Under the terms of the deal, MidSouth Bank shareholders would receive 0.2952 shares of Hancock Whitney stock, which translates to a premium of just under 7% of MidSouth's closing share price of $11.87 on the New York Stock Exchange on Tuesday.
The deal gives the much larger Hancock Whitney, which has headquarters in New Orleans and Gulfport, Mississippi, access to MidSouth's branches and depositors at a relatively cheap 5% premium.
"The real value in the transaction to us is their tremendous core deposit base," said Michael Achary, Hancock Whitney's CFO, who added that "there is significant overlap of market share and an opportunity to consolidate costs."
Hancock Whitney will add 32 MidSouth branches in Louisiana to its own network of 110 in the state, plus 10 out-of-state branches, mainly in Texas. MidSouth has about 500 employees, compared with Hancock Whitney's 4,000.
Achary said the bank hasn't yet decided where cuts will come, but he has told investors that when it has fully absorbed MidSouth the cost savings will add between 13 and 15 cents to earnings per share.
The deal is expected to close and the banks will converge their systems in the third quarter of 2019, pending regulatory and shareholder approvals.
MidSouth Bank, which had assets of $1.7 billion at the end of March, was founded during the gloomiest days of the mid-80s oilfield bust. During the recession of the late 2000s, the bank got national attention for billboards it took out between Lafayette and Houston, letting small businesses know it had $200 million to lend.
But the bank was hit hard by the collapse in oil prices after 2014, with a portfolio that had a high exposure to oil companies -- more than 20% of the total. Two years ago, MidSouth's board fired its founder, C.R. "Rusty" Cloutier, and tried to shore up its finances with a $55 million stock offering, the closure of 17 branches and a deep cut in shareholders' dividends.
"MidSouth is a bank that has a concentration of energy loans and certainly as they navigated the energy cycle they had some challenges," Achary said.
But Hancock Whitney president John Hairston said buying MidSouth now, after it has come through the worst of its oil exposure, represents a "low-risk transaction" that will bring them into new markets in Beaumont and the greater Dallas area, as well as northern Louisiana.
Acadiana Business Today: Hancock Whitney to buy Lafayette-based MidSouth: See details on deal, timing, more; Kitchen on Klinton to open location in Acadiana Mall
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