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Missouri sees a quick start to bank M&A in 2020 with 3 deals

Missouri bank M&A is off to a quick start with three deals announced in the first three weeks of 2020. Last year, only eight deals were announced in the state, down from 11 in 2018 and 15 in 2017.

Most recently, on Jan. 17, Poplar Bluff, Mo.-based Southern Missouri Bancorp Inc. announced it would acquire Rolla, Mo.-based Central Federal Bancshares Inc. for $21.1 million, four years after Central Federal completed its mutal-to-stock conversion. Banking regulators typically bar companies from selling until at least three years after a completed conversion.

This was Southern Missouri Bancorp's fourth deal announcement in the state since the beginning of 2017.

On Jan. 8, East St. Louis, Ill.-based First Illinois Bancorp Inc. announced its own acquisition of Eureka, Mo.-based Rockwood Bancshares Inc. and on Jan. 2, Cassville, Mo.-based Freedom Bancshares of Southern Missouri Inc. announced that it would buy Monett, Mo.-based Community National Bank.

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Missouri's community banks and thrifts posted profits well ahead of their peers in both the Midwest and across the U.S. in the third quarter of 2019.

Among Missouri-based banks and thrifts with less than $10 billion in assets, the median return on average equity was 11.26% in the third quarter, down 15 basis points year over year, but well ahead of the Midwest median of 10.11% and the U.S. median of 9.86%. Missouri banks' 3.92% median net interest margin was 13 basis points higher than the Midwest median and 7 basis points higher than the U.S. median.

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Clayton-based Enterprise Bank & Trust, Missouri's largest community bank under $10 billion in assets, bested the state and national median in all six of the banking metrics examined by S&P Global Market Intelligence for the third quarter of 2019. Last March, Enterprise Financial Services Corp. acquired Los Alamos, N.M.-based Trinity Capital Corp. and its subsidiary, Los Alamos National Bank, which reported $1.25 billion in assets at the end of 2018.

However, outperforming financial results have not translated into outperforming stock returns. During 2019, Enterprise Financial's stock returned 30.0%, which was below the S&P 500's 31.5% return and the 35.2% return for the SNL U.S. Bank and Thrift index.

Creve Coeur-based First Bank, the state's second-largest community bank, came up short in both profitability and loan and deposit growth compared to the state median in the third quarter.

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Missouri banks and thrifts closed 16 branches while opening only eight in the fourth quarter of 2019. Over the course of last year, the state's banks and thrifts closed 67 branches and opened 30.

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Click here for third-quarter 2019 financial information for Missouri's community banks and thrifts.