One of the smaller banks in Northwest Arkansas, Parkway Bank of Rogers with $135 million in assets, has confirmed a pending sale to Citizens Bank of Batesville for an undisclosed sum. The deal will boost Citizens size to more than $700 million in assets.
Citizens Bancshares, which owns Citizen’s Bank, has assets of $575 million and is 62 years old, with a strong financial balance sheet.
Parkway CEO Bob Taylor said the past 72 hours have entailed whirlwind negotiations on both sides of the table, but Parkway employees were told around 5 p.m. today (Oct. 14) of the pending sale.
“We are excited about this new opportunity. We have been approached by several banks over recent months for possible acquisition but the Citizens Bank offer just felt right. Our ownership is looking to move into some other areas and the timing of this deal fell in step,” Taylor said during a Wednesday (Oct. 14) phone interview with The City Wire.
The deal is subject to regulatory scrutiny which is primarily the Arkansas State Bank Department given that both institutions are state chartered. Taylor said the deal is expected to close in the fourth quarter if there are no hitches.
“We will file the paperwork and see how it long it takes to get on the Bank Department agenda,” he said.
As chairman of the Arkansas Banker Association, Taylor said he has become familiar with the leadership at Citizens. He said the cultures, customer bases and management are like-minded which should make for an an easy transition. The bittersweet part of the day for Taylor was knowing that Parkway’s 115-year-old charter will be retired after the deal is completed. He said Parkway remains a financially stable bank, but limited in scope because of its small asset size. A merger with the larger Citizen’s will give the bank more opportunities to compete in Northwest Arkansas.
Parkway Bank grew its net income by double-digits to $497,000 in the first half of this year. The small boutique bank grew its total loans to $90.6 million as of June 30, a gain of 10.7% from a year ago. At the same time, Parkway trimmed its non-current loans to $323,000 in June. Other real estate owned totaled $1.26 million, down 44% from a year ago.
Taylor said the deal will allow both banks to expand into the Northwest Arkansas market. Citizens Bank already has a branch on Joyce Street in Fayettteville, which is run by Doug Lynch. This branch opened last year first as a loan production office but in recent months became a full-service branch. Taylor said the Rogers location on Parkway will be retained and serve as the Northwest Arkansas regional headquarters for the bank.
“We are excited about having a Fayetteville branch and in the coming months we will be looking to expand with three or four other branches across Northwest Arkansas’ two-counties,” Taylor said.
For now until the systems are converted, customers of both banks should continue to conduct business as usual at their existing bank locations. Customers of Parkway Bank can expect to receive notifications in advance of any changes to their accounts. If customers have questions, they should contact their local branch office.
Phil Baldwin, president of Citizens Bank, said the deal fits with the bank’s growth plans.
“Parkway Bank is an important strategic relationship for us and the merger of Parkway Bank and Citizens Bank is consistent with the strategic growth strategy approved by the Citizens Bank Board of Directors in 2014,” Baldwin said in a press release.
He said Parkway Bank’s headquarters in Rogers is a good addition to the bank’s branch in Fayetteville and improves Citizens’ reach in Northwest Arkansas customers.
Taylor said he will continue work as regional CEO through the transition process but has agreed to become the executive credit officer for the larger overall bank sometime next year. In that role Taylor will have bank wide responsibility for Citizen’s lending activities and credit decisions.
Taylor said the synergies the two banks will be able to generate will allow for more aggressive growth than either one could have likely done on their own. The recent acquisition of Bank of Fayetteville by Farmers & Merchants of Stuttgart is another example of banks looking for synergies and ways to finance expansion into the highly competitive banking market of Northwest Arkansas.
Bankers in Northwest Arkansas certainly face a lot of competition. 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.