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Is First Busey's Merger Deal With CrossFirst a Strategic Move?
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First Busey Corporation (BUSE - Free Report) , or “Busey,” entered into a definitive merger agreement with CrossFirst Bankshares, Inc. (CFB - Free Report) , or “CrossFirst.” Per the terms, CrossFirst will merge into Busey. Both companies’ board of directors unanimously approved the merger deal.
After deal completion, the combined holding company will continue to operate under the name First Busey Corporation, while the combined bank will be known as Busey Bank. CrossFirst Bank is planning to integrate with and join Busey Bank by mid-2025.
This merger deal represents a great fit from a strategic, financial and cultural standpoint to capitalize on many prospects as a combined company in 2025 and beyond.
Once completed, this merger will allow BUSE to take advantage of CrossFirst's strong presence in high-growth regions with compelling growth potential. The deal will also assist Busey in catalyzing additional commercial banking growth as well as expanding opportunities to build existing wealth management and payment businesses.
BUSE & CFB Merger Details
CrossFirst will merge with and into Busey in an all-common stock transaction valued at nearly $916.8 million, based on Busey’s closing stock price of $27.39 as of Aug. 26, 2024.
CrossFirst stockholders will receive 0.6675 shares of Busey common stock for each share they own. CFB’s common shareholders, who do not currently receive a dividend, will be eligible to receive Busey's continued dividends as declared following the merger.
Upon closing of the deal, the fully diluted shares of the combined business, which will continue to list on the Nasdaq under the "BUSE" stock ticker symbol, will be owned by about 36.5% of CFB’s shareholders and nearly 63.5% of Busey's shareholders.
Strategic Benefits of BUSE & CFB Merger Deal
By extending its regional operating model into the rapidly-expanding metro areas of Kansas City, Wichita, Dallas/Fort Worth, Denver and Phoenix, the merger will strengthen Busey's relationship with commercial banks and present new avenues. This will propel the expansion of its wealth management division and FirsTech, Inc. — Busey’s subsidiary that provides payment technology solutions.
With combined total assets of about $20 billion, including $17 billion in deposits, $15 billion in loans and $13 billion in wealth assets under care, the combination is anticipated to establish a leading full-service commercial bank that would serve customers from 77 full-service facilities spread across 10 states.
The combination of business models, capital strength and economies of scale is expected to significantly improve Busey's performance metrics, leading to increased profitability and shareholder returns.
Excluding one-time merger-related charges and presuming fully phased-in cost savings, pro forma projections predict an accretion of almost 20% in Busey profits per share in 2026, the first full year of merged operations.
With 9.6% leverage, 11.0% CET1 and 14.1% total risk-based capital, capital ratios are anticipated to be much above "well-capitalized" requirements. An internal rate of return of more than 19% is anticipated from the transaction.
Final Words
First Busey successfully expanded its banking and wealth management services through a series of strategic acquisitions in the past years, tripling its asset size in the process.
BUSE’s strategic merger deal with CrossFirst will boost its presence across Arizona, Colorado, Kansas, New Mexico, Oklahoma and Texas. This deal will also increase its asset size and fortify its commercial banking businesses.
In April 2024, Busey acquired Merchants & Manufacturers Bank Corporation — the holding company for Merchants & Manufacturers Bank that expanded BUSE’s presence in rapidly-growing markets of Chicago suburbs. The buyout also increased its deposit market share and fortified its commercial banking and wealth management businesses.
In the past six months, BUSE shares have increased 20.1% compared with 21% growth of the industry.
Inorganic Expansion Efforts by Other Finance Stocks
U.S. Bancorp’s (USB - Free Report) — banking division — U.S. Bank, entered into a strategic partnership with Edward Jones. The collaboration is intended to offer comprehensive banking and credit card solutions to Edward Jones clients.
The latest collaboration is in line with the U.S. Bank alliance strategy to broaden the company's regional reach and better serve its customers. With this, clients will have access to improved financial solutions that cater to their diverse needs. Through alliances, U.S. Bank continued in its goal of reaching customers where they are and providing a streamlined experience concerning its core deposit products.
In June, Stifel Financial Corp. (SF - Free Report) and Lord Abbett, LLC entered into a joint agreement to establish a leveraged lending joint venture — SBLA Private Credit. This new entity will concentrate on the origination and management of existing loans to small and mid-sized portfolio companies of financial sponsors, thus augmenting the existing capabilities of both firms.
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Is First Busey's Merger Deal With CrossFirst a Strategic Move?
First Busey Corporation (BUSE - Free Report) , or “Busey,” entered into a definitive merger agreement with CrossFirst Bankshares, Inc. (CFB - Free Report) , or “CrossFirst.” Per the terms, CrossFirst will merge into Busey. Both companies’ board of directors unanimously approved the merger deal.
After deal completion, the combined holding company will continue to operate under the name First Busey Corporation, while the combined bank will be known as Busey Bank. CrossFirst Bank is planning to integrate with and join Busey Bank by mid-2025.
This merger deal represents a great fit from a strategic, financial and cultural standpoint to capitalize on many prospects as a combined company in 2025 and beyond.
Once completed, this merger will allow BUSE to take advantage of CrossFirst's strong presence in high-growth regions with compelling growth potential. The deal will also assist Busey in catalyzing additional commercial banking growth as well as expanding opportunities to build existing wealth management and payment businesses.
BUSE & CFB Merger Details
CrossFirst will merge with and into Busey in an all-common stock transaction valued at nearly $916.8 million, based on Busey’s closing stock price of $27.39 as of Aug. 26, 2024.
CrossFirst stockholders will receive 0.6675 shares of Busey common stock for each share they own. CFB’s common shareholders, who do not currently receive a dividend, will be eligible to receive Busey's continued dividends as declared following the merger.
Upon closing of the deal, the fully diluted shares of the combined business, which will continue to list on the Nasdaq under the "BUSE" stock ticker symbol, will be owned by about 36.5% of CFB’s shareholders and nearly 63.5% of Busey's shareholders.
Strategic Benefits of BUSE & CFB Merger Deal
By extending its regional operating model into the rapidly-expanding metro areas of Kansas City, Wichita, Dallas/Fort Worth, Denver and Phoenix, the merger will strengthen Busey's relationship with commercial banks and present new avenues. This will propel the expansion of its wealth management division and FirsTech, Inc. — Busey’s subsidiary that provides payment technology solutions.
With combined total assets of about $20 billion, including $17 billion in deposits, $15 billion in loans and $13 billion in wealth assets under care, the combination is anticipated to establish a leading full-service commercial bank that would serve customers from 77 full-service facilities spread across 10 states.
The combination of business models, capital strength and economies of scale is expected to significantly improve Busey's performance metrics, leading to increased profitability and shareholder returns.
Excluding one-time merger-related charges and presuming fully phased-in cost savings, pro forma projections predict an accretion of almost 20% in Busey profits per share in 2026, the first full year of merged operations.
With 9.6% leverage, 11.0% CET1 and 14.1% total risk-based capital, capital ratios are anticipated to be much above "well-capitalized" requirements. An internal rate of return of more than 19% is anticipated from the transaction.
Final Words
First Busey successfully expanded its banking and wealth management services through a series of strategic acquisitions in the past years, tripling its asset size in the process.
BUSE’s strategic merger deal with CrossFirst will boost its presence across Arizona, Colorado, Kansas, New Mexico, Oklahoma and Texas. This deal will also increase its asset size and fortify its commercial banking businesses.
In April 2024, Busey acquired Merchants & Manufacturers Bank Corporation — the holding company for Merchants & Manufacturers Bank that expanded BUSE’s presence in rapidly-growing markets of Chicago suburbs. The buyout also increased its deposit market share and fortified its commercial banking and wealth management businesses.
In the past six months, BUSE shares have increased 20.1% compared with 21% growth of the industry.
Currently, BUSE carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Inorganic Expansion Efforts by Other Finance Stocks
U.S. Bancorp’s (USB - Free Report) — banking division — U.S. Bank, entered into a strategic partnership with Edward Jones. The collaboration is intended to offer comprehensive banking and credit card solutions to Edward Jones clients.
The latest collaboration is in line with the U.S. Bank alliance strategy to broaden the company's regional reach and better serve its customers. With this, clients will have access to improved financial solutions that cater to their diverse needs. Through alliances, U.S. Bank continued in its goal of reaching customers where they are and providing a streamlined experience concerning its core deposit products.
In June, Stifel Financial Corp. (SF - Free Report) and Lord Abbett, LLC entered into a joint agreement to establish a leveraged lending joint venture — SBLA Private Credit. This new entity will concentrate on the origination and management of existing loans to small and mid-sized portfolio companies of financial sponsors, thus augmenting the existing capabilities of both firms.