East Family Gets Big Payday in Pulaski Bank Sale

by Gwen Moritz  on Wednesday, Aug. 9, 2006 12:04 pm  

Daryl Byrd, CEO of IberiaBank Corp., speaks Wednesday at Pulaski Bank's Little Rock headquarters.

The announcement early Wednesday that IberiaBank Corp. of Lafayette, La., would make Pulaski Investment Corp. of Little Rock its second Arkansas acquisition in as many weeks was the culmination of four years of flirting and 90 days of intense courtship, Pulaski Chairman James C. East told Arkansasbusiness.com.

Pulaski Investment Corp. is the holding company for Pulaski Bank & Trust, a $493 million bank with 10 branches in Pulaski County, one in Bryant and one in the Memphis suburb of Cordova, Tenn.

East and his four children - including Pulaski Bank CEO Hunter East - own 92 percent of the bank, so the $130 million sale represents a payday of almost $120 million for the East clan. Because IberiaBank is paying with a mix of stock and cash, Jim East said he will become the single largest shareholder of IberiaBank, even without including the shares that will belong to his children. (Stock also has tax advantages over a cash deal.)

Jim East will also take a seat on the IberiaBank board of directors.

Another $7.8 million or so of the purchase price will go to Little Rock insurance agent Mark V. Williamson and the Mark V. Williamson Co. profit sharing plan, who own 6 percent of Pulaski stock. Eighteen other minor shareholders will split the remainder, East said.

The sale price is 3.2 times book value, an above-average price and more than double the multiple that IberiaBank is paying for Pocahontas Bancorp of Jonesboro, the publicly traded parent of First Community Bank. "A whole lot" of that, East said, is attributable to the value of Pulaski's "very profitable" subsidiaries: Lenders Title Co. and Pulaski Mortgage Co. Those subsidiaries operate in 20 cities in eight states, he said.

During a news conference Wednesday morning at Pulaski Bank's R Street headquarters in Little Rock, Daryl Byrd, CEO of IberiaBank, called the combination "uniquely synergistic" because IberiaBank "wants to be better" at the mortgage and title businesses that have been particular strengths for Pulaski.

And while he wouldn't promise not to raise Pulaski Bank's historically low credit card interest rates, he did praise Pulaski's credit card strategy as "extraordinarily smart" and "a dynamite franchise."

"We'd be dumb to mess it up," he said.

After the news conference, East said the never-ending rumors that Pulaski would be sold finally came true for a couple of reasons. First, he has "been in the habit" of having the family business valued annually for estate-planning purposes, "and this year it had a very good value."

East will be turning 68 in October, he said.

Secondly, he said, "We were attracted to IberiaBank because they want our people."

To sell to a bank that already had a significant presence in central Arkansas would likely result in the layoff of most of the Pulaski employees, something he said the East family didn't want to do.

According to Hunter East, Pulaski Bank was advised on the deal by Stiefel Nicholas & Co. of St. Louis, the same investment bank that advised Jim East's friend, Frank Lyon Jr., when his family sold TCBancshares to Mercantile Bancorporation of St. Louis in 1995.

During the news conference, Daryl Byrd, CEO of IberiaBank, assured employees gathered with media representatives in the lobby that all tellers would have jobs in the new organization. And while he wouldn't promise that no other personnel changes would be made, the only IberiaBank employee that is being imported is Robert Head, who had already been identified as the new CEO of IberiaBank's Arkansas operation.

(Last week, Head, who grew up near Jonesboro, told Arkansas Business that he would be moving back to Arkansas for the first time since 1987, but he wouldn't commit to moving to Jonesboro. This morning he said, "I'm moving to Little Rock.")

The Jonesboro thrift charter and the Little Rock bank charter will not be collapsed into a single Arkansas charter, nor does IberiaBank plan to use its brand - well established in Louisiana - in its new Arkansas market, Byrd said.

More on IberiaBank

• Click here for more on the Pulaski Bank deal.

• Click here for Arkansas Business' cover story this week on IberiaBank's Pocahontas bank purchase.

• Click here for Jeff Hankins thoughts on Pulaski Bank's sweet deal.

• Click here for IberiaBank's news release.



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