Market Disruption Opens New Doors for Bear State Financial

by George Waldon  on Monday, Aug. 4, 2014 12:00 am  

More dickering resulted in mutual agreement that culminated in a transaction involving $74 million cash and 6.25 million shares of common stock. The acquisition was consummated on June 13, 2014.

When the dust settled, Bear State Financial Holdings LLC held a 63.2 percent stake in the company, worth more than $158 million. The limited liability company had been the catalyst for restoring the financial soundness of First Federal Bancshares Inc. in 2011 and transforming it into Bear State Financial Inc.

Addressing regulatory concerns that Bear State should have sufficient operational capabilities and safeguards in place to manage a much larger organization resulted in a protracted approval process for the purchase of First National Security.

The Bear State Financial Holdings investment group includes Witt Stephens Jr., co-chairman and CEO of the Stephens Group LLC; Joe and Scott Ford, the father-son team of Alltel Corp. fame and partners in Westrock Capital Partners; Gus Blass III, general partner with Capital Properties LLC and principal with Falcon Securities Inc.; and Ron Cameron, CEO of Mountaire Corp.

John Hendrix of McKinney, Texas, individually controls a 9 percent stake in Bear State Financial worth about $22.6 million.

His family owned 77 percent of First National Security, where Hendrix was chairman.

Prior to the merger, Bear State Financial Holdings held stock and warrants that represented a possible 79 percent of the company’s outstanding shares.

Shares of Bear State closed at $8.06 when the acquisition of First National Security closed on June 13. More recently the stock has traded around $8.35 per share.

Bear State announced that its second-quarter results will be released by mid-August. Company officials anticipate reporting a loss for the second quarter due to transaction expenses, retirement of certain pension liabilities and other one-time expenses.

Bear State recorded a net loss of $277,000 for the three months ended March 31, compared with $303,000 profit for the first quarter of 2013.

The company attributed the decrease in earnings to increased operating expenses, primarily related to salaries and employee benefits and real estate owned.

Since its restructuring and recapitalization in 2011, Bear State has recorded annual profits of $729,000 in 2013 and $755,000 in 2012. The company lost $19 million in 2011.

Accompanying the merger were three new members of the Bear State board of directors: Hendrix, 77, largest shareholder in First National Security; Dan Horton, 72, chief executive officer of First National Security; and Ian Vaughn, 37, Hendrix’s stepson and a director at FNS’s First National Bank of Hot Springs.

 

 

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