Conway, NLR banks buy Cabot's Community Bank.

HOME BANCSHARES OF Conway and TC Bancorp of North Little Rock are buying Community Financial Group Inc. of Cabot in a deal valued at $40 million-$50 million.

The agreement will involve a combination of 49 percent cash and 51 percent preferred stock.

Community's entities include Community Bank, Community Home lenders, Community Title Services, Grand Prairie Title Services, Community Trust and two subsidiaries, Community Insurance Agency and Community Financial Solutions.

Home Bancshares, the holding company for First State Bank of Conway, headed by Chairman Johnny Allison, will have 80 percent ownership. TC Bancorp, the holding company for Twin City Bank, headed by Chairman Rick Ashley, will own the remaining 20 percent.

The move is a prelude to going public, Allison said. The preferred stock is convertible to common stock in 30 months, at which time Allison's bank will automatically become a public company because the number of stockholders will exceed the minimum limit. Home Bancshares has 490 stockholders now, Allison said, and Community has 400 stockholders. Any bank with more than 500 stockholders is automatically a public company he said.

Allison's goal has been to get the bank to the size at which it can be a public company, because publicly traded banks bring higher multiples that are good for the shareholders.

Combined assets of the three bank companies are $1.04 billion. First State is the largest with $396 million in assets; Twin City has $339 million; Community, $305 million.

"We're bringing together three community-focused financial institutions into a partnership which will greatly enhance service to customers and maintain local boards of directors and management," said Allison.

Community Bank, which is celebrating its centennial, has offices in Lonoke, Pulaski and White counties.

"A huge bonus for the customers of all three banks will be the ability to transact their business in four counties with more than 30 convenient locations," said Tracy French, CEO of Community Bank. "This is a win, win, win for all parties involved."

French stepped in last year to lead Community Bank after regulators forced the bank to restate its 2001 earnings in March 2002 and Joe Park Jr. resigned as president and CEO four months later.

A $2.6 million profit was transformed into a $176,000 loss when the bank was required to shift $4.2 million to its loan loss reserves.

Since then the earnings picture is back in the black. In the first four months of this year, Community Bank recorded net income of almost $1.3 million--the same amount it recorded in all of 2002.

Allison said the deal does not include Community's stake in The Capital Bank of Little Rock.

At one time, Joseph W. Park and Community Bank's holding company owned a combined 9.4 percent of The Capital Bank, an $84 million-asset concern.