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Co-Owned, Two Banks Join as OneLock Icon

4 min read

June 21 was a big day for First State Bank of Warren and Commercial Bank & Trust of Monticello, but it won’t mean big changes.

That’s the take from Todd Smith, president and COO of both banks before they merged at the close of business that Friday.

The merged institution, which had shared ownership beforehand, is keeping the Commercial Bank name, and keeping Smith at the helm.

Besides offering greater convenience for customers and added efficiency in record-keeping, the marriage won’t cause much of a ripple, Smith said in a telephone interview two days before the merger.

“The changes are all improvements for the customer, employee, community, and bank.”

Just opening up all the two banks’ ATMs to all customers will be a great convenience, he said.

“We’re going to streamline by bringing everything together,” he said.

“But the big deal is convenience for the customer. In our mobile society, people live in one market and work in another. Now they’ll be able to do business at any of our locations.”

The Ryburn family of Monticello has controlling ownership of both banks: more than 83% of Commercial Bank and above 78% of First State.

The combined bank has assets of about $365 million and a three-county footprint. Warren is in Bradley County, about 17 miles west of Monticello, the Drew County seat.

First State had two locations in Warren, and branches in Hampton (Calhoun County) and Hermitage (Bradley County).

“Commercial is the larger of the two banks [with more than $251 million in assets], but First State Bank is older, having been chartered in 1890 as Merchants and Planters Bank,” said Smith, a Magnolia native who graduated from hometown Southern Arkansas University.

Commercial, which has five locations in Monticello, started as Commercial Loan & Trust in 1912. It took its current name in 1965.

A state bank examiner early in his career, Smith earned a degree from Southwestern Graduate School of Banking at Southern Methodist University in Dallas.

He held executive positions at Farmers Bank & Trust Co. and Peoples Bank, both in Magnolia, before becoming president of the Ryburn family banks in Warren and Monticello in 2022.

No Staff Cuts

The merger gives Commercial a chance to streamline and take advantage of economies of scale, but it won’t bring any cuts to the staff of about 67, Smith said. “Actually, we’re hiring now.”

“We’re a little bit different from most banks making acquisitions,” Smith said. “We’re not paying a premium only to offset with expense reductions that sometimes show up in headcount, local philanthropy, etc.

“So instead of making reductions we’re actually looking to grow lending and local community support. That’s important to us.”

Some of the new  hires will be frontline staff, where all banks have turnover.

But Smith noted that Commercial also likes to promote from within. “We’ve also got a couple of lending spots open; we’re not really advertising, but we’re being selective and trying to see who might be available.”

The merger reflects a shift in thinking about the value of hometown bank charters, Smith said.

“There used to be a lot of value and pride in a hometown bank keeping its local charter. But it weighs us down administratively, which doesn’t do anything for the customer.”

Many customers knew about the banks’ common ownership, he said, and thought “it would be nice if they could transact business in each market.”

Local Decisions

Smith emphasized that local employees will keep making local decisions in both markets.

“Loan decisions won’t have to come to the mothership for approval; we’re still going to operate under the same business model,” he said. “We’re just stripping away an unnecessary layer of governance.”

Bennie Ryburn III, owner of Ryburn Motor Co. in Monticello, owned 22.18% of Commercial and 19.97% of First State before the merger. The banks have been in the family for more than 50 years.

Ray Ryburn, who owns Monticello’s Ray Ryburn Real Estate, owned 17.8% of Commercial and 19.469% of First State. Angela and Margaret Ryburn had 17.83% and 19.469% each. Marion Ryburn owned 7.7% of Commercial.

The banks have about 75 investors, Smith estimated, and they benefit from the banks’ return on equity. (See sidebar.)

Commercial Bank & Trust ranked No. 4 on Arkansas Business’ list of Arkansas banks ranked by return on equity for 2023 at 32.86%. The bank had net income of $3.92 million last year. First State Bank had 2023 net income of $468,000.

Market Leadership

“We’ve typically been the market leader for deposits in Drew County as far as market share,” Smith said. “Last reading was we had 41% of the Drew County market, and 38% of the Bradley County market.”

Smith, a member of the State Banking Board since 2019, has been happy in his two years leading Commercial and First State.

“It has been very enjoyable,” he said. “I really like the broad ability to serve the customer in a retail environment and to lead a banking organization.

“And I knew about some of the strategic initiatives the bank was considering,” he said.

“They had discussed combining the two for about a decade, and reached the point where we knew it would be a positive for the customer experience while allowing us to better compete.

“We’re rolling out technology with a conversion,” Smith continued.

“We’re stepping up to offer more digital technology for those that want it, specifically the younger demographic, while continuing to engage face to face with those who value a one-on-one personal banking relationship. We’ll provide both so locals can stay local with their banking relationship.”

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