Liberty Bank Stakes its Claim

Customers at Liberty Bank of Arkansas are in seventh heaven. The door handles have 7s on them — noting the bank’s hours from 7 a.m. to 7 p.m. There is a change counting machine inside the lobby, and employees greet customers — sometimes with a handshake by the president of the bank.

“We want the customers to know that we want their business,” said Scott Hancock, Liberty’s executive vice president and chief lending officer in Northwest Arkansas. “If not for them, we don’t have a bank.”

Since Liberty Bancshares Inc. of Jonesboro teamed with Russellville Bancshares Inc. in October 2004 to purchase the four-office Arkansas State Bank in Siloam Springs for $29.7 million, the group has built five new offices, and a Springdale location is scheduled to open in August. That will make 10 total Liberty locations in less than two years.

Liberty bought out Russellville’s 20 percent share in the northwest offices in the fall of 2005 and then purchased Russellville Bancshares at the end of the year.

Liberty Bank began as Bank of Jonesboro in 2001 with zero deposits and zero assets, said Chairman and CEO Wallace Fowler.

It quickly became one of the fastest growing banks in Arkansas with 26 locations, and as of Dec. 31, had $1.36 billion in assets.

Now Liberty is focusing on more expansions by providing top-notch customer service and staying involved in the communities it serves.

The management team plans to do so by “shaking hands all the way,” said Mark Mizelle, Liberty’s Bentonville and Rogers president.

Along with customer service, they strive to provide innovative products to not only entice new customers but also keep current customers coming back. Their strategy apparently works because last year Liberty saw a 50 percent increase in deposits, assets and loans.

“We’ve been very pleased and excited about the growth we’ve had in Northwest Arkansas,” said Howard Hamilton, the bank’s Northwest Arkansas division president. “The reception we’ve had and the customer response has exceeded our expectations, especially on growing the loans.”

Branching Out

The bank has 26 branches in Arkansas, including nine in Northwest Arkansas. The newest Liberty Bank branch, located in Rogers, opened April 17.

“We’re trying to build a branching system to provide convenient locations for our depositors,” said Doug Lynch, the bank’s Fayetteville and Springdale president. “Each one of our branches are full-service banks.”

Branching out fuels growth, which is shown in Liberty’s numbers.

According to the Federal Deposit Insurance Corp., Liberty Bank of Arkansas had a 58 percent growth in assets compared to $858.1 million for 2004. Income for fiscal 2005 increased 48 percent to $10.7 million from $7.2 million. Deposits were also strong, with a 52 percent increase from $736.1 million in 2004 to $1.1 billion in 2005.

“We’re glad to be up there,” Fowler said. “We think it’s a vivacious community and we’re having tremendous growth.”

The bank had 2.17 percent of the market share for deposits as of June 30 for the six-county area in Northwest Arkansas, which includes Benton, Carroll, Crawford, Madison, Sebastian and Washington counties.

But Hamilton doesn’t look at market share to measure success.

“I don’t know that we look at market share as a measuring gauge,” Fowler said. “We basically look at what we budget for growth. However that falls in with the market share, we’ll go with it.”

Their goals are on loans and deposits, not just what their market share is. It’s about meeting their budget for loans and deposits. Hamilton said last year the bank’s loan-deposit ratio in Northwest Arkansas was in the high 80-percentile bracket. “And that’s manageable,” he added.

Nine out of the 31 banks on the Business Journal’s largest private banks list (PDF) had loan-to-deposit ratios in the 80 percent bracket. Fifteen of those banks had 90 percent or more.

Hamilton said deposit growth in Northwest Arkansas has been close to meeting their expectations, but it hasn’t been as accelerated as loan growth.

“We’ve exceeded our budget on fee aspect and loan growth for the past two years,” he said.

Hancock, the bank’s chief lending officer, credited branch convenience for loan and deposit growth. With branches in different cities, it gives the bank a wide range of deposit and loan projects.

“Our deposit growth in the last couple months has been extremely strong, primarily due to opening our branches in Bentonville, Fayetteville and Rogers,” Hancock said. “Once our branching infrastructure got in place, it has proven our deposit growth is exponential.”

Hamilton said Liberty’s Northwest Arkansas’ loan portfolio is primarily focused on commercial lending, with about 80 percent commercial and 20 percent consumer. Liberty does so much in commercial lending because the people they hired have strong commercial backgrounds, he said.

For 2005, Liberty Bank had $951.1 million in net loans for the state, a 60 percent increase over $591.8 million in 2004. Of that total, 77 percent was made up of consumer and commercial loans. Split out, one- to four-family residential real estate was $178.2 million, 18 percent of the total, and commercial real estate was $307.1 million, 32 percent of the net loans.

Hancock, who has been with the bank since it came to Northwest Arkansas in 2004, said Liberty tries to provide every product in the market to its customers.

“We are a very customer service driven bank,” he said. “We do loans anywhere from student loans to large commercial real estate loans. We have customers that do large real estate loans, and when it comes to their car loans, we’ll do those, too.”

In early 2005, Liberty Bank of Arkansas’ northwest division started a mortgage department to provide 100 percent financing, and it has grown significantly since it started, Hamilton said.

The bank offers a 1.99 percent introductory home equity rate for four months. That’s just one of the innovative products that Liberty Bank provides for its customers.

Quality Service

“We’re always going to be looking for innovations to set ourselves apart product-wise,” Hamilton said, adding that offering an introductory 8 percent certificate of deposit rate “got lots of comments from the banking industry.”

But that’s just one of the ways to show the community that Liberty Bank is “here,” said Joe Spivey, senior vice president in commercial lending and business development in Northwest Arkansas.

Spivey, who joined Liberty Bank the first of this year, said the bank’s 7 a.m. to 7 p.m. hours, although not unique to the area, provide convenience to the customers. But what the bank does that is unique is provide same-day posting up to 7 p.m.

Another unique service product is an instant debit card with a picture ID.

Customers who open an account won’t have to wait seven to 10 business days to receive their debit card. They get their debit card the same day and have immediate access to their account, Spivey said.

Mizelle said the ownership group not being afraid to spend money on branch sites makes the banks more visible to the community. The new Rogers branch is located at the corner of Walnut and 40th streets. The stoplight provides easy in and out access for customers, a big deal for Northwest Arkansas commuters.

Liberty has ATM locations at each of its branches, but to provide extra service, the bank belongs to a preferred network where customers can use another banks’ ATMs in the network free of charge.

Hamilton said another unique aspect of the bank is to have all the branches look alike so they can be easily identifiable to customers. The average cost to construct a branch can range from $1 million to $2 million, not including the land purchase, he said.

At the end of this year, Liberty Bank of Arkansas’ northwest division will start construction on a new headquarters in Fayetteville on Joyce Boulevard, Hamilton said.

Some of the operations will be based there and so will some of the Northwest Arkansas managers. A final plan hasn’t been made on the size of the building, he said, but that completion of the building should take 12 months to 18 months.

Lynch, who joined Liberty when it moved into Northwest Arkansas, added that Fayetteville’s headquarters will also serve as a branch for the northern part of the city.

Plans are also under way to find a location for another branch in central Fayetteville, he said.

Spivey stressed the importance of being involved in the community and having strong customer service.

“I think bankers have to be good listeners,” he said. “I’m going to be out there asking a lot of questions and listening to the needs [of the customers]. Customer service is very important to our bank. Banking is a people business — it’s people doing business with people. We try to really show concern and care for our customers, and we want our customers to have a positive experience when they come in to do business with Liberty Bank.”

David Glass, Liberty’s Siloam Springs and Gentry president, said growth is his banks’ goal, just like any business.

“We want to stay as involved in the local community as it has been in the last 30 plus years,” he said.

According to the FDIC, the Siloam Springs charter was started in 1960.

Glass’ banks in Siloam Springs, Tontitown and Gentry were the first Liberty Banks in Northwest Arkansas. All of the other banks are new, but that doesn’t take away from the customer service aspect.

His market has about 55 employees — about half of the total in Northwest Arkansas, and many of the employees at the bank have been there for over 20 years, Glass said.

Bank Notes

Liberty Bancshares has been aggressive on expanding in the state. When it teamed with Russellville Bancshares to purchase Arkansas State Bank in Siloam Springs, that charter had $174.1 million in assets.

In the fall of 2005, Liberty bought out Russellville’s 20 percent, $6 million stake in the Siloam Springs bank and collapsed it into its Jonesboro charter. At that time, the Siloam Springs bank had $247.5 million in assets, a 42 percent increase in about a year.

Later that year, it purchased Russellville Bancshares for an undisclosed amount.

In February, First Arkansas Valley Bank of Russellville applied with the Arkansas State Bank Department to open a location in Fort Smith. Russellville Bancshares operated FAVB, but because Liberty purchased Russellville, FAVB is now under the Liberty Bank of Arkansas umbrella.

Hamilton said, at this time, the bank doesn’t plan to collapse FAVB into the Jonesboro charter. Fowler said there are plans for at least one more FAVB in Fort Smith.

First Arkansas Valley Bank has 13 offices in five counties (Conway, Johnson, Pope, White and Yell). As of Dec. 31, it had $595.4 million in assets, up from $498.4 million a year earlier, a 19 percent increase. FAVB had $414.0 million in deposits, compared to $360.9 million in 2004.

Outside of the Northwest Arkansas and River Valley area, Liberty Bancshares purchased MidSouth Bank in Jonesboro for more than $20 million in September 2003. And in late 2004, it purchased Mountain Home’s TrustBanc Financial Group Inc. for about $26.6 million.

In early 2004, Liberty Bank of Arkansas acquired People’s Bank of Paragould for an undisclosed amount, showing the growth potential Liberty has statewide.

As for Northwest Arkansas, Hamilton said the bank’s growth is sustained by the economy, just like every other business in the area.

Liberty At a Glance

Click the links below for a series of PDF charts profiling Liberty Bank:

• Assets vs. Deposits
• Loans
• Loans to Deposits
• Net Income

A Liberty Timeline

February 2001 – The Bank of Jonesboro opens in Jonesboro. Wallace Fowler, president and CEO, purchased the charter in 2000, renaming it from The Planters National Bank of Hughes (St. Francis County) and converting it to a state-chartered bank.

June 2003 – The Bank of Jonesboro changes its name to Liberty Bank as the bank starts branching out to other cities.

October 2004 – Liberty Bancshares Inc., holding company of Liberty Bank of Arkansas, partners with Russellville Bancshares Inc. to purchase Arkansas State Bank in Siloam Springs for $29.7 million. Liberty’s part is 80 percent.

November 2004 – Springdale’s Liberty Bank branch opens.

April 2005 – Siloam Springs’s third branch opens.

October 2005 – Liberty Bancshares purchases Russellville Bancshares’s 20 percent, $6 million, stake of Arkansas State Bank in Siloam Springs and collapsed that charter into the Jonesboro charter.

September 2005 – Liberty’s first Bentonville branch opens.

December 2005 – Liberty Bancshares purchases Russellville Bancshares for an undisclosed amount.

February 2006 – Fayetteville branch opens.

February 2006 – First Arkansas Valley Bank of Russellville, which was operated by Russellville Bancshares, applied with the Arkansas State Bank Department to open a location in Fort Smith. Since Liberty Bancshares purchased Russellville Bancshares in December, FAVB is now under the Liberty umbrella.

April 2006 – Liberty opens its first branch in Rogers.