Borrower, Lender Travails Visit Chambers Bank Family

by George Waldon  on Monday, Oct. 27, 2008 12:00 am  

Seth Kaffka and Meeks couldn't be reached for comment.

"I just think I'm better off not commenting at this time," Brandon Barber said.

Direct exposure to family borrowing problems appears to be minimal for Chambers Bank in Danville and Chambers Bank of North Arkansas in Fayetteville, where a third son-in-law, Justin Salter, is president.

Earnings Drop

Like other northwest Arkansas lenders, the Chambers banks are enduring bruised earnings. Net income at the Fayetteville bank fell from $1.9 million during the first six months of 2007 to $932,000 for the same period this year.

Profits at the Danville bank dropped from $6.9 million for January-June 2007 to $4.1 million during the first six months of 2008, the most recent reporting period available.

"We've taken very few properties back, but we've worked with a lot of people and have suffered with them in the losses," Chambers said. "We try to work with them during the bad times, just like we did during the good times to take care of these folks the best we can. About 95 percent of our concerns are in the Fayetteville market."

Despite lending setbacks, the Chambers banks are holding their own in the market. That doesn't surprise Randy Dennis, a Little Rock bank consultant. He said Chambers has an established reputation for running profitable, well-funded banks.

"His banks are successful, and he likes to operate them with capital that is far above and beyond regulatory requirements," said Dennis, president of DD&F Consulting Group.

The strong equity position and past profitability of the banks has given Chambers the luxury of declaring some hefty dividends, even in the face of the recent market slowdown.

Chambers Bancshares dividends have totaled more than $53 million since 2002. This year alone, the holding company declared cash dividends of $11 million for the first quarter and $1 million for the second quarter. Dividends totaled $6.7 million in 2007.

Chambers said much of the workout efforts are focused on the overbuilt residential market, primarily Benton County.



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