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New Pitch for Bank Charter Takes FlightLock Icon

2 min read

While talking to Randy Dennis, bank consultant of renown, about bank deposits last week — see Virus Relief Leaves Arkansas Banks Awash in Deposits — Whispers noted the dearth of bank deals in Arkansas this year.

After a rash of acquisitions that closed in late 2019, only one deal has closed in 2020: Commercial Capital Bank of Delhi, Louisiana, finally acquired First State Bank of Crossett on April 1, more than two years after the deal was first announced.

Dennis said the COVID-19 pandemic had added a new term to the mergers-and-acquisition lexicon: “on pause.”

But Dennis’ firm, DD&F Consulting Group of Little Rock, has been involved in something that’s even more unusual than a bank acquisition in 2020: a brand-new bank charter.

Clients applied last month for a North Carolina state bank charter in Highlands, which is near North Carolina’s border with South Carolina and Georgia. The organizers are looking to raise up to $14.8 million in their initial private offering, according to a report by S&P Global Market Intelligence.

The Federal Deposit Insurance Corp. lists only 31 new bank charters nationally in the past five years, including five approved so far this year. Another half-dozen are in the works.

Dennis said he’s pitching the idea locally.

“I’m doing everything I can to get a new one here,” he said. And while he doesn’t have any takers in Arkansas yet, “There are people who are interested in getting into banking, and that’s a viable option. The state’s all for it. The [Arkansas State] Bank Department would love to have another charter.”

The roster of financial institutions chartered in Arkansas is down to 86, with 10 of those being national banks and one (Priority Bank of Fayetteville) a federally chartered thrift.

The last brand-new bank charter in Arkansas was that of First Southern Bank of Batesville, issued in August 2005. First Southern, you’ll undoubtedly recall, was shut down by state regulators in December 2010 when examiners discovered that major shareholder Kevin Lewis had sold the bank some $22 million worth of fraudulent improvement district bonds.

Lewis was sentenced to 10 years in federal prison and was released late last year.

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