On Wednesday, Piper Sandler increased the stock price target for CrossFirst Bankshares (NASDAQ:CFB) to $19.00 from the previous $17.00, while keeping a Neutral rating on the stock. The adjustment follows the recent announcement of a merger agreement between CrossFirst and First Busey (NASDAQ:BUSE) Corporation (NASDAQ:BUSE), an all-stock deal valued at approximately $916.8 million.
The merger, announced on August 27, is set to close in the first half of 2025, contingent upon customary closing conditions, including the necessary regulatory approvals and the assent of both BUSE and CFB shareholders.
Upon completion, Busey shareholders will hold about 63.5% of the combined entity, with CrossFirst shareholders owning the remaining 36.5%. The transaction pegs CrossFirst's value at $18.62 per share, a slight premium of roughly 1.6% over its closing price on August 26.
The combined company will see its holding company headquarters moved to Leawood, Kansas, while the bank will continue to operate from Champaign, Illinois. The deal represents approximately 133% of CrossFirst's tangible book value (TBV).
The revised price target of $19.00 by Piper Sandler closely aligns with the proposed acquisition price of $18.62 per share, reflecting the terms of the sale to Busey as stated at the time of the announcement.
In other recent news, CrossFirst Bankshares reported a solid performance for the second quarter of 2024. The bank saw an increase in earnings, reporting $18.6 million, or $0.37 per diluted share, driven by higher net interest income and fee income. Notable growth was observed across key financial metrics, including loan and deposit growth, particularly in Texas, Colorado, and Arizona markets.
Moreover, the bank witnessed an improvement in credit quality, marked by a decrease in non-performing assets and classified assets. Management remains cautiously optimistic, forecasting a loan growth of 6% to 8% for the year, while preparing for potential rate cuts that could further bolster their financial position.
These recent developments also highlighted CrossFirst Bankshares' intent to continue building capital and providing shareholder return through a share buyback program. The bank is also targeting a reduction in commercial real estate as a percentage of capital below 300%. However, it was noted that the potential to grow net interest margin is somewhat limited, assuming only two rate cuts.
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