Battered by credit quality issues and slack loan demand, a small banking company in Camden, Ark., has apparently put itself up for sale.
The $249 million-asset HCB Bancshares Inc. said earlier this month that at several recent board meetings directors discussed "available strategies for maximizing shareholder value, including a sale of the company." It has retained Gerrish & McCreary PC, a Memphis legal and consulting firm that has negotiated the sale of several community banks.
Mergers and acquisitions in Arkansas seem to be picking up. Ten banks there were sold last year and seven deals involving Arkansas banks have been announced this year, two this month.
Home Bancshares in Conway said on Aug. 5 that it would pay $43 million for the $309 million-asset Community Financial Group in Cabot. Four days earlier First National Bancorp Inc. of Green Forest announced a deal to buy the privately held Madison Corp. of Little Rock.
The biggest Arkansas deal announced thus far in 2003 came in May, when the $5 billion-asset Arvest Bank Group Inc. in Bentonville said it had agreed to pay $212.3 million for the $1.8 billion-asset Superior Financial Corp. of Little Rock.
HCB, the holding company for the 70-year-old Heartland Community Bank, made its announcement in an Aug. 12 earnings press release for the quarter that ended June 30. President and chief executive officer Charles Black declined to comment, citing a "blackout period" imposed by the Securities and Exchange Commission. (Heartland reported the news of the board's action in an 8-K filing on Aug. 13.)
Mr. Gerrish also declined to comment.
Heartland said it earned $1.06 million during its 2003 fiscal year, which ended June 30. That was down 9% from fiscal 2002. Earnings were hurt by credit quality problems and by a sharp drop in interest income attributed to weak loan demand.
Nonperforming loans were $2.8 million on June 30, or 2.78% of total loans, against 1.54% a year earlier. The forced the company to boost its loan-loss provision by 48% for fiscal 2003, to $533,000.
At the same time Heartland's loan portfolio shrank 18%, to $101 million, contributing to a 15% decrease in interest income, which totaled $6.2 million for the year that ended June 30.
