Bank of the Ozarks Inc. completed its largest deal in its history with the acquisition of Atlanta-based Community & Southern Holdings Inc., the Little Rock regional banking group announced Monday (Oct. 19).
The all-stock deal agreement and plan of merger to acquire Community & Southern Holdings Inc., and its wholly-owned bank subsidiary, Community & Southern Bank, is valued at nearly $800 million, or approximately $20.50 per fully diluted CSB share, bank officials said.
Monday’s deal is the 14th Bank of the Ozarks’ acquisition since March 2010, and its largest transaction to date. According to data from SNL Financial, this acquisition, both in total assets and in purchase price, is the largest ever by an Arkansas bank. The merged operation will have $13.7 billion in assets.
The deal, subject to potential adjustments, is expected to be accretive to the fast-growing Arkansas regional bank’s diluted earnings per common share for the first 12 months after the transaction closes and thereafter.
“We are very pleased to announce the acquisition of Community & Southern Bank. This combination is a hand in glove fit,” said Bank of the Ozarks Chairman and CEO George Gleason. “The synergies created by our highly complementary combined network of 75 Georgia banking offices, with virtually no overlap, will give us a powerful presence in Georgia, providing customers with great access and convenience.”
Gleason said the addition of CSB’s Jacksonville, Fla., office provides the bank entry into the favorable Jacksonville market and expands the Arkansas bank’s existing 10-office presence in Florida.
“Even more important is the depth and expertise of our two extremely talented teams of bankers,” Gleason said. “Our customers in Georgia and Florida will benefit from our great combined team, our expanded network of banking offices and enhanced services. We are excited about the tremendous growth opportunities.”
Community & Southern Holdings was established in 2010 and has completed 14 acquisitions resulting in 47 Georgia banking offices and one Jacksonville, Fla., location. Most recently, CSB acquired certain CertusBank branches on Oct. 9, 2015. At Sept. 30, 2015, CSB had approximately $4.4 billion of total assets, $3 billion of loans and $3.7 billion of deposits.
Upon the closing of the transaction, CSB will merge into the Little Rock regional banking group and Community & Southern Bank will merge into the parent company’s wholly-owned bank subsidiary, Bank of the Ozarks. Completion of the transaction is subject to certain closing conditions, including customary regulatory and shareholder approvals.
Pat Frawley, CEO and founder of CSB, will become the CEO over Bank of the Ozarks’ Georgia operations upon completion of the transaction. Frawley is expected to lead the integration and future strategic direction of the two banks’ combined 75 offices and operations in Georgia.
“Our teammates have worked incredibly hard over the past six years building a quality franchise, and I am very proud of them,” Frawley said. “As a result of this transaction, our shareholders will be rewarded, and our employees, customers and communities will have enhanced opportunities available to them by being associated with the highest performing community bank in the United States. We are extremely optimistic about our future prospects and are eager to get underway with our new partner.”
Under the terms of the agreement, which has been approved by the boards of directors of both companies, each holder of outstanding shares of common stock of CSB will receive shares of common stock of OZRK. The number of OZRK shares to be issued will be determined based on the 15-day volume weighted average stock price of OZRK’s common stock as of the second business day prior to the closing date, subject to a minimum and maximum price of $34.10 and $56.84, respectively.
CSB was advised by the investment banking firm of Sandler O’Neill + Partners, L.P. and the law firm of Alston & Bird LLP. Bank of the Ozarks, Inc. was represented by the law firm of Kutak Rock LLP and advised by the investment banking firm of FIG Partners LLC.
At the close of business Monday, Bank of the Ozarks shares ended at $46.12, up 25 cents. The Little Rock-based regional bank has traded in the range of $31.63 and $48.68 over the past 52 weeks. Last week, Bank of the Ozarks reported third quarter net income of $46.1 million, a 44% jump from 40 cents a share on net income of $32.1 million a year ago.