The first Arkansas bank deal of 2019 was announced Wednesday: Farmers & Merchants Bankshares Inc. of Stuttgart will acquire Mountain Home Bancshares and its subsidiary, Integrity First Bank.
The parties did not reveal terms of the deal, other than that it is a cash transaction. When the acquisition is completed, expected in the second quarter, Farmers & Merchants Bank’s assets will grow by almost half — from just over $1 billion to more than $1.5 billion.
F&M’s footprint will also increase dramatically. It currently operates 19 offices — eight in its traditional Delta markets of Stuttgart, Dewitt, Des Arc and Hazen, and eight in Washington County, the result of its 2015 acquisition of the Bank of Fayetteville. Branches in Morrilton, Perryville and Marianna resulted from the acquisitions of Chart Bank of Perryville in 2008 and First National Bank at Marianna in 2009.
Integrity First has 10 offices, including one in Fayetteville. Otherwise there is no overlap in their markets.
“The joining of these two banks expands Farmers and Merchants’ outreach into Jonesboro, Bentonville, Mountain Home, Flippin, Gassville, Lakeview, and Pocahontas, vibrant communities with good things happening,” Gary Hudson, president and CEO of F&M Bankshares, said in a news release. “Our banks share similar values and business philosophies of community involvement and commitment. We have full faith that combining the financial strength of our organizations will serve the customers of both institutions well.”
Hudson told Arkansas Business in 2016 that F&M was looking “for opportunities that will add value to the investment of our stockholders.” Like F&M, Integrity First is profitable. F&M reported net income of just under $7.5 million in the first three quarters of 2018 and $8.74 million in 2017. Integrity First earned $3.98 million through Sept. 30 last year, almost matching in nine months its net income of $4.09 million in 2017.
“The cultures embracing community investment and excellent customer service present in these two community banks are mirror images of one another. This combination will enhance customer experiences and community relations across our varied markets in Arkansas,” Gary Childers, president of Mountain Home Bancshares, said in a news release.
Their cultures may be similar, but the banks have not had the same kind of charters. Known as First National Bank & Trust until 2012, Integrity First has remained a national bank charter. Losing it to state-chartered Farmers & Merchants will reduce the number of Arkansas banks regulated by the federal Office of the Comptroller of the Currency to 13. A combination of charter conversions (six) and acquisitions (two, not including Integrity First) have reduced that number from 22 in just three years.
As of Dec. 31, Integrity First had assets of $525 million and Farmers & Merchants had assets of $1.06 billion, according to the news release. F&M had 243 employees as of Sept. 30, while Integrity employed 127.
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