M&A Transaction Alert
June 28, 2013
United Community Bancorp, Inc. - Chatham, Illinois
has signed a definitive agreement to acquire the common stock of
Mercantile Bank - Quincy, Illinois
Hovde Group, LLC served as the exclusive financial advisor to Mercantile Bancorp, Inc., and
its wholly owned subsidiary, Mercantile Bank
Transaction Summary
• United Community Bancorp, Inc. ("UCB") will pay $22.3 million in cash for the common stock of Mercantile Bank (the "Bank") (the "Transaction").
• Mercantile Bancorp, Inc. (the "Company") intends to file a voluntary Chapter 11 bankruptcy petition after signing of the Agreement. The Transaction will be effectuated
pursuant to Sections 105, 363, and 365 of the U.S. Bankruptcy Code.
• UCB will act as the "Stalking Horse Bidder" in the bankruptcy auction. Other potential buyers will have the opportunity to bid for the Bank stock pursuant to the
approved bidding procedures under Section 363 of the Bankruptcy Code.
• UCB will acquire four branches with approximately $338 million in deposits in the Quincy MSA and will jump to #2 in deposit market share rank. On March 11, 2013,
UCB announced the acquisition of seven branches of Heartland Bank & Trust Co., and the purchase is still pending.
• This represents Hovde Group's 6th bank M&A transaction of 2013.
Pro Forma Branch Network - Quincy, IL and Broader Footprint
Transaction Terms (using Bank Financials)
Type of Transaction
Asset Purchase
Form of Consideration
100% Cash
Aggregate Deal Price
$22.3 Million
Stalking Horse Bidder Fee
2
77.6%
Price-to-Tangible Book Value
77.6%
Price-to-LTM Earnings
UCB
Premium-to-Core Deposits
Heartland Bank & Trust Co.
Price-to-Assets
2012
PF
Rank Rank Parent Company Name
1
1
First Bankers Trustshares Inc.
2
Pro Forma Company
2
Mercantile Bancorp Inc. 1
3
3
Backlund Investment Co.
4
4
T & C Bancorp Inc.
5
5
Quincy Bancshares Inc.
6
United Community Bancorp, Inc. 2
7
6
Monticello Bancshares Inc.
8
7
Bank of America Corp.
9
8
River Valley Bancshares Inc.
10
9
Town and Country Financial Corp.
11
10 FBL Bancshares Inc.
12
11 First Mid-Illinois Bancshares Inc.
13
12 Clayton Bancshares Inc.
14
13 Illini Corp.
15
14 Canton Bancshares Inc.
16
15 North Adams Bancshares Inc.
17
16 Lima Bancshares Inc.
18
17 First National Bank of Barry
19
18 Clark County Bancshares Inc.
20
19 Spring Bancorp Inc.
21
20 Farmers & Merchants Bancorp Inc.
Market Total
1
Price-to-Book Value
Mercantile Bank
Market Share - Quincy, IL MSA
250,000
NM
(2.0%)
5.8%
Target Information (as of 3/31/2013)*
City
Quincy
Chatham
Quincy
Peoria
Quincy
Quincy
Chatham
Monticello
Charlotte
Lewistown
Springfield
Liberty
Mattoon
Pleasant Hill
Springfield
Hannibal
Ursa
Lima
Barry
Wyaconda
Springfield
Hannibal
# of
ST Loc
IL
5
IL
7
IL
4
IL
4
IL
5
IL
2
IL
3
MO
2
NC
2
MO
2
IL
1
IL
3
IL
2
IL
2
IL
1
MO
1
IL
2
IL
1
IL
1
MO
1
IL
1
MO
1
47
Utilizes 3/31/2013 deposits for analysis
Includes impact of Heartland Bank & Trust branch acquisition
PF
Deposits
($000)
513,100
421,863
337,884
153,039
131,535
93,572
83,979
71,192
63,987
61,606
60,177
59,642
53,024
47,588
40,678
30,252
29,586
26,387
13,960
13,244
11,503
4,743
1,998,930
PF
Market
Share
(%)
25.7
26.0
21.8
7.7
6.6
4.7
4.2
3.6
3.2
3.1
3.0
3.0
2.7
2.4
2.0
1.5
1.5
1.3
0.7
0.7
0.6
0.2
100.0
Headquarters
Quincy, IL
Ticker (Company)
OTCQB: MBCR
States of Operation (Branches)
IL (4)
Total Assets ($000)
$386,343
Total Deposits ($000)
$337,884
Leverage Ratio (Bank)
7.43%
Leverage Ratio (Company)
(10.91%)
LTM ROAA
(1.68%)
Net Interest Margin
2.52%
Noninterest Expense/ Avg. Assets
3.81%
NPAs + 90 Days PD/ Assets
3.16%
LLR/ Loans
2.80%
NCOs/ Avg. Loans
2.26%
Cost of Funds
1.21%
* Source: Call Report Data; Data at Bank-level unless otherwise specified
Steven D. Hovde
shovde@hovdegroup.com
847.991.6622
Andrew J. Fitzgerald
afitzgerald@hovdegroup.com
312.361.3153
1629 Colonial Parkway
Inverness, IL 60067
www.hovdegroup.com