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Harrison Draws More Bank Competition

5 min read

Stone Bank of Mountain View and Cornerstone Bank of Eureka Springs are operating temporary locations in Harrison and building new branches they expect to open there in a year.

Stone Bank is entering the market to offer agricultural loans to the farming community, while Cornerstone sees an opportunity to take advantage of deposit runoff after locally owned Community First Bank merged with an out-of-state bank.

Community First, which had $469.5 million in assets as of Sept. 30, was acquired in November by $1.5 billion Equity Bank of Andover, Kansas. Community First held nearly 30 percent of Harrison’s bank deposits as of mid-2016, second only to Bear State Bank’s 33 percent, according to the Federal Deposit Insurance Corp.’s most recent deposit snapshot.

“Any time a bank moves to a larger, regional, out-of-state company, they lose their localism; it’s extremely favorable for community banks such as mine,” Cornerstone CEO Charles Cross told Arkansas Business.

Cross said Cornerstone had already seen an “extremely favorable response” to its arrival in the market in March and “quite an influx of client base” that formerly banked with Community First.

The sale of Community First was a happy coincidence for Stone Bank. Kirby Williams, executive vice president of marketing and retail banking, said the Mountain View bank purchased property for a new Harrison branch before the Community First sale was announced.

He said Stone Bank hadn’t seen and wasn’t expecting much deposit runoff, though it is working to grow its deposits in Harrison. Instead, it has experienced significant growth in loans there. Williams said the Harrison market had generated $9.2 million in deposits and $25.5 million in loans.

Cross said Cornerstone’s results from entering the Harrison market have “already exceeded some expectations in a short amount of time, so we know — we feel really confident it’s going to be a healthy market for us.”

Stone Bank and Cornerstone also gained something else from the sale of Community First: people.

Williams said Stone Bank snatched up one lender, Dusty Middleton, and the head of the sold bank’s loan processing department, Betty Akins. Akins also brought four other Community First employees with her to Stone Bank, he said.

Three of the seven people Cornerstone employs in Harrison came from Community First.

A Good Fit
Both banks said the market in Harrison was a good fit for the services they focus on.

Cornerstone’s Cross said the city “is within the geographical footprint of where we aspire to grow to. So it was a good next step, and I feel like there’s some community bank space that needs to be filled over there.”

Cornerstone, originally Bank of Eureka Springs, changed its name in 2008 and branched into Berryville the following year. A branch in Huntsville (Madison County) followed in 2015.

Stone Bank was attracted to the market because Harrison has a strong agricultural community and the bank specializes in that kind of lending, Williams said. Cattle farmers in particular are in need of loans, and those are a focus of his bank, along with Small Business Administration loans.

He also called Harrison a commercial corridor that is growing, and said the several smaller cities that surround it are also doing well.

Both banks expect to open full-service branches in the city next year, though Cornerstone may spend an additional six months developing the almost 8 acres it bought on Highway 65, across from a Walmart store.

Stone Bank broke ground last week on a 6,600-SF branch on more than 4 acres at 1302 Hwy. 62/65 N., and executives are hoping for a mild winter that will cooperate with a 360-day construction schedule.

The project will cost Stone Bank more than $4 million, he said. The architect is Greg Steinbeck of Fletcher Firm Architects in Little Rock. The bank has also hired CDI Contractors LLC of Little Rock. The new Stone Bank branch will feature an interactive teller machine and a detached pavilion with a full kitchen and facilities for community events.

Stone Bank’s temporary location opened in December, and Williams said the bank has already doubled the space there to 2,400 SF and the staff to 13.

Cross said Cornerstone expects to break ground in 30 to 60 days and some preliminary dirt work had been completed. He said a cost estimate for the project had not been finalized yet, but the bank has hired Tom Johnson Architecture of Fort Smith and anticipates hiring Pick-It Construction of Fayetteville.

Though the Harrison branch is Cornerstone’s focus for the immediate future and the bank has no specific plans to announce, Cross said, “We do have some other strategic locations we plan to expand to … We’re not done expanding yet.”

Meanwhile, business at both banks’ temporary locations has been going well so far, Williams and Cross said.

Cross envisions 15 to 20 working at the new branch when it opens.

Promotions Underway
Both banks are also running promotions to drum up business in Harrison.

Williams said Stone Bank is offering the highest rates in the market on time deposits and its CDs have grown significantly since the temporary location opened.

Customers who open a checking account also get higher rates on those types of accounts. Though that promotion applies to clients systemwide, it’s aimed at the new market, Williams said.

Other promotions are on their way, too. “We’ll be an aggressive competitor in that market,” he said.

Cornerstone is promoting that it pays an “extremely aggressive” 2.51 percent on one of its checking accounts, and Cross said it too is offering higher rates for things like CDs and savings accounts to customers who do their day-to-day banking there.

Both bank executives have heard rumors of other financial institutions planning to move into the market, though Williams said he didn’t think they had much merit. No other branch applications had been filed with the state or federal regulators as of last week, and Harrison is already home to 19 offices of nine different banks.

In addition to two Equity branches, three Bear State branches and the temporary offices of Cornerstone and Stone Bank, there are branches of AnStaff Bank of Green Forest (2), Arvest Bank of Fayetteville (4), Bank of the Ozarks of Little Rock (3), Berryville-based First National Bank of North Arkansas (2) and Regions Bank of Birmingham, Alabama (1).

“Competition never has bothered me,” Cross said. “If you’re in this business and you don’t like competition, you’re in the wrong business. We certainly welcome the competition.”

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