Bank of Fayetteville Sales Talk Continues (Banking Column)

All's quiet on the Bank of Fayetteville front, and some believe it's too quiet.

Talk of an acquisition in the works by First Bank Corp. surfaced a few weeks ago, and the topic has remained simmering ever since. It's not the first time the Fort Smith holding company was identified as an alleged suitor of the bank.

Back in the summer of 2009, talk of First Bank's purported interest in Bank of Fayetteville also made the rounds.

Both parties denied a deal was in the works, duly recounted in a Whispers item published July 27, 2009.

Only a sprinkling of Bankshares of Fayetteville Inc. shares changed hands in the three months preceding and following that date. Back then, shares in BOF's parent company were trading at an adjusted split value of $31.

In January 2010, talk of a BOFI sale attracted our attention, and it wasn't just a few hundred shares in play. The timing of that coincided with about 6,300 shares changing hands between Oct. 14 ($20 per share) and March 31 ($3.25 per share).

At that time, First Security Bancorp of Searcy was identified as the leading suitor. Things were different when the latest acquisition talk made the rounds.

The timing coincided with 8,300 BOFI shares changing hands Sept. 1-20 at prices between $8.50 and $11.25 per share. That volume may seem tiny by the reckoning of most public companies. But for a thinly traded pink sheets stock like BOFI, that represents nearly 1 percent of the company's total outstanding common shares.

"I don't know what's going on," said Lee Bodenhamer, a founding BOFI shareholder with a 7.8 percent stake. "I've heard the same rumors you have."

Bodenhamer's interest in the company dates back to June 5, 1987, and the bank's launch by the late John Lewis, a former senior vice president with Fayetteville's First National Bank.

The First Bank Corp. scenario gains traction for some in light of the company's move into Benton County.

The holding company bought Bank of Rogers, led by Dick McLelland, as part of a $26.5 million deal in 2005. The bank was merged with its flagship First National Bank of Fort Smith in 2008, though the Benton County offices operate under the First National Bank of Rogers banner.

In neighboring Washington County, Bank of Fayetteville holds the third-largest deposit market share. Its $327 million total represents an 8.9 percent piece of the market.

Only Arvest Bank at more than $1.2 billion (nearly 35 percent) and First Security at more than $483 million (nearly 13.2 percent) hold bigger stakes of Washington County deposits.

BOFI's 847,569 shares of outstanding common stock are worth more than $9.5 million based on a recent asking price. But that stock valuation is misleading.

Those same shares could be valued at more than $47 million when considering the company's most recent equity capital total, which is north of $40.5 million.

And that's using an ultra-conservative value of one times book as a measuring stick. Any sale would result in a bigger multiple than that; just how big depends largely on the quality of the bank's loan portfolio.

Neither Mary Beth Brooks, BOF's president and CEO with 2.6 percent ownership, nor David McClinton, BOF chairman and leading shareholder at
14.3 percent, could be reached for comment. Other big investors are Fayetteville's Jim Lindsey, 4.84 percent; and Curtis Shipley, director, 3.2 percent.