MidSouth Bancorp (MSL) in Lafayette, La., is expanding northward with an agreement to buy PSB Financial in Many, La., for $39 million.
MidSouth has been aggressively scoping out targets in Louisiana and East Texas with assets between $100 million and $500 million. Peoples State Bank, the banking unit for the $495 million-asset PSB, has 16 branches in central and northern Louisiana and Texas. The deal would expand MidSouth's presence north from the Acadiana region to Texarkana.
The $1.4 billion-asset MidSouth last year bought First Louisiana National Bank of Breaux Bridge, La., and earlier this year, it said it would buy two branches in Baton Rouge from rival Hancock Holding (HBHC).
The deal would give PSB the resources to expand further into certain markets. The combined bank would have $1.9 billion of assets and 58 branches.
"Both Peoples and MidSouth experienced remarkable growth during an exceptionally challenging economic environment, but everyone in this industry understands that in this burdensome and costly regulatory environment we must consolidate to remain competitive," Leonard Q. Abington, chairman and chief executive of PSB, said in a news release.
PSB shareholders would receive roughly $16 million in cash, 756,534 shares of MidSouth common stock and $10 million in liquidation value on 4% noncumulative convertible preferred stock. The deal also would provide for an additional cash payment of as much as $2 million based on the resolution of certain loans over a three-year period after the acquisition.
Additionally, PSB's preferred stock issued to the Treasury Department as part of the Troubled Asset Relief Program would be redeemed. PSB received $9 million under the program in February 2009.
MidSouth expects the deal to be accretive to earnings per share by 30% in 2013 based on pretax expense savings of 25%, excluding merger and conversion-related costs of roughly $500,000.
After the transaction closes, Abington would join the board at MidSouth and its bank. John J. Blake III, president and CEO of Peoples State Bank, would become regional president of MidSouth Bank's Timber region.
The deal is expected to close in the fourth quarter. Conversion of Peoples' branches is expected to happen by March 30.