April 28, 2014
by Bob Coleman
Editor, Coleman Report
While an indictment has not been filed against former Arvest Bank’s CEO of Benton County, the allegations published by Arkansas Business are painting a bleak future for Dennis Smiley.
The central allegation is hundreds of thousands of dollars of Arvest Bank stock was used as the same collateral for $4.5 million in loans from 18 different banks.
The banks who have filed lawsuits to date:
Integrity First Bank — $199,881
First State Bank — $145,965
Delta Trust — $245,126
Bank of Fayetteville $479,177
Simmons First National Bank $85,974
First National Bank of Fort Smith $196,093
First State Bank of Lonoke $159,085
Reports Arkansas Business, “Uniform Commercial Code filings with the Arkansas Secretary of State’s office indicate that Smiley used the same shares of Arvest Bank stock as collateral for multiple loans.
“The banks understood that the collateral was not literal stock but a type of phantom shares contrived by Arvest Bank Group as an incentive to reward top executives based on the appreciation of real Arvest shares held by the Walton family.
“Executives holding these phantom shares could, upon leaving the company, cash in the stock for a price tied to the book value of Arvest.
“But until recently the banks did not know that Smiley pledged the same collateral over and over again with multiple lenders. The alleged scheme allowed Smiley to use an asset valued in February at just under $400,000 to help borrow more than $4.5 million.”