Simmons First National Corp. of Pine Bluff announced Monday that it will buy two Memphis-area bank companies in separate deals worth a combined $277.9 million.
The publicly traded parent of Simmons Bank said it will acquire Landmark Community Bank of Collierville, Tennessee, and Triumph Bancshares Inc., the parent company of Triumph Bank of Memphis.
Simmons said it expects to close on these transactions, which have been approved by the three companies' boards, during the fourth quarter. The deals are subject to the approval of Landmark's and Triumph's shareholders, regulators and other customary closing conditions.
Chairman and CEO George Makris Jr. said in a news release that the acquisitions fit the company’s strategy "of partnering with high-quality banks within our current footprint."
"Landmark and Triumph are two successful, local community banks who share our philosophy of a strong credit culture, significant community involvement and a passion for delivering excellent customer service," Makris said in the release. "The opportunity to combine forces with these two institutions also highly complements our existing footprint in Tennessee and enhances our scale in two of our key growth markets — Memphis and Nashville."
Landmark has five offices in Shelby County — two in Memphis and the rest in the eastern suburbs of Collierville (1) and Germantown (2). Triumph has six offices in Shelby County — two in Memphis, two in Collierville and one each in Germantown and Arlington.
Both are also present in the Nashville area. Landmark has a branch in Nashville and one each in its southern suburbs of Brentwood and Franklin. Triumph has one office in Brentwood.
Simmons said the deals would make it the ninth-largest bank in Tennessee based on deposit market share and raise its ranking in Memphis to sixth from 35th and to 15th from 20th in Nashville. Simmons said it is reviewing plans for expanding its branch network in Memphis.
In an interview, Makris told Arkansas Business that Memphis is home to many manufacturers and warehouse buildings — a good fit for the company’s expertise in industrial warehouse financing.
He called Nashville a well-rounded health care and entertainment hub that’s drawing people from both coasts, with many corporations considering it for new headquarters.
Makris said the Tennessee market is attractive because of its proximity to Simmons’ home in central Arkansas. He also cited a longtime affinity and knowledge of the Memphis community in particular. He and several board members are alumni of Rhodes College.
“I guess we have that natural connection to the Memphis market. Actually, the whole state of Tennessee looks quite a bit like what we’re used to in Arkansas,” he said.
“The bulk of our business in Tennessee is in northwest Tennessee, in what I would consider to be rural parts of Tennessee, where we have substantial market share. We acquired those territories through First State Bank, out of Union City, Tennessee,” he said. “So we have a really nice mix of rural communities and metro communities. And, in Tennessee, it's no different. The bulk of our business is still in rural Tennessee.”
Pandemic Proving Ground
Makris said the Landmark deal had been in the works for a couple of years and was close to completion when the pandemic struck. With both banks surviving without major asset quality issues, “it was natural for us to go ahead and pursue that opportunity,” Makris said.
The Triumph opportunity came about a few months ago when a friend of his who serves on Triumph's board visited with Makris about how to turn their investment into a more liquid asset. Makris said Simmons is targeting similar banks — ones that are privately held with a great franchise but seeking more liquidity in their investments.
Simmons is the third-largest bank chartered in Arkansas in terms of total assets ($23.3 billion as of March 31) and ranked fifth in statewide deposits ($6 billion) when the Federal Deposit Insurance Corp. did its last snapshot of deposits on June 30, 2020.
Simmons said the Landmark deal would be paid for with cash and stock valued at about $146.3 million; the Triumph deal would be paid for with the same mixture valued at $131.6 million. The cash would be used primarily for payments to Landmark's and Triumph's option holders.
The bank expects the deals to be about 7.5% accretive to earnings per share in 2022 and to achieve cost savings of about 40% by improving operational efficiency. Revenue synergies have been identified, but have not been included in estimates, Simmons said.
Landmark, with $102.2 million in equity capital as of March 31, reported first-quarter earnings of $2.9 million after earning $10 million in 2020 and $9.1 million in 2019. It had $1 billion in assets as of June 30, 2020.
Triumph earned $2.1 million in the first quarter of this year, $7.7 million in 2020 and $6.5 million in 2019. It's equity capital was $87.9 million as of March 31. It had $893.7 million in assets as of June 30, 2020.
"We believe the opportunity to join the Simmons team is very positive for Landmark's stakeholders," Landmark's Chairman, President and CEO James "Jake" Farrell said. "We are excited to become part of the Simmons organization, and we look forward to using Simmons' resources to strengthen and expand our business while continuing to provide locally focused banking services to our customers.
"With access to Simmons' broader array of consumer and commercial products, combined with their leading-edge digital capabilities, we will be able to provide greater benefits to our customers and the communities we serve."
William Chase Jr., Triumph’s president and CEO, said joining Simmons will allow it to grow with its clients and meet their needs.
"In addition to being able to offer our clients a wider breadth of banking products and services, we will have a greater capacity to lend while continuing to deliver the same excellent customer service and active community involvement," he said.
Simmons Bank operates 198 financial centers, including 68 in Arkansas, 48 in Missouri, 33 in Tennessee, 23 in Texas, 20 in Oklahoma and six in Kansas.
(Gwen Moritz contributed to this report.)