Thanks to Mergers, Arvest Emerges as Largest Bank

by Gwen Moritz  on Monday, Oct. 14, 2002 12:00 am  

(Click here to see the list of banks.)

The merger of 14 Arvest Bank Group banks, including five in Oklahoma and one in Missouri, into a single Fayetteville-based charter has given Arkansas a new largest bank as measured by deposits as of June 30.

Arvest Bank, with more than $4 billion in deposits, eclipsed Superior Bank of Fort Smith, which had been at the top of the list. (The list includes all Arkansas- chartered financial institutions insured by the Federal Deposit Insurance Corp., including savings and loans such as Superior.)

The Arvest mergers — including last year's No. 5, the Bank of Bentonville, and No. 9, Arvest Bank at Rogers — and well-publicized problems at Midsouth Bank in Jonesboro (last year's 10th-largest bank) made room for two new banks in this year's top 10: First Community Bank of Jonesboro and Summit Bank of Arkadelphia.

First Community Bank landed at No. 9 this year, up from No. 57 in 2001, thanks its acquisition by Pocahontas Bancorp, the holding company for last year's No. 21, Pocahontas Federal Savings & Loan. Pocahontas Federal was folded into the First Community Bank charter, and subsequently so was People's Bank of Imboden and Newport Federal Savings & Loan. The holding company's headquarters was moved to Jonesboro.

Last week, Pocahontas Bancorp announced that it will also acquire Marked Tree Bank($30.2 million in assets, $26.5 million in deposits) and merge it into First Community Bank.

Summit Bank made the most remarkable jump in deposits that wasn't assisted by a merger: from No. 31 and $190.43 million in deposits on March 31, 2001, to No. 10 and $366.16 million on June 30.

Since then, CEO Ross Whipple said, deposits actually have passed the $400 million mark.

Summit is Whipple's second banking venture, founded on the Horizon Bank in Magnolia, the only one Whipple didn't sell to Mercantile Bancorporation (now part of U.S. Bank) in 1998. In 2000, as soon as his noncompete agreement expired, Whipple began rebuilding a community banking system in the same communities: Arkadelphia, Malvern and Hot Springs.

Summit also has built branches in two new markets, Hope and Benton.

"We're just going to continue building out the markets we are in. We have a lot of build-out to do in Hot Springs and some in Benton," he said.

Two more branches will be added to the three Summit locations already in Hot Springs, including a new main building in the next 12 months, he said. And Benton will need another branch as well.

"To me, there's still a lot of opportunity for a well-run community bank. They aren't going away anytime soon," Whipple said. But even Summit won't be able to continue the kind of growth it has experienced over the past two years simply by opening new branches.

"Ultimately, if we're going to continue to grow, we're going to have to acquire. The key to growth is capital, and that's what's allowed us to continue to grow," Whipple said.

Midsouth Bank, No. 10 last year, fell one spot with an actual reduction in deposits, from $362.35 million on March 31, 2001, to $342.83 million on June 30, 2002.

In July 2001, a regulatory examination of the bank revealed a number of problem loans. In February 2002, Midsouth and its holding company, MSB Shares Inc., entered a written agreement with the Federal Reserve and the Arkansas State Bank Department designed to improve the bank's loan portfolio. Charge-offs in 2001 exceeded $3.2 million.

Midsouth's problems may be among the best documented, but they are hardly unique. As of Sept. 30, 19 state-chartered banks were under special regulatory oversight by the State Bank Department, according to deputy commissioner Julian Rainey.

That's a disturbing 15 percent of the 129 state banks, compared with fewer than 1.5 percent of institutions nationally that were on the FDIC's "problem list" as of June 30. State law forbids the department from revealing the names of the banks that are currently "under a letter."

"It's a combination of things," Rainey said. "Some of it is poor bank management, some because of embezzlement or fraud, and some is just poor loan quality because of the economy."

Growing and Shrinking

Deposits in Arkansas-chartered banks (both state and national charters) totaled $28.1 billion as of June 30. That's an increase of more than 15 percent from $24.3 billion just 12 months earlier, much of which can be attributed to the $1.7 billion in deposits from Arvest's former Oklahoma and Missouri charters.

But even without those out-of-state dollars, deposits in Arkansas banks grew by more than 8.5 percent between June 2001 and June 2002.

The totals do not include Arkansas deposits in out-of-state charters such as Bank of America, Regions Bank, BankcorpSouth, U.S. Bank and Union Planters. Market-specific deposit information for 2002 won't be released by the FDIC until December; in June 2001, out-of-state banks had another $10.2 billion in deposits in Arkansas.

There were 178 FDIC-insured financial institutions in Arkansas as of June 30, down from 192 a year earlier. The 14 that disappeared during the year were:

• Seven separate charters owned by Arvest Bank Group that were consolidated into the former McIlroy Bank & Trust charter at Fayetteville and renamed Arvest Bank. They were Bank of Bentonville, First Arvest Bank at Siloam Springs, Arvest Bank at Fort Smith, Springdale Bank & Trust, Farmers & Merchants Bank at Prairie Grove, Central Bank & Trust at Little Rock, and Arvest Bank at Rogers.

• People's Bank of Imboden and Newport Federal Savings Bank, both of which were merged into First Community Bank of Jonesboro.

• Pinnacle Bank of Little Rock, which was purchased by BancorpSouth of Tupelo, Miss.

• Bank of Mansfield, which was merged into Bank of Mulberry. The resulting bank was renamed Allied Bank.

• Simmons First Bank of Dumas, which was merged into Simmons First Bank of South Arkansas at Lake Village.

• Sinclair National Bank of Gravette, which was abruptly shut down by federal regulators on Sept. 7, 2001. Its deposits and branches were sold to Delta Trust & Bank of Parkdale, No. 67 on this year's list.

• Century Bank-Arkansas of Texarkana, which was merged into its holding company's flagship bank, Century Bank of New Boston, Texas. n

A list of all 172 FDIC-insured institutions chartered in Arkansas ranked by deposits as of June 30, 2002, is available online at

Top 10 Banks

Top 10 Banks by Return on Equity*

1 — Pulaski Bank & Trust Co., Little Rock — 44.40%
2 — Priority Bank, Ozark — 41.90%
3 — Arkansas Bankers Bank, Little Rock — 28.63%
4 — Fidelity National Bank, West Memphis — 28.44%
5 — Bank of England — 27.33%
6 — Riverside Bank, Sparkman — 27.09%
7 — First State Bank, Crossett — 25.66%
8 — Chambers Bank, Danville — 23.84%
9 — First Nat'l Bank of Sharp County, Ash Flat — 22.90%
10 — Arkansas National Bank, Bentonville — 22.73%

Top 10 Banks by Return on Assets*

1 — Priority Bank, Ozark — 3.86%
2 — Pulaski Bank & Trust Co., Little Rock — 3.53%
3 — Bank of Brinkley — 2.81%
4 — First National Bank Berryville — 2.78%
5 — First Arkansas Bank & Trust, Jacksonville — 2.57%
6 — Chambers Bank, Danville — 2.36%
7 — Union Bank of Mena — 2.34%
8 — First National Bank of Altheimer — 2.29%
9 — Fidelity National Bank, West Memphis — 2.18%
10 — Bank of England — 2.17%

Top 10 Banks by Asset Growth, 2001-02

1 — Arvest Bank, Fayetteville — 882.76%
2 — Bank of Jonesboro — 122.19%
3 — Arkansas Bankers Bank, Little Rock — 97.92%
4 — Homebank of Arkansas, Portland — 95.26%
5 — Twin City Bank, North Little Rock — 84.53%
6 — Timberland Bank, El Dorado — 73.91%
7 — Allied Bank, Mulberry — 66.89%
8 — Summit Bank, Arkadelphia — 64.05%
9 — Peoples Bank, Sheridan — 56.28%
10 — Delta Trust & Bank, Parkdale — 55.58%

Most Profitable Banks

Ranked by net income** in millions

1 — Arvest Bank, Fayetteville — $25.38
2 — Superior Bank, Fort Smith — $10.28
3 — Bank of the Ozarks, Little Rock — $7.19
4 — Simmons First National Bank, Pine Bluff — $6.34
5 — Pulaski Bank & Trust Co., Little Rock — $5.72
6 — First Security Bank, Searcy — $4.75
7 — Chambers Bank, Danville — $4.51
8 — Arkansas National Bank, Bentonville — $4.26
9 — First National Bank of Fort Smith — $4.18
10 — First Federal Bank of Arkansas, Harrison — $3.65

Least Profitable Banks

Ranked by net income** in millions

1 — Midsouth Bank, Jonesboro — -2.24
2 — Peoples Bank, Paragould — -2.22
3 — Bank of Pocahontas — -0.36
4 — First State Bank, Parkin — -0.35
5 — Delta Trust & Bank, Parkdale — -0.22
6 — Madison Bank & Trust Co., Kingston — -0.10
7 — Homebank of Arkansas, Portland — -0.08
8 — Bank of Evening Shade — 0.01
9 — First Community Bank, Marion — 0.04
10 — Corning Savings & Loan — 0.05

Source: BauerFinancial Inc., from data reported to the Federal Deposit insurance Corp.

*Annualized rate as of June 30, 2002

**First two quarters of 2002



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