MC Bancshares and Heritage NOLA Bancorp scrap merger deal

In a surprising turn of events in the banking sector, MC Bancshares, Inc. (“MC Bancshares”), the holding company for M C Bank & Trust Company, and Heritage NOLA Bancorp, Inc. (“Heritage NOLA Bancorp”), the holding company of Heritage Bank of St. Tammany, have mutually agreed to terminate their previously announced merger agreement. The merger, initially set to significantly reshape the community banking landscape in Louisiana, was originally announced on July 6, 2023, with an expected deal value potentially reaching up to $20.50 per share of Heritage NOLA Bancorp common stock.

Background and Deal Details

The all-cash transaction had stipulated that the merger consideration would be equal to the value of Heritage NOLA Bancorp’s adjusted tangible shareholders’ equity at the time of closing, plus an additional $6.5 million. This valuation was subject to adjustments based on various factors, including transaction costs and potential unrealized losses in Heritage NOLA Bancorp’s securities portfolios.

However, on March 13, 2024, Heritage NOLA Bancorp was informed by MC Bancshares of the withdrawal of its applications to acquire Heritage, leading to the eventual cancellation of the merger. The Mutual Termination Agreement, approved by the Boards of Directors of both companies, stipulates that each party will bear its own costs and expenses related to the terminated transaction, without any penalties, and releases both parties from any claims of liability concerning the merger.

Statements from Company Leaders

Chris LeBato, President and CEO of M C Bank, expressed disappointment over the dissolution of the deal but reassured stakeholders of the bank’s continued strength and commitment to community service. “While it is unfortunate that we could not finalize this deal, M C Bank remains a very strong and well-capitalized community bank,” stated LeBato. “We will continue to focus on our human-centric approach to banking and on strengthening the communities we serve, while staying ready for new partnership opportunities.”

Similarly, David Crumhorn, President and CEO of Heritage and HRGG, cited uncertainties in the regulatory environment and the merger approval process as pivotal reasons for the board’s decision to halt the merger. “After extensive review, the Board concluded that it was no longer in the stockholders’ best interest to continue to pursue the proposed merger. Nevertheless, our organization remains strong and we continue to be laser focused on building value for our stockholders, customers, and community,” Crumhorn explained.

Implications and Forward-Looking Statements

The termination of this merger underscores the complexities involved in bank mergers, especially in a fluctuating regulatory landscape. Both institutions appear poised to continue their growth independently, focusing on their core markets and leveraging their established reputations to enhance shareholder and customer value.

As the banking industry continues to evolve, both MC Bancshares and Heritage NOLA Bancorp are expected to explore other strategic opportunities that align with their business goals and market dynamics.