Academic journal article Federal Reserve Bulletin

Order Approving the Merger of Bank Holding Companies: FRB Order No. 2015-03 (February 12, 2015)

Academic journal article Federal Reserve Bulletin

Order Approving the Merger of Bank Holding Companies: FRB Order No. 2015-03 (February 12, 2015)

Article excerpt

Simmons First National Corporation

Pine Bluff, Arkansas

Simmons First National Corporation ("Simmons"), Pine Bluff, Arkansas, has requested the Board's approval under section 3 of the Bank Holding Company Act ("BHC Act") (1) to merge with Community First Bancshares, Inc. ("Community First"), and thereby indirectly acquire its subsidiary bank, First State Bank ("First Bank"), both of Union City, Tennessee. (2) Following the proposed acquisition, First Bank, a state nonmember bank, would be merged into Simmons' subsidiary bank, Simmons First National Bank ("Simmons Bank"), Pine Bluff, Arkansas. (3)

Notice of the proposal, affording interested persons an opportunity to submit comments, has been published (79 Federal Register 43047 (2014)). (4) The time for submitting comments has expired, and the Board has considered the proposal and all comments received in light of the factors set forth in section 3 of the BHC Act.

Simmons, with consolidated assets of approximately $4.8 billion, is the 185th largest depository organization in the United States, controlling approximately $4.0 billion in consolidated deposits. (5) Simmons operates in Arkansas, Kansas, and Missouri.

Community First, with consolidated assets of approximately $2.0 billion, is the 367th largest depository organization in the United States, controlling approximately $1.6 billion in consolidated deposits. Community First operates only in Tennessee.

On consummation of the current proposals, (6) Simmons would become the 125th largest depository organization in the United States, with consolidated assets of approximately $7.8 billion, which represent less than 0.1 percent of the total assets of insured depository institutions in the United States. Simmons would control total deposits of approximately $6.4 billion. In Tennessee, (7) Simmons would become the 13th largest depository organization, controlling deposits of approximately $1.6 billion, which represent 1.3 percent of the total deposits of insured depository institutions in that state. (8)

Interstate and Deposit Cap Analysis

Section 3(d) of the BHC Act generally provides that, if certain conditions are met, the Board may approve an application by a bank holding company to acquire control of a bank in a state other than the home state of the bank holding company without regard to whether the transaction is prohibited under state law. (9) Under this section, the Board may not approve an application that would permit an out-of-state bank holding company to acquire a bank in a host state if the bank has not been in existence for the lesser of the state statutory minimum period of time or five years. (10) In addition, the Board may not approve an interstate acquisition if the bank holding company controls or would control more than 10 percent of the total deposits of insured depository institutions in the United States, or 30 percent or more of the total deposits of insured depository institutions in the target bank's home state or in any state in which the acquirer and target have overlapping banking operations. (11)

For purposes of the BHC Act, the home state of Simmons is Arkansas and Community First's home state is Tennessee. (12) Simmons is well capitalized and well managed under applicable law and has a satisfactory Community Reinvestment Act ("CRA") rating. (13) Tennessee has no minimum age requirement, and Community First has been in existence for more than five years. On consummation of the proposed transactions, Simmons would control less than 1 percent of the total amount of consolidated deposits in insured depository institutions in the United States. In addition, the combined organization would control approximately 1 percent of the total amount of deposits of insured depository institutions in Community First's home state, Tennessee, and there are no states in which Simmons and Community First have overlapping banking operations. …

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