Cullen/Frost Bankers, Inc.
) deal to acquire Odessa, TX-based WNB Bancshares Inc. was recently
approved by the Federal Reserve. The transaction is expected to
close by the end of this month.
Following the completion, all WNB Bancshares branches located in
Midland and Odessa would be merged into Frost financial centers on
Jun 20, 2014. Further, the San Antonio based branch would shutter
on the same day.
Earlier in Aug 2013, Cullen/Frost had signed a definitive merger
agreement with WNB Bancshares under which the latter was to merge
into Cullen/Frost. As per the agreement, the cash and stock deal
was valued at $220 million.
Cullen/Frost will issue 2 million shares, and fund the rest of the
deal with cash. The 2 million shares will be equal to the
volume-weighted average price of the company's common shares during
the 10 trading days prior to the deal's completion.
Further, the purchase price of $220 million can be revised upwards
or downwards, depending on WNB Bancshares' targeted book equity
value of $87 million during completion of the deal. Moreover, the
transaction is expected to contribute about 4% to Cullen/Frost's
2014 earnings per share excluding the restructuring charges.
Cullen/Frost's first-quarter 2014 earnings missed the Zacks
Consensus Estimate. Though the top line improved, results were
adversely impacted by high operating expenses. Notably, the
aforementioned deal resulted in $1.1 million acquisition-related
expenditure which inflated other expenses during the quarter.
Nevertheless, the merger deal will enable Cullen/Frost to
capitalize on the booming Midland and Odessa markets of The Permian
Basin, thereby further strengthening its Texas franchise. On the
other hand, the venture seems beneficial to the customers of WNB
Bancshares too as it facilitates access to Cullen/Frost's wide
range of financial products and services.
Cullen/Frost currently carries a Zacks Rank #3 (Hold).
Better-ranked banks worth considering include
BofI Holding, Inc.
Central Pacific Financial Corp.
CVB Financial Corp.
). All these stocks sport a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research?
Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report
BOFI HLDG INC (BOFI): Free Stock Analysis
CULLEN FROST BK (CFR): Free Stock Analysis
CENTRAL PAC FIN (CPF): Free Stock Analysis
CVB FINL (CVBF): Free Stock Analysis Report
To read this article on Zacks.com click here.