Cadence Bancorp. in Houston has agreed to buy State Bank Financial in Atlanta in the biggest bank deal of the year.
The $11 billion-asset Cadence said in a press release Sunday that it will pay $1.4 billion in stock for the $5 billion-asset State Bank. The deal, which is expected to close in the fourth quarter, priced State Bank at 250% of its tangible book value.
It is nearly twice as large as this year’s second-biggest bank deal, CVB Financial’s agreement to buy Community Bank in California for $878 million, and the premium is among the highest for a bank acquisition announced in 2018.
Cadence will have more than 100 branches, $12 billion in loans and $13 billion in deposits when the deal closes.
Joe Evans, State Bank’s chairman, will become vice chairman of Cadence’s board. Tom Wiley, State Bank’s vice chairman, will become chairman of Cadence Bank.
Cadence Bank will move its headquarters to Atlanta from Birmingham, Ala. Sam Tortorici, the bank’s CEO, will move to Atlanta.
“State Bank is an impressive organization with talented, experienced and customer-centered bankers,” Paul Murphy Jr., Cadence’s chairman and CEO, said in the release.
“We are pleased to combine these two strong, growing institutions which have been built on a common vision with shared values,” Murphy added. “When we went public a year ago, we said we wanted to be active with M&A. We said we would be selective and that we were looking for a gem. We found a gem with State Bank.”
Cadence said it expects the deal to be 6% accretive to 2019’s earnings per share and 7% accretive the following year, excluding $58 million in one-time charges. It should take less than three years to earn back the expected 4% dilution to Cadence’s tangible book value.
Cadence plans to cut about 30% of State Bank’s annual noninterest expense.
Goldman Sachs and Wachtell, Lipton, Rosen & Katz advised Cadence. Sandler O’Neill, Raymond James and Nelson Mullins Riley & Scarborough advised State Bank. FIG Partners provided a fairness opinion and Kilpatrick Townsend & Stockton advised State Bank’s independent directors committee.