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A Conversation With … Joe Turner

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Bank Director magazine reported Great Southern produced the fifth-best, all-time shareholder return among publicly traded banks in the country. What was the return and how did you accomplish that?
They went as far back as they could for every public company and our return was around 15,000 percent. The way we’ve accomplished it is by focusing on organic growth, and that’s one customer at a time. The fact that we’ve really never issued any new shares has helped us, as well. When we went public back in 1989, we issued just over 2 million shares. Since that time we split 12 for one, so that would mean there should be 24.6 or so million shares outstanding and we’ve got about a little over 14 million, so we bought back almost half our stock. We’ve been able to grow the company organically and buy back half our stock and that’s just resulted in a really great return on our investment.

How much of the shares does your family control? How has having skin in the game affected the growth of the bank?
Fifteen percent. I think when you’re invested in the company, your focus is on generating long-term growth in your shareholder value. You’re not so focused on doing things that may result in some pop over the short term. We’ve owned the stock for 29 years and we intend to own it for 30 years or longer.

What industries most represent your shareholder base?
A little bit more retail than a lot of banks would be. I like the fact that our shareholder base is retail because those folks have the same focus we do, pretty long term. Whereas if you get more institutionally based, I think they have a shorter horizon on their investment. That’s not the way we run the company.

Great Southern started 95 years ago. What have your assets grown to today and what do you credit your staying power to? We’ve seen a number of mergers and acquisitions in the Springfield area.
About $4.6 billion. When I took over in 1999, I think it was just under a billion dollars. First of all, the fact that that we do have a shareholder base that has a long-term focus helps us. The way M&A works, oftentimes an acquiring company can come in and offer a target company a premium, maybe it’s 20, 25 percent over their current stock price. That can be very attractive to a certain group of shareholders. If you look back at the last 30 years, we could have sold at any number of times and maybe gotten that 20 percent premium. But if you would have gone further down the road and looked at where we are now versus where we would have been with somebody else’s stock, we’re way better ahead.

You entered two new states this summer, Georgia and Colorado. Tell me more about the expansion.
What we’re doing in those two states is operating loan production offices. That model has just been exceptionally successful for us. Our largest lending market now is St. Louis. We have about $800 million in loan balances out of about $4 billion. That’s 20 percent of our loan balance in St. Louis. Kansas City is about $500 million and that started as an LPO, as well. Tulsa, Oklahoma, has about $400 million; Dallas, Texas, about $300 million; and Minneapolis/St. Paul about $250 million. When loan offices get to that size, they’re very profitable. Being in those markets allows us to look at more deals, become acquainted with more customers, grow our balance sheet and grow our loan totals without sacrificing our credit expectations or pricing expectations. And then you go into towns like Denver and Atlanta. Atlanta will now be our second-largest market that we’re in, Dallas would be the largest. When we open LPOs we’re looking for really two things: vibrant markets and good people to work.

Talk about the tax credits and reduced tax rates that have been a boost to your bank.
Lower tax rates certainly did help us and we have invested a lot of money in tax credits. The federal government in partnership with state governments have a program that encourages the development of low-income housing. In order for that to happen, investors have to be willing to buy the stream of credits and we have done that and we feel good about it. We think it helps promote that kind of development, which is needed and it’s a good economic thing for our company.

Joe Turner can be reached at jturner@greatsouthernbank.com.

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