Mississippi-based regional bank Renasant Corp. said Wednesday that it will acquire Georgia-based Heritage Financial Group, the parent of HeritageBank of the South for $258 million in stock.
The merger will move Renasant, based in Tupelo, into southern Georgia and northern Florida for the first time and slightly bolster the bank's position in the Atlanta and Birmingham, Alabama, markets.
"This merger will expand our market share, earnings growth and profitability and is expected to greatly benefit our current and future clients with expanded locations, services and products," Renasant Chairman and CEO E. Robinson McGraw said in a statement.
Heritage, based in Albany, Georgia, has $1.9 billion in assets. Renasant says the merger would give it $7.5 billion in assets and 171 offices across Mississippi, Alabama, Tennessee, Georgia and Florida. The banks say they hope to complete the merger before October 2015. Renasant says it would boost profits immediately and that there is "minimal" overlap of branches, making it easier to hold on to customers.
If shareholders of both banks approve, Heritage stockholders would get 0.9266 shares of Renasant stock for each share of Heritage. The $258 million value is based on a $27-a-share price for Renasant. Heritage stockholders would own about 20 percent of the combined bank and Renasant would add one Heritage director to its board. Heritage CEO O. Leonard Dorminey would become president of Renasant's Georgia operations.
"This merger will provide greater resources and operational scale that will allow us to grow larger as part of a larger community bank," Dorminey said in a statement.
It's a combination of two banks that have been gobbling up other institutions. Since 2010, Renasant has acquired two banks that had been seized by the Federal Deposit Insurance Corp., as well as the trust business of RBC USA. Then, last year, it took over Mississippi's First M&F Corp. in a $143 million stock deal. Heritage, founded in 1955 took over four Georgia banks that had been seized by the FDIC from 2011 through 2013. It also took over Alarion Financial Services of Ocala, Florida, earlier this year and has bought individual branches.
Renasant spokesman John Oxford couldn't say how many of Heritage's 600 employees might lose their jobs in the deal. Renasant projects that it can cut 20 percent of Heritage's costs, mostly in 2015. Renasant says it will incur $30 million in expenses in the combination.
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