GULFPORT — The $3-billion Hancock Holding Company, the largest financial institution on the Coast, plans to extend its reach to the Hattiesburg area through a deal with Purvis-based Lamar Capital Corp.
The merger, which must be approved by regulatory agencies and stockholders, would result in an institution with combined assets of about $3.4 billion. If the merger is finalized as planned, the name Hancock Bank will be placed on former Lamar Bank offices in the Hattiesburg area in late summer.
Under the proposed merger agreement Hancock Holding Company has offered $11 for each share of Lamar Capital Corporation common stock.
Dr. Ken Cyree, a professor with the department of banking and finance at the University of Southern Mississippi (USM), said the offer is clearly a benefit for Lamar shareholders in that they will receive premiums above and beyond what would have received for the stock.
“My concern is that often the diversification and synergy benefits that in this case Hancock would be expecting generally don’t materialize,” Cyree said. “The cost savings and/or new revenues from most mergers aren’t what they would expect, and there are problems getting two corporate cultures to merge into one. Customers get disgruntled and leave the bank. That creates difficulties they will have to overcome in this market.”
Cyree said that, in his opinion, there are too many banks in Hattiesburg as it is. That creates an intensely competitive marketplace.
“There are 13 banks in Hattiesburg, which is quite a bit for this small market,” Cyree said. “I’m not saying it is impossible for Hancock to succeed with the merger, but they may have some hurdles to overcome.”
Hancock Bank, a subsidiary of Hancock Holding Company, will have to offer competitive rates on loans and deposits in order to pick up new customers, and that can cut into profits particularly if customers “cherry pick” the products they select. If customers only pick the services with the best rates while foregoing the other products that make the bank money, that can affect profitability, Cyree said.
Carl Chaney, chief financial officer for Hancock Holding Company, agreed that Hattiesburg is a very competitive market. But he said that many businesses and individuals have ties to both the Coast and Hattiesburg, and for them it will make sense to do business with a bank that has offices in both locations. Businesses often have offices in the Hattiesburg area and on the Coast, and many Coast families have children attending the USM.
“It is good business sense to have a bank with branches on the Coast and the Hattiesburg area,” Chaney said. “Since the merger was announced we have seen significant deposit growth at Lamar Bank. People said this merger makes so much sense for them as a consumer because either their business activities carry them to both markets or they have children in that area.”
Chaney said the Coast and Hattiesburg area economies have grown closer and closer together. He predicts in a few years it will be just one economy stretching from Hattiesburg/Lamar/ Forrest County all the way down Highway 49 to the Gulf Coast.
Hancock and Lamar Banks have no overlap but are contiguous. “So it was a natural extension of our marketplace into the south central part of the state,” Chaney said.
He agrees that the Hattiesburg banking market is very competitive, and that some people would say it is already overbanked. That is one reason why Hancock decided to merge with Lamar Bank rather than go into the Hattiesburg market and open new branches starting out with zero deposits. He said it makes more sense to enter that market with someone who is already well established with a strong customer base and market share.
“The benefit to us is we expand our market area to include a very fast-growing, dynamic market,” Chaney said. “I think it will be a win-win for everyone involved: shareholders, customers and the banks.”
John Allison, commissioner for banking and consumer finance, Mississippi Department of Banking and Consumer Finance, said the proposed merger continues a trend for the past several years in Mississippi and across the nation towards consolidation of financial institutions.
“As far as this pending merger, it gives Hancock some reaches to the north,” Allison said. “They have been a very dominant player in the four-county area of the Coast for their entire history. For them to continue to grow they have to look at other markets within or outside of the state, and this is certainly a progression that would be in their growth pattern. Lamar Bank was a dominant player in their market, but their potential was getting to a point of being saturated there. They probably couldn’t do much more in that market without heavy injections of capital. Now they will have a much larger capital base to serve the needs of the market area.”
Robert W. Roseberry, chairman and CEO of Lamar Capital Corp., said his company has found a strategic partner to enhance its competitive position. “This merger creates growth opportunities that were unavailable to us individually and thereby promotes the best interests of Lamar Capital’s customers, employees and shareholders,” Roseberry said.
Lamar Capital Corporation had assets of $415.5 million as of December 31, 2000, and locations in six south central Mississippi counties. Subsidiaries are Lamar Bank, a state-chartered commercial bank with nine offices; Southern Financial Services Inc., a consumer finance company with six offices; and Lamar Data Solutions, Inc., a company providing data processing, data recovery and other professional services to community banks. Lamar Bank also provides stock and other securities trading services through an arrangement with Raymond James Financial Services, Inc.
Hancock Holding Company, the parent company of Hancock Bank of Mississippi and Hancock Bank of Louisiana, has assets of $3 billion. Founded in 1899, Hancock Bank stands among the top 100 strongest, safest United States financial institutions, according to Veribanc Inc.
For more information, see www.hancockbank.com.
Contact MBJ staff writer Becky Gillette at firstname.lastname@example.org or (228) 872-3457.