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Basch Report
Jax Daily Record Thursday, Aug. 4, 202203:50 AM EST

Former VyStar target finds new partner

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A Mississippi bank sees Heritage Southeast as its entry into Jacksonville.
by: Mark Basch Contributing Writer

Before the deal fell apart, VyStar Credit Union was expecting its planned acquisition of Heritage Southeast Bancorporation Inc. would expand its business in Georgia.

Now Heritage has a new merger partner and that bank sees Heritage as its entry into Jacksonville.

The First Bancshares Inc., based in Hattiesburg, Mississippi, announced July 27 it will buy Jonesboro, Georgia-based Heritage.

The agreement came about six weeks after Jacksonville-based VyStar and Heritage called off their merger agreement because they were unable to get regulatory approval for the deal.

Heritage has 22 branches in Georgia and one other office at 10328 Deerwood Park Blvd. in Jacksonville.

In the news release about the deal, First Bancshares cited the opportunity to enter the Jacksonville market, as well as entry into the Atlanta and Savannah markets, as its key motivator for the deal.

The First Bank has 89 branches in five states, including 19 Florida offices in the Tallahassee and Panhandle region.

VyStar had agreed to buy Heritage in March 2021, but the deal faced strong opposition from bankers who expressed concerns about credit unions buying commercial banks.

Federal and state regulatory agencies that needed to approve the deal put off a decision amid the pressure from bankers, and VyStar and Heritage finally gave up and agreed June 15 to terminate the deal.

Just two hours after the announcement, Heritage issued another news release saying it had engaged an investment adviser to possibly seek another merger partner.

A Q&A document issued to Heritage employees July 27 included a question about why Heritage sought a merger so soon after terminating the deal with VyStar.

“Heritage Southeast Bank is successful. It is always attractive to other banks looking to merge and grow,” it said in reply.

“This new agreement is with The First Bank, a very successful regional community bank that wants to grow and expand their presence further into Georgia,” it said, with no mention of Jacksonville.

Heritage stockholders may end up receiving more from First Bancshares than they would have in the VyStar deal.

VyStar never announced financial terms of its agreement but publicly traded Heritage said VyStar would pay enough cash to ensure Heritage stockholders would receive $27 per share in cash.

First Bancshares intends to exchange stock for each Heritage share. It said based on the stock price at the time of the agreement, Heritage stockholders would receive First Bancshares stock valued at $29.68 per Heritage share.

However, it said the value will fluctuate based on the trading price of First Bancshares as the deal moves forward.

First Bancshares said the total value of the deal would be $207 million, based on the stock price at the time.

Heritage’s stock dropped as much as $5.55 to a 52-week low of $19.90 on June 16 after the VyStar deal was called off.

The stock jumped as much as $5.68 to a 52-week high of $27.03 on July 28 after the new buyout deal was announced.

Ameris reports lower earnings

Ameris Bancorp reported adjusted second-quarter earnings of $1.18 a share, 7 cents lower than the second quarter of 2021.

With interest rates rising, Ameris reported lower mortgage banking activity. However, CEO Palmer Proctor said in a July 26 news release the company is in a strong position in the current rate environment.

“We are well positioned for future interest rate hikes, and we continue to monitor our loan growth and credit metrics very closely. Southeastern markets where we operate continue to provide opportunities for responsible growth,” he said.

Ameris moved its executive offices from Jacksonville to Atlanta in 2019.

The bank has 164 locations in Georgia, Alabama, Florida, North Carolina and South Carolina.

St. Joe reports lower results

The St. Joe Co. said July 27 that second-quarter revenue fell 6% to $68.2 million and earnings fell by 12 cents a share to 29 cents.

The Panama City Beach-based real estate developer said results were lower than last year because of the timing of homesite sales and the mix of sales from different residential communities.

“Our leasing revenue, hospitality revenue, and number of residential homesites sold increased in the second quarter of 2022 compared to second quarter of 2021, but our overall revenue and net income was down in the quarter,” CEO Jorge Gonzalez said in a news release.

“The reason is not a slowdown in demand, but is directly attributed to construction delays in the delivery of residential homesites.”

Gonzalez thinks St. Joe’s markets in the Florida Panhandle remain strong.

“We continue to see more visitors to our resorts and hotels and more buyers moving into our residential and multi-family communities from a broader range of states across the country. We believe Northwest Florida’s migration and visitor tailwinds will support growing demand in our area well into the future,” he said.

St. Joe was a longtime Jacksonville-based conglomerate, but it relocated its headquarters to the Panhandle in 2010 after it sold off its other businesses to focus on development of its properties in that region.

Fiserv integrating Finxact operations

After completing its acquisition of Jacksonville-based Finxact Inc. on the first day of the second quarter, Fiserv is working to integrate the operations into its other businesses.

“The feedback from both existing and new clients has been very positive,” CEO Frank Bisignano said in Fiserv’s quarterly conference call with analysts July 26.

“The combination of Finxact’s technology and Fiserv’s size and scale, ecosystem of digital surrounds and knowledge of banking, is winning over other competing offers in the market,” he said.

Fiserv was an early investor of Finxact and paid about $645 million to acquire the rest of the banking technology company.

Fiserv’s quarterly report said it registered a pretax gain of about $110 million from the deal, resulting from a remeasurement of its previous investment in Finxact.

However, the report said the acquisition will otherwise not be material to Fiserv’s operating results.

Fiserv reported revenue of $4.2 billion in the second quarter and adjusted earnings of $1 billion.

SG Blocks addresses stock price concern

SG Blocks Inc. CEO Paul Galvin sent a letter to stockholders July 27 addressing concerns about the company’s low stock price.

“Despite record revenue and a steady stream of accomplishments, we believe that our share price has decreased and is being held down due to unusual options activity,” the letter said.

“Please know that we have contacted the appropriate regulatory authorities and will always fight for our shareholders regardless of the size of an enemy.”

The letter gave no other details on the options activity.

SG Blocks closed July at $1.76, down from $4.31 a year earlier.

SG Blocks, which develops and designs modular structures, reported revenue grew from $8.8 million in 2020 to $38.3 million in 2021.

The company moved its headquarters office to Jacksonville in January.

Duval Container acquired by Novvia

St. Louis-based Novvia Group said July 26 it acquired Jacksonville-based Duval Container Co.

Duval Container, founded in 1919, is a supplier of drums, totes, boxes, glass and plastic containers.

Terms of the deal were not disclosed.

Novvia was formed last year by merging several regional packaging firms backed by private equity firm Kelso & Co.

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