Report: Simmons First an active bidder for banks that have failed

05/03/2013 11:14 AM

05/03/2013 11:16 AM

Simmons First National Bank is one of the nation’s most active bidders on banks that have failed, according to a report released Friday.

But one of its top executives said on Friday that he sees that changing.

A report by SNL Financial said Simmons First – which entered Wichita through the October 2010 acquisition of the failed Security Savings Bank – made bids on 12 failed banks between January 2009 and April 2013, ranking the Pine Bluff, Ark.-based bank 13th on the report.

Simmons First successfully acquired four of failed banks for which it bid.

It was the only bank doing business in the area on the SNL list.

David Bartlett, president of Simmons First National Corp., the $3.6 billion-asset holding company of the bank, reiterated Friday that the bank intentionally pursued what he called “FDIC-assisted transactions” largely because the bank wanted to expand its regional footprint and those transactions were the best way to do so.

The Federal Deposit Insurance Corp, which acts as the receiver in all bank failures, invites select, healthy banks to make bids on banks that have been deemed to be insolvent by state or federal banking regulators, generally several weeks before regulators close them.

Bartlett said the recession made traditional bank mergers and acquisitions “few and far between,” largely because even banks that were healthy couldn’t command a strong sales price, hence they put off making themselves a merger or acquisition candidate.

He confirmed that all of the acquisitions Simmons First has made between 2010 and now have been of failed banks.

It was seeking acquisitions after raising $71 million in additional capital in November 2009.

In addition to acquiring Olathe-based Security Savings, which gave Simmons First two Wichita branches, it added Southwest Community Bank in Springfield, Mo.; Truman Bank in St. Louis; and Excel Bank in Sedalia, Mo.

Bartlett said the bank looks for acquisitions within a 325-mile radius of central Arkansas. “That seems to be a general area where cultures and the environment for lending would be similar to what we do here in Arkansas,” he said.

Because of the few traditional acquisition opportunities available to Simmons First during that time, the bank opted for the failed banks, he said. But, Bartlett noted, in each of those transactions the bank made a bid using loss-share agreements, in which the FDIC would assume 80 percent of the losses Simmons First could incur on most of the loans it assumed as part of the acquisitions.

Even though the number of failed banks is declining – there have been 10 failures in 2013 through May 2 compared with 22 in the same period in 2012, according to the Federal Deposit Insurance Corp. – Simmons First is still looking for potential acquisitions.

But, Bartlett said, the bank’s focused more on “traditional mergers or acquisitions,” that is of banks that are healthy and deals that don’t require FDIC assistance.

“We like banks around $500 million … in size, and we enjoy being in communities like Wichita,” Bartlett said. “FDIC deals are slowing down. With that, we’re moving back to the traditional merger and acquisition side … in order to filling in the footprint we’ve acquired through the FDIC-assisted transactions.”

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