Wintrust Financial Corporation WTFC is set to acquire Community Financial Shares, Inc. ("CFIS"), the parent company of the Illinois-based state chartered bank, Community Bank-Wheaton/Glen Ellyn ("CBWGE"). The transaction is valued at $42.4 million.
Per the terms of the contract, shareholders of CFIS, inclusive of the convertible preference shares, will be entitled to receive the proposed merger consideration through a cash and stock transaction.
Post the deal, Wintrust will hold six operating branches in the Wheaton and Glen Ellyn markets. The company plans to consolidate three of these branches with its existing branches within the second quarter of 2015.
The deal, which is expected to close in the second quarter of 2015, is not likely to materially impact Wintrust’s 2015 earnings. Moreover, terms of the acquisition are still subject to approval from CFIS’ shareholders, banking regulators and other customary closing conditions.
Wintrust, which operates 15 community bank subsidiaries, through a network of over 140 branches, seeks to enhance footprints in the Illinois market with the latest acquisition. Jointly, the two parties look forward to serve the communities in a better way.
Similar to the aforementioned deal, Wintrust had completed the acquisition of Wisconsin-based Delavan Bancshares, Inc. ("Delavan") in Jan 2015. However, location-centric deals like these might generate concentration risks going forward. Also, the deal failed to grab attention, since the acquisition is not expected to be accretive to earnings in the current year.
Nevertheless, we believe the company is poised to grow through more diversified as well as strategically and financially meaningful acquisitions, based on its healthy capital position and sound asset quality.
Currently, Wintrust carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the banking space are Heartland Financial USA, Inc. HTLF, MidWest One Financial Group, Inc. MOFG and Pinnacle Financial Partners Inc. PNFP. All these stocks sport a Zacks Rank #1 (Strong Buy).
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