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Who Are The Most Aggressive Lenders In The Arkansas Financial Community?

Northwest Arkansas is growing like a weed, but there aren't any banks there listed among the state's 10 most aggressive lenders.

That roster is controlled by eight banks and two thrifts in east Arkansas, an area that has suffered economically in recent years, due in part to its heavy reliance on agriculture.

Is the Delta indeed a hotbed of lending activity?

Yes, but it's a phenomenon that happens with regularity. That's because most east Arkansas financial institutions are inundated with crop loans.

"Higher production costs are exceeding the growth rates of the banks," says Dan Horton, a Little Rock banking consultant.

In other words, the deposit base at most east Arkansas banks hasn't changed much. But the size of farm loans keeps growing. The combination accounts for some whopping loan-to-deposit ratios.

Public funds are excluded from the deposit totals used to determine the rankings. That accounts for high ratios at some banks. For example, Peoples Bank of Paragould and Wilmot State Bank surpass the 100 percent mark for loans/deposit ratios. Peoples is an anomaly. The bank was created from the ruins of an insolvent savings and loan, First Federal Savings & Loan Association of Paragould. Spring River Bancshares Inc. of Imboden bought the S&L, which had branches in Paragould and Rector, and converted it to a bank. The Resolution Trust Corp. actually paid about $19.5 million to get rid of the thrift -- bad loans, deposits and all.

"What we basically said was that if you give us so much money, we'll take over ... loans that aren't obviously blue chippers," says Charles Luter.

Spring River Bancshares, equally controlled by Luter and Bob Downing, also owns Peoples Bank of Imboden. The bank has assets of $25.4 million.

Four lenders in the "bottom 10" also are new institutions, created from the salvaged assets of defunct savings and loan associations. They are:

* Greers Ferry Lake State Bank at Heber Springs. M&P Community Bancshares Inc. of Newport bought the assets of First Federal Savings of Arkansas branches at Heber Springs and Clinton. M&P is the holding company of Merchants & Planters Bank of Newport, which has assets of $63.4 million. The three largest shareholders are the Merchants & Planters employee stock ownership plan (14.35 percent), Fred and Eran Pickens (10.92 percent) and John and Alice Conner (10.78 percent).

* First Western Bank & Trust Co. at Rogers. First Western Bancshares Inc. of Booneville bought the assets of a First Federal branch. First Western Bancshares is the holding company of Citizens Bank at Booneville, which has assets of $78 million. The three largest shareholders are the company's employee stock ownership plan (24.8 percent), Jeral Hampton (15.8 percent) and A.B. Littlefield (15.6 percent):

* First State Bank of Huntsville. BTS Bancshares Inc. bought the assets of a First Federal branch. BTS -- which stands for Bryan, Tom and Sam -- is controlled by Bryan Reed, Tom Mathias and Sam Mathias.

* Citizens First Bank of Little Rock. FDH Bancshares Inc., controlled by Frank D. Hickingbotham of Little Rock's TCBY Enterprises Inc., bought the assets from two failed thrifts to create the bank. Citizens First is composed of what was the main branch of Savers Federal Savings and Loan Association in downtown Little Rock, Savers' Maumelle branch and Arkansas Federal Savings Bank of west Little Rock.
Arkansas Lenders
(Ranked By Total Loans/Deposits(*))
Top Ten
Bank (Location) Loans/Deposits
People's Bank (Paragould) 115.88
Wilmot State Bank 107.29
Bank of England 99.45
Corning Savings & Loan 97.03
First Southern Bank (Earle) 95.58
Merchants & Farmers Bank (Dumas) 94.46
Home Federal Savings & Loan (Jonesboro) 94.10
Bank of Parkdale 92.40
Mercantile Bank of Jonesboro 92.12
Merchants & Farmers Bank (West Helena) 90.28
Bottom Ten
Bank (Location) Loans/Deposits
Greers Ferry Lake State Bank (Heber Springs) 0.40
First Western Bank & Trust (Rogers) 2.24
First State Bank (Huntsville) 4.52
Citizens First Bank (Little Rock) 5.17
Southern Credit Corp. (Malvern) 19.43
Peoples Bank (Portland) 22.43
One National Bank (Little Rock) 23.27
Bodcaw Bank (Stamps) 25.48
Dermott State Bank 26.34
First Community Bank (Conway) 27.96
Rankings determined as of Sept. 30, 1991.
*Public Funds are excluded from total deposits.

Southern Credit Corp. of Malvern, one of the state's few remaining industrial loan institutions, is being converted to a state bank.

First Community Bank of Conway is a new venture begun by local investors to compete with First National Bank (which is controlled by Little Rock's First Commercial Corp.), Worthen National Bank of Conway and Security Savings Bank.

How do Pulaski County banks stack up against each other when it comes to loan/deposit ratios? These are the ratios for those institutions not included in the statewide "top 10" or "bottom 10":

* First Exchange Bank of Little Rock -- 80.25 percent.

* Bank of Little Rock in North Little Rock -- 73.11 percent.

* Twin City Bank of North Little Rock -- 68.71 percent.

* Eagle Bank & Trust Co. of Little Rock -- 68.20 percent.

* Pulaski Bank & Trust Co. of Little Rock -- 62.27 percent.

* Central Bank & Trust of Little Rock -- 62.04 percent.

* National Bank of Arkansas in North Little Rock -- 57.98 percent.

* Worthen National Bank of Arkansas in Little Rock -- 54.58 percent.

* Metropolitan National Bank of Little Rock -- 53.49 percent.

* First Commercial Bank of Little Rock -- 52.97 percent.

* First Jacksonville Bank & Trust -- 40.72 percent.

* Union National Bank of Arkansas in Little Rock -- 40.43 percent.

Tale Of Two Banks

Wilmot State Bank and the Peoples Bank of Portland are separated by 12 miles of cropland in southeastern Ashley County. But the lending activity at the two institutions makes them seem worlds apart.

Wilmot State Bank had a loan-to-deposit ratio of 107.29 for the reporting period that ended Sept. 30, 1991. The Peoples Bank ratio was 22.43.

"Crop loans account for about 70 percent of our loans," says Kenneth Allbritton, president and chief executive officer of Wilmot State Bank. "Right now, our loan-to-deposit ratio is below 50 percent."

High ratios during the third quarter are guaranteed now that the federal government is moving away from direct agricultural lending.

At Portland, which has a population of 560, other variables come into play.

"The group that controls the other bank in town owns a majority of the farmland around here," says Tipton Pugh, president and CEO of the Peoples Bank. "That prevents us from making competitive loans as such."

The Pughs are among the most prominent planters in southeast Arkansas, and branches of the family have an interest in both Portland banks. Tipton Pugh's cousins and other wealthy farm families control the Portland Bank, which finances their farming operations.

Cut off from many local markets, the Peoples Bank has turned to other types of investments. They include about $8.3 million worth of government and corporate bonds and certificates of deposit in other institutions.

Peoples Bank also historically has operated as a conservative lender.

"The banks with high ratios run a big risk of problems, especially in the economic times we have now," Pugh says.

The bank began operations in 1908. Pugh intends to err on the side of caution to keep the family institution in operation during this period of consolidations and other restructuring in the financial sector.
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Title Annotation:Arkansas' most aggressive lenders
Author:Waldon, George
Publication:Arkansas Business
Article Type:Industry Overview
Date:Feb 24, 1992
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