Under the terms of the agreement, St. Martin Bancshares will be merged with and into Home Bancorp (the "Merger"), and St. Martin Bank will be merged with and into Home Bank.
Upon consummation of the Merger, shareholders of St. Martin Bancshares will receive 9.2839 shares of Home Bancorp common stock for each share of St. Martin Bancshares common stock (the "Stock Consideration"). In addition, immediately prior to the closing of the Merger, St. Martin Bancshares will pay a special cash distribution of $94.00 per share to its shareholders (the "Special Distribution").
Based on the ten (10) day average closing price of Home Bancorp's common stock through August 22, 2017 ($39.15 per share), the Stock Consideration plus the Special Distribution has a combined value of $457.47 per share to holders of St. Martin Bancshares common stock, or $96.1 million in the aggregate.
St. Martin Bancshares operates twelve (12) branch locations in Acadia, Jefferson Davis, Lafayette and St. Martin, Parishes. As of June 30, 2017, St. Martin Bancshares had assets of $597.3 million, $455.5 million in loans and $508.7 million in deposits. The combined company will have assets of approximately $2.2 billion, $1.7 billion in loans and $1.8 billion in deposits.
"This Merger is a win-win for both St. Martin Bank and Home Bank customers, as each will enjoy more locations and enhanced products to serve them," said John W. Bordelon, President and Chief Executive Officer of Home Bancorp. "Our partnership with St. Martin Bancshares is also a significant momentum builder for our shareholders, as we expect greater than 20% EPS accretion as a result of combining our companies after expected efficiencies are realized."
"We have long admired the way Home Bank treats its customers and employees and serves our Acadiana community," said Paul A. Durand, President of St. Martin Bancshares. "St. Martin Bank has achieved great success over the years because its employees share Home's commitment to serving our friends and neighbors. Given our shared values, we're going to be very effective building our company and community together."
"Our Board believes that this transaction represents an attractive return for our shareholders, providing immediate liquidity in the form of the $94.00 per share pre-closing cash distribution, as well as the opportunity for future growth through an ownership interest in the combined company," said Guy M. Labbe' Chief Executive Officer of St. Martin Bancshares.
Paul Durand will remain active in the combined company serving customers in an executive business development role. In addition, two members of St. Martin Bancshares' current Board of Directors will join the boards of Home Bancorp and Home Bank.
The merger agreement was unanimously approved by the boards of directors of both companies. The transaction is expected to close in the fourth quarter of 2017 or first quarter of 2018, subject to customary closing conditions, including regulatory approvals and shareholder approvals of both companies.
Home Bancorp anticipates the transaction will be over 20% accretive to earnings per share once cost savings are fully realized and accretive to tangible book value per share within 3.5 years of closing. Following the Merger, Home Bank's capital position is expected to remain strong with leverage and total risk-based capital ratios of approximately 9.1% and 12.3%, respectively. No additional capital will be needed by Home Bancorp to complete the transaction.
BSP Securities, LLC acted as financial advisor to Home Bancorp and Silver, Freedman, Taff & Tiernan LLP acted as its legal advisor in the transaction. Raymond James acted as financial advisor to St. Martin Bancshares and Fenimore, Kay, Harrison & Ford, LLP acted as its legal advisor in the transaction.
