Simmons First National Corp. of Pine Bluff is buying privately held Delta Trust & Banking Corp. of Little Rock, the pair announced Monday.
Per the deal, publicly traded Simmons First will acquire all the outstanding common stock of Delta Trust in a transaction valued at about $66 million. The valuation is based on Simmons First's Friday closing price (Nasdaq: SFNC) and "subject to potential adjustments." The price is 1.6 times Delta's total equity capital of $40.6 million as of Dec. 31.
Delta Trust reported net income of $4.3 million in 2013, almost identical to its net income of $4.37 million in 2012.
"[Delta CEO] French Hill and his team have developed a successful and well-respected financial services franchise," George A. Makris, Simmons First's chairman and CEO, said in a news release. "In addition to the growth opportunities afforded Simmons Bank, we look forward to expanding our Simmons Trust services, and offering investment management and insurance products throughout the markets we serve.
"We believe the acquisition will enhance our ability to offer a full range of financial services to our customers including wealth management, consumer and commercial financing needs, and asset protection," Makris said.
Executives expect the deal to close in the third quarter.
"We are excited that our expertise in the strategic areas of investment brokerage, trust administration and insurance sales along with our experienced commercial bankers in all three Arkansas markets are going to be able to join the dynamic, growing Simmons franchise," Hill said in the news release. "Our employees will have expanded career opportunities as Simmons expands its reach in Arkansas and its new locations in Missouri and Kansas."
In a conference call decribing the deal, Makris said he expects some bank branches to close as a result of the merger. "We're not at a point to say which ones," he said.
Still, Makris called the purchase "a great fit."
In Delta Trust, Simmons First is getting an $431.4 million-asset lender that has nine offices in Arkansas: three in Little Rock, two in northwest Arkansas and four in south Arkansas. Delta Trust just last week announced a new office under construction in Conway.
The deal is the second for an Arkansas bank by publicly traded Simmons in less than a year. In November, the publicly traded bank holding company bought Metropolitan National Bank of Little Rock for $53.6 million out of the bankruptcy estate of Rogers Bancshares Inc.
In the conference call, Makris reiterated previous statements that Simmons is on the lookout for acquisitions.
"We're not going to sit on the sidelines," he said. "We're going to continue to move forward."
Makris said there are other Arkansas banks that would fit into Simmons' strategy. He added that "we would really like to focus on out-of-state markets to fill in some of that footprint in Missouri and Kansas." Simmons has said before that it also wants to expand its presence in central and northwest Arkansas.
"There are a lot of privately held [banks] who quite honestly are getting sort of tired of the regulatory burden that they're having to go through," Makris said.
Those banks might be looking to sell, he said.
Simmons First National Corp. is a $4.4 billion based financial holding company with operations in Arkansas, Kansas and Missouri. It currently has 111 total branch offices, but 27 of those are closing as Simmons assimilates the Metropolitan operation. Simmons First National Corp. has also announced a plan to consolidate its seven separate bank charters under the single charter of Simmons First National Bank.
On the Market
There’s been an appetite for selling at Delta.
As Arkansas Business previously reported, former USA Drug owner Steven LaFrance Sr., his family and others were working to assemble a controlling stake in Delta Trust last year before LaFrance’s death in June. But the parties couldn’t agree on a price.
Arkansas Business reported in February that Simmons First and Delta Trust were in talks and that a deal was coming. At the time, Hill would not comment. David Garner, Simmons’ executive vice president and spokesman, said it was "totally a rumor" that Simmons was buying Delta.
The deal comes as Hill, the founding chief executive officer of the $431.4 million-asset lender, runs for the Republican nomination for Arkansas’ 2nd District seat in Congress.
That seat is in play after incumbent Republican Tim Griffin decided not to seek re-election. Griffin is running for lieutenant governor.