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.
Contact: Matt Funke, CFO, Southern Missouri Bancorp, Inc.(573)
778-1800William Stoltz, CEO, Central Federal Bancshares, Inc.(573)
364-1024
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