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Walton money in the bank.

Walton Money In The Bank

The Walton name is synonymous with billion-dollar retailing.

It's a fortune built on hard work and Wal-Mart's successful execution of the "Everyday Low Prices" concept.

America's No. 1 retailing family has extended its business reputation into the world of banking.

The collective assets of their five Arkansas banks topped the $1-billion mark for the first time this year. Total deposits could break the $1-billion barrier in 1991 as well.

As with their retailing interests, the Walton's sphere of influence extends beyond northwest Arkansas.

Village South National Bank at Tulsa, Okla., (total 1990 assets of $18.3 million and net income of $43,000) is the latest addition to the Walton family of banks.

"You're always looking for areas of expansion, and the Tulsa market and the northwest Arkansas market complement each other," says Burton Stacy, the Bank of Bentonville's president and chief executive officer since 1978. "Tulsa has been in a down period, and we're hoping to catch it on the rise."

Federal regulators have given their blessing to the $1.98-million cash acquisition, and Arvest Bank Group is free to consummate the deal.

Arvest, the Walton's bank holding company, controls four Arkansas financial institutions:

* First National Bank & Trust of Rogers (total 1990 assets of $256.4 million and net income of $3 million), a 1975 acquisition.

* McIllroy Bank & Trust of Fayetteville (total 1990 assets of $233.3 million and net income of $2.4 million), a 1986 acquisition.

* First National Bank of Siloam Springs (total 1990 assets of $144.1 million and net income of $1.6 million), a 1983 acquisition.

* Springdale Bank & Trust (total 1990 assets of $42.4 million and net income of $152,000), created in 1988 with the charter from the Bank of Pea Ridge, a 1963 acquisition.

The Walton family also owns 65 percent of the Bank of Bentonville (total 1990 assets of $271 million and net income of $3.8 million).

Under federal rules, the Waltons would have to own at least 80 percent of the Bentonville bank before it could be taken under the Arvest umbrella. Their controlling interest, which dates back to 1961, makes the Bank of Bentoville's exclusion a mere technicality.

Factoring the Bentonville institution into the equation makes the Walton family owners of the third-largest bank holding company in Arkansas, ahead of First United Bancshares of El Dorado and behind Little Rock's First Commercial Corp. and Worthen Banking Corp.

Keen Competitor

Arvest made its move into Springdale in 1988 by taking the charter from the Bank of Pea Ridge, renaming it and relocating it. At the same time, the Pea Ridge operation was converted into a branch of First National Bank & Trust of Rogers.

The move was vigorously opposed by the two existing banks in Springdale, First National and First State Bank (now Worthen National).

The state Banking Board gave its approval despite the objections of the two Springdale banks. The decision also withstood a lawsuit filed by the banks in Pulaski County Circuit Court.

"We've never opposed anyone," Stacy says. "We feel strongly about having a free market system. You can't say you oppose the usury limit on the one hand and then oppose competition and deregulation on the other without talking out of both sides of your mouth."

The performance of Springdale Bank & Trust, smallest of the Walton-controlled banks, stands out. It's easy to see why the two existing Springdale banks didn't want Arvest bringing its act to town.

In 1989-90, Springdale Bank & Trust increased its market share of deposits from 5.1 percent to 8.7 percent. Most of that gain came at the expense of Worthen, which saw its market share drop from 36.5 percent to 33.3 percent.

Springdale Bank & Trust also reaped some of the benefits from the demise of savings and loans. Another part of the growth can be attributed to a policy used in all Walton banks.

"We don't have a minimum loan, and we never have," Stacy says. "We think everyone is worthy of consideration. The guy that needs a small loan today may need a bigger loan tomorrow."

The policy contributed to the Bank of Bentonville, First National Bank & Trust of Rogers and First National Bank of Siloam Springs enhancing their position as the big three in Benton County banking.

The combined countywide market share of bank deposits increased from 60.9 percent to 65 percent during 1989-90.

Much of the growth came from buying the assets of the defunct First Federal Savings of Fayetteville. The $89.9 million in assets were spread out among the Walton banks.

There aren't any Wal-Mart deposits in the Walton banks, however. The Waltons decided to err on the side of caution and avoid the appearance of impropriety.

"They'll go to any length to avoid that impression," Stacy says. "I'm not sure the world can appreciate how straightforward and honest the Waltons truly are."

What's In A Name?

Arvest Bank Group is the third incarnation of the Walton's bank holding company.

Northwest Arkansas Bancshares, created in March 1978, became Heartland Bank Group in December 1988. Heartland then became Arvest in January 1990.

Why the name changes?

Northwest Arkansas Bancshares wasn't geographically correct following a move into Oklahoma in 1987. There was also confusion with an unrelated bank, Northwest National Bank of Fayetteville.

A contest among employees resulted in the name Heartland Bank Group and its broader geographic implications. However, a banking group in Oklahoma changed its name to Heartland, and other Heartlands were discovered across the country.

"We ended up going with a |no-meaner," Stacy says of the holding company's current name. "Arvest doesn't mean anything."

The Village South acquisition isn't the Walton's first banking foray into Oklahoma.

Helen Walton and her four children own 2.6 percent of Rogers County Bank Holding Co., which owns Rogers County Bank in Claremore, Okla. They are passive investors, however, in deference to the 53.8 percent stake of Helen Walton's brother and his family.

Arvest Bank Group also owns Security National Bank of Norman, Okla., in a 50-50 joint venture put together in 1987 with Little Rock's First Commercial Corp.

Security National, with assets of $188 million, had earlier failed and was taken over by the Federal Deposit Insurance Corp.

Arvest and First Commercial also bought $150 million worth of single-family mortgages from the Resolution Trust Corp., part of the portfolio of First Federal Savings of Arkansas and Savers Savings Association.

Some wonder if the arrangement between Arvest and First Commercial is an indication of bigger things to come. Sam Walton serves on First Commercial's National Advisory Board.

A few industry insiders even believe First Commercial is preparing to buy out the Waltons if they decide to get out of the banking business.

Others believe the joint venture has more to do with the friendship between Jim Walton, who oversees his family's banking interests, and Barnett Grace, First Commercial's chairman and chief executive officer.

Still others say talk of First Commercial buying Arvest in little more than idle speculation.

"We've never had any thoughts of merging that I'm aware of," Stacy says. "And we're not really interested in the Little Rock market. Our only real interest is northwest Arkansas."

And Oklahoma.

For now.
COPYRIGHT 1991 Journal Publishing, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1991 Gale, Cengage Learning. All rights reserved.

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Title Annotation:Walton family extends their business into banking
Author:Waldon, George
Publication:Arkansas Business
Date:Jun 17, 1991
Words:1204
Previous Article:John McKay on the move.
Next Article:Fortune, Forbes 500 companies have more than 100 Arkansas operations.
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