Despite Troubles, Family Carries on Peterson Legacy

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The pending sale of Decatur State Bank, likely for no cash, is the latest blow to a family business empire built on scientific innovation and brought down by bank investments and challenging market conditions in the poultry industry.

The bank was chartered in 1954 by the late Lloyd Peterson, founder of Peterson Farms in Decatur. From humble beginnings in 1939, Peterson grew his chicken breeding and processing operations into the state’s 39th-largest private company, as ranked by Arkansas Business in 2002. The company boasted 1,900 employees and estimated 2001 revenue of $150 million.

In 2004, Peterson appointed his grandson, Blake Evans, as CEO, and when Peterson died at 94 in 2007, the company still had revenue of about $128 million.

But by then, the family was heavily involved in Bentonville-chartered ANB Financial NA, which was closed by the Federal Deposit Insurance Corp. in May 2008. The bank failure wiped out shareholder equity reported at nearly $180 million just seven months earlier — almost 30 percent of it owned by Peterson family members.

Two months later, Peterson Farms sold its broiler operations, propane company and other assets to Simmons Foods Inc. of Siloam Springs for an undisclosed amount.

At the time, Evans told the Northwest Arkansas Business Journal the sale had nothing to do with the failure of ANB, citing rising feed and energy costs as the reason for the sale.

Today, Evans — 36-year-old son of Lloyd Peterson’s daughter, Debra Evans — remains president of L&L Farms Inc., north of Rogers. The family’s polled Santa Gertrudis cattle breeding operation, L&L Farms is also the parent company of what remains of Peterson Farms, which produces broilers for Whole Foods Market and several genetic lines.

Decatur State Bank, which the family owns through Peterson Holding Co., began losing money in late 2010, and lost $12.69 million last year on assets of about $165 million. In April, the holding company agreed to sell it to Mathias Bancshares Inc., a bank holding company owned by real estate developer Sam Mathias of Fayetteville. Final regulatory approval of the sale is expected in the third quarter.

Peterson Holding Co. still owns Grand Savings Bank of Grove, Okla., which was founded in 1981 and remains profitable.


Finding Niches                         

Blake Evans declined to discuss what impact ANB’s failure had on his family.

“There is no reason to discuss how this affected my family,” he wrote in an email. “Obviously if you lose something, you pick up and move on doing the best job you can. That is what my family and I have done.”

Regarding the sale of the broiler operations, Evans said his grandfather “was one of the most dedicated people I know” and “the type of guy that would gamble his last dime to keep Peterson Farms alive and going for the community.”

When Peterson died in 2007, there was a surplus of poultry in the world and prices were very cheap, Evans said, and oil prices were at record highs.

“In addition to that, we were in front of some very nervous grain markets due to ridiculous ethanol mandates and subsidies,” he said, and corn prices when the operations sold were triple what they’d been six months earlier.

“Despite a significantly successful hedge I placed on corn in November/December 2007, it was still the right decision for the family to sell,” Evans said. “We wanted to make sure jobs would stay in Decatur and the plant would continue to operate.”

When the broiler operations were sold to Simmons, they were producing about 5 million pounds of chicken every week for the retail and food-service industries.

The sale included Peterson Farms’ feed mills, hatchery operations, transportation vehicles, flocks and a network of contract growers, a news release stated.

But Rogers architect Collins Haynes said what fascinates him the most about the Peterson family isn’t what they had and lost, but the niches they found.

Lloyd Peterson didn’t set out to be a chicken tycoon, although his company was one of the pioneer chicken producers in Northwest Arkansas.

His real interest was genetics, and his goal was breeding a better chicken — one that could be sent to market at a full weight after a shorter growing period. He established the company’s breeding farm around 1950, and recruited experts from around the world. By decade’s end, the company introduced a breeding rooster known as the Peterson Male.

By 1994, the Peterson Male commanded 70 percent of the domestic market for breeders and 50 percent of the international market, according to a Northwest Arkansas Business Journal article.

Peterson Farms sold the Peterson Male line to Aviagen in 2010.

Haynes calls Lloyd Peterson a man of vision and determination.

Whatever needed to be done to make his vision a reality, Peterson “was going to get it done one way or another,” said Haynes, who had helped Vic Evans, Debra Evans’ former husband and ANB Financial’s board chairman, and ANB CEO Dan Dykema develop Bentonville’s Commerce Center in the late ‘90s.

When people willing to work at Peterson’s chicken plants in the 1940s and ‘50s were scarce, Haynes said, Peterson got approval from the tribal lands of eastern Oklahoma to send a fleet of buses there to take Native American workers to and from the plant each day.

And as the demand for Peterson Male chicks grew worldwide, Peterson built an airport with a 3,863-foot runway on the shore of Crystal Lake to get the days-old chicks to market.

“He started off with a plane that would seat maybe 10 to 12 people and would take off with nothing but 1,000 chicks in the plane with the pilot,” Haynes said.

 “I just thought that was amazing, just absolutely amazing, [Peterson’s ability] to figure out how to do something and then go do it.”


Banking on Development  

The bank originally known as Arkansas National Bank was formed after First Bank of Bentonville was purchased in 1993 by Worthen Banking Corp. First Bank officers Debra Jackson, Dan Dykema and Harry Brown left to form the new bank that evolved into ANB Financial.

As Northwest Arkansas’ population and economy boomed, the bank prospered. By the end of 2005, it had assets of more than $966 million.

By early 2007, ANB was ranked the fifth-largest bank charter in the state. But even as it was acquiring loan production services and expanding into other states, trouble was brewing.

ANB finished 2007 with a loss of $120.4 million. The value of its nonperforming and past-due loans — mostly related to construction and land development — grew 545 percent in the year’s final quarter.

Also, about 85 percent of its year-end deposits were “brokered,” or purchased from other banks to fund its loan growth.

Already under sanctions from federal regulators, the death blow came May 9, 2008, when the FDIC shut it down.

The owners of Peterson Farms were the bank’s largest shareholders, collectively owning nearly 30 percent. Vic Evans owned 14.47 percent; Debra Evans owned 14.09 percent; and Blake Evans owned about 1.06 percent.

Vic and Blake Evans were also bank directors.

That July, former employees filed a class-action suit in federal court against the holding company, directors and trustees of its employee stock ownership plan. The workers had held about 18.03 percent of the bank’s shares in the plan.

The suit said the defendants “knew or should have known that the stock was an imprudent investment because ANB Financial was engaged in unsafe and unsound banking practices” and misrepresented the value of the stock to employees.

A settlement signed last October established a $2 million fund to pay the plaintiffs’ court costs and other fees, with the rest to go into the employee plan. In return, the plaintiffs released all claims against the defendants.


More Banking Woes

In November, the FDIC ordered Decatur State Bank to reserve an additional $6.13 million to cover possible loan losses and shore up its capital.

The bank, which has offices in Decatur, Gentry and Siloam Springs, reduced its assets by about 20 percent during 2011, and followed last year’s $12.7 million loss with a $1 million loss in the first quarter of 2012.

“While the bank does have some acknowledged asset quality challenges coming out of the last few recessionary years, we are obviously confident these problems can be remedied over the next couple years,” Sam Mathias said in a news release announcing the purchase agreement. “The bank has a good staff which we intend to keep intact to continue the efforts already set in motion to return the bank to a satisfactory and profitable condition.”

Arkansas Business, citing the Federal Reserve Bank in St. Louis, recently reported the proposal involves buying out the Decatur bank’s shareholders for $2 million, provided the bank maintains minimum equity capital of $6.5 million when the deal closes.

Debra Evans, as family trustee, controls at least 95 percent of the stock in Peterson Holding Co., Arkansas Business reported.

But if the bank’s capital is below $4.5 million at the time of closing, “no cash consideration will be paid at closing,” MBI stated in regulatory paperwork regarding the transaction.

Decatur State Bank reported equity capital of less than $5.4 million and total assets of $146.4 million as of March 31.

The agreement also entails rebuilding the Decatur bank’s depleted capital through a $10 million loan from Chambers Bank of Danville and a $4 million special dividend from First State Bank of Northwest Arkansas, Mathias Bancshares’ Huntsville-based bank.

Although Mathias intends to operate the banks as separate entities, Larry Olson will serve as president and CEO of both. He’s held those posts with FSB since October 2010.

The Huntsville bank has assets of $81.9 million.


Changing Times

Change is “not necessarily a bad thing,” Blake Evans told Arkansas Business when he was named to its 2007 Forty Under 40 class. (He was in the Northwest Arkansas Business Journal’s Forty Under 40 the previous year.)

That outlook has no doubt helped him through the many changes his family has experienced in the last few years, and as they regroup and look to the future.

Peterson Holding Co.’s Grand Savings Bank, with assets of $238.4 million, reported net income of $1.96 million in 2011 and $953,000 in the first quarter of 2012. Its equity capital stood at $22.2 million on March 31.

L&L Farms had nearly 7,000 acres at the time of the Simmons sale, which included about 300 acres of that property. Evans said L&L has sold more land in the past year, and now has about 5,000 acres. He declined to say how many head of cattle it has.

The home in Pinnacle Country Club that Evans and his wife, Kim, bought last October for $735,000 was put back on the market in May. The 5,569-SF home, built in 2006, is listed at $889,900.

Other family real estate up for sale includes the Crystal Lake Airport, on 163 acres with three homes. It’s listed at $1.2 million.

Debra Evans owns a home near her son’s, according to Benton County tax records, but it’s not on the market. The realty website shows the home last sold in July 2010 for $800,000.

Arkansas Secretary of State records show Blake Evans is the registered agent for BB Wings of Fayetteville LLC, formed in 2005; BB Wings LLC, formed in 2004; and BBE LLC, formed in 2001. Evans said these are personal LLCs for investments and have no employees.

His sister, Brooke Evans Mountain, lives with her husband in New York City, where she studied fashion design at the famed Parsons School of Design.

Evans says he has “plenty of contact” with his dad, who now lives in Florida. Vic Evans’ LinkedIn profile describes him as an independent financial services professional in the West Palm Beach area. The only work experience he lists is 13 years as chairman of the board at ANB Financial.