Seeks Change in Arkansas Law that Curbs Growth
Worthen Banking Corp. plans to push for a change in an Arkansas law that prevents a bank from holding more than 15% of deposits in the state, said Curt Bradbury, the company's chairman and chief executive.
Little Rock-based Worthen, which has $2.7 billion in assets, will be close to the legal limit after completing its acquisition of crosstown rival Union of Arkansas Corp. for $100 million in stock.
The deal, announced last week, would boost Worthen's share of deposits in the Arkansas capital to about one-third, ranking it first instead of second.
1993 Legislative Initiative
Mr. Bradbury said Worthen would push to revise the 15% limit during the January 1993 legislative session. "I, personally, think there's a reasonable shot that we might put together a coalition that would be successful at getting the limit altered somewhat," he said.
Areas of the state where Worthen would like to expand its presence include Jonesboro and Fort Smith in the north and El Dorado and Texarkana in the south, according to Mr. Bradbury.
Without a change in the deposit limit, Worthen would have to consider deploying its excess capital in other states. Mr. Bradbury said he would give priority to Texas, since Worthen will pick up Union's $110 million-asset Austin bank if the deal goes through.
Forced Out of State?
"We would be virtually forced to look at interstate opportunities," Mr. Bradbury said. "Frankly, that's not my first choice. I would rather complete a strategic coverage of Arkansas."
Mr. Bradbury added that he considers Arkansas "underrated" as a banking state. Despite the state's onerous usury law, which restricts bank interest rates to 500 basis points over the discount rate, Worthen earned a 0.99% return on average assets and a 17.33$ return on average equity last year. In the first quarter, those ratios 1.07% and 17.32%, respectively.
"When states and companies are underrated, that's what creates opportunity," Mr. Bradbury said.,
The purchase price for Union is about two times book value. Union has $710 million in assets.