BATON ROUGE, La. - Business First Bancshares, Inc. (NASDAQ: NASDAQ:BFST), the parent company of b1BANK, has announced a definitive agreement to acquire Oakwood Bancshares, Inc., including its wholly-owned subsidiary Oakwood Bank, in an all-stock transaction valued at approximately $85.7 million. This deal, based on the closing price of Business First's shares on April 22, 2024, is expected to substantially increase the company's market presence in Dallas, one of the strongest markets in the United States.
Upon completion, Business First's consolidated total assets are projected to grow to about $7.4 billion, with over $5.6 billion in consolidated total loans. Oakwood Bank's assets were reported at $843 million, with total deposits of $732 million and total equity capital of $90.7 million as of December 31, 2023. The acquisition will add six full-service banking centers to b1BANK's portfolio, enhancing its footprint in Texas.
The transaction is anticipated to close in the fourth quarter of 2024, subject to regulatory approvals and Oakwood's shareholder approval. Business First will issue nearly 4 million shares of its common stock to Oakwood shareholders, who will then own roughly 13.5 percent of the combined company.
Jude Melville, CEO of Business First, expressed confidence that the acquisition aligns with the company's long-term strategy and will bolster its presence in North Texas. Roy J. Salley, CEO of Oakwood Bank, also endorsed the merger, highlighting the benefits for shareholders, employees, and customers, as well as the potential for expanded product offerings.
Post-merger, Salley will join b1BANK as the regional chairman for Dallas, and William G. Hall, chairman of Oakwood Bancshares, will be appointed to the boards of directors of Business First and b1BANK.
Business First's legal counsel for the transaction is Hunton Andrews Kurth LLP, while Raymond James & Associates, Inc. provided a fairness opinion. Oakwood's financial advisor is Stephens Inc., with Norton Rose Fulbright US, LLP as legal counsel. Further details on the transaction can be accessed on the SEC's website and at www.b1BANK.com.
InvestingPro Insights
Amidst the strategic expansion of Business First Bancshares, Inc. (NASDAQ: BFST) through the acquisition of Oakwood Bancshares, Inc., InvestingPro data and tips offer a deeper understanding of BFST's financial health and market position. With a market capitalization of $555.97 million and a P/E ratio of 8.32, Business First presents itself as a company with a compelling valuation. The adjusted P/E ratio for the last twelve months as of Q4 2023 stands at 8.45, indicating consistency in the company's earnings relative to its share price.
InvestingPro Tips highlight that Business First has a track record of increasing its dividend for 6 consecutive years, an attractive feature for income-focused investors. Moreover, the company is trading at a low P/E ratio relative to near-term earnings growth, suggesting potential undervaluation. Analysts predict that Business First will be profitable this year, a sentiment supported by the company's profitability over the last twelve months. However, it is worth noting that the company suffers from weak gross profit margins, which investors should consider when evaluating the company's overall financial health.
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