Pine Bluff, Ark.-based Simmons First National Corp. (Nasdaq: SFNC) moved to add its first trust asset north of The Natural State with its definitive agreement to purchase Springfield-based Ozark Trust and Investment Corp., the parent company of Trust Company of the Ozarks.
Simmons First National Bank CEO Marty Casteel said the deal, expected to close in the third quarter, adds $1.1 billion in assets under management to the financial institution that currently manages roughly $3.5 billion in trust assets.
“This helps give us a much larger customer base across Springfield and southern Missouri, in particular,” Casteel said. “This is a great company and a great fit because it offers a full range of trust services.”
According to terms of the deal, Simmons would pay roughly $20.7 million in cash and stock for the firm that ranked No. 3 on Springfield Business Journal’s 2014 list of the area’s largest trust companies. TCO held $1.1 billion in assets under management, with 1,346 accounts and 1,314 clients.
The move follows Simmons First National’s first-quarter closing of its Liberty Bancshares Inc. acquisition – a deal valued at $206.9 million – which transferred 1,000 shares of TCO’s common stock to the Arkansas company.
Jay Burchfield, chairman of Ozark Trust and Investment Corp., said he would become a member of Simmons First National’s board of directors once the sale closes. Burchfield said he helped provide guidance for Liberty Bank as an adviser to the board through its Simmons First National merger, and the work led him to get to know several executives with the Arkansas-based firm.
“Along the way, we started talking about the trust company. Since Simmons doesn’t have any trust assets in Missouri, they said they had an interest,” he said. “The more I worked with George [Makris, Simmons First National chairman] and his team, the more I found our cultures were very similar.”
The deal is subject to review by the Missouri Division of Finance and other regulatory bodies.
If approved, Burchfield said he’ll move out of the trust company’s chairman post, but the roles of CEO Dwight Rahmeyer and President Rodger Gadd would remain unchanged. He said the deal should have little or no direct impact on the other 20 employees.
TCO is owned by 36 individual shareholders and 16 banking institutions, according to TrustCompanyOzarks.com. Individual shareholders include Burchfield, Joe Turner of Great Southern Bank and several members of the O’Reilly family, including O’Reilly Automotive Inc. Chairman David O’Reilly. Banking shareholders include Wood & Huston Bank, Great Southern and Mid-Missouri Bancshares.
“In the transaction, 25 percent of the deal price is in cash and will be going to the banks, and the individual shareholders will receive the stock, so hopefully, a tax-free exchange,” Burchfield said, noting TCO employees also are among the shareholders.
He said when the trust company was founded in 1998, it had 20 banking shareholders, but there were only about 12 at the time of the transition because TCO had bought back shares over the years.
“Each of the banks owned 500 shares, but Liberty bought Stone County National Bank, so it had 1,000,” Burchfield said.
Terms of the deal stipulate each outstanding share of TCO common stock held by banking institutions would be converted into the right to receive $701.93 in cash, which means banks with 500 shares would net over $35,000 apiece. Common stock held by individual shareholders would be converted into 16.7 shares of Simmons’ common stock. SFNC shares closed May 6 at $43.81 against a 52-week range of $35.72 to $46.38, putting the estimated value of individual shares on that date at over $730.
Another attractive factor in the deal, Burchfield said, was former Liberty CEO Gary Metzger’s transition to the role of chairman for Simmons’ Kansas-Missouri region. Metzger was a Trust Co. board member for 17 years until the Simmons merger finalized.
“He understands and knows everything about the Trust Company, and all the people have great confidence in his abilities,” Burchfield said.
Casteel said the acquisition would be Simmons First National’s first independent trust-company purchase. However, through the 2013 acquisitions of two Little Rock-based institutions – Metropolitan National Bank (separate from the Springfield bank of the same name) and Delta Trust & Banking Corp. – Simmons First has absorbed banks with their own trust divisions.
When the deal with Liberty Bank was pursued, Casteel said Simmons’ officials didn’t consider TCO, but the fee-based assets were, in time, seen to naturally support the bank’s growth into the Missouri and Kansas footprint.
“It really wasn’t part of the equation. We certainly were interested in the markets, but these were two separate transactions,” Casteel said.
Liberty Bank systems were converted to Simmons First on April 24, and three days later, the branches opened under the Simmons Bank name. He said positions were cut due to duplication of roles in the transition but declined to say how many workers were laid off. Simmons Bank officials previously told SBJ less than 45 jobs would become redundant after the April 24 conversion date.
According to SimmonsFirst.com, the bank holding company held assets of $7.8 billion at the time the purchase agreement was announced and Simmons Bank doubled quarterly net income available to common shareholders to $8.7 million during the first three months of the year.[[In-content Ad]]
Plaza Shopping Center gained an arcade with the March 1 opening of The Flying Lap LLC; the repurposing of space operated by Burrell Behavioral Health resulted in the March 18 opening of the company’s second autism center; and a group of downtown business owners teamed up to reopen J.O.B. Public House.
