Legacy National Bank to acquire Bank of Gravett

Springdale-based Legacy National Bank announced Friday (May 4) a plan to acquire the Bank of Gravett for an undisclosed price. The combined bank will have total assets of more than $543 million and will solidify the lender as one of the four largest in the region in terms of deposit market share. With $504 million in deposits, it would be behind only Bank of America, First Security Bank and Arvest Bank.

Shareholders of the Bank of Gravett and regulators must approve the deal, but bank officials expect the transaction will close by mid-summer. Bank of Gravett was founded in 1898 and is one of the oldest financial institutions in the state. For now the bank will retain its own charter and name.

“We have great respect for Bank of Gravett and its long history of service to the communities they serve,” Legacy National Bank CEO Parick Swope said in a statement. “Like them, we too are a local, hometown community bank with local directors, many of which have years of experience as community bank leaders in Northwest Arkansas. With the addition of the Bank of Gravett our organization will become stronger both in terms of size and presence in Benton County, adding to the existing Legacy Northwest Arkansas locations in Bentonville and Rogers, and four Washington County locations.”

Legacy’s Bentonville branch is under construction on Walton Boulevard and is expected to open later this year. Bank of Gravett has four Benton County branches in Gravette (2), Hiwasse and Centerton.

Swope said the banks also have similar values and cultures and will continue the tradition of service that its customers and communities expect. Customers at each bank will see no changes as a result of the deal, and they will continue to use their checks and debit cards as well as visit their local branches.

“I look forward to working with the Legacy National Bank team to make this a positive experience for our customers and employees.  This will be a good fit for both banks.” said Rick Pollreis, chairman and chief financial officer for Bank of Gravett. Pollreis will remain at the bank in the position of executive vice president and city executive of Gravette.

Banking consolidation continues to be a trend with community banks as regulatory costs escalate and competition in the local market remains fierce. Dr. Tim Yeager, Arkansas Bankers Chair at the University of Arkansas, said with 40 banks in this metro area the region is among the top 10 competitive regions in the country.

“I expect to see more of these mergers as the Federal Reserve continues tightening the money supply,” Yeager said. “That is going to mean the cost of money increases threatening bank profitability over time.”

He said there is very little, if any, overlaps in the two bank’s operating areas in loans or deposits. Yeager said both banks are healthy and Legacy is growing a good bit faster than Bank of Gravett. Legacy grew loans by $80 million year-over-year and Gravett reduced loans by roughly $3 million. He said the urban areas of the region are growing much faster than the rural. That said, Bank of Gravett will give Legacy some loan diversification and more deposits to fund loan demand as costs of borrowing from the Fed increase overtime.

“This merger makes sense for both banks who are entering the deal from positions of strength,” Yeager said.

Legacy reported net income profits of $3.474 million in 2017 with total assets of $426.4 million. In the first quarter of 2018, Legacy reported net income profits of $1.465 million, up 72% from the year-ago period. The bank grew deposits totaling $403 million as of March 31. Deposits, a metric for lending strength, increased 16% year-over-year.  The bank also has a healthy capital equity of $49.651 million with a stellar return on assets of 1.26%. ROA is a metric indicating how well a bank uses assets to generate profits. The benchmark is 1%. Legacy employs 85 people in its locations.

Bank of Gravett had profits of $1.038 million in 2017 and added another $259,000 to the company coffers in the first quarter of 2018. Total assets were $116.5 billion as of March 31. Deposits total $101 million, up slightly from a year ago. The bank’s equity capital is $16.395 million and its ROA is 0.89% as of March 31. Bank of Gravett employs 41 people.