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Justice Department Requires Divestitures in BancorpSouth, Cadence Bank Merger

September 03, 2021, 07:18 AM
Filed Under: Mergers & Acquisitions

The Department of Justice announced BancorpSouth Bank and Cadence Bank have agreed to sell seven branches in northeastern Mississippi, with more than $446 million in deposits, to resolve antitrust concerns arising from BancorpSouth’s planned acquisition of Cadence Bank.

According to a BancorpSouth Bank filing with Security and Exchange Commission, BancorpSouth Bank and Cadence Bank, N.A. entered into an agreement with The First, A National Banking Association (The First) whereby The First will purchase seven bank branches from Cadence Bank, and BancorpSouth Bank, a s successor in interest to Cadence Bank. BancorpSouth Bank expects the purchase of the branches to close contingent upon the consummation of, and within 180 days of, the previously announced merger of Cadence and Cadence Bank into BancorpSouth Bank, subject to approval by regulators, and customary closing conditions.

The branches are located in communities in Mississippi. The First will assume branch deposits at closing and will pay a deposit premium of $1,000,000. Also, as part of the transaction, The First will acquire branch loans and related fixed assets. As of June 30, branch deposit balances were approximately $450 million and branch loan balances were approximately $42 million.

“Today’s settlement underscores that all Americans, including those in rural communities and small towns, are entitled to access competitively priced banking products and services close to where they live and work,” said Acting Assistant Attorney General Richard A. Powers of the Justice Department’s Antitrust Division in its announcement. “Banks are the anchors of many communities. Families and small businesses rely on banks to keep their money safe and obtain credit for important expenses and investments in their lives.”

Under the agreement with the department, the parties will divest seven branches located in Aberdeen, West Point and Starkville, MI. The assets that must be divested include all the deposits and loans associated with the seven branches, as well as all physical assets. The companies also have agreed to suspend existing non-compete agreements with branch managers and loan officers located in Aberdeen, West Point, and Starkville, MI, and will not enter into new non-compete agreements with those managers and officers. Further, the companies have agreed that any branches located in any of these markets that are closed within three years of the merger’s closing will be sold or leased to an insured depository institution that offers deposit and credit services to small businesses. As a result of the merger, BancorpSouth will become the 10th largest bank, based on assets, in its nine-state region in the southeastern United States and the 46th largest bank in the country.  

The proposed merger is subject to the final approval of the Federal Deposit Insurance Corporation (FDIC). The department’s role when reviewing a proposed bank merger necessarily focuses on the merger’s competitive effects. Here, the department has advised the FDIC that the department will not challenge the merger provided that the parties divest branches in certain areas of overlap and agree to the commitments described above. The parties’ commitments to the department will be included as a condition that the parties’ make to the FDIC’s order allowing this transaction.

BancorpSouth Bank, headquartered in Tupelo, MI, has approximately $25.8 billion in assets, $21.2 billion in deposits and 325 full-service branches across nine states in the southeastern United States.

Cadence Bank N.A., headquartered in Atlanta, GA, has approximately $18.8 billion in assets and $16.1 billion in deposits. Cadence Bank has 98 branches across the southeastern U.S. with 11 of those branches in Mississippi. Cadence also offers a full range of products and services to retail, small business and middle market customers as well as investment and trust services.

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