J. Thomas May Talks Acquisitions, Student Loans, Illness (Executive Q&A)

by J. Thomas May  on Monday, Jan. 16, 2012 12:00 am  

The chairman and CEO of Simmons First National Corp. and Simmons First National Bank of Pine Bluff discusses Simmons' strategies for growth and other topics.

This Week: J. Thomas May
Chairman and CEO of Simmons First National Corp. and Simmons First National Bank of Pine Bluff

J. Thomas May has headed Simmons First National Corp., parent company of Simmons First National Bank and several smaller banks, since 1994. He has announced plans to retire at the end of 2013.

Bio: J. Thomas May
Background: May graduated from El Dorado High School, served in the U.S. Marine Corps and earned bachelor's and master's degrees in business administration from the University of Arkansas at Fayetteville. He is also a graduate of the National Commercial Lending School and the Stonier Graduate School of Banking. He has served on the board of directors of the Federal Reserve Bank of St. Louis and as chairman of the Arkansas Bankers Association and the UA Board of Trustees. May was inducted into the University of Arkansas Business Hall of Fame in 2010.

Q: Simmons First National Corp. made a couple of FDIC-assisted acquisitions. How have those worked out? Do you anticipate doing any more deals with the FDIC?

A: We are very pleased with our acquisitions in Missouri and Kansas. Acquiring a failed bank and restructuring it to take advantage of the market opportunities is not easy because you have lost many of your good core customers and some associates by the time we take control of the bank.

A lot of our success is determined by the early decision of buying into the right market, buying at the right price, and being able to keep some good talent in the associates of the new bank as they are the ones who are able to identify and retain the good customers.

This takes planning. We have broken down the process into four teams: Acquiring, Integrating and Accounting, Loss Share and Go Forward. It takes a strong management team to liquidate the bad assets and meet the enormous requirements of the FDIC. We have a lot of experience in integrating acquired banks into our culture and system. We have allocated some of our most talented executive management to this process. David Bartlett, our president and chief operating officer, leads a group of talented executives in making all this happen. 

Our focus in doing an FDIC deal is not just buying a troubled bank at a deep discount, but it is buying a failed bank at the right price in a good market, which is exactly what we did in Springfield, Mo., and Olathe, Wichita and Salina, Kan. We are able to buy the banks using a minimal amount of front-end capital, we bid at a discount price that enables us to record a significant profit, we take minimal risk due to the FDIC guarantee feature in our bid, and it is an easy entry into a new market.

From a long-term perspective, we acquire these failed banks to rebuild them into strong community banks similar to the banks that are already part of the Simmons First community banking network. A part of this strategy ultimately will be to expand the acquired footprint through de novo branching, other FDIC-acquired markets or traditional acquisitions.

We are fortunate to have a large level of excess capital, and it is our plan to use that excess capital in additional FDIC acquisitions, which we believe will be accomplished during the next 24 months.

Q: What about conventional acquisitions? How far outside Arkansas would you be willing to go?

A: From 1995 through 2005, we completed 10 acquisitions to geographically diversify by expanding our footprint throughout Arkansas. The lack of acquisitions since 2006 has been related to seller price expectations being too high during 2006 and 2007, followed by very little activity due to the Great Recession. We believe traditional acquisitions will be a part of our strategy going forward, but we expect most of that activity will be after 2014.

 

 

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