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George Makris turned over a $2 billion region to former Liberty Bank CEO Gary Metzger.
George Makris turned over a $2 billion region to former Liberty Bank CEO Gary Metzger.

March to Mo.: SWMO financials whet acquisition appetite for Ark. banks

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Little Rock’s Bear State Financial Inc. made it an Arkansas party of three in the southwest Missouri market, joining Simmons First National Corp. of Pine Bluff and Arvest Bank Group Inc. of Bentonville.

The $70 million stock swap-cash purchase of the $443 million-asset Metropolitan National Bank in October provided the gateway for publicly traded Bear State (Nasdaq: BSF) to enter a new regional market. The decision to make its first move outside of Arkansas via Springfield was calculated.

“It was market specific,” said Richard Massey, chairman of the nearly $2 billion-asset Bear State. “We do a lot of work looking at the economy and opportunities of a market. We kind of circled the Springfield market as something highly desirable. We get a lot of opportunities, and you have to know how to prioritize.”

Home to 29 lenders fielding 122 offices, there’s no shortage of banking options in Greene County.

“It’s as competitive as any market we’re in, not just the number of branches but the number of banks,” said Cliff Gibbs, regional president for Arvest Bank in southwest Missouri and Benton County in Arkansas.

Arvest, the largest Arkansas-based banking franchise and among the 100 largest in the nation, became a player in the southwest Missouri market 17 years ago.

Publicly traded Simmons First dipped its toe in the market through the Federal Deposit Insurance Corp.-assisted acquisition of $96.6 million-asset Southwest Community Bank in May 2010.

“It was a good way to test the water, but we knew a lot about the Springfield market,” said George Makris Jr., chairman and CEO of the $7.5 billion-asset Simmons. “We really liked what we saw in the economy, with its base of education and health care. The market was a lot like what we saw in Arkansas, stable without big peaks and valleys.”

The Southwest deal was one of four FDIC-assisted transactions Simmons completed to help build its Missouri franchise. But the $206.9 million acquisition of Liberty Bancshares Inc. that closed in April was a game changer.

Simmons and Bear State executives were as excited about ushering in southwest Missouri banking talent as buying new market share. Bear State even named Mark McFatridge, CEO of Metropolitan National, as CEO of the acquiring company.

“He was building something for the long term, and we hit it nicely,” said Massey, who passed the CEO torch. “McFatridge was brought in to fix Metropolitan. He built a lending team that was fully capable of doing larger loans in the market.

“The problem you have with doing these community bank deals is the loan team doesn’t usually have the sophistication, experience or Rolodex to do
big deals.”

Metropolitan National’s legal lending limit was about $9 million, compared to the $28 million top loan Bear State brought to the mix.

“The hard part is do you have a lending team to now do $35 million loans. Usually, you don’t see that scalability in your loan team,” Massey added. “We think those guys are going to immediately walk in and do big loans, and in their case, even bigger loans than they could do before the merger. That’s uncommon in these community bank deals.”

Bear State officials say doubling the bank’s asset portfolio to the $3 billion-$5 billion range is their near-term goal.

Simmons executives were equally smitten with the team assembled by Gary Metzger, the CEO of Liberty Bank who was named regional chairman for Simmons.

“We were taking a look at our organization and a way we need to operate,” Makris said. “What makes sense is to have this Missouri-Kansas market as one region for us. We met Gary Metzger and the folks at Liberty Bank, and it was a great marriage. We turned over an almost $2 billion region for him to manage. It was appealing to them and appealing to us, and Springfield is the headquarters.”

A clash of corporate cultures is considered a nonissue for the melding of Arkansas and Missouri bankers.

“The way you screw a deal up is where the cultures don’t mix,” said Massey of Bear State. “Having a similar culture is important. It really does matter.”

Massey was part of a Little Rock investment group that launched Pinnacle Bancshares, a de novo effort that built a $135 million-asset bank. Launched in 1997, the Little Rock venture was sold for $21.2 million in 2002 to Tupelo, Miss.-based BancorpSouth Inc.

A strong representation from the Pinnacle investors banded together in 2011 to form Bear State, built on the bones of a near insolvent Arkansas thrift, First Federal Bank of Harrison.

Simmons First traveled a conservative growth path for much of its history, focusing exclusively on in-state opportunities until the post-2008 era. And then, there’s Arvest.

“Our philosophy is to enter a state and do infill and leverage our name and reputation,” said Gibbs, a 29-year veteran with Arvest. “Some people refer to us as the Wal-Mart bank, and we don’t consider that to be anything but a compliment.

“Actually, the Walton family was in banking before there was a Wal-Mart.”

Back when Sam Walton was the future charismatic leader of what would become the largest retail chain on the planet, he led the purchase of Bank of Bentonville in 1961.

That acquisition was the start of what developed into today’s Arvest Bank. Like the Walton family’s retail business, its banking interests have gotten really big.

Total assets at Arvest Bank tallied almost $16 billion as of Oct. 31, plus another $10 billion in assets under management by Arvest Wealth Management.

Arvest began its march into Missouri with two small steps: opening a loan production office in Anderson and buying the $11 million-asset State Bank of Noel in November 1998.

“There are so many similarities in the markets in southwest Missouri and northwest Arkansas,” Gibbs said, also drawing likenesses to the communities served in Oklahoma. “It was the next natural expansion area for us.”

The $2.1 million purchase of State Bank provided a Missouri bank charter for Arvest, and de novo branching accomplished the heavy lifting to build its southwest Missouri franchise.

“We typically try to stay within the four-state footprint we’re in and do infill in markets that make sense for us,” Gibbs said. “That was the Springfield proposition for us.”

In 2007, Arvest opened the first of its four Springfield branches and entered the Branson market.

The company added 15 branches to its Missouri franchise in a 29-branch transaction with Bank of America. The March 2013 deal included a dozen branches in southwest Missouri.

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