The First Bancshares, Inc. (NASDAQ: FBMS) (“First Bancshares” or “the Company”), parent company of The First Bank (“The First”) and Heritage Southeast Bancorporation, Inc. (OTCQX: HSBI) (“HSBI”), parent company of Heritage Southeast Bank, announced today execution of a definitive merger agreement, pursuant to which the Company has agreed to acquire HSBI. Upon the completion of the acquisition, Heritage Southeast Bank will merge with and into The First Bank. The proposed transactions will deepen The First’s presence in Georgia and Florida, including providing The First with entry points into the Atlanta, Savannah, and Jacksonville markets.
Heritage Southeast Bank operates 23 branches across Georgia and northeast Florida. As of June 30, 2022, Heritage Southeast Bank had total assets of approximately $1.7 billion, total loans of $1.1 billion, and total deposits of approximately $1.5 billion.
Upon completion of the transaction, the combined company is expected to have approximately $8 billion in assets, $7 billion in deposits, $5 billion in loans, and over 100 branches across five states in the Southeast.
M. Ray “Hoppy” Cole, Jr., President and CEO of The First Bancshares, Inc. said, “The announcement today of our proposed merger with HSBI 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. Individually, each transaction is extremely attractive and enhances our organizations’ franchise value. Collectively, they are transformative for our company providing meaningful market share in some of the most dynamic, fastest growing markets in the South.
“Heritage Southeast Bank is a true community bank with an experienced, well respected team of local bankers invested in the communities they serve. Culturally we are aligned and focused on growing our company by providing excellent service and building long term relationships with our clients.
“We are thrilled to be partnering with the team at Heritage Southeast Bank as we continue to create value for our stakeholders.”
Leonard A. Moreland, Chief Executive Officer of HSBI, added, “We are proud to join The First, which has a similar culture and approach to business as Heritage Southeast Bank. This partnership will add to the momentum that both banks are already experiencing in Georgia and Florida. As a group of lifelong community bankers, the Heritage Southeast Bank team is looking forward to continuing to provide outstanding service to our loyal customers, to be an employer of choice, and to expand our product offerings in support of our communities.”
Subject to the terms of the definitive merger agreement, HSBI shareholders will receive 0.965 shares of First Bancshares common stock for each share of HSBI common stock upon the closing of the transaction. The exchange ratio for the transaction is fixed, which means that the transaction value will fluctuate as a result of changes in the First Bancshares stock price. All outstanding options to acquire shares of HSBI common stock will be cashed out at the closing of the transaction. Based on the closing price of First Bancshares common stock of $29.68 as of July 26, 2022, the transaction is valued at approximately $207 million or $28.64 per share.
The definitive merger agreement has been unanimously approved by the boards of directors of each of HSBI and the Company, and the transaction is expected to close in the fourth quarter of 2022 or first quarter of 2023, following receipt of approvals from regulatory authorities, the approval of HSBI’s shareholders, the approval of the Company’s shareholders, and the satisfaction of other customary closing conditions. Certain shareholders of HSBI who are expected to own more than 4.9% of First Bancshares common stock following the completion of the merger have also agreed to be subject to a restriction on the sale of their First Bancshares shares for 90 days following the completion of the transaction.
Keefe, Bruyette & Woods, Inc, A Stifel Company, served as financial advisor to First Bancshares and rendered a fairness opinion to its board of directors. Alston & Bird LLP served as legal counsel to First Bancshares. D.A. Davidson & Co. also served as a financial advisor to First Bancshares and rendered a fairness opinion to its board of directors. Piper Sandler & Co. served as financial advisor and Nelson Mullins Riley & Scarborough LLP served as legal counsel to HSBI.