Westrock Sets Sights on More Banking Deals

by George Waldon  on Monday, Feb. 28, 2011 12:00 am  

Shareholders in Harrison's First Federal Bank hope new investors will bring their golden touch to the once-profitable thrift.

Westrock Capital Partners, in turn, hopes its proposed $55 million investment in First Federal Bancshares of Arkansas Inc. will be followed by more deals in the financial services sector.

"We at Westrock have looked at literally dozens of banks and, one way or another, looked at probably 100 banks," said Rick Massey, partner at the Little Rock investment management firm. "I think there is a renaissance in community banks. I believe they will flourish over the next decade.

"With that thesis in mind, we've been looking for more than two years. More lenders will get sicker and not survive."

The First Federal transaction is happening through Bear State Financial Holdings LLC, a group of about two dozen investors anchored by a well-known cadre of former stakeholders in Little Rock's Pinnacle Bancshares Inc.

Bear State investors will end up owning more than 80 percent of a business if regulators approve the deal, which includes a government forbearance component. This part of the transaction would allow Bear State to repay First Federal's $16.5 million TARP loan at a 64 percent discount.

As structured, First Federal would remain as a public company. Its stock, now trading in the $2.75 range, reached as high as $25.74 on March 27, 2006.

Massey, a leading shareholder in Pinnacle and co-founder of the Little Rock office of Kutak & Rock, is a mergers-and-acquisitions veteran with stints at the Rose Law Firm, Stephens Inc. and Alltel Corp. to his credit.

Dabbs Cavin, also a Pinnacle shareholder and founding executive of the bank, will join the operational leadership at First Federal as part of the shift in ownership.  His specific duties and title with the thrift remain to be determined.

"I love working with these guys, and I'll be happy working with whatever title they give me," he said. "We think a lot of their management team and their folks.

"We just want to come alongside them and help stabilize and grow the business. As far as my role with the company, we want me to be where it makes the most sense."

Other Little Rock members from the old Pinnacle gang have rejoined as investors in Bear State. They include 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; and Gus Blass III, general partner with Capital Properties LLC and principal with Falcon Securities Inc.

Ron Cameron, CEO of Mountaire Corp., wasn't part of the Pinnacle Bancshares effort but is a Little Rock member of the Bear State investors.



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