Rising Interest Rates Force Bank of England to Cut Costs

Bank of England headquarters at the Main and Fordyce streets. Since 2002, the bank has developed a billion-dollar mortgage origination business.
Bank of England headquarters at the Main and Fordyce streets. Since 2002, the bank has developed a billion-dollar mortgage origination business. (Google Maps)

Among Arkansas-based lenders, none felt the fiscal sting from rapidly rising interest rates during 2022 more than Bank of England.

The Federal Reserve’s seven interest rate increases last year raised borrowing costs and dried up loan demand, battering Bank of England’s nationwide mortgage operation.

Despite cutting its staff by 22% during 2022, Bank of England ended the year with a loss of more than $3.8 million. Powered by its billion-dollar mortgage origination pipeline, the bank had tallied a $27.3 million profit in 2021.

That hellacious 12-month swing prevailed even though the bank eliminated 280 jobs and slashed total salaries and benefits from $206.6 million to $116.2 million.

Two more hikes by the Fed this year sent interest rates to their highest level in more than 25 years, setting the stage for heightened challenges at Bank of England and other big mortgage lenders during 2023.

Dollars in thousands except where noted. (Source: Federal Deposit Insurance Corp.)
Dollars in thousands except where noted. (Source: Federal Deposit Insurance Corp.)

As those rising rates made headlines, leadership changes took place at the bank’s big money maker, Bank of England Mortgage.

Michael Cupples, executive vice president and member of the bank’s board of directors since 2020, is gone. Brad Canada, executive vice president, isn’t in the mortgage office either.

Canada, whose family owns a controlling interest in the Bank of England, declined to talk about the changes when contacted by Arkansas Business. Last year, he ventured out with a bank acquisition in Alabama. (See sidebar at bottom.)

Canada and Cupples were considered the top dogs at BOE Mortgage. They joined forces 18 years ago when Bank of England acquired Little Rock’s Ozark Lending, where Cupples was president.

Since then, the growing mortgage operations helped boost the bank’s bottom line into new realms of profitability. Before hitting the interest-rate wall last year, the bank recorded three successive years of double-digit profits: Nearly $11 million in 2019, almost $50 million in 2020 and more than $27 million in 2021.

Downsized Footprint

Guiding Bank of England back to profitability after a rough 2022 is the task at hand. So what’s the plan for 2023?

Efforts to reach Jack Nunnery, president of Bank of England Mortgage since September 2022, were unsuccessful.

Nunnery came to Bank of England after a 12-year stint with Texas Capital Bank in Dallas. During his last five years in Texas, Nunnery was president of mortgage finance at the $28 billion-asset bank.

BOE Mortgage generates most of its revenue originating and selling loans. The bank’s total noninterest income reflects the steep drop in business; the 2021 tally of more than $265 million plummeted to $129 million last year.

While enduring that, the bank cut its mortgage payroll during 2022. But that only helped reduce total noninterest expenses from more than $239 million in 2021 to $147 million last year.

Bank of England Ownership


MHBC Investments Ltd. I LLLP


Gary R. Canada Jr. Irrevocable Family Heritage Trust


Bradley S. Canada 


Hanna Nicole Luebke Irrevocable Family Heritage Trust


James Neal Anderson IRA 


Leon Hill IRA 


Michael E. Frizzell Family Revocable Trust


MHBC Investments Shareholders


Gary R. Canada Family Trust* 


Gary R. Canada Jr. 2020 Trust 


Bradley Seth Canada 2020 Trust 


Nicole C. Luebke 2020 Trust 


Gary R. Canada Jr. Trust I* 


Bradley Seth Canada Trust I* 


Hanna Nicole Canada Trust I* 


Gary Rector Canada Trust Fund* 


Mary Hanna Boles Canada Trust Fund* 


Mary Hanna Boles Canada* 


*Shares voted by Gary and Hanna Canada, the parents of Gary Canada Jr., Brad Canada and Nicole Luebke.

Not long ago, BOE Mortgage operated loan production offices in 45 states. The number now stands at 34. Last year’s tally of mortgage offices fell from 145 to 113.

According to the BOE Mortgage website, it has 15 offices in Arkansas; 8 in Mississippi; 7 each in Colorado and Texas; 6 each in Florida, Kentucky and Massachusetts; 5 each in Alabama, California and Tennessee; 4 each in Louisiana, Oregon and Pennsylvania; 3 each in Georgia and Indiana; 2 each in Arizona, Minnesota, Nevada, North Carolina, North Dakota, Ohio and Washington; and solo offices in Connecticut, Idaho, Kansas, Maryland, Michigan, Montana, New York, South Carolina, Utah, Virginia and Wisconsin.

The Bank of England’s quarterly call reports filed with federal regulators last year trace the staff attrition.

The headcount declined from 1,254 on March 31 to 1,195 on June 30, then to 1,122 on Sept. 30 and 968 at year’s end.

But ongoing lease obligations of unmanned but shuttered loan production offices resulted in no savings for the bank. Its annual cost for offices remained unchanged at $14 million.

Along the way, Bank of England’s year-end total assets fell from $547 million in 2021 to $441 million in 2022.

BOE Background

Gary Canada Sr., CEO/president of the Bank of England from 1989 to 2019, is the patriarch of the lender’s ownership family. He; his wife, Hanna; and their three adult children — Gary Jr., president of the bank, Brad Canada and Nicole Luebke — own more than 90% of the bank’s outstanding shares.

The elder Canada was an educator by vocation before he started work in the mid-1970s at Bank of England. His father-in-law, Seth Boles Jr., was president of the bank from 1961 to 1989 and leading shareholder.

The bank was chartered in 1898 with start-up capital of $10,000.

Canada Owns 60% Bank Stake In Alabama

Last year, Brad Canada became chairman of Local Bancorp Inc. as part of an out-of-state banking venture.

Canada formed the bank holding company to purchase one of the smallest banks in Alabama: the $17.5 million-asset Peoples Bank of Red Level. He owns a 60% stake in the now renamed Local Bank.

In the wake of the acquisition, the bank’s equity capital was pumped up from $1.9 million to $17 million in preparation for growth. Last month, the headquarters moved 160 miles north from its south Alabama hometown to its first new office in Tuscaloosa.

Future branches are planned to the north in Huntsville and to the south in Fairhope on Mobile Bay.