3 state banks maneuvering acquisitions
2 working through big buys; LR institution’s deal done
Arkansas’ three largest publicly traded banks are in different places when it comes to buying other banks.
Simmons First National Corp. in Pine Bluff is closing on its two largest acquisitions. Conway-based Home BancShares is nearing the close of its largest acquisition. And Bank of the Ozarks of Little Rock completed its two largest bank purchases last year.
In March, Home BancShares announced the purchase of Stonegate Bank in Pompano Beach, Fla., which has $3.5 billion in assets. It is the biggest bank Home BancShares has bought.
Matt Olney, a banking analyst in Little Rock with Stephens Inc., expects the Stonegate deal to close early next year. Home BancShares will have about $13.5 billion in assets when the deal closes.
“Home BancShares remains acquisitive and is now targeting banks in the size range of $1 billion to $2 billion in assets,” Olney said in a recent research brief.
During the second quarter, Home BancShares signed four nondisclosure agreements with banks and completed research on one of those banks, Olney said.
The Conway bank has its sights on a couple of deals that may come together sooner rather than later, said John Allison, chairman of the bank. Home BancShares owns Centennial Bank offices in five states.
“We remain extremely disciplined on our [acquisition] strategy, no dilution to shareholders,” Allison said in a recent conference call. “We take what the world gives us. The way to get in trouble is to push loans. The key is to remain disciplined, work on your loan problems, raise deposits and try to be more efficient.”
Olney’s price target for the Conway bank is $29 a share, down from $31. Home BancShares closed at $25.30 Thursday, up 11 cents, in trading on the Nasdaq exchange.
In December, Simmons announced the purchase of publicly traded Southwest Bancorp, a Stillwater, Okla., bank and its subsidiary, Bank SNB, with $2.5 billion in assets. In January, Simmons said it had agreed to buy First Texas, the holding company for Fort Worth’s Southwest Bank with $2 billion in assets.
The Dallas-Fort Worth economy is performing extremely well, said George Makris, Simmons’ chairman and chief executive officer.
“And the economy is diversified there,” Makris said. “There’s not a lot of concentration in one industry segment. Southwest Bank, because of its reputation, has been able to take advantage of that. I will tell you this: When we talk about the underwriting at Southwest Bank, almost all of the loans that we participated in this last quarter were loans that were already on their books, that we had a chance to look at during our due diligence phase.”
Because of that, Simmons is comfortable with Southwest Bank and Bank SNB’s underwriting standards, Makris said.
Simmons has had regulatory examiners at its headquarters since January, Makris said.
“If we felt there were any regulatory issues that would prevent the approval of the application, we wouldn’t have filed one,” Makris said.
After Simmons released its second-quarter earnings, Olney raised his rating on it from hold to buy.
“Simmons second quarter results were highlighted by solid loan growth, good expense management and steady net interest margin,” Olney said in a research brief. Olney also has buy rating on Home BancShares. He lowered his rating to a hold on Bank of the Ozarks on Friday after the resignation of Vice-Chairman Dan Thomas.
When Simmons completes the two pending purchases, it
will have about $13.5 billion in assets.
Olney projects that Simmons will close the two pending acquisitions some time after Jan. 1, allowing Simmons to remain below a $10 billion regulatory asset threshold and delaying associated costs for another year.
Olney raised his target price to $64 a share from $60. Simmons shares closed at $54.40 Thursday, up 55 cents, in trading on the Nasdaq exchange.
Bank of the Ozarks completed its two largest deals last year — Community & Southern Holdings of Atlanta, with $3.9 billion in assets, and C1 Bank of St. Petersburg, Fla., which had $1.7 billion in assets.
Bank of the Ozarks is still looking to grow through acquisition, George Gleason, chairman and chief executive officer, said in a recent conference call. But Bank of the Ozarks’ stock
hasn’t been trading as strongly as it did a year or two ago, he said.
“So that has made the math of transactions less appealing and more challenging,” Gleason said.
Acquisitions still will be an important part of the bank’s growth strategy, Gleason said.
“But we will be disciplined about it,” Gleason said.
Bank of the Ozarks, which has more than $20 billion in assets, continues its nationwide commercial real estate lending in its real estate specialties group, which accounts for about 70 percent of the bank’s loans.
Recent published reports have highlighted a $90 million loan from the bank to the New York developer of a 16-story building on Park Avenue; a $58 million loan for Wynwood 25, a 289-unit apartment complex in Miami; a $29 million loan for nine residential condominiums in an 11-story building in New York; and a $27 million loan for the construction of an eight-story, 168-unit hotel in downtown Minneapolis.
On March 31, Bank of the Ozarks had $2.6 billion in real estate loans in New York, $2.1 billion in Florida, $1.4 billion in Georgia, $1.3 billion in Texas and $1.2 billion in Arkansas. In 25 other U.S. and international markets — including the Bahamas and Cayman Islands — Bank of the Ozarks had another almost $3.7 billion in real estate loans.
Altogether, the Little Rock bank had $12.3 billion in real estate loans.
After the bank’s secondquarter report, Olney maintained his buy rating on Bank of the Ozarks but lowered his price target for the bank from $64 to $58. Bank of the Ozarks shares closed at $47.57 Thursday, up 28 cents, in trading on the Nasdaq exchange.
Bank of the Ozarks recently celebrated its 20th year as a public company. It has grown from 13 offices and $309 million in total assets in 1997 to 251 offices and more than $20 billion, Gleason said.