Court Opinion

ID: 7817006
Source: CourtListenerOpinion
Date Created: 2022-09-07 17:40:04.812008+00
Date Added: 2024-06-11T16:30:37.658104
License: Public Domain

Carleton Harris, Chief Justice, dissenting. In my view, the ruling of the Pulaski County Circuit Court (Third Division) should be affirmed, because of the provisions of Ark. Stat. Ann. § 67-1824 (3) and (4) (Repl. 1966). Sub-section (3) provides that an applicant for a charter must show that: “There is a public need for the proposed association and the volume of business in the area in which the proposed association will conduct its business is such as to indicate a successful operation.” No public witnesses testified, and there was no evidence, in my opinion, that would justify a finding that there was a public need for the proposed association at Heber Springs. The only witnesses who testified for appellant were the President, Secretary, and a member of the Board of Directors. According to the testimony of Mr. Robert Harrison, Secretary of the proposed association, no problems had arisen in Cleburne County with regard to obtaining home financing. Mr. Harrison was unable to name any qualified borrower within Cleburne County who had been turned down for a loan by existing financial institutions, and, in fact, the witness stated, “Well we have been satisfied with the service.” The witness admitted that quick and efficient loan service has been received from Batesville Federal Savings and Loan Association, and other neighboring lending institutions. Likewise, on cross-examination, Mr. Harrison admitted that, based on the experience of 1962,1963, and the first ten months of 1964, there were not enough loans available in the county for the new association to be successful. As Mr. Harrison stated, “Based on the past figures, we might as wTell just close the door.” The witness also stated that the proposed association would need a million dollars volume before it could start making money, and that available loans would have to be four times greater than at present. The evidence reflected that there were only 2,858 householders in the county in 1965, and that building permits issued numbered only 36, 20, and 21, respectively, for the years 1962, 1963 and 1964. Another figure which would appear pertinent to the matter is the public school enrollment, which fell from 2,010 in 1961 to 1,855 in 1965.1 recognize that Greer’s Ferry at Heber Springs will bring economic growth to Cleburne County, but to what extent, cannot yet be known. At any rate, I am unable to agree that the testimony established a public need for the proposed association. The other requirement for a charter that I deem here controlling is found in Sub-section (4). It provides : ‘ ‘ The operation of the proposed association will not unduly harm any other existing association or federal savings and loan association or other financial institution.” My dissent is based mainly on the proof relating to this phase of the litigation. There are three small banks in Cleburne County, two in Heber Springs, and one in Quitman. These banks have combined assets of only about eight million dollars. The net earnings of the bank at Quitman in 1963 amounted to $10,869.36, and the net earnings of the Cleburne County Bank were $16,319.52.1 It is my view, from the evidence offered, that the establishment of the proposed savings and loan association could have a most harmful and detrimental effect upon the existing financial institutions within the county. The proof reflected that the association would expect to draw its principal support from the Cleburne County area. Several witnesses, experienced in finance, testified that the granting of the application would have an adverse effect on existing lending agencies in the county. Mr. Warren Bass, a certified public accountant, who has served as a representative of the state of Arkansas on the Governing Council of the American Institute of Certified Public Accountants, and who is also a former member of the State Banking Board, prepared a series of exhibits projecting the position of the existing banks in the Cleburne County area after first assuming the existence of the proposed savings and loan institution. According to his testimony, if the proposed association had existed in 1963, the three banks in Cleburne County, collectively, would have shown a profit of $3,101.69. He concluded his testimony by stating: “Well, in summary, the way I would summarize it, that you would strengthen the weak by weakening the strong. These are not big institutions we are talking about. There is a thin profit margin involved. Our forecast again based on realistic accounting information shows that the savings and loan would be a loss situation, that there would not be material profits made by the other three insitutions in the county and I had rather summarize it by saying it would almost be like strengthening the weak by weakening the strong.” It may well be that, in the not too distant future, the economy of Cleburne County will be such as to support this additional financial institution, but I am presently of the view that the granting of the charter was premature.  Paul Hensley, President of the Arkansas National Bank in Heber Springs, supported the application by letter.