Chambers Bank of Danville Sets Sights on Dallas

J.R. Meeks, left, senior executive vice president, and Mike Donnell, president of Chambers Bank in Danville (Karen E. Segrave)

Danville’s Chambers Bank has taken steps to expand beyond Arkansas.

This fall, the $1.3 billion-asset lender expects to open a dallas office, which would be its 24th full-service location.

“We plan to get that going in the next 90 to 120 days,” said Mike Donnell, president of Chambers Bank. “We’re looking to build core deposits and relationship banking.”

The plan is to start operations in leased quarters in the Love Field area of Dallas with an eye toward future expansion northward up through the metro area.

J.J. Gomez, a 34-year veteran banker in Texas, was hired in June to lead the effort as Dallas market president. Gomez worked in a similar capacity during the past four years with Texas Regional Bank, American State Bank and Veritex Community Bank before joining Chambers. Before that, he worked 30 years at PlainsCapital Bank.

The Dallas office will be Chambers Bank’s first operation there. But it is no stranger to making loans in the Dallas-Fort Worth metroplex.

Having Dallas Cowboys owner Jerry Jones in the extended family helped the bank build some lending relationships in the area over the years. Jones, a shareholder in Chambers Bancshares, is married to Gene Chambers Jones, sister of John Chambers, chairman and CEO of his family’s bank.

“We’ve always had some loans down there,” said J.R. Meeks, senior executive vice president at Chambers Bank. “But this will give us an opportunity to provide full-service banking in Texas.”

Chambers Bank renewed its effort to enter the $278 billion deposit Dallas County market after delays from economic disruption caused by the coronavirus pandemic and ensuing interest rate concerns.

“And we decided we’d wait,” said John Chambers.

The Texas office will be the first new full-service branch opened by Chambers Bank since December 2019 when its Van Buren location opened for business.

“It will give us a new market,” Chambers said of the Dallas expansion. “It’s going to be fun. We’ve had $50 million to $100 million in loans down there at times.”

During the past five years, the bank has explored possible acquisitions in Arkansas as well as Texas and Missouri.

“We’re continuing to look for those opportunities if we see something that fits,” Donnell said. “Over the last four or five years, we have put a lot of emphasis on our growth. We’re going to be doing some things to enhance that growth.”

“I’d love to be $2 billion [in total assets] by the end of 2030,” said Meeks, who grew up in the Dallas area. “I could easily see that happening, but we’re going to do it in a way to not put on too much risk and stay in our lane.”

Meeks, a nephew of John Chambers, represents the fourth generation of the Chambers family in the bank’s leadership.

His work in the family business dates back to 1999 with a series of summer jobs in Fayetteville while he attended the University of Arkansas on his way to a finance and banking degree.

“I’ve always had an interest in banking from being around it, even as a kid,” Meeks said. “The finance aspect was always an interest. I wanted to be a lawyer or a banker and went with the banking route. I’ve basically done everything at the bank from emptying wastebaskets on up.”

Meeks, who joined Chambers Bank full time in 2003, works primarily out of the Fayetteville office.

He is recognized as the CEO-in-waiting as his uncle enjoys more play time and less work.

“That position J.R. will inherit,” Chambers said during a phone interview from Florida while taking a break from the sun and surf of Destin. “He’s pretty close to that now.

“J.R. is an extremely hard worker. He creates a large percentage of our loan portfolio. He has put together a really good team.”

John Chambers’ family entered the banking business in 1930 when his namesake grandfather converted the Bank of Belleville into Danville State Bank and moved the business into the former home of Yell County Bank, a casualty of the Great Depression.

Total assets of Danville State Bank stood at $10 million when John Chambers joined as an assistant vice president in the early 1970s.

“Now we’re over $1.3 billion,” Chambers said. “We’re shooting for 5%-8% annual growth. We could grow a little bit faster, but that’s not our goal. We work hard, and we play hard. But you better be at work the next morning.”

Challenging Times

The bursting real estate bubble in 2008 introduced stress and drama to the bank’s historically profitable storyline.

“Everything’s been good and upward except for that,” Chambers said. “It was pretty rough.”

Northwest Arkansas became a triage area for real estate lenders hammered by market reversals back then.

John Ed Chambers, CEO of Chambers Bank (Photo provided by Chambers Bank)

Chambers Bank suffered its only unprofitable years in 2010 and 2011, posting back-to-back losses of nearly $17.8 million and about $5.5 million.

“We’ve learned to be a lot more careful and be more selective in what we do,” Chambers said. “We had over $50 million in OREO [real estate recovered from borrowers gone bust]. J.R. was active in the work-out. He got us out of a lot of bad spots.”

“When the glass is always half full, you find out things can go bad,” Meeks said. “What do you do then to work out of it? I don’t think I’ll ever forget those lessons. They were burned into my head.

“We’re more disciplined on how we evaluate things. We have a very good team, and the way we do underwriting today is totally different than the way we did it back then. What are the contingencies?

“You’ve got to make sure that the borrowers have the capacity to make sure they can get a project completed the way it’s supposed to be completed and completed on time.”

Chambers Bank entered the northwest Arkansas market during the late 1990s with investments in the Bank of Elkins (Washington County) and Community Bank of North Arkansas in Fayetteville. The two lenders were combined to create Chambers Bank of North Arkansas, which in November 2008 was merged into Chambers Bank.

The bank holds the distinction of breaking the billion-dollar mark for total assets twice thanks to unusual circumstances. Financial fallout from the 2008 meltdown of real estate provided the catalyst for the first occasion more than 11 years ago.

During 2012, total assets at Chambers Bank ballooned from $704 million in the third quarter to a smidgen beyond $1 billion in the fourth quarter.

Driving that fiscal surge was the bank taking control of the $359 million-asset Peterson Holding Co. No money changed hands when Chambers Bank took possession of the parent company of Decatur State Bank and Grand Savings Bank of Grove, Oklahoma.

The deal amounted to an asset forfeited in lieu of foreclosure. The Peterson family relinquished its stock holdings, which secured a loan held by Chambers Bank.

In bank regulatory parlance, the change of ownership was accomplished through a DPC (debt previously contracted) acquisition. Under the Bank Holding Company Act, a bank can hold DPC shares for two years with the possibility of regulators granting three one-year extensions if more time is needed.

Chambers only needed the two-year minimum to position the banks for sale, liquidate the assets, recover millions and close the book on the bad loan.

“We pretty well had 15-18 people up there for two years, and it wasn’t much fun,” Chambers said of salvage operations at Decatur. “But we worked our way out of it without a loss.”

In April 2013, the $235 million-asset Grand Savings Bank was sold for $21.8 million.

The same group of investors later purchased the $128 million-asset Decatur State Bank for $6 million in 2014.

The new ownership was dominated by Arkansas investors who controlled a combined 75% stake through four families: Anthony Steele of Bentonville, president of Steele Development Inc.; Rex Grimsley of Bentonville, cattleman and president of Center Valley Estates Inc.; Gary Anderson of Rogers, owner of Anderson Electric & Plumbing Supply; and Steve Zimmerman of Rogers, president of Midland Construction Inc.

During the temporary ownership of the Peterson Holding banks, total assets at Chambers Bank fell to $747 million in 2013 and $682 million in 2014.

That set the stage for Chambers Bank’s second and more traditional climb over the $1 billion mark during the second quarter of 2020, powered largely through organic growth with a boost from one acquisition in 2019.

The bank paid $17 million for the $134 million-asset River Town Bank of Dardanelle.

These days, Chambers Bank ranks as the 17th-largest banking franchise headquartered in Arkansas.

Credits