Leader Blues

Monday, March 26, 2007

TOP STORY >>$517,000 payment will keep bank out

IN SHORT: Bank of the Ozarks agrees to stay out of Jacksonville and sell its Main Street lot to First Arkansas Bank after a lengthy lawsuit.

Leader editor

After protracted litigation, Bank of the Ozarks has decided not to put a branch in Jacksonville.

First Arkansas Bank and Trust— which had challenged Bank of the Ozarks’ application to put in a branch at Main and James—bought the corner property for $17,000 and paid Ozarks an additional $500,000 on Friday, ending the dispute between the two banks.

With the sale and settlement, Bank of the Ozarks has agreed to stay out of Jacksonville permanently. The settlement compensates Bank of the Ozarks for the cost of its two-year legal battle to establish a Jacksonville branch.

The branch application was originally filed with state banking authorities in December 2004 and has been the subject of long-running regulatory and legal proceedings.

First Arkansas — which would have seen a competitor across the street if the branch had been built in front of Hastings Music and Video — claimed in a lawsuit there are too many banks in Jacksonville.

Both sides scored victories before bank regulators and in the courts, but the issue remained unresolved.

George Gleason, chairman and chief executive officer of Bank of the Ozarks, said, “After more than two years of pursuing final approval of our contested Jacksonville branch application, we have concluded that further pursuit of this application would be a distraction from other more important priorities.

“After extensive discussions with First Arkansas Bank and Trust, we reached a mutual agreement to sell them our branch site and resolve the litigation related to the branch application. We have agreed not to open a branch within the present city limits of Jacksonville, now or in the future.”

But Gleason said his bank still welcomes Jacksonville customers, who can be served at branches in Cabot, Sherwood and North Little Rock.

“We will continue serving our existing Jacksonville customers, and we will aggressively seek new customers and new businesses in Jacksonville,” Gleason insisted. “We will serve our Jacksonville customers from our area offices, including two branches in Cabot, our Sherwood branch and our four North Little Rock branches.”

Larry Wilson, chairman, president and chief executive officer of First Arkansas Bank, seemed relieved the battle was over.
“We are pleased to have this matter resolved and to once again focus all our efforts and energies delivering great service and banking products to our many customers in our home town of Jacksonville and nearby communities,” Wilson said.

“We protested the Bank of the Ozarks’ branch application on the basis that there are a sufficient number of competitor banks serving Jacksonville,” Wilson said. “Bank of the Ozarks’ decision to withdraw their application reflects their assessment that they have better opportunities elsewhere.”

Bank of the Ozarks has $2.5 billion in assets and trades on NASDAQ. The bank has branches in central and northwest Arkansas, as well as Texas and North Carolina.

First Arkansas Bank has $500 million in assets and remains family owned, with branches from North Little Rock to Damascus.