The Bank of Fayetteville Embarks on a New Era

Bank of Fayetteville Growth
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Mary Beth Brooks has a tough act to follow.

But she’s up for the challenge of taking center stage as president and CEO of the The Bank of Fayetteville N.A. as its 65-year-old founder John Lewis steps aside for a new generation of bankers and customers.

Brooks, a 20-year banking veteran, was hand picked from at least a half dozen other candidates and lured from the sales manager position at Arvest Bank-Rogers. She was named president of The Bank of Fayetteville in a July 22 letter to BOF shareholders. On Jan. 1, she was also named CEO.

John Lewis, known by some as “Mr. Fayetteville,” served as the president and CEO of the bank for 18 years. He announced his intent to retire as chairman of the board at the March 29 shareholders meeting. The board of directors is still looking to fill that position, and when the appropriate candidate has been selected, he will step down from that role as well, he said.

Though the job has been settled for months, Brooks said it will take about a year for employees — and some customers — to get through the full transition from the bank’s founder to his first successor.

She said her goal is to make BOF more profitable for its 400 or so shareholders, without sacrificing Lewis’ bedrock foundation of being the champion bank for the “little guy” and small business owner in the community.

Brooks plans to increase the bank’s return on assets from a 2004 year-end 0.65 percent, to a 0.85 percent for 2005, and up to 1 percent by the end of 2006. BOF closed 2004 with a 9.32 percent return on equity. She’s shooting for a 2005 ROE of 15 percent.

And she can do it, she believes, just by fine-tuning the bank Lewis built.

The bank’s assembled team is good, Brooks said, and she’s offered them extra motivation. If the bank meets its goal of increasing income by about 33 percent this year, the 116 employees will share in a bonus plan.

BOF had 2004 net income of just more than $2 million.

The strategy is a little more metropolitan than BOF has had. Its inspiration comes from Brooks’ background at Bentonville-based Arvest, National Bank of Commerce in Memphis and the Arkansas State Bank Department.

Already she’s seen a change in the way the bank’s employees behave. They’re watching expenses and paying attention to pricing the bank’s products, she said.

It’s too early for hard numbers from the Federal Deposit Insurance Corp. to see how Brooks’ plan will affect the bottom line. However, Bob King, BOF’s executive vice president, said March was a red-letter month.

Under Brooks’ leadership and constant team encouragement, BOF had its highest-ever loan production month with $19.7 million in loans generated between March 1 and 31. The typical monthly goal is around $8 million, he said.

“She is a visionary,” King said.

Brooks has come on strong in her position, her energy level is always high and it’s infectious, he said. But her ability to impress goes beyond the balance sheet.

King said Brooks has an uncanny ability to “pick anyone up” if they’re feeling down. Her exuberance and positive attitude have helped breathe some new life into the bank, he said, but in a way that honors Lewis’ 18 years of contributions.

King is convinced she’s the right person to succeed Lewis, and would opt to follow her if she ever left.

But that’s not likely to happen, Brooks said. She plans to spend the rest of her career at BOF on the downtown Fayetteville square.

“It just doesn’t get much better [than this],” she said.

Ch-ch-changes

As of Dec. 31, BOF’s assets were $355 million, up 96 percent from 2000. And deposits were $241 million, up from $165 million in 2000 — a 46 percent increase for the four-year period.

The bank’s ROE has hovered in the mid-range for the last decade with an average of 8.64 percent. And ROA has slipped from a 1996 year-end of 1.28 percent to 0.65 percent as of Dec. 31, a 49 percent decrease.

The decade average was taken into account because in 1999, the bank adjusted its loan loss reserves as a hedge against uncertain economic times. As a result, BOF’s ROA and ROE were negative that year, Lewis said.

The bank isn’t the best performer in Northwest Arkansas, but the picture is far from bleak.

“We’re never going to be a highly profitable bank. We’re probably never going to be the mid-range profitable bank, because we do spend a lot of money in the community,” Brooks said.

Brooks said she’s out to increase BOF’s profitability, but not out to change the face of the company. It won’t be an “everyone” bank, she said.

The most noticeable changes on tap will be in the form of an improved online banking system set to debut sometime later this year, unified hours of operation at all locations, loan officers in most of the branches, and a wider reach in the ATM network.

Brooks said at least two new ATM locations should open by year’s end.

Prior to January 31 all of BOF’s branches operated different lobby and drive-through hours. Since then, all lobbies have been set to open from 8 a.m. to 5 p.m., and the drive-throughs are open from 7:30 a.m. to 6 p.m.

And until recently, many customers had to travel downtown to visit loan officers. Now there is an officer in the majority of the bank’s eight branches, Brooks said.

The new boss is also into cutting costs behind the scenes. Brooks inspects the bills that come in, and is constantly looking for ways save, a frugal trait she learned from Arvest.

Within the first five months of joining BOF, she overheard a conversation about ordering copy paper. It piqued her interest, she said.

She asked an operations manager to figure the difference between the way the bank had been ordering and distributing paper to its branches, and ordering it through a major office supply store’s online service.

The report back was the bank could save up to $12,000 a year — just on paper — by using the online service.

“I really think, we will be able to operate much more efficiently, and probably, far more profitably without the customers ever seeing the difference,” she said.

The Female Factor

Brooks, a Fort Smith native, is the only female bank president and CEO among the 39 banks that do business in the six-county region that makes up Northwest Arkansas — Benton, Washington, Carroll, Madison, Crawford and Sebastian counties. In fact, of the 168 banks in the state, she is only one of four current female CEOs, according to Bauer Financial Inc., an independent bank and credit union analysis firm in Coral Gables, Fla.

Virginia Ryburn was a longtime chairman and CEO of Commercial Bank and Trust Co. in Monticello, but she died Jan. 5 and the bank has since named her son, Bennie Ryburn, as the CEO.

Of the remaining four female-led banks, BOF is by far the largest bank in the state headed by a woman.

Brooks, of course, has no qualms with gender and a leadership role. She was raised to believe a woman is just as capable to do any job a man can, she said.

The first time she can remember being in trouble was when she asked her parents what “man” won a mayoral race. The reaction was less than enthusiastic, she said.

Her predecessor agrees.

“When she sits in the [CEO’s] chair, it doesn’t matter what her gender is,” Lewis said.

The Offer

Lewis said he was responsible to bring candidates to the board of directors and a search had been underway for about four years.

He’d met Brooks once or twice but had more word-of-mouth information about her than anything.

“She was everything that my friends had told me about her,” he said.

Brooks said she got a letter from The Bank of Fayetteville in August of 2003, saying the board had narrowed their focus to six or seven people for the succession of Lewis.

The letter was a complete surprise to her, she said.

“I did the nice thing that my mom always taught me to do, which was to write a nice note back,” she said.

Her response was along the lines of: Thank you, I’m flattered, but I’m happy where I am.

Then in May of 2004, Lewis began to make phone calls to her home so he wouldn’t disturb her at work, she said.

“He wanted the right kind of person who would hopefully maintain the heritage of the bank and a lot of the same qualities and priorities of the bank,” Brooks said.

Lewis even made several trips to Brooks’ home and pitched her the job. She turned him down.

Finally Lewis convinced her to talk to a couple of BOF’s customers and meet with the board of directors.

One of her concerns was that the bank would sell and she would loose her job after already having burned a bridge with Arvest, the largest player in the market.

“If the bank sold, who’s the very first person that goes, you know?” she said.

The board and several shareholders assured her the bank would not sell.

“They ultimately convinced me that I would be able to do what I wanted to do, that I wouldn’t just be a puppet for John, but that I would be able to make the changes I needed to make, hire the people I needed to hire, do what I needed to do in order to make it successful with their complete trust and support,” Brooks said.

When asked how he was finally able to sway Brooks, Lewis joked, “I just conned her into it I guess you’d say.”

Accolades

When Brooks moved back to Fayetteville after a career that spanned from Alma to Memphis, she started with Arvest Bank Group Inc. at the holding company level. She was helping install in-store branches in Arkansas, Oklahoma and Missouri Wal-Mart Stores and area groceries. The niche was an expertise she picked up during her stint with National Bank of Commerce in Memphis.

She did that for three years and supervised about 200 people, but was getting phone calls day and night, she said. She decided to “slow down” and moved to Arvest Bank-Fayetteville as a commercial loan officer, where she managed a loan portfolio worth about $50 million.

Brooks worked there for several years before taking a position with Arvest-Rogers as the sales manager.

Both Rob Brothers, president of Arvest Bank-Rogers, and Gary Head, the former Arvest Bank-Fayetteville president, said they admire Brooks and spoke highly of her as a banker and an individual.

“She’s a very smart lady and very talented,” said Head, whose startup, Signature Bank of Arkansas, was slated to open in late April.

“She’ll be an excellent competitor of mine, and she’s a friend.”

Lewis Says So Long, Not Farewell, Fayetteville

Shareholders and community members filled the main office of The Bank of Fayetteville N.A. on April 14 for a reception honoring the bank’s founder and longtime president and CEO, John Lewis.

The reception was a retirement party of sorts, though Lewis already handed the reigns of the bank to Brooks on Jan. 1 and he is still officially the chairman of the board of directors, until a new chairman is selected.

No time line has been given for that process.

Lewis quipped that he was touched by how many people came to see him, but then he realized there was “free food and whiskey.”

The bank set up a charitable fund with the Fayetteville Community Foundation in honor of Lewis, and he will have discretion over how the funds are spent.

At some point mid-summer, the bank will officially dedicate the building at 1 South Block Ave., to Lewis. Lewis’ family has occupied the building on the downtown Fayetteville square for more than 100 years. The family ran Lewis Brothers Hardware for most of that time.

BOF opened on June 5, 1987, and during its first six months of operation, made $18 million in loans and by December 1987 had assets of $28 million.

One year later, the bank had $47 million in deposits and had made $32 million in loans.

An avid hiker, mountain biker and a voracious reader, Lewis won’t let retirement slow him down. He still serves on many boards and philanthropic projects including the Beaver Water District, the Genesis Technology Incubator, the Northwest Arkansas Museum Study, the Northwest Arkansas Council and the Fayetteville Community Foundation.

He looks at the retirement as an opportunity to work at another career, he said.

“I just do what I enjoy. That’s how you live long,” Lewis said.