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Nicolet (NCBS) Agrees to Acquire Charter for $158 Million

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Continuing with its growth efforts, Nicolet Bankshares, Inc. has entered an agreement to acquire Charter Bankshares, Inc. and its wholly-owned subsidiary, Charter Bank. Subject to regulatory approvals and other customary closing conditions, the deal is expected to close in third-quarter 2022.

Headquartered in Eau Claire, WI, Charter has offices in Chetek, WI, and Chanhassen and Chaska, MN. Also, a new office is being constructed in Chippewa Falls, WI.

Per the financial data as of Dec 31, 2021, the combined company will have pro-forma total assets of $8.8 billion, deposits of $7.3 billion and loans of $5.4 billion.

Terms of the Deal & Financial Impact

The deal is valued at $158 million. Per the terms of the merger, shareholders of Charter will get 1.26 million shares of Nicolet common stock and $38.8 million in cash.

Prior to the deal closing, Charter shareholders will receive up to a $30-million special dividend.

Pre-tax expenses worth $9.5 million will likely be incurred as a result of the merger. The transaction is expected to result in cost savings of 25% of Charter’s total non-interest expense base (100% of which will be realized in 2023).

Assuming 100% phase-in of the cost synergies, the merger is anticipated to result in earnings per share (EPS) accretion in the high-single digits in 2023. Moreover, the deal will likely be immediately accretive to Nicolet’s tangible book value per share.

Management Comments

Nicolet’s president and CEO, Mike Daniels, stated, “Much like Nicolet, Charter has a history of serving its customers and a deep-rooted commitment to community banking. We have known and respected the leaders at Charter for a long time. Our banks are culturally similar in that we trust our local people to understand and serve the market. The magic of this opportunity is trust in the partnership and the people. This trust in a people-driven approach to the market has created shared success for Nicolet's customers, employees, and shareholders, as well as the communities we serve.”

Jeff Halloin, the CEO of Charter, said, “As big banks have increasingly focused their attention on bigger customers and big cities, we were impressed that Nicolet has chosen to expand in places with similar strengths and needs to the markets Charter serves. While Nicolet is certainly a bigger bank than we are with great resources that come with added size, they don't think like a big bank. Local still matters to them just as it does to us, and we are confident that will resonate here.”

Bob Atwell, the executive chairman of Nicolet, commented, “As Nicolet continues to grow, we see the positive impact that the right partner can have on communities and shareholders alike. We are confident that we found the right partner in Charter.”

Upon the completion of the merger, Nicolet will likely appoint Brenda L. Johnson (the chairperson of Charter) to its board of directors.

Paul Kohler, the president and CEO of Charter Bank, is expected to join Nicolet National Bank and lead the Western Wisconsin and Twin Cities markets post the deal closure.

So far this year, shares of Nicolet have gained 10.7% against nil growth of the industry.

 

Zacks Investment Research
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Currently, Nicolet carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Inorganic Growth Moves by Other Finance Companies

First Horizon Corporation (FHN - Free Report) and The Toronto-Dominion Bank (TD - Free Report) signed a definitive agreement. Per the deal, the latter will acquire the former for $13.4 billion in cash or $25 for each FHN common share.

Toronto-Dominion anticipates the FHN acquisition to close by Nov 1, 2022. The buyout is subject to customary closing conditions, including approvals from First Horizon's shareholders, and the United States and Canada regulatory authorities.


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