First Federal Bancshares to Vote on Name Change, $20M Private Placement

by George Waldon  on Monday, Jan. 13, 2014 10:58 am  

Shareholders in First Federal Bancshares of Arkansas Inc. of Harrison will vote on a name change to Bear State Financial Inc. and a $20 million private placement, according to a filing Friday with U.S. Securities & Exchange Commission.

The items are part of a special shareholders meeting scheduled for March 5 to vote on the $151 million purchase of First National Security Co. of Hot Springs announced in July.

As proposed, FNSC shareholders will receive $686.46 in cash and 58 shares of First Federal stock. The transaction is divided between $74 million in cash and more than 9.1 million shares of stock, worth more than $77.8 million based on a per share of $8.50 today.

The move would more than double the size of the $530 million-asset First Federal.

FNSC owns the $690.8 million-asset First National Bank of Hot Springs and the $251.2 million-asset Heritage Bank of Jonesboro. First National operates 22 full-service branches in southwest Arkansas and Oklahoma. Heritage Bank operates nine full-service locations in northeast Arkansas.

The acquisition would expand the footprint of the First Federal from its current northwest Arkansas network of 10 full-service branches. First Federal has a full-time staff of 169, compared to 247 at the two FNSC banks.

The proposed private placement involves the sale of 2.5 million shares to its largest shareholder, Bear State Financial Holdings LLC, and "certain individual members of the limited liability company." The price is $7.90 per share.

The named individuals are Richard Massey, First Federal chairman and Bear State's Managing Member, and Scott T. Ford, a director.

The proceeds of the private placement will be used to fund a portion of the cash paid to FNSC and raise additional capital.

Bear State Financial Holdings controls more than 15.6 million shares, about 78 percent of First Federal's outstanding shares.

Shareholders also will vote to increase the number of authorized shares from 30 million to 100 million shares. The change will help accomplish the FNSC acquisition as well as better position First Federal to address future growth needs. 



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