Two new names joined the roster of Arkansas banks with more than $1 billion in total assets this year, and a third lender is poised to cross the 10-digit threshold during the next six months.
Fayetteville’s Signature Bank of Arkansas Inc. and Jacksonville’s First Arkansas Bank & Trust became the latest members to join the Billion-Dollar Club. In the first quarter, both lenders moved past the $1 billion mark.
Chartered in November 1949 as Jacksonville State Bank, First Arkansas traveled the longest road of the two to reach the fiscal milestone. When Larry Wilson joined his family’s bank full time as marketing officer in June 1971, the asset total stood at $17 million.
“It’s been a great ride,” said Wilson, chairman and CEO of First Arkansas Bank & Trust.
Built on the dormant charter of Camden’s First Bank of South Arkansas, Signature Bank launched in May 2005 with $44 million in capital. The lender battled to make and maintain its place in the competitive and opportunity-rich market of northwest Arkansas.
“We’ve kind of fist-fought and did it the Arkansas way,” said Gary Head, chairman and CEO of Signature.
The addition of First Arkansas and Signature pushes the headcount of Arkansas banks surpassing $1 billion to 19. The growth track of Green Forest’s Anstaff Bank has positioned it to move into the billion-dollar realm in the next few months.
“We think it could happen during the fourth quarter,” said Steve Stafford, chairman and CEO of the $981 million-asset Anstaff Bank. “We have our procedures in place, and we’re ready.
“I never, 20 years ago or whatever, I never thought about being a $1 billion bank. But we’re excited to be there. Not last year, but the two previous years we had exceptional growth. Then we thought, ‘Whoa, we need to be ready.’”
Reaching $1 billion in total assets brings a new level of regulatory requirements encompassing additional policy and procedures with particular emphasis on risk management. Heightened scrutiny by regulators comes as part of the package.
“They don’t like surprises, and we don’t like surprises,” said Larry Wilson of First Arkansas.
Part of the drill: Ramping up internal control over financial reporting with adequate testing supported by enhanced documentation.
Another requirement is the formation of an audit committee composed entirely by outside directors with an audit report generated by an independent auditor.
Testing information technology controls is another area that receives extra attention as a bank approaches $1 billion in total assets.
“We’ve been planning on this for a while,” said Keith Collard, senior vice president at First Arkansas. “Every single department has to be ready.”
Signature, First Arkansas and Anstaff shared some common ingredients to power their climbs to $1 billion. All three followed a recipe of organic growth sprinkled with new market branches and a dash of acquisitions.
Of the three, Signature endured the shortest and rockiest path to reach $1 billion after 18 years in business. A year after purchasing Bank of Brinkley in 2007, Signature essentially had to reset after it was jolted into survival mode in the wake of the real estate meltdown in northwest Arkansas.
“We’ve had a good 13-14 years,” said Gary Head.
Two of the years absent from that tally are 2010 and 2012. That’s when Signature registered losses of $15.8 million and $7.3 million, the result of a bursting real estate bubble splattering the balance sheets.
The U.S. Treasury’s Troubled Asset Relief Program was a godsend in the midst of a horrible market to raise capital. In February 2009, Signature boosted its equity capital with $16.8 million in TARP funds.
“It cost us a lot of money to pay back,” Head said during a 2019 interview with Arkansas Business. “It was an expensive life preserver, but what would you pay for a life preserver?”
Branches in Rogers and Siloam Springs along with loans made by the offices were sold in 2010 to help restore order. Signature has since returned to Rogers, and its parent company took steps to boost its profile along with capital and liquidity.
Shares in its parent company, White River Bancshares, began trading on the OTCQX Best Market on Dec. 27, 2018, and the holding company issued subordinated debenture offerings of $11 million in December 2019 and $15 million in July 2022.
“We didn’t wait till we needed capital,” Head said. “From an accounting standpoint, we probably could’ve been over a billion dollars last year. We had to sit on our hands not to go over a billion dollars.”
After increasing by $100 million in 2021, total assets grew by $130 million last year. About $40 million of that was in Jonesboro, where the bank opened a full-service branch in February 2022. Another $30 million was in Harrison, which Signature entered with a full-service location in July 2021.
“There’s so much construction outside the windows of the Rogers office; it’s crazy,” he said. “If you’re not growing in the banking business up here, you’re not working very hard.
After building a bilingual staff to connect with Latino-Hispanic customers through its Banco Sí branch in Rogers last year, Signature is developing a Springdale office to expand its efforts to build financial relationships with Spanish speakers.
“Everyone asks me, ‘Can you make any money on that?’” Head said. “I don’t know, but I know there’s a couple hundred thousand Hispanic people living in Arkansas.
“What I’ve learned is that what most Latino customers want to do is negotiate in Spanish. You can’t blame someone who doesn’t feel comfortable communicating from shying away from doing business. We have nothing but pure motives to win over a customer’s trust. It is a slow and steady process that requires a whole lot more communication.
“Many of our Spanish-speaking customers have a distrust of the government and banking system from where they came from. We have to educate them on why we’re different here.”
Larry Wilson never had an inkling that hiring a French-fluent staffer would be a necessity at First Arkansas. That bilingual capability was required because of an unforeseen business opportunity for the bank: credit cards.
First Arkansas issues credit cards for 250 banks across the nation plus two Canadian banks, and some of those customers from north of the border are French-speaking Canadian snowbirds frequenting Florida.
The bank’s credit card venture began in 2010 with an 18% stake in an asset purchase from the Federal Deposit Insurance Corp. Two years later, First Arkansas bought sole ownership of the former credit card portfolio of Atlanta’s Silverton Bank.
Along the way, the bank augmented its de novo branching growth with two acquisitions: the $207 million-asset First Team Bank in Heber Springs in November 2005 and the $63 million-asset Greers Ferry Lake State Bank in Heber Springs in August 2008.
“If you’re not growing, you’re dying,” Wilson said.
As with other lenders, asset growth during 2020-21 was strong at First Arkansas. During those two years, total assets at the bank increased by nearly $200 million.
“Bank examiners were asking us why we didn’t forecast this growth,” Wilson said. “Well, the pandemic wasn’t part of the model. What pushed a lot of this was COVID.”
More deposits from savings-conscious customers plus extra cash from federal COVID giveaways and Paycheck Protection Program loans combined with bigger loans from escalating housing costs blew up balance sheets of many banks.
Completing the installation of 18 interactive teller machines by December 2019 positioned First Arkansas well heading into the unforeseen new world order of COVID-19.
“We looked like geniuses,” Wilson said. “It’s all about timing. The hours we were able to cover for our customers was significant.”
Retained earnings, without the aid of debt or stock offerings, have built the capital base to support the growth of First Arkansas.
“We’re a conservative bank,” said Keith Collard. “We’re a methodical, risk-averse bank.”
FNB to Anstaff
Formed in May 1931 as First National Bank in Green Forest, Anstaff made its first venture outside Carroll County in May 1994 on the heels of the state’s new contiguous county branching law.
“The first out-of-county branch was in Harrison,” Stafford said. “We always had several Boone County customers, and we wasted no time in preparing to enter the market.
“Before the law changed, we were already building. The law didn’t say you couldn’t start building before you could open.”
In September 2003, the bank bought the $28 million-asset Madison Bank & Trust in Kingston. That $3.2 million deal put the bank in Madison County followed by a new Jasper branch in neighboring Newton County in April 2006.
He said two important moves accelerated the growth of the bank during the past nine years: a corporate name change and the acquisition of the $112 million-asset Twin Lakes Community Bank of Flippin.
The shift away from the common “First National” brand and its localized Green Forest calling card in July 2014 created a unique name free of geographic limitations with regional implications. The resulting Anstaff moniker is an amalgamation of the Anderson and Stafford families who have operated the bank since the beginning.
The $15.3 million purchase of Twin Lakes in 2015 expanded the bank’s four-county north Arkansas franchise into Marion and Baxter counties and pushed total assets beyond $500 million.
“That has worked really well for us, and we’ve gotten an expanded talent pool of staffers,” Stafford said of the transaction, which also opened the door to Mountain Home. “Our challenge has always been as we grow, to provide the same level of service we provided when we were a $100 million bank.”
Investing more than $2 million in 2018 to transform the former Community First Bank operations center in Harrison into its own operations center before the pandemic proved to be a fortuitous decision.
“I don’t think we would’ve done as good a job serving our clients if we hadn’t done that,” Stafford said. “It was the right call at the right time. We thought we would put five people in the operations center, and before we knew it, we had 18 in there.
“We are in this for the long run. We’re not looking to get bigger to sell. We’re looking to get bigger to provide better services to our customers.”
Pending & Recent: Billion-Dollar Activity
Springdale’s Legacy National Bank was approaching the $1 billion mark a year ago. But after reaching $982 million in June 2022, the bank’s asset total declined two consecutive quarters before rebounding.
Legacy’s total assets stood at $940 million as of March 31.
Between 2020 and 2022, four Arkansas banks joined the roll call of lenders that tallied total assets of more than $1 billion.
Batesville’s Citizens Bank and Danville’s Chambers Bank both topped the mark in the second quarter of 2020 followed by White Hall’s Relyance Bank in the fourth quarter of 2020 and Encore Bank in the second quarter of 2021.