Bank Deals Fly Despite a Flattening Of Deposits

Total bank deposits in Arkansas declined by about a half-percent in the 12 months that ended June 30, but that certainly doesn’t mean the state’s banking industry is stagnant.

All over the country, the banking industry is consolidating and, for the first time since 2008, most of the deals are “live banks” — not acquisitions assisted by the Federal Deposit Insurance Corp. (There were 490 of those between Jan. 1, 2008, and last Wednesday.)

(GET THE LIST: Purchase the Largest Banks by Deposit in PDF or spreadsheet formats by clicking here.)

Arkansas is no exception, of course, with bank deals coming fast and furious since Bank of America announced last December that it would sell 29 branches to Arvest Bank of Fayetteville, including nine in Arkansas. That deal closed in March, in time to be reflected in the FDIC’s June 30 “summary of deposits,” which was released on Sept. 30.

Since then:

• Home BancShares Inc. of Conway announced (June 25) and closed (Oct. 23) a $280 million acquisition of Liberty Bancshares Inc. of Jonesboro, a deal that will create the second-largest Arkansas-chartered bank when Liberty Bank of Arkansas is folded into Home BancShares’ Centennial Bank.

• Sigma Holdings Inc. of Little Rock, a newly formed investment company led by veteran Little Rock banker Troy Duke and Garland County businessman Lewis Ray “L.R.” Gardner, announced in May a deal to buy the Bank of Rison.

• First Federal Bancshares of Arkansas, the publicly traded parent company of First Federal Bank of Harrison, announced on July 1 a $124 million cash and stock deal to acquire First National Security Co., the holding company for First National Bank of Hot Springs and Heritage Bank in Jonesboro. The combination, set to close in the fourth quarter, will almost triple First Federal Bancshares’ assets to about $1.4 billion, although the three banks will continue to be operated as separate charters.

• Rogers Bancshares Inc. announced Chapter 11 bankruptcy to facilitate the sale of Metropolitan National Bank of Little Rock at auction. The winning bid, $53.6 million, came from Simmons First National Corp. of Pine Bluff, which collapsed its Simmons First Bank of Northwest Arkansas into its Simmons First National Bank of Pine Bluff on Friday and will do the same with Metropolitan when regulatory approval is final, probably by mid-December.

• First Community Bank of Crawford County, recently identified by federal regulators as "significantly undercapitalized," announced last week that it would be sold to First Bank of Hampton, pending regulatory approval.

And those are just the in-state deals. Greg McKinney, chief financial officer of Bank of the Ozarks Inc., told Arkansas Business last month that his company has “more acquisition opportunity and more investment bankers calling us and trying to pitch us a potential bank acquisition than we can handle. We have to make the list and do some tabletop due diligence and prioritization.”

In the past year, the publicly traded Little Rock bank has acquired a one-branch bank, The Citizens Bank of Geneva, Ala., and completed the $68.5 million purchase of First National Bank of Shelby, N.C.

Deposit Market Share

The FDIC’s summary of deposits is an accounting taken at midyear by the government agency that insures bank deposits. It is not a holistic report card on the health of a bank or of the banking industry, but it is the only official report that provides Arkansas-specific trend data for multistate banks like Arvest, Regions Bank and Bank of America.

Total deposits statewide dropped back to $53.1 billion, down $267.6 million in a year, and those were divided among 146 bank charters — up from 144 doing business in the state at the mid-point of 2012. (See sidebar.)

It would be easy to say that Arvest Bank of Fayetteville, the state’s largest bank, accounted for most of the decline, because its in-state deposits dropped by $245.4 million to $6.2 billion, a drop of almost 4 percent. But declining deposits weren’t unusual among the larger banks doing business in Arkansas.

In an email to Arkansas Business after the summary was released, Arvest spokesman Jason Kincy discouraged reading too much into the summary of deposits.

“As you may know, these deposit figures are a snapshot in time of a bank’s deposits and there can be fluctuations in the amount of deposits on any particular given day based on what’s coming in or out of the bank at the time the numbers are totaled,” Kincy said.

Half — 49.5 percent — of the state’s bank deposits were held by the 10 largest banks in the state. Here’s a rundown of deposit trends among other large banks:

• Regions Bank of Birming-ham, Ala., also lost deposits. Its total of $4.19 billion in Arkansas deposits represented a decline of 2 percent since the midpoint of 2012.

First Security Bank of Searcy increased its deposits by $81.5 million, a bump of 2.5 percent, to $3.33 billion. Reynie Rutledge’s bank now controls 6.28 percent of Arkansas deposits.

• Bank of America of Charlotte, N.C., saw its Arkansas deposits decline by almost 5 percent to $2.98 billion. That followed a decline of 6.5 percent the previous year.

• Liberty Bank of Arkansas, which has since been acquired by Centennial Bank, added $55.8 million in deposits, an improvement of 2.6 percent that brought its total to 2.2 billion. That followed an increase of 6.8 percent the previous year.

• BancorpSouth Bank of Tupelo, Miss., took the No. 6 spot away from Centennial despite a tiny decline (0.2 percent) in total Arkansas deposits, which stood at $1.73 billion as of June 30.

• Bank of the Ozarks of Little Rock also moved ahead of Centennial by adding $76.3 million in deposits in Arkansas, an increase of 4.8 percent that brought its total to $1.66 billion. BOZ’s deposits grew even more — by almost $106 million — outside the state, where deposits totaled $1.34 billion.

• Centennial, then, dropped to No. 8 when ranked by Arkansas deposits, thanks to a decline of 7.4 percent in in-state deposits. For the first time, Centennial’s out-of-state deposits, $1.73 billion, surpassed its Arkansas deposits, $1.63 billion.

• Deposits at Simmons First National Bank’s Arkansas branches declined by $41.2 million, a 3 percent drop to $1.29 billion. Simmons First National Corp. had seven other bank charters in Arkansas (until last Friday), and the holding company’s total deposits of $2.52 billion represented a decline of less than 2 percent from the previous year. Simmons stands to add $862.5 billion in deposits when it acquires Metropolitan, but deposit runoff after a bank merger is typical.

• IberiaBank of Lafayette, La., added $117.7 million in deposits to bring its Arkansas deposits to $1.1 billion, breaking the billion-dollar mark for the first time. That represents just more than 2 percent of the statewide deposits.