Simmons First National Not Alone In Bank Branch Assessment

by George Waldon  on Monday, Sep. 16, 2013 12:00 am  

The $53.6 million Chapter 11 acquisition of Metropolitan National Bank will pose some assimilation questions for executives at Simmons First National Corp. of Pine Bluff, particularly in the overlapping footprints in northwest and central Arkansas.

But Simmons isn’t the only bank that is assessing current branch locations, and some of the branches it decides to drop may be readily scooped up by other lenders.

Branches with $15 million or less in deposits are likely to draw special attention. Metropolitan has a dozen locations in northwest Arkansas and 15 in central Arkansas below that threshold. Simmons, through two of its eight separate bank charters, has six sub-$15 million deposit branches in northwest Arkansas and eight in central Arkansas. (See slideshow above.)

For many lenders, $15 million in deposits is a measuring stick for the viability of a bank branch, while others think even that is too low.

“If you get below $15 million in deposits, it gets pretty tough,” said Reynie Rutledge, chairman and CEO of First Security Bank.

Branch evaluation is an ongoing process, and deposits are but one item for review.

“We’re looking on a fairly continuous basis,” Rutledge said. “Are we continuing to open new accounts and getting new customers? Every situation is different.

“We do believe in brick and mortar. Can you do without as many assets tied up in branches as you could in the past? Probably you can.”

First Security is expanding its northwest Arkansas network with the purchase of a Farmington branch from First Federal Bank of Harrison. The location will bring the number of branches First Security has in Washington County to 11, but it is the first outside of Fayetteville and Springdale.

First Federal opened the location in 1997. Sixteen years later, its deposit total stands at $10.7 million.

Chris Wewers, president and CEO of First Federal Bank, said the decision to sell the Farmington operation was made as part of the company’s “branch rationalization” efforts.

“We were looking around at our branch network: size, location and lending activity over time,” Wewers said. “We decided we’re probably not the best owner of it. Let’s see if someone else is interested in it.



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