First Bank expands its reach in western Arkansas

November is a bittersweet month for fourth generation family banker Jon Harrell, who is the president of First Bank’s Northwest Arkansas region and new chairman of Harrell Bancshares of Hampton, Ark.

It’s been three years this month since First Bank purchased two branches – Rogers and Siloam Springs – from Signature Bank of Arkansas and Harrell took over as market president.

Earlier this month First Bank announced the acquisition of First Community Bank of Crawford County, which will help grow the southern Arkansas bank’s footprint on the western side of the Natural State.

But the news of this recent bank purchase was immediately followed by family tragedy as the bank’s board chairman, 72-year-old Searcy Harrell and father to Jon, was killed when the plane he was piloting crashed in Washington County. The senior Harrell was on his way to see grandson Max Harrell’s football game in Rogers.

This untimely death meant Jon Harrell would assume the role of board chairman for Harrell Bancshares, one of the oldest family owned banks in the state dating back to 1907.

 “The family owns 60% of the growing bank, with the balance owned by a few outside investors,” Harrell said. “My dad had been chairman for 20 years, taking over from his dad. I am the fourth generation Harrell to hold the seat.”

Banking professor and analyst John Dominick has known the Harrell family for 40 years. He first met Jon Harrell’s grandfather in 1970 when Dominick was the Arkansas Bankers Chair for the University of Arkansas.

“Then a few years later Jon Harrell was one of my banking students at the University of Arkansas, who later worked for Signature Bank where I serve on the board. This family has a long history of being fine bankers. They’re just good people who have managed to grow a very successful bank throughout many years,” Dominick said.

CRAWFORD COUNTY
Harrell said the recent acquisitions in Crawford County are an exciting opportunity for the growth of the First Bank brand.

The deal is subject to regulatory approval from the Arkansas State Bank Department and the Federal Deposit Insurance Corporation. Upon approval, which is expected in first quarter 2014, First Community will merge into First Bank. First Community had total assets of $67 million as of Sept. 30, the most recent filing with the Federal Deposit Insurance Corp.

“We like the staff in these locations and plan to keep them in place once the deal is complete. Our hope is to get in there and help work out some problem loans so we can begin to growth the business, following the same plan we had in Northwest Arkansas during the past three years,” Harrell said.

First Community Bank of Crawford County has been under enforcement actions with regulators since July 2012 and came under heightened scrutiny for capital deficiencies in September of this year. The pending purchase from First Bank will infuse the Crawford County bank with the capital it needs to shake free from the two enforcement orders.

The bank has reported losses of $1.031 million through three quarters of this year. Since 2010, the bank has lost more than $6 million linked to a steep rise in non-performing loans. At the same time the bank curtailed lending and its capital equity was eroded to “unsafe” levels, according to the federal enforcement orders.

Terry Carson, president of First Community, will become market president for Crawford County.

“Our bankers are looking forward to the opportunity of providing expanded financial services to our customers in Crawford and surrounding counties with the support of First Bank’s ownership and management team,” Carson recently noted.

Dominick said Crawford County is a competitive banking market showing signs of growth given its location along Interstate 40.

“I think First Bank will do just fine in this market,” Dominick said.

NWA GROWTH
It’s been exactly three years since Harrell took charge of First Bank’s two branches in Northwest Arkansas. He said the bank has expanded their loan portfolio by 50%, and nearly all of that growth came from the two Benton County branches.

First Bank reported total loans of $187.55 million as of Sept. 30, up 10% so far this year. Going back to 2010, the bank has grown its loans from $113.7 million, an increase of 65% during the three year period.

“We have been pleased with our growth in Northwest Arkansas and plan to open a new loan production office in Fayetteville in January,” Harrell said.

The bank has pocketed $1.825 million in net profits through three quarters of 2013. Since expanding into Northwest Arkansas in the fall of 2010 the Hampton-based bank has earned $6.79 million in net profits.

During the same period, the bank has managed to maintain exemplary capital ratios demonstrating it core financial strength. Dominick said the loan demand in western Arkansas is more robust than in south Arkansas where First Bank is based and operates thee different institutions. He said the recent acquisition in Crawford County added to the Benton County branches gives the First Bank some diversity, a good idea for any bank.

BY THE NUMBERS
$320 million: The estimated assets of the pro forma First Bank
$30.4 million: The combined capital equity of First Bank and First Community Bank
7: The number of cities where First Bank will have locations: Hampton, Camden, Junction City, Rogers, Siloam Springs, Van Buren and Alma.