Simmons First National in Pine Bluff, Ark., has agreed to buy Landmark Community Bank in Collierville, Tenn., and Triumph Bancshares in Memphis, Tenn.
The $23.3 billion-asset Simmons said in a press release Monday that it will pay $146.3 million in cash and stock for the $1 billion-asset Landmark and $131 million in cash and stock for the $900 million-asset Triumph.
The deals, which are expected to close in the fourth quarter, priced Landmark at 143% of its tangible book value and Triumph at 151%, Stephen Scouten, an analyst at Piper Sandler, wrote in a note to clients.
The acquisitions would add 14 branches, $1.5 billion of loans and $1.6 billion of deposits. Simmons said the acquisitions would make it s the sixth-biggest bank in Memphis, in terms of deposit market share, and the 15th-biggest in Nashville, Tenn.
“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,” George Makris Jr., Simmons’ chairman and CEO, 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,” Makris added. “The financial metrics of these mergers are compelling and consistent with our M&A strategy of partnering with high-quality banks within our current footprint that represent an efficient use of our capital and delivers on our commitment of building long-term value for our shareholders.”
Simmons said it expects the deals to be 7.5% accretive to its 2022 earnings per share, excluding merger-related expenses. They should be slightly accretive to tangible book value.
Simmons said it plans to cut about 40% of the sellers’ combined annual noninterest expenses. The company expects to incur $18.4 million of merger-related charges.
The proposed bank acquisitions would be the first for Simmons since it bought Landrum Co. in Columbia, Mo., in late 2019.
Makris hinted recently that the company’s hiatus could be nearing an end, commenting during a April earnings call that “our dance card is filling up.”
“We are not surprised by this announcement given management’s recent bullish commentary around M&A and the manner in which these deals fit Simmons’ strategy of seeking out low-risk, digestible transactions with good cost save opportunities,” Scouten wrote in his client note.
“Management also noted that smaller deals like these will allow Simmons to remain active in M&A conversations as execution risk is low, and the team did not rule out further M&A in the near-term if the right opportunity presents itself,” Scouten added. “We think the pricing … is favorable given the strong economic trends in Tennessee and other recently announced deals in the Southeast that carried higher” premiums.
Stephens and Covington & Burling advised Simmons, while Mercer Capital Management provided a fairness opinion. Olsen Palmer and Baker, Donelson, Bearman, Caldwell & Berkowitz advised Landmark. Southard Financial and Farris Bobango advised Triumph.