First National Bank & Trust in Wyoming
Sheshunoff & Co. Structures Friendly Wyoming Bank Sale Despite Difficult Economy
It isn’t every day that, after selling your bank, you get to keep your bank name on the door and continue to serve your customers like your grandfather did, amidst the worst recession since the 1930s. This is the unexpected fortune of First National Bank & Trust in Wyoming. When the parent company, First Company of Cody, approached Sheshunoff & Co. Investment Banking to assist them in finding a buyer, none of the parties could have known for certain that so positive an ending was possible.
After all, as John Adams, Director of Mergers & Acquisitions at Sheshunoff & Co explained it, “many of the typical buyers in that region were not considering expansion but were focused internally. Considering the region, the north central part of the U.S., Wyoming, and Montana, there aren’t many banks to talk to.”
Adams said Sheshunoff & Co.’s good name and reputation helped the team get a foot in the door with likely buyers and through sheer persistence and creativity they were able to find a suitable structure for the sale of First Company. There were difficulties along the way given the remote location of the bank and not a lot of healthy buyers in the market. And First Company had heavy losses during 2008, and began experiencing asset quality challenges, so finding a buyer in this climate was challenging. But perseverance despite a downturn in the economy led Sheshunoff’s team to Glacier BanCorp, Inc., a Montana-based bank.
Ty Nelson, the former President of First Company (and the great grandson of the founder, S.A. Nelson), had been discouraged by their own attempts to raise money and decided that their option was a full sale. They then searched on their own for a buyer but not having much confidence that a buyer could be easily found given the regional economy and the state of the industry as a whole, turned to Sheshunoff & Co. “We’ve been Affiliation members for a long time and we went through a succession plan [with Sheshunoff] and are very comfortable with the firm,” says Nelson. In addition, “we thought our best option was to work with someone we knew.”
The Sheshunoff team began working with First Company in the fall and by early January they had structured a deal that both banks’ boards of directors ultimately approved. Adams and his team provided valuation guidance to the board and shareholders, identified likely buyers, and were there to direct the negotiations, all part of their sell-side services. Given the economy, structuring a mutually acceptable deal had its own set of challenges. Certain loans were taken out of the bank as part of the transaction in order to give the buyer comfort while allowing the seller to realize the potential long-term value.
Ty Nelson thought it would be extremely difficult to find a buyer but had confidence in the Sheshunoff team as they “focused on people they knew would be a good fit for us in the long term.” And as the team came closer to identifying Glacier BanCorp as a potential buyer, Nelson was assured that he could rely on Sheshunoff’s expertise. “It took someone who knows how to structure the deal,” says Nelson. He had wanted to be able to keep the bank name and, along with his brothers, keep a hand in the day-to-day operations of the bank.
As Adams retells it, “we were pleased that we could find Glacier BanCorp and structure a transaction that allows the First National Bank & Trust bank name and their local presence to remain largely unchanged. This means everything to their customers and the Nelson family, who continue to help run the business.” Adams cautions it is unusual to keep your bank name once you’re sold – it’s just a unique feature of this particular deal.
“This transaction in many ways reflects the nature of our community bank brokerage business: a client located in a somewhat remote region, not many local buyers, but through persistence and relying on the respect we’ve built among the community bank buyer universe, we were able to lead our client to the best possible outcome.” Adams continued, “in this case our client was a family-owned business and we were sensitive to this and through our collective efforts accomplished a friendly transaction.”
The Sheshunoff team met with First Company’s Board of Directors to help them understand the fairly complex transaction with a winning result. Soon after, they met again and approved the merger. The team presented the board with a fairness opinion, which the board can rely on to fulfill their fiduciary obligations and provide to shareholders to support their decisions. Sheshunoff recommends that boards obtain a fairness opinion from an experienced financial advisor who is able to thoroughly analyze the transaction, as Sheshunoff can in its capacity as a financial advisor.
In a challenging bank environment, it’s never been more important to work with a trusted, reputable company with proven results. You can almost hear the relief in Ty Nelson’s voice: Sheshunoff & Co “helped us accomplish the best outcome for our shareholders and the bank”.
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