LITTLE ROCK — Four Arkansas banks have purchased financial institutions from the Federal Deposit Insurance Corp. in the past 10 months, but there are others in the state with the capacity and desire to buy failed banks.
Banks chartered in Arkansas have bought eight failed banks in 2010, or 6.4 percent of the 125 banks that had failed Jan. 1 through Sept. 17.The state’s banks have been among the most active acquirers in the country.
Banks in California and Florida have bought 13 failed institutions each this year. But both of those states have much larger populations than Arkansas, and each has more than twice the 132 banks that Arkansas has.
Conway-based HomeBancShares, parent of Centennial Bank, has bought four banks this year. Bank of the Ozarks in Little Rock has acquired three failed banks. Simmons First National Corp. of Pine Bluff has purchased one this year.
Fayetteville-based Arvest Bank was the first in the state to purchase a failed bank, buying a Kansas City-area institution in December.
Executives with Jonesborobased Liberty Bank of Arkansas, Summit Bank of Arkadelphia and Southern Bancorp of Arkadelphia said they would be interested in buying failed banks if the right opportunity arises.
Liberty Bank, with $2.5 billion in assets, already has inspected one failed bank but did not make an offer to the FDIC, said Wallace Fowler, Liberty’s chairman and chief executive officer.
“We did look at one in Florida, a small bank,” Fowlersaid. “But I’m not fully convinced how long it will take Florida to turn around. It’s a good thing for some banks, and it wouldn’t be good for others. We’re certainly interested in [possibly buying a failed bank].”
The FDIC has approved Liberty to bid on failed banks, and Liberty executives have gone through training to make an acquisition and take over a bank, he said. Liberty has been approved to bid onbanks with assets up to about $250 million.
Liberty would be most interested in buying a bank in Arkansas, western Tennessee or Missouri, Fowler said. “We get the reports every day on which banks are having a problem. You never know what the next one is going to be and where it is going to be.”
The FDIC notifies the nation’s banks a short timein advance when it decides which banks must be closed and put up for sale. That information is not made public until the bank is actually closed, most often on a Friday afternoon.
Summit Bank made a bid to buy the deposits of ANB Financial of Rogers, which failed in 2008, said Ross Whipple, Summit’s chairman and chief executive officer. Iberiabank made the highest bid for ANB.
Losing the ANB bid might have been a blessing, considering the decline in the real estate market in Northwest Arkansas, Whipple said.
Summit still would consider an acquisition of a bank within about 300 miles of Arkadelphia, but there are several constraints that make a purchase difficult, Whipple said.
“My main concern is who would we get to manage a bank, especially if it is out of our geographical area?” Whipple said. “I’m not sure you want to keep the people who caused the bank to fail.”
And moving executives from Summit Bank to an acquired bank may not be a good choice because they would be unfamiliar with the new area, Whipple said.
Summit Bank has provided training for its upper management on how to take over a failed bank, particularly inlearning to make the quick conversion from the closing of the bank on a Friday until it reopens under new ownership on the next Monday, Whipple said.
Summit has looked at several failed banks but has not made a bid since the offer for ANB, Whipple said.
Arkadelphia-based Southern Bancorp, with $1.1 billion in assets the largest community-development bank in the country, has acquired a bankthat was failing but had not been closed by the FDIC, said Phil Baldwin, chief executive officer at Southern Bancorp.
Southern’s mission as a community-development bank is to reduce poverty and unemployment in the Delta region.
In 2009, Southern bought Timberland Bank of El Dorado for about $5 million, about a month before the FDIC had scheduled Timberland’s closing, Baldwin said.
The El Dorado bank had received a cease-and-desist order from the FDIC in July 2008. A cease-and-desist order is the strongest enforcement action the FDIC takes against a bank.
Southern would consider buying a failed bank from the FDIC, but it would have to be a bank in Southern’s target area of the Delta in Arkansas or Mississippi, Baldwin said. Because not many of those are likely to fail soon, Baldwinsaid, Southern is anticipating buying banks with another strategy.
“A lot of these small banks in Arkansas and Mississippi are family-owned,” Baldwin said.
“And with these new banking rules, it will probably prompt a lot of owners to sell,” he added, referring to regulations resulting from the Dodd-Frank Wall Street Reform and Consumer Protection Act signed by President Barack Obama in July. “I believe you’re going to see a consolidation in the industry.”
Not all of the state’s banks are in the market for failed institutions.
First Security Bank of Searcy, with $3.3 billion in assets the second-largest Arkansas-based bank, is not pursuing acquisitions of failed banks, said Reynie Rutledge, chairman and chief executive of the bank. “At this time, we’re focusing on our Arkansas customers.”
Business, Pages 73 on 09/26/2010