Arvest to acquire Bear State Financial in a $391 million deal (Updated)

Fayetteville-based Arvest Bank is acquiring Little Rock-based Bear State Bank in a deal valued at $391 million that is expected to close no later than the first quarter of 2018, and will push Arvest to almost $20 billion in assets.

The deal was announced early Tuesday (Aug. 22) and equals $10.28 per share of Bear State stock.

Thinly-traded Bear State shares (NASDAQ: BSF) closed Monday at $9.20 and were up almost 11% in Tuesday morning trading. During the past 52 weeks, the share price ranged between $8.65 and $10.95.

Bear State Bank operates 42 branches, three technology centers equipped with interactive teller machines and three loan production offices in Arkansas, Missouri and Oklahoma.

Bear State has been on a growth spurt in recent quarters. For the period ended June 30, Bear State reported second-quarter earnings of $6.7 million, compared with earnings of $4.5 million in the second quarter of 2016. The bank posted record revenue of $23.4 during the quarter, an increase of 12% from a year ago. First quarter income was up 47% over the same quarter in 2016, and full year 2016 net income totaled $17.5 million, up 65% compared with 2015 net income.

The bank ended the second quarter of 2017 with total assets of $2.24 billion, up 12% compared with the same period in 2016.

Prior to June 2014, Bear State was First Federal Bancshares of Arkansas. In May 2011, Bear State Financial Holdings invested $46.3 million in First Federal to recapitalize the bank. Bear State Chairman Richard Massey led the Bear State group and brought a new management team to the bank. In June 2014, the bank changed its name to Bear State Financial.

Arvest is privately held with Jim Walton, son of Wal-Mart Stores co-founders Helen and Sam Walton, serving as chairman and CEO of Arvest Bank Group. The bank has more than 250 bank branches in Arkansas, Oklahoma, Missouri and Kansas that operates in 16 locally managed markets. The bank posted $17.298 billion in assets at end of second quarter.

UPDATED INFO:
‘STRATEGIC MOVE’
Arvest President and CEO Kevin Sabin said the deal allows the bank to capture market share in existing markets and expand into new areas.

“This is a strategic move for us and one made after much careful consideration,” Sabin said in the announcement. “In addition to giving us the opportunity to expand into some new communities, this deal also allows us to strengthen our presence in some existing markets.”

Arvest has operations in 18 of the 34 markets in which Bear State operates. The new cities and towns for Arvest are in Arkansas are: Ashdown, De Queen, Dierks, Glenwood, Jonesboro, Manila, Monette, Mount Ida, Nashville and Waldron. In Missouri the new cities and towns are Golden City, Kimberling City, Lamar and Marshfield; and Broken Bow and Idabel in Oklahoma.

“Arvest Bank and Bear State customers will not notice any immediate changes, and both banks will continue to conduct business as usual. A full conversion of systems and accounts will occur in 2018, and Arvest Bank will be communicating with Bear State customers over the next several months regarding their transition to Arvest Bank. Additionally, all those employed by Bear State on the date of contract closing will become employees of Arvest Bank,” noted the Arvest statement.

Arvest Bank posted net income of $102.315 million during 2016, up from $66.359 million in 2015, but below the $105.166 million in 2014, according to information from the Federal Deposit Insurance Corp. (FDIC). As of June 30, 2017, the bank reported $68.703 million in net income.