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Top Picks - Capture Arkansas

For $66 million, Simmons to buy Delta Trust & Bank

By David Smith

This article was published March 25, 2014 at 4:32 a.m.

Simmons First National Corp. has agreed to pay $66 million to acquire Delta Trust & Bank, the Pine Bluff bank said Monday.

Delta Trust, which has $430 million in assets, is based in Parkdale in Ashley County but has most of its assets and deposits in central Arkansas.

Delta Trust has nine branches - three in Little Rock and one each in Bella Vista, Eudora, Fayetteville, Hamburg, Parkdale and Wilmot. Delta Trust also has proposed a branch in Conway.

“We believe the [Delta Trust] acquisition will enhance our ability to offer a full range of financial services to our customers,” George A. Makris Jr., Simmons’ chairman and chiefexecutive officer, said in a statement.

Delta Trust manages more than $800 million in assets in its trust department. Combined with Simmons’ $2.7 billion in trust assets, the acquisition makes Simmons the largest trust department in the state with $3.5 billion in managed assets, moving past Arvest Bank with its $3 billion in trust assets.

With the purchase, Simmons will move into third in mortgage originations in the state behind Arvest Bank and Wells Fargo.

“With Delta Trust’s trust and wealth-management operations, this fits like a glove,” said Randy Dennis, president of DD&F Consultant Group, a Little Rock-based bank-consulting firm. “It is a huge plus for Simmons and should enhance the wealth management that [Simmons]provides now.”

Delta Trust also has a strong investment-banking arm and an insurance business.

Simmons, which has $4.4 billion in assets, will expand those Delta Trust businesses throughout Arkansas and into Missouri and Kansas, where Simmons has other branches, Makris said in a conference call Monday.

Simmons’ shares closed at $37.47 Monday, down 14 cents, in light trading on the Nasdaq exchange. The announcement of the Delta Trust purchase was made after the market closed Monday. The sale is expected to close in the third quarter.

Simmons may not need Delta Trust’s branches, however, particularly after Simmons’ acquisition of Metropolitan National Bank of Little Rock last year, Dennis said.

For example, Simmons has 15 branches in Northwest Arkansas, and Delta Trust has only two. Delta has three in Little Rock, and Simmons, with the Metropolitan acquisition, has more than 30 offices in Pulaski County.

“Our desire has been to expand our presence in central Arkansas and Northwest Arkansas,” Makris said. “Along with Metropolitan, this helps us.”

Simmons will have to close some branches that may overlap with Simmons’ existing offices, Makris said. Simmons has not yet determined which branches those will be, Makris said.

French Hill, chairman and chief executive officer, and other investors bought Delta Trust in 1999 and moved its main office to Little Rock. From four small branches in southern Arkansas with $61 million in assets in 1999, Hill grew Delta Trust by seven times to more than $430million in assets.

The reason Delta Trust decided to sell, Hill said, was Simmons’ banking strategy.

“[Delta’s] long-term strategy called for us to find a partner that would let us expand our wealth-management businesses in investment brokerage, asset management, trust administration and insurance across a bigger geographic [area],” Hill said. “We believe Simmons is a great partner for us given that desire.”

Over the past 2 ½ years, Delta’s board of directors has talked with a “number of potential regional banking and investment management partners,” Hill said.

“We kept coming back to the fact that Simmons would be an excellent strategic fit,” Hill said.

Hill said he plans to continue in a leadership position with Simmons.

Hill also is seeking the Republican nomination in central Arkansas’ 2nd Congressional District.

The purchase of Delta Trust will increase Simmons’ value, said Garland Binns, a Little Rock banking lawyer.

“Delta Trust is a very well-operated bank,” Binns said. “I think it will complement Simmons.”

Simmons’ sale of some Delta Trust branches, including some Metropolitan branches, also will provide opportunities to smaller banks in the state to move into the central Arkansas market, Binns said.

Simmons paid 1.6 times Delta Trust’s book value, Dennis said. That is about the same multiple Bank of the Ozarks paid recently for Summit Bank of Arkadelphia, Dennis said.

Simmons has made five acquisitions in the past three years, Makris said. It paid $53.6 million to buy Metropolitan out of bankruptcy last year. It finished the conversion of Metropolitan’s systems to Simmons’ operations last weekend, Makris said.

Simmons is still open to more acquisitions, Makris said.

There are probably other acquisition opportunities in Arkansas that would fit Simmons’ strategy, Makris said.

“We would like to focus on our out-of-state markets,” Makris said. “We would like to fill in some of that footprint in Missouri and Kansas.”

Simmons is seeing a lot of activity in the acquisition arena, Makris said.

“Some bankers are getting tired of the regulatory burden they are having to go through,” Makris said. “There is fatigue on the board level and the management level. We’re seeing a little more interest [in banks selling] than in the last couple of years.”

Front Section, Pages 1 on 03/25/2014

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