Leader Blues

Wednesday, June 22, 2005

TOP STORY>> Bank appeals ruling on new Ozarks branch

IN SHORT: First Arkansas Bank files an appeal to have Bank of the Ozarks’ Jacksonville branch approval reversed.

By Sara Greene
Leader staff writer

First Arkansas Bank and Trust quietly continued its battle against Bank of the Ozarks by filing an appeal recently in Pulaski County Circuit Court. On May 6, Arkansas Bank Commissioner Robert H. “Bunny” Adcock approved Bank of the Ozarks’ application to construct a branch at 901 W. Main St. in Jacksonville. The appeal asks the court to reverse that decision. Bank of the Ozarks and Adcock are listed as respondents in the appeal.

“We can’t comment on pending litigation,” said Candace Franks, attorney for the Arkansas State Bank Department. “The state has 20 days to reply to the appeal.”

Donnie Farmer, senior vice president of Bank of the Ozarks, said he could not comment on the appeal or the status of the property at 901 W. Main. Farmer, a long-time Jacksonville resident, had been slated to manage the new branch.

The appeal hasn’t deterred Bank of the Ozarks, according to Susan Blair, executive vice president of Bank of the Ozarks.

“We’re even more eager to do business in Jacksonville,” Blair said. “It’s a vibrant community. Just look at the expansion of the Little Rock Air Force Base.”

The base is tentatively slated to get about 3,900 new jobs, if the Base Relocation and Closure (BRAC) commission approves a recommendation making LRAFB the nation’s primary C-130 training facility.

Bank of the Ozarks submitted an application last December to the Arkansas State Bank Department to construct a branch in Jacksonville. First Arkansas Bank and Trust filed a formal protest against the application with Adcock’s office on Jan. 12 .

Adcock and the Arkan\sas State Bank Department examined the application, protest and responses before approving the application. First Arkansas Bank and Trust reviewed the decision and decided to appeal in circuit court.

In the appeal, First Arkansas Bank and Trust states “the economy in Jacksonville is stagnant” and deposits are not growing. It takes Adcock’s order to task for failure to have an administrative hearing and “cherry picking statistics for Pulaski County and Arkansas instead of the correct market, Jacksonville.”

The appeal further states Bank of the Ozarks failed to meet its burden of proof while Jacksonville’s population is growing, if at all, at a marginal rate, less than half of one percent per year.

“This action is not about anti-competitive measures,” said Larry T. Wilson, chairman, chief executive officer and president of First Arkansas Bank and Trust. “It is all about the Bank Department rubber- stamping branch applications with little or no regard for the real needs for banking services of any particular market and the health of the institutions already operating in those markets.”

Wilson said six banks with 13 locations and the state’s largest credit union is evidence there is already significant banking competition in Jacksonville.

“It was particularly interesting to see that the Bank Department appeared to accept everything submitted in this case by Bank of the Ozarks as factual and completely disregarded or discounted each and every fact submitted by us,” said Wilson. “One would think that since we have been operating in the market for over 45 years that we would have more insight into the market than a bank that has never had a presence here.”
Jacksonville has six banks and the Arkansas Federal Credit Union that serve a population of 29,916.

In addition to First Arkansas Bank and Trust, the Jacksonville banking industry has US Bank, Community Bank and Metropolitan National Bank, as well as Bank of America, the country’s largest bank, and Arvest Bank, the largest bank in the state. In Lonoke County, Cabot has seven banks serving an estimated population of 40,000 over a five-mile area surrounding the city limits. Community Bank started in 1903 as the Bank of Cabot. It has five locations in Cabot and two in Jacksonville. First Arkansas Bank and Trust opened a branch in Cabot in 1994.

South of Jacksonville, North Little Rock has 12 banks serving a population of about 63,000.

According to the Federal Deposit Insurance Corporation’s spring 2005 profile, Arkansas banks headquartered in Arkansas posted record earnings of $454 million in 2004.

According to the Federal Deposit Insurance Cooperation, First Arkansas Bank and Trust had a first- quarter income of $1.2 million and total assets of $262 million. Bank of the Ozarks had a first-quarter income of $7.8 million and total assets of $1.7 billion.
“The general public can easily see that the number of branch banks in the state has mushroomed in the last few years even though the public’s needs were being met by the banks already in place and can’t understand why it is happening,” said Wilson.

“The state Bank Department doesn’t seem to see the same picture,” he added.

According to the FDIC, there were 168 banks in Arkansas in 2004.