The DD&F Story
The DD&F story begins 30 years ago in 1993, when DD&F first opened its doors for business. However, to really understand the full picture, you need to know the back-story, or as Paul Harvey used to say, “the rest of the story.” Let’s wind the clock all the way to 1977 when a bright-eyed, 24-year-old Randy Dennis moved to Little Rock, Arkansas at a pivotal time in the world of banking – for Randy, anyway.
Armed with a freshly printed MBA, a young wife and a two-month-old daughter, Randy jumped at the first – and almost only – job offer he received and entered the world of banking and finance through the doors of Arkansas Financial Services (“AFS”) in Little Rock.
Five years later, two more future DD&F’ers entered the picture – Bob Fegtly and Bill DaBoll. Bob Fegtly had just graduated with an MBA and moved to Little Rock looking for opportunities. On the first day after moving, he looked up “consultants” in the Yellow Pages (remember those?) and gave AFS a call. Luckily for him, he was hired and began to work alongside Randy. That same day, Bill DaBoll was also hired by AFS. Bill came from Chicago and brought with him “real world consulting experience.”
Location, Location, Location
At this time, Little Rock was home to the Federal Home Loan Bank of Little Rock, which supervised savings and loans (“S&Ls”) across what was known as the 9th District, which included the states of Arkansas, Mississippi, Louisiana, Texas, and New Mexico. All S&Ls in the region were regulated by the Federal Home Loan Bank of Little Rock, making Arkansas’s capital the center of the universe for S&Ls in those five southern states. It turned out to be the perfect place for Randy, Bob, and Bill to learn the industry firsthand, and to form a great working team.
Not only was Little Rock an important regulatory hub, but AFS turned out to be a very unusual company. The company was owned by 75 S&Ls in Arkansas, allowing Randy, Bob, and Bill to learn both banking and consulting from the inside out. It’s one thing to read about consulting in business school, yet quite another to actually provide value in the consulting process. AFS was the perfect training ground to learn about the importance of regulators and the regulatory world of preparing branch applications, evaluating banking markets, chartering savings and loans, and facilitating mergers. The early 80’s were foundational for each of them and set the stage for the company that the three would later establish.
The S&L Crisis
Between 1986 and 1988, the S&L world imploded. Triggered by a perfect storm of stagflation, plummeting oil prices in Texas, asset-liability mismatch and shifting regulatory policy, the S&L crisis marked the largest collapse of U.S. financial institutions since the 1930s. Between 1986 and 1995, 1,043 of the 3,234 (32.3%) S&Ls in the United States failed. Arkansas was particularly affected since some of the biggest thrifts to fail (First Federal of Arkansas, Savers Federal, First America and FirstSouth) were in Arkansas and were even owners of AFS. Randy, Bob, and Bill were located at ground zero of the resulting recovery efforts.
Congress passed the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) to help pick up the pieces of the broken S&L industry. FIRREA abolished the bankrupt Federal Savings and Loan Insurance Corporation, transferred the insurance coverage to the FDIC and created the Resolution Trust Corporation (RTC). The RTC was charged with closing, selling, or merging troubled thrifts and disposing of assets. Arkansas was the site of one of the early RTC failures, First Federal of Malvern. After the thrift failed and was marketed, no bank bid on the deposits, and as a result the insured deposits were paid out or liquidated. It was one of the first major failures of the RTC.
Seeing a great opportunity for Arkansas banks embedded in the S&L crisis, Randy approached the Arkansas State Bank Commissioner, Bill Ford, and convinced him that the failed S&Ls offered opportunities for Arkansas banks. Fortunately, Mr. Ford liked the idea. It was during this timeframe that Randy, Bob, and Bill began building the relationships with bankers and regulators across the state and region which would drive the future growth of Arkansas banks.
The years from 1988 to the first half of 1992 were a blur as AFS capitalized on the failures throughout the south. AFS prospered during this time, but in June 1992, the failures all but stopped. It was during this lull in activity that the three realized they could not continue with AFS and its mission to serve the savings and loan industry because the S&L industry was rapidly nearing extinction. Something had to change.