Simmons First National in Pine Bluff, Ark., has agreed to buy Reliance Bancshares in Frontenac, Mo.
The $16.3 billion-asset Simmons said in a press release Tuesday that it will pay about $170 million in cash and stock for the $1.5 billion-asset Reliance. Simmons will also issue preferred stock to certain investors, with a liquidation value of $42.1 million, and repay some debt Reliance owes to third parties.
The deal, which is expected to close in the second quarter, prices Reliance at 187% of its tangible common equity.
The acquisition marks a major expansion for Simmons in St. Louis, where it already has commercial lending operations. Reliance has 22 branches, $1.1 billion in loans and $1.2 billion in deposits.
“By adding Reliance Bank’s 20-plus branches to the Simmons … footprint, we will substantially enhance our retail presence within the St. Louis market, where we’ve already seen success in our commercial lending efforts,” George Makris Jr., Simmons’ chairman and CEO, said in the release.
“Our desire is to be a strong, supportive, full-service financial institution for the people, businesses, and organizations of St. Louis; and I am confident that we have teamed with another great banking partner to achieve that goal,” Makris added.
Simmons said it expects mid-single-digit accretion to its earnings per share. It should take a little more than three years to earn back the expected 3.5% dilution to Simmons’ tangible book value.
Simmons said it will likely incur $6.4 million in merger-related charges. The company plans to cut 30% of Reliance’s annual noninterest expenses.
Simmons was advised by Keefe, Bruyette & Woods and DD&F Consulting Group; it received a fairness opinion from Sandler O’Neill.
