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First NBC to Buy State Investors; Accretive to 2015-16 EPS - Analyst Blog


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Strengthening its footprint in the New Orleans metropolitan area, First NBC Bank Holding Company ( NBCB ) is set to acquire State Investors Bancorp, Inc. ( SIBC ). The merger-deal is expected to close in second-quarter 2015.

Louisiana-based State Investors - the holding company of State-Investors Bank - operates four full service banking offices, spread in the New Orleans metropolitan area. As of Sep 30, 2014, State Investors had assets of $269 million, loans of $213 million and deposits of $158 million.

Merger Agreement

As per the merger deal, for every State Investors share held at the time of the merger, shareholders of State Investors will get a cash amount of $21.25, resulting in a total cash consideration of around $49million. Further, the holders of stock options will get cash consideration equal to the difference between $21.25 and the exercise price of the option, for buying shares of State Investors common stock. Notably, for the outstanding stock options, First NBC expects to pay around $2 million.

An Attractive Deal

The acquisition of the 120 year old bank will not only boost the loan and deposit balances of First NBC, but also brings certain other benefits.

It is anticipated that First NBC will realize annual pre-tax expense reductions of around 55% of the annual operating expenses of State Investors. First NBC will be able to fully achieve the cost savings on an after-tax basis during the first full year of operations, upon closure of the merger. On an after-tax basis, acquisition and conversion related costs are projected to be around $3.4 million.

The deal is expected to be around 2.3% accretive to First NBC's earnings per share in 2015 and 4.4% accretive in 2016. Further, the transaction is expected to fetch an internal rate of return of more than 17%, exceeding First NBC's cost of capital.

President and Chief Executive Officer of First NBC, Ashton J. Ryan, Jr. stated, "This transaction enables us to further expand our presence within the New Orleans metropolitan area, our primary market." He further added "We also believe that the significant cost savings expected to result from the merger will enhance shareholder value."

Other

Concurrent with the latest press release, First NBC mentioned that it will continue to trade on the NASDAQ Global Select Market with a new ticker symbol "FNBC" instead of the existing symbol "NBCB". This will be effective from Jan 1, 2015.

Currently First NBC carries a Zacks Rank #2 (Buy). Some better-ranked stocks in the south-east banking space include Customers Bancorp, Inc. ( CUBI ) and First Community Bancshares, Inc. ( FCBC ). Both the stocks sport a Zacks Rank #1 (Strong Buy).


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FIRST COMM BCSH (FCBC): Free Stock Analysis Report

FIRST NBC BANK (NBCB): Free Stock Analysis Report

CUSTOMERS BANCP (CUBI): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



This article appears in: Investing , Business , Stocks
Referenced Symbols: FCBC , CUBI ,



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