TUPELO, Miss. - In a significant move within the banking sector, Renasant Corporation (NYSE: NYSE:RNST) and The First Bancshares , Inc. (NYSE: NYSE:FBMS) have announced a definitive merger agreement. The all-stock transaction is valued at roughly $1.2 billion, based on Renasant's closing stock price as of July 26, 2024.
The merger, which has received unanimous approval from both companies' boards of directors, is anticipated to be completed in the first half of 2025, subject to customary closing conditions and shareholder and regulatory approvals.
The First, headquartered in Hattiesburg, Mississippi, currently operates 111 branches across five Southeastern states. As of June 30, 2024, The First reported total assets of approximately $8.0 billion, total loans of $5.3 billion, and total deposits of $6.6 billion.
The combined entity will create a banking franchise that spans six states in the Southeast, with projected total assets of $25 billion, total loans of $18 billion, and total deposits of $21 billion.
Renasant CEO Mitch Waycaster expressed respect for The First's operating philosophy and customer service dedication, highlighting the merger's potential to create a more valuable company with the scale needed to compete in the current operating environment. Kevin Chapman, Renasant's President, emphasized the benefits for customers, including expanded locations, services, and products.
Following the merger, M. Ray "Hoppy" Cole, President and CEO of The First, will become a Senior Executive Vice President and join the boards of directors of both Renasant and Renasant Bank. Additionally, three independent directors from The First will be appointed to the Renasant and Renasant Bank boards, with two more joining the Renasant Bank board.
Shareholders of The First are set to receive 1.00 share of Renasant common stock for each share of The First common stock they own. The transaction is expected to be immediately accretive to Renasant's estimated earnings per share, excluding one-time costs, and to positively impact key profitability and operating ratios over the long term.
Renasant has also announced the adoption of a Community Benefit Plan, effective upon the merger's completion. This five-year plan commits Renasant to an investment of $10.3 billion to support economic growth and financial inclusion in the combined footprint of Renasant and The First.
The merger is based on a press release statement and is subject to the customary closing process, including regulatory and shareholder approvals. The companies have advised their respective shareholders to read the forthcoming registration statement and joint proxy statement/prospectus carefully for more details about the merger.
In other recent news, Renasant Corporation has reported robust financial results for the second quarter of 2024, with earnings reaching $38.9 million, or $0.69 per diluted share. The solid performance was fueled in part by an increase in loan interest income, spurred by a rise in loan yields. The company also experienced a surge in traditional retail deposits, which exceeded $200 million.
In addition, non-interest income increased for the first time since the first quarter of 2023. Renasant Corporation has also announced the sale of its insurance business, Renasant Insurance, which is projected to impact the third quarter results.
These developments underscore the company's ongoing efforts to improve profitability and manage asset quality, particularly within the commercial loans sector. Analysts from various firms have noted that Renasant Corporation is focusing on organic growth and potential merger and acquisition opportunities within their current markets.
InvestingPro Insights
As Renasant Corporation (NYSE: RNST) prepares for its strategic merger with The First Bancshares, Inc., its financial health and market performance are of particular interest to investors. According to data from InvestingPro, Renasant's market capitalization stands at $2.03 billion, with a Price to Earnings (P/E) ratio of 13.65, reflecting its current earnings compared to its market value. The company's Price to Book ratio is 0.86, suggesting that the stock may be undervalued compared to the company's net asset value.
InvestingPro Tips highlight several aspects of Renasant's performance and outlook. Notably, the company has demonstrated strong returns over the last month and three months, with a one-month price total return of 21.45% and a three-month price total return of 26.82%. This robust performance is indicative of positive investor sentiment and could be a favorable sign for the merger's prospects. Moreover, Renasant has a track record of maintaining dividend payments for 32 consecutive years, which may appeal to income-focused investors.
Investors considering Renasant as part of their portfolio can access additional insights on InvestingPro, which offers a total of 8 InvestingPro Tips for a deeper analysis. For those looking to leverage these expert insights, use coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription. This comprehensive analysis could be invaluable in assessing the potential impact of the upcoming merger and Renasant's future in the banking sector.
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