By David Smith From Northwest Arkansas Democrat Gazette

Simmons Bank acquired all the capital stock of Little Rock-based Heartland Bank at a public auction Monday, the Pine Bluff bank said.

The auction was held Monday morning to satisfy certain indebtedness of Rock Bancshares Inc., Heartland’s parent company.

Heartland and Rock Bancshares have been under regulatory sanctions since December.

Simmons Bank, a subsidiary of Simmons First National Corp., a publicly traded banking firm, said it is now Heartland’s only shareholder. Simmons did not disclose the amount of its bid.

After the auction, Simmons Bank and Heartland remain separately chartered state banks, although Simmons said it is evaluating its next steps.

Garland Binns, a Little Rock banking attorney, said he expects that Simmons will merge Heartland into Simmons at some point.

“This indicates to me that Rock Bancshares borrowed money from Simmons Bank and secured its loan with the shares of Heartland Bank,” Binns said.

Under the pledge agreement, in the event of default by Rock Bancshares, Simmons was allowed to hold the auction and it was the successful bidder, Binns said.

Shares of Simmons First National closed at $52.35 Monday, down 35 cents, in trading on the Nasdaq exchange.

“Heartland’s challenging circumstances have been well publicized over the past several months,” Marty Casteel, Simmons Bank’s chairman and chief executive officer, said in a prepared statement. “Simmons’ immediate goal is to create a stable environment for that bank to continue providing its customers with the products and services they need.”

Simmons Bank executive Larry Bates has assumed the position of Heartland’s chairman and CEO.

“Larry is a fantastic leader with years of banking experience and I am confident in his ability to manage the day-to-day affairs of [Heartland],” Casteel said.

Two other Simmons executives — Steve Wade and Lisa Hunter — also were given roles with Heartland. Wade was named executive vice president of lending and Hunter becomes executive vice president of operations.

The Federal Reserve placed Heartland and Rock Bancshares under a written agreement in December.

The Fed issued another directive to the bank this month, indicating Heartland was undercapitalized. The bank posted a loss of $7.8 million in the first quarter this year.

Heartland lost $7.9 million in 2016, primarily because of a $7.2 million loan Heartland made to the Platinum Partners Arbitrage Fund of the Cayman Islands. In October 2016, two Platinum Partners funds, including the arbitrage fund, filed for Chapter 15 bankruptcy protection.

Heartland had $199.2 million in assets as of June 30, compared with $227.1 million a year earlier.

Judy Lawton had been Heartland’s president. The bank had five offices and 37 employees as of June 30.

Walter Quinn III was the largest stockholder in Rock Bancshares. Quinn owned 43 percent of the privately owned Rock Bancshares. Craig Benson of Austin, Texas, was the second-largest shareholder with 16.7 percent of Rock Bancshares’ stock.

Heartland was one of only two banks in the state with a zero-star rating from BauerFinancial Inc. of Coral Gables, Fla. The other is One Bank & Trust of Little Rock. BauerFinancial, which rates every bank in the country on a system from five stars to zero stars, says banks with zero-star ratings are facing “considerable challenges.”

For more on this story go to: http://www.nwaonline.com/news/2017/aug/29/simmons-takes-over-lr-based-heartland-w/

IMAGE: Simmons Bank Logo