story by Michael Tilley
mtilley@thecitywire.com
Memorial Day weekend will be a working weekend for the signage company hired by Muskogee, Okla.-based Armstrong Bank. The weekend will see Armstrong signs replace Benefit Bank signs in the Fort Smith area and Northwest Arkansas as part of a deal that could see Armstrong Bank rise to the top five in Fort Smith metro deposit market share.
Ironhorse Financial Group, a privately held bank holding company and parent company of Armstrong Bank, announced Dec. 29 it would acquire Fort Smith-based Benefit Bank. Terms of the deal have not been disclosed. Armstrong Bank was established in 1910, and has 17 banking locations in northern and eastern Oklahoma along the Interstate 40 corridor. Benefit Bank, organized in 1999, has four full-service branches in the Fort Smith area and a loan production office in Springdale.
Gary Andrews, Armstrong’s regional president over Fort Smith and Northwest Arkansas, said the conversion process is underway between the two banks and new signage will be installed over the Memorial Day weekend. A signage unveiling ceremony is set for 10 a.m., May 26, at the bank location on Massard Avenue (and near Phoenix Avenue).
“We’re excited about coming to Fort smith and to our Springdale office there in Northwest Arkansas. ... It’s a great team that was assembled there by him (former Benefit Bank President Joe Edwards) and we’re looking forward to working with them,” Andrews said.
The company has also worked to coordinate with Benefit Bank customers. Part of that includes a guidebook designed to help Benefit Bank customers transition to Armstrong.
MARKET SHARE GROWTH
Customers who do stick with Armstrong will be part of a larger bank company. Armstrong Bank reported first quarter net income of $3.693 million, down from $4.411 million during the first quarter of 2014. The bank ended 2014 with net income of $16.332 million, better than the $13.98 million in 2013 and up 37% over the $11.914 million in 2012.
Armstrong ended the first quarter with $689.453 million in assets, and total deposits of $588.73 million. Ironhorse Financial, which also owns Norman, Okla.-based Republic Bank, has combined assets with the Benefit Bank acquisition of more than $1.3 billion.
Benefit Bank had $194.68 million in assets at the end of the first quarter. Benefit Bank net income in 2014 was $1.436 million, up from $1.076 million in 2013, and well ahead of the $871,000 in 2012.
Armstrong now has 22 locations in eastern Oklahoma and western Arkansas. Andrews, a 30-year veteran with Armstrong, joined the bank out of college when it had just two offices. The bank will employ around 300 people post-acquisition, Andrews said.
That growth includes growth in deposit market share. As of June 30 2014, the most recent FDIC market share report, Armstrong Bank had four bank locations inside the Fort Smith metro market and a market share of 4.09%. By comparison, First National Bank of Fort Smith had the most metro market share at 21.35%, with Arvest Bank at 16.51% and BancorpSouth rounding out the top three at 11.23%.
Benefit Bank had five locations in the metro market with 3.61% of market share.
If Armstrong is able to retain deposits through the acquisition, it would move the bank into the top five for metro market share. Citizens Bank & Trust in Van Buren – owned by the parent company of First National Bank of Fort Smith – had a market share of 7.71% and Regions Bank rounded out the top five at 4.95%.
LOOKING AT NORTHWEST ARKANSAS
Andrews said Armstrong Bank also will “investigate” new opportunities in the “highly, highly competitive” Northwest Arkansas banking sector. Prior to the acquisition, Benefit Bank obtained state approval to convert its Springdale loan production office into a full-service branch bank. Armstrong was able to retain that approval.
“We’re going to go up there (Northwest Arkansas) and try to carve out a niche and compete and do the best we can,” Andrews said.
How competitive is Northwest Arkansas? The region has 39 bank institutions active in a market with $8.552 billion in deposits, compared to a central Arkansas market with $14.778 billion in deposits among 35 active banks.
And Ironhorse Financial with more than $1.3 billion in assets could attract the attention of larger regional and national banks. Consolidation through mergers and acquisition has been the banking industry story in recent years. For example, the number of banks in Arkansas at the end of 2014 was 109, down from 120 at the end of 2013. It’s a similar story in Oklahoma, with 221 banks at the end of 2014 compared to 229 at the end of 2013.
Andrews said Armstrong “ownership (is) still in an acquiring mode and to my knowledge there is no design on selling.”