First Arkansas Bank and Trust does not want Bank of the Ozarks in its backyard - and is suing to keep it out.
Bank of the Ozarks, based in Little Rock, has received approval from the state's Department of Banking to open a branch in First Arkansas' hometown of Jacksonville.
But Larry T. Wilson, First Arkansas' chairman and chief executive officer, said that slow-growing Jacksonville (population 30,600) could not support another branch - especially since two have opened in the last six months and a third is on the way.
"It's not a situation of being anticompetitive, it's a question of being overbanked," Mr. Wilson said. "It's simply a matter of oversupply and limited demand."
In late June the $262 million-asset First Arkansas filed a suit in Pulaski County Circuit Court against the $1.8 billion-asset Bank of the Ozarks and the state bank commissioner, Robert H. "Bunny" Adcock. It is asking the commissioner to reverse his approval.
The suit is First Arkansas' second attempt to stop the branch. In January, soon after Bank of the Ozarks filed its application, First Arkansas filed a formal protest with the Bank Department. Despite the protest, the branch was approved in May.
Candace Franks, a lawyer for the Bank Department, said that First Arkansas' suit is unusual. It had been about 15 years since one bank had opposed another's branch application in the state, she said.
Susan Blair, a spokeswoman for Bank of the Ozarks, said Jacksonville is attractive as a bedroom suburb of Little Rock and the home of Little Rock Air Force Base. She noted that the Defense Department announced four months after the branch application was filed that the base, Jacksonville's main employer, would get another 3,800 jobs under the 2005 Base Realignment and Closure plan.
Bank of the Ozarks also wants to provide better service for its many customers who live in Jacksonville and now must drive several miles to reach its branches in the surrounding area, Ms. Blair said. "We are confident that we can comfortably and profitably serve our customers in the Jacksonville community," she said.
Neither she nor Ms. Franks would discuss the legal case.
The branch was slated to open by the end of the year, but Ms. Blair said it probably will not.
In the last 10 years Bank of the Ozarks has opened 50 branches in Arkansas, always without opposition, she said. In fact, she said, two of them are in Cabot, which has 17 branches (including three First Arkansas branches) for a population of 19,600 people.
That is many more branches per resident - one per 1,153 - than in 11-branch Jacksonville, at one per 2,781, according to Census Bureau and Federal Deposit Insurance Corp. data. The Arkansas average is one branch per 2,001; the nationwide average is one per 1,791.
However, Mr. Wilson was quick to point out that these figures do not include the two new branches and the one slated to open, which he claims the commissioner failed to consider.
Deposits in Jacksonville increased 3.5% last year, to $214 million, according to the most recent numbers from the FDIC. That followed minor fluctuations, including a 3.5% drop in 2003.
In the lawsuit Mr. Wilson said Bank of the Ozarks did not refer to any statistics like these for Jacksonville but instead was "cherry-picking" data from Pulaski County, where Jacksonville and Little Rock are located, to make its case for a branch more convincing.
For example, Pulaski County deposits have risen in each of the last five years, for a total increase of 29%. The county's population is also growing much faster than Jacksonville's, and its average income is much higher.
"The bank commissioner used statistics from Bank of the Ozarks' application, most of which were not from this particular market," Mr. Wilson said. "So his decision was based on erroneous information."
