Bank of the Ozarks, Inc. OZRK announced the completion of the deal, which marked the company’s 13th acquisition since Mar 2010, to acquire Bank of the Carolinas – the wholly owned bank subsidiary of Bank of the Carolinas Corporation.
About the Transaction
The agreement and plan of merger and reorganization signed between both the companies on May 6 this year resulted in the transfer of each issued and outstanding share of Bank of the Carolinas for 0.00313515 of a share of Bank of the Ozarks stock.
With fractional shares redeemed in cash, Bank of the Ozarks issued around 1.4 million shares in exchange for the North Carolina-based company. Concurrently, Bank of the Carolinas merged with and into the wholly-owned bank subsidiary of Bank of the Ozarks.
Benefits from the Deal
With Bank of the Carolinas operating eight full service branches in North Carolina, the deal will help Bank of the Ozarks strengthen its presence in the region. Bank of the Ozarks will now own 24 offices in the state.
Further, Bank of the Carolinas had $345 million in total assets, $277 million in loans, $296 million in deposits and $48 million in common stockholders’ equity, as of Jun 30, 2015. The merger will likely provide a boost to Bank of the Ozarks’ expansion strategy.
Moreover, the deal is projected to be immediately accretive to Bank of the Ozarks’ book value per common share and its tangible book value per common share. However, the transaction is expected to make a moderate contribution to diluted earnings per common share (excluding transaction costs) for the first year after completion.
On the other hand, Bank of the Carolinas will get access to Bank of the Ozarks’ extended products and services base. This will aid it in offering improved services to its clients, thereby, boosting growth.
Our Take
Bank of the Ozarks has shown strong inorganic growth over the years. Notably, in Feb 2015, the company completed the acquisition of Intervest Bancshares Corp., enhancing its footprint across New York and Florida regions.
Moreover, in May 2014, the company had acquired Summit Bancorp, Inc., which strengthened its position in the Arkansas market. Further, in Mar 2014, it had completed the acquisition of Texas-based Bancshares Inc., which contributed to earnings.
While these acquisitions will help Bank of the Ozarks keep the earnings momentum alive, acquisition-related expenses could turn out to be a drag on profitability.
Currently, Bank of the Ozarks carries a Zacks Rank #3 (Hold). Some better-ranked southeastern bank includes BNC Bancorp BNCN, Carolina Financial Corporation CARO and Fidelity Southern Corporation LION. All these stocks sport a Zacks Rank #1 (Strong Buy).
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