CrossFirst in Kansas buying Farmers & Stockmens Bank to move into Colorado, New Mexico

CrossFirst Bankshares in Leawood, Kansas, has agreed to pay $75 million in cash to acquire the $567.5 million-asset Farmers and Stockmens Bank in Clayton, New Mexico.

Monday’s deal, which is expected to close in the second half of 2022, would give the $5.5 billion-asset CrossFirst entry points into Colorado and New Mexico, along with expanded capacities in Small Business Administration and agricultural lending, as well as private banking, CEO Mike Maddox said in a press release.

“This transaction represents an exciting milestone for our company, allowing us to enter new, dynamic markets, and expand our capabilities by partnering with an impressive team of bankers,” Maddox said.

The 102-year-old Farmers & Stockmens operates five branches spread across Clayton, Roy and Des Moines in New Mexico and Denver and Colorado Springs in Colorado. CrossFirst expects the deal to serve as a springboard for further expansion opportunities in both states. The combined company would have assets of $6.2 billion, deposits of $5.3 billion and loans of $4.9 billion. CrossFirst has locations in Texas, Oklahoma, Missouri and Arizona, in addition to its home state, Kansas.

According to the SBA, Farmers & Stockmens closed 19 7(a) loans totaling $17 million between Oct. 1 and May 31. CrossFirst closed 10 7(a) loans totaling $8.5 million in the same span. The 7(a) program is the SBA's largest, with fiscal 2022 originations totaling $16.3 billion through June 10.

CrossFirst is forecasting cost savings of 20% of Farmers & Stockmens' noninterest expense base, which totaled $5.3 million in the quarter ending March 31 and $17.9 million in 2021. CrossFirst projects the deal to be 11.7% accretive to earnings per share in 2023. CrossFirst reported earnings of $16.8 million, or 33 cents per share, for 2022’s first quarter.

“We are confident this combination will create extraordinary value for our stockholders, our clients, our employees, and our communities,” Maddox said.

While Central Bancorp, the corporate parent of Farmers and Stockmens, has agreed to sell Farmers & Stockmens, it plans to retain its wealth management subsidiaries, the Corundum Group and Corundum Trust Co.

“We have built a successful and differentiated franchise in our local communities, and this combination will provide our clients with the full breadth of CrossFirst’s comprehensive set of products, services and systems,” Farmers & Stockmens CEO Scott Page said in the press release.

Page, who served as CEO of CoBiz Bank in Denver from 2014 to 2018, is expected to stay on with the merged company, alongside Farmers & Stockmens market executives for Colorado and New Mexico and the leaders of its SBA lending and private banking teams.

Monday’s deal comes less than a week after Maddox announced that he had ceded the role of president of at the holding company's CrossFirst Bank subsidiary to Chief Credit Officer Randy Rapp. Maddox remains president and CEO of CrossFirst Bankshares and CEO of CrossFirst Bank. Maddox said he opted for a less prominent role managing CrossFirst Bank’s day-to-day operations to focus more on the company’s overall strategy.

The deal’s $75 million price tag is 1.63 times Farmers and Stockmens' tangible book value. For CrossFirst, it would result in tangible-book-value dilution of 5.8% with an earn-back period of 2.7 years.

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