425: Renasant Corporation to Acquire The First Bancshares, Inc. in $1.2 Billion All-Stock Deal

Renasant Corporation announced its planned acquisition of The First Bancshares, Inc. in an all-stock transaction valued at approximately $1.2 billion, aiming to create a leading six-state Southeastern banking franchise.

Summary

• Renasant Corporation (Renasant) and The First Bancshares, Inc. (The First) have entered into a definitive agreement for Renasant to acquire The First in an all-stock transaction valued at approximately $1.2 billion.
• The merger consideration is 1.00 share of Renasant common stock for each share of The First common stock.
• The transaction is expected to close in the first half of 2025, subject to regulatory and shareholder approvals.
• The combined company will operate across six states in the Southeast, with approximately $25 billion in total assets, $18 billion in total loans, and $21 billion in total deposits.
• The First's President and CEO, M. Ray Hoppy Cole, will join Renasant's and Renasant Bank's boards of directors as a Senior Executive Vice President, along with three additional independent directors from The First.
• Renasant has committed to a $10.3 billion, five-year Community Benefit Plan to support economic growth and financial inclusion in the combined footprint.
• The merger is expected to be immediately accretive to Renasant's earnings per share, excluding one-time transaction costs, and have a positive long-term impact on key profitability and operating ratios.
• Stephens Inc. is serving as Renasant's financial advisor, while Keefe, Bruyette & Woods, A Stifel Company, is advising The First.

Sentiment

Score: 8

Explanation: The document presents a positive outlook on the merger, highlighting strategic benefits, financial accretion, and community commitment. The tone is optimistic and confident about the future success of the combined company.

Positives

• The merger creates a larger, more competitive banking franchise in the Southeast.
• The transaction is expected to improve Renasant's profitability and operating efficiency.
• The Community Benefit Plan demonstrates a commitment to supporting local communities.
• The addition of The First's CEO and directors to Renasant's board brings valuable expertise and experience.
• The combined company will have a stronger balance sheet and a more diversified loan portfolio.

Risks

• The transaction is subject to regulatory and shareholder approvals, which may not be obtained.
• Integration of the two companies may be challenging and may not result in the anticipated benefits.
• Economic and competitive factors in the Southeast could impact the combined company's performance.
• The transaction may be more expensive to complete than anticipated.
• There is potential for adverse reactions from customers or employees.

Future Outlook

The combined company aims to leverage its increased scale and expanded footprint to compete more effectively in the Southeast, enhance customer service, and drive long-term shareholder value.

Management Comments

• Mitch Waycaster (Renasant CEO): 'As with Renasant, The First has expanded into some of the most dynamic, fastest growing markets in the Southeast. Together, we create a more valuable company with the meaningful scale needed to compete in today's operating environment.'
• Kevin Chapman (Renasant President): 'This merger will greatly benefit our current and future customers by expanding our locations, services and products.'
• M. Ray Hoppy Cole (The First President and CEO): 'Going forward, we are excited for our customers, bankers and shareholders to experience our next chapter as we join Renasant and 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.'

Industry Context

The announcement reflects the ongoing consolidation trend in the banking industry, driven by the need for scale, efficiency, and expanded market presence to compete effectively in a challenging operating environment.

Comparison to Industry Standards

• The combined company is projected to achieve a 1.3% ROAA and a 16% ROATCE, placing it among the top-quartile financial performers compared to publicly traded banks with $10-$50 billion in assets headquartered in the Southeast.
• The combined entity is expected to have a stronger balance sheet with a 2.0% ACL/Loans HFI and a Cash/Assets ratio of 11%, exceeding the median of its Southeast peers.
• The combined loan-to-deposit ratio is projected to be 86%, which is within the range of its Southeast peers.

Management Changes

Stakeholder Impact

• Customers: Benefit from expanded locations, services, and products.
• Employees: Anticipated retention of key employees and management, with advanced career development opportunities.
• Communities: Commitment to economic growth and financial inclusion through the Community Benefit Plan.
• Shareholders: Projected earnings accretion and enhanced shareholder value.

Next Steps

• Obtain regulatory approvals.
• Obtain shareholder approvals from both Renasant and The First.
• Complete the merger, expected in the first half of 2025.
• Integrate the operations of The First into Renasant.
• Execute the five-year Community Benefit Plan.

Key Dates