First National Still Strong in Northwest Arkansas

Established in 1907, The First National Bank of Springdale served generations of families as a small, community bank. Northwest Arkansas grew up around it, and people counted on First National as a dependable neighbor. When First Tennessee National Corp., a banking behemoth, bought First National in 1995, even the staff became nervous about losing the institution’s local feel.

Now, five years after the purchase, First National enjoys the same, lofty market share in Washington County that it had before the buyout. It resulted in an advantageous union between big-bank ability and small-town service.

First National is an aberration as many out-of-state banks in smaller communities lose their market share by earning reputations for impersonal service and poor customer relations.

“It’s in people’s minds that when you’re owned by a big bank, service declines,” said First National President Jerry Reinert. “We strive everyday to see that that doesn’t happen.”

As of June 2000, the last time the Federal Deposit Insurance Corp. published market share data, First National retained 13.9 percent of the Washington County market’s total deposits. It trailed locally owned Arvest McIlroy Bank & Trust by about four percentage points and led North Carolina’s Bank of America by two.

Although First National’s market share has declined over the last few years, the bank has held a strong position in the increasingly diluted sector.

First National’s administrators agree that First Tennessee encourages the bank’s success in part by leaving it alone. After the acquisition, First National kept its name, administration, local board of directors and customer-service policies with only minor changes. One person from First Tennessee joined the board.

“Our decisions are made here,” said Nadine Tinsley, a 33-year First National veteran and senior vice president of employee services. “We don’t really do anything that different than we did before.”

First National hires its own people and sets its own interest rate according to the local market. With 126 employees, 14 of whom are part-timers, the bank still uses word of mouth and newspaper help-wanted ads to fill its open jobs.

Long-term, experienced employees also root the bank into the community. Tinsley, who started as a teller, said her dedication of 33 years isn’t such a rarity. After moving from Springfield, Mo., Reinert joined the bank in 1976 as a cashier in the bank’s back room.

Using the Connections

Backing from First Tennessee is like having a protective big brother. The more experienced sibling offers advice and strong support.

For instance, bank laws limit the amount of money that one bank can loan to one borrower, Reinert said, and smaller banks must often seek assistance from other lenders to help cover substantial requests.

First National enlists First Tennessee to help make bigger loans than otherwise would’ve been possible.

“Big businesses in Northwest Arkansas can turn to First National [for lending],” said Arthur Thurman, senior vice president of commercial lending at the bank.

First Tennessee’s total assets for 2000 were $18.5 billion, with $12.3 billion in deposits.

First National’s total assets last year were $351.8 million, with $293.1 million in deposits. It also reported 0.76 percent return on assets and net income of $2.5 million.

With four locations, all in Springdale, First National was the only bank in Washington County to manage a positive recovery for net charge-offs. (See Page 11 for related article.)

Corporate support from First Tennessee allows First National to offer small-town, face-to-face service with big-bank amenities such as five different checking account plans, Internet banking, ATMs, debit cards and auto-deposit programs.

Before First Tennessee bought First National’s holding company, Financial Investment Corp., on Oct. 1, 1995, First National had been working to get a debit card for its customers. After the acquisition, debit cards became immediately available.

As the best example of big services in a small bank, First National’s Web site, www.fnbspringdale.com, bulges with online banking opportunities.

Customers can manage savings, checking, credit card and loan accounts with inquiries and balance transfers. For a small fee, customers can pay their bills online.

Within six months, First National plans to offer bank statements for online banking, complete with printable images of the client’s checks, Reinert said. First Tennessee manages the site and mans the 24-hour customer hotline.

About 450, or 3 percent, of the bank’s 15,000 customers have online accounts, said Jeff Thames, First National’s senior vice president of operations.

Reinert compared online banking’s sluggish start to the first onslaught of ATM machines.

“Bricks-and-mortar branches are not as important as they were 20 years ago,” Reinert said. First National put its first automatic teller machine on the streets in 1976. Four years later, the bank needed a second machine, and now the bank boasts nine ATM locations.

Racing for the County Line

With a solid history in Washington County, expansion into Benton County would appear fruitful for First National. Although Reinert and Thurman agreed that First National is definitely interested in the Benton County market, heavy competition poses a challenge.

“It’s a tough market,” Reinert said.

The Arvest clan of banks retains a tight grip on the Benton County patrons. It holds 51.6 percent of that county’s market.

Population growth in Benton County and big businesses such as Wal-Mart Stores Inc. make that area shimmer, and Thurman said he hopes to have one-third of the bank’s lending customers stemming from Benton County within five years.

Now, an estimated 10-15 percent of the bank’s credit customers come from Benton County.

“We still think Washington County is our primary market,” Thurman said.

Tinsley said about 15 percent of the First National’s employees live in Benton County.

Aside from venturing north, First National has another impending enterprise. Within six months, the bank’s brokers plan to begin selling several, yet unnamed brands of insurance.

Until now, First National has offered accidental death and dismemberment and credit-life coverage to its customers, but a licensed insurance salesman and broker at the bank will soon market term and universal life insurance, too, Thames said.

If the insurance venture does well, he said, the bank might also eventually sell car and home insurance.

First National Bank of Springdale’s Board of Directors are as follows:

J.D. Cypert — Cypert Crouch Clark & Harwell

Gary George — George’s Inc.

Gene George — George’s Inc.

Dewey Johnson — Johnson Communication Inc.

Mike Kennedy — First Tennessee National Corp.

Dr. J.R. Power — physician, retired

Tom Reed — Reed & Associates Inc.

Jerry L. Reinert — The First National Bank of Springdale

B.G. Shaw — Willis-Shaw Express Inc., retired

Willis Shaw — Willis-Shaw Express Inc., retired

Gene Thompson — The First National Bank of Springdale

W.C. Walker — Wal-Mart Stores Inc., retired