Simmons First seeks regional foothold with Liberty buyout

The fifth largest bank in the Springfield metropolitan statistical area in terms of deposits is being purchased by a Pine Bluff, Ark., holding company on a mission to grow its presence throughout the region.

With an aggressive beverage distributor-turned banker at the helm, Simmons First National Corp. (Nasdaq: SFNC) since November has penned agreements to buy four banks, including the $206.9 million all-stock agreement with Liberty Bank. Simmons First board Chairman George Makris Jr. moved into the CEO role to start the year, and he’s picked up where former CEO J. Thomas May left off.

Since March 2013, the bank has doubled its asset count to $4.4 billion as of May 28, when it formally agreed to terms with Liberty. From central Arkansas, Simmons First’s banking footprint stretches north to Wichita and Salina, Kan., and across to Kansas City and St. Louis, positioning Springfield to potentially serve as a regional hub.

Makris said Liberty met two acquisition tests.

“The first thing we consider is whether their culture is similar to ours. Liberty is a conservative bank dedicated to the conservative banking philosophy – which means it wants to take care of its customer relationships and aren’t just out there chasing transactions,” Makris said in a June 3 phone interview from Pine Bluff. “The second reason Liberty was so attractive to us is that we already have a presence in Missouri and Kansas.”

After closing on the Liberty deal and its 24 branches, which is expected in early fourth quarter, Simmons First would operate over 120 branches between the three sates.

Bar service to bank service
As of June 30, 2013, Simmons First was No. 41 out of 41 banks in the Springfield MSA based on deposits, according to the FDIC. Makris acknowledges Simmons First is something of an unknown in the local market.

Before moving into the CEO post at the first of the year, Makris served on Simmons First’s board for 15 years. He said former Chairman and CEO May was diagnosed with Lou Gehrig’s disease eight years ago, and Makris worked side-by-side with May throughout 2013 to learn the job.

Makris is not a banker by trade. His family owns a 50-year-old Anheuser-Busch distributorship in Pine Bluff – a business he’s left in the hands of his two sons. “It was time to kick dad out of the nest,” Makris said with a laugh. “I’ve been around banking for a long time, but what I think I bring to the table is the customer’s perspective.”

He said Liberty will continue to operate independently until systems are converted, which is expected in spring 2015.

“We don’t anticipate closing any of Liberty’s branches,” Makris said, adding it is no given that Liberty would undergo a name change. “We’re going to do a little market research to make sure we understand the risks associated with that. Liberty has a well-established reputation in the market.”

He said it’s too early to know if there would be any layoffs with the merger.

“We are still going through the process of determining how much back-office support we are going to need with the combined organization. It is our goal to preserve as many jobs as we possibly can,” Makris said.

Liberty’s mortgage loan volume was down in 2013 to $92.4 million from $128.1 million, according to Springfield Business Journal list research. Makris said that was no cause for concern. “Mortgage business has been down in every region of the country,” he said, citing a refinancing peak now on the downslope. “We’re experiencing down volume in our mortgage operations just as Liberty and others are.”

According to the FDIC, Liberty Bank held total assets on March 31 of $1.06 billion, down slightly from $1.07 billion during the same time last year, and liabilities had fallen as well to $940 million from $964 million. Undivided profits, an accumulated corporate earnings statistic, grew nearly 20 percent to $65.7 million.

Seizing opportunities
Simmons First National Bank, which operates a branch at 3333 E. Battlefield Road, entered the Springfield market in 2010 when it picked up the failed Southwest Community Bank in a $96.6 million asset deal – the first of four FDIC-assisted takeovers it’s managed the past four years.

Also in 2010, the bank acquired Olathe, Kan.-based Security Savings Bank FSB in a $508 million transaction. In 2012, Simmons First picked up two more failed banks: St. Louis-based Truman Bank, with $282 million in assets, and the $200 million Sedalia-based Excel Bank.

“The opportunity to merge with Liberty and its seasoned management team with Gary Metzger and Garry Robinson gave us the opportunity to build a region out of our FDIC banks,” Makris said.

He said Liberty CEO Metzger and Executive Vice President Robinson would have advanced roles in the company – a key component to the deal – though many details still have to be worked out.

“They want to stay on with Simmons and continue to grow their footprint,” Makris said. “While we looked at it as an acquisition on our end, they also looked at it as acquisition on their end because the management group is picking up a more substantial regional approach to banking.”

Metzger was traveling out of state and unavailable for comment by press time, and calls to Robinson and multiple board members were not returned. Robinson and Liberty are currently defending themselves against accusations of self-dealing in a Greene County Circuit Court lawsuit involving claims that Robinson had an independent stake in a company that purchased disputed Barton County land at a discount. The case has recently moved to Barton County.

In an open letter to customers on TheRisingStar.com, Metzger welcomed the Simmons merger and added that changes wouldn’t come quickly.

“For now, it is business as usual. Liberty Bank will continue to operate until the merger is complete,” he said in the letter.

Makris said a third party, an investment banker who knew Simmons First and Liberty each was actively pursuing growth, connected the bank officials in late 2013.

“They had a lot of options,” Makris said of Liberty Bank administrators. “They could have gone public on their own. They could have raised capital from current investors, new investors or looked for a merger partner like Simmons.”

Once Simmons’ pending acquisitions close, the bank’s assets are expected to come in at nearly $8 billion, which is roughly equal to all local deposits held by the 41 banks in the Springfield MSA. In late 2013, Simmons completed the acquisition of Little Rock-based Metropolitan National Bank (not the Springfield-based bank of the same name) and in March agreed to buy Little Rock-based Delta Trust & Banking Corp. In early May, bank officials signed a deal to acquire Union, Tenn.-based Community First Bancshares Inc., which would extend Simmons’ footprint into four states.