After 111 years of operating exclusively in its own state, Trustmark Corp. of Jackson, Miss., said Wednesday that it is expanding into Tennessee by acquiring Barret Bancorp in Barretville for $102.5 million.
The announcement of the deal came less than four months after Union Planters Corp. of Memphis said it had signed a letter of intent to buy $516 million-asset Barret. But in an interview, Barret president Charles M. Ennis called Union Planters announcement premature and said that no definitive agreement was ever reached.
Both $6.7 billion-asset Trustmark and $34 billion-asset Union Planters began courting Barret in the early summer after it announced it was on the block. Barret was looking to sell because its former chairman and president, Paul Barret Jr., died in December 1999 and left all his assets, including his 60% stake in the privately held banking company, to a charitable trust.
Mr. Ennis said Barret decided to sell to Trustmark because it is confident that the Mississippi company would continue operating 92-year-old Barrets subsidiaries as community banks.
We were impressed with the people, the organization, and corporate philosophy, Mr. Ennis said. And we are very excited to be part of their entry into Tennessee.
Richard G. Hickson, Trustmarks president and chief executive officer, said Barrets eight Peoples Trust branches would take the Trustmark National Bank name and charter and the five Somerville Bank and Trust Co. branches in the Nashville suburbs would retain their names and state charter until the Trustmark name becomes more familiar in the area. All of Barrets employees would be retained, he said.
The deal, valued at 1.19 times book value, would bring Trustmark closer to the deposit-rich Memphis market, Mr. Hickson said, where he is eager to expand. Barretville is near the Mississippi and Arkansas borders and 15 miles from Tennessees largest city.
Its a natural expansion from our market, Mr. Hickson said. One of our branches is in sight of the Tennessee state line, and Barrets size puts us on a scale where we can be effective there.
Christopher Kelley, an analyst at Morgan Keegan & Co. of Memphis, said he applauds the deal. Though Trustmark has performed solidly since Mr. Hickson came on board in mid-1998, it only has so much room to grow in Mississippi, Mr. Kelley said. Now its chapter two. They are doing well in Mississippi, and now they have to find more growth.
Joseph Roberto, an analyst at Keefe, Bruyette & Woods Inc. in New York, agreed with Mr. Kelleys assessment. Its not a big jump for them, he said, and there is much more growth opportunity in Tennessee.
Nevertheless, the analysts said they were surprised by Trustmarks announcement since the Union Planters deal was never called off.
In mid-September, just after the death of Union Planters chairman and CEO Benjamin W. Rawlins Jr., the new chairman, Jackson W. Moore, said a definitive agreement with Barret was weeks away.
Union Planters officials would not comment on why their deal for Barret collapsed.
We respect Trustmark as a competitor and welcome them to Tennessee, said Union Planters spokesman Tom Woodberry, but we are not able to discuss the details of any of the discussions we had prior to todays announcement.
The deal is scheduled to close in the second quarter.