Banking Board Minutes -May 1, 2003

Arkansas
State Bank Department

State Banking Board

Meeting Minutes for May 1, 2003

(updated September 2, 2003)

A special meeting of the State Banking Board was held in the conference room of the Arkansas State Bank Department, 400 Hardin Road, Suite 100, Little Rock, Arkansas, at 10:00 a.m. on Thursday, May 1, 2003. The following Board Members were present: Chairman Ted C. Skokos, Vice Chairman David Bartlett, Charles Mazander, Gus Rusher, and David Short. Representing the State Bank Department were Commissioner Frank White, Deputy Commissioners Don R. Clark and Candace Franks, Management Project Analyst Cynthia Nixon, Administrative Assistants II Barbara Mahoney and Marilyn Myers, and Chief Examiner Wilks Marshall. Betty Chenault from Bushman Court Reporting was the recording reporter for the applicants. No representatives from the media were present.

State Bank Commissioner Frank White called this special meeting of the State Banking Board. Notice of the special meeting was sent by regular mail to each member of the State Banking Board on March 26, 2003. The notices were also given to the news media in accordance with state law.

Commissioner Frank White opened the meeting. Secretary Don R. Clark declared a quorum was present. Commissioner White asked the visitors and guest to stand and introduce themselves and state whom they represent. He then turned the meeting over to Chairman Ted Skokos.

First on the agenda was consideration of the Minutes of the February 6, 2003, Special Board Meeting. A motion was made by David Bartlett, seconded by Charles Mazander, to approve the Minutes as presented. Motion carried and the Commissioner concurred.

Next was approval of expenses for the Board. A motion was made by David Bartlett, seconded by Gus Rusher, to approve the Board's expenses. The motion carried and the Commissioner concurred.

Next was the election of a new Vice Chairman for the Board. A motion was made by Gus Rusher, seconded by Charles Mazander, to elect David Bartlett Vice-Chairman. Motion carried and the Commissioner concurred.

Next was an application by Pulaski Bank and Trust Company, Little Rock, Arkansas, for the merger of Munford Union Bank, Munford, Tennessee, with and into Pulaski Bank and Trust Company, Little Rock, Arkansas. Chief Operating Officer Bob Magee represented and spoke for the application. He stated this would be a branch office in Memphis, they already have a mortgage company in Memphis and this would give them an additional five offices in the Memphis area. Pulaski Bank feels this would be very beneficial for future growth. A motion was made by Gus Rusher, seconded by David Short, to approve the application. The motion carried and the Commissioner concurred.

Item six on the agenda was an application by Arvest Bank, Fayetteville, Arkansas, for the merger of the The Bank of Yellville, Yellville, Arkansas, with and into Arvest Bank.

Randy Dennis of DD& F Consulting Group, Little Rock, represented and spoke for the application. Ron Strother from the Arvest Bank group also spoke for the application. Randy Dennis explained the application stating they have a tentative date for the merger of July 1. Ron Strother explained that Arvest can better serve North Central Arkansas and can bring an important impact, in the way of bank services, to consumers. Mr. Bartlett questioned how Arvest was structured to comply with the Community Reinvestment Act. Mr. Strother explained the Arvest Bank group is very sensitive to the Community Reinvestment Act, that the Waltons are very strong on economic development. He stated Judy Loving will remain with the bank and her loan limit will be set by Jim Walton. After general discussion, a motion was made by Gus Rusher, seconded by Charles Mazander, to approve the application. The motion carried and the Commissioner concurred. The Secretary was asked to note in the Minutes that David Short excused himself from the vote on this application.

Item seven on the agenda was a proposed regulation for application requirements for industrial development corporations. Deputy Commissioner and Staff Counsel Candace Franks explained the regulation. Mr. Skokos further explained the reason for rewriting this regulation is that we wanted to be sure we were right. Motion was made by David Bartlett, seconded by Gus Rusher, to approve the regulation. Motion carried and the Commissioner concurred [see copy of appendage to these Minutes].

Next on the agenda was a proposed charter amendment for Central Arkansas Regional Industrial Development Corporation, LLC. Bob Francis, President of the company, represented and spoke for the application. He explained the company has gone below the minimum capital requirements and he is asking the Bank Board to approve raising additional capital. He noted they have several projects in process. Commissioner White commented the Department has been watching these projects, he told Mr. Francis we would not let them operate undercapitalized - it is necessary they put in more capital. Mr. Bartlett asked if the new capital would bring in new shareholders. Mr. Francis commented there would not be any change in Directors but will be a change in ownership. Mr. Skokos commented we need to look at the background of those people who are making investments in this type of company. Mr. Francis commented they currently have ten bankers on board and a fifteen-county-area. A motion was made by Gus Rusher, seconded by Charles Mazander, to approve the amendment subject to review of the investors and the new capital by the State Bank Department. Motion carried and the Commissioner concurred.

Under "other business" a Resolution is to be prepared honoring past Board Member Judy Loving [see copy appendage to Minutes.] Gus Rusher commented we should also do a Resolution for Bob Douglas. The Commissioner stated the Department would send flowers to the family, the balance of the flower money would be sent to Arkansas Children's Hospital in the name/memory of Mr. Douglas.

The Commissioner commented he has hired a new examiner; there has been a 56% turnover with the examiner staff in four years. David Short stated it would be good if the turnover could be held 15%. The Commissioner stated that "Flex Friday" is working very well for the examiners. He said we have the best-trained examiners in the history of the Department. He stated the Governor has appointed a new Board Member to replace Bob Douglas - her name is Margie Russ, she is from Magnolia, Arkansas. He noted she had not yet received her paperwork - and this is the minority position on the State Banking Board. He stated there was an article in the Arkansas Democrat-Gazette that the banks are just holding their own at this time. Also, the Federal Reserve and the Federal Deposit Insurance Corporation are real tough under the present economic conditions, they are not cutting any slack.

The Commissioner noted we have a Directors' Training Seminar tomorrow, we have approximately 1,132 Directors in the state, approximately one-half of them have been trained. He stated we plan to hold two more sessions, one at the Peabody Hotel on August 12^th and one in Jonesboro on September 5`^h. He noted our budget had passed and we are in the clear and we have nothing in the next session of the Legislature. He stated it is going to be tough in the state government, they may have three special sessions and they are looking at various ways to raise income. Chairman Skokos asked if the Bank Department funds were segregated under the Governor's proposal to reorganize state government. The Commissioner explained they are not but we have been assured they will not use the Bank Department funds at least for the next two years. Chairman Skokos stated we need to be thinking about a Resolution before the next Board Meeting on June 5^thto let people know how the Board feels about Bank Department funds need to be specifically segregated in any new law.