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Inside Bank OZK: George Gleason’s 10 Defining MomentsLock Icon

8 min read

With 45 years to choose from, George Gleason has plenty of options for naming the biggest events during his tenure at Bank OZK. The chairman and CEO of the $34 billion-asset lender managed to winnow the bank’s most significant moments to a top 10 list.

Gleason enumerated the milestones chronologically, starting all the way back at the beginning: March 7, 1979, the day after he bought the Bank of Ozark. He scheduled a 7:30 a.m. meeting to address the 27-member staff as the new leader of the $28 million-asset bank.

“I told the staff that morning that our goal was not ever to be the biggest bank in Arkansas but to be the best,” Gleason said. “That goal that we set that morning of a relentless pursuit of excellence, just always striving to be the absolute very best we can be, I think that has been the defining hallmark of our company.

“It’s simply a reflection of the fact that quality in what we do is so much more important than the quantity of what we do.”

Milestone No. 2 happened a half-hour after the staff meeting. Several officers gathered outside Gleason’s office and each had questions for their new CEO, who was just 25.

“One by one, I invited them into the office, and they all presented a problem or an opportunity and asked me what I wanted them to do,” he said.

“My answer to them was ‘Well, I’ll tell you what I want to do, but before I tell you my answer, I want you to tell me what you think the right answer to your question is and explain to me why you think that’s the right answer.’

“That was a bit defensive [on my part] that morning because I was brand new as a banker and was getting asked to make all the final decisions, and I realized that each of the people that I was working with had far more experience and knowledge about banking than I did. But it worked out in a very unexpected way. And it’s permeated our culture today.

“We realize that in order to achieve the maximum potential of our organization that we have to harvest, capture the very best ideas of every team member. If we can get everybody to put their very best thinking on every issue in the company, then we can achieve some very extraordinary things as a team.”

Phoenix Lesson

Milestone No. 3 occurred a few months later in Phoenix where Gleason was attending an asset liability management course, among a series of courses that he was taking to learn more about banking.

“They divided us into teams the very first day,” Gleason said. “And all these guys were presidents and CEOs, and I was there at 25, and they were all 50 and 60 years old so they wanted to play golf and not miss happy hour. So they elected me leader of our team.”

At the end of the week, his team was recognized for presenting the best solution to the scenario of “How to manage a balance sheet to mitigate interest rate risk and yet take advantage of a dynamic rate environment.”

He recalls the ruling: “This team has come away with far and away the best result, but we’re going to disqualify them from the competition because they didn’t follow standard accepted conventional practices for addressing the fact set that we gave you. Their solutions were not banklike.”

“I protested, and we laughed about it and talked about it,” Gleason said. “But I went home and told my assistant, I said, ‘Cancel every other banking course that you’ve got me registered for’ because if I continue to go to these courses, we’re going to develop a very average, typical bank, and we’re never going to think we’re going to do extraordinary things because we’re going to be like every other bank. And we can be better than that.

“I would describe that as intellect trumps convention. We’ve always believed that innovative thinking and a willingness to do things that made sense even when they weren’t the conventional things to do were the right things for Bank OZK to do.

“In my 45 years at the helm here, we’ve been profitable every year. And almost every year, we’ve made record annual profits. That’s very unusual for a bank, a credit business subject to economic cycles.”

Bad News = Good News

Milestone No. 4: The savings and loan crisis, which saw the failure of more than 2,900 banks and thrifts with collective assets of more than $2.2 trillion between 1980 and 1995, according to the Pew Research Center.

“We were buying pieces of savings and loans and portfolios of loans from savings and loans, and we made millions and millions of dollars as a small bank doing that,” Gleason said.

“The profits we made were not the important thing. The reason the savings and loan crisis was so important is that it taught me and the rest of the team a profound lesson, and that is: Every crisis creates great opportunities.

“If you look back at the history of Bank OZK, we’ve had our greatest periods of growth in times of great crisis.”

Making Good Better

Milestone No. 5: Principles matter more than profits. Gleason said the company tightened its focus on corporate ethics while contemplating increased business opportunities after the S&L crisis.

“We decided to make character, integrity, fair dealing the guiding principles of our company, and if that cost us profits, it cost us profits,” he said.

“In reality, it’s been a critical part of our structure.

“It wasn’t an epiphany and a moment when the lights went on. It was just a realization that our company is grounded in sound economic principles and sound business principles.

“But we need to make character, integrity, honesty, fair dealing the ethical parameters of our company even more pervasive and even more important than the business parameters of our company.

“And boy, that has kept us out of a lot of mischief and a lot of problems that many companies find themselves in. It’s provided a certainty of conduct and behavior that undergirds our business, and that firm foundation is critically important. There’s no substitute for good behavior and no excuse for anything less.”

(Karen E. Segrave)

Capital Move

Milestone No. 6 was the decision to relocate the corporate headquarters from Ozark to Little Rock in 1995.

“We realized we had the potential to do bigger things in bigger markets without sacrificing the trust and relationships we had in our small markets throughout the state at that time,” Gleason said.

“It’s an important principle today.

“We’re in small towns all over Arkansas and Georgia and Florida and North Carolina and Texas. We’re also in the largest metropolitan markets in the country.”

He’s proud the bank has maintained its roots as a small-town lender while broadening its culture to embrace urban clientele and sophisticated commercial lending.

“Your company doesn’t evolve that way if you don’t make an intentional decision to culture the company to be that way,” Gleason said. “That’s one of the things that I like so much about our company is the fact we’ve got people in Ozark and Jasper who have done business with us for 4½ decades.

“And we love them, and they love us.”

Going Public

Milestone No. 7: The decision in 1997 to take the $300 million-asset bank public. “We were growing a lot, and to continue to grow, we needed access to more capital sources,” Gleason said. “That was the driving force. With that came a rigorous discipline that is just inherent in being a public company.

“You either rise to the occasion and up your game, or you are unsuccessful in that environment. We realized that was a good thing. It’s like a demanding parent who says you’ve been making all As, but you can do better.”

Beyond Arkansas

Milestone No. 8: The decision in 2001 to open the first office outside of Arkansas. That loan production office in Charlotte, North Carolina, would be the first in an ongoing series of out-of-state moves to expand Bank OZK’s footprint, which now encompasses more than 240 offices in eight states supported by a staff of more than 2,700.

Big D Move

Milestone No. 9: The decision in 2003 to enter the Dallas market and the formation of the Real Estate Specialties Group. Today, this division of the bank has amassed commercial real estate loans of more than $16.9 billion, 65% of Bank OZK’s overall loan portfolio.

“When we went to Dallas, it was really to capitalize on that Texas market,” Gleason said. “Underpinning that desire to capitalize on the Texas market was the realization that we wanted to build something that was a cut above in how a bank approached commercial real estate.

“That decision was just critically important to the future of our company. We could never have the company that we have and the profitability and the track record we have now if we did not have that national leading expertise in commercial lending.”

Major Crisis Opportunity

Milestone No. 10: The great financial crisis fueled by over-valued residential real estate lending, which began to show up on balance sheets of banks across the globe in 2007.

“We were about a $3 billion bank when the great financial crisis started,” Gleason said. “That crisis provided our bank two really extreme opportunities. One, we were able to acquire seven failed banks in 2010 and 2011 from the FDIC, and we followed that with eight live bank acquisitions, some of which were distressed banks and some of which were really high-performing banks.

“Those 15 acquisitions gave us a deposit and retail customer footprint that matched and balanced out the deposit side of our business with the growth potential of our Real Estate Specialties Group and our indirect marine and RV lending businesses.”

The ability to conduct business as usual while so many banks were reeling from the bursting real estate bubble positioned Bank OZK to gain new business. Potential clients who wouldn’t talk to the bank before the crisis began to change their tune.

“So we picked up scores of customers who wouldn’t really give us the time of day before, and suddenly we were becoming their primary source of business,” Gleason said. “Those include some of the biggest names in commercial real estate in the U.S.

“They suddenly realized, ‘Wow, these guys actually have a level of expertise that we’ve never seen in a bank before and we never even did business with them before,’ and we’ve become very engrained in what they do.”

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