BancorpSouth Inc. is wasting no time bulking up in Missouri.
The Tupelo, Miss., company entered the state early last month by acquiring City Bancorp, the parent of Signature Bank in Springfield, and since then it has opened two branches in St. Louis.
Aubrey Patterson, the $13 billion-asset BancorpSouth's chairman and chief executive, said it intends to build more branches in and around that city and is eyeing an expansion into Kansas City, so that it would have a foothold in the state's three largest markets.
"To have a viable presence in the state of Missouri, you need to be in all three," Mr. Patterson said.
For its future expansion, Mr. Patterson said that the markets it is eyeing include Dallas, Houston, east Tennessee, and coastal Alabama, because it wants to concentrate for now on states in which it already operates.
He called the Missouri acquisition "just another step in the sequential process that we've built the company on."
BancorpSouth, founded as Bank of Mississippi in 1876, made its first out-of-state acquisition a decade ago by acquiring a Tennessee bank. Since then it has made acquisitions in Alabama, Arkansas, Louisiana, Texas, and Missouri. It also recently opened a branch in Destin, Fla., after acquiring a Florida charter from Superior Bancorp in Birmingham, Ala.
The company, which became BancorpSouth in 1997, now has 290 branches in eight states.
"Our strategy has been consistent. From our historic base in the mid-South, we've continued to push our footprint out very gradually and very systematically into contiguous states," Mr. Patterson said. "We haven't leapfrogged into Las Vegas or Miami or Palm Beach."
Missouri is not as fast-growing as Florida and Texas, but analysts said it is healthier than some of BancorpSouth's other markets, particularly in its home state.
"Compared to a lot of their core markets, which you could say are Deep South and rural in nature, it's very attractive," said Peyton Green, an analyst at First Horizon National Corp.'s FTN Midwest Securities Corp.
Brian Klock, an analyst with KBW Inc.'s Keefe, Bruyette & Woods Inc., said BancorpSouth's move into Missouri is the latest example of its efforts to leverage the deposits from its slower-growing markets.
"One thing that Mississippi has going for it is that it's a pretty stable deposit base, but there is not a lot of asset generation there," Mr. Klock said. "What BancorpSouth has been doing … [is] trying to leverage off that core deposit base that it has in Mississippi and then look for the areas that are close enough geographically to its headquarters that provide an opportunity to get the asset generation."
By acquiring the $847 million-asset Signature Bank on July 1, BancorpSouth gained six branches in Springfield and the No. 4 deposit share in the state's fastest-growing market. Springfield's population, roughly 400,000, grew more than 8% from 2000 to 2005 - nearly twice the statewide growth rate, according to BancorpSouth statistics.
In St. Louis, the state's largest metropolitan market, BancorpSouth has opened a branch and converted a Signature loan production office into a full-service branch.
Mr. Patterson said that his company will "look to have several more in that market," though he would not give specifics. (He also would not say when it might move into Kansas City.)
Of course, St. Louis is also very competitive. Local companies, such as Commerce Bancshares Inc. of Kansas City and UMB Financial Corp., as well as out-of-state ones such as Bank of America Corp., U.S. Bancorp, and Fifth Third Bancorp, have added dozens of branches there in the last three years, according to Federal Deposit Insurance Corp. data.
U.S. Bancorp, B of A, and Commerce control more than 37% of the deposits in the St. Louis market.
Analysts said that BancorpSouth's success in St. Louis would rest on the strength of its lending team.
Mr. Patterson said that his company has retained the entire Signature lending team - including the executives from its loan production office in St. Louis - and is looking to acquire seasoned lenders in the area.
