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Update: Simmons First to Buy Spirit of Texas Bancshares in $581M Deal

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Simmons First National Corp. of Pine Bluff said Friday that it’s acquiring Spirit of Texas Bancshares Inc. of Conroe, Texas, and its wholly-owned subsidiary, Spirit of Texas Bank SSB, in a cash and stock deal valued at about $581 million.

Spirit is a publicly traded bank holding company that operates 37 locations primarily in what’s called the “Texas Triangle”: the Dallas-Fort Worth, Houston, San Antonio and Austin metropolitan areas. It has more locations in the Bryan-College Station, Corpus Christi and Tyler metropolitan areas, along with offices in North Central and South Texas.

In a news release, Simmons First Chairman and CEO George Makris Jr. said the deal would strengthen Simmons Bank’s existing presence in Texas, establishing “a platform for growth” in the state’s fastest growing cities.

The company also predicted the merger would result in combined assets of $28.2 billion, enough to push it past Arvest Bank of Fayetteville to become the largest bank chartered in Arkansas.

“Spirit is a highly regarded, high performing bank with whom we share a common philosophy — providing outstanding customer service and developing deep and long-lasting relationships with the clients and communities that we serve and where we live,” Makris said. 

As of Sept. 30, Spirit had total assets of $3.15 billion, total loans of $2.3 billion and total deposits of $2.7 billion. The company went public on the Nasdaq (STXB) in May 2018. It earned $35.8 million in the first three quarters of 2021, exceeding the $34.7 million it earned in all of 2020.

Spirit of Texas Bank is a Texas-chartered thrift; the SSB in its name stands for state savings bank. It has been active in Arkansas as a Small Business Administration lender. 

Simmons’ announcement follows another Arkansas bank’s Texas purchase. Home BancShares Inc. of Conway, the parent of Centennial Bank, announced the $919 million acquisition of Happy Bancshares Inc. of Texas on Sept. 15. The move marked Centennial’s re-entry into the Texas market after a long absence.

On Friday, Simmons said growth in Texas “has been a strategic priority.” Markis said the deal “not only enhances our current footprint, but also establishes a platform for growth in Houston, Austin, San Antonio and College Station. 

“These markets have been among the fastest growing in the nation in terms of population and economic activity and projections call for this trend to continue. We believe this merger places us in an advantageous position to capture future growth in the Lone Star State.”

Gaining Assets

Simmons (Nasdaq: SFNC) claimed $25.1 billion in assets in its news release, although its average reported for the quarter ended Sept. 30 was $23.2 billion. Simmons predicted combined assets of $28.2 billion, which would elevate it past Arvest Bank of Fayetteville to become the largest bank chartered in Arkansas. Arvest had total assets of $26.39 billion as of Sept. 30, overtaking Bank OZK of Little Rock ($26.01 billion) for the first time since 2016.

Simmons has been busy. In October, it completed the acquisitions and conversions of two Tennessee banks, Landmark Community Bank and Triumph Bancshares Inc., the parent company of Triumph Bank. It’s also been raising its marketing profile in key cities.

On Oct. 1, Arkansas Business reported that Simmons was in advanced negotiations to be the title sponsor of Liberty Bowl Memorial Stadium in Memphis, a deal that would rename the venue Simmons Bank Memorial Stadium. Later that month, Simmons announced that it was seeking naming rights to the field at War Memorial Stadium in Little Rock from the state Department of Parks, Heritage and Tourism, which manages the stadium. Simmons got the naming rights to Verizon Arena in North Little Rock in 2020. It’s name is also on two buildings in downtown Little Rock: the 40-story former Metropolitan National Bank Building and the 12-story former Acxiom Corp. building in the River Market District.

Simmons said that, on a pro forma basis and including Landmark and Triumph Bank deposits at June 30, it now ranks as the eighth largest bank in Tennessee, the seventh largest bank in the Memphis metropolitan area and the 14th largest bank in the Nashville metropolitan area, according to FDIC deposit market share data as of June 30.

The Texas deal has been approved by the boards of directors of Spirit and Simmons and is subject to approval by Spirit shareholders, regulatory approval and other customary closing conditions. Simmons expects to close the deal in the second quarter of 2022. 

In a news release, Spirit Chairman and CEO Dean O. Bass said the merger gives the company the opportunity “the increased capacity to lend by leveraging a larger balance sheet and access to a broader array of products and services,” including digital capabilities. 

“We believe the opportunity to join the Simmons team is very positive for our organization and will provide greater benefits to our customers and the communities we serve,” Bass said.

The companies said Bass will join the Simmons board as an independent director after the deal closes. David M. McGuire, Spirit of Texas Bancshares’ president and chief lending officer, will be a member of the company’s executive team in Texas.

Keefe Bruyette & Woods, A Stifel Company, served as financial advisor to Simmons; Covington & Burling LLP served as its legal advisor. Stephens Inc. of Little Rock served as financial advisor to Spirit, and Hunton Andrews Kurth LLP served as Spirit’s legal advisor, the companies said.

Shares of Simmons were trading at $29.70 Friday morning, down about 5.7%.

(Gwen Moritz contributed to this report.)

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