Springdale Bank Aggressively Slices off a Bigger Piece of Pie

Managing relationships has enabled First National Bank of Springdale to manage more money.

Among banks that had at least $150 million in deposits during 2001, it was the two-county area’s biggest winner for increasing its share of the local deposits market.

First National grew its deposits in Washington County, which contains all four of its locations, 16.78 percent from more than $260 million through June 30, 2000, to about $301.7 million through June 30, 2001.

That’s according to the Federal Deposit Insurance Corp., which recently made the comparison available.

Jerry Reinert, president & CEO of First National Bank of Springdale, said a strategy shift over the last three to four years has made the difference. Instead of the bank’s officers holding out their hands for deposits, Reinert said they’re using them to dial the numbers of prospective clients.

“It’s taken time for us to cultivate our new strategy,” Reinert said. “But we’ve gotten a lot more aggressive. We have been actively calling our customers and potential customers to let them know we’re interested in taking care of their business.

“We have learned that you don’t always make a sale on the first call, but we’ve been persistent and let people know we are committed to customer service.”

First National is owned by First Tennessee National Corp., which bought the bank in 1995.

Reinert said the bank’s executives strive to be “relationship managers,” and that First National has made a concerted effort to learn more about their commercial clients’ businesses and what their needs might be. He said having employees who have become a resource by learning about their clients’ is starting to pay dividends.

First National grew its share of the Washington County deposit market by 6.78 percent from 13.87 percent in 2000 to 14.81 percent for last year. Reinert said his firm will probably close out calendar 2001 with $317 million in deposits, so he’s already ahead of the curve for the cycle ended June 2002.

A strong reputation in public funds, furthered by its deep pockets, helped First National land the Springdale public school system’s business for a $7 million bond issue last year. The proceeds from the bonds are deposited with First National until the notes are paid off.

And the potential for even more related growth is there because the district hopes to complete $100 million in building projects during the next decade.

“I have been very satisfied with the service that First National has given us,” said Greg Murry, the district’s assistant superintendent for business affairs. “They have been very helpful in making sure that we’ve got the very best rates that we can possibly have.”

Reinert said First National has always been competitive when it comes to rates for public funds. The bank, chartered for its current form in 1907, has many of the market’s newer institutions at a disadvantage. Because the FDIC only guarantees individual loans up to $100,000, banks making public loans must back up any amount above that level by pledging securities from their own portfolios.

First National’s investment portfolio was about $301.7 million through June 30. The bank’s loan portfolio jumped 12 percent from $155 million for calendar 2000 to about $173 million for 2001.

How Others Fared

The largest losses of market share in Benton County were felt by Regions Bank (down 13.86 percent) and Arkansas National Bank (down 13.86 percent). Bank of America saw the biggest decline in the Washington County market by losing 11.1 percent.

Jerry Vest, president and CEO of Alabama-based Regions’ Northwest Arkansas operations, said 2001’s interest rate environment and thin margins contributed to his bank’s loss of deposit share.

“We’ve had historical lows for interest rates, and a lot of financial institutions that were more aggressive than we were from a CD-pricing standpoint,” Vest said. “Banks that are new to the area and trying to grow were trying to grow their shares by paying higher rates … but money is a commodity.

“We have to maintain a profitable margin between the cost of the goods that we buy as inventory and the money that we loan out. We’re going to grow profitably as we grow.”

Arkansas National Bank also lost 12.02 percent of the deposit pie in Washington County. But it’s deposits for five locations there (about $61.2 million) are significantly lower than then the more than $238.3 million in deposits it holds through five Benton County branches.

Of the $4.2 billion in deposits at 130 bank locations in the two-county area, more than $2.2 billion of it is held by Arvest Bank Group Inc. members. Among Arvest’s institutions, Arvest Bank in Rogers had the best year with a 4.17 percent increase in its share of the Benton County market.

“We were in a good market in Rogers, which is growing,” said Rob Brothers, Arvest’s president in Rogers. “We just continued to do a good job of meeting or exceeding our customers’ expectations. This was also the first full year of operation for our new Village on the Creeks branch, which is a significant full-service location.

“We expected to see some increase in activity as a result of that. We’re also going to have a new branch by mid-2002 in the New Hope Road area near the new Wal-Mart Neighborhood Market.”

Bank of Rogers, a big winner among the mid-sized local banks with an 11.59 percent increase in market share, was apparently the beneficiary of being at the right place at the right time. Its president, Dick McLelland, said he had to curtail growth in the fourth quarter to offset a third quarter boom.

“We weren’t doing anything special as far as CD rates or marketing,” McLelland said. “We were competitive, but we really just grew out of an unusual influx of money during the third quarter. I can’t really put my finger on what that was, but it just happened. Hopefully, it’s at least partly a result of us taking care of our people.”

McLelland said deposits for calendar 2001 were about $82 million, down slightly from the the $83 million tally at the end of the third quarter. The bank simply realized it was growing quicker than expected, and stopped accepting significant deposits toward the end of the year.

Market newcomer First Security Bank, which is based in Searcy but has been focused on a Northwest Arkansas expansion, was impressive for 2001. It showed a 280.09 percent increase in deposits from about $15.9 million to $60.4 million in Benton County. It made an 80.21 percent improvement in Washington County from about $53 million to $95.5 million.

Reinert said most banks should fare well for calendar 2001. After all, low interest rates offered institutions the opportunity to earn additional or repeat business.

“People in general are putting more money in the bank right now,” Reinert said. “They’re looking for something to invest in. Maybe they pulled money out of the stock market because of its drop and they don’t know where else to put it. But [2001] should wind up being a growth year for everyone.”