George Creates Legacy

Two of the three local startup banks announced this year have hundreds of investors. Gary George’s proposed Legacy National Bank has between 10 and 15.

The poultry magnate’s heavy hitters have bellied up to the teller window and laid down their scratch to get the new bank off the ground by the first quarter. Like the principal’s George’s Inc. poultry company, which had $425 million in 2003 revenue, the bank is set to be a Springdale institution.

So far in 2004, three groups announced plans to start new banks, one said it will relocate here from south Arkansas, three out-of-market banks plan new branches in the two-county area and two mergers/acquisitions by other outsiders will bring even more banks to the party.

“This is clearly a land-grab type of environment,” said Scott Alaniz, an analyst for Sandler O’Neill & Partners, a bank and thrift investment firm.

Alaniz keeps his eye on the Arkansas bank industry from his Atlanta office. He said a rush to a hot market is common in banking. No one wants to be the first, and no one wants to be the last, he said.

Future loan and deposit pricing will be indicators of how aggressively area banks are pursuing business, Alaniz said.

“The work is in the next five to six years as we see who is going to make money for their investors,” he said.

As of June 30, 2003, there were 21 banks doing business in Benton and Washington counties. By the beginning of 2004, there were 19, thanks to Bentonville’s Arvest Bank buyout of Superior FSB and First Security Bank’s acquisition of the First National Bank of Springdale.

Also as of that date, there were 142 brick-and-mortar offices competing for $4.7 billion in deposits in the same area, a number that is bound to have increased. The 2003 deposits were up 20 percent from $3.9 billion in 2000 with 127 offices, so the trend is upward.

If and when all the announced and new-to-the-market institutions are open for business, there will be 26 banks for consumers to choose from in the two-county area.

There are eight different banking institutions with a total of 25 offices in Springdale. Only one, United Bank, is chartered in that town, but it is a savings association, also known as a thrift, and technically not a bank.

Alaniz said it will be interesting to watch for a competitive reaction, such as existing banks ramping up their locations.

Arvest Bank, which holds 43 percent of the two-county market share, recently announced it will spend about $17 million on building new and renovating existing locations in Northwest Arkansas during the next 14 months.

Regions Bank is making ATM moves in Washington County and has mumbled about future branches. There’s also talk of other established banks beginning to expand their presence.

The Legacy

From the nondescript basement of George’s Inc. on Sept. 23, Don Gibson, Gary George and Patrick Swope unveiled tentative plans for their proposed bank. The basement has served as the group’s temporary headquarters while readying the mountain of paperwork necessary to apply for a new bank charter.

Gibson, future president and CEO of the bank, said the group will file applications with the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency around Oct. 1.

The first location, pending approval, is slated for 40th Street and West Sunset Avenue in Springdale, with a soon-to-follow location picked for Butterfield Coach Road and East Robinson Avenue in Springdale. New buildings at both locations will eventually house the banks, the group said.

“We look at ourselves as primarily getting started in the Springdale market,” Gibson said. “And then we’re going to grow from that market, and eventually we will be looking at the entire [Fayetteville-Springdale-Rogers metropolitan statistical area].”

The group was tightlipped about how much capital it’s raised to fund the fledgling venture, but George joked, “How about ‘plenty.'”

“Our ability to attract capital is not really an issue at our bank,” Gibson said.

Luther Guinn with the Arkansas State Bank Department said the minimum required to start a state-chartered bank in the Northwest Arkansas market is $5 million.

Legacy is applying for a national charter and may require more.

Joe Mills, president of Pinnacle Bank of Bentonville (a state chartered bank which will eventually relocate to Rogers), said his group of 145 investors raised about $15 million.

Gary Head, president of the proposed Signature Bank of Arkansas, said his institution will have more than 300 investors and more than enough capital.

Gibson said he has a personal investment in Legacy.

Legacy’s board of directors are: Gary George, CEO of George’s Inc.; Gene George, chairman of George’s Inc.; Don Gibson, former state president of Bank of America; Dorothy Hanby, CPA; Steve Stafford, president and CEO of The First National Bank in Green Forest; Bob Shaw, former chairman of Willis Shaw Express; Loyd Swope, former president and CEO of the Bank of Lincoln; and Patrick Swope, former vice president of Fayetteville/Rogers Bank of America.

Gibson and Swope worked for the last several years in Bank of America’s Wealth Management Division, but both of them have roots in community banking. George said that makes the team well rounded.

Bank Buddies

Stafford and George were college roommates at the University of Arkansas. George said he admires how Stafford runs FNB in Green Forest, and it was a logical move to include him in Legacy.

FNB in Green Forest has $298 million in assets and operates 7 offices in Boone, Carroll and Madison counties.

For 26 years, Gary George, and for 35 years, Gene George, served as directors for the First National Bank of Springdale. Gary George has not served on that board since earlier this year.

While on vacation in Arizona, Gibson got a phone call from Gary George. Gary George said he and Stafford had thought a bank project through and wanted Gibson to join. They said they wanted to do something special in banking for their kids and their grandkids, Gibson said.

“You know, reel me in and put me on the trotline because I was ready to play,” Gibson said.

It only took about 10 minutes to convince Gibson to join the cause, he said.

The genesis of the Legacy name started there, the group said, but it is intended to be a banking legacy left for all of Northwest Arkansas, a true community bank, they said.

“You get a chance to have a lot of tomatoes, but this is going to be a homegrown one,” Gibson said.