Renasant will enter Louisiana and strengthen its presence in Florida by acquiring its smaller rival, The First Bank.
Published July 30, 2024
The First, which currently has 111 branches across Mississippi, Louisiana, Alabama, Florida and Georgia, had about $8 billion in assets, $5.3 billion in loans and $6.6 billion in deposits, as of the end of June.
Renasant has about 185 locations across Mississippi, Tennessee, Alabama, Florida, Georgia, North Carolina and South Carolina, and about $17.5 billion in assets. The merger gives Renasant an entrance into Louisiana and strengthens its presence in Florida and along the Gulf Coast, Renasant President Kevin Chapman said.
Renasant aims to shave 30% of The First’s non-interest expenses for 2025, according to a presentation on the proposed deal . “Together, we create a more valuable company with the meaningful scale needed to compete in today’s operating environment,” Waycaster said in the news release.
In connection with the deal – the largest Renasant has ever done – the lender announced a $10.3 billion, five-year community benefit plan “to foster economic growth, access to financial services and inclusion in Renasant’s and The First’s combined footprint,” the release said.
When asked about executives’ confidence of receiving regulatory approval, Waycaster noted both banks have good relationships with their respective regulators, and there’s been plenty of “intentionality” during the process. The lender has reached out and sought input from regulators, and “they’ve been very helpful as far as guidance, as we think about the application process and moving forward,” he told analysts during Tuesday’s call.
M. Ray “Hoppy” Cole, president and CEO of The First, will become a senior executive vice president and join Renasant’s board of directors. The merger will “form a leading Southeast regional bank with the scale and capabilities of a larger bank while maintaining the community bank touch our customers have come to expect,” Cole said in the news release.
The combined lender will have a 278% commercial real estate concentration ratio, according to the presentation.
A willingness to lend in the CRE market is “a core competency of The First as well as Renasant; we understand it, we underwrite it well, we manage it well,” David Meredith, Renasant’s chief credit officer, told an analyst who asked about the bank’s plans to trim the CRE ratio post-deal close. “So I don’t think we’ll see a material decrease in those dollars, or a material increase, but we’ll continue to probably operate within that range.”
Meredith also defended both lenders’ CRE office exposure, saying it’s “different than what we see in the marketplace today. We’re talking about single-story, small office properties” in cities such as Hattiesburg, Mississippi; Valdosta, Georgia; and Decatur, Alabama.
The First’s shareholders will receive one share of Renasant common stock for each share of The First common stock, under the merger agreement, and all options of The First will be cashed out at their in-the-money value at closing. Renasant’s closing stock price Friday puts the implied transaction value at about $37.09 per The First share.
The agreement’s terms note that The First will pay a $40 million termination fee if the deal is called off, under certain circumstances, according to a securities filing .
The Renasant-The First deal follows last week’s announcement that West Virginia’s WesBanco intends to buy Ohio’s Premier Financial in a $959 million deal.
