By JACK WEATHERLY
BancorpSouth Inc. has reached an agreement to extend to Dec. 31, 2017 an attempt buy two banks, which has been delayed by federal regulatory intervention.
The Tupelo-based banking chain announced Friday the third extension of the merger effort that began in January 2014.
“We continue to believe these proposed transactions are in the best interest of the shareholders and teammates of all three organizations as well as the communities we collectively serve,” BancorpSouth Chairman and Chief Executive Dan Rollins said in a release.
BancorpSouth seeks to buy the Central Community Corp. of Temple, Texas and Ouachita Bancshares Corp. of West Monroe, La. The merger agreements were valued in January 2014 at $325 million in stock and cash.
Top officers of the other two banks likewise voiced determination and hope that the deal will transpire.
The mergers have been unanimously approved by the boards of directors of all three banks, and by the shareholders Ouachita Bancshares and Central Community.
BancorpSouth reached a $10.6 million settlement in June with the U.S. Consumer Financial Protection Bureau, for what had been described as redlining in its Memphis operations. Redlining is an illegal practice whereby a “red line” is drawn around an area and lending is materially restricted there.
The Tupelo bank said it disagreed with the allegations and did not admit to any liability. The settlement “was made to avoid prolonged and distracting litigation,” the bank said at the time in a prepared statement.
Nevertheless, regulators have prolonged the merger effort, presumably denying the purchasing bank the ability to benefit from the acquisitions.
Meantime, the bank has added a chief fair-lending officer and added a community development lending manager.
Additionally, it has hired 16 more community investment bankers.
The Federal Deposit Insurance Deposit Corp. lowered BancorpSouth’s Community Reinvestment Act rating to “needs to improve” from “satisfactory.”
The bank issued a statement Friday saying: “We continue to work daily toward the things the [Consumer Financial Protection Bureau] has asked us to do.”
The latest merger amendment makes it harder for Ouachita and Central Community to break off the effort.
If Central Community terminates the agreement before it expires, it would pay $2 million instead of $1 million for “certain reasons,” according to a document filed by BancorpSouth with the Securities and Exchange Commission on Thursday.
If Ouachita breaks off the deal before the extended period expires it would have to pay an increased penalty ranging from $2 million to $3 million from the original $750,000.
Another penalty is that the value of BancorpSouth stock would drop by 5 percent for what both banks would have received.
BancorpSouth shares closed at $22.66 on Friday, up 24 cents, on the New York Stock Exchange. The 52-week range is $18.69 to $27.23.
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