BancorpSouth expands southern footprint into Alabama market

Tupelo, Miss.-based BancorpSouth Bank announced after the close of markets Tuesday (Nov. 13) that it has reached a deal to expand its southern footprint with the purchase of Merchants Trust Inc. in Jackson, Ala.

Merchants operates six full-service banking offices in Clarke and Mobile counties in Alabama. BancorpSouth officials said the acquisition will allow the regional banking group to expand its reach in Mobile County, Ala., and enter new markets in surrounding counties. BancorpSouth operates two full-service banking offices, two mortgage loan production offices and one regional insurance office in Mobile.

“We’re pleased that Merchants agreed to join forces with us,” said BancorpSouth Chairman and CEO Dan Rollins. “Through this merger, we’ll be able to leverage our combined strengths in Southwest Alabama, which is a strategically important market for BancorpSouth. I want to commend Merchants’ leadership and teammates on their extraordinary efforts to help their customers and communities grow. I’m confident that we’ll be able to continue to build on their track record of success.”

As of Sept. 30, 2018, the South Alabama community bank had total assets of $221 million, total loans of $152 million and total deposits of $195 million. Under the terms of the deal, BancorpSouth Bank will issue 950,000 shares of its common stock, plus $8 million in cash, for all outstanding shares of Merchants Trust Inc. capital stock, subject to normal conditions.

The terms of the agreement provide a collar with respect to the total deal value ranging from $37.5 million to $43 million. If necessary, the share count may be adjusted downward or the cash consideration adjusted upward to accommodate the respective boundaries of the collar.

Upon completion of the transaction, Merchants Bank CEO Joe Bedwell will serve as BancorpSouth’s Clarke County chairman. Jim Reid, president and CFO of Merchants Bank, will serve as BancorpSouth’s Clarke County president.

The merger has already been unanimously approved by the boards of directors of both companies. The closing of the transaction is subject to certain conditions, including the approval by Merchant’s shareholders and the receipt of customary regulatory approvals. The transaction is anticipated to close during the first half of 2019, officials said.

In early October, BancorpSouth closed on its earlier announced April acquisition of Houston-based Icon Bank in a stock-and-cash deal valued at nearly $145 million. Icon, which has assets of $794 million and total deposits of $692 million, operates seven full-service banking offices in the Houston area. Those branches will be combined with BancorpSouth’s two full-service banking locations, one mortgage loan production office, and a regional insurance office in the Houston market.

Once the Merchant Bank deal closes, BancorpSouth will have about $18 billion in assets with nearly 285 full-service branch locations as well as additional mortgage, insurance and loan production offices in Alabama, Arkansas, Florida, Louisiana, Mississippi, Missouri, Tennessee and Texas.

The recent deals will allow BancorpSouth, which has 42 branches in 29 cities in Arkansas, to keep pace with similarly sized Arkansas rivals like Bank of the Ozarks, Arvest Bank, Simmons Bank and Centennial Bank, which have all seen post-recession growth.

Earlier Tuesday, Pine Bluff-based Simmons First National Corp. announced a deal to acquire St. Louis-based Reliance Bancshares in a cash-and-stock deal valued at around $214 million. Reliance has assets of $1.5 billion and operates 22 branches in the St. Louis metro. By comparison, Simmons reports $16.3 billion in assets.

BancorpSouth has looked for small, strategic acquisitions to keep stride with its acquisition-hungry regional banking peers after emerging from legal and regulatory proceedings related to the bank’s lending and mortgage practices to mostly African-American consumers.

At the close of business Tuesday, BancorpSouth shares (NYSE: BXS) were up 13 cents at $18.91. The company’s shares have traded in the range of $26.91 as a low and $35.55 as a high.