CrossFirst Bankshares of Leawood, Kansas, has agreed to pay $75 million in cash to acquire Central Bancorp of Clayton, New Mexico, the holding company of Farmers & Stockmens Bank, with assets of $567.5 million .
Monday’s deal, which is expected to close in the second half of 2022, would give CrossFirst’s $5.5 billion in assets entry points in Colorado and New Mexico, as well as expanded capabilities in the in small business administration and agricultural lending, as well as in private banking, CEO Mike Maddox said in a press release.
“This transaction represents an exciting milestone for our business, allowing us to enter dynamic new markets and expand our capabilities by partnering with an impressive team of bankers,” Maddox said.
Farmers & Stockmen, 104, operates five branches spread between Clayton, Roy and Des Moines in New Mexico, and Denver and Colorado Springs in Colorado. CrossFirst expects the agreement to serve as a springboard for new expansion opportunities in both states. The combined company would have assets of $6.2 billion, deposits of $5.3 billion and loans of $4.9 billion. CrossFirst has offices in Texas, Oklahoma, Missouri, and Arizona, in addition to its home state of Kansas.
According to the SBA, Farmers & Stockmens completed 19 7(a) loans totaling $17 million between Oct. 1 and May 31. CrossFirst entered into 10 7(a) loans totaling $8.5 million during the same period. The 7(a) program is the SBA’s largest, with issuances for fiscal year 2022 totaling $16.3 billion through June 10.
CrossFirst forecasts cost savings of 20% based on Central Bancorp’s noninterest expenses, which totaled $5.3 million in the quarter ending March 31 and $17.9 million in 2021. Cross First expects the deal to be 11.7% accretive to earnings per share in 2023. CrossFirst reported earnings of $16.8 million, or $0.33 per share, for the first quarter of 2022.
“We believe this combination will create extraordinary value for our shareholders, customers, employees and communities,” Maddox said.
While Central Bancorp has agreed to sell Farmers & Stockmens, it plans to retain its wealth management subsidiaries, the Corundum Group and Corundum Trust Company.
“We have built a successful and differentiated franchise in our local communities, and this combination will provide our customers with the complete set of CrossFirst products, services and systems,” Farmers & Stockmens CEO Scott Page said in the release. Press.
Page, which served as CEO of CoBiz Bank in Denver from 2014 to 2018, is expected to remain with the combined company, alongside Farmers & Stockmen’s market executives for Colorado and New Mexico and leaders of its SBA lending and private banking teams.
Monday’s deal comes less than a week after Maddox announced he had ceded the role of president from the holding company’s CrossFirst Bank subsidiary to credit manager Randy Rapp. Maddox remains President and CEO of CrossFirst Bankshares and CEO of CrossFirst Bank. Maddox said he has taken a lesser role in managing day-to-day operations at CrossFirst Bank to focus more on overall business strategy.
The $75 million transaction price represents 1.63 times the tangible book value of Central Bancorp. For CrossFirst, this would result in a tangible book value dilution of 5.8% with a payback period of 2.7 years.