United Bank Reigns Again in Returns

For the second-straight year, United Bank in Springdale has gotten a better return on its assets than any other bank in Northwest Arkansas.

The bank’s 2.29 percent return in 2000 makes it No. 1 on the Northwest Arkansas Business Journal’s annual Top Bank Performers list. United Bank’s ROA in 1999 was 2.10 percent, which moved it up two notches from third place in 1998 when it recorded a 1.34 percent ROA.

ROA is not the only valid measuring stick for bank performance. The Business Journal chose it because ROA is the best apples-to-apples comparison of asset productivity for banks across the board. Return on equity, or how well a bank invested its stockholders’ money, is the measure with which bankers themselves are most concerned.

Since United Bank’s ROE was also high — 20.33 percent, second only to Arvest McIlroy Bank & Trust’s 20.43 percent ROE — it’s clear that the Springdale bank had a stellar year. Fayetteville-based Arvest McIlroy had a 1.49 percent ROA, which put them third behind Citizens Bank & Trust Co. in Van Buren. Citizens had a 1.59 percent ROA.

United Bank was the only Northwest Arkansas institution that finished among the Top 25 banks statewide. It was No. 3 overall. The only other area banks that made the state’s Top 40 were Citizens Bank & Trust (No. 27) and Fayetteville’s Arvest McIlroy (No. 36).

Locally owned by Don Pitts, United Bank’s ROE improved from 16.41 percent in 1999, and its assets grew 19 percent from $71.9 million. Hank Brashears, president and CEO of United Bank, said the bank focused on growing its loan portfolio in 2000. That growth, plus managing expenses, enhanced its performance.

United Bank’s loan portfolio grew about 20 percent year-over-year to $64.8 million. Brashears said about 50 percent of the bank’s loans were for homes.

“We reduced the percentage of our assets in investment securities and cash assets, which helped our yield,” Brashears said. “We made an effort to attract more checking and other accounts to reduce our dependency on CDs, which are higher-cost products.

“We also did more home loans, in particular, and even more commercial loans than normal.”

Brashears said United Bank is currently shopping locations for another branch. In addition to its main office on South Thompson Street and branch on Emma Avenue, Brashears said the bank is considering locations at Pinnacle Point and Village on the Creek in Rogers or even Joyce Boulevard in Fayetteville.

The bank, organized under United Holding Co., will likely build a new office rather than lease an existing facility. Craig Young, president of the shell, said he’s proud of the bank’s growth because it happened with only two locations.

“Because we have local ownership and management, we’re a lot more responsive and creative with our customer base than maybe some regional or national institutions,” Young said. “They have to get a lot more locations involved to be able to make decisions. Customers want fast service, and they want to feel special.

“Having that personal touch is something United Bank prides itself on.”

Brashears said much of United Bank’s growth in 2000 came because of referrals. It was the first year under Pitts’ ownership that the bank has paid a dividend, and it actually paid two. One dividend of $1.9 million was paid in early 2000 to the holding company, of which Pitts owns about 97 percent. Another $1 million dividend was paid at the end of the year.

Pitts bought United Bank in 1985, then Little River Savings & Loan in Ashdown. He transferred its main office to Springdale in 1986 and in 1994 sold the south Arkansas bank.

Young said the dividend funds gained this year will likely be used to create future locations, for acquisitions or for establishing additional lines of business.

Jim Williamson, Citizens’ chairman, said strong loan demand in the Arkansas River Valley helped his bank.

“We’re heavily involved in real estate lending both for our own portfolio and for selling loans in the secondary market,” Williamson said. “We have mortgage offices in both Fort Smith and Van Buren, and about a third of our portfolio is mortgage lending.”

The average age of banks among the Top 5 in Northwest Arkansas was 98 years. United Bank is the youngest by 71 years, counting from its 1978 charter issued in Ashdown.