Home » NEWS » BancorpSouth inks merger agreement with First United Bancshares of Ark.
Deal worth about $455 million

BancorpSouth inks merger agreement with First United Bancshares of Ark.

TUPELO — BancorpSouth broadened its geographic footprint to a six-state region last week, announcing merger plans with El Dorado, Ark.-based First United Bancshares Inc., in a transaction valued at about $455 million based on April 14 closing prices.

The addition of the $2.7-billion-asset company, which operates 11 affiliate banks and a non-bank subsidiary, First United Trust Company N.A., will expand BancorpSouth’s reach to Arkansas, Texas and Louisiana and will boost the company’s overall asset size to about $8.6 billion. Currently, BancorpSouth operates banking offices in Mississippi, Alabama and Tennessee. The transaction should be completed in the third quarter of this year, according to company officials, and is expected to be accretive to earnings in 2001. Currently, BancorpSouth has 167 banking offices in its three states and First United has 69.

In a move that surprised some BancorpSouth-watchers, it was announced that James V. Kelley, First United chairman, CEO and president, would become president and chief operating officer of the combined company following the merger’s completion. BancorpSouth chairman and CEO Aubrey Burns Patterson will continue in those roles.

As BancorpSouth has expanded and become more acquisitive in recent years, observers have speculated whether Patterson would officially designate a president and chief operating officer from inside or outside of the company.

Patterson, who is 57, said he has known the 50-year-old Kelley for many years and has “had the highest respect for him.”

“Jim and I share the same philosophy on super-community regional banking,” Patterson states.

Officials said that Kelley would be moving to Tupelo to serve in his new role. On a combined basis, BancorpSouth would have 13 members on its board of directors, of which four would come from the current First United board.

Strategically, analysts say the merger should provide a broader platform for BancorpSouth’s product offerings.

“For some time now, Aubrey Patterson has talked about reaching the $8-billion asset mark and becoming a regional financial services company and this certainly gives him those attributes,” said Joseph Roberto, a Keefe, Bruyette & Woods analyst in New York.

Roberto added that First United provides geographic markets that share synergies with existing BancorpSouth markets and that First United’s low-cost funding can be used to support loan growth throughout BancorpSouth’s existing markets.

Last year, BancorpSouth reported net income of $69 million, with a ROA of 1.24% and an ROE of 14.47%. First United reported $33.5 million in net income, with an ROA of 1.32% and an ROE of 12.88%. BancorpSouth employs 2,500 and First United employs 1000.

Contact MBJ contributing writer Karen Kahler Holliday at mbj@msbusiness.com or (601) 364-1018.


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