Heritage Southeast Bancorp. in Jonesboro, Ga., which tried unsuccessfully to sell its bank to a credit union, has agreed to be sold to First Bancshares in Hattiesburg, Miss.
The $6.3 billion-asset First Bancshares said in a press release Wednesday that it will pay $207 million in stock for the $1.7 billion-asset Heritage Southeast. The deal, which is expected to close in the fourth quarter or early next year, priced Heritage Southeast at 181% of its tangible book value.
Heritage Southeast has 23 branches, $1.1 billion of loans and $1.5 billion of deposits.
The acquisition “and the upcoming closing of our merger with Beach Bank represent continued execution on our strategic plan of creating a high-performing community bank in the Southeast,” Hoppy Cole, First Bancshares’ president and CEO, said in the release.
“Each transaction is extremely attractive and enhances our organizations’ franchise value,” Cole added. “Collectively, they are transformative for our company providing meaningful market share in some of the most dynamic, fastest growing markets in the South.”
First Bancshares said the deal should generate double-digit earnings accretion once cost savings kick in. It should take less than three years for First Bancshares to earn back the less than 8% dilution to its tangible book value.
First Bancshares plans to cut about 30% of Heritage Southeast’s annual noninterest expenses, or $48.5 million. The company expects to incur $26 million of merger-related expenses.
Leonard Moreland, Heritage Southeast’s CEO, will become First Bancshares’ Georgia president.
Heritage Southeast agreed in March 2021 to sell its bank to VyStar Credit Union in Jacksonville, Fla., for $195.7 million in cash. The parties agreed to terminate the deal earlier this year after they were unable to secure regulatory approval.
Keefe, Bruyette & Woods; D.A. Davidson; and Alston & Bird advised First Bancshares. Piper Sandler and Nelson Mullins Riley & Scarborough advised Heritage Southeast.