Great Southern opens doors in Tulsa, Dallas

As the economy slowly improves and fewer failed banks offer acquisition opportunities, Springfield-based Great Southern Bank has turned to a tried-and-true growth strategy to enter new markets in Oklahoma and Texas.  

Great Southern Bancorp Inc. (Nasdaq: GSBC) is expanding its commercial lending footprint this month with offices in Tulsa, Okla., and Dallas, marking the bank’s first entry into Oklahoma and Texas.

The moves mirror a loan production office expansion model of the early to mid-2000s that took the bank into new markets – Kansas City, St. Louis and Fayetteville, Ark. – and turned into retail opportunities.

“That’s three markets where we have a pretty good retail presence, but our initial entry was through LPOs,” Great Southern President and CEO Joe Turner said.

More recently, Great Southern has grown through acquisitions. The company purchased four failed banks between 2009 and 2012, growing its footprint to roughly 100 branches from nearly 50. With the new LPOs in place, Great Southern will operate in eight states with assets of $3.6 billion.

LPO to retail
The LPO model was employed when Poplar Bluff-based Southern Missouri Bancorp (Nasdaq: SMBC) entered the Springfield market three years ago.

In September 2010, banking veteran Dave Tooley came out of retirement to open a Southern Bank loan office in the city, and a year later, a full-service branch was born at 4850 S. National Ave.

Tooley recruited Justin Cox, a former associate at Metropolitan National Bank, to help run the office.

Now Southern Bank’s Springfield community president, Cox is preparing to move the retail center into the first floor of the Gardner Capital building, planned down the street at 4803 S. National Ave.

Cox said the bank has charted at least three locations in Greene and Christian counties, though he said there is no timeline for expansion.

Cox said Southern Bank’s original plan was to build up loan volume for two years before opening a retail location, but with Cox writing loans he and Tooley had attracted to the bank, the company etched plans for a retail center after just nine months in the Springfield market.

“It was something we needed to add just to serve our current customers,” Cox said, declining to disclose first-year loan volumes but noting customer interest in a retail center sped up the bank’s plans.

He said LPOs perform well in testing retail demand in new markets.

“You get the income side built up first before you bring in the non-income producing side,” Cox said.

Great Southern’s Turner said retail operations aren’t on the drawing board in Tulsa, Okla., and Dallas.

“Down the road, we may have a retail presence in those two markets, but that is yet to be determined,” he said.

During the second quarter this year, Great Southern plans to add its second retail branch in Fayetteville, Ark., and its eighth in the St. Louis market. Great Southern currently operates seven retail banks in the Kansas City area.

Turner said St. Louis loan production gained traction quickest, producing $254 million in new loans in its first two years, 2005–07, before the development bubble burst.

“We could be certainly short of what we did in St. Louis and still be well satisfied,” he said of the efforts in Tulsa and Dallas.

Beware of bad loans
Turner said the new LPO markets show promise, coupled with bank personnel charged with running the operations. Leading the Tulsa office is Blake Will, an 11-year commercial real estate lending veteran, who is moving from Springfield.

“He has contacts and has done some lending in that area, so we felt he’d be a natural,” Turner said. “It’s a good career move for him, and it’s a good move for our company.

“That’s just 175 miles down the road, and we want to be a player in that market.”

Tim Young, who has 30 years of commercial lending experience in the Dallas market, was hired to manage operations in the Big D.

“Dallas has been a thriving market, even through the downturn,” Turner said. “Tim Young has been down there for many years with a couple of different banks, so we had an opportunity to move into a very strong market with a very strong lender, and we seized that opportunity.”

While the loan officers will provide a mix of commercial lending services, including fixed- and variable-rate real estate loans, the bank hasn’t set loan volume expectations.

“We don’t want our lenders to feel pressure to hit a specific goal as far as loans on the books because we think when lenders feel pressure to hit goals, that’s a very dangerous thing. That’s when you get a bank full of bad loans,” Turner said.

“We want them to be active. We want them to be talking to as many people as they can. We want them to aggressively prospect, and then we’ll make as many loans as we safely can.”

Great Southern’s provisions for loan losses – money to cover bad loans – decreased by 60 percent in the past year.

Those provisions were at $17.4 million in 2013, compared to $43.9 million a year earlier, according to the bank’s annual earnings report.

Great Southern spokeswoman Kelly Polonus said Will and Young would be the only staff members in the office writing loans to start, and they each have support staff.