Dive Brief:

• Gulfport, Mississippi-based Hancock Whitney Corp. has agreed to acquire Jackson, Mississippi-based Trustmark Corp. in an all-stock deal valued at $3.2 billion, the banks said Thursday. 
• The combination would create a $58 billion-asset bank with about 370 branches across six Southeastern states, according to an investor presentation. 
• The transaction is expected to close in the first quarter of 2027.

Dive Insight:

The combination of $39 billion-asset Hancock Whitney and $19 billion-asset Trustmark would create “the premier Gulf South bank” that’s “better positioned to compete with dominant nationwide and super-regional banks,” the lenders said in the investor presentation. 

Hancock Whitney and Trustmark both have branches in Alabama, Florida, Mississippi and Texas. Hancock Whitney also has a sizable presence in Louisiana, while Trustmark’s footprint extends to Tennessee. 

“By bringing together two high-performing banks with shared values, complementary capabilities, and a relentless focus on client success, we create an organization that is stronger as one,” John M. Hairston, Hancock Whitney’s president and CEO, said in the release. “This combination enhances our platform, expands growth opportunities, strengthens the core deposit franchise, and broadens the capabilities we deliver to consumer and business clients.”

The combined entity would have about $40 billion in gross loans and $48 billion in deposits.

Trustmark has 93 locations and the largest deposit market share across Mississippi, at about 13%, according to Federal Deposit Insurance Corp. data from June. Hancock Whitney, meanwhile, has the No. 2 deposit position in Louisiana, with about 12.4% market share and 97 locations. 

Five members of Trustmark’s board, including President and CEO Duane Dewey, will join Hancock Whitney’s board once the deal closes, the banks said. 

Both banks “have long held a shared commitment to exceptional client service and relationship banking,” Dewey said in the release. 

“Given the strong cultural alignment and complementary business lines between our two organizations, we believe this transaction will generate substantial value and meaningful benefits for our customers, shareholders, associates, and communities,” he said.

Under the deal’s terms, Hancock Whitney will issue 0.7463 shares of common stock for each outstanding Trustmark share, at a consideration of about $54.02 per share, according to the investor presentation. 

Hancock Whitney shareholders will own about 65% of the combined company once the deal is complete, compared with 35% for Trustmark shareholders.

The acquisition is estimated to be about 7% accretive to Hancock Whitney’s 2028 earnings per share, and “mildly dilutive” to regulatory capital at close, the bank said in the release. 

The deal is priced at 1.78 times tangible book value. The transaction will be about 7% dilutive to tangible book value per share, with an earn-back period of about 2.8 years, inclusive of merger expenses, Hancock Whitney said. 

“While the deal comes as a modest surprise, we view the transaction favorably and believe the potential synergies are being overlooked,” Citi analyst Benjamin Gerlinger wrote Thursday. “We believe the combination offers opportunities to deepen lower-cost deposit relationships, expand in concentrated [metro area] growth markets, and generate cost savings beyond management's assumptions given the meaningful branch overlap, particularly in Mississippi.”

Hancock Whitney has been “opportunistic” with acquisitions, “if the stars lined up and it made sense, for investors and for the long term,” Hairston said during a call Thursday to discuss the deal. 

But smaller deals have been more the focus of late, analysts noted. Earlier this year, Hancock Whitney acquired Orlando-based OFB Bancshares and its subsidiary, One Florida Bank, in a $377.6 million deal. Last year, Hancock Whitney bought St. Petersburg-based Sabal Trust Company. 

“I think the only way we would have done one at the size we’re announcing today was because it was this particular team and this particular organization,” Hairston said during the call.

The lender has long wanted a statewide presence in Alabama, and “by putting the two banks together, we finally achieved it,” Hairston said. 

The banks’ market overlap is about 20%. “Every market that Trustmark is in is one we are already in or we wanted to be in,” Hairston said. 

Hancock Whitney CFO Mike Achary called out the Florida panhandle, Houston and entrance into Tennessee with a solid presence in Memphis as areas bolstered by the Trustmark deal.

“Florida as a more meaningful part of our footprint is going to be a big story over the next four or five years,” Hairston said. 

Achary said executives are “cognizant” of a potential deposit concentration issue in one southern Alabama market. “It’s not more than about $150 million of deposits, so certainly not significant at all,” he said.

Bank executives highlighted that in conversations with regulators, “so that’ll be something we work through” with the Federal Reserve and the Justice Department, Achary said.

Democrats’ sweeping wins in the midterm elections and the possibility of a closing regulatory window related to M&A “was something we thought about, but it wasn’t the driving factor to get it done sooner rather than later,” Achary said in response to an analyst question. “It was just the right time, I think, for the two companies to come together.” 

Still, he said he expects that result to inspire more deal activity over the next two years than the industry saw the last year or so. 

Hancock Whitney estimates about $205.5 million of pre-tax, run-rate net expense savings, according to the presentation. Achary said the bank will be “very, very careful and deliberate” with branch consolidation. 

About 30 Trustmark branches are within three miles of Hancock Whitney branches, which he offered as a point of context but said it doesn’t necessarily mean the bank will close all of those.