(A correction has been made to this story. See end for details.)
George Makris still doesn’t consider himself much of a banker, but he’s a fast learner.
For instance, from his very first call on an institutional investor in Connecticut after joining the executive team at Simmons First National Corp. in 2013 he learned that the healthy but sleepy Pine Bluff banking company had to change, pronto.
“I thought the meeting went extremely well, and I’m getting ready to leave when the guy looks at me and he goes, ‘George,’ he said, ‘hostile takeovers aren’t really prevalent in the banking business, but your company is a prime candidate.’”
Makris, 61, was running his family’s beer distributorship in Pine Bluff and had served on Simmons’ board of directors for more than 15 years before being selected to succeed the legendary Tommy May as CEO of the publicly traded company. It was an outside-the-box choice by a bank that was so traditional it was in danger of disappearing.
The investor ticked off the reasons Simmons could easily be gobbled up.
“We had everything banks were looking for: liquidity, capital, great asset quality. Our efficiency rating was horrible, so if a bank came in and bought us and stripped the bank, they’d get all the efficiencies of cost savings.
“And our valuation in the market was just barely above book value at the time, so it wasn’t going to take much of a premium for our directors to have to consider an offer very favorably.”
Makris, then CEO-elect, drove away from that meeting with things to discuss with CFO Bob Fehlman and Simmons Bank President Marty Casteel. “Between that call and the next call, in the car, we all agreed that we had to do something.”
That learning experience came four-and-a-half years ago, a blink of an eye in Simmons’ 114-year history but dog years in the evolution of the corporation.
“Hopefully it’s changed for the better and, no, it’s not attributable to me,” Makris said during a recent interview at soon-to-be-vacated offices in the Simmons Tower in Little Rock. “It is attributable to some open-minded executives we’ve had who had the foresight and the ability to sit back and not feel threatened or criticized by investigating new ways to do things.”
A few months after the Connecticut epiphany, shortly before Makris became CEO at the start of 2014, he took the lead on Simmons’ successful bid to buy Metropolitan National Bank of Little Rock and its 45 branches from its insolvent holding company in a bankruptcy court auction. The timing was pure luck, Makris said, and the winning bid — $53 million, which came from a $75 million cushion of excess capital — was “worth every penny.” It transformed Simmons.
Overlapping markets in central and northwest Arkansas allowed Simmons to close 28 branches. That improved Simmons’ efficiency ratio, a metric comparing costs with revenue, and improved the stock value. Within three months, the stock was trading for what was then top-dollar, 1.6 times book value.
“All of a sudden, instead of having to pay cash for banks, we were able to use stock,” he said.
The Metropolitan purchase closed in November 2013. Three more acquisitions were announced over the next six months: Delta Bank & Trust of Little Rock; First State Bank of Union City, Tennessee; and Liberty Bank of Springfield, Missouri.
Those four acquisitions — and the merger of an anachronistic structure of eight separate subsidiary charters — took the assets of Simmons Bank from $3.5 billion in mid-2013 to $7.6 billion two years later.
More Assets, More People
Assets weren’t the only things Makris was growing.
“All of a sudden, those acquired banks had as many associates in the Simmons organization as the legacy Simmons organization did,” he said. The head count is now about 1,850 in Arkansas, Missouri, Kansas and Tennessee, according to Simmons’ June 30 call report, but it will push up to about 2,500 when two pending acquisitions close.
Marrying five corporate cultures into a cohesive whole required top-level HR talent, Makris said, and that person is Jena Compton, whose title is chief people officer. “We must have lied to her to get her to come over here and leave Acxiom,” Makris said.
Compton, he said, methodically defined cultural attributes that were common to the banks and formalized the culture and the hiring, training and employee evaluation processes in order to spot and develop talent. It was important to a rapidly growing organization that the corporate office not be “just cramming something down from legacy Simmons, even though it was 110-something years old at the time.”
Now every bank activity and every new project considered, must be consistent with the cultural attributes of Simmons Bank, which has now pumped its assets up to $8.57 billion with the acquisitions of Trust Co. of the Ozarks in Springfield and two Tennessee banks, Citizens National Bank of Athens and First South Bank of Jackson.
The process will be applied to the two pending acquisitions, Southwest Bank of Fort Worth, Texas, and Bank SNB of Stillwater, Oklahoma. Both are expected to close in the current quarter, creating a bank with assets above $13 billion — almost four times the size that was vulnerable to a takeover less than five years ago.
Of a total of 47 branches about to be brought into the family, only the two Bank SNB branches in Wichita, Kansas, are in cities where Simmons already has a presence. Southwest has 17 branches, most in Fort Worth, but Bank SNB also brings five Texas branches, plus 18 in Oklahoma and three in Colorado. When the two acquisitions close, the Simmons footprint will grow from four states to seven and stretch from Knoxville in east Tennessee to Denver’s southern suburbs.
The pending acquisitions will also mean that more than half of Simmons’ branches will be outside Arkansas.
Makris, like Simmons, is a product of Pine Bluff, and he feels a responsibility to the struggling Delta city
“Pine Bluff is a unique situation,” he said. “We have a really, really high market share in Pine Bluff. It is our headquarters and it is where the majority of our interests lie.”
Simmons’ corporate philanthropy “disproportionately goes to Pine Bluff” through the Simmons First Foundation’s “Go Forward Pine Bluff” initiative, Makris said. And his family’s business in Pine Bluff, M.K. Distributors, created a foundation in 1991 to create a stable source of grants for local projects.
Two of Makris’ three sons work at the Anheuser-Busch distributorship. “Our family is rooted in Pine Bluff,” he said. “But with Simmons, ultimately, we’re going to have to make the best decision on how and where we can grow the business. We’re going to be able to grow some of it in Pine Bluff; we’ll grow some of it in Little Rock — that’s why we bought the Acxiom building.”
Sheer size — assets, payroll, geography — has forced Simmons to push the decision-making authority downward and outward through the organization.
“The biggest change has been to start thinking of our bigger size,” Makris said. Simmons no longer has to find lending partners to participate in larger loans, and its growing presence in major population centers like Dallas-Fort Worth, Oklahoma City and Nashville, Tennessee, has strengthened its talent pool.
“We’re just building a really good foundation,” he said. “But here’s what we are really trying to build: We believe that our obligation as a larger bank is to be able to take care of as many financial needs in that community as we can.”
And the culture that Simmons has identified means it wants to be the hometown bank in every market where it does business. “We’re still a community bank,” Makris said. “We’re just bigger than most community banks.”
(Correction, Sept. 6, 2017: The number of Metropolitan branches acquired in November 2013 was incorrect in the original story.)