First Financial Bank Expands Service Offerings with Acquisition of Oak Street Holdings Corporation

  • M&A Deals
  • 24.07.2015 01:00 am

First Financial Bank, N.A., a subsidiary of First Financial Bancorp (Nasdaq: FFBC) (collectively "the Company" and "First Financial"), signed a definitive agreement to acquire Oak Street Holdings Corporation ("Oak Street") for $110 million in cash.


Oak Street, a nationwide lender based in Indianapolis, Indiana, was formed in 2003 to provide commission-based loans to help insurance agents and brokers maximize their book-of-business value and grow their agency business.  Oak Street had total assets of $242 million and total loans of $238 million as of June 30, 2015.  Oak Street is majority owned by Angelo, Gordon & Co., a privately-held registered investment advisor dedicated to alternative investing.  Upon completion of the acquisition, Oak Street will become a subsidiary of First Financial Bank, with Rick Dennen, Oak Street's founder and President, continuing in his current position.

"We view a combination with Oak Street as a tremendous opportunity to expand and diversify our service offerings and also provide Oak Street's team with the balance sheet and funding capacity necessary to continue to grow the business," said Claude Davis, Chairman & CEO of First Financial Bank.  "We are very excited by the cultural and business fit between the two organizations and the growth and profitability profile of Oak Street.  This acquisition will complement our existing nationwide franchise finance business which currently has over $500 million of loans outstanding.  We look forward to welcoming Oak Street's associates and clients to First Financial."

"We are excited about our partnership with First Financial Bank, one of the most respected community banks in the country," said Rick Dennen, President of Oak Street.  "Like Oak Street, First Financial has an entrepreneurial culture and is a nimble organization that will provide a very supportive environment from which to build on our success.  We look forward to joining First Financial Bank and leveraging our combined strengths for continued growth."

"The success of our partnership with Oak Street, which commenced in 2010, has exceeded our expectations," said Art Peponis, Head of Private Equity at Angelo, Gordon & Co.  "Oak Street, the premier commercial finance platform focused on insurance industry financing, has achieved significant growth in both portfolio balances and profitability over the last five years.  In First Financial Bank, Oak Street has found a strong, high quality partner to help the company fully realize its growth potential."

The Boards of Directors of both companies have approved the transaction.  Completion of the acquisition is expected within 30 days.

First Financial estimates the following financial impact from this acquisition in the first full year of operation:

  • Operating earnings per share accretion of $0.16 - $0.20,
  • Net interest margin expansion of more than 0.20% related to Oak Street's portfolio yield of approximately 9.0%,
  • Return on average tangible common equity increase of more than 270 basis points,
  • Excellent risk-adjusted returns with expected annual net charge offs to total loans of approximately 0.50% and
  • Tangible book value dilution earn back between 4 - 5 years

RBC Capital Markets, LLC acted as financial advisor to First Financial and Frost Brown Todd LLC acted as its legal advisor.  Raymond James & Associates, Inc. acted as financial advisor to Oak Street and Akin Gump Strauss Hauer & Feld LLP acted as its legal advisor.

Related News