Alerus Financial Corporation (“Alerus”) (NASDAQ: ALRS) announced today the signing of a definitive agreement and plan of merger to acquire MPB BHC, Inc. (“MPHX”) (OTCPK: MPHX), the bank holding company for Metro Phoenix Bank, the largest full-service community bank headquartered in Phoenix. The transaction represents the twenty-fifth acquisition for Alerus since 2000 as part of its long-term plan to continually expand its four business segments—banking, retirement and benefits services, wealth management, and mortgage. Alerus has been operating in the Phoenix market since 2009.
Founded in 2007, Metro Phoenix Bank is a high-performing full-service community bank, with approximately $411 million in total assets, $283 million in total loans, and $366 million in total deposits as of September 30, 2021. MPHX operates one branch in Phoenix, serving small- and medium-sized businesses throughout the metro area.
The acquisition significantly increases the Alerus presence in Arizona and, following the completion of the transaction, Alerus will have the fifth largest deposit market share in the Phoenix metropolitan statistical area (MSA) among community banks. On a pro forma basis, Alerus will operate three branch locations in Arizona (Phoenix, Scottsdale and Mesa). The combined company’s Arizona operation will have approximately $439 million in total loans and approximately $483 million in total deposits.
“Alerus has a long history of successful strategic acquisitions that strengthen our ability to provide diversified financial services to clients across the country,” said Alerus President and Chief Executive Officer Randy Newman. “The addition of Metro Phoenix Bank will complement our business model and enhance our ability in Phoenix to offer commercial lending and banking services. We are honored to welcome our new team members and clients, and we look forward to continue providing them with excellent client service and growing these relationships with the diversified products that make Alerus unique among financial service providers.”
Alerus Chief Financial Officer Katie Lorenson, who will succeed Randy Newman as Alerus President and Chief Executive Officer on January 1, 2022, led the negotiations for the acquisition.
“We are thrilled to expand our Arizona footprint with Metro Phoenix Bank. We believe this will allow us to continue delivering value to our shareholders while staying true to our commitment to pursue acquisitions that align with our culture and core values,” said Lorenson. “The Phoenix MSA is one of the largest and fastest growing metropolitan areas in the country. By combining our existing market presence and diverse product offerings with the commercial banking experience and talented professionals of Metro Phoenix Bank, we grow our commercial client base which provides an opportunity to expand those relationships by serving the business, the owners, and their employees holistically.”
“We are excited about joining Alerus, and we saw a natural fit between our two companies which was compelling,” said Steve Haggard, President and CEO of Metro Phoenix Bank. “Our clients will benefit from the broader product set and greater resources to support our continued growth initiatives. We have found a tremendous long-term partner with Alerus, which will benefit the shareholders, employees, and clients of Metro Phoenix Bank.”
Upon completion of the transaction, Haggard will join Alerus as President of its Arizona Market, ensuring a smooth transition for clients and employees. In this role, he will also be a member of Alerus’ leadership team and oversee growth for the company in the Arizona market.
Subject to the terms of the agreement and plan of merger, MPHX shareholders will receive 0.74 Alerus common shares for each outstanding MPHX share, or approximately 2.58 million Alerus shares in the aggregate. Using a price per share of Alerus common stock of $31.43 as of December 7, 2021, the transaction has an implied purchase price of $23.26 per share, which equates to an aggregate value of $85.3 million, including $4.3 million in consideration for option holders. The transaction is anticipated to be immediately accretive to Alerus’ earnings per share, excluding one-time transaction related expenses, and approximately 8.5% accretive in the first full year.
The agreement and plan of merger has been approved by the boards of directors of Alerus and MPHX. Completion of the merger is subject to customary closing conditions, including receipt of required regulatory approvals and the approval by the shareholders of MPHX. The transaction is expected to close in the first quarter of 2022, and the data processing system conversion will occur in the first half of 2022 subsequent to the closing. Alerus currently intends to merge Metro Phoenix Bank into Alerus Financial, N.A. at that time.
D.A. Davidson & Co. served as financial advisor and Barack Ferrazzano Kirschbaum & Nagelberg LLP served as legal counsel to Alerus on the transaction. Raymond James & Associates, Inc. served as financial advisor and Spierer, Woodward, Corbalis, & Goldberg served as legal counsel to MPHX.
