Renasant, BancorpSouth acquisitions seen boosting earnings per share
by Ted Carter
Published: February 17,2014
Analysts see bump-ups in earnings per share from growth achieved by Tupelo’s Renasant Bank through acquisition of M&F Bank of Kosciusko and growth expected by Tupelo neighbor BancorpSouth’s announced acquisitions in Texas and Louisiana.
The $5.7 billion Renasant’s first full quarter with M&F was a solid one, Birmingham, Ala.-based Stern Agee reported, citing a .03 percent increase in net interest margin from the third quarter which helped to drive net interest income growth of 30 percent.
“Cost savings from the deal should drop to the bottom line in 2014, along with solid loan growth and the continued reduction in credit expenses,” Stern Agee said in a late January report. The analysts say savings from the deal should benefit Renasant by an EPS of 28 cents.
The publicly held Renasant’s acquisition of M&F added $1.6 billion in assets and 42 banking and insurance locations throughout Renasant’s Mississippi, Alabama and Tennessee markets. The merger, completed in the fall, significantly increased Renasant’s deposit market share in the Birmingham and Memphis metro markets as well as the key Mississippi markets of Tupelo, Oxford and Starkville, while providing entry into the markets surrounding Jackson. Also in 2013, Renasant completed a de novo expansion into the East Tennessee markets of Jonesborough, Maryville, Bristol and Johnson City. The expansion gave the banking company 17 locations covering all three major Tennessee markets.
Renasant has 120 banking, mortgage, financial services and insurance offices in Mississippi, Tennessee, Alabama and Georgia. While Renasant looked east for much of its 2013 growth, the $13 billion BancorpSouth’s announced acquisitions are in the west in Louisianan and Texas. BancorpSouth said it expects to close in the second quarter on its acquisitions of $1.3 billion First State Bank, which is headquartered in Austin, Texas, and operates 31 full-service banking offices.
BancorpSouth will acquire parent Central Community Corp.’s interest in First State Bank, Central Community Capital Trust 1, and First Central Union Capital Trust 1 in exchange for approximately 7,250,000 shares of BancorpSouth common stock plus $28.5 million in cash.
In a deal announced shortly after New Year’s, BancorpSouth said it will acquire the $652 million Ouachita Bancshares Corp. and its wholly owned subsidiary, Ouachita Independent Bank headquartered in Monroe, La. Ouachita Independent operates 12 full-service banking offices in Louisiana and loan production offices in Natchitoches, La., and Madison, Miss.
BancorpSouth will issue a maximum of 3,675,000 shares of BancorpSouth common stock plus $22.875 million in cash for all outstanding shares of Ouachita Bancshares Corp. capital stock.
BancorpSouth put the total value of the deal at between $99 million to $112 million.
Meanwhile, analysts at Stern Agree estimate the acquisitions will benefit BancorpSouth’s EPS by 22-cents.
Based on BancorpSouth’s fourth quarter results and the accretion from the Central Community acquisition, Stern Agee said it was raising BancorpSouth’s EPS estimate for 2014 by 3-cents and its 2015 EPS by 12-cents.
The analysts estimated the Ouachita Bancshares acquisition will give BancorpSouth a 10-cents annual benefit to EPS, assuming 30 percent savings and a 4 percent mark on the loan portfolio. With the acquisition, BancorpSouth’s EPS estimate from Stern Agee rose by cents for this year and 10 cents for 2015. BancorpSouth has 292 commercial banking, mortgage and insurance locations in Alabama, Arkansas, Florida, Louisiana, Mississippi, Missouri, Tennessee and Texas, including an insurance location in Illinois.
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