The string of litigation between Chambers Bank of Danville and Lex Golden et al has a new addition.

Golden and his wife, Ellen, sued the bank in Crawford County Circuit Court alleging the lender essentially was responsible for causing all their money troubles.

That claim is tied to allegations that Chambers Bank wouldn’t agree to various proposed transactions to sell or buy Allied Bank branches.

Nor would Chambers Bank agree to a proposed transaction to sell delinquent debt owed by Allied’s parent company, Acme Holding Co. The would-be purchaser of the Acme debt was Walter Quinn, the leading shareholder of Little Rock’s Heartland Bank.

According to the complaint, the proposed deals could’ve cured Acme’s delinquent loan problems with Chambers Bank.

Chambers Bank and affiliates hold more than $5.9 million in Acme debt, at least $2 million of which is personally guaranteed by the Goldens.

The complaint alleges that Chambers Bank’s actions led to the bankruptcy filing of Acme Holding more than two years ago and the continued deterioration of Allied Bank.

The bank, controlled by the Golden family and managed by Lex Golden and his son, Alex, has labored under sustained loan losses for five years. Allied has operated under a consent order with regulators since 2012.

The Goldens’ lawsuit also implies the actions of Chambers Bank in dealing with Acme Holding and Allied Bank impaired the couple’s ability to repay other debts.

Among the delinquent debts were two loans totaling $1.5 million owed by Ellen Golden’s Little Rock antique business, a $599,813 loan owed by a Golden family real estate venture in Washington County and a loan of unspecified value secured by the family’s ownership of Community State Bank of Bradley (Lafayette County).

All of that debt was owed to Heartland Bank, which recovered the antique store in January and sold it for $1.2 million in April.

Other property forfeited in lieu of foreclosure to Heartland included two undeveloped parcels totaling 18.1 acres along Butterfield Coach Road at East Emma Avenue in east Springdale.

The Goldens purchased the northwest Arkansas property, originally part of the OREO portfolio of Bentonville’s ANB Financial, for $825,000 in November 2009.

The Goldens claim damages of more than $2.5 million were caused by Chambers Bank.

In response, the bank noted a number of alleged legal flaws with the “rambling, internally inconsistent” complaint, which didn’t include proper supporting documents.

In summing up its motion to dismiss the case, Chambers described the complaint as “an incoherent conglomeration of statements and arguments which cannot be fairly characterized as a proper pleading.”

The Wall Street Journal today takes a look at Bank of the Ozarks Inc. of Little Rock, which it says is filling a loan void in big markets like New York and Houston.

The publicly traded bank, led by George Gleason, opened a loan production office in Manhattan in 2013. It established another office in Houston in 2014 after purchasing Bancshares Inc. for $23 million. It has other loan production sites in Austin, Texas, and Atlanta.

The Journal finds the company providing commercial loans in places where bigger banks have pulled back. It says the company now has $1.9 billion in loans outstanding in New York as of the first quarter, and its portfolio of loans and leases now stands at $9.7 billion.

"A lot of our competitors tend to move as a pack and are heavily driven by headline risk," said George Gleason, the bank’s chairman and chief executive, on a recent call with investors. "So what we have tried to do is ignore the headlines, to a great extent…we are finding tremendous opportunities in Manhattan, Miami, Houston [and] Dallas."

The Journal has more on what could be choppy waters ahead, as analysts weigh warning signs that the rally seen in some of those markets could be coming to end.

Simmons First National Corp. of Pine Bluff on Wednesday announced second-quarter net income of $22.9 million, up 14 from the same quarter last year, as the company continued to integrate recent acquisitions.

The publicly traded firm (Nasdaq: SFNC) reported earnings per share of 75 cents, up from 67 cents in the same quarter last year.

"We are pleased with the results from the second quarter as we continue to absorb the acquisitions from the previous two years," Chairman and CEO George A. Makris said in a news release. "Competitive pressures and artificially low interest rates continue to put pressure on our net interest income but we have done a good job of diversifying our revenue through other lines of business such as our trust operations, mortgage lending, credit card services and other wealth management offerings. We will continue to focus on improving our efficiency throughout the remainder of the year."

Included in second-quarter results were $2.2 million of after-tax expenses related to noncore items. Excluding those items, Simmons' "core" earnings were $25.1 million, up 11 percent from the same quarter last year. Diluted core earnings per share were 82 cents, up 9 percent from the same quarter last year.

Year-to-date net income was $46.4 million, up 61 percent from the same period of 2015. Year-to-date diluted earnings per share was $1.52, up 38 percent from the same quarter last year. 

In May, Simmons announced that it would purchase Citizens National Bank of Athens, Tennessee, in a deal then valued at $77 million. Makris said the company will complete that merger later this year.

Arkansas Business will update this story.

Home BancShares Inc. of Conway on Thursday reported second-quarter net income of $43.5 million, up 28 percent from the same quarter last year, amid $172.5 million in loan growth and another improvement to the company's efficiency ratio.

It was the 21st consecutive quarter that the company (Nasdaq: HOMB), the parent of Centennial Bank, reported record quarterly profit.

"During the second quarter of 2016, we continued our momentum growing both earnings and organic loans," Chairman John Allison said in a news release. "Organic loans grew by $172.5 million for the quarter, while the core efficiency ratio improved again to an impressive 36.84 percent. Additionally, we are pleased to have crossed another milestone by reporting a quarterly return on assets greater than 1.80 percent for the second quarter of 2016 at 1.83 percent.”

Arkansas Business will update this story.

Bear State Financial Inc. of Little Rock on Thursday reported second-quarter net income of $4.5 million, up 80 percent from the same quarter last year, as the company completed the integration of Metropolitan National Bank of Springfield, Missouri, which it purchased last year.

The publicly traded company (Nasdaq: BSF), the parent of Bear State Bank, reported earnings per share of 12 cents, up from 8 cents in the same quarter last year.

"Our second quarter results demonstrated the strength of Bear State’s value proposition, of competing with more than price, and the successes we have experienced with the integration of Metropolitan," President and CEO Mark McFatridge, formerly of Metropolitan, said in a news release. "This is evident by our record mortgage production and profitability, while continuing to diversify within our loan portfolio and maintaining our strong credit culture."

Bear State announced last year plans to Metropolitan in a cash and stock deal worth $70 million. The purchase of the bank expanded Bear State's Missouri network. Since the purchase was completed in the fourth quarter, the bank consolidated six branch locations, which Bear State said contributed to a second-quarter core efficiency ratio of 68 percent, down from 72 percent in the first quarter.

The Metropolitan acquisition pushed up key metrics. Total assets were $1.9 billion as of June 30, up 37 percent from the same time last year. Total loans were about $1.5 billion, up about 41 percent. Total deposits were $1.6 billion, up about 36 percent.

Second-quarter net interest income was $16.6 million, up from $12 million during the same quarter last year. Non-interest income — generated primarily through deposit account fee income, profit on sale of mortgage loans, and earnings on life insurance policies — was $4.3 million, up from $3.4 million in the same quarter last year.

EL DORADO - A former branch manager at a south Arkansas bank has been sentenced to 21 months in federal prison after pleading guilty to bank fraud.

Melinda Gwin was also ordered Wednesday to repay $210,875 to the First National Bank of Crossett. U.S. Attorney Kenneth Elser says Gwin was employed at the bank from 2009 to 2015, first as a teller and then as manager of its Hamburg branch.

According to court records, Gwin had access to the bank's vault. Elser says surveillance video showed Gwin pretending to deposit funds into the vault, then concealing the cash and leaving with it.

Elser says Gwin admitted taking the cash in $2,000 and $3,000 increments over five years. She was indicted last September and pleaded guilty to one count of bank fraud in December.

(Copyright 2016 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)

A court hearing that would have kept the foreclosure train moving on the Main Street Lofts project was postponed Friday morning.

The 11th hour move in Pulaski County Circuit Court amounted to a 60-day timeout concerning the financially troubled downtown Little Rock redevelopment.

The mutually agreed delay appears to be linked with a potential sale to an investment group led by Sam Alley, CEO of Little Rock's VCC general contracting firm.

The unfinished three-building, 125,000-SF redevelopment at 510-524 Main St. went dormant after Scott Reed and his partners apparently ran out of money.

Today's hearing was expected to produce a $900,000-plus judgment for Little Rock's AMR Construction.

The company won an arbitration award in March for legal expenses and its unpaid work on Main Street Lofts.

AMR walked off the job 15 months ago after the ownership group failed to come up with money to keep the over-budget, behind-schedule project moving.

Two lenders have a dog in the financial hunt but haven't formally entered the fray: Riverside Bank of Sparkman (Dallas County), which holds a $3.2 million mortgage on the property; and the Pulaski County Brownfields Revolving Loan Fund Committee, which holds a $916,000 mortgage.

Bank of the Ozarks Inc. of Little Rock said Thursday that it had completed a deal to buy C1 Financial Inc. of St. Petersburg, Florida, and its wholly owned bank subsidiary, C1 Bank, in all-stock transaction.

The publicly traded bank said the deal was worth $402.5 million when it announced it in November. The move puts the rapidly expanding bank in Miami and Orlando for the first time and makes Bank of the Ozarks the largest bank in Arkansas by assets.

"Bank of the Ozarks is very pleased to complete the acquisition of C1 Bank, providing 33 strategically located and highly complementary Florida offices, including offices in some of Florida's highest growth and strongest economic markets," Chairman and CEO George Gleason said in a news release. 

It was the second major bank merger Bank of the Ozarks completed this week. On Wednesday, it finalized its record-setting, $800 million deal to buy Community & Southern Bank of Atlanta, announced in October.

That deal pushed the company further into Georgia, where it now has almost as many branches as it does in Arkansas.

"We expect C1's unique culture and leadership in technology and innovation to be transformational in our quest to be an industry leader in best-in-class customer experiences and operational efficiency," Gleason continued. "We have already begun to implement technology enhancements developed at C1 Bank which will benefit our clients throughout our nine state footprint and provide increased operational efficiencies."

With the closing of the merger, C1 Bank, C1's wholly-owned bank subsidiary, merged with Bank of the Ozarks' wholly owned bank subsidiary.

Trevor Burgess, formerly president and CEO of C1 and founder of C1 Bank, was named chief innovation officer of the company and its bank subsidiary. Alan Randolph, formerly executive vice president and senior lender with C1 Bank, was named Florida division president at Bank of the Ozarks, overseeing the firm's 44 Florida banking offices.

As of June 30, C1 had about $1.7 billion in total assets, $1.4 billion of loans and $1.3 billion of deposits. The asset total pushes Bank of the Ozarks' to $17.9 billion in assets, including the more than $4 billion in assets it took on through the Community & Southern Bank deal.

Privately held Arvest Bank of Bentonville, led by Jim Walton, is now the second-largest bank in Arkansas, with $16.4 billion in assets as of March 31.

A 64.5-acre tract in North Little Rock tipped the scales at $2.8 million.

Richardson Properties LLC, led by Keith Richardson, purchased the undeveloped land adjoining Foothills Apartments at 2401 Lakeview Road.

The seller is Mlake 1 LLC, an affiliate of Maxus Realty Trust Inc. of North Kansas City, Missouri.

The deal is financed with a $1.82 million loan from Centennial Bank of Conway.

The property previously was linked with a June 2015 mortgage of $1.95 million held by The Woodcrest Co. LLP, led by the James P. Matthews family.

The property was acquired for $2 million 13 months ago from The Woodcrest Co.

Tract Transaction

Undeveloped land totaling nearly 155 acres in north Pulaski County weighed in at $1.3 million.

Lone Pine Holdings LLC, led by Marna Givens, bought the tract, about 1.5 miles north of the North Little Rock Airport between Highway 107 and Kellogg Acres Road, from Farmers Bank & Trust of Magnolia.

The bank entered the ownership picture in July 2014 through a deed in lieu transaction with Semko LLC valued at $1.32 million. The original investment group was composed of Ellen Shinn, Ben Eiler, Eric Morrison, Michael Kinard and Randy Oliver.

New Orbea Home

A 3.25-acre commercial property in downtown North Little Rock changed hands in a $725,000 deal.

The Works at Rockwater LLC, led by James Jackson and Lisa Ferrell, acquired the 36,350-SF Superior Spring Clutch & Gear facility at 700 W. Broadway to house the Orbea bike-making concern.

The seller is Truck Pro LLC of Memphis. The deal is backed with a 5.5-year loan of $1.25 million from Magnolia’s Farmers Bank & Trust.

The location was bought for $101,000 in June 1979 from Beatrice Hurn.

Inter-Denominational Deal

Church property in Sherwood rang up a $700,000 transaction.

North Hills Baptist Church purchased the 1.77-acre development at 9650 and 9700 Hwy. 107 from North Little Rock’s First Pentecostal Church of Jesus Christ Inc.

The deal is funded with a two-year loan of $150,000 and a seven-year loan of $988,886 from Little Rock’s Bank of the Ozarks.

First Pentecostal assembled the property in two deals totaling more than $600,000 with Centennial Bank in June 2010 and North Hills Baptist Church in August 2010.

Multifamily Purchase

A 14-unit apartment project in downtown Little Rock is under new ownership after a $495,000 sale.

Mark Brown and Jill Judy bought the Residences at Gracie Mansion at 503 E. Seventh St. from Karcher Capital LLC, led by Hamlin Au.

The 0.39-acre development is now helping secure a 10-year loan of $955,000 and a two-year loan of $100,000 from Arvest Bank of Fayetteville.

The project previously was tied to a June 2012 mortgage of $382,500 held by Wells Fargo Bank of Sioux Falls, South Dakota.

Karcher Capital purchased the property for $510,000 four years ago from D. Taylor Investment Properties LLC, led by Deborah Taylor.

Parcel Acquisition I

A 5.05-acre commercial parcel in west Little Rock drew a $365,000 transaction

15400 Chenal LLC, led by Larry Crain Jr., acquired the land near the northeast corner of Wellington Hills Road and Chenal Parkway. The seller is Chenal Commercial Partnership, led by Jim Hathaway.

Investors in the partnership include the Morrison Family Partnership, led by James P. Morrison; Dr. David Newbern; the Lyda C. Campbell Revocable Trust; Howard Cockrill Jr.; and Barbara G. Moore.

The partnership, originally operating as CCMN Joint Venture II, bought most of the property in June 1977 as part of an 81.84-acre deal with John F. Pride totaling $445,000 (12.5 cents per SF).

A 1-acre piece was added for $63,000 in a July 2009 deal with Wellington Hills 2007 LLC, led by Jeff Nicholas.

The property previously was linked with a December 2014 mortgage of $585,000 held by Simmons Bank of Pine Bluff.

Parcel Acquisition II

A 1.13-acre commercial parcel in North Little Rock sold for $319,000.

Central Arkansas Veterinary Investment Group LLC, led by Amber Brown, Lynn Beach, William Beirbaum, James Ireland and Cliff Peck IV, purchased the 10500 Maumelle Blvd. site. The seller is MGY LLC, led by Marc Yelenich.

The deal is financed with a one-year loan of $239,250 from Simmons Bank. The location was acquired for $175,000 in June 2006 from Red Hill Partners Ltd., led by Greg Williams.

Turbo Buy

A 5,000-SF office-warehouse in southwest Little Rock changed hands in a $250,000 transaction.

River City Turbo Inc., led by Christopher Wherry, bought the project at 8511 Distribution Drive from Orgil Ganbold.

The deal is backed with a three-year loan of $200,000 from Bank of the Ozarks. The 1-acre development previously was tied to a January 2012 mortgage of $150,000 held by the bank.

Ganbold purchased the property for $275,000 more than four years ago from Easter Vending Service Inc., led by Edward Salazar.

PV Manor

A 5,560-SF home in west Little Rock’s Pleasant Valley neighborhood tipped the scales at $1.2 million

Tejas and Mauli Patel acquired the house from Larry Wood. The deal is funded with a 30-year loan of $1 million from Bank of America in Charlotte, North Carolina.

The residence previously was linked with a December 2003 mortgage of $250,000 held by Metropolitan National Bank of Little Rock.

The property was bought for $246,000 in January 1993 from Anthony and Cathy Fakouri.

Heights Home

A 4,100-SF home in the Heights area of Little Rock rang up an $829,000 sale.

Wilson and Stephanie Bynum purchased the house from Jim Pace Homes LLC. The deal is financed with a 30-year loan of $621,750 from First Financial Bank of El Dorado.

The residence previously was tied to a September 2015 mortgage of $683,200 held by BancorpSouth Bank of Tupelo, Mississippi.

The property was acquired for $305,000 nine months ago from Gerado and Amy Galdamez.

Country Club House

A 3,651-SF home near the Country Club of Little Rock is under new ownership after a $794,000 deal.

Kelly and Ellen Kreth bought the house from Michael and Kirsten Blanchat. The deal is backed with a 15-year loan of $417,000 and a five-year loan of $218,000 from Arvest Bank of Fayetteville.

The residence previously was linked with a June 2015 mortgage of $276,107 held by Wells Fargo Bank of Sioux Falls, South Dakota.

The Blanchats purchased the property for $425,000 in December 1997 from Janet Aronson.

Warehouse Mortgage

The owner of a 67,500-SF warehouse in Little Rock landed a $2 million funding agreement. United Cerebral Palsy of Central Arkansas Inc., led by Larry Stang, obtained the 10-year loan from Simmons Bank.

The 10-acre development at 8121 Distribution Drive previously was tied to an August 2013 mortgage of $680,000 held by Centennial Bank.

The property was acquired nearly three years ago for $850,000 from 8121 Distribution LLC, led by Justin Muller.

Seven-Digit Construction

Remodeling    $1,000,000
Arkansas Veterinary Specialists
11619 Pleasant Ridge Road, Little Rock
Grinder Taber & Grinder Inc., Memphis

Randy Scott is the president and chief operating officer of Farmers Bank & Trust in Blytheville. A 26-year veteran of banking,  he has worked the last 16 years at Farmers. He was appointed to the six-member State Banking Board on June 8, and his term runs through Dec. 31, 2020.

Scott grew up near Hornersville, Missouri, and graduated from Southeast Missouri State University in Cape Girardeau, majoring in finance with a minor in accounting. After college, Scott went through the management training program at Mercantile Bank of St. Louis and returned to the Missouri Bootheel, where he worked at several banks in Sikeston. He is a director at the Arkansas Bankers Association and serves on the board of trustees at Arkansas Northeastern College in Blytheville.

Farmers Bank & Trust, established in 1908, is a $485 million-asset lender.

What happened to turn your career compass toward banking?

Some people switch careers several times in their lifetime. I’ve been fortunate to know that I have always wanted to be a banker. I grew up on a family farm, and both of my older brothers became farmers. Very early on, I knew that I didn’t want to be a farmer. I set my goal to become a banker in eighth grade, and on my high school senior spotlight, under ambition it stated “Bank President.”

What is your biggest challenge as an east Arkansas banker?

I think we face the same challenges that bankers all across rural America face. Rural America is drying up. Small towns are getting smaller, which provides fewer business opportunities for us as bankers. We are not only bankers; we also serve as economic developers, civic leaders, youth sports directors, church leaders, etc.

If you could make one change in the banking industry, what would it be?

Less federal regulation!

Every time there is an economic crisis, a mass of regulations is placed on all banks, regardless of their size. No regulations are ever removed. Arkansas banks have always outperformed their peers in other states and rarely get into the risky lending issues that have affected the banking industry in the past; however, we get the same regulations that are imposed on the Wall Street banks. This, in turn, hurts our consumers. When I started my banking career 26 years ago, a consumer had to sign eight times to get a home loan. Today, that consumer would have to sign over 80 times to get the same loan.

What is your favorite part of being a banker?

Helping people achieve their goals, whether it is home ownership, starting a new business, expanding a business or planning for retirement. I love to hear their success stories and know that I helped play a small part in their success.

Agri lending is a big component of operations at Farmers Bank & Trust. What are some of the big issues in this lending sector?

There’s no doubt that this sector of the economy is soft right now. With lower commodity prices and increased input expenses, the farmers’ cash flows are very tight. Fortunately, our farmers have had several very successful years, allowing them to build up equity in their land and equipment. They are in good shape to weather a few bad years.

It is important for our bank and our regulators not to panic when they have a losing year or two. We are in it for the long term with our farmers. We have banked several generations of farmers, and they have had their good years and their bad years, just like any industry sector.

Mistakes are said to deliver some of the most meaningful lessons. What was your biggest career mistake and how has it helped shape your career?

I was young and eager and accepted my very first lending job for a bank that was desperate for a lender. Little did I know at the time, the bank had major lending problems with a toxic loan portfolio. I spent the first two years attending foreclosures and bankruptcies. I learned everything not to do as a banker. It turned out to be a great learning experience for me.

Stacey Hogue was recently named chief financial officer and vice president of finance at Pulaski Technical College, replacing Pat Palmer, who retired after 35 years of service.

Hogue was director of financial services at the University of Arkansas at Little Rock before serving at Pulaski Tech as associate vice president of finance.

Cherri Arnold has been promoted to market specialist and vice president at Generations Bank in Camden. Arnold has served at Generations Bank for 20 years as assistant vice president and secretary to the board. In her new position, she will oversee the Camden market and the coordination of staff and resources.

Clinton Ryan has joined Signature Bank of Arkansas of Fayetteville as vice president and commercial lender. Ryan previously was vice president and commercial lender at First National Bank of Northwest Arkansas. He received his undergraduate degree in finance and finance management from the University of Arkansas in 2005 and graduated from the Commercial Lending School at Southern Methodist University in Dallas.

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

Lex and Ellen Golden were hit with a $2 million judgment in Yell County Circuit Court on July 15. Chambers Bank of Danville received the favorable ruling in connection with the Little Rock couple’s personal guarantee of a long delinquent loan to Acme Holding Co.

The case is one in a string of lawsuits spawned by the bankruptcy of Acme, the parent company of Allied Bank of Mulberry. Under the Golden family’s ownership and management, the bank has lost more than $14 million since 2010.

The year-long, bad-debt lawsuit against the Goldens culminated in summary judgment during a brief hearing. Circuit Judge Terry Sullivan said there was no substantial issue of fact in the case, and the Goldens submitted no evidence to refute the claim of Chambers Bank.

“Your client signed the note,” Sullivan said. “I don’t have anything before me that the plaintiff put a gun to the defendant’s head and made him sign the note.”

The $2 million promissory note — dated Dec. 16, 2010, and guaranteed by the Goldens — was linked with efforts to recapitalize Allied Bank. It followed a Sept. 29, 2010, loan of $3 million from Chambers Bank to Acme, which is also in default.

Acme’s sole source of money to service its debt to Chambers Bank and other creditors is dividends from Allied. That income stream was turned off by regulators because of the bank’s poor fiscal condition.

The last time Allied paid a dividend to Acme was in the third quarter of 2010. Bank regulators prohibited the bank from declaring dividends in order to preserve its capital in the face of mounting loan losses.

In 2010, the bank reported year-end high-water marks for total assets ($185 million) and equity capital ($18 million). Total assets now stand at $72.4 million, and equity capital has fallen to $4.9 million. Staffers now number 40, down from a peak of 60 during 2011.

Allied Bank remains under the terms of a cease-and-desist order by the Arkansas State Bank Department, dating back to Nov. 15, 2011, and a supervisory agreement with the St. Louis Federal Reserve, May 2, 2012.

What follows is a chronological summary of lawsuits surrounding Acme Holding, Allied Bank and the Golden family.

2014

Chapter 11 reorganization of Acme Holding Co.
Filed April 29 in U.S. Bankruptcy Court in Fort Smith

The move by the parent company of Mulberry’s Allied Bank is made a step ahead of Chambers Bank of Danville foreclosing on delinquent Acme loans secured by Allied Bank stock.

Acme listed total assets of $12.2 million and liabilities of $11.4 million in its bankruptcy petition, but that position has worsened as liabilities have swamped deteriorating assets.

Acme’s lead creditor is Chambers Bank, which holds all the shares of Allied Bank as security on two delinquent loans totaling more than $4.5 million. C Holdings LLC, an affiliate of Chambers Bank, also holds a $1.4 million delinquent loan claim against Acme.

A third Acme creditor, Hildene Asset Management, represents the holders of trust-preferred securities with a claim of more than $3 million.

The case was converted to Chapter 7 liquidation on July 23, 2015, by U.S. Bankruptcy Judge Ben Barry. He ruled the reorganization plan championed by the Goldens was overly speculative with poor terms for creditors.

The plan was predicated on the financial turnaround of Allied Bank and eventual regulatory approval to restart dividend payments from the bank to Acme to service its debt. Barry’s order deemed both events unlikely given the flagging fortunes of Allied Bank.

The public docket on Acme’s bankruptcy case has gone silent since Oct. 2, 2015 as the court-appointed trustee, Ray Fulmer of Fort Smith, privately shops Allied Bank in hopes of finding a buyer.

2015

Allied Bank and Acme Holding Co. v. Chambers Bank
Filed June 22 in Crawford County Circuit Court

The complaint alleges tortious in-terference by Chambers Bank with the planned sale of three Allied Bank branches in 2014.

The Lex Golden family, which controls Acme and Allied, hoped to sell bank offices in Mansfield (Sebastian County), Van Buren and Alma. However, Chambers wouldn’t sign off on a proposed deal that allegedly could’ve netted Allied Bank about $2 million but wouldn’t repay any Acme debt.

The deal surfaced again during the early stages of Acme’s bankruptcy, which drew separate objections from the Arkansas State Bank Department and the Federal Home Loan Bank of Dallas.

The complaint by Allied and Acme also mentions that Walter Quinn, the lead investor in Heartland Bank of Little Rock, tried to buy Acme’s debt in August 2013 from Chambers Bank. The case is awaiting a trial date.

Chambers Bank v. Lex and Ellen Golden
Filed July 17 in Yell County Circuit Court

The bank received a $2 million judgment on July 15, 2016, against the Goldens, as personal guarantors on a loan to Acme Holding Co.

The last interest-only payment on the loan was made on Dec. 31, 2013. The loan matured on Dec. 16, 2015. The debt is secured by 4,000 shares of Allied Bank stock and a $5 million term life insurance policy on Lex Golden.

Golden portrayed his personal guarantee as an accommodation to Acme Holding; Chambers Bank portrayed the personal guarantee as a condition to extending the loan agreement.

Golden implied that Chambers Bank shouldn’t look to collect from him and his wife because it was aware that they didn’t have “the ability to repay the debt.”

Chambers Bank said the Goldens “are simply trying to delay the inevitable, which is a judgment against them in this case.”

Federal Deposit Insurance Corp. v. Alex Golden, Amy Golden McCay et al
Filed Sept. 5 in U.S. District Court in Atlanta

The FDIC registered judgments from the Georgia case in U.S. District Court in Little Rock against the adult children of Lex and Ellen Golden, Alex Golden and Amy McCay, and their grandchildren’s trusts on March 7, 2016.

The judgment against Alex Golden, CEO of Allied Bank, is $780,788 and uncalculated interest since Sept. 5, 2014, plus attorney fees of $118,889. The judgment against McCay is $282,288 and uncalculated interest since Aug. 27, 2014, plus collection costs of $42,342.

The awards date back to Jan. 9, 2015, and stem from lawsuits to recover delinquent loans used to buy stock in Acme Holding Co., the now-bankrupt parent company of Allied Bank.

The FDIC filed the lawsuit as receiver of the $4.1 billion-asset Silverton Bank of Atlanta, closed by the Office of the Comptroller of the Currency on May 1, 2009.

The Silverton loans were originated on Jan. 18, 2008, and matured on Jan. 13, 2013.

John S. Hunter IRA v. Lex Golden et al
Filed Oct. 23 in Crawford County Circuit Court

The case, brought on behalf of an individual retirement account of the former president of Allied Bank, seeks more than $356,000.

According to the complaint, Hunter’s IRA is owed $178,082 on each of two delinquent promissory notes dating from Dec. 27, 2011. Payment was due in full Dec. 27, 2014.

The debt is owed by two trusts established for the benefit of the grandchildren of Lex Golden, chairman and CEO of Acme Holding Co. He personally guaranteed payment of the notes, which financed the purchase of Hunter’s Acme Holding stock.

The defendants include Golden, the two trusts and the trustees: his son, Alex, and his daughter, Amy McCay, who left the bank as vice president in 2013 amid regulatory scrutiny over her duties and her salary.

Originally scheduled for bench trial on May 17 in Crawford County Circuit Court, the case is on hold until September pending the performance of a settlement agreement.

2016

Lex and Ellen Golden v. Chambers Bank
Filed May 9 in Crawford County Circuit Court

The case is cut from the same cloth as the 2015 lawsuit filed in the name of Allied Bank and Acme Holding Co.

In this version, the Goldens allege Chambers Bank is essentially responsible for causing all their money troubles. That claim is tied to allegations that Chambers Bank wouldn’t agree to various proposed transactions to sell or buy Allied Bank branches.

Nor would Chambers Bank agree to a proposed transaction to sell delinquent debt owed by Allied’s parent company, Acme Holding.

The complaint alleges that Chambers Bank’s actions led to the bankruptcy filing of Acme Holding more than two years ago and the continued deterioration of Allied Bank.

The lawsuit also implies the actions of Chambers Bank in dealing with Acme and Allied impaired the couple’s ability to repay other debts.

Among the delinquent debts were two loans totaling $1.5 million owed by Ellen Golden’s Little Rock antique business, a $599,813 loan owed by a Golden family real estate venture in Washington County and a delinquent loan of unspecified value secured by the family’s ownership of Community State Bank of Bradley (Lafayette County).

Lex Golden, through Allcorp Inc., borrowed $2.1 million six years ago to finance the purchase of Community State, which now has $16.9 million in assets — the smallest bank chartered in Arkansas.

The Golden family controlled 87 percent of Allcorp at the time. The balance of shares was divided among four Jacksonville families: Frank Swift Jr., Ben Rice, William and Pam Hall and Terry Weatherford.

The Goldens claim damages of more than $2.5 million.

In response, Chambers Bank noted a string of alleged legal flaws with the “rambling, internally inconsistent” complaint, which didn’t include proper supporting documents.

In summing up its motion to dismiss the case, Chambers Bank described the complaint as “an incoherent conglomeration of statements and arguments which cannot be fairly characterized as a proper pleading.”

The motion to dismiss, filed July 7, is still pending.

Allied Bank

Assets, Income and OREO
All dollars in thousands

^*Real estate recovered in connection with bad loans.
^**As of March 31.

Source: Federal Deposit Insurance Corp.

A bank’s locations used to be pretty important to customers. But with many people, especially millennials, choosing to bank on their mobile devices as they do almost everything else, the bank branch is under pressure to stay relevant. Bank branches, once the staple of the banking experience, haven’t become obsolete — and banking executives say that won’t happen anytime soon, if ever — but they are disappearing.

The Federal Deposit Insurance Corp. reported that the number of bank branches in the United States fell from 11,971 in 1995 to 6,270 in 2015. In Arkansas, the number peaked at 1,513 in mid-2008 but has steadily fallen to 1,365.

“The successful organizations in the future will build an entirely new model,” said Phil Baldwin, president and CEO of Citizens Bank of Batesville. “Remember Blockbuster? That same type of disruptive technology is in place in business commerce, including banking. The successful bank in the future will be able to look around the corner and create something new.”

Baldwin, whose bank has been in expansion mode, said the future will have to include a hybrid banking experience. Bank branches will serve an important role that both complements and is supported by mobile banking services.

“I think the new technologies are allowing people to bank in a much different way than they used to, especially the younger generation,” Baldwin said. “For folks who are younger than 40, I do think having a strong social media and technology-based presence with mobile applications is really important.

“The older generation really felt like it was important to have a personal relationship with their banker. I think younger folks are more interested in having that relationship through technology. As you look out into the future, I think you’ve got to have both.”

Branching Out, or Not

Baldwin’s Citizens Bank paid $21.8 million last year for Parkway Bank of Rogers and moved into Parkway’s branch on Pinnacle Hills Parkway. Citizens, with assets of $736 million as of March 31, had also recently moved into Hot Springs, Arkadelphia and Monticello.

“The Rogers expansion — you want to be part of a growing, very dynamic market area,” Baldwin said. “You realize when you come into that market, you’re going to be the littlest bank in town. That’s OK. There’s a lot of growth opportunity in a market like that.

“In Arkadelphia, the market is not as large as Rogers so the dynamics are different, but in the end it is the same type of decision. We felt we could provide banking services that would be sought after by people in those markets.”

Arkansas’ other Citizens Bank — Citizens Bank & Trust of Van Buren — is also planning an expansion of his $375 million-asset bank in Crawford County. CB&T announced in early July it would open a branch in Cedarville on the site of a former barbecue restaurant that has been razed.

CB&T has seven branches, all in Crawford County, but CEO Keith Hefner said the bank’s internal metrics approved the Cedarville investment. A similar expansion in Mountainburg was successful with the development of a $13 million-deposit branch.

There is debate in banking circles as to the level of deposits that justify a branch — $15 million, $20 million are popular opinions — but Hefner said the Cedarville branch was “definitely justified” because it’s an underserved area with growth potential.

“There was a void in facilities to bank; we have several existing customers up in that area,” Hefner said. “We feel like we’re providing a better service to them. We’re trying to position ourselves for the future. We have somewhat of a proven model that this will work.

“The other thing — everyone is getting a lot of press about online banking and banking by phone. But there is still data out there that would support that one of the major decision factors is because of the presence of a branch — even though they don’t use it. I don’t think in Crawford County, Arkansas, you’ll see branch banking go away.”

In the saturated northwest Arkansas market, Simmons Bank of Pine Bluff closed a $3.2 million-deposit branch July 1 on Wedington Drive in Fayetteville. There is a $6 million-deposit branch a couple of miles away on Martin Luther King Jr. Boulevard.

Where to Bank

Hefner believes Citizens Bank & Trust’s expansion in Cedarville will foster loyalty in a growing population area. But surveys have shown that bank locations are becoming less important to a consumer’s decision about where to take his business.

Accenture’s North America Consumer Banking Survey in 2015 showed the No. 1 reason, at 38 percent, that people chose a bank was the quality of its online banking services. In 2013, location was the No. 1 reason at 36 percent; in 2015 it had fallen to 28 percent, tied with low fees.

Bankrate’s Financial Security Index in December reported that 45 percent of bank customers had visited a branch in the previous 30 days.

(Related: Survey: Branch Banking in the U.S. Still a Robust Service)

“We are much more diligent in making our branching decisions based on the way people bank these days,” said Greg Stanfill, Arvest’s director of community banking. “In the past we saw a growing community or growing area, and we probably wouldn’t do quite the level of due diligence that we do today to determine whether we put a branch there. I think you’re going to see fewer branches going up and greater emphasis on this technology in the way we deliver this technology.”

While the number of branches has dropped in Arkansas since 2008, the amount of deposits has grown every year with the exception of a small drop from 2012 to 2013. In 2008, total deposits in Arkansas banks were a little more than $47.1 billion and, in 2015, that amount had risen to nearly $56.5 billion.

“It is a rapidly changing industry, and we have to think completely different than the way we used to think,” Stanfill said. “It’s a two-edged sword. We are providing all these services to customers that allow them to not have to come into the bank. As a result, we never get to really build relationships like we used to. This has always been a relationship business.”

Hefner is convinced the math works for his bank’s move into Cedarville. There’s only one way to be sure.

“We’re building our branch network and hopefully it will pay off,” Hefner said. “Call me in two years, and we’ll see. If I answer the phone, you’ll know it worked out.”

Arkansas Banking

^*Deposits in thousands.

Bank customers continue to seek the human touch provided by bank branches, according to a survey by Protiviti, a global consulting firm based in Menlo Park, California. The survey, released late last year, found that 84 percent of bank customers visit their branches at least once a month.

“Our survey suggests that in the mind of the customer, the branch continues to be the place where their money lives, while the web and mobile are applications that direct the movement of that money,” Jason Goldberg, a director in Protiviti’s business performance improvement practice, said in a news release. Protiviti is a subsidiary of Robert Half International.

The survey, “Bricks & Clicks — Consumer Preferences on Retail Banking & Payments,” said that customers were moving from “multichannel” banking (options from which customers could choose one) to “omnichannel” banking (customers using multiple options).

“Our survey results show no negative correlation between frequency of branch visits and web and mobile banking use, except for the predictable spike in electronic check deposits for respondents who indicated that they never visit a branch,” the report said.

(Related: Online Banking Rises in Use, but Arkansas Branches Remain Important)

Little Rock developer Philip Herrington believes if he sells his undeveloped lots in Oklahoma City, he will have more than enough to repay the creditors in his $13.45 million bankruptcy.

Herrington’s Chapter 11 reorganization, filed on March 18, represents one of the largest debt totals in a personal bankruptcy filing in recent years in Arkansas. He listed $5.1 million in assets.

As of last week, Herrington’s detailed plan for how he’s going to emerge from reorganization hadn’t been filed with the U.S. Bankruptcy Court, and Bankruptcy Judge Ben Barry hadn’t set a filing deadline. But Herrington told Arkansas Business last week that a plan for reorganization will be filed soon, “and we’ll go from there.”

The creditors then will review it and could make objections.

One of Herrington’s creditors, Timberdell Road Group LLC of Oklahoma City, asked Wednesday for permission to question Herrington about his reorganization plans.

“Cryptic and late-filed operating reports state that there are no business cash transactions in the reporting periods,” Timberdell’s attorney, Michael Bickford of Oklahoma City, wrote in the filing. “It is impossible to tell if [Herrington] is actually paying prepetition debts based on the operating reports filed.”

Herrington’s handwritten monthly operating report for May listed his ending checkbook balance at $69.82.

He declined to comment further on specifics of his bankruptcy, in part because he is also a defendant in a number of pending lawsuits.

Herrington’s financial trouble can be traced to the Gaillardia Golf & Country Club in northwest Oklahoma City, which he bought in 2002 as part of a $9.1 million transaction with Oklahoma Publishing Co., led by Christine Gaylord Everest.

Creditors started filing lawsuits against Herrington and his other business entities in 2013 after he began defaulting on loans connected to Gaillardia, which features a 55,000-SF clubhouse and an 18-hole golf course. In 2014, he was removed from the operational control of the club after allegations of mismanagement.

Herrington’s personal bankruptcy followed a $3.7 million judgment that First Commercial Bank of Edmond, Oklahoma, received in June 2015 against him, Gaillardia Development LLC and his real estate development company, Herrington Inc. The bank assigned the judgment to Timberdell in October, and Timberdell now has a $3.1 million claim against him.

As Timberdell searched for Herrington’s assets, Herrington headed to U.S. Bankruptcy Court in Little Rock, which stopped the collections process and stayed the other lawsuits.

During a bankruptcy proceeding, an audio recording of which Arkansas Business obtained, Herrington, 63, said that he filed for bankruptcy protection because Timberdell was “pursuing collection of virtually all of my assets.”

Herrington said during the proceeding that he wants to sell the undeveloped lots in Oklahoma City. That, he said, would “allow me to be able to move forward in my other operating company, to deal with the rest of my career. But I really can’t do that without handling the issue in Oklahoma City.”

The bankruptcy filing and other lawsuits give insight into how Herrington’s financial world collapsed despite his 30 years in the real estate development industry.

Golf Course Trouble

One of the first public signs that there was financial trouble at the Gaillardia Golf & Country Club came in June 2013.

First Liberty Bank of Oklahoma City filed a lawsuit in District Court of Oklahoma County against Herrington and Herrington Inc. in an attempt to collect on a defaulted $1.6 million loan. The loan had been made to Gaillardia Country Club LLC, but Herrington and Herrington Inc. had personally guaranteed the loans. (Herrington Inc. has not filed for bankruptcy protection.)

The bank also asked that a receiver be appointed because the property wasn’t being maintained.

The club facilities received approximately $2 million in damage during a hailstorm, according to court proceedings. An insurance company paid a claim to have the property repaired, but the fixes weren’t made, according to the bank’s lawsuit.

Gaillardia also owed $460,000 for real estate taxes dating back several years.

In addition, Gaillardia “has been placed on ‘Cash on Deliver’ terms of payment by critical vendors such as food and beverage providers,” the filing said.

Oklahoma City District Judge Patricia Parrish placed Gaillardia in the hands of a receiver on June 27, 2013, as the property moved toward foreclosure.

Herrington worked out a deal for Concert Golf Partners of Newport Beach, California, to acquire the property.

In early 2014, Concert Golf received the property in a deed-in-lieu-of-foreclosure transaction worth $7.3 million. And Phil Herrington and Herrington Inc. were released from their personal liability on the loans and their personal guaranties on more than $7 million in debts, according to the court filings.

But Herrington’s financial problems in Oklahoma City weren’t over.

In 2015, Oklahoma Publishing Co., which had sold him Gaillardia in 2002, filed suit accusing him, Herrington Inc. and other defendants of breach of contract in connection with allegedly failing to pay approximately $160,000 for sales of lots in the Gaillardia community called the Promenade.

Oklahoma Publishing, according to the lawsuit filed in Oklahoma County District Court, said it should have received more than the $1 million Herrington remitted after the sale of Gaillardia to Concert Golf.

Also included in that amount is the insurance settlement that should have been used to repair the property but wasn’t.

It accused Herrington of fraud and deceit for failing to protect its superior liens in the Promenade lots.

Herrington and the other defendants denied the allegations in court filings. The case is pending.

Meanwhile, other issues with the Promenade were developing.

Development in Disarray

Herrington, the sole and managing member of Tri-Core Custom Homes LLC, a construction company founded in 2005, had been planning to develop the Promenade.

Starting in October 2013 and over the next 14 months, JLL Consulting LLC of Florida loaned Tri-Core a total of $1.58 million, Herrington said in a June affidavit filed in a court proceeding. The money was used for Herrington Inc. as “well as all of its subsidiaries, including the Gaillardia Development Co. LLC,” Herrington said in the sworn statement. Herrington also is the manager of Gaillardia Development, a real estate development firm founded in 2002. Gaillardia is a subsidiary of Herrington Inc.

In March 2015, Herrington sold the construction rights and the development rights in the Promenade to JLL Consulting for the forgiveness of the loans as well as an additional $100,000 advanced to Herrington Inc.

The transaction later would cause headaches for JLL.

After First Commercial Bank received its judgment against Herrington in June 2015 and assigned the amount to Timberdell Road, Timberdell started looking for Herrington’s assets.

Timberdell targeted JLL Consulting. Timberdell said JLL didn’t own construction rights to the Promenade, according to a lawsuit JLL filed in 2015 in U.S. District Court in Oklahoma.

JLL asked the federal judge to say that JLL has exclusive development and construction rights in the Gaillardia development. Timberdell then filed a counterclaim asking the judge to rule that Timberdell’s rights in the Promenade area of the Gaillardia residential community are superior to any right of JLL’s.

Timberdell also filed a claim in that lawsuit against Herrington for the deal with JLL. It alleged that Herrington made the transaction with “actual intent to hinder, delay or defraud Timberdell,” according to the pleading, which was filed by Bickford. Timberdell said the deal was made “without receiving reasonable equivalent value in exchange for the alleged transfer” and asked that Herrington’s transfer of the development rights to JLL be voided.

The portion of the lawsuit against Herrington has been stayed because of his bankruptcy procedure, but the rest of the litigation is moving forward.

A jury trial is set for March 14.

The Promenade rights weren’t the only thing that Herrington shed himself of in 2015.

In November, Phil and Annette Herrington sold their 6,151-SF home near Pleasant Valley County Club in west Little Rock for $1.3 million.

Phil Herrington said in the bankruptcy proceeding in April that he didn’t receive any cash equity from the sale of the home.

Herrington also said that he hadn’t received a salary from his Herrington Inc. in at least two years and didn’t have any gross income from his operations.

And when he sold items any proceeds from the sale went to repay debts, he said.

Herrington told Arkansas Business last week that he thinks the value of the 56 lots in the Promenade ultimately could be as high as $14 million. His Gaillardia Development Co. has a 53 percent interest in the lots, which could generate $7.4 million for Herrington. But the current value is reported lower in his bankruptcy filing. “There’s a difference between the cost versus the market value, and I think once we clarify that, they’ll be substantially higher than the filing,” he said. “But we’ll have to determine that.”

He said he went through bankruptcy to be transparent.

“All the parties need to be included, and my objective is to maximize what we can get for the assets and distribute those to creditors,” he said. “This is far and away the most transparent process that is available, as opposed to a bunch of private and/or side deals, which we don’t have any interest in doing.”

Johnny Allison, the Home BancShares Inc. chairman for whom the word “colorful” was invented, loves the banking game. And it is a game to him, he said in an interview last week, albeit a serious one.

If he weren’t occupied with maintaining fiscal discipline at HBI — his primary role now that he’s not CEO — he’d still want to keep his hand in the banking business.

“If I retired tomorrow, I would consider a bank fund. I would consider having a fund that invested in banks,” he said in an interview for an upcoming feature in Arkansas Business.

And he thinks he could do well with it since he knows a lot about bank stocks all over the country.

The U.K.’s June 23 vote to leave the European Union, which sent a brief shockwave through the U.S. stock market, presented him with an opportunity to do some bank investing.

“I couldn’t buy my own bank stock” — Home BancShares was in a quiet period before its earnings release last Thursday — “so I just bought Simmons,” Allison said. “I mean, they beat up Simmons too. But there’s no reason to beat up Simmons; there’s no reason to beat up [Bank of the] Ozarks; there’s no reason to beat us up.”

And he predicted that the market would figure that out too.

Allison bought “only” a half-million dollars’ worth of Simmons First National Corp. stock when it was “on sale” — it bottomed out at $42.54 on the Monday after the surprise results of the “Brexit” vote became clear on June 24. By July 12, it had bounced above its pre-Brexit level, briefly topping $49.

Allison hadn’t taken his profits. “I’m not a trader,” he said. He just added the new shares to the holding he already had from Simmons’ acquisition of Delta Bank & Trust, where Allison was a minority stockholder. “It’s a good bank,” he said.

“My point is, how many times do they put Bank of the Ozarks, Home BancShares and Simmons on sale? We were on sale!”

It looks like there’s a buyer for the foreclosed Lakewood mansion of troubled North Little Rock businessman John Rogers.

“We have an offer accepted on it, and we also have a backup offer,” said Lynn Pangburn, a real estate agent with Coldwell Banker RPM, which listed the home. “We’re hoping one of these two will happen.”

She declined to say the amount of the offer, but she hopes it closes within 30 days.

The 12,400-SF manor home had been listed for $1.7 million.

In 2015, Centennial Bank of Conway foreclosed on delinquent loans totaling nearly $3.5 million to Rogers and his ex-wife, Angelica. The loans were secured by the Rogers’ home on the stretch of Avondale Road known to the locals as Snake Hill.

A new spiral is taking shape in the Lex Golden-Allied Bank-Walter Quinn nexus.

Southern Bank of Poplar Bluff, Missouri, has sued Allied Bank over participation in a June 2010 loan to Quinn Investments Ltd.

Southern alleges that Allied breached its fiduciary obligation by failing to administer the loan equitably, as mandated by the participation agreement.

According to the complaint, Allied received payments and additional collateral last year from Quinn that weren’t shared with Southern.

More than $637,000 is outstanding on the loan, which matured in January.

Lex Golden, controlling shareholder of Allied Bank, denied the allegations.

Six months after the loan was made, Southern Bank inherited the $1 million agreement in its FDIC-assisted purchase of First Southern Bank of Batesville.

You might recall the downfall of First Southern is attributed to an investment portfolio of bogus special improvement district bonds totaling $22.7 million.

Those fraudulent bonds were sold to the bank by its controlling shareholder, Little Rock lawyer Kevin Lewis.

Lewis, who is doing federal time for his record-setting fraud, also burned Allied Bank on a $3.2 million loan secured by counterfeit SID bonds. That deal ultimately cost Allied $1.5 million.

During the Lewis era at First Southern, the bank made loans to Allied Bank’s employee stock ownership plan, overseen by Golden.

But back to Quinn.

The Little Rock businessman made unsuccessful attempts to help Golden extricate Allied Bank’s parent company, Acme Holding Co., from its financial pit with Chambers Bank of Danville. (For much more on that, see Chambers Bank Lands $2 Million Golden Judgment.)

While Acme is in the final weeks of its Chapter 7 liquidation, Quinn continues to confront his own financial travails.

His 5,183-SF vacation home in Colorado is up for sale at the legal insistence of creditors.

Union Bank & Trust of Monticello provided a $3.7 million loan to buy the place back in October 2008 and later made a second loan of $675,000.

Quinn Investments paid a reported $5.7 million for the six-bed, eight-bath residence in the western suburbs of Aspen.

We understand the property also helps secure a $2.1 million loan from the Bank of Little Rock.

Smaller banks really are hit harder by the cost of regulatory compliance, a report published last week concluded.

Fortunately, bank regulators seem to be aware of the problem and are taking action, economists with the Federal Reserve Bank of St. Louis wrote in the July issue of The Regional Economist.

Economists Drew Dahl, Andrew P. Meyer and Michelle Clark Neely analyzed data on compliance costs from a survey of 469 banks conducted by state banking commissioners and the Conference of State Bank Supervisors by comparing them to total noninterest expenses. Banks with more than $10 billion in assets were not included.

“We found that, in 2014, the ratio of compliance costs to total noninterest expense increased substantially as the size of the bank decreased. For example, banks with assets of $1 billion to $10 billion reported total compliance costs averaging 2.9 percent of their noninterest expenses, while banks with less than $100 million in assets reported costs averaging 8.7 percent of their noninterest expenses,” they wrote.

(For more, see Community Banks Feel Regulatory Pinch.)

The cost of compliance personnel was the biggest piece, representing 60 percent of the cost. That ranged from more than 5 percent of noninterest expenses for the smallest banks to less than 2 percent for the largest.

A similar pattern was found in other categories of compliance expenses: data processing, legal fees, accounting and consulting.

The authors of the report recognized that the raw numbers assumed that banks were spending money to achieve the same level of regulatory compliance, so they also compared the costs to confidential ratings of the banks by their regulators.

The result “provided no evidence that compliance performance decreased as bank size increased,” they concluded. “In fact, ratios of the most highly rated banks to other banks in a given size category tended to increase in larger size categories. This suggests that governance practices across community banks may not be as critically dependent on direct expenditures as they are on the ability of management, boards, audit committees and internal auditors to work together to properly focus oversight attention, and that larger banks have an edge in focusing that attention more efficiently.”

The article quoted from a recent speech in which Federal Reserve Board Gov. Jerome Powell said: “The risks and vulnerabilities of community banks differ substantially from those of larger banks, and an explicit tailoring of regulation and supervision for community banks is appropriate,” Powell said.

2014 Mean Compliance Expenses

                                                                                          Asset Size Categories

NOTES: The sample consists of 469 commercial banks with assets under $10 billion that responded to the CSBS survey and for which complete data are available. The highest-rated banks are those assigned to the best category by regulators in the management component of their overall CAMELS rating; other banks are in lower categories. “Ratio” is the ratio of the number of banks in the highly rated category to the number of banks in the other category.

Source: Federal Reserve Bank of St. Louis

Seats are filling up, with more than 200 expected to attend the Venture Center's VC FinTech Accelerator's Global Investor Demo Day to be held from 1-5 p.m. Aug. 3 at the Clinton Presidential Library, according to spokesman Steve Rice.

Rice said there's still time for people interested in going to register here.

Gov. Asa Hutchinson will be the keynote speaker for the event, which concludes the 12-week summer startup program hosted at the Venture Center in Little Rock and backed by FIS of Jacksonville, Florida, a global banking technology services provider.

The 10 companies selected to participate in the first financial services industry-specific accelerator will also give pitches at the demo day. 

"We are excited to showcase the significant traction these disruptive fintech companies have made in our program," Venture Center President and CEO Lee Watson said in a news release. "The past 12 weeks have been intense; these CEOs have made tremendous steps forward with going to market in the short time they’ve been at the Venture Center."

Each startup received an initial $50,000 investment.

"This inaugural portfolio exceeded our expectations," Gary Dowdy, the program's managing director, said. "In many cases, these founders are seasoned business owners who have created strong products that are disrupting the financial services sector. We're proud to celebrate their success on Global Investor Demo Day and are even more excited for the deals they have in the pipeline for the coming year."