Editor’s note: This article is the cover story in the latest magazine edition of Talk Business & Politics, which you can access online here.
There aren’t many parents capable or willing to co-sign a multi-million dollar loan with their 27-year old son to help buy a bank in a community where no one really had roots.
But Reynie Rutledge had parents who knew their son was a good investment.
Now, father to three sons who have all eventually found their way to Rutledge’s privately-held First Security Bank, the 65-year old bank chairman and CEO is watching the dividends of having his boys – John, Adam and Nathan – help build the family business into one of the largest financial institutions in the state.
“I didn’t know if any of them would join the bank,” Reynie Rutledge said in a recent interview. “But I kind of hoped that one of them would, in all honesty.”
Rutledge grew up in the south Arkansas town of Smackover, a small community in Union County with a population that has hovered around the 2,000 mark since the 1920s when it was incorporated. The oil boom of that decade sparked settlements that created the town about 20 miles north of El Dorado.
Smackover’s most famous residents include Arkansas football legend and NFL player Clyde Scott and a rockabilly musician named Sleepy LaBeef, whose name is befitting for the town with the mascot the Battlin’ Buckaroos.
Rutledge’s mother and father, Jeanne and NT Rutledge, found their way back to south Arkansas after meeting in Dallas. Jeanne’s father had a sawmill near Smackover and she met her future husband at church one Sunday while she was attending Southern Methodist University.
NT was the youngest of seven kids and was lucky to find himself in school at a local business college. He was a Highland Park volunteer firefighter, which afforded him free room and he worked as a dishwasher at a dormitory cafeteria, which paid for his food. He later transferred to SMU and obtained his engineering degree.
Reynie’s father was an encourager and couldn’t have been disappointed that his son earned a degree in industrial engineering from the University of Arkansas. The younger Rutledge then stayed an extra year to land his MBA and protect his younger future wife, Ann, from potential suitors.
Reynie interviewed with companies like IBM and AT&T for engineer-related jobs, but he wasn’t sure he wanted to take that route.
His father suggested he talk to a local Smackover banker, whose advice was to give banking a try. “What you learn will make a difference and you’ll be dealing with bankers for the rest of your life,” was the advice Rutledge recalls.
Rutledge found employment in the banking world in the early 1970s with Worthen Bank in Little Rock as a loan officer. It was a good place for a young banker to cut his teeth and the connection would later prove instrumental in Rutledge’s long-term plans.
After three years at Worthen, Rutledge took a job in Springdale at First State Bank, but that only lasted 9 months. An opportunity had presented itself.
E.D. Yancey was looking for a buyer for a small Searcy bank called First Security, which had been around since the early 1930s. Just 27 years old, Reynie Rutledge convinced his father and Worthen Bank to finance and help guarantee the loan, which was more money than Reynie ever imagined he could borrow.
“To say that my parents went a little overboard or perhaps stepped a little bit over the line than they should have by letting me do that is probably an understatement,” Rutledge says today.
Negotiations began on July 4, 1977 and the deal closed on October 1.
Rutledge has taken the bank from its meager assets of $46 million in 1977 and six acquisitions later – including the buyout of bond brokerage house Crews and Associates – First Security’s holding company, First Security Bancorp, boasts assets of more than $4.9 billion today.
With more than 1,000 employees and over 75 locations statewide – and growing – you could say N.T. and Jeanne Rutledge got a pretty good return on their investment.
THREE DIFFERENT PATHS
Reynie and Ann Rutledge are blessed to have three sons, John, Adam and Nathan.
All three boys have taken circuitous routes to the First Security hallways.
For John, the oldest at age 36, he didn’t take an interest in the bank until close to the end of his college studies at the University of Arkansas.
“I was going to look at every other option to figure out and make sure this was the right option versus assuming this was the option,” the regional market president says with confidence.
As kids, all of the boys had jobs ranging from changing tires to a lawn service. They were told they couldn’t come to the bank for a job except under one condition.
“You can’t come to work at the bank unless you want to learn,” John recalls his dad’s policy. As John took higher-level business courses at school and became more intrigued about the banking world, he finally attained “learner” status and began his banking career.
Adam, age 34, runs the Northwest Arkansas market for First Security. He thought about real estate for awhile, but by his junior year of college, he felt the calling to join the family’s banking business.
“At some point in time, you hit a maturity and realize the opportunity to stand on some shoulders,” he said. “You want to be a part of that.”
A shy youngster, Reynie taught Adam (and his brothers) how to look someone in the eye and shake their hand. Adam laughs now that it takes 20 minutes to get to their seats at Bud Walton Arena because his dad is working the customer circuit.
Nathan is the youngest brother, a 31-year old lawyer who was recently named senior managing director at Crews & Associates. He’s held a variety of roles at the big bond house and will now oversee the firm’s public finance operations.
He didn’t lean towards banking until his senior year when he was sitting for the LSAT to get into law school. He says that he had an awareness that his family’s life had been blessed and that “we grew up having way more than we ever deserved.”
There is a desire to give back to the family business and state that has provided for them.
“I think all of us had a sense of wouldn’t it be fun to keep building on what they’ve done so well,” he said referring to his father and grandfather.
All three sons have absorbed the company culture: service to the communities they serve. It’s probably part of their DNA.
In our boardroom conversation, Reynie talks about learning about each community the bank serves, not acting as if they know it all when they enter a market.
Adam explains that leadership among employees takes place at all levels; all three sons have served in a variety of roles from bank teller to business development.
John describes the commitment to the customer whose needs are “first and foremost.”
“If you’ll do what’s right and do what’s needed, then you won’t have to worry about the bottom line. It’ll take care of itself,” he contends.
Nathan said all of these qualities are characteristics that anybody in business should follow. “Work hard. Do what’s right. Smile. Have fun doing what you’re doing. Treat everybody in the room with respect,” he says, noting that he didn’t learn these traits in school. He learned them from his father.
“He didn’t tell us. We watched it,” he confides.
You can’t get into a room with four knowledgeable bankers and not shoot the breeze about the current banking climate.
The economy still lacks firm confidence. Interest rates are still too low. Regulations are killing smaller banks.
Reynie Rutledge was chairman of the Arkansas Bankers Association when the Dodd-Frank legislation was passed in 2010.
“I lobbied very hard with our delegation and lost,” he says. He once thought that only banks with $500 million in assets could absorb the compliance overhead of the federal regulatory measure, but now he thinks that number might be closer to $1 billion in assets. If that estimate ultimately pans out, Arkansas would be reduced to only 7 state-chartered banks in that category versus the 109 that exist today.
“I hope I’m wrong,” he confesses. “But it’s going to be difficult.”
Rutledge believes the Feds will eventually raise interest rates and when they do, he says it will be a good thing.
“I think it will be slow,” he says of the potential uptick, unlike the Greenspan years when each Fed Open Market Committee meeting resulted in interest rate moves. “I view it as being a positive move. Depositors need an increase.”
Adam, who has witnessed the rebound of the red-hot Northwest Arkansas market, says he’d prefer a steadier pace in the region. It’s more predictable and sustainable.
“We don’t need it to heat up much more than it is,” he warns, recalling the crash that ensued after the housing market bubble burst in the Great Recession.
John agrees that lower gas prices, decent housing statistics and improving unemployment numbers are a reason for cautious optimism, but he worries that it doesn’t “feel sustainable.” He brings the whole thought of banking and the economy back to the customer.
“Banking is a reflection of the economy in which it’s in,” he says. “So we’re only as good as our customer base and our customers are only as good as the economy they have to perform their business, to get jobs and have the opportunity for upward mobility to create wealth and income.”
Sounds like something his father – or his father’s father – would say.