Citizens Bank of Batesville is on target to reach $1 billion in assets and made a move in that direction in October when it announced the purchase of Parkway Bank of Rogers.
After the acquisition, Citizens Bank will have between $730 million and $750 million in assets, said Phil Baldwin, Citizens' chief executive officer.
"Our initial goal is to get to $1 billion, and we believe we'll get there next year," Baldwin said.
The state Bank Department approved the Parkway Bank purchase on Wednesday, and it should close on Monday, Baldwin said. The Parkway branches will keep their name until later next year.
Citizens Bank has divided the state into geographical regions, Baldwin said.
"We're interested in western Arkansas, moving down Interstate 40 to Little Rock; the greater Little Rock area," Baldwin said. "We also want to expand what we have in the Hot Springs area. Also we have an interest in El Dorado."
Those are in addition to Northwest Arkansas and northeast Arkansas where Citizens already has branches. Citizens has branches in Batesville, Cave City, Fayetteville, Hot Springs, Imboden, Pleasant Plains and Mountain View. Parkway has branches in Rogers, Crossett, Portland and Monticello.
Baldwin would like to see Citizens with $2 billion to $3 billion in assets at some point.
"But we want to retain the strength of a community bank, particularly the relationships with the communities it serves," Baldwin said. "At some point in time if you get too big you begin to lose that. Just because there are too many other challenges you have to face."
Citizens' goal, Baldwin said, is to operate like the old First Commercial Bank in Little Rock, which was bought by Regions Financial Corp. in 1998.
"They were a big organization, they were statewide," Baldwin said. "But they always stayed focused on the communities they served. I was always impressed with how they did that."
Baldwin began work at Citizens Bank in late 2013 and was promoted to chief executive officer in July 2014.
Before that, Baldwin was at Southern Bancorp in Arkadelphia for 11 years, serving as chief executive. He joined CredAbility, an Atlanta-based national nonprofit credit counseling agency, in 2011 as president and chief executive.
Baldwin does a good job building banks, said Randy Dennis, president of DD&F Consulting Group, a Little Rock bank consulting firm.
If Citizens passes $1 billion in assets next year, it will be the second bank Baldwin has helped to guide over $1 billion. Southern Bancorp had about $250 million in assets in 2000 and passed $1 billion in 2010.
The regulations pertaining to mortgage lending have made it difficult for small banks, Baldwin said.
"The regulations make it harder to serve our customers," Baldwin said. "That is a challenge for banks and especially small banks."
A major concern are regulations relating to appraisals, Baldwin said.
"Sometimes when you're in a rural area there are not a lot of comparables," Baldwin said. "You're not loaning money on a house in a subdivision, you're loaning on a house on acreage. It's hard to get [comparable properties] that fit the new regulations."
Citizens is servicing many of its home loans and not selling them to larger lenders, Baldwin said.
Baldwin came to Citizens Bank at a good time, Dennis said.
"Citizens has been a very sleepy little bank," Dennis said. "But Jeff Teague, the chairman of the board, is a visionary guy. And he has a lot of confidence in Phil."
Citizens also has considered expanding outside Arkansas, most likely in states contiguous to Arkansas but also possibly in Alabama or Georgia, Baldwin said.
"We have not progressed deep into that though that is part of our strategic plan," Baldwin said.
Dennis said there are many opportunities for growth in adjoining states, including southern Missouri, eastern Oklahoma and Mississippi.
Garland Binns, a Little Rock banking attorney, said that over the years, Baldwin has been a leading force in a large number of acquisitions.
"He's made acquisitions in Mississippi, purchases from Union Planters [Corp., formerly of Memphis] and in Blytheville," Binns said.
Baldwin doesn't have to rely on acquisitions to expand Citizens Bank, Binns said.
In addition to acquisitions, Baldwin also has expanded Citizens Bank by opening new branches in the Hot Springs and Fayetteville areas, Binns said.
SundayMonday Business on 12/20/2015