Another bank merger is on the horizon

MyState Bank, operating out of Hobart, and Auswide Bank, headquartered in Bundaberg, have signed a scheme implementation agreement (SIA), indicating a desire to merge.

The combined loan book is expected to be around $12.5 billion. Meanwhile, net assets will be $755 million and total deposits, $9.6 billion.

The name of the game is growth, with MyState saying that the “two high-quality, complementary businesses will deliver significant scale, contributing to improved operating efficiency from a larger balance sheet and increased funding flexibility.”

Mid to late December 2024 is the “targeted implementation” and, under the proposed merger, Auswide shareholders would receive 1.11 new MyState shares per Auswide share, implying 65.9 per cent pro forma ownership of the combined group for existing MyState shareholders.

Commenting on the announcement, MyState’s managing director and CEO Brett Morgan hopes to leverage recent growth to drive the merger: “In addition to delivering a solid FY24 result and executing on important strategic initiatives, I am delighted to announce that MyState has today signed a scheme implementation agreement to merge with Auswide Bank.

“The combination of two high-quality and complementary businesses is consistent with our stated growth strategy and brings significant scale advantages to the Group. We expect significant cost synergies from the merger, which we also expect to be EPS accretive for MyState shareholders from FY26 on a post synergies run rate basis. The scheme, which is subject to the customary regulatory, Auswide shareholder and third-party approvals, is expected to become effective in mid-to-late December 2024.”

Both banks reportedly have “quality” loan books, low arrears, and loyal customers, bringing similar ideals together and allowing for further diversity in loan balances by geography.

MyState’s chair Vaughn Richtor said: “We look forward to the value creation arising from merging two sound customer focused businesses with long histories of serving their local communities.”

Operational integration is expected to be mostly completed by the end of the financial year 2027. MyState anticipates achieving pre-tax cost synergies ranging from $20 million to $25 million, with the merger projected to be EPS accretive for MyState shareholders, including full run-rate synergies by FY26.

The primary sources of these synergies are expected to include the consolidation of technology platforms, the integration of shared services, a streamlined leadership and management structure, and the consolidation of third-party providers. Earnings for FY25 will be affected by upfront transaction and integration costs.

Key dates for the process are detailed below:

• Lodge regulatory applications: August 2024
• Lodge Scheme Booklet with ASIC: September 2024
• First court date application served on ASIC: October 2024
• First court date: October 2024
• Dispatch Scheme Booklet: October 2024
• Scheme meeting held (Auswide shareholder vote): November/December 2024
• Second court date: December 2024
• Record date: December 2024
• Implementation date: December 2024

[Related: Experian/illion merger given green light by ACCC]

Jack Campbell is the editor of Broker Daily. After graduating from the University of Wollongong in 2022, Jack began his journalistic career working on Broker Daily’s sister brand, HR Leader. In August 2023 he was made the news editor and worked alongside some talented journalists writing articles and recording podcasts.

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