Wall Street likes BancorpSouth deal

BancorpSouth got Wall Street’s nod of approval for the acquisition of Ouachita Bancshares, a deal analysts said will likely push the bank’s earnings and share price higher this year.


RBC Capital raised its target stock price for BancorpSouth from $23 to $27 based on accretive earnings it expects in 2014 from the combined operations.


This acquisition is the first for BancorpSouth since 2007. Analysts with Stern Agree expects the deal will benefit earnings by 10 cents per share annually, assuming 30% cost savings and a 4% mark on the loan portfolio.


Peyton Green, analyst with Stern Agee, said more importantly the deal allows BancorpSouth to build scale and market share in the Shreveport-Bossier CIty and Monroe, La. metro areas.


BancorpSouth will issue a maximum of 3.675 million shares and $22.875 million in cash to shareholders of Ouachita Bancshares.


“We believe the  pro forma footprint will operate with 15-16 branches in Shreveport (2-3 closures) and Monroe (3 closures) versus 21 pre-deal for the two banks,” Green noted.


On a pro forma basis, BancorpSouth’s market position will improve to No. 4 with 9.6% share in Shreveport-Bossier City versus No. 5 with 7.2% share prior to the deal. In the Monroe metro area market share will improve to 13.2% versus 3.3%. 


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Despite the positive notes, Bancorp South shares dipped on Friday, trading at $24.69, down 9 cents at the noon hour amid broader market sell-offs related to the lackluster jobs report.

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