In-state consolidation has shrunk the world of Arkansas banking, and some observers say it will get even smaller in the next few years.
There have been seven mergers in the state so far this year. From 1999 through 2002 the number of banks headquartered there dipped 17.3%, to 177, according to the Federal Deposit Insurance Corp. Assets held by banks headquartered in Arkansas rose 24.4% over the same period, to $35.4 billion.
A lot of the deal activity involves a trio of executives who worked together at First Commercial Corp., which at $7.2 billion of assets was Arkansas' largest banking company until 1998, when Regions Financial Corp. of Birmingham, Ala., bought it.
Johnny Allison left First Commercial to become the chief executive at Home Bancshares Inc. of Conway; Wallace Fowler became the CEO of Liberty Bancshares Inc. of Jonesboro; and Truman Arnold became the chairman of Century Bancshares in New Boston, Tex., just across the southwest border.
The three teamed up in 2001 to form Russellville Bancshares Inc. for the express purpose of buying a 62% stake in first Arkansas Valley Bank in Russellville.
"Ever since First Commercial sold to Regions and we went back into the banking businesses and did our own deals, people have suggested that the pals from First Commercial would come back together," Mr. Allison said.
In the most recent deal, announced last month, Home Bancshares, which has $398 million of assets, would buy at least 80% of the $304 million-asset Community Financial Group in Cabot. The $339 million-asset TCBancorp Inc. of North Little Rock, in which Home has a minority stake, would purchase the remainder.
The $43 million deal is expected to close in the first quarter.
Last month the $336 million-asset Liberty closed its $21 million purchase of the $300 million-asset MSB Shares Inc., also in Jonesboro.
Many say these will not be the trio's last large deals.
Indeed, insiders and observers predict a five-way deal, with Home, TCBancorp, and Liberty combining with the $404 million-asset Century, which has two branches in the state, and the $399 million-asset Russellville, which has 10 branches operating under the Arkansas Valley name.
That would create a $2.5 billion-asset bank, which would be the state's second largest. It would also reunite the three former colleagues under one corporate roof.
Mr. Allison said the rumors of a supermerger have increased since the Home and Liberty deals, which will probably force both companies to go public. With the purchase of Community, Home would be well above the 500-shareholder threshold that triggers the Securities and Exchange Commission's reporting requirements. Liberty is also close to that threshold.
All parties denied any such plans now, but Mr. Fowler conceded that it could happen.
"We are very friendly when we work together, and we share a lot of information with each other," he said. "At some point in time we may to come together, but that is certainly not on the horizon."
Mr. Allison said Arkansas needs a large community-owned bank.
The largest bank based in the state, the $5.1 billion-asset Arvest Bank in Fayetteville, is owned by the Walton family of Wal-Mart Stores Inc. It has also been a part of the consolidation trend, acquiring the No. 2, the $1.8 billion-asset Superior Financial Corp., late last month.
"Every bank in town has sold to megabanks, creating a tremendous niche for a community bank," Mr. Allison said.
