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First Mid-Illinois Bancshares to acquire SCB Bancorp

Published 13 June 2018

First Mid-Illinois Bancshares has signed a definitive agreement to acquire all of the outstanding shares of SCB Bancorp.

SCB is the holding company for Soy Capital Bank and Trust Company (Soy Capital Bank), which includes a wholly owned subsidiary, J.L. Hubbard Insurance and Bonds (J.L. Hubbard). 

Under the terms of the agreement, SCB shareholders may elect to exchange each share of SCB common stock for either 8.0228 shares of First Mid common stock or $307.93 in cash, subject to certain potential adjustments. 

Overall elections are subject to proration such that, depending on the number of shares of SCB common stock electing First Mid common stock between 19 and 32.5 percent of the SCB shares will be exchanged for cash, and between 67.5 and 81 percent will be exchanged for First Mid common stock. 

Additionally, SCB’s outstanding stock options will be fully vested upon consummation of the merger, and all outstanding SCB options that are unexercised prior to the closing will be cashed out.  Based upon First Mid’s 10-day volume weighted average price through June 8th of $38.38 per share, the aggregate consideration paid by First Mid is approximately $70.4 million. 

In addition, SCB intends on issuing an aggregate of $25 million of its cash as a special dividend to its shareholders, and as a corresponding reduction to the exercise price of outstanding options, immediately prior to the close of the transaction.

SCB is a $437 million asset financial services holding company headquartered in Decatur, IL and operates out of six key regions including Bloomington, Champaign, Decatur, Kankakee, Peoria and Springfield. 

Soy Capital Bank has 10 branch locations and provides full banking services, as well as two additional lines of business that generate significant non-interest income in insurance services and agricultural management services.  J.L. Hubbard is the largest community bank owned insurance company in the state of Illinois with gross revenues of approximately $10.1 million in 2017. 

This division is a full service insurance agency offering commercial insurance, personal insurance, employee benefits packages, and surety bonds.  The agricultural services division is the largest farm manager in Illinois with approximately 248,000 acres of farmland under management across eleven states and also provides farmland brokerage and appraisal services.

“The acquisition of SCB strengthens First Mid’s commitment to community banking and further enhances our various lines of business providing an attractive loan and deposit portfolio and a significant increase in non-interest income through services that we are very familiar with,” said Joe Dively, Chairman and Chief Executive Officer of First Mid.  

“SCB has a long history of delivering excellent service with a community-minded focus and an unmatched diversity of revenue.  All three of First Mid’s lines of business, the bank, insurance and wealth and farm management, align perfectly with SCB’s franchise.”

Following completion of the transaction, First Mid is expected to have approximately $3.8 billion in total assets.  In addition, First Mid’s wealth and farm management business will have approximately $3.9 billion in assets under management and the combined insurance business will be approximately $14.0 million in annual revenue. 

First Mid’s non-interest income will increase from 25% of revenue to approximately 31%.

Bob Smith, Chief Executive Officer of SCB, said, “First Mid is a perfect fit both culturally and strategically for our customers, employees and shareholders.  The combination creates a larger organization that will broaden and advance the products and services available to our customers.  First Mid’s stock, which trades on NASDAQ, will provide our shareholders with enhanced liquidity and ownership in one of the most respected and best performing banks in the region.”

The transaction has been unanimously approved by each company’s board of directors and is expected to close in late-2018, subject to regulatory approvals, the approval of SCB’s stockholders and the satisfaction of customary closing conditions.

Source: Company Press Release