First Federal Bancshares to Buy Two Banks in $124 Million Deal

First Federal Bancshares of Arkansas Inc., a publicly traded company in Harrison and the holding company of First Federal Bank, has announced the signing of a merger agreement to acquire First National Bank of Hot Springs and Heritage Bank of Jonesboro.

The two banks are wholly owned subsidiaries of First National Security Co. of Hot Springs. According to the FDIC, First National Bank had total assets of almost $710 million as of March 31, and Heritage had nearly $200 million.

Following the merger, First Federal Bancshares will nearly triple to approximately $1.4 billion in total assets, with 44 branches in Arkansas, two branches in Southeast Oklahoma, 47 ATM’s and approximately 430 employees.

According to a news release, First Federal Bancshares will acquire all of the stock of First National and shareholders of First National will receive shares of First Federal Bancshares common stock and $74 million in cash.

First Federal Banchshares CEO Chris Wewers said the value of the stock was nearly $50 million.

“This is a great deal for both of our companies,” he said. “Their management teams are exceptional and they are going to help us grow in the future.”

Wewers said a Form 8-K, to be filed later today with the Securities & Exchange Commission, would provide further details of the acquisition.

Certain principal shareholders of Bear State Financial Holdings LLC, FFBH’s controlling shareholder, have separately agreed to invest in the equity of FFBH in order to fund a portion of the cash merger consideration.

Three members of First National’s board of directors will join First Federal’s board, including John H. Hendrix, First National’s chairman, and Daniel C. Horton, First National’s president and CEO.

The leadership of First National Bank president Jason Lenderman and Heritage Bank president Steve May will continue.

The deal is expected to gain regulatory approval in the fourth quarter this year.