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Banking on Arkansas.

Worthen-Union Merger, First Commercial Acquisitions, Simmons' Growth Dominate Local Banking Scene

WHILE MULTITUDES of supporters and well-wishers crowded into downtown Little Rock on Nov. 3 to cheer the first Arkansan to reach the White House, two of the state's top bankers were noticeably conspicuous by their absence.

Curt Bradbury, chairman, president and chief executive officer of Worthen Banking Corp., and Andrew Melton, the holding company's chief financial officer, were nowhere near Little Rock the night of Bill Clinton's victory.

The top executives of the state's largest bank holding company were in London, meeting with possible investors interested in buying into what is becoming a very hot commodity.

"We wanted to meet some potential buyers of |Worthen~ stock to build a base for potential buyers if McAdams sells the stock," Melton says.

The stock in question is 4.5 million shares of the company's public stock Worthen is giving to Union of Arkansas Corp., owned by the Herbert McAdams family, in a merger of the two holding companies announced June 30.

The merger, expected to be completed in early 1993, will increase Worthen Banking Corp.'s total assets from $2.8 billion to $3.4 billion. That will improve its lead over First Commercial Corp., the second-largest holding company in the state with total assets of $2.5 billion.

"Obviously, they liked what we had to say," says Melton of foreign investors he and Bradbury met over the course of the four-day journey. Besides London, they went to Zurich and Milan as well.

As the value of Worthen's stock continues to grow on the American Stock Exchange, climbing from 20 3/4 Oct. 7 to 26 1/2 a week after the election, its sales potential continues to grow, too. The trip abroad was the first of many Melton anticipates taking in the future, one at least every 18 months. Included will be annual runs to New York.

Thinking Ahead

The merger, expected to cost Worthen about $100 million, is part of a long-term strategy Bradbury and his staff have undertaken.

"We're the dominant bank in Arkansas now with dominance in northwest Arkansas |First National Bank of Fayetteville merged with Worthen National Bank of Northwest Arkansas on Jan. 31~ and central Arkansas, the two largest metropolitan areas," Melton says. "We would like to expand to contiguous states. We have some optimistic expectations, but our directors have a fiduciary commitment to our shareholders."

The Union purchase will produce 35 Worthen banking locations in Pulaski County alone.

Worthen will retain Union's branches in Jacksonville, Magnolia, Russellville and Conway. Worthen also will acquire Union National Bank of Texas in Austin.

Because it represents Worthen's first venture into out-of-state banking, the Texas bank is of prime interest to bank officials.

"We could sell it, we could grow it," says Melton of the Texas institution. "It costs a lot to operate a remote site. We would like to get it in a $300 million-$500 million asset range so we can 'Worthenize' it. But right now our goal is to work there to see whether it will be a reasonable investment for us."

While Worthen was busy with merger plans in 1992, First Commercial was not content to stand pat.

In July, First Commercial officials named Lynn Wright as the holding company's chief financial officer. It was a position he had held on an interim basis for 10 months.

"It's a very interesting time in the banking industry," says 30-year-old Wright, one of the youngest CFOs in the state.

Wright is filling the shoes of one of the bank's most highly regarded officers, the late Tom Hill.

"It's a lot of pressure, no question about that," Wright says. "There's the high expectations by shareholders ... Keeping up with those expectations is a definite challenge."

Pair of Purchases

Another major move by First Commercial in 1992 was a pair of acquisitions.

Officials of First Commercial Corp. announced in August that an agreement had been reached to acquire Tennessee's First City Inc., the parent company of First City National Bank of Memphis.

Expected to receive regulatory approval by early 1993, the merger will combine First City's assets of $39.6 million with First Commercial Bank of Memphis, a First Commercial holding with assets of $107.3 million.

On a smaller scale and closer to home, First Commercial Bank of Little Rock purchased neighboring First Exchange Bank the very day the smaller bank was placed into receivership by the Federal Deposit Insurance Corp.

For its purchase price of $1,195,000, First Commercial acquired First Exchange's lone building, $23.7 million in insured deposits and $5.4 million in loans. First Commercial executives intend to use the building as the base of its commercial and retail business in west Little Rock.

The fate of First Exchange aside, Arkansas banks enjoyed a remarkably strong first three quarters in 1992. The state's 260 banks had achieved a 1.503 return on assets as of Sept. 30, improving on its June 30 rating of 1.325. The U.S. average ROA on June 30 was only 0.904.

"The performance of banks |in 1992~ was very favorable compared to the rest of the country," says Bill Houston, a FDIC regional director based in Memphis.

Houston's territory includes Arkansas, Louisiana, Mississippi, Tennessee and Kentucky.

He attributes the health of Arkansas' banks to several factors, including the strength of the state's economy compared to neighboring states such as Texas and Mississippi and the conservative attitude of Arkansas bankers toward overhead expenses, buildings, fixtures and salaries.

"They tend to keep overhead down," Houston says. "You don't get the high overhead |in Arkansas~ that you have in other parts of the country."

Simmons Success

While the Federal Reserve's discount rate, the rate by which it charges member banks for loans, plummeted to a 30-year low of 3 percent, Simmons First National Bank of Pine Bluff saw its credit card business soar.

Simmons was one of the few banks in the state to provide a locally owned credit-card membership. It drew some 115,000 applications from across the country, thanks to Arkansas' usury limit of 8 percent and the national media, before restricting memberships to Arkansas residents last summer.

Of those 115,000 applications, 35,000 were approved, bringing in some $30 million in outstanding debt to Simmons.

The success stories of banks like Worthen, First Commercial and Simmons are sure to attract national attention in months to come, as two Arkansans ascend to positions of power in their respective fields.

Clinton aside, William Brandon, chairman, president and CEO of Helena's First National Bank of Phillips County, became president of the American Bankers Association in October. The ABA is the country's largest banking organization.

"It's a rare occurrence for a state to have two past presidents of the American Bank Association in a 10-year period," says H.C. "Bo" Carvill, executive director of the Arkansas Bankers Association.

The late William Kennedy of Pine Bluff headed the organization in 1982.

"|Brandon~ has attracted the attention of bankers all over this country," Carvill says. "And when you add in Clinton, interest in the state and the banking industry has grown like I've never felt before."
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Title Annotation:The Year 1992 in Review; past developments in banking industry
Author:Taylor, Tim
Publication:Arkansas Business
Article Type:Industry Overview
Date:Dec 28, 1992
Previous Article:Public enterprise in 1992.
Next Article:The year of wrangling.

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