Lone Star Bank postpones vote on sale to First Guaranty

First Guaranty Bancshares

Lone Star Bank in Houston plans to delay by roughly a month a shareholder vote on its pending sale to First Guaranty Bancshares in Hammond, Louisiana. The would-be seller could use the extra time to seek more votes in favor of the deal.

The transaction, announced in January, would give First Guaranty a larger presence in Texas' most populous market. But it comes at a time when banks — and mergers — are under added scrutiny in the aftermath of recent failures. The downfall of First Republic Bank in May followed the collapses of Silicon Valley Bank and Signature Bank in March. Bank stocks took big hits following the failures, though they have recently rallied.

When the deal to buy Lone Star was announced, the $3.2 billion-asset First Guaranty did not say when it expected to close the acquisition. It also did not disclose a specific value of the all-stock deal but said it would issue shares of its common stock to the $155 million-asset Lone Star's shareholders with an aggregate value of 1.5 times of Lone Star's tangible book value at the end of the month prior to the closing date.

First Guaranty said in a press release Wednesday that Lone Star plans to convene and immediately adjourn its June 13 special meeting. It will then restart the meeting on July 11. The buyer said the change would provide Lone Star investors time to review information First Guaranty filed on June 2.

First Guaranty did not delve into specifics about the new information Lone Star shareholders would digest. But the bank in late May said Chairman Marshall Reynolds and other directors, along with other insiders, participated in a $10 million private placement. The stock sale involved the purchase of more than 714,000 shares at $14 each.

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The bank's shares closed just shy of that level on Wednesday. The stock had started the year above $23 per share but fell below the $12 level in the immediate wake of the First Republic failure early in May. Most of the banking sector also lost ground at the time.

The private placement supported the bank's capital levels and signaled insider confidence in First Guaranty's stock. It "definitely reflects the board's commitment and its confidence in our staff," Chief Administrative Officer Desiree Simmons said at the time.

First Guaranty and Lone Star executives were not immediately available for comment on Thursday.