Chambers Loads Up For Regional Rollout

John Ed Chambers III, president and CEO of Chambers Bancshares Inc., chews gum like a man with a lot on his mind.

Maybe it’s his impending Chambers Bank invasion of Northwest Arkansas.

Chambers’ financial holding company, Chambers Bancshares Inc. of Danville, gained controlling interest of a Fayetteville bank in December, and he plans to rebrand the eight-branch Community Bank of North Arkansas by year’s end. The chain will operate as Chambers Bank of Northwest Arkansas giving the existing 12-office Chambers Bank organization a ribbon of sister branches from Hot Springs Village to Fort Smith to the Missouri state line.

“When we play, we play to win,” Chambers said.

Chambers said he will also open two or three new strategically placed branches in Northwest Arkansas. Those will start at Johnson’s posh Clear Creek Golf Club and Rogers’ upscale development, The Peaks. He said it’s too early for details on those facilities, but construction is expected to start in the next 18 to 24 months.

The name change comes just months after Chambers Banchshares bought the remaining 44 percent minority shares of the $228 million Community Bank in December. Terms of the deal were not disclosed, although Chambers Bancshares’ CFO Mike Donell said the company paid a “premium.”

Community Bank has offices in Fayetteville, Springdale, Rogers, Elkins and Goshen.

Robert Taylor, president and CEO of Community Bank, said the chain will relocate some of its branches to the upscale venues, but he’s not sure yet which locations will go dark.

Chambers said some corporate operations for Chambers Bancshares, which also owns the $420 million Chambers Bank, will eventually also relocate to Benton and Washington counties. He’s not yet sure what departments that will entail, but Chambers said the move will be designed to eliminate redundancies and better support the northwest interests.

In addition to significant personal real estate investments, he has family in the area and finds himself spending more time in Northwest Arkansas.

Dual Personality

Chambers, 57, said the name change won’t lead to a charter consolidation in the immediate future, athough he doesn’t rule out that possibility down the line. In fact, he and some of his executives see it as inevtiable.

Chambers said his west Arkansas operation is a small-town, deposit-driven bank. Community Bank, he said while sitting in the board room of its Joyce Boulevard location in Fayetteville, is “a faster-paced city bank.”

“They’re totally different in their style of banking,” Chambers said. “This is more upscale, aggressive. We’re very heavy in real estate and development up here. If you go to Chambers Bank, it is mainly made up of small towns.”

He said Chambers Bank’s locations make it deposit driven. Its commercial loans usually run $200,000 to $300,000. At Community Bank, $15 million (resellable) loans are common.

The differing corporate cultures at the banks’ administrative offices, Chambers said, is one reason he’s not in a hurry to merge the two worlds.

“Like my dad said, ‘If it ain’t broke, don’t fix it,'” Chambers said, referring to his father and fellow banker John Chambers II.

Taylor said the ownership consolidation in December allows Community Bank the opportunity to make larger loans in Northwest Arkansas because it has the backing of Chambers Bank. The Danville bank and the holding company can purchase loans from Community Bank, freeing up additional capital.

Taylor said other Arkansas banks purchase all or part of their loans, too.

A Niche to Scratch

Community Bank has carved a niche in the bank-heavy Northwest Arkansas market by lending for commercial development. Recently, decision-makers at the bank have also made significant investments in the residential market.

Doug Lynch, executive vice president of Community Bank, said the institution made more than $40 million in commercial loans in the Pinnacle Point area during its development and it has at least that much pending in development dollars at Fayetteville’s CMN Business Park and Collins Haynes’ Lake Keith project in Cave Springs. And there are others.

Lynch said the bank is an active lender in Centerton, with loans tied to more than 300 acres of residential development in that booming community just west of Bentonville.

“We’re real heavy in the dirt development and then following that up with the interim construction to mini-perm financing on the commercial buildings as well,” Lynch said.

Mini perm — short for miniature permanent — is a short-term financing option used to pay off construction costs on commercial developments, usually three to five years, with a balloon payment at the end of the term.

Chasing the commercial niche was a no-brainer. The Northwest Arkansas Regional Planning Commission reports the number of commercial building permits increased 50 percent from 174 in 1990 to 261 in 2002. The dollar value of those permits increased from $52 million to $244 million during the same period, a 369 percent jump.

Chambers’ deal-making teams continue to be bullish on the market. They don’t predict a saturation point soon.

“Virtually every major project that we’ve done is coming out either pre-leased, or we’ve got substantial people behind it,” Lynch said.

The trick, he said, is to partner with people who move the market and keep a clean portfolio.

“We’re aggressively conservative,” Taylor said.

Chambers and his executives said the thing that sets Community Bank apart from many other banks in the area is its ability to make multi-million dollar decisions quickly. They said the family-owned aspect and the closeness of the board members — which is made up of several Chambers relatives — can get customers answers. That’s important because time is money in the construction business.

Collins Haynes, a partner at Rogers architecture firm Haynes Ltd. and an upscale developer, said, “The bank is very developer savvy.”

Haynes said Chambers is the only banker he knows of who puts as much value in an individual behind a project as he does in the actual project.

“With him and his bank, we don’t have to go through layers of committees,” Haynes said.

“We’ve actually done $10 [million] to 20 million deals in half a day with two phone calls,” Taylor said.

Chambers said he believes in keeping strong capital, so that there are fewer limits on what the bank can loan.

“[Chambers’ father] always left the money in the bank,” Chambers said. “And we felt like we could make more money with the money in the bank than we could by taking it out.”

Bought Small, Built Big

Chambers, referred to as “Johnny” by Community Bank executives, started working with his father’s Danville State Bank in 1973 when he graduated from the University of Arkansas with a degree in banking and finance. He said assets were $8 million or $9 million at that time. According to the Federal Insurance Deposit Corp., Chambers Bancshares booked $649 million in total assets as of Dec. 31.

Danville State Bank was converted by Chambers’ grandfather in 1930 from the Bank of Belleville and moved it to the former home of Yell County Bank at that time.

In 1980, Chambers chartered the Scott County Bank in Waldron. Throughout the ’90s, Chambers Bancshares acquired ownership in the Bank of Amity and Bank of Hot Springs Village, both of which have now been consolidated into the Chambers Bank charter in Danville. The holding company did own part of the Bank of Atkins, which became Arkansas Valley Bank, but sold its shares in that concern.

In April of 1998, the holding company acquired the Bank of Elkins from the Bunch family. In October of 1999, the 1912 state-chartered Bank of Elkins merged with Community Bank of North Arkansas, which was chartered as a thrift in 1995. Chambers Bancshares held 56 percent interest in Community Bank until December.

All in the Family

Chambers, who was born and raised in Yell county’s Danville, was mayor of that town for 25 years.

He has personal investments in The Peaks in Rogers, Petit Jean Poultry and he developed Chamberlyn Country Club in Danville. He said he recently got out of the cattle business when he sold 1,500 head to a friend.

His sister, Gene, is married to Dallas Cowboys’ majority owner Jerry Jones. Another sister, Patricia, married Jack Dixon, a sports consultant. And sister Kathy married Dr. James Counce, a cardiovascular surgeon in Springdale and former Arkansas Razorbacks basketball player. All seven make up the board of directors for Chambers Bancshares.

He has three daughters who live in Northwest Arkansas. One, Keri Barber is the principle broker for the upscale Dallas Real Estate Services Inc., of which she and husband Brandon Barber are investors. Another of Chambers’ sons-in-law works at Community Bank and a son-in-law-to-be also works there.

But Chambers doesn’t believe in favoritism. “I tell them, ‘Just because you’re family doesn’t mean you’re going to be running this thing.'”

He said his father said the same to him.