Last week’s news that Citizens Bank of Batesville is buying Parkway Bank of Rogers should surprise exactly no one who has been watching Citizens since Phil Baldwin was hired as CEO two years ago.

Citizens opened a loan production office in Fayetteville last fall and then expanded to a full-service branch over the summer.

When Baldwin hired, en masse, 10 Hot Springs staffers away from Southern Bancorp Bank last December, Citizens didn’t even have a branch in the Spa City. By April it had two.

Whispers asked Baldwin how that Hot Springs adventure was working out.

“We thought we might do $40 million in loans there this year,” he said. “We had almost $50 million by June. We’re running about twice what we thought we would do in that market.”

As of June 30, Citizens’ two Hot Springs branches, one on Central Avenue near the Hot Springs Mall and one on Airport Road, had a total of $1.6 million in deposits.

Relyance Bank of Pine Bluff is gearing up for its third Little Rock branch.

“We’re shooting for the end of January, first of February,” CEO Chuck Morgan told Whispers last week.

Relyance bought the 2,656-SF branch at 14220 Cantrell Road from Simmons First National Bank of Pine Bluff in August.

Purchase price: $985,000.

Two branch staffers have been hired, and Morgan is still looking for a third.

Relyance entered Pulaski County in September 2014 by buying the former Simmons branch at 11000 Financial Centre Parkway for $1.2 million.

Then in June, Relyance opened a branch in leased space at 1801 N. Fillmore St. in the Heights, a former Regions Bank location.

Relyance, formerly Pine Bluff National Bank, absorbed its sister charter, Hot Springs Bank & Trust, at the end of 2013. It currently has 14 branches: five in Pine Bluff, three in Hot Springs, two in Little Rock and one each in White Hall, Redfield, Hot Springs Village and Star City.

Assets topped $560 million as of June 30, up nearly 10 percent since the end of 2014. Relyance reported net income of just over $5 million in 2014 and just under $2 million for the first half of 2015.

Bank of the Ozarks' record-setting deal to buy Community & Southern Bank of Atlanta will mean the bank George Gleason built will have almost as many branches in Georgia as it has in Arkansas.

The company announced the all-stock deal late Monday: just shy of $800 million for CSB's $4.4 billion in assets. It is the single biggest acquisition by an Arkansas bank in terms of both purchase price and assets acquired, according to Bank of the Ozarks.

Bank of the Ozarks, with 14 acquisitions under its belt since 2010, will grow its assets — $9.3 billion as of Sept. 30 — by nearly 50 percent in a single gulp. Already the second-largest bank headquartered in Arkansas, the addition of CSB will move Bank of the Ozarks away from the pack of also-rans and into striking distance of Arvest Bank of Fayetteville, which had assets of $15.4 billion as of June 30.

And privately held CSB is profitable, earning $13.2 million in 2014 and $10.8 million in the first half of 2015. Bank of the Ozarks, one of the most efficient profit-generators in the country, earned $125 million last year and $89.4 million in the first half of this year.

The publicly traded Little Rock bank (Nasdaq: OZRK) already has 28 branches in Georgia, the result of aggressive acquisition of failing banks along the East Coast during the financial crisis. With the addition of CSB's network, Bank of the Ozarks will have 75 Georgia branches compared with 80 in Arkansas.

"This combination is a hand in glove fit," CEO Gleason said in a news release announcing the deal. "The synergies created by our highly complementary combined network of 75 Georgia banking offices, with virtually no overlap, will give us a powerful presence in Georgia, providing customers with great access and convenience."

CSB also has a branch in Jacksonville, Florida. Bank of the Ozarks already has 10 Florida branches, but none in what Gleason called the "favorable Jacksonville market."

With the purchase, Bank of the Ozarks will also get Pat Frawley, a former bank regulator who created CSB in 2010 and began rolling up failing banks in Georgia, where 90 banks have failed in the past seven years. Frawley will become chief executive of Bank of the Ozarks's Georgia office when the deal is completed.

No target date for completing the acquisition was given.

Arkansas’ seasonally adjusted unemployment rate dropped two-tenths of percentage point, from 5.4 percent in August to 5.2 percent in September.

The Arkansas Department of Workforce Services said Tuesday that Arkansas’ civilian labor force declined by 1,400 last month, the result of 2,500 fewer unemployed and 1,100 more employed Arkansans. The U.S. jobless rate remained stable at 5.1 percent in September.

Arkansas’ nonfarm payroll employment rose by 12,300 in September to total 1,219,400. The state reported 1.7 percent year-over-year growth in non-farm payroll, just behind the 1.9 percent growth posted by the U.S. as a whole, the report said.

Five major industry sectors added jobs from August to September, which the department said offset declines in six sectors. Among the sectors reporting gains: 

Government increased by 12,900. All gains occurred in local (7,800) and state (5,200) government, due to public school employment.

Jobs in educational and health services rose by 2,000 related to seasonal growth in educational services (1,600).

Construction added 1,100 jobs, with hiring reported in both heavy and civil engineering and in construction of buildings.

Kathy Deck, director of the Sam M. Walton College’s Center for Business and Economic Research at the University of Arkansas, said that construction is by far the state’s soundest sector.

"On a percentage basis, obviously construction has the most significant job growth," Deck said. "Arkansas is very, very strong in construction."

Trade, transportation and utilities dropped by 1,900, with most of the loss occurring in retail trade (1,400), an expected decline between shopping seasons.

"Transportation utilities and wholesale trade are likely to be weak through the end of the year," Deck said. But she said she would be watching the final months of the year to see whether seasonal hiring will offset some of the supply.

Compared to September 2014, nonfarm payroll jobs in Arkansas have increased by 20,300. Seven major industries posted growth, while employment in four sectors decreased. Among the sectors adding jobs:

Construction added 7,800 jobs, mostly in specialty trade contractors (5,800). 

Employment in educational and health services rose by 5,600. 

Gains in health care and social assistance (6,300) offset losses in educational services (700). 

Professional and business services added 5,400 jobs.

Jobs in leisure and hospitality increased by 4,100, largely in food services (3,600). 

Manufacturing posted the largest decline. A majority of the loss was reported in durable goods manufacturing, down by 2,100. 

But overall, Deck believes that "Arkansas looks to be growing at a good clip."

Simmons First National Corp. of Pine Bluff on Thursday reported third quarter net income of $21.6 million, up 145 percent from $8.8 million in the same quarter last year.

The company reported earnings of 72 cents per share, up from 52 cents last year.

On a "core earnings" basis, the company reported third-quarter net income of $25.6 million, or 85 cents per share, up from $10.7 million, or 63 cents per share.

"We continue to make good progress with our efficiency initiatives, both in revenue enhancement and in expense control," George A. Makris, chairman and CEO, said in a news release. "Our core efficiency ratio was 57.5 percent for the quarter and our core [return on assets] was 1.33 percent."

As of Sept. 30, total loans were $4.9 billion, up 76 percent from the same period in 2014. Deposits were $6.1 billion, up 56 percent from the same period in 2014. 

Net interest income was $78.7 million, up 88 percent from the same period last year. Non-interest income was $23.5 million, up $7.5 million from the same time last year.

Non-interest expense was $67.9 million, up $23.6 million from the same period in 2014. Included in the quarter were $1.2 million of "merger-related and branch right-sizing expenses."

First National Bancorp Inc. of Green Forest (Carroll County) has reached an agreement to expand its north Arkansas footprint eastward by acquiring a $109 million-asset bank.

Terms of the deal for Twin Lakes Community Bank of Flippin (Marion County), announced Friday morning, weren't disclosed. Plans call for the bank to continue operating under the Twin Lakes name.

The purchase is expected to close by year's end, subject to regulatory approval.

First National is the parent company of $430 million-asset Anstaff Bank, formerly First National Bank of Green Forest. Twin Lakes is owned by First National Corp. of Wynne, which also owns First National Bank of Wynne.

Anstaff operates eight full-service branches in Carroll, Boone, Madison and Newton counties. It earned $5.2 million in 2014 and posted net income of $2.3 million in the first six months of 2015. Anstaff had $46.4 milion in equity capital as of June 30.

Twin Lakes operates three full-service branches in Baxter and Marion counties. It reported net income of $630,000 in 2014 and of $695,000 in the first half of 2015. Twin Lakes had $10.5 million in equity capital as of June 30.

"It was a perfect fit," said Steve Stafford, chairman and CEO of Anstaff. "We like the market they’re in. It’s a growing market."

Stafford said all Twin Lakes employees, including CEO Jerry Cunningham, will be retained. Stafford said he contacted Cunningham in the spring to talk about a possible acquisition. The deal was agreed upon on Wednesday, Stafford said.

Anstaff Bank was renamed in July 2014 in preparation for expansion because Stafford said small community banks had to either expand or be acquired because of the growing cost of regulations. Stafford said the bank chose a non-geographical name for that reason, and because the Anderson and Stafford families had run the bank since its founding in 1931.

John “Stephen” Tipton was recently promoted to chief operating officer of Home BancShares Inc. of Conway and its subsidiary, Centennial Bank. Tipton previously served as a regional vice president for Centennial. A graduate of the University of Arkansas at Fayetteville, he began his banking career in 2005 and joined Centennial in 2006.

See more of this week's Movers & Shakers, and submit your own announcement at ArkansasBusiness.com/Movers.

Pete Yuan, in his role as president of IberiaBank’s Arkansas region, also is responsible for the bank’s title business, operated under Lender’s Title, United Title and American Abstract.

Yuan, who has 28 years of experience in the financial services industry, began his career in 1987 with NationsBank in Dallas and went on to serve a number of banks. In 2005, he joined IberiaBank as president of its headquarters market in Lafayette. In 2010, Yuan moved to Little Rock to assume responsibility for the company’s Arkansas markets and title company. He serves on the boards of a number of area organizations and nonprofits, including the Little Rock Regional Chamber of Commerce.

Yuan is a 1986 graduate of the University of Texas at Arlington with a BBA in finance. He’s a recipient of the university’s Outstanding Alumni Award, given by the school’s Finance Society.

The post-2008 regulatory environment continues to evolve in the world of finance. What are the most significant changes that have arrived or are on the way?

By far the most significant change has been the Dodd-Frank legislation. Much has already been said and written about this topic, so I will not get into it again. What I will say is this legislation has fundamentally changed the banking industry, and not all of that change has resulted in benefits for the consumer. The next biggest challenges for banks are related to new accounting rules that are coming over the next few years.

IberiaBank became a player in Arkansas through tandem acquisitions in early 2007. What are some highlights since entering the market?

Arkansas was the first market we entered outside of Louisiana. Since that time, we have steadily grown our presence in each of the markets we serve in the state — central, northeast and northwest Arkansas. What I am most pleased with is the way in which we have conducted our business. We do not follow the crowd and work very hard to take care of the clients we want to bank. Today, Arkansas is a strong contributor to our company and in many performance metrics is the leader within our company’s peer markets. Our employees across Arkansas made this possible, and I am very proud of their efforts.

If you could change one thing about the banking business, what would it be?

The regulatory environment in which banks operate today is the toughest I have seen in my career. The financial crises several years ago confirmed that more regulation was indeed needed in our industry, but this oversight has now evolved to the point where it is hindering the way well-run banks do business.

On a lighter note, another change would be in the public’s perception that bankers keep “banker’s hours.” I chuckle every time I hear it.

How would you describe the corporate culture or personality of IberiaBank?

I am pretty proud of our culture. Our long record of success (our company is 128 years old) has been based on an entrepreneurial approach in which decisions are largely made at the local market level. We believe this allows us to remain nimble and make smarter decisions. We are also a very community-centric company that cares deeply about the communities in which we do business. The consistency with which we have retained this culture has enabled us to attract both quality clients and top banker talent.

Mistakes are said to deliver some of the most meaningful lessons. What was your most important business mistake?

Thinking that I am the smartest person in the room. I have learned through my career that there are always multiple perspectives to everything. My job requires me to make good decisions. To do this well, it is important to not be overly confident in my own opinions.

Johnny Allison considered the first-time quarterly posting of a sub-40 percent efficiency ratio at Home BancShares Inc. worthy of some celebratory skylarking and corporate levity.

About 20 minutes before the third-quarter conference call on Oct. 15, the colorful chairman left the Conway headquarters in search of theatrical props.

“He hopped in his car and drove over to Walgreens and came back with some New Year’s Eve-looking horns,” said Donna Townsell, senior executive vice president of corporate efficiencies for Home BancShares and its Centennial Bank.

The horns were tooted instead of uttering the word “record” during the conference call. The substitution was made as a nod to some analyst chiding of Allison for using “record” too frequently when describing the company’s fiscal accomplishments.

“We got feedback that the horns kind of shook them up,” said Townsell, Allison’s sister-in-law. “So we’ll go back to the word ‘record.’”

It’s difficult to get your head around big data. In fact, it might be impossible, even with today’s superfast computer processors and scores of scary-smart programmers trying to do just that.

“I tell people, ‘You think you know how big big data is until you see bigger data,’” said Casey Kinsey, the president and founder of Lofty Labs, a Web development consultancy company in Fayetteville. “There’s always some bigger set of data.”

The Northwest Arkansas Technology Council recently held a panel discussion on big data, and Kinsey was one of the featured panelists. The panel discussion was about how companies can use information gleaned from the production of so much data in today’s world.

Big data has always existed, but slow computers — computers fast enough to analyze millions and millions of units of data were prohibitively expensive — prevented a lot of over-the-counter analysis of the data. Now, insight gained from big data is a fact of business life.

“Every time you visit a website you have some cookies stored that have 10 to 20 data points about you,” Kinsey said. “That data can be analyzed. It’s all limited by how much data you can crunch through a computer. In a decade I would imagine we will be able to handle a vast amount of data.”

Banking on Big Data

Properly analyzing big data information is big business for the banking and finance industries. A lot of financial information is, of course, cold hard numbers. But in today’s social media world, there are all kinds of electronic data — what Rick McGraw calls “unstructured data” such as Twitter postings and blog entries.

McGraw, the CEO of Black Oak Analytics in Little Rock, said so many transactions now are done remotely that face-to-face interactions with customers are becoming rarer. That makes understanding what customers think — through their social media proclamations — all the more important.

“Previously, the banking systems have been designed to handle structured data where there are very precise columns and rows and everything lines up very nicely,” McGraw said. “How do you know how best to serve your customer? You do it by analyzing the data that you have available to you.”

Todd Greer of SpotRight in Little Rock, a data analytics and marketing firm, said big data gives banks a chance to compete for customers in a variety of ways. Knowing a customer’s profile — age, marital status, children, etc. — can let a bank better customize its website when the customer visits it online, or market specific products to customers who are more likely to be interested in those products.

So if you recently have had a child and have blogged about it or shopped online for diapers, then a bank can likely develop your profile with those facts in mind. “Just across marketing in general, you want to target your message for a particular audience,” Greer said. “You could just do broadcast medium with the same message for everybody, but statistics show if you make it more relevant to me, I’m more likely to pay attention and more likely to do something about it.

“It’s because they’ve made an attempt to profile you as a consumer and tailor a message that is more fitting for you. Obviously, it’s a lot of guesswork. They try to put you in big bucket categories of parents of young children or things like that. There is enough data out there to get pretty precise.”

Greer said the other big target that big data helps banks with is risk management with new customers. Those customers fall into two categories — someone new to credit, such as college students, and someone with bad credit history but not necessarily a bad risk currently.

“There’s a race for financial services to find those two categories of credit risk,” Greer said. “How do you find those and go after those types? You want more customers who look like your best customers, and you don’t want to waste your time on customers who look like your worst customers or those who aren’t likely to be your customers.”

Kinsey’s Lofty Labs works with MondoBrain of Virginia, a company that uses algorithms and data analytics in business modeling and predictive analysis. MondoBrain collected data from a host of banks related to lending and then analyzed it to determine how to categorize prospective applicants according to risk.

“For people in this age range, what is the ideal salary range that predicts 100 percent of the time that they will never miss a payment?” Kinsey asked, referring to a sample result of the analysis. “Credit management is risk mitigation, which in its way is a type of gambling. You’re hedging. What’s our risk? We’re trying to hedge our bets, so for every loss we have, we have a big enough gain that tends to justify the means.”

Discovering Trends

Ryan Frazier, CEO of DataRank in Fayetteville, said his company uses social media postings to track consumer spending. That data can give a real-time prediction of a company’s performance — rather than waiting for its quarterly earnings report — through comparing how many people are checking in at a store or blogging about a bank product.

“If you have more real-time flow of data, that gives you a better idea of trends,” Frazier said. “It can give you an indication if they are going to be earning and, if so, by how much. You can see if more or less people are checking in this quarter versus last quarter or this quarter versus the same quarter last year. It can give you an idea directionally of how they are performing.”

McGraw said shopkeepers used to know their customers because they talked face-to-face during transactions in the store. Now, many purchases are online or otherwise impersonal, so businesses learn about their customers through social media.

McGraw said Black Oak works with its clients to better handle the interaction and collection of information from customers. It’s important that people understand they control their data and how to share it.

“There is a creepiness factor in that,” McGraw said. “People don’t like to feel like they’re being spied on. Transparency in data use [is important] because you can’t underestimate the creepiness factor in all of this.”

Greer stressed that data mining is done with consumer privacy rights protected.

“Every point in life a potential consumer touches some area, and there is somebody who is hoping to interact with that consumer,” Greer said. “It’s way more precise now than it ever has been, and it will continue to be more and more precise as people get better analytics. As things get more sophisticated, so does the marketing and targeting.”

On paper, someone got an automotive bargain at a public auction two months ago.

However, a high bid of $100 for an SUV once owned by alleged serial fraudster John Rogers is now in controversy.

First Arkansas Bank & Trust of Jacksonville, which had the 2003 GMC Yukon seized on Aug. 21, is seeking to undo a sale conducted by the Pulaski County Sheriff.

Procedural grounds are cited. At the top of the list is the lack of notice to the bank, which wouldn’t have let the vehicle go for such a low price.

While the court sorts through this, the Yukon’s owner of record for now remains Belencia Ellington of North Little Rock.

This week, Arkansas Business takes a deep dive into bank deposit market share in the 19 counties with the largest total deposits.

If you aren’t a bank geek, it might make your eyes cross.

But we did note this: First Security Bank, the Searcy bank owned by Reynie Rutledge, overtook publicly traded Centennial Bank in Faulkner County — Centennial’s home county.

Not by much, mind you; less than $10 million in a countywide market of almost $1.8 billion. But First Security grew its Faulkner County deposits by 7 percent in the year that ended June 30, while Centennial lost a half of a percent.

“We have a good group in Conway,” Rutledge told Whispers.

Bank deposits in Arkansas grew by 5 percent in the 12 months that ended June 30, according to the annual summary of deposits released Sept. 28 by the Federal Deposit Insurance Corp., a pace somewhat slower than the 5.4 percent growth in bank deposits nationally.

Total deposits statewide reached a record of $56.5 billion even as the number of separate bank charters and branch locations continued to decline.

Arvest Bank of Fayetteville, which achieved the top position in the state as measured by deposits in 2007, continued to stretch its lead by adding almost $523 million in deposits in a single year. Only 18 other banks in the state have that much in total deposits.

But an even bigger gain — $785 million — pushed Bank of America, the North Carolina powerhouse, from the fourth position in Arkansas in mid-2014 to No. 2 this year. BOA leapfrogged over Regions Bank of Birmingham, Alabama, and First Security Bank of Searcy. Despite a 4 percent drop in deposits, Regions retained a small lead on First Security, which continued to make deposit gains.

Bank of the Ozarks also experienced huge in-state deposit growth: $605 million, up almost 22 percent — and all of that and more was gained at the publicly traded bank’s main office in Little Rock.

Tyler Vance, chief operating officer for Bank of the Ozarks, said the bank has been adding thousands of checking accounts in Arkansas. But the whopping growth in deposits at the main office has more to do with winning bids on public deposits from state agencies and municipalities across the state, he said.

“With loan growth and additional loans being made, deposits tend to follow,” Vance told Arkansas Business shortly after the summary of deposits was released.

The FDIC’s summary of deposits is an accounting taken at midyear by the government agency that insures bank deposits. It is not a holistic report card on the health of a bank or of the banking industry — deposits are, after all, a liability for banks. But the summary of deposits is the only official report that provides Arkansas-specific trend data for multistate banks like Arvest, Regions and Bank of America.

More Money, Fewer Banks

Thanks to the acquisition of Delta Trust & Bank a year ago and the merger with the last of its sister charters in El Dorado, Russellville and Lake Village, Simmons First National Bank of Pine Bluff moved up a spot to No. 5, pushing Centennial Bank of Conway to No. 6. Both actually saw slight losses in deposits inside Arkansas while growing total deposits through acquisitions outside the state.

Simmons contributed to the contraction in the number of separate bank charters, both in-state and out-of-state, that operated in Arkansas: 129 as of June 30, down from 137 a year earlier. The number of bank offices continued a post-recession contraction, down by 23 to 1,365.

The bank now known as Bear State Bank also soaked up two charters in the year between June 30, 2014, and June 30, 2015. Its holding company — now Bear State Financial Inc., formerly First Federal Bancshares of Arkansas — traditionally operated a thrift at Harrison called First Federal Bank. In early 2014, Bear State Financial acquired First National Bank of Hot Springs and Heritage Bank of Jonesboro, and the three were combined on Feb. 13 into the Hot Springs charter. The combined bank was simultaneously renamed.

Also disappearing from the list of banks doing business in Arkansas were Decatur State Bank and 1st Bank of Texarkana, Texas.

Decatur State was collapsed into Grand Savings Bank of Grove, Oklahoma, on Dec. 29. Both Decatur State and Grand Savings Bank were owned by the Peterson Holding Co. of Decatur, and were brought back together by an investment group based in Oklahoma but dominated by Arkansas investors. Grand Bancorp Inc. bought Grand Savings Bank for $21.8 million in April 2013 and then paid $6 million for Decatur State.

1st Bank, which operated six branches in Arkansas, was acquired by Farmers Bank & Trust of Magnolia in January for $31.8 million.

Only one new bank entered the state in the 12 months ended June 30: Armstrong Bank of Muskogee, Oklahoma, which acquired Benefit Bank of Fort Smith on May 23, less than a year after Benefit converted from a thrift charter to a state-chartered commercial bank. Armstrong’s holding company, Ironhorse Financial Group Inc., paid $32.2 million in cash for Benefit Bank. Armstrong is still operating Benefit’s four Fort Smith branches but has closed a Van Buren branch, according to the FDIC.

Pending Deals

Two more Arkansas bank deals are pending: Farmers & Merchants Bank of Stuttgart’s $42.3 million cash purchase of the Bank of Fayetteville, which is scheduled to close on Nov. 30, and Citizens Bank of Batesville’s acquisition of Parkway Bank of Rogers, expected to close by the end of the year. No terms of that deal have been made public.

Mary Beth Brooks, president and CEO of the Bank of Fayetteville, confirmed last week what she hinted at when the F&M deal was announced in July: She won’t be staying on.

“I have had some really intriguing offers but I do not want to seriously consider anything until I have time to clear my head,” Brooks wrote in an email. “Unless I have a complete change of heart, I think I have had about as much fun as I can stand in the banking business.”

Bob Taylor, president and CEO of Parkway Bank and current president of the Arkansas Bankers Association, will become Citizens Bank’s regional CEO in northwest Arkansas and executive credit officer for the entire bank.

The Arkansas Influence

Nine Arkansas banks have branches out of state, and four of them are big enough to be important players in other states.

• Arvest Bank, No. 1 in Arkansas with almost $7.2 billion in in-state deposits representing 12.67 percent of the state’s total deposits, is also No. 4 in Oklahoma ($4.6 billion, 5.56 percent) and No. 20 in Missouri ($1.17 billion, 0.75 percent).

• Simmons First National Bank, No. 5 in Arkansas ($3.53 billion, 6.25 percent) is now the 12th-largest bank in Tennessee as ranked by deposits ($1.5 billion, 1.18 percent), thanks to its purchase of First State Bank of Union City. It is also No. 23 in Missouri with $1 billion in deposits there.

• Centennial Bank, No. 6 in Arkansas ($3.45 billion, 6.11 percent), was No. 31 in Florida with $2.2 billion in deposits as of June 30 (0.43 percent of the statewide market). Since then, Centennial’s publicly traded parent company, Home BancShares Inc., has completed the purchase of Bay Cities Bank of Tampa. When its $471.5 million in deposits are rolled into Centennial, the Conway bank could crack the top 25 in Florida.

• Bank of the Ozarks, No. 7 in Arkansas ($3.37 billion, 5.96 percent), has more than $1 billion in deposits in Texas (only good enough for No. 54 where everything is bigger) and another $747 million in Florida (No. 57). Its $688 million in Georgia deposits put it at No. 28 in that state, but BOZ announced last week an $800 million deal to purchase Community & Southern Bank of Atlanta, the No. 8 bank in Georgia in terms of deposits. (The combination is still likely to be No. 8.) Bank of the Ozarks is No. 33 in North Carolina ($578 million).

In 2008, the leadership at Home BancShares Inc. of Conway set its sights on achieving a sub-40 percent efficiency ratio. Seven years later, the $8.5 billion-asset bank holding company made the mark in the third quarter: 39.79 percent.

“That’s been a major goal of ours,” said Johnny Allison, chairman of Home BancShares. “I wasn’t sure if we would get there.”

The metric, which has grown in profile in the post-2008 finance world, reflects how many pennies it costs a company to make a buck. In the case of Home BancShares, the cost was slightly less than 40 cents for every $1 in revenue during the quarter ending Sept. 30.

The company’s Centennial Bank of Conway (39.37 percent) is among three Arkansas-based banks that recorded sub-40 percent efficiency ratios through the first six months of 2015.

First Security Bank of Searcy was No. 1 at 32.13 percent followed by Little Rock’s Bank of the Ozarks at 35.9 percent.

(Purchase the list of the Top 75 Arkansas banks ranked by efficieny ratio in either PDF or spreadsheet formats.)

The average efficiency ratio among all Arkansas banks through the first half of 2015 is about 70 percent.

Randy Dennis, president of DD&F Consulting Group, said the strong showings by First Security, Bank of the Ozarks and Home BancShares Arkansas continue to attract national attention.

The Little Rock bank consultant pointed out that Reynie Rutledge uses a different fiscal recipe to produce First Security’s enviable efficiency ratio.

“His is lower by the nature of his business model,” Dennis said of Rutledge, chairman and CEO of First Security. “He’s a bond bank. He’s more wholesale than retail. He’s always been a bond guy, and he’s always done well at it.”

The bank’s parent company owns the Little Rock investment firm of Crews & Associates, which specializes in bonds.

Instead of loans, securities are the main ingredient in First Security’s total assets. Stocks and bonds account for more than 52 percent of the private company’s $4.8 billion asset total.

That compares with a much lighter mix of securities in total assets at the publicly traded Bank of the Ozarks (8.7 percent) and Home BancShares (18 percent).

Treading in the land of sub-40 percent efficiency ratios is familiar territory for Bank of the Ozarks. It’s a source of corporate pride for George Gleason, chairman and CEO.

Bank of the Ozarks was named the top performing bank in the nation with total assets of between $5 billion and $50 billion by Bank Director for a third consecutive year.

While Gleason is pleased with the strides made, his sights are set on an ultimate goal of achieving a sub-30 percent efficiency ratio. Wall Street investors appreciate the earnings boost typically reflected by low efficiency ratios, too.

“They’re very complimentary of Home (BancShares) and George (Gleason) and his organization,” Allison said.

A seven-year push at Home BancShares resulted in an improved efficiency ratio of 20 percentage points, a feat accomplished while acquiring 15 banks.

“It’s a balancing act,” said Donna Townsell, senior executive vice president of corporate efficiencies for Home BancShares and its Centennial Bank. “It was hard to get here, and it will be hard to stay here.”

Where does Home BancShares go from here?

“Thirty-five is our next number,” Allison said. “I didn’t tell Donna that.”

Metric Formula

What goes into calculating an efficiency ratio?

The number is derived from dividing noninterest expense (overhead) by tax-equivalent net interest income plus noninterest income (revenue).

In general, lower is better. However, serious operational problems can lurk beneath low efficiency ratios.

Dennis said that was evident during 2007 and 2008 when banks with once-glowing call reports began recording ugly numbers that exposed their tell-tale efficiency ratio.

“Are they covering all the bases in order to manage the bank?” he said. “Where is the low efficiency ratio coming from? A low efficiency ratio can sometimes indicate a lender doesn’t have enough back office staff to support healthy growth. Growth covered all sins.

“You have to drill down on both high and low efficiencies. If it’s high, we try to see how they’re overspending. If it’s too low, we look at their noninterest expenses — audit, loan administration and things like that — because it can tell you a lot.”

Bank of the Ozarks and Home BancShares have built thriving multistate franchises accelerated by opportunities afforded by FDIC-assisted transactions of failed banks.

“I’m so proud of those guys,” Dennis said. “They are so good. They took a good idea and just ran with it. Now they’re buying failed-bank acquirers. They know the business model. They know how to do it even better.

“I told people back in 2010 that Arkansas could be the next regional banking force. I think it’s being proved out even as we sit here and watch.”

The whopping $800 million deal to buy Community & Southern Bank of Atlanta established a new mountaintop experience on the acquisition trail for Bank of the Ozarks.

“They just bought a whale of a deal,” Dennis said. “I think C&S has a great franchise over there. It’s everything Bank of the Ozarks knows. Compared to so many other banks in the country, they have been able to get the jewel out of the muck and create a great franchise in the Southeast.”

C&S was built through 11 acquisitions, eight that were government-assisted. The $4.4 billion-asset concern carried an efficiency ratio of about 66.9 percent as of June 30.

Harrell Bancshares Inc. of Camden announced Wednesday that it plans to rename its bank subsidiary from First Bank to Generations Bank.

First Bank, which is chartered at Hampton, was originally called Calhoun County Bank but adopted its current name in fall 2010, just in time to begin expanding into northwest Arkansas by buying branches in Rogers and Siloam Springs from Signature Bank of Fayetteville. 

In February 2014, First Bank expanded its northwest footprint by acquiring struggling First Community Bank of Crawford County from Ashley Bancstock Co. of Crossett and rolling it into the Hampton charter.

Jon Harrell, chairman of Harrell Bancshares, said the latest change is one of name only.

"In northwest Arkansas there are a lot of banks with similar names," Harrell said in a news release. "We wanted a name that would stand out and at the same time it was important to us not lose sight of our roots."

First Bank was founded in 1907 by Harrell's great-grandfather and his uncle, and Harrell is part of the fifth generation of his family to work in banking.

"Generations Bank is the perfect name for us, and we are rebranding to that name to take us into the next century," he said.

Generations Bank may stand out in northwest Arkansas, but the name is not unique. In 2012, a bank in Exeter, Nebraska, and a thrift in Seneca Falls, New York, chose the same new name.

First Bank had assets of $365 million as of June 30. It has 10 locations in Hampton, Junction City, Camden, East Camden, Rogers, Siloam Springs, Van Buren and Fayetteville.

First Bank reported net income of $3.1 million in 2014 and $1.7 million in the first half of 2015.

WASHINGTON — The Federal Reserve is keeping its key short-term interest rate at a record low in the face of a weak global economy, slower U.S. hiring and subpar inflation. But it signaled the possibility of a rate hike in December.

(Copyright 2015 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)

Simmons First National Corp. announced Friday that it had completed the acquisition of Ozark Trust & Investment Corp. of Springfield, Missouri.

The $20.7 million cash and stock deal to buy the Trust Co. of the Ozarks and its holding company had been announced in April.

Trust Co. of the Ozarks, a fee-only firm, had about $1.1 billion in assets under management for more than 1,300 clients. They will become clients of Simmons First Trust Co., the largest trust division in Arkansas at the end of 2014, when it managed $3.5 billion in assets.

Gary Metzger, the Missouri/Kansas regional chairman for Simmons, previously served as a director for Ozark Trust and the Trust Co. of the Ozarks. Jay Burchfield, the chairman of Ozark Trust joined the Simmons First National Corp. board of directors in April.

Phillip Partain has been named Saline County community president by Arvest Bank of Fayetteville. A Benton native and 20-year bank industry veteran, Partain previously held the position of vice president of commercial lending for Simmons First National Bank of Pine Bluff.

Bruce Timmons has joined Southern Bancorp Bank of Arkadelphia as market president in Eudora, and Stoney Fortenberry has joined the bank in Helena as a commercial loan officer. Timmons is a Hamburg native with 42 years of banking experience. Fortenberry is a McGehee native with 17 years of commercial and agricultural lending experience. Brian Coston has joined Southern Bancorp Bank in Malvern as executive vice president and commercial loan officer. A Malvern native, Coston is serving his fifth term on the Hot Spring County Quorum Court and his third term on the Malvern School Board.

Richard W. “Skip” Colvin has joined MidSouth Bank of Lafayette, Louisiana, as president of its Texarkana market. Colvin previously spent four years with Regions Bank in Texarkana and Hot Springs, most recently as a senior business relationship manager and vice president of commercial banking.

See more of this week's Movers & Shakers, and submit your own announcement at ArkansasBusiness.com/Movers.

A 33,720-SF office building in west Little Rock tipped the scales at $4.5 million.

Elman Little Rock Associates LLC of New York bought the 333 Executive Court Building from KRL Properties LLC, led by Mark Leverett.

The deal is financed with a 10-year loan of $3.4 million from Simmons First National Bank of Pine Bluff.

The 2.3-acre development previously was tied to an August 2013 mortgage of $2.3 million, a February 2014 mortgage of $66,000 and a December 2014 mortgage of $182,000 held by the bank.

KRL purchased the project for $1.8 million in December 2011 from Herbert and Barbara James.

Immanuel Acquisition

A west Little Rock congregation expanded its holdings in a $3.65 million deal for a neighboring 45,528-SF grocery store.

Immanuel Baptist Church acquired the vacant Kroger at 315 N. Shackleford Road from Kroger Limited Partnership 1 of Cincinnati.

Kroger bought the 4.78-acre development for $4.05 million in December 2011 from Powell Brothers Inc., led by Matt Chandler.

Charity Deal

Two Little Rock nonprofits were on either side of a $1.11 million transaction.

Arkansas Children’s Hospital purchased the soon-to-be former home of Ronald McDonald House at 1009 Wolfe St.

The seller is Ronald McDonald House Charities of Arkansas Inc., which is developing a new and larger facility.

The half-acre property was acquired for $120,400 in January 1980.

The sellers were Leslie and Linda Longstreth.

Branch Buy

A 2,656-SF bank branch in west Little Rock rang up a $985,000 sale.

Relyance Bank of Pine Bluff bought the project at 14220 Cantrell Road from Simmons First National Bank.

Simmons purchased the 0.97-acre location for $440,000 in June 1998. The sellers were Joe and Margaret Whisenhunt.

Sparkle Purchase

A laundry/car wash combo in North Little Rock changed hands in a $575,000 deal.

Loose Properties LLC, led by Mark and Debbie Loose, acquired the Sparkle Clean project at 4724 E. Broadway. The seller is Somers Enterprises Inc., led by Sheila Somers.

The deal is backed with a three-year loan of $618,256 from Little Rock’s Bank of the Ozarks.

The 0.62-acre development previously was linked with a September 2006 mortgage of $205,000 held by Six Bridges Capital Corp. of Little Rock and a March 2011 mortgage of $299,000 held by Centennial Bank of Conway.

Somers Enterprises bought the property in August 2006 as part of a $650,000 deal with Buckler Management Inc., led by Allen Buckler.

Buckeye Property

A 1.48-acre commercial project in North Little Rock drew a $230,000 transaction.

Buckeye Properties LLC, led by Joe Murdaugh, purchased the former Masco facility at 121 S. Buckeye St.

The seller is Koon Properties LLC, led by Walter Koon.

The deal is funded with a five-year loan of $230,000 from Arvest Bank of Fayetteville.

Koon Properties acquired the property for $176,000 in June 2002 from the bankruptcy estate of Masco Inc.

Tandem Transactions

A 7,760-SF home in west Pulaski County tipped the scales at $1.15 million.

Candy and Raymond Nosler bought the 12.1-acre spread from Diane Irby.

The deal is financed with a 25-year loan of $920,000 from Regions Bank of Birmingham, Alabama.

The land was purchased in December 1995 as part of a $310,000 deal with Ikansa Realty Inc., led by John Haley.

On the flip side of the deal, Irby acquired the Noslers’ 4,472-SF home in the Lamarche Place neighborhood of west Little Rock’s Chenal Valley development for $565,000.

The residence previously was tied to a March 2011 mortgage of $392,000 held by Leader One Financial Corp. of Overland Park, Kansas.

The Noslers bought the property for $490,000 in June 2003 from Mark and Karla Gibbs.

Grandview House

A 5,600-SF home in Little Rock’s Grandview neighborhood sold for $857,000.

Kim Whetstone acquired the house from JDM Grandview LLC, led by the late Jane Dills Morgan.

The deal is backed with a one-year loan of $575,000 from Bank of the Ozarks.

The residence previously was linked with a May 2008 mortgage of $600,000 held by Citizens Bank & Trust of Van Buren.

Morgan purchased the property for $750,000 more than seven years ago from Worth Gibson Sr. and his wife, Stacy.

Bretagne Abode

A 6,481-SF home in the Bretagne Circle neighborhood of west Little Rock’s Chenal Valley development is under new ownership after an $850,000 deal.

Kevin and Kristen Halpin bought the house from Jeffrey and Christine Gardner.

The deal is funded with a 15-year loan of $417,000 from One Bank & Trust of Little Rock.

The residence previously was tied to a June 2014 mortgage of $300,000 held by Bank of America in Charlotte, North Carolina.

The Gardners acquired the property for $634,000 in July 1998 from Randy and Patricia Ferguson.

Woodland’s Home I

A 3,893-SF home in the Woodland’s Edge neighborhood of west Little Rock rang up a $575,000 sale.

Michael Allwine purchased the house from Lamay-O Inc., led by William Martin Jr.

The residence previously was linked with a June 2014 mortgage of $368,000 held by Gibbsland Bank & Trust of Bossier City, Louisiana.

The home site was bought for $50,000 in March 2012 from Rocket Properties LLC, led by Ron Tyne and Lisenne Rockefeller.

PV Residence

A 3,432-SF home in west Little Rock’s Pleasant Valley neighborhood changed hands in a $549,900 deal.

Jack and Montine McNulty acquired the house from Richard and Laurel Lawrence.

The deal is financed with a 30-year loan of $524,425 from Regions Bank.

The residence previously was tied to a February 2011 mortgage of $202,603 held by Regions and an August 2013 mortgage of $206,000 held by Bank of America.

The Lawrence family purchased the property for $320,000 in April 2003 from the Judith Ann Friend Revocable Trust.

Woodland’s Home II

A 3,476-SF home in the Woodland’s Edge neighborhood of west Little Rock drew a $524,000 transaction.

Andrew and Lindy Smith bought the house from J. Martin Homes Inc., led by Jeffrey Martin.

The residence previously was linked with an October 2014 mortgage of $409,600 held by First Security Bank of Searcy.

The home site was acquired for $73,000 13 months ago from Rocket Properties.

Seven-Digit Construction

Renovation & Addition    $8,078,574
Ridge Road Elementary
4601 Ridge Road, North Little Rock
Nabholz Construction Corp., Conway

Legion Village    $2,975,000
516 Rock St., Little Rock
Central Construction Group, Little Rock

Office Remodeling    $1,075,000
1512 W. Third St., Little Rock
Consolidated Construction Inc., Little Rock

Last week, the board of directors of the Global Alliance for Banking on Values met in Little Rock, and members of its North American chapter visited Helena and Clarksdale, Mississippi. Southern Bancorp of Arkadelphia, which is one of GABV’s 27 member banks, hosted the tour.

I wasn’t on that tour, but Darrin Williams, CEO of Southern, said Marcos Eguiguren, the executive director of the GABV, commented that he hadn’t realized that there was such poverty in the United States. A Spaniard like Eguiguren might be forgiven for his ignorance, but I fear that many of us right here in Arkansas forget.

Not all of the banks in the GABV have the same mission as Southern, which is a commercial bank that uses its profits to support poverty alleviation efforts like the KIPP charter schools in Helena and the Arkadelphia Promise college scholarship fund. Some of them are focused on supporting entrepreneurs; others only lend to environmentally responsible borrowers. The group’s Bangladeshi member, Brac Bank, is deeply involved in helping its customers afford the kind of houses that won’t be washed away every time there’s a flood.

But all of them view banking as something more than just a profit-making enterprise, as Peter Blom, chairman of the GABV, emphasized in an interview that Williams arranged for me.

“When it comes to the values,” Blom said, “we have a lot in common. That we want to be there for people is something we strongly have in common.”

Now, I’ve talked to a lot of bankers over the past couple of decades, and I can tell you that they all see banking as something higher than just making a profit, just as we journalists view our craft as something more than just a way to sell subscriptions and advertising. But talking to Blom is not like talking to the Arkansas bankers that I talk to regularly — and not just because of his Dutch accent.

Blom was one of the first employees of Triodos Bank when it was founded near Amsterdam 35 years ago and is now its CEO. He looks and dresses like the CEO of a bank roughly the size of Bank of the Ozarks who will turn 60 next year. But when he starts to talk about banking, he sounds like that guy who, while he was still a teenager, helped create a market for organic foods.

He acknowledges that banks have to make a profit — and Triodos does, and pays dividends. But he is not at all interested in making a big profit, and thinks any bank that is profit-centric is short-sighted. Shareholders seem to be pretty far down his list of concerns — and institutional investors are not on his radar at all. The future of banking, he says, is in steady, reliable, modest profits that allow banks to remain closely involved with the businesses they lend to over the long term.

“I can claim that shareholders in our bank have a better return than shareholders in the big banks,” he said — especially those shareholders who want to know that something good and worthy is being done with their money. “You cannot be just a shareholder and only look at short-term results,” Blom said.

Triodos advertises itself as a different kind of bank, even in Europe. Its marketing slogan is “Not for sale.”

***

Triodos, Williams said, “has done a great job of making profits from its mission, not making profits its mission.” Even here in Arkansas, Williams said, he had detected “an interest in not just doing well but doing good. Millennials really are asking what my money is being used for.”

In furtherance of its mission of trying to alleviate poverty in its communities, Southern is working on a lower-cost alternative to the predatory payday loans that enslave so many low-income borrowers. Arkansas’ usury law finally drove the storefront loan sharks out of the state, but they are Southern’s biggest competitors in Mississippi. (Arkansas law will limit the interest on Southern’s product to 17 percent or less, Williams pointed out.)

After spending much of last week with the GABV members, Williams sounded energized, throwing out crazy ideas like texting photos to customers to remind them of what they are saving for.

In the meantime, Southern is looking for ways to raise more capital to replace its $33.8 million in federal TARP funding before the mandatory interest rate goes up in a couple of years.

Gwen Moritz is editor of Arkansas Business. Email her at GMoritz@ABPG.com.