Pine Bluff, Ark.-based Simmons First National Corp. took on its third pending deal, agreeing to buy First Texas BHC Inc., the Fort Worth, Texas-based parent of Southwest Bank.
Under the deal, Simmons would pay, in total, 6,500,000 common shares and $70 million in cash, subject to adjustment. The cash-and-stock transaction is valued at about $462 million, according to a press release. SNL calculates the price to be 208.2% of book, 250.4% of tangible book and 26.1x earnings, on an aggregate basis. It is also 30.50% of deposits and 22.88% of assets and has a tangible book premium-to-core deposits ratio of 20.46%.
For comparison, SNL data shows that bank and thrift targets in the Southwest between Jan. 23, 2016, and Jan. 23, 2017, averaged 155.70% of book, 169.47% of tangible book and had a median of 20.29x last-12-month earnings, on an aggregate basis.
Simmons calculates that the deal value is 24.8x estimated 2016 earnings, 21.0x estimated 2017 earnings and 13.9x estimated 2018 earnings with synergies.
Simmons is the parent of Simmons Bank, which plans to absorb Southwest Bank after an interim period following the merger's completion. The Southwest Bank brand will remain, though.
According to SNL data, Simmons First National had $8.40 billion in assets as of Dec. 31, 2016, and First Texas BHC had $2.02 billion in assets as of Sept. 30, 2016. The seller also had loans of $1.8 billion, deposits of $1.5 billion and 16 branches as of Sept. 30, 2016, the press release stated. In Texas, Simmons will enter Tarrant County with 13 branches, to be ranked sixth with a 3.44% share of approximately $36.55 billion in total market deposits. It will also enter Dallas County with two branches, to be ranked No. 48 with a 0.07% share of approximately $164.19 billion in total market deposits. And it will enter Johnson County with one branch, to be ranked No. 11 with a 2.28% share of approximately $1.63 billion in total market deposits.
The combined bank would have assets of $13.5 billion on a pro forma basis, including the pending acquisitions of Hardeman County Investment Co. Inc. and Southwest Bancorp Inc.
The deal is subject to the approval of both companies' shareholders and regulators. It is expected to close in the third quarter.
Stephens Inc. was financial adviser to First Texas, and Fenimore Kay Harrison & Ford LLP was its legal adviser. Mercer Capital Management Inc. was Simmons' financial adviser, and Covington & Burling LLP served as its legal adviser.