BancorpSouth's (BXS) Ouachita & Central Community Deals OK'd

After a wait of nearly four years and extension of completion dates multiple times, BancorpSouth Bank (NYSE:BXS) has finally received all necessary approvals to acquire Ouachita Bancshares Corp. and Central Community Corporation. Both the deals are now expected to close on Jan 15, 2018.

BancorpSouth received regulatory consent from the Federal Deposit Insurance Corporation and the Mississippi Department of Banking and Consumer Finance for the mergers.

Dan Rollins, BancorpSouth Chairman and Chief Executive Officer said, “We are pleased to have secured the necessary regulatory approvals and are working to complete both transactions. Our team is diligently executing our overall strategic plan and these acquisitions are significant to our company and an integral part of our future.”

Ouachita will likely strengthen BancorpSouth’s position in “along the I-20 corridor in Louisiana” while Central Community is expected to support the company’s operations in Austin, TX. Following the closure of the transactions, BancorpSouth will become the seventh largest bank in Louisiana and hold the 29th position in terms of deposit in Texas.

Deal Details

On Jan 22, 2014, BancorpSouth had announced a definitive agreement with the Central Community, according to which, the company will issue around 7.25 million shares of its common stock along with $28.5 million cash to acquire Central Community’s stake in First State Bank, Central Community Capital Trust 1 and First Central Union Capital Trust 1.

Previously, on Jan 8, 2014, BancorpSouth had signed a merger agreement with Ouachita — the parent company of Ouachita Independent Bank, headquartered in Monroe, LA. Per the deal terms, the company will issue a maximum of 3.675 million shares of its common stock along with $22.875 million cash to acquire all outstanding shares of Ouachita’s capital stock.

Our Take

Driven by its solid liquidity position, BancorpSouth is making strategic investments through M&As. While the two deals were stuck owing certain regulatory concerns, the company continued with its inorganic growth plan.

In April 2014, the company acquired the assets of Knox Insurance Group, LLC while in December 2016, it acquired certain assets of Waguespack & Associates Insurance, Inc. BancorpSouth looks forward to tap similar opportunities in the future as well.

However, the company has been witnessing pressure on net interest margin despite a rise in interest rates. This is expected to continue owing to its liability sensitive balance sheet.

Shares of BancorpSouth have gained 3.4% year to date, marginally underperforming the industry’s rally of 4.4%.



Currently, BancorpSouth carries a Zacks Rank #4 (Sell).

Stocks Worth a Look

Some stocks worth considering in the finance space are S&T Bancorp (NASDAQ:STBA) , sporting a Zacks Rank #1 (Strong Buy), First Bank (NASDAQ:FRBA) and The First of Long Island Corporation (NASDAQ:FLIC) , both carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for S&T Bancorp’s current-year earnings has remained stable in the last 60 days. Its share price has increased 11.1% in the past six months.

First Bank has seen the Zacks Consensus Estimate for current-year earnings being revised upward by 3.1% in the last 60 days. The company’s share price has risen 19.4%, in the past six months.

The First of Long Island Corporation’s current-year earnings estimates have been revised 1.4% upward over the last 60 days. Also, its shares have climbed 2.1% in the past six months.

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