Stephens Inc.

Stephens Inc. of Little Rock (Pulaski County), a privately owned investment bank, is among Arkansas’s most prominent businesses. The company, one of the nation’s largest investment banks not based on Wall Street, was founded in 1933 by Prattsville (Grant County) native W. R. “Witt” Stephens as the W. R. Stephens Investment Co. Witt Stephens’s younger brother, Jackson T. (Jack) Stephens, joined the company in 1946 and went on to serve as chairman and chief executive officer from 1956 to 1986. Since 1986, Jack Stephens’s youngest son, Warren Stephens, has served as CEO.

Witt Stephens was a regional manager based in Colorado for National Crafts Co. when his father, a farmer who served two terms in the Arkansas House of Representatives, convinced him to return to Arkansas in 1932. Witt Stephens set up a partnership with W. H. Thurman, a Prattsville native, to sell Arkansas highway bonds and municipal bonds, using $15,000 in borrowed money. Arkansas highway bonds were trading at ten cents on the dollar at the time. Witt Stephens soon earned a reputation for his bond expertise. In 1945, he diversified his holdings with the purchase of Arkansas Oklahoma Gas Corp. at Fort Smith (Sebastian County).

Jack Stephens joined his brother following graduation from the U.S. Naval Academy. The brothers founded Stephens Inc. on a handshake partnership that lasted more than forty-five years. In 1948, Allied Telephone Co. began a decades-long relationship with Stephens Inc. Allied would evolve into a telecommunications titan known as Alltel (which merged with Verizon Wireless in 2009).

The Stephens brothers acquired Oklahoma Producing Co., a natural-gas producer, in 1953 and renamed it Stephens Production Co. Owning both Arkansas Oklahoma Gas Corp. and a production company, the Stephens brothers could drill for natural gas and then pipe it into homes and businesses. Stephens Production Co., with its extensive natural gas holdings, has paid an estimated $1 billion to the family in dividends through the years. A year after the purchase of what is now Stephens Production Co., the Stephens brothers purchased Arkansas Louisiana Gas Co., commonly known as Arkla.

In 1956, Witt Stephens left Stephens Inc. to become the chairman and president of Arkla, where he stayed until 1973. After his retirement from Arkla, he returned to Stephens Inc. to dabble in bond trading and host daily luncheons of the state’s business and political leaders. Jack Stephens had become president of Stephens Inc. upon his brother’s departure. Under Jack Stephens’s leadership, the company made a series of private equity investments, including a number of banks and a chain of nursing homes. With $400,000 in start-up capital, Stephens created a bank data processing company known as Systematics in 1968. The Little Rock–based company became an international leader in the bank processing business. After being acquired by Alltel, the company was renamed Alltel Information Services. It later was acquired by Fidelity National Information Systems.

In 1970, Stephens Inc. handled the initial public stock offering for Walmart Inc. Walmart Inc. had $32 million in annual revenues at the time. It was the beginning of a long relationship between Jack Stephens and Sam Walton as Walmart Inc. grew into the world’s largest retailer. Stephens Inc. also handled the initial public offerings for Tyson Foods and Alltel. In 1989, Stephens Inc. helped oversee Tyson’s $1.5 billion acquisition of Holly Farms.

In 1971, Stephens Inc. helped underwrite $113 million in municipal bonds in New Orleans, Louisiana, to build the Superdome. At the time, it was the largest municipal bond issue in the South. A major entry into the banking business came in 1983 when the Stephens family invested in Worthen Banking Corp. at Little Rock. Two years later, the bankruptcy of the securities firm Bevill, Bresler & Schulman wiped out Worthen’s capital. The stockholders, led by Jack Stephens, provided the funds necessary to keep the bank solvent. Worthen was sold in 1994 to Boatmen’s Bancshares, a regional bank based in St. Louis, Missouri. In 1996, Boatmen’s was sold to NationsBank, which in turn became part of Bank of America.

Stephens Insurance was established as a division of the company in 1987. From 2006 until 2009, the insurance division grew from thirteen employees to more than 300 with over $300 million in annualized premiums. A significant move into the media business came in 1993 when the Stephens family purchased Donrey Media, renaming it Stephens Media Group. At the time of the purchase, the company owned fifty-two newspapers, twelve outdoor advertising franchises, seven cable television operations, and one television station.

In May 2006, members of the Stephens family announced that they were dividing their businesses into two segments. Warren Stephens maintained control of Stephens Inc. and its related financial services companies. Witt Stephens Jr. and Elizabeth Stephens Campbell, children of the late Witt Stephens, began to pursue private investments under the name the Stephens Group.

When the New York–based investment firm Lehman Brothers collapsed in September 2008, Warren Stephens wrote a memo to his staff noting that while many Wall Street–based firms were leveraged 30–1, Stephens Inc. was leveraged just 2–1 with more than half of its assets in government securities.

By the end of 2011, Stephens Inc. had offices in twenty-four cities in fourteen states.

For additional information:
Barnes, Steve. “Understatement, at $5 Billion.” New York Times, November 21, 1999.

Dumas, Ernest. “The Stephens Empire—I, Brothers Envy of Wall Street.” Arkansas Gazette, June 26, 1977, pp. 1A, 14A.

———. “The Stephens Empire—II, Government ‘Partner’ of Brothers.” Arkansas Gazette, June 28, 1977, pp. 1A, 15A.

———. “The Stephens Empire—III, A Legend in State Politics.” Arkansas Gazette, June 29, 1977, pp. 1A, 10A.

Helman, Christopher. “Good Ol’ Balance Sheets.” Forbes, August 3, 2009, p. 86.

Knowlton, Christopher. “Of Bibles, Bonds, and Billions.” Fortune, February 12, 1990, pp. 112–116.

Stephens Inc. https://www.stephens.com/ (accessed February 6, 2024).

Thornton, Raymond H. A. J. Thornton, As Remembered by His Family. Little Rock: August House, 1983.

Rex Nelson
Arkansas’ Independent Colleges & Universities