Trustmark in deal to acquire Panhandle’s Bay Bank

November 30, 2011

Banking & Finance

In a move that will return Jackson-based Trustmark Corp. to the scene of some its biggest commercial real estate loan troubles, the regional bank has signed a definitive agreement to acquire Bay Bank & Trust Co. of Panama City in a $22 million transaction.

Trustmark CEO Jerry Host said the acquisition of the 76-year-old, $247 million bank gives the bank an “excellent opportunity for Trustmark to expand and enhance its franchise within the attractive Panama City – Bay County market.”

Bay Bank, with 86 employees in seven offices serving the Panhandle markets of Panama City, Panama City Beach, and Lynn Haven, reported loans of $121.6 million and deposits of $220.6 million at the end of the third quarter. Late loans and leases totaled nearly $5 million, though that figure is half of the amount of tardy loans and leases the bank reported at the close of last year’s third quarter.

Together, Bay Bank and Trustmark will have the second largest deposit market share in Bay County, said Trustmark, which has over 150 offices in Florida, Mississippi, Tennessee and Texas.

E. Clay Lewis, vice chairman of Bay Bank, said the merger will provide Bay Bank’s current customers increased convenience “as well as the addition of broader financial products and services, including wealth management and insurance.”

Under terms of the definitive agreement, the transaction is valued at $22 million, with $10 million of the consideration to be paid in cash and $12 million to be paid in common stock of Trustmark. The consideration represents approximately 85 percent of Bay Bank’s tangible book value as of Sept. 30, 2011.

The transaction is expected to be completed during the first quarter of 2012 . Further, the transaction is expected to be neutral to Trustmark’s 2012 earnings and tangible book value and accretive in 2013 and beyond, the bank says.

In an interview shortly before retiring at the start of 2011, former Trustmark CEO & Chairman Richard Hickson noted the bank’s 2005 venture into the Panhandle commercial real estate market was ill-timed but will eventually benefit Trustmark.

“That turned out to be an investment that we feel is a good long term investment but was not good timing because two years later the real estate crisis came,” he said.

Bay Bank marks the year’s second acquisition for the $10 billion Trustmark. It acquired troubled Heritage Banking Group’s of Carthage’s nine locations in mid-April in a Federal Deposit Insurance Corp-assisted sale.

The deal gave Heritage’s $226 million in assets, including $196.2 million in total deposits, held by Heritage.

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