Executives at Hancock Holding Co. and Whitney Holding Corp. told investors Wednesday that their $1.5 billion all-stock deal would create one of the largest community banks in the Gulf Coast region.
Hancock, of Gulfport, Miss., is buying the larger New Orleans-based Whitney. Hancock would gain an entree into Texas and Louisiana and a bigger presence in Florida and Mississippi.
"This truly enhances our strategic position and our relevance," said Hancock's chief executive, Carl J. Chaney, during the investor conference call. "At end of day we'll be the envy of the financial institutions arena."
The deal is among the larger acquisitions in terms of asset size and price announced by community banks this year. Including Hancock's $8.3 billion of assets, the combined institution would have approximately $20 billion of assets and 305 branches across five states from Texas to Florida.
It would be the fourth most expensive deal announced among community banks this year based on the estimated price of 170%-to-tangible-book value. The highest price-to-tangible-book value was Eastern Bank Corp.'s purchase in November of Wainright Bank & Trust Co. for $163 million, or 200.2% of tangible book, according to data provided by Sandler O'Neill & Partners L.P.
Hancock agreed to offer Whitney shareholders 0.418 shares of Hancock common stock for each share of Whitney stock. The $15.48 per share value of Whitney shares is based on Hancock's Dec. 20 closing price and represents a 42% premium to Whitney's closing price on the same date.
Hancock said it will also seek to raise $200 million to achieve a 8% tangible common equity ratio. It anticipates that the transaction will be 10% accretive to earnings in 2012 and 19% accretive once the companies are fully integrate in 2013.
At the closing, and subject to regulatory approval, Hancock has also agreed to repay Whitney's $300 million investment from the Treasury Department under the Troubled Asset Relief Program.
The companies expect to complete the merger in the second quarter of 2011.