Update: Bank of the Ozarks to Buy Summit Bancorp for $216M

by George Waldon and Lance Turner  on Thursday, Jan. 30, 2014 4:51 pm  

Even as it was announcing in early December the $23 million acquisition of Omnibank of Houston, Bank of the Ozarks was already courting a much bigger partner: Summit Banchares of Arkadelphia.

That $216 million deal, at least 80 percent of which will be paid in Bank of the Ozarks stock, was announced Thursday by the Arkansas banking titans that have built the two banks: Ross Whipple, chairman and CEO of Summit, and George Gleason, chairman and CEO of Bank of the Ozarks.

When the two pending deals are complete — Omnibank in the first quarter and Summit in late May or early June — Bank of the Ozarks' assets will exceed $6.3 billion.

At a news conference Thursday, Gleason said Bank of the Ozarks is continuing to look at acquisition targets. While the footprint of the combined bank still leaves the eastern half of Arkansas virtually empty, Gleason also said that starting branches from scratch — what bankers call de novo branching — doesn't make much sense in an industry weighted down with an oversupply of branches. 

Summit and Bank of the Ozarks have overlap in central Arkansas, especially in Saline and Garland counties, and branch consolidations will follow the combination. But Gleason said not all in overlapping areas will be closed because some of the markets have too much business for a single branch to handle.

Whipple said consultation with banking specialists at Stephens Inc. had persuaded him that Summit, which he founded in 2000, had three options: to grow through acquisition, to sell or to "find a strategic partner." And while Bank of the Ozarks is buying Summit and will be the surviving entity, Whipple said, "This merger has the feel of a strategic partnership." 

Summit has about 330 shareholders, and they will be allowed to vote on the exact form of the buyout. At least 80 percent of the purchase price will be paid in stock.

Summit is the largest acquisition in Bank of the Ozarks' history, and its first in-state since the purchase of River Valley Bank of Russellville in 2003. Since 2010, Bank of the Ozarks has completed nine deals that have expanded its presence in Georgia, Florida, Alabama, North Carolina and South Carolina. It also has a robust lending presence in the Dallas area.

Bank of the Ozarks was the second-largest bank chartered in Arkansas as ranked by assets — $4.7 billion — as of Sept. 30. Summit ranked sixth in Arkansas by assets, with $1.2 billion.

The deal will also be the second big bank transaction for Whipple, who sold the $551 million-asset Horizon Bancorp Inc. in February 1998 for 3.2 times book value in a $150 million stock swap with Mercantile Bancorporation Inc. of St. Louis.

Whipple began building Summit two years after the Horizon sale. Summit now has six offices in Hot Springs, three in Little Rock, two each in Arkadelphia, Benton, Conway, Hope, Malvern and Magnolia, and one each in Bryant and Lonsdale (Saline County).

Whipple is now expected to be elected to Bank of the Ozarks board of directors after the deal closes.



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