Poplar Bluff-based Southern Missouri Bancorp, Inc., is buying Fortune Financial Corporation for $29.9 million in a cash and stock deal. The Arnold, Mo.-based Fortune has $254 million in assets, $209 million in net loans and $215 million in deposits as well as an additional branch in St. Louis, Mo.
“Fortune has developed a number of business lines that complement our organization well, and provides a point of entry to a large and growing banking market where we believe our community banking model will perform well,” said Greg Steffens, president and CEO of Southern Missouri.
The value of the deal, set to close in the first quarter of 2022, equates to 155 percent of Fortune’s capital at announcement, represents a 5.8 percent premium to core deposits, and is a multiple of 6.4 times Fortune’s projected forward earnings including fully phased-in cost savings, which are estimated at 30 percent. It will be accretive to earnings per share by approximately 8.8 percent in Southern’s fiscal year ending June 30, 2022, and by 9.1 percent in its next fiscal year. Tangible book value per common share is expected to be diluted by approximately 3.8 percent at closing, with a projected earnback period of approximately 11 quarters, based on the crossover method. As part of the merger, Southern Missouri will also assume approximately $7.5 million in subordinated debt.
Daniel Jones, founder, chair and CEO of Fortune, will join the boards of Southern Missouri and its subsidiary Southern Bank. ““From the inception of Fortune, it has been my desire and that of Chris Ford, as the founding family members, to offer the highest level of customer service from a true community bank platform.” Jones said. “Many things have changed over the sixteen years since we chartered the bank, but our desire to operate with the highest level of integrity within our amazing community never wavered. Chris and I will remain with the combined organization, ensuring the same founding principles carry on well after the merger.
The $2.7 billion Southern currently has $2.2 billion in net loans and $2.3 billion in deposits as well as 49 offices in Missouri, Arkansas, and Illinois.
“Entering the St. Louis MSA will help us achieve our long-term growth goals,” Steffens said. “Moreover, we believe this growth can be achieved along with strong core profitability as we combine our institutions and capitalize on the core competencies of each.”
Piper Sandler & Co. acted as financial advisor and Armstrong Teasdale LLP served as legal advisor to Fortune, while Silver, Freedman, Taff & Tiernan LLP served as legal advisor to Southern Missouri.