Tupelo, Miss.-based BancorpSouth Bank and Houston-based Cadence Bancorp. are not closing the door on more M&A opportunities following their announced merger with a total market value of more than $6 billion.
The combination marks BancorpSouth's third deal announcement in the past four months. On a conference call to discuss the deal, management said the combined companies, which will have about $44 billion in total assets and a branch network spanning nine states, are open to more M&A.
"The combination of our two companies puts us as an acquirer of choice over the next several years across our entire footprint and I don't think we're going to change our stripes," James Rollins III, Chairman and CEO of BancorpSouth, said on the call. "We want to be opportunistic wherever those opportunities present themselves."
The combined companies will look to add scale in Texas, specifically in the Dallas and Austin markets, Rollins said.
The merger is a "pivot" from BancorpSouth's historical M&A experience "which has focused on bite-sized acquisitions" of banks under $1 billion in assets, Jefferies analyst Casey Haire wrote in a note.
On Dec. 2, 2020, BancorpSouth announced its acquisition of National United Bancshares Inc. with a value of $114.7 million. About a month later BancorpSouth announced its acquisition of Scottsboro, Ala.-based FNS Bancshares, Inc. with a deal value of $108.4 million.
Both deals are still pending, but are expected to close in the first half of this year. Those two deals mark BancorpSouth's ninth and 10th whole-bank acquisitions since 2014, according to S&P Global Market Intelligence data.
“Their success in identifying and integrating other institutions into their bank certainly was a key consideration for us,” Cadence CEO Paul Murphy Jr. said. “They’ve got a great formula and track record.”
Future targets will have to be larger than BancorpSouth's recent deals given the combined company's new size, Rollins said.
"Certainly, as a $45 billion bank, the little transactions that we've been doing, while they haven't individually moved the needle for us, when you get to $45 billion, they certainly won't," he said. "So we've got to continue to look for opportunities of a larger scale. There's a lot of opportunity out there for us as we look forward."