$42.3 million, all cash.
That’s the payday on the way for investors in Bankshares of Fayetteville Inc., holding company of the $358 million-asset Bank of Fayetteville.
Announced in July, the acquisition by Farmers & Merchants Bankshares Inc. of Stuttgart will close before year’s end. As expected, Bank of Fayetteville will be merged into the $702 million-asset Farmers & Merchants Bank of Stuttgart.
The combination is expected to boost the asset total of Farmers & Merchants beyond the $1 billion mark. The tally would make it the 13th Arkansas financial institution to achieve that asset milestone.
First Community Bank of Batesville, with total assets of $991 million at June 30, joined the $1 billion club on July 31.
First National Bank of Paragould, with total assets of $981 million at June 30, crossed the 10-digit threshold during the third quarter as well.
“As of Sept. 30, we were at 1 billion and 9 million dollars,” said Greg Graham, CFO at First National. “That’s a hard number to say.”
Because of the seasonality of its agri loan portfolio, the bank’s total assets will ebb and flow during the fourth quarter as crop loans pay off as harvest time winds down. But First National will more than likely end the year somewhere north of $1 billion.
More Merger Musings
The Bank of Fayetteville sale will cipher out to about 1.34 times book value, according to bank watchers familiar with the transaction.
Five of the largest stockholders in Bankshares of Fayetteville include:
- David McClinton, chairman, 14.33 percent worth $6.06 million.
- Lee Bodenhamer of Little Rock, 7.79 percent worth $3.3 million.
- Jim Lindsey, 5.13 percent worth $2.17 million.
- Curtis Shipley, director, 3.43 percent worth $1.45 million.
- Mary Beth Brooks, president and CEO, 2.35 percent worth $1 million.
Except for Bodenhamer, that lineup is Fayetteville-centric.
Farmers & Merchants isn’t the first ardent suitor to court BOF shareholders.
The Bank of Fayetteville was in the merger spotlight back in 1997-98 when a Magnolia State bank holding company came calling.
Deposit Guaranty Corp. of Jackson, Mississippi, made a $31 million proposal in late 1997. That unsolicited offer prompted BOF officials to orchestrate a formal bidding process that attracted 15 interested parties.
However, the flurry of activity came to naught.
During the winnowing process, 11 received bidding packages. Five made preliminary bids, but only two fell within the bank board’s acceptable price range.
After due diligence, those last two suitors exited the picture as well.
Deposit Guaranty itself was acquired during 1998 in a $2.4 billion stock swap with First American Corp. of Nashville, Tennessee — a multiple of 4.2 times book value.
Ah, those heady days when merger mania was sweeping through the national banking scene.
Deposit Guaranty’s $31 million offer for Bank of Fayetteville represented a book value multiple of 2.4.
With the benefit of hindsight was the would-be deal a missed opportunity?
Not exactly. The Deposit Guaranty bid fell by the wayside in deference to its pending sale to First American.
BOF shareholders also can take solace in the $16.7 million in dividends they’ve collected since 1998.