Paragould’s FNB enters Little Rock market with purchase of once-troubled Onebanc

First National Bank announced a deal Monday (April 23) to acquire the once-troubled Onebanc of Little Rock, further expanding the Northeast Arkansas’ community bank’s fast-growing footprint into the state’s largest financial market.

The deal comes nearly a year after the U.S. Treasury Department purchased 99% of the shares of Onebanc’s parent company, One Financial Corp., at a federal auction. The Treasury Department’s stake, which represented 344,577 shares, was acquired after the Little Rock bank’s stock was seized by the U.S. Marshals in late 2015 because of outstanding debt held by holding company.

OneBanc shares have since been held in escrow by the U.S. Treasury. Federal banking regulators appraised Onebanc’s assets at more than $300 million, but troubled and failed banks sold through the U.S. Treasury and the FDIC bidding process are often sold at pennies on the dollar.

Paragould-based First National, formally known as FNB, did not disclose terms of the Onebanc deal. Bank officials also did not respond to several questions from Talk Business & Politics concerning the transaction and regulatory approvals from the U.S. Treasury’s Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp. (FDIC).

According to a news release, the addition of Onebanc will grow FNB to 20 locations and a total asset size of over $1.5 billion. Onebanc now operates six locations in the Little Rock and North Little Rock markets with assets totaling $274 million. FNB has a combined 14 offices in 10 Arkansas cities.

“First National Bank has had a long-standing goal of expanding into the Central Arkansas region and Onebanc provides us the perfect platform to accomplish this,” said Will Brewer, vice chairman of the Paragrould-based community bank.

FNB has been one of the state’s fastest-growing banks for several years. FNB’s holding company, First Paragould Bankshares Inc., is based in Paragould with rural branches in Jonesboro, Corning, Piggott and Heber Springs.

The bank made its foray into Northwest Arkansas in October 2014 when it closed on a $12.2 million purchase of five empty bank branches belonging to Pine Bluff-based Simmons Bank in Benton and Washington counties. FNB opened its Rogers banking center that same year. Offices in Bentonville, Fayetteville, Springdale and Johnson opened in 2015.

At the end of 2017, First Paragould Bankshares had $1.28 billion in assets, which ranks among Arkansas’ 10-largest banks. By comparison, at the end of September 2012, FNB had assets of $713.6 million, according to the Federal Deposit Insurance Corp. (FDIC). That’s an 80.3% increase during the last five years.

First National officials said the Northeast Arkansas bank holding company plans to release further details concerning the Onebanc acquisition “in the coming weeks,” noting that the deal is expected to be completed by fall of 2018.

TARP TROUBLES
Once completed, FNB’s acquisition of Onebanc will end nearly a decade of regulatory scrutiny of the Little Rock community bank that began after local bank executives plotted to participate in the federal government’s bailout program known as TARP’s Capital Purchase Program in 2009.

One Financial secured $17.3 million in capital from the Treasury’s TARP program. But fraud into how the bank failed to disclose all relevant financial information became evident several years ago when bank ownership at the time — Layton Stuart — was found to have diverted $1.5 million of the TARP proceeds toward personal use. That money has not been repaid to the government.

The U.S. Government sued Stuart’s estate in 2015 and did recover $3.88 million related to a $4 million False Claims action, according to a recent TARP report to Congress filed in April. That report also states on June 28, 2016, the federal government completed a settlement of several lawsuits related to the Treasury’s investment in Onebanc.

In 2014, federal prosecutors charged former Onebanc senior vice president Gary Alan Rickenbach of Little Rock on bank fraud and money laundering charges.  The indictment said Rickenbach conspired with others to use taxpayer money from the Troubled Asset Relief Program (TARP) to hide the loss resulting from a $1.5 million bad loan from non-bank board members and federal regulators, and conceal the bank’s true financial condition.

Of the top Onebanc executives charged in connection with the fraudulent use of TARP proceeds, only Rickenbach was convicted. He was sentenced in late 2016 to two years of probation and 100 hours of community service in exchange for pleading guilty to failing to report a crime.

Charges against former Onebanc CFO Tom Whitehead were dropped in exchange for his testimony against two other Onebanc executives, Mike Heald and Brad Paul. Those two company executives were acquitted after a three-week trial in October 2016. Stuart died in March 2013 before he was brought to prosecution.

Talk Business & Politics Senior Reporter Kim Souza contributed to this report.