NW Arkansas Institutions Selling Financial Mix

The Gramm-Leach-Bliley Act, referred to in the industry as “GLIBA” or the “Financial Modernization Act,” has caused concern about protecting the privacy of customers’ financial or even health information.

States are required to issue GLIBA privacy regulations by July 1, 2002, but Arkansas has already established its own policy. And that has helped several northwest Arkansas institutions offer or direct customers to insurance alternatives and asset management services.

Farm Bureau Insurance Cos. and State Farm Insurance are aggressive on banking products. Chet Caldwell, managing general agent for American National Insurance Cos. in northwest Arkansas, operates Caldwell & Associates in Fayetteville. His company is doing well with everything from money market accounts to mutual funds.

Chris Weavers, president of Community Bank in Fayetteville, said his firm is still exploring what it will do. He wants to give customers what they want, but small banks like his, which has $200 million in assets, must watch margins closely to compete.

Weavers said in addition to an over-banked market, credit unions’ federal tax-free status and favorable rates from lenders like GMAC make it tough. The key, he said, is his bank’s 70 employees staying efficient and maintaining strong customer relationships.

“A majority of our customers want to come in, get a handshake and a Coke and tell you about their grandkids and church,” Weavers said.

Jeff Dunn, president of Bank of Arkansas N.A., sees the blurring of financial sector lines a little differently. He doesn’t shun the mass consumer market, but with a $9.7 billion holding company, Bank of Arkansas focuses on commercial accounts.

So he sees GLIBA as a chance to compliment Bank of Arkansas’ commercial products like online banking with wire transfer capabilities, sweep accounts, control disbursement and international services.

Already the bank’s 401K portfolio has grown to 20 local companies, and Bank of Arkansas has an in-house brokerage and insurance capabilities through its parent company.

“If you’re a small business and you need a $200,000 loan, you can get that from 25 banks in this market,” Dunn said. “But if you need $5 million to $30 million and you want some cash management products, we can do that better than anyone.”

Dick Bove, a banking analyst at Raymond James and Associates in St. Petersburg, Fla., said commercial service will certainly be a major selling point for Regions Bank’s expanded corporate family, which now includes Rebsamen Insurance of Little Rock and will soon include Morgan Keegan of Memphis.

For instance, he said, the company’s ability to lend clients the use of its balance sheet, by backing up commercial paper or financial offers, is a luxury for both parties.

The possibilities, Bove said, are nearly limitless.

“Regions isn’t just adding products,” Bove said. “They’re looking to increase profits by adding to their distribution system more products and services with higher returns.”