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One Bank Founding Traced to 1956 Organization of American National Bank

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(Editor’s Note: This is the latest in a series of business history feature stories. Suggestions for future “Fifth Monday” articles are welcome. Please contact Gwen Moritz at (501) 372-1443 or by email at GMoritz@ABPG.com.)

Five businessmen are recognized for planting the corporate seed for what developed into today’s One Bank & Trust of Little Rock. The venture was launched as American National Bank and morphed into its better-known incarnation as First American.

The roots can be traced back to North Little Rock and 1956 when the five men began to organize the bank: G. Ted Cameron, president of Cameron Feed Mills; L.L. Holsted, owner of Holsted Drug Co.; Maurice Mitchell, an attorney; Dave Phelps, of Adkins-Phelps Seed Co.; and insurance executive Frank L. Whitbeck.

First American National Bank grew to rival Twin City Bank for claim as North Little Rock’s largest lender. In later years, its investors positioned First American at the tip of the spear to overcome legal obstacles and expand beyond its state-mandated market. (See Timeline.)

Along the way, there was talk of developing a high-rise office building at the northeast corner of U.S. 67-167 and Interstate 40 on property owned by the family of one its leading shareholders, Jim Matthews.

Ultimately, First American investors paved the way for the development of the bank’s namesake office building at the western end of Interstate 630: today’s Kirkpatrick Plaza.

J.C. Barnett, executive vice president of Farmers & Merchants Bank of Stuttgart, was recruited to be the bank’s first president. Barnett led First American into the 1970s.

He was succeeded by William Rice, who lost his job after resisting efforts by Jim Matthews, grandson of real estate mogul Justin Matthews, to buy control of the bank. After one unsuccessful tender offer, Matthews was able to amass a controlling interest and replace Rice.

“That was not a very happy transition,” Mike McBryde, vice president and trust officer at First American, said last week. “It was very acrimonious.”

The Frank Lyon family, which controlled Twin City Bank, later made a run at buying First American in 1986 before another suitor could formalize a bid.

The deal-breaker for Twin City proved to be First American’s employee stock ownership plan, according to Bill May, a senior vice president at First American from 1983-89.

“As it worked out, the ESOP stock was not in the deal, and Twin City didn’t want to pay the multiple on that stock,” May said. “It blew the deal. There was about $3 million to $4 million in ESOP stock.”

McBryde said he was pressured to sign off on a document that effectively would have excluded the ESOP stock from the sale and cut the employees out of a payday.

“I was told they could not have anyone working for them who didn’t interpret legal documents the same way they interpreted them,” McBryde said. “But I was the trustee of the ESOP. I just couldn’t go along with it.”

The Office of the Comptroller of the Currency got wind of the leadership’s effort to exclude the ESOP stock and warned the bank’s executives in no uncertain terms that if that happened, someone would go to jail.

With Twin City out of the way, J.B. Hunt and David Howell put together a winning proposal that amounted to 2.2 times book value, according to May. The trucking magnate and banking executive had plans of building a banking powerhouse.

At the time, the banking interests of Hunt and Howell represented $580 million in total assets. The combined assets of the First American banks and their First National Bank of Fayetteville created the third-largest bank holding company in Arkansas behind Worthen Banking Corp. and First Commercial Corp.

In round numbers, asset totals at the banks were First American Bank of North Little Rock, $240 million; First American Bank of Little Rock, $50 million; and the First American Bank of Hot Springs, $50 million. Their First National Bank of Fayetteville added another $240 million to the mix.

“They paid way too much to service the debt, much less make a profit,” May said. “If you take the four best years they ever had, you still couldn’t service the debt.”

The First American purchase was backed with a $41 million loan syndicated by Centerre Bank of St. Louis. Documents filed with bank regulators outlined the vision of Hunt and Howell:

“While there are no definite plans or timetables at this time, the acquiring parties also intend, during the two-year, interest-only period to sell stock in First American Bancshares Inc. through private and/or public offerings in order to reduce the amount of acquisition indebtedness.”

Derailing the possibility of an IPO was the stock market crash on Oct. 19, 1987, and performance issues at First American that flowed into its incarnation as One National Bank.

“We had dreams of getting into big banking, and it turned out not to be as easy as we thought it would be,” said Bob Shell, president of Little Rock’s Baldwin & Shell Construction Co., who served as a director for 15 years at One National Bank-One Bank & Trust.

During his tenure, the bank struggled to meet the expectations and service the debt.

“It was profitable, but not very profitable,” Shell said. “They were just getting along, but not much better than that. But again, we weren’t having any problems, and we were making some money.”

A sell-off of Hunt’s banking interests in 1991 slashed the debt and created today’s One Bank. Helping Hunt with this repositioning was Layton “Scooter” Stuart.

He would enter the ownership picture and lead the bank until his OCC-mandated ouster last year.

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