For Arvest, Bear State The Biggest Buy Ever

For Arvest, Bear State The Biggest Buy Ever

The proposed $391 million cash purchase of Little Rock’s Bear State Financial Inc. represents a historic acquisition for Arvest Bank of Fayetteville.

The transaction tops Arvest’s $211 million cash buy of another publicly traded Little Rock bank holding company: $1.78 billion-asset Superior Financial Corp.

That deal served up a tangible book value multiple of 2.56 when it was announced in May 2003. The tangible book value multiple for $2.24 billion-asset Bear State is pegged at 1.99.

The addition of Bear State will push total assets to $19.5 billion at Arvest, owned by the Walton family through their Arvest Bank Group Inc. of Bentonville.

The Aug. 22 announcement of the deal generated an 11.8 percent stock price bump to $10.28 and sent class-action attorneys trawling for disaffected Bear State shareholders.

Bear State Financial Holdings LLC holds the biggest block of stock, a 40.28 percent stake worth $156 million. Rick Massey, managing member of the investment group and chairman of Bear State, has sole voting power over these shares.

Other Little Rock members of the group include Witt Stephens Jr., co-chairman and CEO of the Stephens Group LLC; Joe and Scott Ford, the father-son team of Alltel Corp. fame and partners in Westrock Capital Partners; Gus Blass III, general partner with Capital Properties LLC and principal with Falcon Securities Inc.; and Ron Cameron, CEO of Mountaire Corp.

Scott Ford, a Bear State director, individually holds a 2.27 percent stake worth $8.8 million.

A complete roster of the two dozen members of Bear State Financial Holdings has never been publicly disclosed. The largest single shareholder disclosed in Bear State securities filings is Carol Hendrix with a 6.75 percent stake worth $26.1 million.

She is the widow of John Hendrix, who entered Bear State through the 2014 acquisition of First National Security Co., where he was the largest shareholder. He died on Nov. 9, 2016.

Six Bear State executives had change-in-control severance agreements as part of their employment. One is already gone.

Mark McFatridge, who resigned as president and CEO of Bear State Financial on Jan. 14, is receiving a payout of more than $800,000. His successor, Matt Machen, had a deal valued by the company at $977,886. Completing the short list are:

  • Tom Fritsche, EVP and chief risk officer, more than $1.3 million.
  • Sherri Billings, senior EVP and chief financial officer, $618,817.
  • Shelly Loftin, EVP and chief administrative officer, $540,302.
  • Yurik Paroubek, EVP and chief technology officer, $337,305.

Bear State Financial Inc.
Little Rock

Total Assets: $2,239,090     Net Income: $11,574     Staff: 443
41 full-service locations: 29 in Arkansas, 10 in Missouri and two in Oklahoma
As of June 30

  Total Assets Net Income Staff
2016* $2,053,175 $17,459 484
2015 $1,920,216 $10,574 392
2014** $1,514,595 $24,306 413
2013 $548,872 $729 182
2012 $530,395 $755 179
2011# $579,046 -$19,034 203
2010 $600,046 -$4,035 229
2009 $731,070 -$45,498 255
2008 $795,172 $2,507 290
2007 $791,978 $2,643 300

All dollars in thousands.
* Reflects the $70 million purchase of Metropolitan National Bank of Springfield, Missouri.
** Reflects the $124 million acquisition of First National Security Co. of Hot Springs.
# Bear State investors buy control of First Federal Bancshares of Arkansas Inc. of Harrison in a $6 million deal with the United States Department of the Treasury and a $46.3 million infusion of new capital.