Southern Missouri Bancorp, Inc. (NASDAQ: SMBC, “Southern
Missouri”), the parent corporation of Southern Bank, and Central
Federal Bancshares, Inc. (“Central”), the parent corporation of
Central Federal Savings & Loan Association, today announced the
signing of a definitive merger agreement whereby Southern Missouri
will acquire Central in an all-cash transaction. As part of the
transaction, Central Federal will be merged with and into Southern
Bank.
Central operates one location in Rolla, Missouri. At September
30, 2019, Central’s consolidated assets were $69 million, including
loans, net of allowance, of $53 million, while deposits totaled $46
million.
Southern Missouri operates 47 locations in Missouri, Arkansas,
and Illinois, and reported consolidated assets at September 30,
2019, of approximately $2.3 billion, including loans, net, of $1.9
billion, and total deposits of $1.9 billion.
Under the terms of the merger agreement, unanimously approved by
the boards of directors of Central and Southern Missouri, Central
shareholders will receive $15.90 in cash for each share of Central
common stock, subject to adjustment for Central’s capital at
closing. The deal is valued at approximately $24.0 million,
inclusive of the retirement of debt outstanding under Central’s
Employee Stock Ownership Plan.
“Southern Missouri itself was originally a savings and loan
association, and we retain an understanding of the needs and
expectations of the customers of these organizations, as well as
the commitment to service by their team members,” stated Greg
Steffens, President and CEO of Southern Missouri. “We’re very
excited to have the opportunity to serve Rolla, Missouri, and we
look forward to welcoming the customers and staff of Central
Federal Savings & Loan to our Southern Bank family.”
William Stoltz, President and Chief Executive Officer of
Central, said, “We are truly excited to be merging with Southern
Missouri, an institution that has served the financial needs of
America’s Heartland for over 130 years, in a transaction that will
benefit our shareholders, our customers, our employees and our
community. The merger will provide our customers with a
greatly expanded array of products, services and locations.”
The deal value is intended to approximate 100% of Central’s
expected book value, adjusted for certain transaction expenses, at
closing. “Tangible book value per common share is expected to be
diluted by slightly less than 1% at closing, with a projected
earnback period of approximately two years, based on the crossover
method,” noted Steffens. “Excluding nonrecurring
transaction-related expenses, the acquisition is anticipated to be
accretive to earnings per share within six months of closing, but
even after fully achieving our projected cost savings, which are
targeted at 50%, accretion will only improve earnings per share by
a negligible amount. While this is a very low-risk transaction for
us, its ultimate success will be based not on these near-term
statistics, but on our ability to meaningfully grow Central’s role
in the Rolla market over time. As the home to the Missouri
University of Science and Technology, a nationally-recognized,
highly-selective institution focusing on a number of fields of
study that will drive economic growth in coming decades, we see the
Rolla community as poised for growth and one where we expect our
products and services to be well-received.”
Southern Missouri and Central anticipate completion of the
transaction late in the second calendar quarter of 2020, subject to
satisfaction of customary closing conditions, including regulatory
and shareholder approvals.
The firm of Lewis Rice, LLC served as legal advisor to Central,
while Silver, Freedman, Taff & Tiernan LLP served as legal
advisor to Southern Missouri. Keefe, Bruyette & Woods, a Stifel
Company, served as financial advisor to Central.
Forward-Looking Information:
Except for the historical information contained herein, the
matters discussed in this press release may be deemed to be
forward-looking statements that are subject to known and unknown
risks, uncertainties, and other factors that could cause the actual
results to differ materially from the forward-looking statements,
including: the requisite regulatory and shareholder approvals for
this acquisition might not be obtained, or other conditions to
completion of the transaction might not be satisfied or waived;
expected cost savings, synergies and other benefits from Southern
Missouri’s merger and acquisition activities, including this
acquisition and Southern Missouri’s other acquisitions, might not
be realized within the anticipated time frames or at all, and costs
or difficulties relating to integration matters, including but not
limited to customer and employee retention, might be greater than
expected; the strength of the United States economy in general and
the strength of the local economies in which we conduct operations;
fluctuations in interest rates and in real estate values; monetary
and fiscal policies of the Board of Governors of the Federal
Reserve System and the U.S. Government and other governmental
initiatives affecting the financial services industry; the risks of
lending and investing activities, including changes in the level
and direction of loan delinquencies and write-offs and changes in
estimates of the adequacy of the allowance for loan losses; our
ability to access cost-effective funding; the timely development of
and acceptance of our new products and services and the perceived
overall value of these products and services by users, including
the features, pricing and quality compared to competitors' products
and services; fluctuations in real estate values and both
residential and commercial real estate market conditions; demand
for loans and deposits in our market area; legislative or
regulatory changes that adversely affect our business; results of
examinations of us by our regulators, including the possibility
that our regulators may, among other things, require us to increase
our reserve for loan losses or to write-down assets; the impact of
technological changes; and our success at managing the risks
involved in the foregoing. Any forward-looking statements are based
upon management’s beliefs and assumptions at the time they are
made. We undertake no obligation to publicly update or revise any
forward-looking statements or to update the reasons why actual
results could differ from those contained in such statements,
whether as a result of new information, future events or otherwise.
In light of these risks, uncertainties and assumptions, the
forward-looking statements discussed might not occur, and you
should not put undue reliance on any forward-looking
statements.
Matt Funke
573-778-1800
William Stoltz
573-364-1024
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