Arvest Ascends to No. 2 in Arkansas by Deposits

Regions Bank, the largest in Arkansas, continued to lose deposits statewide in the 12 months that ended June 30, but the five-year runoff slowed to a trickle thanks to a tremendous turnaround in Pulaski County.r

Meanwhile, Arvest Bank in Fayetteville solidified its position as the second-largest bank in the state — first with the acquisition of the Bank of Yellville and then, in September, with the acquisition of Superior Financial Corp. of Little Rock, parent company of Superior Bank of Fort Smith.r

The Federal Deposit Insurance Corp. released detailed market-share data on Nov. 4, the earliest it has ever had the annual “summary of deposits” report ready for public consumption. It is the only data that the FDIC breaks down by specific markets.r

Like Regions, Bank of America of Charlotte, N.C., reported an increase in deposits between 2002 and 2003, but the increase was less than the 5.51 percent increase in the statewide deposit market. As a result, both banks experienced declines in their market share figures.r

Regions, based in Birmingham, Ala., has experienced a 32 percent decline in its market share since the heady day in 1998 when it acquired First Commercial Corp., whose various charters controlled almost 16 percent of the state’s deposits. Regions’ experience is typical of out-of-state megabanks that have entered Arkansas: BancorpSouth of Tupelo, Miss., has lost only 11 percent of its market share, while U.S. Bancorp of Minneapolis has barely half the market share predecessor Mercantile Bank claimed five years ago.r

First Tennessee National Corp. of Memphis, which controlled 0.84 percent of the state’s deposits through its First National Bank of Springdale charter, is abandoning Arkansas completely by selling to fast-growing First Security Bancorp of Searcy. And Union Planters Corp., also of Memphis, is reducing its presence in Arkansas through attrition and by gradually selling off various branches.r

Meanwhile, homegrown banking companies like First Security Bancorp of Searcy and Bank of the Ozarks Inc. of Little Rock have recorded double- and triple-digit growth in their share of the state’s deposits over the same period.r

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Deposit Score-keepingr

Deposits are of vital interest to the FDIC, which is in the business of insuring bank accounts up to $100,000. They are less important to bankers, for whom assets (primarily loans) are the primary source of revenue and who are just as content to manage customer’s money in uninsured investment accounts. But deposits — which include “demand deposits” like checking accounts and certificates of deposit — can be an indicator of a bank’s ability to satisfy retail customers.r

“Deposit market share is more a scoring thing,” said Kevin Sabin of Tulsa, president and chief operating officer of Arvest Bank. “We focus on the blocking and tackling — service, locations, hours, people — and the market share will come.”r

In recent years, larger bank holding companies have paid little attention to deposits because they have other, cheaper sources of funding for loans. But Regions has proved — at least in Pulaski County — that the downward trend in deposit market share can be turned around. Regions added $137.6 million in deposits statewide between June 2002 and June 2003, but all of that and more — $178.9 million — came in the form of new Pulaski County deposits.r

That was enough to increase Regions’ share of the Pulaski County market by 2 percent. Market leader Bank of America added almost $159 million in deposits, but its market share still declined slightly.r

“There’s no question that we’ve had a resurgence in our deposits,” said Chuck Cook, president and CEO of Regions Bank in Little Rock. “The key is we have the best retail team since we became part of Regions, which was just over five years ago.”r

Cook said the upward trend had accelerated since the start of a “free checking” campaign that began at the first of this month.r

“The early numbers since Nov. 1 have been beyond our expectations,” he said.r

Certificates of deposits have lost popularity as interest rates have bottomed out and banks have gained the privilege of dealing in noninsured investment products that offer returns that are potentially much higher. But for smaller banks, offering higher CD rates can still be a primary source of funding for loans.r

“The CD is ultimately going to become a dinosaur,” said Ray Skelton, president of U.S. Bank in North Little Rock, still the fifth-largest bank in the state in terms of deposits despite its steady loss of market share.r

Among bank holding companies, U.S. Bank is the state’s seventh largest.r

Still, CDs can be an important funding source for smaller banks, said Jack Fleischauer, president of Regions’ western division, which includes Arkansas.r

“When a new bank is chartered, the first thing they do is come out with a big CD rate,” Fleischauer said. CD buyers, he said, are often “single service” customers that will take their deposits to the bank paying the highest rate.r

Nationally, deposits in FDIC insured institutions — commercial banks and thrifts — increased 11.4 percent to more than $5.1 trillion. r

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Arvest Prepares for Superior Shiftr

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Most of the Arvest Bank signs are in place, although they still may be draped with tarps bearing the Superior Bank name.r

But on Dec. 10, the shrouds will come off and Superior Bank, the venerable Fort Smith savings and loan, will be no more.r

Arvest announced in May that it would acquire publicly traded Superior Financial Corp. of Little Rock, Superior Bank’s holding company, in a deal valued at $211 million. Superior had 57 locations in Arkansas and Oklahoma. The deal will increase Arvest’s network, which also extends into Missouri, to 190 locations.r

One of the fastest-growing banking franchises in the state, having also purchased the Bank of Yellville this year, Arvest is not contemplating any more acquisitions, said President Kevin Sabin.r

“With all that we have brought in with the Superior acquisition, for the time being our attention needs to be focused on those communities,” he said.r

Jim Cargill, president of Arvest’s central Arkansas division, said most of the former Superior offices in Pulaski, Saline, Garland, Faulkner, Lonoke and Conway counties will convert to the 12-hour operating schedule that has been part of the Arvest approach. r

But instead of being open from 8 a.m.-8 p.m., the branches with extended hours will be open from 7 a.m.-7 p.m. — a response to customer demand, Cargill said. r

— Gwen Moritz