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Jeff McNatt: Turnaround efforts were too late.
Jeff McNatt: Turnaround efforts were too late.

Simmons First takes over Southwest Community

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When Springfield’s Southwest Community Bank became one of 72 bank failures this year, Pine Bluff, Ark.-based Simmons First National Bank took an opportunity to grow outside its home state.

After more than a year of troubling assets – dating back to late 2008, according to Springfield Business Journal coverage – the Missouri Division of Finance shut down Southwest Community Bank on May 14. The next day, Simmons First National Bank opened its first branch in southwest Missouri.

Simmons First purchased 14-year-old Southwest Community Bank’s approximately $96.6 million in total assets and agreed to pay the Federal Deposit Insurance Corp. a premium of 0.5 percent to assume $102.5 million in total deposits, according to an FDIC news release.

A Missouri Division of Finance news release stated that the bank’s failure could be attributed to “aggressive, imprudent lending decisions made by prior management.”

Southwest Community Bank’s troubled assets totaled $16.1 million in December, compared to $12.9 million in third-quarter 2009. Its troubled asset ratio – a stress indicator developed by Banktracker.com that compares a bank’s troubled assets to its capital and loan loss reserves – was at 328.4 percent at the end of last year. At that time, the national median was a troubled asset ratio of 14.5 percent.

Jeff McNatt was hired to replace Mark Uhler as Southwest Community Bank president in January 2009, he said, with a primary objective of building a team that could help the bank recover. By the end of first-quarter 2009, Southwest Community Bank recorded a net loss of $294,000, and by the end of first-quarter this year, the bank’s net loss was $4.9 million.

Still, Simmons executives have thrown their support behind McNatt and his 10-member team, naming him community president at the Simmons First branch, 3333 E. Battlefield Road.

Once FDIC announced the closing and Simmons First decided to get involved, the decision was made early on to keep current Southwest Community employees on staff, said J. Thomas May, chairman and CEO of Simmons First National Corp. and Simmons First National Bank. “We decided that they were part of the solution and not the problem,” he said.

McNatt and crew now join a 107-year old holding company with $3.1 billion in total assets and eight subsidiary banks with total assets ranging from $150 million to $1.6 billion. Its trust division, Simmons First Trust Co. NA, has assets in excess of $2 billion, he added.

“Take the product and services we already have, take the trust company and a nationwide credit card product … and we think we’re going to be able to make that bank very successful,” May said.

For two years, Simmons has been positioning itself to expand outside of Arkansas, May said. A radius of 325 miles from central Arkansas was established as an ideal range for possible purchases. And in November of last year, the holding company raised $70 million in equity to have cash handy for an acquisition.

The Springfield market appealed to Simmons First because of its good mix of industries, May said, pointing to Bass Pro Shops Inc., BKD LLP, the hospitals and universities in the area as examples.

As far as continued growth for Simmons First, May declined to say whether future acquisitions are already in the works. Expansion is, however, the bank’s intent, he said.

“We’ll be very proactive in trying to grow our company, but we’re going to do it in the same way we’ve done for 107 years, and that’s in a professional way.”[[In-content Ad]]

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