ROSEMONT, Ill. and HOLLAND, Mich. - Wintrust Financial (NASDAQ:WTFC) Corporation (NASDAQ:WTFC) and Macatawa Bank Corporation (NASDAQ:MCBC) announced today an agreement for Wintrust to acquire Macatawa in an all-stock transaction. The merger will see Macatawa, the parent company of Macatawa Bank, join Wintrust's family of community banks.
Macatawa Bank, which was founded in 1997, operates 26 full-service branches in Michigan and as of December 31, 2023, held approximately $2.7 billion in assets, $2.4 billion in deposits, and $1.3 billion in loans.
Wintrust President and CEO Timothy S. Crane highlighted Macatawa's strong deposit base and asset quality as key factors in the acquisition, stating that the merger will create a "formidable, community-minded competitor" in the area.
The terms of the transaction estimate the aggregate purchase price for Macatawa shareholders at around $510.3 million, or $14.85 per share. The conversion rate for Macatawa common stock into Wintrust common stock will be based on Wintrust's average trading price at closing according to the merger agreement.
This strategic move is subject to regulatory and Macatawa shareholder approvals, with an expected completion in the second half of 2024. The acquisition is not anticipated to have a material effect on Wintrust's earnings per share for the year 2024.
Both companies have emphasized the cultural and operational alignment, with Macatawa Chairman Richard L. Postma noting the potential for enhanced community presence and services. Macatawa will retain its name, key employees, and branches, becoming the 16th community bank subsidiary of Wintrust and its only one in Michigan.
The transaction is advised by Morgan Stanley (NYSE:MS) & Co. LLC and Warner Norcross + Judd LLP for Macatawa, and ArentFox Schiff LLP for Wintrust.
Wintrust, a financial holding company with assets around $57 billion, is known for its "HAVE IT ALL" model, combining large bank resources with community-focused banking. Macatawa Bank is recognized for its local management and customer service, having been acknowledged as one of West Michigan's top companies to work for over thirteen years.
The information in this article is based on a press release statement.
InvestingPro Insights
As Wintrust Financial Corporation (NASDAQ:WTFC) prepares to enhance its community banking presence with the acquisition of Macatawa Bank Corporation, it's worth noting that Wintrust stands out with a solid track record in dividend reliability.
An InvestingPro Tip reveals that Wintrust has raised its dividend for 10 consecutive years and maintained dividend payments for 25 consecutive years, indicating a commitment to shareholder returns. This consistency in dividend payments could be a reassuring sign for investors looking for stable income streams.
In terms of valuation, Wintrust is currently trading at a low P/E ratio relative to near-term earnings growth, with a P/E Ratio (Adjusted) of 9.95 as of the last twelve months ending Q4 2023. This could suggest that the stock is undervalued considering its earnings potential, which is supported by a PEG Ratio of just 0.52, indicating a favorable growth to P/E ratio.
Moreover, analysts have a positive outlook on the company's profitability, predicting that Wintrust will be profitable this year. This optimism is backed by the company's performance over the last twelve months, where it has been profitable and witnessed a large price uptick of 39.24% over the last six months.
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