TUPELO, Miss. (AP) -- Renasant Corp. will buy fellow Mississippi bank First M&F Corp. in a $119 million stock transaction.
Shareholders in First M&F Corp., the parent of M&F bank, will get shares of Renasant. Shareholders of that bank, based in Kosciusko, Miss., would gain about 20 percent of the combined company and two members on Renasant's board of directors.
"This merger creates a stronger Renasant franchise that allows for not only new market entries and additional branch locations within our legacy markets, but provides the realization of significant cost savings through strategic branch consolidations and future earnings growth by combining two strongly competitive community banking institutions," Renasant Chairman and CEO E. Robinson McGraw in a statement Thursday announcing the merger.
Adding M&F's $1.6 billion in assets would give Renasant $5.8 billion in total assets. Renasant, based in Tupelo, Miss., says the deal will give it the fourth-largest share of deposits in Mississippi. McGraw said the M&F acquisition would boost Renasant's presence in the Birmingham, Ala., and Memphis, Tenn., markets as well.
Renasant said adding M&F would also double its insurance operations, and add to profits of the overall company immediately.
M&F saw its profits drop in 2009 as bad loans increased, but the bank saw profits rebound almost to pre-recession levels by 2012. The bank has drastically cut lending to real estate developers during that time.
It's the latest in a series of expansions for Renasant. It bought two failed banks with $1.1 billion in assets near Atlanta. Renasant has also bought RBC's trust business, which was based in Birmingham, and opened offices in new markets in Mississippi, Alabama and Tennessee since 2010.
Thursday's merger is likely to be accompanied by significant consolidation. Renasant said seven of the 36 M&F branches are within a mile of a Renasant branch, and 13 are within 5 miles. Renasant spokesman John Oxford said Renasant planned to cut $12 million worth of costs a year, or 25 percent of M&F's current costs. It wasn't immediately clear if Renasant would lay off M&F employees, and if so, how many.
Shareholders of both companies must approve the merger. Renasant officials said they expect it to be complete before Sept. 30.
Renasant currently has $4.2 billion in assets with operations in Mississippi, Alabama, Tennessee and Georgia. First M&F currently has operations in Mississippi, Alabama and Tennessee.