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.

"I'm proud of the organization we've built over the past 14 years at Summit Bank and equally proud to join forces with Bank of the Ozarks," Whipple said in the news release. "We are very pleased to partner with one of the nation’s most respected banking organizations."

Bank of the Ozarks has 136 offices, including 66 in Arkansas. The company went public in July 1997 and has since expanded into Georgia, North Carolina, Texas, Florida, South Carolina and New York.

Arkansas Business was first to report the deal. Later, Bank of the Ozarks issued a news release disclosing the value of the transaction. Shares of the company closed 7 percent higher on Thursday at $62.31. 

'Comfortable Transition'

Bank of the Ozark has filed several documents with Securities and Exchange Commission detailing the acquisition. There's a slideshow presentation for investors, a question-and-answer document for employees and an 8-K filing.

In the slideshow, Bank of the Ozarks touted the two banks' "similar culture" and prospects for a "comfortable transition." It said it expects the the system conversion for the two banks to take place in the fourth quarter.

The presentation also said the merger will give Bank of the Ozarks "significant presence in new Arkansas markets," including Arkadelphia, Malvern, Magnolia and Hope. And it said the combination will result in "top or near-top market share in Saline and Garland counties."

Another Bank Deal

The deal is the latest in a series of Arkansas bank mergers since last year. 

In May, Sigma Holdings Inc. of Little Rock, a new investment company led by veteran Little Rock banker Troy Duke and Garland County businessman Lewis Ray "LR" Gardner, announced a deal to buy the Bank of Rison.

In June, Home BancShares Inc. of Conway, the publicly traded parent of Centennial Bank, announced a deal to purchase Wallace Fowler’s Liberty Bancshares Inc. of Jonesboro, creating the second-largest Arkansas-chartered bank. When it closed in October, the deal was worth $320.1 million.

In July, First Federal Bancshares of Arkansas, the publicly traded parent company of First Federal Bank of Harrison, announced a $124 million cash and stock deal to acquire First National Security Co., the holding company for First National Bank of Hot Springs and Heritage Bank in Jonesboro. The deal will triple First Federal Bancshares’ assets to about $1.4 billion and expand its branch network. It’s set to close in March.

Also in July, Rogers Bancshares Inc. announced a Chapter 11 bankruptcy to facilitate the sale of its Metropolitan National Bank of Little Rock. In September, Simmons First National Corp. of Pine Bluff bought the bank at auction for $53.6 million. The purchase closed in November.

In October, Arvest Bank announced it would buy National Banking Corp., the holding company of North Little Rock's National Bank of Arkansas, for an estimated $9.6 million. Arvest said the deal will help improve its market share and visibility in Conway, Maumelle, North Little Rock and West Little Rock. The deal closed in November.

 

 

Please read our comments policy before commenting.