Hancock to buy MidSouth Bancorp for $213 million
Hancock Whitney in Gulfport, Miss., has agreed to buy MidSouth Bancorp in Lafayette, La.
The $28.2 billion-asset Hancock said in a press release Tuesday that it will pay $213 million in stock for the $1.7 billion-asset MidSouth. The deal, which is expected to close late in the third quarter, priced MidSouth at 140% of its tangible book value.
“The merger fits perfectly with our stated strategies of adding scale and enhancing value through in-market, financially accretive, low-risk transactions that strengthen our current franchise and provide opportunities for future growth,” John Hairston, Hancock’s president and CEO, said in the release.
MidSouth has $900 million in loans and $1.4 billion in deposits. The deal will provide Hancock with its first branches in Dallas.
"The executive leadership of MidSouth views this all-stock transaction as an opportunity to allow our customers, employees, and shareholders to realize benefits of scale that would have taken years for us to accomplish independently," Jim McLemore, MidSouth's president and CEO, told employees, based on remarks included in a regulatory filing.
"Whenever mergers are under way our competitors assume there will be disruption and they redouble their efforts to attack our customer base," McLemore added. "Let’s prove them wrong by staying focused on our customers and executing our jobs flawlessly. Our team members have exhibited a remarkable ability to stay focused on our clients over the last several years through change and we need to do all we can to stay focused on our clients."
Hancock said it plans to cut about half of MidSouth’s annual expenses. The deal should be accretive to Hancock’s earnings per share in the first quarter of 2020.
MidSouth had been working on a turnaround since it abruptly fired founder and CEO Rusty Cloutier in April 2017. At that time, the company had a large concentration of oil and gas credits that totaled nearly a fifth of all loans. Moreover, it owed 9% interest on millions of dollars in capital from the Small Business Lending Fund.
MidSouth raised capital, unloaded energy credits, sold and closed branches and added a veteran turnaround expert to its management team. It also sliced its quarterly dividend. It had $128 million of energy loans at Sept. 30, down to 13.3% of total credits.
The moves came at a huge cost.
Since firing Cloutier, MidSouth has lost more than $46 million, excluding losses tied to tax reform; it has been in the red in seven of its last eight quarters. The company has recorded $19.6 million in loan-loss provisions over the past two quarters.
Morgan Stanley and Wachtell, Lipton, Rosen & Katz advised Hancock. Sandler O’Neill and Troutman Sanders advised MidSouth.