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BancorpSouth on Buyout Spree, Expands in Texas & Florida

Zacks Equity Research

Continuing its efforts to strengthen footprint through strategic opportunities, BancorpSouth Bank BXS has announced plans to acquire Van Alstyne Financial Corporation and Summit Financial Enterprises by the second half of 2019. Notably, both the companies and their subsidiaries will be merged with BancorpSouth, upon competition.

Terms of the Mergers

The acquisition of Van Alstyne Financial is valued in terms of stock and cash, with a boundary in place for the total deal value of $80.0 million to $86.7 million.

Per the terms, BancorpSouth will issue 2.1 million shares of its common stock and distribute $20.5 million in cash, for all outstanding shares of Van Alstyne Financial’s capital stock. However, if need be, the share count or the cash consideration may be adjusted in accordance to the respective caps of the deal value.

With this merger, BancorpSouth will strengthen foothold in Dallas-Fort Worth, TX (CMSA), giving access to seven full-service branches, along with additional locations north of Dallas, Texas and one in Oklahoma.

In case of Summit Financial, the acquirer will issue 2.5 million shares plus $20 million in cash, for all outstanding shares of the former. This deal too comes with a cap placed on either side of the total deal value of $95.0 million to $107.5 million.

The merger will substantially expand BancorpSouth's presence in Florida. Summit Financial operates from four offices located in Panama City, Panama City Beach, Fort Walton Beach and Pensacola. It offers a comprehensive range of personal and business accounts, lending solutions, wealth management and investment services.

Prior Acquisitions

In 2018, BancorpSouth completed its previously announced acquisitions of Icon Capital Corporation, Ouachita Bancshares Corp. and Central Community Corporation. These deals together added loans worth about $1.9 billion and $2.5 billion in deposits.

Further, in late 2018, it entered into an agreement to acquire Merchants Trust and Casey Bancorp, along with their subsidiaries. The deals are expected to be completed in the first half of 2019.

With these acquisitions, the company will gain access to six full-service banking offices in Clarke and Mobile counties; and four other full-service banking offices in the cities of Dallas, Grand Prairie, Horseshoe Bay and Marble Falls.

Our Take

BancorpSouth’s inorganic moves reflect its strong capital position and focused approach to expand reach and product offerings. Further, its efforts to deepen customer relationships through improved technology offerings bode well for the long term. However, elevated merger-related expenses might deter bottom-line growth in the near term.

Over the past three months, the Zacks Rank #3 (Hold) stock has rallied nearly 9%.

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Camden National Corporation CAC has witnessed 1.4% upward estimate revision for current year over the past 60 days. It currently carries a Zacks Rank of 2.

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