Jefferson Bancshares to Buy Out Hot Springs B&T Shareholders, Collapse Charters

by Gwen Moritz  on Tuesday, Aug. 27, 2013 4:35 pm  

Jefferson Bancshares of Pine Bluff announced Tuesday a plan to buy out minority shareholders in its unprofitable Hot Springs Bank & Trust and to merge the charter with that of its flagship  institution, Relyance Bank of Pine Bluff, by the end of the year.

Jefferson Bancshares will exchange common stock for the minority-owned shares of Hot Springs B&T in a transaction valued at $2.88 million, according to a press release.

CEO Chuck Morgan said the purchase price - the equivalent of about $36.75 per share - represents 77.18 percent of the book value of the Hot Springs shares. Jefferson Bancshares already owns roughly 53 percent of Hot Springs Bank & Trust, with the remainder being held by 50 to 60 individual investors, he said.

Jefferson Bancshares founded Hot Springs B&T in 2005, using a leftover charter relocated from Clarksville. The bank's assets peaked at nearly $115 million in 2010, according to call reports filed with the Federal Deposit Insurance Corp, but it has never had a profitable year. In the first two quarters of 2013, Hot Springs Bank & Trust has lost $732,000, and its assets stood at $85.74 million as of June 30.

Relyance Bank - which was known as Pine Bluff National Bank until May - earned $4.6 million in 2012 and had net income of $2 million in the first two quarters of 2013. Relyance Bank had assets of $395.7 million as of June 30.

"Although Hot Springs Bank and Trust has had its issues in the past, this team of talented bankers has worked diligently to eliminate those issues and is on track to move the bank forward," the press release said. "We look forward to bringing Relyance Bank’s history of outstanding customer service and community banking to the Hot Springs and Hot Springs Village markets."

The merger of the two charters will be a money-saver for Jefferson Bancshares, which currently deals with the Office of the Comptroller of the Currency as primary regulator of Relyance's national charter and with the Arkansas State Bank Department as primary regulator of Hot Springs B&T's state charter.

"We're projecting it to be profitable, a profitable transaction, the following year," Morgan said.



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