Simmons CEO sees purchase as a start

Map showing the location of the bank purchased by Simmons First National Corp.
Map showing the location of the bank purchased by Simmons First National Corp.

With its agreement to buy an east Tennessee bank, Simmons First National Corp. now has a base to build business in two nearby metropolitan areas -- Chattanooga and Knoxville -- George Makris, Simmons' chairman and chief executive officer, said Thursday.

Simmons agreed Wednesday to buy Citizens National Bank of Athens, Tenn., which is about halfway between Chattanooga and Knoxville. Simmons will pay about $77 million, with $40.3 million in cash and the remainder in Simmons stock.

Citizens has nine offices in east Tennessee with about $550 million in assets, $350 million in loans and $473 million in deposits. Simmons has $7.6 billion in assets in Arkansas, Kansas, Missouri and Tennessee. It will grow to about $8.1 billion in assets after it closes on the Citizens purchase.

Simmons already has 34 branches in Tennessee in connection with its purchase in 2014 of Community First Bancshares in Union City, Tenn. Simmons has three branches in the Knoxville metropolitan area.

"We've said for some time that the corridor between Knoxville and Chattanooga is a very attractive market for us," Makris said on a conference call Thursday. "What we've done is we've started building a road from the middle. So now our objective is to finish it off from both ends."

The purchase of Citizens is "very strategic" for Simmons, said Randy Dennis, president of DD&F Consulting Group, a Little Rock bank consulting firm.

"It's a good bank and it fits [Simmons] well in the Knoxville market," Dennis said. "It's profitable and [Simmons] bought it at a good price."

While Citizens has no branches in Chattanooga or Knoxville, it does have nine offices along the corridor between the two cities. When the deal closes, Simmons will rank ninth in Tennessee with almost $2 billion in deposits in the state. It will have $109 million in deposits in the Knoxville area, which will make Simmons the 24th-largest bank there.

"Quite honestly, we have not been successful in finding good merger partners in the Knoxville area or the Chattanooga area thus far," Makris said. "What we have done with the acquisition of Citizens, we now have a base to support growth in east Tennessee."

Simmons will be looking for substantial executive talent in both the Knoxville and Chattanooga areas to be supported by the Citizens infrastructure, Makris said.

"So we see a heck of a lot of opportunity going forward with our ability to recruit and provide resources to top-notch producers in both the Knoxville and the Chattanooga markets," Makris said.

Citizens had a high percentage of nonperforming assets to total assets -- 13 percent to 14 percent -- during the recession, one analyst pointed out on the conference call. That is now below 2 percent.

When it is considering potential merger partners, Simmons looks closely at how the banks performed in the credit crisis, Makris said.

"What we were impressed with was that the current management team [at Citizens] successfully navigated through that crisis and in short order got their house in order," Makris said. "And others were not able to do that."

Makris was asked if Simmons likely would make another acquisition this year.

"We continue to have what I consider to be very positive discussions with several institutions," Makris said. "We're going to concentrate on integrating [Citizens] while we continue to look for other opportunities. We're certainly not on the sidelines by any stretch of the imagination."

Business on 05/20/2016

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