John W. Allison

CONWAY — Johnny Allison is a banker with the bark off.

Remember TARP — the Troubled Asset Relief Program? TARP was the politically debatable, but debatably essential, offspring of the sub-prime mortgage crisis circa 2008. Billions of dollars were lent to financial institutions by the U.S. Treasury.

Allison’s Home BancShares, parent of Centennial Bank, took $50 million of the federal government’s money as a backstop, those being tumultuous times.

“I bought an insurance policy,” Allison says in his office in Conway. “I slept better at night knowing we had it.”

“We never used a penny of it,” he adds. “I told Wall Street that I took it home, put it under my my mattress and put my .357 Magnum next to it.”

They love that kind of down-home talk on Wall Street.

That’s not all Wall Street should love. It should also love the fact that in the second quarter of this year, Home BancShares notched its ninth straight quarter for record earnings.

And now Home BancShares will be the second-largest financial institution in Arkansas since it agreed in June to buy Liberty BancShares of Jonesboro, a deal expected to be consummated by December. Home BancShares will then have $7.1 billion in assets, $4.5 billion in loans, $5.6 billion in deposits, 1,500 employees and 151 branches in Arkansas, Florida and Alabama.

Arvest Bank of Fayetteville, with antecedents in the Walton family empire, is still about twice as big as Centennial. Not that Allison is sitting on his hands. When the Liberty deal was announced, he said Home BancShares was still seeking acquisition opportunities. Since 2010, Home BancShares has bought seven failed and three healthy banks in Florida.

Centennial eventually gave back the Treasury’s money, plus millions in interest, for peace of mind. A sign applicable to the TARP deal — to every deal — hangs in the boardroom near Allison’s office. The sign says: “Something for nothing.” That’s a warning, right? There is no free lunch? “That’s exactly right,” Allison says — and grins again.

Mil Adams calls himself a semi-retired businessman. He lives in Conway and has been a friend and business associate to Johnny Allison for 31 years.

“He has the most charismatic personality of any individual I’ve ever known,” Adams says. “I can say that without reservation.”

“He’s comfortable with and enjoys the company of an array of individuals, from the hourly wage earner sitting around the table enjoying a beer to a group of investment bankers in a 40th-floor conference room. He relates with one as well as the other.”

Another longtime friend and business associate, Little Rock investor Alex Lieblong, agrees. He travels to New York for investor conferences, which gives him the opportunity to size up the executive competition. He was in New York in mid-September.

“After seeing every executive up there in New York, 15 companies from casinos to hotels to finance, I didn’t see one that I’d put ahead of Johnny,” Lieblong says.

“I’ve invested in banks for 30 years,” Lieblong adds. “Never met a banker who has the competitive spirit he’s got. But that’s his nature. He and I have done deals for 30 years, and he always brings a fresh insight and is better with details than anybody I know. People look at him as a gun-slinging cowboy, but he’s the opposite.”

In fact, Lieblong jokes: “Lock him in a room with four other bankers and get them out three days later and Johnny will have all their wallets.”

A DODD-FRANK WALKS INTO A BANK

Johnny Allison has been in banking since 1983, when he became chairman of First National Bank of Conway. But he has been a businessman for much longer — he sold his first mobile home at 13.

“I had no idea what I was learning.”

Something he has learned since then is that banking is plenty different from what it was in 1983.

Now there are ATMs, banking by phone, and more regulation. It’s the latter that gets him excited — and not in a happy way. He is critical of Sen. Mark Pryor, D-Ark., for voting for Dodd-Frank, passed by Congress in 2010 to further regulate the financial sector after the sub-prime mortgage debacle.

Allison twice disapprovingly notes Pryor’s vote.

Dodd-Frank is especially hard, Allison says, on small banks.

“Local community banks take care of our local communities. Politicians make laws and have no clue what they’re doing — the law of unintended consequences. Take the $80-$150 million bank. It’s the cornerstone of its community. But its shareholders and management are getting older. What happens to those banks?

“We’re forcing regulations that have their foot on the throat of small banks. I would not want to be a $100 million bank in Arkansas today.”

Dodd-Frank “is awful. Go punish the big banks. Leave the small banks alone.”

Michael Teague, a spokesman in Little Rock for Pryor, differs with Allison’s criticism of Dodd-Frank.

“First off, right now in Arkansas our community banks are making more money than they ever have in the history of the state,” Teague says. “Number two, Sen. Pryor worked extremely hard during that debate to exempt community banks under $10 billion in assets from being examined by the Consumer Finance Protection Bureau.

Since Dodd-Frank has passed, Home BancShares’ annual net income has gone up 358 percent. “You can’t make money hand over fist and then complain about Dodd-Frank running you out of business.”

A bookcase in Allison’s office displays the trophies bagged over the expansion years. They are mostly coffee cups with the names of the absorbed banks. Key West Bank. Vision Bank. Wakulla Bank. Old Southern Bank. Premier Bank. First Commercial Bank of Florida. Gulf State Community Bank. On his desk is a new book by C.R. Cloutier, Big Bad Banks.

His bank, Allison says, doesn’t fall into the “big bad” category.

Small banks share with their towns and their shareholders, Allison says, and Home BancShares has created a billion dollars’ worth of value for its shareholders.

“People tell me, ‘My grandson went to college because of Home BancShares.’”

Dodd-Frank has created a line for banks, Allison says. Home BancShares is a $7 billion bank.

“We might go to $8.5 billion and stay there,” he says. “Or we could go over $10 billion and get all this excessive regulation. That’s the call, and it’s a damn tough decision. What you really want to be is a $14 billion to $16 billion bank.”

However big Home BancShares and Centennial grows, it’s a long way from 1998 when Allison and Bunny Adcock bought the Bank of Holly Grove, a clock from which hangs on Allison’s wall.

He was on the board of Little Rock’s First Commercial, and chairman of the executive committee, from 1985 to 1998 when it was sold to Regions Financial Corporation. He was chairman of First National Bank of Conway from 1983 to 1998.

‘MOVING PARTS’

Before that, he had been a businessman. Allison built Spirit Homes Inc. of Conway into one of the largest mobile home manufacturers in the country. He sold it to Belmont Homes of Mississippi in 1995.

“I like to went broke several times,” he says. “No disrespect to bankers, but if you can run three manufacturing plants with 800 workers you can run a bank. There were thousands and thousands of moving parts. There aren’t as many moving parts in this building.”

His experience in businesses other than banking has served Allison well, Lieblong says.

“The more I look at it over time, my belief is that people are born with a certain knack, and then you add desire and a little bit of obsessive-compulsive behavior, and you’re successful.”

“Johnny didn’t come through banking school or an MBA program,” Lieblong says. “He came from trying to meet a payroll and trying to run a business. He came at it from a completely different training, background and life experience. But he had the natural ability.”

In 1988, Allison founded Capital Buyers Inc., which bought house trailers from failed savings and loans during the S&L crisis of the 1980s. More accurately, he bought the trailers from the Resolution Trust Corporation, a federal agency created to liquidate the assets of the many S&Ls that disappeared from the financial landscape.

How many mobile homes?

About 8,000 over three years.

What does a guy do with 8,000 trailers?

“We sold them off. I made more money than I had in my entire life. Dealers put them on their lots and resold them, and we knew the dealers from the manufacturing business.”

One of Allison’s characteristics, Mil Adams says, is “tremendous insight. He has always said that in our lifetime there are three or four opportunities. We need to use wise judgment in identifying those opportunities and be prepared to strike.”

Strike they did.

“Johnny saw an opportunity where repossessed units would be available in large numbers. Johnny could pick up units that were new or barely used, buy them for pennies on the dollar, and those homes would become much more affordable to that manufactured home buyer. He’d have those units available not only to the general public, but would sell to dealers. They could buy those discounted units cheaper than a new house.”

Another characteristic, Adams says, is generosity.

“There is nothing Johnny would not do if I picked up the phone and called to ask a favor.”

Alex Lieblong concurs.

“If someone can fault him, it’s that he’s loyal to a fault. If that’s the worst thing someone can say about you, you’re in pretty good shape.”

All of Allison’s business successes lead Adams to a simple conclusion.

“There’s nobody’s pocket I’d rather have my money in than Johnny Allison’s. If he’s managing my money, I never lose a wink of sleep at night.”

Not that Allison and Centennial haven’t made mistakes. Allison admires Kemmons Wilson, the businessman who founded the Holiday Inn hotel chain.

Allison channels some of Wilson’s wisdom.

“Good judgment comes from bad judgment,” Allison says. “There is no substitute for experience. You can go to school and get your doctorate, but what that means is you’re ready to learn.”

One important thing Allison has learned is not to lend money in an inflationary market, as Centennial did some years ago in the Florida Keys — and lost $30 million.

“When the clock stops, what happens? That $12 million condo I just loaned on, it’s now worth $1 million. But when something bad happens, something good happens, too. I now know how to price real estate in Florida. The good is that when the government looks for buyers for bad banks, we know the market.”

The result: “Home BancShares has bought more failed banks than anyone in the country.”

Allison has a simple formula for success.

“I surround myself with good people. They’re homegrown, not some hot dog who flew in here. I’m a trusting soul with two dozen people who have the key to the vault. I’m looking for the 13th and 14th person. I’m proud of that, and I reward them. I want them to become wealthy.”

“I’m like an old pair of shoes,” he says. “I don’t run the bank. My team runs it.”

Allison, as the largest individual shareholder of Home BancShares, is plenty wealthy himself. He has about 5 million shares worth about $150 million.

A new Home BancShares building is under construction.

At 67 years old, what’s next?

“I’m in great health,” he says. “I love what I do, and I’m not ready to quit. This sounds egotistical, but there’s not another Johnny Allison in this company.”

THE POLICE WHEN

YOU NEED THEM

Allison proudly serves on the Arkansas State Police Commission, appointed first by Gov. Mike Huckabee and reappointed by Gov. Mike Beebe. He became an admirer of the state police at the 1998 trial of his kidnapper, James Slack.

Slack was already in prison for kidnapping Jo Anne Lieblong, wife of Alex Lieblong, but escaped from the prison unit at Wrightsville in 1997. At trial, he testified it took him five days to walk to Conway, after which he bought supplies, then camped out at Toad Suck and in a wooded area near Allison’s home.

Slack went to Allison’s office, from where the kidnapping progressed to Allison’s car.

After driving around, Allison remembers, Slack started talking about Allison’s wife and kids. That’s when “I ran my car head-on into a dump truck. I planned it for about an hour. It knocked me a little cuckoo.”

Slack walked away as a crowd gathered. “He’s the bad guy, he’s the bad guy,” Allison told the onlookers.

Slack got 60 years as a habitual offender and is currently incarcerated at the East Arkansas Unit in Lee County.

Back in Conway, Allison pulls out two more life lessons from what he calls his knapsack full of thousands of them.

He shows off his $9 Wal-Mart watch.

“I don’t wear a Rolex anymore.” That’s kidnapping lesson No. 1.

Even better, he has this long association with the Arkansas State Police. That’s kidnapping lesson No. 2.

“If someone kidnaps me today,” Allison says, “he’s got 530 troopers looking for him.”

SELF PORTRAIT

Johnny Allison

DATE AND PLACE OF BIRTH: June 15, 1946, Little Rock FAMILY: Wife and four children I KNEW I WAS GROWN UP WHEN: Still waiting to know I’m grown up! I DRIVE a big, black Ford Excursion. MY GREATEST STRENGTH AS A BUSINESSMAN is recognizing opportunities. MY FAVORITE JUNK FOOD: Peanut butter pretzels. I’M MOST COMFORTABLE WEARING jeans. ONE WORD TO SUM ME UP: Businessman