Simmons Bank to acquire Heartland Bank via public auction

Pine Bluff-based Simmons Bank said it was the winning bid at the public auction for total ownership of Little Rock-based Heartland Bank. The auction was held Monday (Aug. 28) in order to settle the indebtedness of Rock Bancshares, the holding company for Heartland. The holding company came under stern orders in December from the Federal Reserve Bank to raise its capital levels amid rising loan losses.

The bank’s capital levels fell dangerously low when its losses through June rose to $11.777 million, according to call reports filed with the Federal Deposit Insurance Corp. Heartland is one is one of the smaller banks in the state with total assets of $203.61 million. The tier-one capital ratio fell to 4.32% as of June 30, well below the mandated 11.47%.

“Heartland’s challenging circumstances have been well publicized over the past several months,” said Marty Casteel, Simmons’ senior executive vice president. “Simmons’ immediate goal is to create a stable environment for that bank to continue providing its customers with the products and services they need.”

Larry Bates has assumed the role of chairman and CEO of Heartland and Casteel said he’s confident in Bates’ ability to manage the day-to-day affairs of the institution. Following the auction, Simmons and Heartland will remain separately chartered state banks, although Simmons is evaluating its next steps. Heartland Bank has five locations in Central Arkansas with total deposits of $186.113 million as of June 30.

“I am excited about this opportunity and look forward to joining with Heartland’s associates as we work to enhance the organization and service its customers,” Bates said.

Steve Wade and Lisa Hunter were also named executive vice presidents of lending and operations, respectively.

Simmons’ takeover of Heartland gives the troubled bank a lifeline and new capital to continue operations. Since the December regulatory orders were handed down, Heartland Bank officials were told to submit an improvement plan with better controls of lending practices and strategies to minimize credit losses and reduce its level of problem loans.

Bank officials were also prohibited from extending, renewing or restructuring any loans criticized in an April 11 examination without major board approval. The recent credit losses were a result of the bank being told to write down the value and reclassify the assets in trouble.

In the recent quarter ending June 30, Heartland’s losses totaled $3.028 million, on top of $7.849 million lost in the first quarter of this year. As of June, troubled loans totaled $23.994 million forcing the bank to set aside $5.45 million in loan loss reserves in the first half of this year.

Simmons Bank has more than $8.491 billion in assets with total net income earned through June of $50.481 million. The bank’s healthy capital levels of $1.156 billion automatically cure the capital ills of Heartland Bank.