George Makris
After holding out much longer than most other bank holding companies, Simmons First National Corp. of Pine Bluff announced Wednesday that it will collapse its six state bank charters into its flagship Pine Bluff charter, Simmons First National Bank.
The move should make Simmons First National the fourth-largest bank headquartered in Arkansas with $4.4 billion in assets – although fast-growing First Security Bank of Searcy, with $4.3 billion as of Dec. 31, could be very close.
Simmons First National Corp. expects the move to save money and increase efficiency, the same reasons companies like Home BancShares and Arvest Bank Group took similar actions years ago.
The publicly traded company (Nasdaq: SFNC) said in a news release that it would combine the charters in two phases, one in May and another August.
“The elimination of the separate bank charters will increase the company’s efficiency and assist the company in more effectively meeting the increased regulatory burden currently facing banking institutions,” George A. Makris Jr., chairman and CEO, said in a filing with the U.S. Securities and Exchange Commision. “There are many operational functions that we currently perform separately for each of our seven banks, after the consolidation these tasks will only need to be performed once.”
The state charters being combined into the national charter are Simmons First Bank of Northeast Arkansas, Simmons First Bank of Searcy, Simmons First Bank of Hot Springs, Simmons First Bank of Russellville, Simmons First Bank of South Arkansas and Simmons First Bank of El Dorado.
The banks in Jonesboro, Searcy and Hot Springs will be consolidated in May; the remaining banks will combine in August.
“We expect our customers to experience a positive impact from this change. All of our banking and financial services will continue to be available in the same locations as before the consolidation,” Makris said. “Our local management and community boards of directors are committed to maintaining our nearby and neighborly service and this change will allow them more opportunity to meet the needs of our customers and the communities we serve.”
Simmons First National Corp. has operations in Arkansas, Kansas and Missouri.
In November, the firm closed on its $53.6 million acquisition of Metropolitan National Bank of Little Rock, which was incorporated into the Pine Bluff national bank. As part of the integration, Simmons also collapsed its state-chartered Simmons First Bank of Northwest Arkansas into Simmons First National on Nov. 1.
Simmons has been conspicuous in its continued operation of multiple charters. In 2012, CEO J. Thomas May – who retired Dec. 31 – was specifically asked about the practice in an “Executive Q&A” for Arkansas Business. His answer:
“This has been a strategic decision based on a plan of building a network of community banks. The reason we have been successful in making traditional acquisitions is not because we bid the highest price but because we provided a fair return, and our model of separate charters allowed those community banks some autonomy to continue to make local decisions for their local customers.
“Further, during the last two years, we have centralized much of the back-office operations, which eliminated duplicative cost. Concerning our headquarters, we are not unique in having our corporate headquarters outside of Little Rock. Four of the five largest holding companies have their headquarters in cities outside of Little Rock.
“All four of those banks have a corporate presence in Little Rock, including Simmons First. Simmons First National Bank, our lead bank, will soon be 109 years old, and our roots are in Pine Bluff. This market has been very good to our company.”
By that time, Simmons had taken some steps to streamline its regulatory burden, although it still answered to both state and federal regulators.
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