Incoming CEO George Makris Jr. Plans to Tap Simmons First’s Big, New Markets

George Makris Jr., CEO-elect Simmons First National Corp. of Pine Bluff

George Makris Jr. is not a banker. Or wasn’t until January, when he became CEO-elect of Simmons First National Corp. of Pine Bluff, heir-apparent to a legendary banker who will retire at the end of this year, J. Thomas May.

Makris, who will turn 57 this month, had spent his career in his family’s Anheuser-Busch beer distributorship, M.K. Distributors Inc., another Pine Bluff mainstay less than a mile from the Simmons headquarters building. And he has been a bank director for decades, starting with 12 years at Pine Bluff’s National Bank of Commerce, which was acquired by Worthen, then Boatman’s, then Bank of America. He has been a director at publicly traded Simmons since 1997.

If there’s anything all that experience has taught George Makris, it’s that he is not a banker. Or, in his words, “I’m not a banker, and I put myself in the category of an old dog. You aren’t going to teach me many new tricks.”

But he is a marketer — M.K. received regional and national awards from Anheuser-Busch in March — and marketing may be what Simmons First National Corp. needs now more than ever as it looks to untapped — if you’ll pardon the beer pun — markets in Missouri and Kansas for the growth that simply isn’t available back home.

In the past three years, Simmons First National Bank, the flagship of the bank holding corporation’s eight charters, has acquired three failed banks in Missouri and one in Kansas. Those acquisitions now represent almost a third of the bank’s deposits and about one-sixth of the holding company’s. But they are spread so thinly among St. Louis, Springfield, Kansas City, Salina and Wichita that Simmons has less than 1 percent of the deposit market in each of those markets except Salina. There it has about 6.5 percent of the market, but that’s still less than $90 million in deposits.

Simmons’ Share of Select Deposit Markets    
As of June 30, 2012

*Includes Excel Bank and Truman Bank, both of which were acquired by Simmons First National Bank with FDIC assistance after the summary of deposits snapshot on June 30, 2012    
Source: Federal Deposit Insurance Corp. summary of deposits

The good news, as Makris pointed out at Simmons’ annual shareholders’ meeting last month, is that even a small gain in market share in those big, new cities could be very lucrative. The bad news is that Simmons, a name that has meant banking in Pine Bluff for 110 years, is meaningless in St. Louis or Kansas City. Or worse, it means something completely different.

“We don’t sell chickens, and we don’t sell mattresses,” he told the shareholders, underscoring the branding problem.

Having to explain that Simmons is a bank “is new to our culture,” he said in an interview last week in his new office in the headquarters building on Pine Bluff’s Main Street. Simmons First National Corp. has, for reasons that Makris still finds valid, maintained eight separate charters in Arkansas: Simmons First National Bank and seven state charters that all start with “Simmons First Bank of” — of El Dorado, Hot Springs, Northeast Arkansas, Northwest Arkansas, Russellville, Searcy and South Arkansas. Signage and marketing materials that just say “Simmons First” work fine for all of them, Makris said, but it’s not very helpful on a strip-center branch in Missouri, where the locals might at least need to see the word “bank.”

In Arkansas, particularly in Pine Bluff, “we’ve penetrated about as much as we can,” Makris said. The company is active in community outreach, sponsoring kids’ sports teams and other activities, “but we have to do very little name recognition advertising, and that’s not something we’ve been good at.

“We have to get good at that.”

And that’s where selling beer, especially beer from one of the most successful marketing organizations in retail history, may come in very handy indeed.

“When I was in the beer business, I didn’t understand why everyone didn’t drink one of my products,” Makris said. “As a bank, we need to ask why everyone doesn’t use our products.”

And, “I’ve said many times: We’ve got products people don’t know they need.”

Observing the success Anheuser-Busch has had marketing in a variety of markets, he said, “has taught me a good balance between standardization and customization.”

Growth Intentions

Simmons First National Corp. intends to grow, and talk of hunting for acquisition targets was unavoidable at the shareholders meeting and in last week’s interview. But to say that Simmons has a growth strategy might be too generous: Makris indicated that the company is open to growth in just about any form it takes.

FDIC-assisted deals — like the ones that brought in Excel Bank of Sedalia, Mo., and Truman Bank of St. Louis last year and Southwest Community Bank of Springfield, Mo., and Security Savings Bank FSB of Olathe, Kan., in 2010 — are slowing to a crawl and the terms aren’t nearly as generous as they were at the height of the banking crisis.

So Simmons has turned its sights back to the kind of conventional deal-making it used over two decades to acquire banks like First Bank & Trust of Jonesboro, National Bank of Commerce of El Dorado, First State Bank & Trust Co. of Lake Village and Alliance Bank of Hot Springs.

In many cases, Simmons changed the bank’s name but agreed to keep the charter and the local board of directors intact.

Maintaining separate charters is an expensive luxury, especially when one bank has a national charter and the others are state-regulated, but Makris said having local directors serving on loan-review committees has also saved the bank a lot of money.

“That’s one of the reasons our credit quality is so good,” he said, noting that the Simmons corporation’s asset quality problems had been limited almost exclusively to northwest Arkansas.

Simmons has no plans to collapse the eight existing charters, but Makris acknowledged that there were factors — particularly regulatory headaches — that could eventually affect that preferred organization.

The Missouri and Kansas banks have been rolled into Simmons First National Bank and have not come with local directors, although Makris said Simmons had inherited some good bankers — generally talent brought in near the end to try to save mismanaged banks. “What we’re left with [in the new markets] is a pretty good retail operation,” he said.

But as retail operations, they are too small. “We probably have enough branches in Pine Bluff,” where there are seven. “For St. Louis, four isn’t enough.”

While building de novo branches is always an option, Simmons would rather grow the faster, easier way by buying banks with existing presence in the St. Louis and Kansas City markets. Makris indicated that Simmons is eager but not desperate to do some deals — especially not if purchase price is the only factor.

“We prefer to negotiate with our potential partners,” he said. “We don’t relish these bids — just someone who wants to maximize his take and doesn’t care if half his associates are going to be cut. We really aren’t interested in that.”

For the right acquisition, Simmons might even be willing to keep another charter intact. “If that’s important, we know how to do that,” Makris said.