The Federal Reserve System board approved an order on Friday (Oct. 11) giving the go ahead for the fast-growing Magnolia Banking Corp. (MBC) to acquire the smaller Prescott Bancshares Inc. under the federal Banking Merger Act.
In the notice of proposal published in the Federal Register on June 27, 2019, Farmers Bank & Trust Company in Magnolia, the state member bank subsidiary of MBC, had requested the Fed’s approval under the federal act to merge with Bank of Prescott, the main operating subsidiary of PSI. In approving the order, Farmers Bank will be the surviving entity, but will establish and operate a branch at the main office of Bank of Prescott.
According to the Federal Reserve order, Farmers Bank and Bank of Prescott compete directly in the “Hope banking market,” which includes Hempstead and Nevada counties.
“The Board has considered the competitive effects of the proposal in this banking market in light of all the facts of record. In particular, the Board has considered the relative share of total deposits of insured depository institutions in the market that Farmers Bank would control; the concentration levels of market deposits and the increase in these levels, as measured by the Herfindahl-Hirschman Index under the Department of Justice,” the 17-page order states.
Based on data filed with the Federal Reserve, MBC had consolidated assets of nearly $1.6 billion and deposits of $907 million before the acquisition, making the South Arkansas community bank the 508th largest insured depository organization in the U.S. Through its Farmers Bank subsidiary in Magnolia, the community banking group operates in eight counties in Southwest Arkansas and two in Texas, with 23 branches and one loan production office.
Bank of Prescott had consolidated assets of only $67 million and deposits of $58.6, making it the 4,631th largest insured depository institution in the U.S., Federal Reserve data shows. On consummation of the proposal, MBC will remain the nation’s 508th largest insured depository organization with consolidated assets of approximately $1.7 billion and deposits of nearly $965.8 million.