Arkansas bank pens deal to acquire Legacy Bank & Trust

Darrin Williams: Acquisition provides opportunity to expand affordable housing lending.

Arkadelphia, Arkansas-based Southern Bancorp Inc., the holding company for Southern Bancorp Bank, entered into an agreement to acquire Ozarks Heritage Financial Group Inc. and its wholly owned subsidiary, Legacy Bank & Trust Co., headquartered in Springfield.  

The deal, if approved by regulators and subject to a final vote by shareholders, would make a combined banking institution with $4.7 billion in assets. Brandon Taylor, Legacy Bank & Trust’s chief financial officer, said the deal is expected to close before the first quarter 2026.

Officials would not disclose the purchase price or terms of the acquisition; however, a March call report on the Federal Deposit Insurance Co.’s website puts Legacy Bank & Trust’s equity capital at $219 million, providing insight into the size of the deal.

Southern Bank has 56 locations in Arkansas and Mississippi and holds $2.8 billion in assets. Legacy Bank & Trust, with $1.9 billion in assets, has nine locations in Missouri, Oklahoma and Texas.

“This is not just a financial transaction; it’s the continuation of a relationship that’s nearly a decade in the making,” Taylor said in an interview with Springfield Business Journal. “We’ve had nearly 10 years to observe, collaborate and build trust. That kind of relationship is rare, and it adds an enormous amount of confidence and alignment as we take this next step together.”

Taylor said Legacy and Southern executives first met at a Community Development Bankers Association forum in June 2016. Both banks are certified community development financial institutions, which are lenders with a mission to provide financing and support to underserved communities.

He added conversations on the acquisition began in earnest earlier this year.

“Always in the back of our minds [we] knew they would be a good partner,” he said. “Over time, we just realized we could do more together than we could do by ourselves.”

Southern Bancorp Inc. CEO Darrin Williams, who is also chair of the Community Development Bankers Association, said the leadership of the banks found common ground in their missions to improve access to capital and credit.

“Legacy is such a well-run institution. [President and CEO] John Everett and Brandon Taylor and team over there have done a fantastic job and we are excited to join forces with them to build upon their impressive record of Southern Bancorp-like legacy,” Williams said in an interview with SBJ. “What’s unique and important about Southern is really its mission focused on serving underserved people and places. We’re excited about the branch out throughout all of Springfield and all the markets that Legacy serves, really try to focus on being wealth builders for everyone.”

Williams said in 2022, the Southern board used $250 million in Emergency Capital Investment Program funds to shore up operations, employees and technology to prepare for a large bank acquisition. He said acquiring Legacy will allow for expanded and additional areas of focus at Southern.

“We’ve expanded our secondary mortgage loan program, so putting people in homes and home ownership, and we can expand that in their territories,” Williams said. “(Legacy) actually has an aggressive multifamily or low-income housing and tax credit business. We both have done new market tax credit work, so together we’ll do more of that. So, there are a lot of synergies here and [we’re] really excited about the impact we’re going to have together.”

Taylor also sees the growth potential in affordable housing.

“In addition to the growth locally, which obviously we’re very committed to this market and this area, we’ve developed nationwide lending niches in affordable housing and new markets tax credits,” Taylor said. “They don’t have that division at Southern, so something that is very attractive to them.”

Taylor said Legacy is ranked among the top 25 lenders in the nation for affordable housing lending based on a 2024 Affordable Housing Finance lenders survey.

Coming together
Taylor noted no branch closures are anticipated in the deal as there is no geographic crossover between the two institutions. Williams echoed that plan, adding Southern is focused on expanding its market reach.

While combined the banks have physical locations in only five states, Williams noted Legacy has funded low-income housing projects in 27 states and Southern has customers in all 50 states through its fintech platforms like high-yield savings accounts.

“They’re based there locally in Springfield, but their impact really is, I would consider it, national,” Williams said.

Taylor said the executive team at Legacy Bank & Trust will remain in place as regional leaders, adding, “There will likely be some of the Legacy team involved at the executive level of the combined entities.”

Williams said the team at Legacy, which has more than 200 employees, was key to the deal, noting an organizational chart has yet to be determined.

“They have created and grown a phenomenal bank, and this deal wouldn’t work unless they’re going to stay with us,” he said of the executive leadership at Legacy. “The local flavor of Legacy is not changing. Those same people you walk through the door and talk to, they’re going to be there.”

He also noted, while not his decision, likely members of the Springfield region will join the Southern holding company and bank boards.

Williams said the acquisition will likely lead to a name change for both institutions.

“We have toyed with a name change for ourselves for some time now, and we thought it would be a larger acquisition before we did that,” Williams said. “Our marketing team has been working, trying to find a name that’s meaningful, that’s impactful, that really demonstrates our mission focused nature of the work that we do.”

JPMorgan Chase served as financial adviser and Nelson Mullins served as legal adviser to Southern Bancorp for the transaction. Ozarks Heritage Financial Group Inc. hired Stephens Inc. as its financial adviser and Stinson LLP as legal counsel.

Southern history
Southern Bancorp traces its roots back nearly four decades in Arkansas. In the mid-1980s, then-Gov. Bill Clinton was looking for opportunities to stimulate economic growth in poor areas of the state, specifically the Arkansas Delta, and Williams said that led to the 1986 founding of Southern Bancorp Inc.

An investment of $12 million started the banking holding company, Williams said. The Walton Family Foundation and The Rockefeller Foundation invested $5 million each, along with capital raised across the state by Clinton.

“The whole goal was to create a financial institution, or a group of financial institutions, that would invest in rural communities, underserved communities, low-wealth communities – communities that lack access to capital and credit,” he said.

The holding company’s first acquisition was Elk Horn Bank in Arkadelphia, Arkansas, which led to the creation of Southern Bancorp Bank and led to a series of acquisitions in the almost 40 years since. Williams said the Legacy Bank & Trust acquisition will be the largest one for Southern, which employs 500 people in Arkansas and Mississippi.

Williams said as president, Clinton took his concept of banking with a mission to Washington, D.C. In 1994, the Riegle Community Development Banking and Financial Institutions Act was signed into law and Southern became among the first group of banking institutions to become CDFI certified.

“The CDFI space is a great public-private partnership,” Williams said. “Today, with every $1 in support that the government provides or invests in CDFIs, we leveraged that to $8 to $10.”