Denver, CO-based InBankshares, Corp (INBC) and Wiley, Colorado-based Legacy Bank announced they entered into a definitive merger agreement pursuant to which Legacy will merge with and into InBank, the wholly owned subsidiary of INBC, in a stock and cash transaction.
Founded in 1907 and headquartered in Wiley, CO, Legacy is a full-service community bank with approximately $497 million in total assets, $316 million in gross loans and $426 million in deposits as of Sept. 30. Legacy has nine full-service offices serving customers in Colorado Springs, Pueblo, Pueblo West, Cañon City, Buena Vista, Lamar, and Wiley, CO.
INBC is headquartered in Denver, and is a full-service commercial bank with $705 million in total assets, $426 million in gross loans and $603 million in deposits as of Sept. 30. Following the completion of the merger, the combined bank will have approximately $1.2 billion in total assets and serve customers from 19 offices, including 12 full-service offices and two loan production offices in Colorado, and five full-service offices in northern New Mexico.
"We are excited to announce this partnership that expands upon our commitment to serving the Colorado Front Range and northern New Mexico markets by adding new and important growth markets to InBank's footprint," said Ed Francis, Chairman, President and Chief Executive Officer for InBankshares, Corp and InBank. "Legacy brings an experienced team of bankers and has a similar commitment to serving clients to that of InBank. The combination will further leverage our significant investment in people, commercial treasury products, and technology while helping position InBank to be the premier locally owned commercial bank. Legacy is great fit for us geographically, strategically, financially, and culturally. Both banks share the same values, culture, and commitment to our customers, communities, and associates, which should allow for a smooth integration."
"Our family looks forward to the strategic partnership and success that we believe the combined bank will have moving forward," said Dave Esgar, Chairman, President and Chief Executive Officer for Legacy Bank. "Legacy Bank has a long-standing history of service excellence and giving back to its communities. InBank is the right partner to extend and build upon this proud history as a locally-managed community bank."
Under the terms of the merger agreement, which has been unanimously approved by the boards of directors of INBC and Legacy, INBC will issue 3,566,387 shares of INBC common stock and pay $21.25 million in cash to the shareholders of Legacy Bank in the aggregate. Based on INBC's closing common stock price of $9.75 per share on November 29, 2021, the consideration to be paid by INBC is valued at approximately $56.0 million. The actual value of the consideration to be paid will change due to fluctuations in the price of INBC common stock and is subject to certain potential adjustments as set forth in the merger agreement. Prior to the closing of the transaction, Legacy will distribute to its shareholders other real estate owned (OREO) and other assets, and will pay its shareholders a special cash dividend, the amount of which will depend upon Legacy's tangible common equity at the closing, net of certain seller-paid transaction expenses.
The Esgar family (Dave Esgar and his sister Janet McClure) will hold a significant stake in INBC post-closing and will receive a board seat on the INBC and InBank boards of directors. Dave Esgar will continue to work with the combined entity to help ensure a smooth and successful transition. Andrew Trainor, Regional President of Legacy Bank, will join the executive team of InBank and help lead a talented group of employees post-closing.
The merger is subject to approval by federal and state bank regulators and the Legacy shareholders and to customary closing conditions. The transaction is expected to close early in the second quarter of 2022, with a systems conversion planned for late third quarter of 2022.
"This is expected to be a transformational merger for InBank with the potential to gain significant scale and operating leverage, increase our market capitalization, and significantly improve our earnings power," concluded Francis. "The completion of this transaction will help make InBank a formidable competitor in the Colorado Front Range banking marketplace and helps position us for continued profitable growth."
Advisors
In connection with the transaction, Stephens Inc. served as financial advisor and Otteson Shapiro LLP served as legal counsel to INBC. Olsen Palmer LLC served as financial advisor and Lewis Roca Rothgerber Christie LLP served as legal counsel to Legacy.