Roughly two months after putting itself up for sale after its plan for raising fresh capital fell through, BancTrust Financial Group (BTFG) in Mobile, Ala., has found a buyer.
The $2 billion-asset BancTrust announced early Tuesday that it is selling itself to Trustmark Corporation (TRMK) in Jackson, Miss., for about $55.4 million in stock. As a condition of the deal, the $9.8 billion-asset Trustmark will also repay the $50 million BancTrust owes to the Treasury Department as part of the Troubled Asset Relief Program.
The deal, expected to close in the fourth quarter, would be Trustmark's second this year following its acquisition in March of Bay Bank & Trust in Panama City, Fla. Its acquisition of BancTrust would add 49 branches in Alabama and Florida, as well as $1.8 billion of deposits and $1.3 billion of loans.
The deal also comes with risks, however. BancTrust in March had to revise its earnings to reflect a $50 million loss in the fourth quarter after a review of its loan portfolio forced it to set aside more funds for problem loans. At the same time, the company announced that it called off its deal to raise capital by selling shares to two private-equity groups after determining that the price they were offering was insufficient.
In a news release, Trustmark President and Chief Executive Gerard Host said that his company conducted multiple reviews of BancTrust's real estate portfolio before striking the deal.
"We understand the inherent credit risk of the portfolio, and we have a proven record of managing real estate related assets in a challenging economic environment," he said.
Trustmark is paying the equivalent of $3.08 for each share of BancTrust stock, or a 62% premium above BancTrust's closing price Friday.
W. Bibb Lamar Jr., BancTrust's president and CEO, said the deal is a win for BancTrust's customers and investors. "Trustmark’s reputation, financial strength and capabilities will enhance our ability to meet the expanding needs of our customers," he said. "Our shareholders will be receiving shares of a very strong, successful banking company.”