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Eastman National Bank merging with Wichita, Tulsa banks

Team Radio Marketing Group - July 17, 2017 11:12 am

According to a story published by NASDAQ GLOBE NEWSWIRE on Monday, Equity Bancshares, Inc., the parent company of Equity Bank in Wichita, announced today it has entered into two definitive merger agreements with Oklahoma-based banks.

Equity entered into definitive merger agreements with Eastman National Bancshares, Inc., the parent of The Eastman National Bank of Newkirk, Oklahoma, and Cache Holdings, Inc., the parent company of Patriot Bank of Tulsa, Oklahoma. Equity intends to close the mergers simultaneously during the fourth quarter of 2017.

After the mergers conclude, Equity will have completed 13 successful integrations in its first 15 years, and five mergers since the Company’s initial public offering on Nov. 11, 2015. These newest mergers add a fourth state – Oklahoma – to Equity’s Midwestern footprint, and each is within close proximity to Equity’s corporate office in Wichita. Eastman’s headquarters is 55 miles from Wichita, and 10 miles from the Kansas and Oklahoma border. Tulsa is 170 miles from Wichita.

“Each time we partner with a strong, local community bank, we’re fortunate to work alongside a group of bankers who match up with our philosophy of strong credit culture, significant community involvement, and commitment to our customers. Eastman and Patriot are no exception. We’re pleased to welcome employees and leadership with similar values to ours,” said Brad Elliott, Chairman and CEO of Equity. “We believe these mergers continue our model of adding markets that help build our footprint, like Ponca City and Newkirk, complemented by metropolitan areas of Kansas City, Wichita, and now Tulsa. We’re proud to offer sophisticated, innovative financial products and services coupled with the customization and local decision-making customers expect from a community bank.”

Equity reported $2.40 billion in consolidated total assets, net loans of $1.51 billion, and deposits of $1.82 billion as of March 31, 2017. Equity operates 37 Equity Bank branch offices in Arkansas, Kansas and Missouri. After consummation of the transactions, which are expected to occur in the fourth quarter of 2017, Equity expects to be approximately $3.01 billion in consolidated total assets, including 42 branch offices across the four-state footprint of Arkansas, Kansas, Missouri and Oklahoma. The combined institution is expected to have $2.08 billion in loans and $2.29 billion in deposits.

Eastman National Bank and Eastman National Bancshares, Inc.

Eastman principally conducts banking business through four full-service branch locations in Kay County, Oklahoma, including branches in Ponca City, Oklahoma and the original Eastman branch in Newkirk, Oklahoma, which was established in 1893 as The Eastman National Bank of Newkirk.

“We’re pleased to announce our next chapter and continued, dedicated service to the Ponca City and Newkirk communities. We’re particularly pleased to work with Equity Bank to deliver straightforward financial solutions with the local decision-making that our customers have trusted for more than 100 years,” said Mark Detten, President and CEO of Eastman.

“Our customers and communities will benefit from additional products, services and solutions of a strong bank with a regional network committed to Kay County and our community bank customers,” Detten said.

As of March 31, 2017, Eastman had $254.0 million in total assets, $181.5 million in loans and $217.6 million in deposits. Eastman ranks No. 2 in FDIC deposit market share in Kay County, Oklahoma, with share of 24.31% as of June 30, 2016, according to FDIC data published by SNL Financial. Eastman’s local leadership will continue to serve Kay County as part of Equity, including Detten, Senior Vice President Darin Kirchenbauer and Senior Vice President Erin Liberton.

At closing of the transaction, which is expected to occur in the fourth quarter of 2017, Eastman will merge with and into Equity, subject to receipt of customary regulatory approvals and closing conditions, including Eastman shareholder approval. Under the terms of the definitive agreement, approved by the boards of directors of Equity and Eastman, at the effective time of the merger the shareholders of Eastman will have the right to receive an aggregate consideration of approximately $242.72 per share. Equity will acquire all outstanding shares of Eastman common stock. The definitive agreement provides that each outstanding share of Eastman common stock will represent the right to receive a fixed exchange ratio of 6.1389 shares of Equity Class A common stock and $48.91 in cash.

Based on Equity’s closing stock price on July 14, 2017 of $31.57 per share, the aggregate transaction value is approximately $46.6 million. The actual aggregate transaction value may be subject to equity adjustments prior to closing, as further set forth in the definitive merger agreement.

Equity expects the merger to be approximately $0.20 accretive to diluted earnings per share in 2018, and $0.21 accretive to earnings per share in 2019, with transaction-related and one-time costs of approximately $4.6 million. Equity expects the merger to be approximately 3.2% dilutive to tangible book value per share at closing, inclusive of the estimated purchase accounting adjustments, and expects the tangible book value earnback to be 2.8 years. Finally, Equity expects to remain above all “Well Capitalized” capital ratios as defined by regulatory guidelines, inclusive of the impact of all estimated purchase accounting adjustments.

Patriot Bank and Cache Holdings, Inc.

Patriot Bank of Tulsa, Oklahoma was established in 1995 and focused on commercial loans and treasury services to the Tulsa community. Tulsa is the second-largest metropolitan statistical area in Oklahoma, with a diverse economy that includes wholesale and retail trade, professional and business services, government and health services as its largest segments.

“We’re pleased to partner with a bank that shares many of our core principles and values, and provides honest, straightforward service to our business clients,” said Mike Bezanson, Chairman and CEO of Patriot. “Since founding Patriot Bank, we’ve worked tirelessly to meet the financial needs of our commercial and consumer clients. We’re pleased to add the products, services, and entrepreneurial spirit of a bank that will help our local loan officers and professionals offer quick, local decisions, and is committed to Tulsa.”

As of March 31, 2017, Patriot had total assets of $320.0 million, loans of $287.7 million, and $271.6 million in deposits. Patriot ranks No. 20 in FDIC deposit market share out of 291 institutions in the Tulsa metropolitan statistical area, with a market share of 1.01% as of June 30, 2016, according to FDIC data published by SNL Financial.

At closing of the transaction, which is anticipated to occur in the fourth quarter of 2017, Patriot’s parent company will merge with and into Equity, subject to receipt of customary regulatory approvals and closing conditions, including the approval of Patriot shareholders. Patriot’s long-tenured management team of Bezanson, Jay Morey, and Philip Houchin will continue to serve Equity’s Tulsa market.

Under the terms of the definitive agreement, approved by the boards of directors of Equity and Patriot, at the effective time of the merger the shareholders of Patriot will have the right to receive an aggregate consideration of approximately $2,288.33 per share. Equity will acquire all outstanding shares of Patriot common stock. The definitive agreement provides that each outstanding share of Patriot common stock will represent the right to receive a fixed exchange ratio of 53 shares of Equity Class A common stock and $615.12 in cash.

Based on Equity’s closing stock price on July 14, 2017 of $31.57 per share, the aggregate transaction value is approximately $50.5 million. The actual aggregate transaction value may be subject to equity adjustments prior to closing, as further set forth in the definitive merger agreement.

Equity expects the merger to be approximately $0.15 accretive to diluted earnings per share in 2018 and $0.16 accretive in 2019, with transaction-related and one-time costs of approximately $2.7 million. Equity expects the merger to be approximately 2.1% dilutive to tangible book value per share at closing, inclusive of the estimated purchase accounting adjustments, and expects the tangible book value earnback to be approximately 2.8 years. Finally, Equity expects to remain above all “Well Capitalized” capital ratios as defined by regulatory guidelines, inclusive of the impact of all estimated purchase accounting adjustments.

Equity Bancshares, Inc. was advised by and received fairness opinions on each transaction from Stephens Inc., and Norton Rose Fulbright US LLP as legal counsel.

Eastman National Bancshares, Inc. was advised by and received a fairness opinion from Keefe, Bruyette & Woods, and Hartzog, Conger, Cason & Neville as legal counsel.

Cache Holdings, Inc. was advised by and received a fairness opinion from D.A. Davidson & Co. and McAfee & Taft, P.C. as legal counsel.

 

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