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BancorpSouth (BXS) Receives FDIC Nod for Icon Capital Merger

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Shares of BancorpSouth Bank (BXS - Free Report) gained 1.2% after it received the Federal Deposit Insurance Corporation’s nod for the acquisition of Icon Capital Corporation and its wholly-owned subsidiary, Icon Bank of Texas, National Association. The deal, announced in April 2018, is expected to close on Oct 1, 2018.

Details of the Deal

Per the terms of the agreement, BancorpSouth will issue about 4.1 million shares of its common stock, along with $17.5 million in cash, for all outstanding shares of Icon Capital, subject to certain conditions and potential adjustments.

Benefits of the Deal

BancorpSouth’s management predicts the merger to result in heightened demand for its diversified products and services from Icon Capital’s customers who will be able to access services across the Southeast region as well.

Notably, Icon Capital operates seven full-service banking offices in Houston, TX.  As of Mar 31, 2018, the company reported total assets of $794 million, total loans of $624 million and total deposits of $692 million.

The above-mentioned merger will add around $1 billion loans and $740-million deposits to BancorpSouth’s portfolio in the Houston area. Also, the deal is anticipated to fortify BancorpSouth’s presence, as well as escalate the bank’s growth in Houston.

Our take

Backed by a solid liquidity position, BancorpSouth looks forward to continue its inorganic growth strategy through investment in mergers and acquisitions. Notably, earlier this year, the company also completed the acquisitions of Ouachita Bancshares Corp. and Central Community Corporation. This is expected to enhance the company’s profitability over the long run.

BancorpSouth’s shares have gained 14% over the past year compared to the industry’s growth of 17.5%. The stock currently carries a Zacks Rank #3 (Hold).

Key Picks

A few better-ranked stocks in the same space are CBTX, Inc. (CBTX - Free Report) , Entegra Financial Corp. and First BanCorp. (FBP - Free Report) . All these stocks carry a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Over the last 60 days, the Zacks Consensus Estimate for CBTX’s current-year earnings has been revised 8% upward. Its share price has gained 31.2% in the past year.

Entegra Financial’s earnings estimates for 2018 have been revised 2.4% upward over the past 60 days. Its shares have rallied 11.6% in a year’s time.

Over the last 60 days, First BanCorp.’s 2018 earnings estimate moved 3.5% north. Over the past year, its share price has appreciated 53.9%.

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