Posted 3/31/2014 12:00 am
A version of this article originally appeared in Arkansas Business on Aug. 3, 1987. It is being republished as part of Arkansas Business' 30th anniversary issue. You can access the digital edition for free here.
The setting is mid-1984 near the bluffs of the Arkansas River in Franklin County. Some unusual goings-on are transpiring here at the Bank of Ozark, flagship of Ozark Bankshares Inc.
Some observers believe the group’s young CEO, a whiz kid lawyer named George Gleason II, is receiving a hard lesson about the rigors of banking. They note that Gleason, who in 1979 bought control of the Bank of Ozark at age 24, has initiated an about-face in strategy.
Reports indicated Ozark Bankshares, which includes Arkansas Valley Bank in Dardanelle and Newton County Bank in Jasper, is adopting a conservative stance toward the market.
Word has it that officials are tightening loan provisions, even with established clientele. Those eye-catching interest rates once offered for deposits are being lowered into the banking mainstream, too.
Gleason’s move contrasts sharply with the wheeling and dealing of unsecured, non-recourse and negative amortization loans offered by some lenders.
Could this be the same Gleason-led group that plunged into deregulation armed with a take-no-prisoners marketing campaign in search of major asset growth during 1981-83?
That blitzkrieg campaign bagged new deposits numbering in the tens of millions of dollars by featuring interest rates sometimes as high as 1 percent above anyone in the state, including the biggest institutions.
Some view Ozark Bankshares’ withdrawal as a sign that things aren’t going well in the house that Gleason built. They believe he is now paying for his aggressive posturing. Apparently those premium interest rates on deposits necessitate some risky investments that aren’t panning out as expected.
Not so, explains Gleason. His reasoning at the time reads like a prophet of doom: “We see things getting tough. The national economy doesn’t look good. The oil and gas industries don’t look good. Agriculture doesn’t look good. A lot of real estate markets are getting overbuilt.”
The hindsight afforded by the passage of three years has upheld Gleason’s beat-of-a-different drummer analysis. Joe Hiatt, chairman and CEO of American State Bank in Charleston, comments: “He proved his wisdom when he pulled his wings in.”
Invariably, one of the first things people associate with Gleason is intelligence, and for good reason. Through his school days in Dardanelle, he was known as the smart kid. Setting the grade curve came as naturally for Gleason as for his three older sisters — Marcia, Lynne and Diane. All graduated as class valedictorians, as had his parents George and Mildred.
Gleason, a former Dardanelle Sand Lizard defensive lineman, blitzed through Hendrix College at a record-setting clip of two years. At the University of Arkansas School of Law in Fayetteville, he graduated No. 1 in his class. Guess who wrote the top paper when Gleason took the Arkansas bar exam: Yeah, he aced that one, too.
When a restless Gleason turned his energies from securities law at the Rose Law Firm toward banking, he also met the familiar face of success. Working with business veteran Carl Holt and a young staff, he built the Bank of Ozark with 35 employees and total assets of $28 million into today’s Ozark Bankshares Inc., with more than 100 employees and assets totaling $150 million.
With 36.37 percent stock ownership and voting control of another 27.84 percent, Gleason is the final decision-maker.
“I have great trust and respect for his mental abilities,” Holt, the chairman of Ozark Bankshares, says. “It’s unusual for someone that age to be capable of handling it. But everything he said he’d do, he did.”
Many agree that Gleason is super bright and knows how to generate rapid growth. His insight in pulling back from loan activity in 1984 when other hard-chargers continued deeper into a financial ambush triggered by plunging oil prices and deflation was nothing short of savvy.
“It almost makes him unique in respect to the institutions that were engaging in aggressive growth and lending practices,” Arkansas Bank Commissioner Marlin Jackson remarks. “Ozark Bankshares did it far more successfully than others. They didn’t go unscathed, but they took their fair share of lumps.”
Gleason concurs, but the company’s wounds are superficial by comparison. “We had no significant losses, but there were problem loans and situations that had to be worked out,” he states. “We expect 1987 profits to be slightly less than 1986, and that’s primarily caused by a decrease in net interest margins, part of an industrywide trend.”
Oil Belt loans (mostly in Oklahoma) have always comprised less than 10 percent of the holding company’s investments. Commercial real estate in Arkansas is far and away the organization’s mother lode. The investments are spread from Arizona and Nevada in the west to Mississippi and Tennessee in the east.
Ozark Bankshares is now refining an informational network that will enable management to further streamline operations and poise the holding company for additional expansion.
Gleason discloses plans for two to four new banks in the near future. As a matter of logistics, he’s most interested in acquiring banks in the northwest of the state or west-central Arkansas.
“We don’t plan on looking until 1988,” Gleason relates. “It’s not in the budget, and we have no plans till then.”
‘His Permanent Mark’
A first meeting with Gleason leaves a visitor with thoughts of his articulate and polite speech that, like his facial expressions, change little. As the conversation progresses, however, he becomes more animated with an occasional wave of the hand, an arched eyebrow and slight voice inflections.
His mannerisms and bearing reflect a lifestyle that is mostly private yet display the attributes of a quietly charismatic leader.
Little Rock attorney Graham Catlett, a law school classmate of Gleason, notes: “He will make his permanent mark on Arkansas in his lifetime. I just hope we get to see him involved in public affairs.”
Gleason admits he once had political ambitions, but those ideas have, for the most part, been stored away. “I’m not much of a politician,” he expounds. “Maybe in an appointed position; I’m too frank to be successfully elected.”
Jim Miller, now assistant dean and director of admissions at the UA School of Law in Fayetteville, taught Gleason junior high science, history and civics.
“He is much like he is now,” Miller remarks. “He always had a gleam in his eye. You never knew what he was going to do, but it wouldn’t be bad. He was one of those kids who always seemed older than he was.”
Close friends affirm Miller’s assessment, describing Gleason as a 24-year-old going on 44 when he bought the Bank of Ozark.
His age was a non-issue when his funding proposal convinced Commercial National Bank to back the $3.5 million purchase. As collateral, he put up everything his father had built — the family’s 989-acre ranch in Yell County and a trust set up for his sisters and himself.
“We trusted him implicitly,” Gleason’s mother adds. The loan was paid off in September 1985, and his family made a tidy profit for their support.
“When I bought the Bank of Ozark, I borrowed 100 percent of the purchase price,” Gleason intones. “When you talk about fast track, that’s fast track. … I liked to go Mach 3 all the time, and our organization did.”
Gleason didn’t sprint through college solely out of his quest for a fast-paced life. A sense of urgency was involved.
His father had suffered a severe heart attack while Gleason was in the eighth grade. George Gleason Sr. wasn’t expected to live long. His son took the prospect of becoming the lone male in the family to heart.
“At the age of 14 or 15, I began assigning some reality to the thought that, ‘Gosh, I might have an enormous responsibility soon,’” Gleason declares. “I became the top of the class in law when my father died. That was one of the last things my father saw me do. I was the last child; he knew I would make it and be OK.”
Arkansas Gazette reporter Bob Wells, a former roommate at Hendrix, recalls frequent visits by senior and junior students seeking scholarly aid from his freshman roommate. Wells also remembers their initial bull session together.
“That first night we were in the room, he told me he was going to graduate in two years, marry his high school sweetheart, get a law degree and go into business,” Wells says. “And he did. I never knew anyone who had it laid out like that.”
A Spiritual Conviction
Unlike Gleason’s other endeavors, his first effort at marriage ended in divorce. (“That was the first project that I ever failed at that I put my will toward succeeding,” he admits.)
By age 28, Gleason thought he had accomplished everything he had ever hoped for — a flourishing career, a second wife and children in the wings. “But my life was a mess,” he discloses. “Financially, it was a success. … May 28, 1982. That’s the beginning of the story of my life. That day, I realized that being the best, the first and accomplishing and possessing were the wrong goals.”
A spiritual conviction overcame Gleason that day in a Texas hotel room while reading “Born Again” by Charles Colson. Christian friends had been talking with Gleason for several years about changing his personal goals, from a life based on increasing monetary net worth to a more fundamental net worth. A restructuring of priorities, i.e., God, family and self, followed.
Despite Gleason’s conversion, his second marriage also ended in divorce. “That was a real trial,” he says of the obvious disappointment. “As a believer, that was a terrible decision to make.” Friends report Gleason has weathered this crisis and continues to work hard at living his Christian tenets.
Friends also note that before Gleason’s conversion, he was driven, almost compulsive, toward business and its rewards. Those same friends and Gleason himself say he now has a more balanced life.
He and his third wife, Linda, are newly married with two sons from his second marriage (Tripp, 4, and Peter, 2) and her two children (Amy, 11, and Eric, 6).
Friends reveal that Gleason has retained his business drive, but he is no longer driven, as was the case when he bought the Bank of Ozark.
“It was an all-or-nothing deal,” Gleason observes. “I had to make the bank pay for itself. … I would never come within miles of doing that again. It would be like me trying to take over First Commercial today. If I really wanted to, I could gamble and go after big deals. I don’t have the incentive.
“Why continue to push everything to the limit all the time? Gosh, I slept seven-and-a-half hours last night,” Gleason exclaims in amazement. “In our really busy days, we’d work almost all night, but that was ridiculous.”
Gleason’s zest for work remains in the shadow of his enthusiasm for his wife and children. Some of his most enjoyable work is being a father and playing with kids, whether it involves watching Union Pacific trains pass through town, throwing rocks in the Arkansas River or watching Care Bear movies on the home VCR.
“It’s as fulfilling as any job I’ve ever had,” he smiles. “The impacts on my kids are going to impact other kids on into the future. That’s a lot more important than buying another bank.”
In a characteristic break from the norm, Gleason has some unusual plans for 5,400 SF beneath his office. He and his family intend to take up residence on the unoccupied second floor of the bank.
The structure (gray-painted brick, dark tinted windows and red metal roof) will soon include an extra large Manhattan-style walkup apartment with six bedrooms and five bathrooms. The move is a reverse of the take-work-home principle, allowing Gleason to spend even more time with his family.
“We’re committed to the family, and we’re committed to the business,” he states. “We’ll lease from the bank at market rate like any other tenant would.”
Gleason’s reputation for being unconventional and innovative was also manifested through banking operations. Some approaches he undertook from 1979-86 are now routine, while others are still novel for small and medium-sized banks:
- Making loans and soliciting deposits from outside a bank’s traditional trade area.
- Focusing on loans, which are debt-type investments, rather than stocks and bonds, which are equity investments.
- Originating loans and developing a network of participating banks to help finance multimillion-dollar commercial and residential real estate loans.
- Coordinating private placements in municipal bond issues and building a trust department.
Under his leadership, the Ozark Bankshares banks were acting, and on a smaller scale performing, like big-time financial institutions. As one competitor points out, “When he came in, he made a big splash; he seemed to want to be bigger and better than other banks, including Little Rock.”
The company ran full-page ads in area newspapers comparing its interest rates with other Arkansas banks in 1981-83. With the competition as much as 1-1.5 percent lower, the display left little doubt about who had the best deal going.
The then-unheard-of practice of listing competitors by name in direct comparison galled neighboring bankers. Some of the state’s larger institutions got similar treatment. Every $1 million in new deposits flowing into Gleason’s banks was coming out of someone else’s vault.
“We named names and compared rates,” Gleason agrees. “Boy, it had the desired effect. It was a success in a business sense but foolish. Our advertising went from legitimate competition to outright warfare. That was hurtful to people. We could’ve been almost as successful without advertising other people’s rates.”
Dennis James, chairman of the James Keet & Strawn Financial Group in Little Rock and former CFO at Ozark Bankshares, recalls another marketing ploy:
“Once I walked into the bank lobby at Ozark and noticed the tellers had a $100 bill pinned to their lapel. Of course, I walked right into the trap and asked what it was all about. She rattled off a memorized spiel about how I would get a $100 bill on the spot if I opened a certain type of account. That was probably the first of its kind in Arkansas.”
Gleason’s hardball marketing with its nontraditional approach stunned many competitors and prompted numerous complaints to regulators. No foul was the ruling.
Perhaps the man to blame for Gleason’s decision to enter banking is King Crow, the president of Arkansas Federal Savings Bank in Little Rock. It was Crow, then an employee at Commercial National, who suggested the idea of buying a bank to Gleason during lunch in 1978.
“I said, ‘That’s a possibility,’ and one thing led to another,” Gleason remembers. He soon left the Rose firm, and the rest is history.
“He’s a great banker; he’s not a very good racquetball player,” Crow chides mockingly before laughter breaks his façade. “He’ll probably take exception with that and challenge me to a game.”
Besides racquetball skills, Crow adds this equally significant foible: “He likes a dry salad. He has the most atrocious palate of anyone I know. His taste in food is bland.”
Like his salad, Gleason’s sense of humor is dry and sometimes self-effacing. His response to the question of “What scares you?” is as warm and dry as the Santa Ana winds.
“Other than how this article is going to come out?” he quips, then pauses to reflect. Gleason looks out of the southeast window of his third-story office. From this vantage point, the Ozark-Jeta Taylor Lock & Dam is visible over the roofs and treetops of downtown Ozark. North of this man-made structure, the forested slope of Randall Reed Mountain climbs rapidly from the banks of the Arkansas River.
“The one great caution in my life is that I never forget how I got to where I am,” Gleason answers in earnest. “I used to think about my job all the time. I’ve just learned to focus on other things. … It’s a matter of discipline and commitment.”
As a reminder, Gleason mentally pictures that phrase — “Remember how you got here” — in the bathroom mirror as he begins each day. Gleason now appears to have those phantom scales weighing personal life and career at a happy equilibrium.
“I’ve questioned whether I’d have to get out of business to do this,” he reveals. Gleason believes trading a portion of his self-will for a higher one can maintain that balance.
Since Then ...
2014: Ozark Bankshares Inc., obviously, is now Bank of the Ozarks Inc., and George Gleason is still running it.
From the $150 million community bank that Arkansas Business wrote about in 1987 has evolved a regional banking concern that now has assets of more than $5 billion, making it one of the 200 largest banks in the country. When the acquisition of Summit Bancshares of Arkadelphia is completed in late May or early June, Bank of the Ozarks’ assets will exceed $6.3 billion.
Bank of the Ozarks spread across Arkansas, especially the northern half, with a mix of acquisitions and de novo branching.
George and Linda Gleason moved to Little Rock some 20 years ago, and they — she was and still is a director — took the bank public in 1997. A share of stock purchased then is worth almost 40 times as much after almost 17 years and three stock splits.
No one has benefited from that market success more than the Gleasons. Their ownership interest has declined as the company has grown, from more than a third of the outstanding stock in 1998 to less than 9 percent in 2014. But they remain the largest shareholders, and their 3.2 million shares are now worth some $215 million. (For comparison: Bank of the Ozarks only had $150 million in assets when the original 1987 profile was written.)
Continuing the mix of “from scratch” branching and acquisitions — including the FDIC-assisted acquisitions of six failing banks in 13 months in 2010-11 — Bank of the Ozarks has developed a far-flung network of full-service offices stretching from Texas to the Carolinas. (The bank even opened a loan production office on Park Avenue in Manhattan in 2013, and just last month it opened a similar LPO on Avenue of the Stars in Century City, Calif. Both, needless to say, are a very, very long way from Ozark, Ark.)
Bank of the Ozarks has also been recognized as one of the most “efficient” banks in the country. Bank of the Ozarks’ efficiency ratio — essentially the number of cents spent to generate $1 in revenue — has consistently remained in the mid-40s in recent years, when most banks pray for 60.
That sort of attention to the bottom line has earned George Gleason national attention as well. In 2010, he was one of three honored by American Banker magazine as “Community Banker of the Year.” (John Allison, chairman of Home BancShares of Conway, would be similarly recognized in 2013.)
Away from the office, George and Linda Gleason have built a palatial French-style home on more than 100 acres in west Little Rock, and Linda Gleason told the Arkansas Democrat-Gazette that their estate plan includes an endowed foundation to maintain the property as a museum.