Spirit of Texas expanding eastward with latest deal

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Spirit of Texas Bancshares in Conroe has agreed to buy Chandler Bancorp in Tyler, Texas.

The $1.9 billion-asset Spirit of Texas said in a press release Wednesday that it will pay $66.2 million in cash and stock for the $349.1 million-asset parent of Citizens State Bank. The deal, which is expected to close in the fourth quarter, priced Chandler at 170% of its tangible book value.

Spirit also said it will raise roughly $49.5 million by selling up to 2.3 million shares of stock. The proceeds will be used to pay the $19.2 million cash portion of the acquisition and to repay a $21 million credit line. The remaining funds could be used for additional acquisitions.

Citizens has seven branches, $275 million in loans and $266 million in deposits.

Spirit said it expects the deal to be immediately accretive to its earnings per share. The company plans to cut a quarter of Citizens' annual noninterest expense.

It would be Spirit's 10th bank acquisition since 2008 and its third since its May 2018 initial public offering.

"Together, we will be better positioned to take advantage of organic growth and acquisition opportunities that will enable us to better serve our customers and further enhance shareholder value," Dean Bass, Spirit's chairman and CEO, said in the release.

David Monk, Citizens' president and CEO, will join Spirit. Two Citizens directors, including Greg Kidd, the bank's chairman, will join Spirit's board.

Kidd said in the release that selling to Spirit will allow Citizens to provide its customers with more products and services, while offering larger lending limits to commercial clients.

"We are confident that this merger will make us ever more competitive in this great ast Texas market and allow us to deepen our relationships and increase business opportunities," Kidd said.

Stephens and Hunton Andrews Kurth advised Spirit. Hillworth and Fenimore, Kay, Harrison & Ford advised Chandler.

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