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NationsBank brings back bucks.

Bank Generates $250 Million in Commercial Loans in State

In the first seven months of 1998, NationsBank Corp. has produced more than $250 million in new commercial loans in Arkansas and increased major commercial accounts by 20 percent statewide.

One reason, says James Stobaugh, state executive for NationsBank's commercial lending, is the "power of the franchise" of the Charlotte, N.C.-based $315 billion bank.

"What we've been able to do in these first seven months, and it's continuing, is to bring back the good, solid Arkansas companies that have their corporate offices here and the owners live here," Stobaugh says. "But they had to go out of state for their [company's] banking business because of the issues of capacity and expertise.

"So we've been able to get in front of those people and get those relationships turned back around. You can just name the banks [the business has come from]: Bank of Detroit, Bank of Canada, Union Planters and the list just goes on and on."

A group of NationsBank executives in Arkansas - including Stobaugh; Brian Foster, president of the Arkansas division; Gary Smith, state executive for professional and executive clients and business banking; and Barney Larry, state executive for consumer lending - met recently in the bank's downtown Little Rock office to discuss NationsBank's growth in the state since it officially changed its name from Boatmen's Bancshares in August last year.

Stobaugh, a 30-year banking veteran in Arkansas, first with National Bank of Commerce in Pine Bluff, and then Worthen Banking Corp. and Boatmen's Bancshares Inc., wouldn't name the companies who have brought their business back home to Arkansas. But he says they come from every industry sector, such as health care, forestry products, manufacturing, wholesale distributorships.

"The clients we're talking about here are the ones who have probably more than $100 million in sales placed annually," Stobaugh says. "You're looking at anything from [loans of] $1 million-$2 million up to as much as $35 million, which is the largest. That's just in the first seven months of the year."

Foster says in a typical year Boatmen's or Worthen would increase commercial lending by 3-5 percent.

In central Arkansas, the growth has been about 33 percent, Foster says.

"It's over 20 percent statewide," Stobaugh says. "To have 10-12 percent growth would have been outstanding. By the end of the year, we may have 2223 percent growth."

Some of the companies who made the move to NationsBank, Foster says, have national reputations. Stobaugh acknowledged that he wasn't talking about billion-dollar Arkansas corporations, such as Wal-Mart Stores Inc. or Tyson Foods Inc., moving all their banking business to NationsBank.

"But these are companies who do have national reputations, and they do market nationally," Stobaugh says. "Good solid companies."

Foster adds, "Of the Fortune 500 companies in the state, I can tell you that NationsBank is the bank or one of the primary banks for all of them. Those Fortune 500 companies are banked by our corporate finance division, which is done nationally."

Two other Little Rock bank executives also indicate business in commercial lending has been good this year.

"I would say we have had stronger commercial loan growth [this year] statewide, Little Rock included, than in the last three or four years and possibly back to the early '90s when interest rates were also very low," says Bob Birch, president of Mercantile Bank of Arkansas.

In addition to the lower interest rates, Birch attributes the growth to the aggressive banking market in Arkansas. He says Mercantile has closed most of its commercial loans for under $10 million, although a couple of loans have exceeded that.

Jack Fleischauer, president of First Commercial Bank in Little Rock, says his institution, which was acquired by Regions Financial Corp. of Birmingham, Ala., also has had "very vigorous loan growth" this year.

"A lot of the loan growth has been off balance sheet through conduits and other financial markets where we've found a place for our customers' loans," says Fleischauer, who adds that First Commercial's charter at the Little Rock bank will end in November. "Statewide we're doing real well. I'm glad to see [NationsBank is] doing well, too, because that's a good sign for the Arkansas economy."

Stobaugh says a key factor in NationsBank's success is that its commercial loan officers are limited to 20 major accounts each.

"So he's going to spend the majority of his time working with those individual clients," says Stobaugh, who's based in Fayetteville but travels throughout the state to counsel clients.

"That puts [the loan officers] in front of those companies a lot more frequently on a one- on-one basis."

On many of those multimillion-dollar deals, NationsBank is offering 10-, 15- and sometimes 20-year fixed rate loans, Stobaugh says.

Foster recalls recruiting a chief executive officer of a large local company who had taken his firm's banking out of state for the past 17 years.

"He said, 'You have a good product, and we really like it, and it's saving us some money,' "Foster says." 'But what really makes me feel good is that I'm doing it here now, and your folks live here, you pay taxes here.' He never had been able to do that in any bank in this state. It's making our customers feel better when we can do that."

Model Banking

NationsBank did its largest conversion ever to its model banking computer program after the acquisition of Boatmen's. NationsBank spent more than $1 million to install the system, which was developed by Little Rock's Alltel Information Services Inc.

The system allows any Customer to bank from his account at any NationsBank location or ATM nationwide, says Larry, who handles consumer lending for NationsBank from its Mountain Home branch.

"It also allows us to go to online, or Internet, banking [in Arkansas]," says Larry. NationsBank began doing business with Alltel Information Services when it was known as Systematics Inc.

Another product NationsBank will offer in early October is the money manager account, Smith says. It is a sweep account that utilizes full-service or discount brokerage and banking services in one account, he says.

"You can convert your checking account number into a money manager account with $10,000 in cash and/or securities," Smith says. "It's a combined statement of checking account, money fund account where you can use your ATM card or make a deposit at any location. Some [similar accounts] require a $25,000 minimum.

"The brokerage firms used to have the best checking accounts in America but no longer."

Smith says the annual fee is $80, but falls to zero with $50,000 in the account.

NationsBank is also offering 15-year fixed rate loans at 8.5 percent for owner-occupied small businesses, Smith says.

"Most small businesses have had to go to Arkansas Capital Corp. or some other group to get a long-term fixed rate," Smith says. "Many times they had to do it at a higher rate than what we're offering. So far I haven't seen any other one at 8.5 percent."

Smith says NationsBank is now reaping the benefits of the customers it had anticipated it would attract last year.

"We didn't just change the name," Smith says. "We've changed the whole company."

RELATED ARTICLE: With No State Charter, NationsBank Down to 63 Offices

Nationsbank Corp. has made some significant changes in Arkansas since its conversion from Boatmen's Bancshares Inc. in August 1997, says Brian Foster, president of the Arkansas division.

* NationsBank now has 63 offices in the state. It has closed, sold or consolidated 20 former Boatmen's locations.

* NationsBank has no bank charters in Arkansas or in the other states where it does businesses. Collapsing into one charter saves NationsBank almost $50 million a year nationally just in fewer regulatory filings, Foster says. It also makes it difficult to determine the amount of assets NationsBank has in Arkansas. The bank focuses its business through separate divisions, such as commercial lending or small business banking, instead of different bank locations or charters.

* Boatmen's had very few home equity loans in Arkansas before NationsBank took over, Foster says. NationsBank now has almost $50 million in home equity loans in the state.

* NationsBank now services about 17 percent of all mortgage loans in Arkansas, Foster says.

* NationsBank, which typically did not offer education loans, noticed the success Boatmen's had with those loans in Arkansas and has begun offering them systemwide. NationsBank now does more than 34 percent of all education loans in Arkansas, Foster says, about twice as many as the next largest lender. Herb Brubaker, who had pioneered the program for Boatmen's in Arkansas, now oversees NationsBank's education loans in seven states, including Arkansas and Texas, from his office in Little Rock.

* Last year, NationsBank had no 15-year consumer loans tied to a first mortgage in any of the five Midwest states where Boatmen's did business. In the past year, NationsBank has done more than $1 billion in those states, including Arkansas.

- David Smith
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Article Details
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Title Annotation:includes related article on the bank's growth in Arkansas
Author:Smith, David
Publication:Arkansas Business
Date:Sep 14, 1998
Previous Article:Northeast Arkansas sets the pace for growth in state.
Next Article:Central Arkansas television stations refocus.

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