country Financial Corporation and Town and Country Bank.
Town and Country Bank is a community bank serving markets in Central Illinois and St. Louis Metro East with a relationship-based approach. Specializing in commercial banking, Town and Country Bank had total assets of $875 million, total loans held for investment of $624 million, and total deposits of $744 million as of June 30, 2022. Based on the financial results as of June 30, 2022, the combined company would have had pro forma total assets of $5.1 billion, total loans held for investment of $3.1 billion, and total deposits of $4.4 billion.
Key benefits of the transaction include:
- Expands HBT Financial’s Illinois footprint with entry into the Springfield, St. Louis Metro East, Decatur, Jacksonville and Quincy markets
- Strong EPS accretion of 17 percent expected in 2023 (excluding transaction expenses, assuming transaction closes in first quarter of 2023)
- Short tangible book value dilution earnback period of 2.0 years using the crossover method
The transaction has been unanimously approved by each company’s board of directors, and stockholders collectively holding approximately 67.1 percent of the outstanding shares of Town and Country common stock have entered into a voting agreement pursuant to which they have agreed, among other things, to vote their shares of Town and Country common stock in favor of the transaction. The transaction is expected to close in the first quarter of 2023, subject to regulatory approvals and other customary closing conditions.
Fred Drake, Chairman and CEO of HBT Financial, said, “We are very pleased to announce our merger with Town and Country Financial Corporation, which is a highly compatible franchise that we have respected and admired for a long time. Operating with a similar relationship-based approach to commercial banking and conservative credit culture, Town and Country has built a high-performing institution with an attractive deposit base. Throughout our history, our disciplined approach to M&A has helped us to consistently enhance the value of our franchise. We believe that combining with Town and Country will help us continue generating profitable growth and create additional value for shareholders in the years ahead.”
Micah Bartlett, President and CEO of Town and Country Financial Corporation, said, “The Town and Country team is proud to have created a high-quality, high-performing financial services company. We are excited to partner with one of Illinois’ highest-performing banking organizations to create even more opportunities for our employees and customers. There are significant opportunities and challenges ahead in the banking business, and the combination of these two strong organizations makes us better equipped to flourish in the long run.”
David Kirschner, Executive Chairman of Town and Country Financial Corporation, added, “HBT Financial is an ideal merger partner for Town and Country that shares our commitment to superior customer service and supporting the communities in which we operate, and we believe this combination will provide many benefits for our shareholders, employees and customers. We look forward to completing this merger and further enhancing the banking experience that we provide our customers by leveraging the greater resources that HBT will provide.”
Under the terms of the merger agreement, Town and Country shareholders will have the right to receive either (i) 1.9010 shares of HBT’s common stock for each share of Town and Country, or (ii) $35.66 per share in cash, or (iii) a combination of cash and stock consideration, subject to adjustment and to the election and proration provisions in the Merger Agreement. Based upon the closing price of HBT common stock of $18.76 on August 22, 2022, the implied per share purchase price is $35.66 with an aggregate transaction value of approximately $101.4 million. Upon closing of the transaction, shareholders of Town and Country are expected to hold approximately 11% of HBT’s outstanding common stock.
The estimated transaction value represents a 1.39 multiple of Town and Country’s tangible book value as of June 30, 2022, and an 8.9 multiple of Town and Country’s expected earnings for 2022. A presentation with additional information on the transaction can be found on the Company’s investor relations website at ir.hbtfinancial.com.