Executives at First State Community Bank in Farmington, Mo., swear they don't actively pursue deals — but do listen when approached.

Overtures from would-be sellers are becoming more frequent, says Greg Allen, the chief executive and chairman of First State.

The $1.3 billion-asset company has agreed to buy nine branches in its home state from Bank of America (BAC), First State said this week. Once First State completes that deal and another one for Bank Star of the LeadBelt in Park Hills, Mo., it will have doubled its network to 46 branches through acquisitions in the last five years.

"We've taken opportunities as they have come," Allen says. "We are not out actively looking for acquisitions to make. We have just kind of been contacted and reacted as they have come along."

First State, a unit of First State Bancshares, is widely known as a potential acquirer as it has been blessed with a strong financial position and shareholders and directors willing to invest capital as needed, Allen says.

It picked up five branches when it acquired Progress Bancshares in 2007. In 2010 First State bought a total of five branches from Truman Bank and Premier Bank, two banks that were looking to raise capital. Both would eventually fail — Premier in 2010 and Truman earlier this year.

First State's deal to buy the $116 million-asset Bank Star of the LeadBelt from the multibank holding company BancStar is expected to close in 2013.

The branches in the Bank of America deal would provide First State an entrée into new markets that resemble, and are nearby, its current ones. The financial terms of the deal, which is expected to close in the second quarter, were not disclosed.

"The attractiveness of the deal was No. 1, [and] the branches are in towns similar to ours," Allen says. "It's a natural extension of what we have already done."

First State's drive to increase its branch network differs from the trend at Bank of America and other banking companies that have pledged to close or sell branches to lower costs and improve efficiency.

Bank of America has been working to streamline its operations and boost capital by selling off a number of business units or stakes in other companies. It has also cut its branch network by shutting hundreds of branches and selling others, including its deal to sell more than a dozen branches in Maine to Camden National Bank (CAC) earlier this year.

Despite the predictions that large branch networks have outlived their usefulness, Allen still sees a need for brick-and-mortar offices, especially for community banks. Building relationships with customers, often through in-person interactions, cannot be replaced with technology, he says.

It will likely take First State a year to 18 months to digest the branches from the Bank of America deal. This is likely to take the bank out of the mergers and acquisitions game for the foreseeable future, Allen says. Because of this, First State had to consider whether the deal was worth possibly missing other deals as it has been approached by an increasing number of banks that are considering selling.

"A lot of the time, it's just the frustration with regulations and compliance and just the idea of what size you have to be to survive that is driving people to think about it," Allen says. "We've had discussions with people who are deciding what to do, and they are just considering their alternatives."

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.