SYDNEY, AUSTRALIA: Auswide Bank Limited has entered into a binding agreement to merge with MyState in a transaction that, if implemented, will combine two high-quality banks and materially increase scale with the potential for shareholder value creation.

The proposed merger aims to strategically consolidate two high-quality, complementary banks, creating a trusted national organization. This merger will significantly enhance scale, with combined lending assets of $12.5 billion and customer deposits of $9.6 billion. It will also diversify the lending and deposit portfolios by combining distinct regional areas, establishing a national presence across Australia.

Both banks share similar operating models, technology roadmaps, and growth strategies, enabling simplification, harmonization, and scale efficiencies. Additionally, the merger is expected to generate pre-tax cost synergies of $20 million to $25 million per annum, representing approximately 13% to 16% of the combined cost base, benefiting shareholders through improved governance, technology, and other areas.

Auswide Chair Sandra Birkensleigh: “The proposed merger is a step-change event for Auswide. Through combining two high-quality banks with strong operational alignment, we intend to unlock a range of efficiencies, synergies and growth opportunities and deliver value for our shareholders. We look forward to the next chapter of success for Auswide’s customers, staff and shareholders.”

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

Auswide Bank also announced the 100% acquisition of Selfco, an established non-bank SME lender. Selfco represents a compelling acquisition opportunity for Auswide, offering an entry point into the SME funding market.

The acquisition facilitates Auswide’s entry into asset finance, expanding its service offerings into the large SME funding market and diversifying its loan portfolio, reducing concentration in home loans and key geographies. It provides access to a high-quality loan book with a history of low arrears and negligible losses. Additionally, the acquisition offers substantial revenue growth opportunities for Selfco through synergies with Auswide’s lower wholesale funding costs and strong structural tailwinds in Selfco’s key end markets.

Auswide will pay a total consideration of up to 56.5 million for Selfco, comprising an initial consideration of $5.0 million and potential earn-out payments of up to $1.5 million based on the achievement of profit-related performance hurdles.

The initial $5.0 million consideration is payable in the form of Auswide scrip, which will be issued to Selfco shareholders at the VWAP of Auswide shares in respect of the last five trading days prior to signing.

All Auswide scrip issued to Selfco shareholders will be subject to voluntary escrow, with 40% to be released 12 months post-Acquisition completion and 60% to be released 36 months post-Acquisition completion.