The Bank Slate


A look at Origin’s two-year wait for BT Holdings

Origin Bancorp in Ruston, La., first approached BT Holdings in Quitman, Texas, about an acquisition two years before they agreed to a deal. 

The $7.9 billion-asset Origin agreed to buy the $2 billion-asset BT Holdings in February for $313.5 million in stock. 

Drake Mills, president and CEO of the $7.9 billion-asset Origin, originally reached out to Bob Dyer, who was BT’s chairman and CEO, in early 2019 to seek a meeting, according to a regulatory filing tied to the pending deal. Dyer, who was diagnosed with cancer, was unable to make a meeting happen – he passed away in October 2020. 

Mills waited three months before calling Jay Dyer, Bob Dyer’s son and BT Holdings’ executive vice president, to revisit negotiations. 

Mills met with Dyer and Lori Sirman, BT Holdings’ vice chairman and president, in Dallas on Feb. 8, 2021. It was the first of several in-person meetings that took place in Dallas and Louisiana over the next seven months. 

The companies signed a mutual confidentiality agreement in August 2021. 

Topics covered during September included general structure and valuation, similarities in cultures, customer service philosophies and potential synergies. 

Origin delivered its first draft of a letter of intent on Nov. 4, 2021. The letter proposed an all-stock deal that valued BT Holdings at $303.6 million, based on Origin’s stock price at the time. 

BT Holdings’ board had a “fulsome discussion” during a Nov. 15 special meeting that looked at the company’s strategic plan and “the potential benefits and risks” of continuing merger negotiations.

Origin revised the letter on Nov. 24, 2021, increasing the consideration to $314.9 million. The draft included a protection mechanism for Origin that would let it terminate the deal if BT Holdings’ tangible common equity at closing, subject to adjustment, fell below $204 million.

BT Holdings would have been allowed to walk away based on a “specified decline” in Origin’s stock price. Origin also proposed adding two outside directors to its board. 

Origin revised its offer again on Dec. 3 after negotiating with BT Holdings. It eliminated the termination right tied to BT Holdings’ TCE, replacing it with a consideration adjustment if the seller’s adjusted tangible equity fell below $201 million at closing (later lowered to $198 million). 

The new letter proposed adding Sirman and Dyer to the Origin board. The executives are also expected to become Origin employees. 

The companies executed the letter of intent on Dec. 21, 2021. The draft of the merger agreement was circulated on Jan. 24.

BT Holdings’ board approved the merger on Feb. 21. Origin’s board unanimously approved the deal two days later; it was announced on Feb. 24. 

The acquisition, which is expected to close in the second half of this year, priced BT Holdings at 151% of its tangible book value. 

The deal should be 12.7% accretive to Origin’s 2023 earnings per share. It should take a little more than two years for Origin to earn back an expected 3.6% dilution to its tangible book value.

Origin plans to cut about 30% of BT Holdings’ annual noninterest expenses. It expects to incur $18 million of merger-related expenses.

“I am excited to bring our strong teams together and expand our Texas franchise,” Mills said in the press release announcing the acquisition. 

“These two companies have been passionately committed to community banking for more than 100 years and are deeply rooted in the communities we serve,” he added. “I firmly believe that our cultural alignment and shared values provide an ideal combination to drive growth and long-term value for our employees, customers, communities and shareholders.”

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