UMB Financial Corporation (UMBF - Free Report) , a Kansas City, MO-based financial services company, announced a definitive contract with the Pohlad family of Minneapolis to acquire the latter’s privately held Marquette Financial Companies and its thirteen Meridian Banks. The all-stock transaction was valued at around $182.5 million.
Per the agreement, the Pohlads will get 3.4 million shares representing 7% ownership stake in UMB Financial, making them the second largest stakeholder of the company. The deal is subject to regulatory approval and is expected to be wrapped up by the middle of next year.
Benefits of UMB Financial
UMB Financial operates through two branches in Arizona and the acquisition of Marquette will further enhance its footprints in Arizona as well as Texas. Marquette operates two specialty lending businesses and an asset management firm along with the thirteen branches.
This expansion will improve UMB Financial’s commercial banking business with the addition of Marquette’s national factoring, asset-based lending and asset management businesses. According to the company, the acquisition will prove to be immediately accretive to its tangible book value per share at the time of closing.
Moreover, UMB Financial estimates the deal to be accretive to its 2016’s earnings per share. Also, the company expects cost savings of either $14 million or 23% of Marquette’s non-interest expense in the previous twelve months as of Sep 30, 2014, spread over two years.
The partnership with the Pohlads is expected to be beneficial for UMB Financial in terms of growth and profitability. Also, with the sale of Marquette, the Pohlads plans to exit the banking sector. The ownership stake in UMB Financial will provide the Pohlads’ with an opportunity to remain indirectly involved as an investor, with main focus on commercial real estate, the automobile business as well as sports and entertainment.
Currently, UMB Financial holds a Zacks Rank #3 (Hold). Some better-ranked Midwest banks include Baylake Corp. , Enterprise Financial Services Corp. (EFSC - Free Report) and Associated Banc-Corp . While Baylake and Enterprise Financial Services hold a Zacks Rank #1 (Strong Buy), Associated Banc-Corp carries a Zacks Rank #2 (Buy).