Coronavirus emerges as risk factor for pending bank mergers
Bankers are warning that the coronavirus outbreak could create challenges for pending mergers.
Pacific Premier Bancorp in Irvine, Calif.; First Horizon National in Memphis, Tenn.; and South State in Columbia, S.C.; have included the pandemic on a list of risk factors that could impact their deals.
The $11.8 billion-asset Pacific Premier is acquiring Opus Bank in Irvine. The $43 billion-asset First Horizon is planning to merge with Iberiabank in Lafayette, La., while the $15.9 billion-asset South State has a pending deal with CenterState Bank in Winter Haven, Fla.
While the disclosures are precautionary, they reveal how the disease, along with the federal response, could complicate mergers that have been announced but have not yet closed.
“Given the ongoing and dynamic nature of the circumstances, it is difficult to predict the impact of the coronavirus outbreak on businesses of Pacific Premier, Opus and the combined company,” Pacific Premier said a registration statement filed Monday for the $1 billion Opus deal.
“There is no guarantee that efforts by Pacific Premier, Opus and the combined company to address the adverse impacts of the coronavirus will be effective,” the filing added.
First Horizon amended its registration statement for the $3.9 billion Iberiabank deal on March 9 to include similar language. The same warning was included in South State's filing for its $3.2 billion merger with CenterState.
The companies noted that future developments, including the severity of the outbreak and efforts to contain it, could adversely affect their financial conditions, along with those of the banks involved in the pending mergers.
Read more: Complete coverage of the coronavirus impact
Each filing noted that the mergers could be delayed, or become more costly to complete or integrate, depending on what happens with the pandemic.
While neither company set dates for shareholder meetings, First Horizon and Pacific Premier reiterated in their filings that they expect to complete their mergers in the second quarter. South State-CenterState remains on track for a third quarter closing.
First Horizon has a separate deal to buy 30 branches from Truist Financial in Charlotte, N.C.
“We remain committed to our merger of equals with Iberiabank and our acquisition of the Truist branches,” Bryan Jordan, First Horizon’s chairman and CEO, told employees in a Monday letter included in a separate regulatory filing.
“The fundamentals of both transactions remain intact,” Jordan added. “They will make us a better and stronger company. Respective balance sheets and cash reserves remain strong. In addition, I am optimistic that together we are taking the appropriate steps to successfully integrate the branch acquisition and merger to build an even stronger combined company."