Berryville Bank Converting Shell

First National Bank of Berryville, a 112-year-old institution held by First Carroll Bankshares Inc., is converting from a “C” corporation to an “S” corp. The Federal Reserve Bank of St. Louis on Nov. 8 gave approval to the bank’s ESOP — First National Bank of Berryville Employee Stock Ownership Trust — increasing its ownership percentage in the holding company.

Subchapter “S” corps can only have 75 stockholders, so the bank is undergoing a reverse stock split to pare its 150 current shareholders down to size.

About 95 percent of the $124.7 million bank is owned by the 75 stockholders who will remain.

“The vast majority of our employees are very much in favor of this move,” said Robert West, the bank’s president.

The ESOP’s ownership increased from 31.7 percent to 36.8 of First Carroll Bankshares.

In bankerspeak, the move will enhance First National’s ability to function as a dividend bank and lessen the tax burden on the company.

Arkansas National Bank of Bentonville and its holding company, Arkansas National Bancshares, are undergoing a similar conversion.