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BancorpSouth on Buyout Spree, Gets FDIC Nod for Acquisitions

Zacks Equity Research

Recently, BancorpSouth Bank BXS received Federal Deposit Insurance Corporation’s (FDIC) regulatory approvals for the completion of proposed mergers with Van Alstyne Financial Corporation and Summit Financial Enterprises. Notably, continuing its efforts to strengthen footprint through strategic opportunities, the company had announced the acquisitions this March which will likely close on Sep 1, 2019, post meeting of all customary conditions.

Both companies and their subsidiaries will be merged with BancorpSouth, upon competition. As of Jun 30, 2019, Van Alstyne Financial and Summit recorded total assets of $905.6 million, total loans of $610.7 million and total deposits of $799.8 million.

Terms of the Mergers

At the time of announcement, the acquisition of Van Alstyne Financial was valued in terms of stock and cash, with a boundary in place for the total deal value of $80 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 with the respective caps of the deal value.

With this merger, BancorpSouth will strengthen its 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 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 the 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, this April, the company completed the buyouts of Merchants Trust, Inc. and Casey Bancorp, Inc.

With these acquisitions, the company gained 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 initiatives reflect its strong capital position and focused approach to expand the company’s reach and product offerings. Furthermore, its efforts to strengthen 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.

Year to date, this Zacks Rank #3 (Hold) stock has rallied nearly 2.8% compared with 6.5% growth recorded by the industry.


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