Simmons First National Corp. continued its rapid pace of bank acquisitions Wednesday, agreeing to buy Liberty Bancshares of Springfield, Mo., the second deal this month for the Pine Bluff bank and the fourth in eight months.
When all the purchases close, Simmons will be the second-largest bank based in Arkansas, with about $7.8 billion in assets, behind only Arvest Bank of Fayetteville, which has $14.5 billion in assets.
In September, Simmons bought Metropolitan National Bank of Little Rock, which had about $1 billion in assets, out of bankruptcy for $53.6 million. In March, it announced the purchase of Delta Trust & Bank of Little Rock, with about $430 million in assets, for $66 million.
On May 6, Simmons said it would buy Community First Bancshares of Union City, Tenn., which had $1.9 billion in assets, for $243 million in stock.
Wednesday's announcement came only three weeks after the Community First announcement. Liberty, with $1.1 billion in assets, has 23 branches in southwest Missouri, is the 10th-largest bank in the state and the top Small Business Administration lender in Missouri. Simmons agreed to pay $206.9 million in stock for Liberty, based on Tuesday's closing price for Simmons. The deal should close in the fall this year.
Simmons shares closed at $40.32 Wednesday, down 30 cents in trading on the Nasdaq exchange.
The purchase of Liberty fits well with Simmons' presence in Missouri, said Matt Olney, a banking analyst with Stephens Inc. Simmons has nine branches in Missouri, including one in Springfield.
"We were looking for them to get more scale there, because it's tough to be in a market with such a light presence," said Olney, who owns no Simmons stock. "So it's great to see them [grow] in a good market like Springfield, which makes tons of sense given how close they are to [Simmons'] presence in Northwest Arkansas. Strategically this makes a lot of sense."
Garland Binns, a Little Rock banking attorney, agreed.
"I was impressed that Liberty has been a top leader in small-business lending for at least two consecutive years," Binns said.
Community First Bancshares, Simmons' acquisition announced earlier this month, was also the top lender in small-business loans in Tennessee.
"I've noticed that banks that have the ability to handle with expertise [small-business lending] do very well," Binns said. "I think that will really complement the other loan activities that Simmons already has."
Liberty's expertise in small-business lending will enhance Simmons' lending throughout its markets in Arkansas, Kansas, Missouri and Tennessee, George Makris, Simmons' chairman and chief executive officer, said in a statement.
"We view this strategic merger as a win, win, win situation," Gary Metzger, Liberty's chairman and chief executive officer, said in a statement.
Metzger said Liberty's customers will benefit from additional services Simmons provides, its employees will continue to work in a banking environment similar to Liberty's, and the bank's shareholders will have a more liquid stock.
Simmons will have a busy time integrating these banks into its operations.
Simmons completed the consolidation of three of its subsidiary banks last weekend and will complete three more in August, Makris said Wednesday during a conference call.
The Delta Trust & Bank purchase will close in July and Delta's conversion into Simmons' data system will occur in October, Makris said. Community First and Liberty banks will close late this year. Liberty's system will be converted in April next year and Community First's conversion will occur in late summer 2015, Makris said.
"We think we've got these spaced out as a very reasonable time frame for this entire process," Makris said.
Completing the process will be a challenge but isn't a concern, Olney said.
"They've got a lot of work in front of them, but I think they can do it," Olney said.
From 2000 to 2005, Simmons purchased six banks, but then was silent until 2010 when it made two small purchases of failed banks through the Federal Deposit Insurance Corp.
It bought two other failed banks in 2012.
"Between 2006 and 2009, a lot of bank acquisitions out there were bad deals," Olney said. "It's no coincidence that Simmons was on the sidelines at that time. Because they realized that the deals were too expensive. Then the failed-bank period happened and they were very active during that time."
Makris, a Simmons director for years, was selected as the successor to J. Thomas May, the bank's' longtime chairman and chief executive officer, in 2012. But he did not officially take over until May's retirement in December.
Then the pace of acquisitions picked up quickly.
"I think the reason they've been a lot more active [recently] is that they see the market provides a lot more attractive acquisitions than were available [from 2006 to 2009]," Olney said.
Makris said another deal this year "is pretty unlikely."
"But you never say never," Makris said during the conference call. "It really just depends on the transaction itself. It would be awfully difficult and I don't know if we would be prepared today for another transaction above $1 billion [in assets] by the end of the year. It could be that there may be some smaller transactions that we may talk about and be able to get close to a deal by the end of the year. But our first priority is the integration of these acquisitions."
Since December 2009, Arkansas banks have made more than 30 bank acquisitions. Nineteen of those were purchases of failed banks through the FDIC.
Bank of the Ozarks of Little Rock bought seven failed banks in 2010 and 2011, but made bids on more than 60 failed banks, more than any other bank in the country. In the past 16 months, Bank of the Ozarks also has acquired three healthy banks, led by Summit Bank of Arkadelphia, which it bought for $216 million.
Centennial Bank in Conway, owned by Home BancShares, also bought six failed banks in 2010 and one in 2012. It bid on more than 30 failed banks. Since 2011, Centennial has bought another four healthy banks, led by Liberty Bank of Jonesboro, which it bought for $320 million last year.
Simmons bought three Missouri banks and one Kansas bank in 2010 and 2012 through the FDIC.
A Section on 05/29/2014