Posted 2/10/2014 12:00 am
Updated 9 months ago
The way Ross Whipple and George Gleason described it, the courting process between Summit Bancorp Inc. of Arkadelphia and Bank of the Ozarks Inc. of Little Rock was abbreviated.
In fact, the dinner meeting to discuss a potential merger in late fall amounted to a first date.
“It has been a substantial date,” quipped Gleason, chairman and CEO of Bank of the Ozarks.
His observation drew laughter from the gathering at Little Rock’s Capital Hotel, where the $216 million purchase of Summit Bancorp was formally announced at a Jan. 30 press conference.
Substantial indeed and the product of a whirlwind corporate romance.
The first-time get-together between Gleason and Whipple, chairman and CEO of Summit Bancorp, culminated in a deal that represents the largest bank acquisition in the history of Bank of the Ozarks.
Gleason described it as an “amazing, compelling transaction” and noted that bankers live in a world where size and scale increasingly matter.
The purchase of Summit Bank, the sixth-largest bank in Arkansas at $1.18 billion, along with the pending Texas acquisition of Omnibank in Houston, will boost total assets at Bank of the Ozarks to more than $6.2 billion.
Among Arkansas chartered banks, only Arvest Bank of Fayetteville (total assets: $14 billion) and Centennial Bank of Conway ($6.8 billion) are larger.
Summit recorded a profit of $14.5 million during 2013 while Bank of the Ozarks reported net income of $92.5 million.
“George Gleason is building a powerhouse on the way to taking the bank to the next level,” Whipple said. “It should be obvious [shareholders] will be pretty happy.”
The estimated value of the deal is 1.6 times book value and 15.8 times earnings. Summit Bancorp shareholders, more than 300 of them, will exchange their private stock for public shares in Bank of the Ozarks, with an option of taking some cash.
The Bank of the Ozarks-Summit Bank union represents the combination of two profitable banking ventures that grew their Arkansas operations largely through de novo branching.
Until the 2010 launch of an FDIC-assisted buying spree, Bank of the Ozarks opted with rare exception to grow its footprint in Arkansas and elsewhere by building instead of buying branches.
“We’re not in an environment now where de novo branching makes economic sense like it [once] did,” said Gleason, who took the company public in July 1997.
The starting point for Summit was a de novo bank in Magnolia that Whipple retained after the 1998 sale of Horizon Bancorp Inc. in a stock swap valued at $120 million. Horizon Bank of Columbia County, chartered in 1996, was excluded from the transaction with Mercantile Bancorporation Inc. of St. Louis because state law prohibits the sale of banks that are less than five years old.
After a two-year non-compete agreement elapsed on Feb. 14, 2000, Whipple moved the charter from Magnolia to Arkadelphia and rechristened it Summit Bank. Total assets numbered about $75 million back then.