First Commercial of Arkansas seals acquisition of State First.

Little Rock, Ark.-based First Commercial Corp., and State First Financial Corp., Texarkana, have reached a definitive merger agreement.

First Commercial will exchange 3,367,308 shares of its common stock for all the outstanding shares of State First.

The total value of the transaction, based on First Commercial's current stock price, is about $110 million.

Combined, the banks will form a $4.2 billion-asset company with 23 affiliated banks in Arkansas, Texas, Tennessee, and Oklahoma.

"I think it is a very good transaction for us," said Lynn Wright, First Commercial's chief financial officer.

Fills Out Franchise

State First is a plum because it is profitably run and has $713 million of assets. It also fills out First Commercial's franchise in southwest Arkansas and northeast Texas.

First Commercial and State First will have $1.4 billion of assets in that region.

"It really kind of completes our franchise in that corridor," Mr. Wright said.

First Commercial's chairman and chief executive, Barnett Grace, said: "These additions will extend FCC's franchise into an area which has very positive long-term economic prospects. State First will immediately become a major contributor to our affiliate bank family following consummation of the proposed transaction."

First Commercial has $3.3 billion of assets and operates banks in Arkansas, Tennessee, and Texas, and 50% of a bank in Oklahoma.

It earned $9.4 million and posted a 1.25% return on average assets in the third quarter. State First earned $2.2 million with an ROA of 1.20%.

Mr. Wright said there would be no management changes. He said First Commercial's philosophy is to acquire community banks and leave management intact.

"We get a very strong management team," Mr. Wright said. "They will be a very important piece of the combined company."

String of Acquisitions

The State First acquisition is First Commercial's largest. The aggressive banking company has snapped up 13 banks this year.

Mr. Wright said the banks began merger talks about two months ago.

"It was kind of a mutual understanding that when they were ready to do something . . . that we were open to that type of arrangement," he said.First CommercialAt a GlanceHeadquarters Little Rock, Ark.Assets $3 billionDeposits $2.7 billionNet Income $27.9 million(nine months)ROA 1.26%ROE 15.40%Nonperforming 0.61%loansFigures as of Sept. 30

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