The Federal Reserve Board has approved the previously announced merger of the $67 million-asset Bank of Prescott with the $1.6 billion-asset Farmers Bank & Trust of Magnolia.
Farmers has a holding company, Magnolia Banking Corp., while Prescott Bancshares Inc. owns the Bank of Prescott.
The Fed didn’t receive any public comments about the merger, according to the approval order it released on Oct. 11. The Bank of Prescott will be operated as a branch of Farmers.
The Fed was required by the Ban Merger Act to report on the competitive effects of the proposed merger.
Post merger, Magnolia Banking will remain the 508th largest insured depository organization in the U.S. and control about $965.8 million in deposits, or less than 1% of the total amount of deposits from such organizations, according to the order.
Farmers will remain the 14 largest bank in the state and represent 1.5% of the total deposits.
The order also notes that Farmers Bank and the Bank of Prescott compete directly in the Hope market. Farmers is the largest competitor, representing about 28.9% of deposits, while Bank of Prescott is the third largest, at 14.2%.
Post merger, Farmers will remain the largest and control about $176.2 million in deposits, or 42.6% of the deposits in the Hope market.
“Although consummation of this proposal would eliminate one existing competitor, the Hope market would continue to be served by seven depository institutions,” the order states. “Excluding Farmers Bank, these competitors would include a depository institution with more than 20% of market deposits and two depository institutions each with more than 10% of market deposits. The presence of these viable competitors suggests that Farmers Bank would have limited ability to offer less attractive terms to consumers unilaterally, and these competitors would be able to exert competitive pressure on Farmers Bank in the Hope market.”
The order also states that the branch locations and where consumers go to bank suggest Farmers and the Bank of Prescott do not compete as much with each other as with other institutions.
No major changes are planned for the Bank of Prescott, but customers are expected to gain access to additional products and services as a result of the merger.