BancorpSouth Inc.'s nearly 3-year hiatus from bank acquisitions officially ended Friday, when the Tupelo, Miss., company struck a pair of deals that would move it into the fast-growing markets of Baton Rouge, La., and Nashville.
The $10.7 billion-asset company said it is buying the $164 million-asset Business Holding Co. in Baton Rouge and the $151 million-asset Premier Bancorp in Brentwood, Tenn. - its first bank deals since February 2002.
Chairman and chief executive Aubrey B. Patterson did not disclose the price of either deal but said they would dilute earnings by 2 cents a share in 2005. The dilution will be temporary, he said, and he expects the companies to add significantly to earnings long-term.
"That's the theme," Mr. Patterson said Friday. "This is an investment. There will be a minute amount of dilution in the immediate short term, but tremendous growth potential."
BancorpSouth was an active acquirer from 1997 to 2002, buying eight banks in Mississippi, Alabama, and Arkansas. In recent years it has concentrated on beefing up its fee income business, buying an insurance agency and two investment firms.
Mr. Patterson said BancorpSouth has been looking for a bank deal in Baton Rouge since May 2003, when it paid $18.2 million for Wright & Percy Insurance, which is headquartered there. The agency is the largest in Louisiana.
"Having a connection to Wright & Percy will be a big benefit to the Business Bank of Baton Rouge, and vice versa," Mr. Patterson said, referring to Business Holding's bank subsidiary. "They'll play mutually supportive roles."
Charles "Buddy" Roemer 3d, Business Bank's president and Louisiana's governor from 1988 to 1992, would head BancorpSouth's operation in Baton Rouge, Mr. Patterson said.
Mr. Roemer said Friday that BancorpSouth's deeper pockets would help his team expand its business-focused approach throughout Louisiana and into Texas.
"All the pieces are in place to put together a very good operation," he said. "BancorpSouth will enable us to serve our customers better and to expand. … This is undeveloped soil for our style of banking."
Mr. Patterson said, "We're going to put a lot more bullets into Buddy Roemer's gun."
Mr. Roemer said that much of the growth would be organic but that BancorpSouth would consider doing additional deals.
John Blaylock, a senior associate with Alex Sheshunoff & Co. Investment Banking in Austin, said getting Mr. Roemer, who is also a former congressman, is a big benefit for BancorpSouth.
"With him on board, they've got someone who knows the market they're entering as well or better than anyone else," Mr. Blaylock said. "When you're moving into a new market, you want someone who is knowledgeable and who can drive business."
The situation is similar in Tennessee, where Mr. Patterson said James D. Harris, Premier's chairman and CEO, and Diane West, its president, have agreed to lead BancorpSouth's Nashville operation.
"Bringing them on gives us an opportunity to ramp up our growth" there, Mr. Patterson said.
BancorpSouth has wanted to expand in the Nashville area for several months, he said. It opened a loan production office in the suburb of Brentwood in December.
Baton Rouge and in particular Nashville are growth markets, which makes the earnings dilution acceptable, Mr. Blaylock said. "This is a geographic expansion into two markets that make sense for their footprint."
Investors apparently are not troubled that the deals would temporarily dilute earnings. BancorpSouth's stock closed Friday at $22.97, down just 0.78%.
