Prosperity Bancshares Inc. in Houston has struck its second deal in three months, announcing Friday that it is buying East Texas Financial Services Inc. in Tyler in an all-stock deal valued at $20.4 million.
East Texas Financial is the parent of the First Federal Bank Texas, which has $211 million of assets and four branches in and around Tyler. Prosperity said in a news release that it would exchange 510,000 shares of its stock for all the outstanding shares of East Texas Financial.
Based on Prosperity's Thursday closing price of $38.51, the deal is valued at 1.12 times the seller's book value. The deal would end East Texas Financial's long search to find a merger partner.
The company, which has struggled with credit quality issues in recent years, had been looking for a buyer since its deal to be acquired by a private investor group fell through in August 2010. "We completed a thorough process and we are confident we reached a deal that is in the best interest of our stockholders and one that will receive all necessary regulatory approvals," Derrell W. Chapman , East Texas Financial's president and chief executive said in a news release.
Friday's news follows Prosperity's announcement in September that it is buying Texas Bankers Inc. in Austin in a stock swap. The two acquisitions would end a deal-making drought for Prosperity, which for years was one of the industry's most acquisitive companies.
The $9.6 billion-asset Prosperity acquired roughly two-dozen banks last decade, but it hadn't completed a whole-bank deal since it bought the failed Franklin Bank in Houston in late 2008. "We are excited about expanding our presence in the Tyler market," said David Zalman, Prosperity's chairman and CEO in a press release. "Following the merger, Prosperity will have 23 banking centers across east Texas." The East Texas Financial purchase is expected to close in the first half of 2012.