Enterprise Financial Services Corp. (NASDAQ:EFSC) (the “Company,” “EFSC,” “Enterprise,” “we,” “us,” or “our”), the holding company of Enterprise Bank & Trust (“EB&T”) and Trinity Capital Corporation (“Trinity” or “TCC”), the holding company of Los Alamos National Bank (“LANB”) announced today that they have entered into a definitive merger agreement in a transaction valued at approximately $213 million. On a pro forma consolidated basis, the combined company would have approximately $7 billion in assets.
TCC is headquartered in Los Alamos, New Mexico, with approximately $1.3 billion in assets, $714 million in loans, and $1.1 billion in deposits as of June 30, 2018. LANB operates six full-service banking offices in Los Alamos, Santa Fe, and Albuquerque, New Mexico. Additionally, as of June 30, 2018, LANB ranked first and fourth in deposit market share in the Los Alamos and Santa Fe, New Mexico Metropolitan Statistical Areas with 84% and 14% of the markets, respectively.
Jim Lally, President and Chief Executive Officer of EFSC, commented, “We are thrilled that Trinity has selected us as their partner. LANB has a deep history and commitment to their employees, customers and communities that is demonstrated by a dominant market share and extraordinary customer loyalty. Enterprise has a similar philosophy of supporting its communities, and encouraging its employees to do the same. We believe this combination of like cultures positions us to better serve all our constituents for the foreseeable future.”
“In Enterprise, we found an ideal partner with shared-values,” said John Gulas, President and Chief Executive Officer of TCC, “We are pleased to join with Enterprise particularly due to an admiration for their diverse business model as well as their commitment to serving their clients. We believe the complementary strengths of this combined organization will provide a stronger future for our customers, associates and the communities we serve.”
Under the terms of the definitive agreement, upon consummation of the transaction, TCC shareholders will receive 0.1972 shares of EFSC common stock and $1.84 in cash for each share of TCC common stock they hold. Based on EFSC’s closing price of $43.45 per share on October 31, 2018, the merger consideration mix would result in a total of approximately $38 million in cash and $175 million in EFSC shares. The transaction is intended to qualify as a tax-free reorganization for U.S. federal income tax purposes and Trinity shareholders are not expected to recognize gain or loss to the extent of the stock consideration received. The Company expects the transaction to be immediately accretive to 2019 diluted earnings per share (excluding the impact of the one-time transaction expenses), with full-year 2020 EPS accretion of approximately 8%. Anticipated tangible book value per share dilution is expected to be earned-back in approximately 3 years under both simple and crossover methods.
In connection with the transaction, two Trinity directors, Tony Scavuzzo of Castle Creek Capital and James F. Deutsch of Patriot Financial Partners, will be appointed to EFSC’s Board of Directors. Additionally, James E. Goodwin, Jr., Chairman of the board of directors of TCC and LANB, will join the Board of Directors of EB&T, the Company’s banking subsidiary.
The transaction, which has been unanimously approved by the board of directors of the Company, EB&T, TCC, and LANB, is expected to close in early 2019, subject to satisfaction of customary closing conditions, including regulatory approvals and approval of the TCC’s shareholders. Certain TCC shareholders, as well as TCC’s directors and executive officers, have entered into agreements with the Company pursuant to which they have committed to vote their shares of TCC common stock in favor of the merger. For additional information about the proposed merger, shareholders are encouraged to carefully read the definitive agreement that was filed with the Securities and Exchange Commission (“SEC”) today.
