David Banks, the former president and CEO of what was for many years Fort Smith-based Beverly Enterprises, has died at his San Diego residence. He was 76.
Banks, who would reside in and around Fayetteville in his retirement years, was appointed to the Board of Leisure Lodges in 1975 as a representative for Little Rock-based Stephens Inc.
Stephens would eventually acquire and merge Leisure Lodges and Beverly Enterprises in a deal completed in late 1977. At the time, the two companies owned about 130 nursing homes and various other medical-related companies around the U.S.
Hostile takeover attempts of the emerging company were thwarted by what was then an innovative “blocking preferred” technique used by Stephens Inc. The technique saw Stephens make an investment for “preferred stock” in Beverly Enterprises that gave Stephens the ability to block hostile takeover attempts. (Link here for more on Stephens’ use of preferred stock.)
Following the blocking protection provided by Stephens Inc., Banks and other officers at the company grew the company from more than $150 million in revenue to more than $3 billion in annual revenue.
Banks quickly rose through the ranks to become president and CEO of the company. He would also become chairman of the Beverly Board of Directors, a position he held until Dec. 31, 2001.
“He is the most wonderful man I ever met in my live. He was a straight shooter, as we would say in Arkansas,” said Bobby Stephens, a former top Beverly executive who worked with Banks for about 30 years. “David was a fair and compassionate man, and he understood the nursing home business from a quality standpoint. … But his biggest trait was financial. He was able to use that (finance) knowledge and really grow the company.”
Banks oversaw a company that would grow from less than 200 nursing home facilities to more than 1,350 by 1990. Also, the company expanded into operations that included pharmacy, home health and therapy. He acquired Pharmacy Corporation of America, which was essentially a mail order pharmacy and eventually sold it more about $500 million, Stephens explained.
Stephens – no relation to the family who owns Stephens Inc. – said during “the many jet rides around the country,” Banks stayed connected to his family.
“He was a good family man,” Stephens said when asked what people may not have known about Banks. “He called his children every night when he was out of town if he could. That was important to him.”
CHANGING TIMES, LEGAL TROUBLES
Beginning in the early 1990s, an increase in federal regulations, a reduction in federal healthcare reimbursements and litigation involving nursing home operations forced consolidation and bankruptcy in the nursing home sector. Beverly, with Banks at the helm, was one of the few companies to survive the 1990s and continued to be a major presence in the industry beyond 2000. In fact, Banks was instrumental in the company building a modern, five-story, 318,000-square-foot new corporate headquarters building in Fort Smith.
In the late 1990s and early 2000s, Banks began to pare back the company he helped build up. Beverly sold facilities – often on a statewide level – until the company around 400 nursing homes and just a few ancillary businesses.
“The way we looked at that was that we had the best 400 nursing homes in the United States,” Bobby Stephens explained.
Banks was instrumental in hiring William R. “Bill” Floyd to be the CEO of Beverly in early 2001. Beverly became a private company in 2006 following a $1.8 billion buyout by San Francisco-based Fillmore Capital Partners. The equity firm changed the name to Golden Living, and initially kept the headquarters in Fort Smith. In March 2011, officials with Golden Living publicly announced that the company’s headquarters would move to Dallas, with the Fort Smith building to remain in operation as an administrative center.
Doug Babb, now the CEO of Cooper Clinic, was hired by Banks in early 2000 to be the chief legal officer for a company beleaguered by a growing number of legal problems related to federal regulations and litigation related to allegations of patient mistreatment.
“What I learned, was that David Banks was a Santa Claus without a beard. He was a marvelous entrepreneur who put together a great business … but it had terrible legal troubles,” Babb said in a Sunday evening interview.
Babb said he quickly learned that Banks was not only a good business man, but had deep empathy for employees and customers.
“David was a loving, wonderful human being who cared about people. He was so decent. … He was about giving everybody the benefit of the doubt,” Babb said. “He would also want to be remembered as a great human being who cared more about people than just a bottom line.”
Babb said in his 35-plus years of working with and observing CEOs, Banks was unique.
“In my opinion, I would put David Banks in the top of the list of all the CEOs I ever worked with,” Babb said.
Stephens said Banks also loved, in no particular order, fly fishing, the University of Arkansas, a good cigar and a good glass of wine.
“I’ve lost a great friend. I really have. It’s a great loss to many of us,” Stephens said.
The biggest lesson Stephens said he learned in all his years working with Banks was to be upfront with all situations.
“Always tell your boss the truth; just lay it out on the table,” Stephens said.
Fort Smith Mayor Sandy Sanders said Banks was good for Fort Smith.
“David was instrumental in bringing what was then Beverly Enterprises to Fort Smith. He was a strong supporter of Fort Smith and instrumental in bringing jobs to Fort Smith. I hate to hear that we lost him,” Sanders said.