# Jay Brogdon on Banking, Growth & Arkansas’ Economic Future 💰🏦

https://www.youtube.com/watch?v=0ikhBZVrm40

[00:00] In this banking industry, one of the common isms, phrases, is if it grows like a weed, it's probably a weed.
[00:07] Yeah, it's probably a weed.
[00:08] We're not a technology company, and so we are in we manage risk.
[00:10] We sell risk and manage that risk.
[00:14] And that's what banks do at the end of the day.
[00:18] And so so that's why if it grows like a weed, it's probably a weed.
[00:21] It's not managing your risk effectively.
[00:24] So we try to stay really consistent in our guardrails, sort of strategically, offensively,
[00:29] where are we going?
[00:29] Other guardrail risk appetite, what risks are we willing to take and what risks are we not willing to take?
[00:36] And we we really keep it keep a lot of discipline around those things.
[00:45] Okay, welcome to another edition of Free Arkansas.
[00:47] This is Andy McNail, and I'm happy today to have Jay Bradford here who is the relatively new CEO of Simmons Bank.
[00:52] And banking is, in my opinion, so important to driving growth in our state.
[00:57] And Jay's in this very
[01:02] interesting position that I'm going to try to unpack as best I can.
[01:06] Jay, how are you doing?
[01:07] Doing great. Good to be here.
[01:08] I appreciate you, Andy. Looking forward to the conversation.
[01:10] Yeah.
[01:11] Um
[01:11] so, I want to talk about your background, and I want to talk about the bank.
[01:17] But first, I just want to simplify what banking is.
[01:19] Uh and I want to try to do this a couple different ways.
[01:22] So, um
[01:23] can you just sort of walk me through sort of the difference, cuz we see all these different names, right?
[01:28] Community bank, regional bank, national bank.
[01:30] And then if you just sort of throw in investment bank or
[01:35] you know, other forms of capital, can you just sort of give us the layman's view of just the banking hierarchy?
[01:42] I'll I'll do my best. That's a That's a That's a challenging question.
[01:44] I'm going to talk about the banking landscape.
[01:48] You called it a hierarchy. I'll I'll maybe refer to a banking landscape.
[01:51] Okay.
[01:52] I'm going to I'm going to start with what would all encompass commercial banks, regional banks, community banks, some of that genre.
[01:57] We'll we'll we might tuck in investment banks and other forms
[02:02] of of finance that's out there.
[02:04] But broadly speaking, if you think about Andy D um you know, the banking landscape in the United States, we'll just stay in the US here.
[02:11] It's you've got what we call the money center banks.
[02:15] That's four or five very large banks.
[02:17] That's your That's JP Morgan Chase, right?
[02:19] Bank of America, Wells Fargo.
[02:23] And then you've got what I would call the super regionals, what you often hear of as the super regional banks.
[02:29] And those are banks that are going to be, you know, over a hundred billion, a hundred fifty billion, up to, you know, a trillion dollars, right?
[02:36] Hundreds of billions of dollar banks.
[02:38] Those money center banks are all They literally have trillions of dollars of assets.
[02:43] When you get below the super regionals, you start getting into an area of the landscape that didn't exist when I started in this industry.
[02:51] It really basically didn't exist, and it's getting into what we kind of call You'll hear hear different terms.
[02:55] Regional banks.
[02:58] Right.
[02:59] You might hear super community banks.
[02:59] Um
[03:02] and that's this that's this wave of banks that really many of them were born out of the financial crisis in 2008 and nine.
[03:11] Simmons Bank would be one of those banks.
[03:13] These are banks that 15 or 20 years ago were one or two or five billion dollar asset banks that today are 20 and 30 and 50 billion dollar asset banks.
[03:25] And instead of being banks that maybe were isolated to one geography, now they have largely through acquisitions morphed their businesses into multiple states.
[03:35] And hence that those terms like regional or super community banks.
[03:37] That's that's like you you know, a few dozen banks in the United States.
[03:46] I'm talking like money centers, five banks.
[03:48] Yeah.
[03:49] Super regionals, maybe like a dozen banks in the in the whole United States.
[03:52] Right.
[03:53] And then you've got a few dozen banks in the middle that I'm talking about.
[03:56] They're called those the banks that are between 10 and 100 billion in assets.
[04:01] And then below that, you've got over 4,000 banks below 10 billion in assets.
[04:05] still in the US today.
[04:07] And so like that's kind of how you got to think about the continuum of asset size.
[04:11] And those are the banks, very good banks, that we call community banks.
[04:14] Those are the ones that that are just tend to be deeply rooted in a community or in a relatively small geographic area.
[04:23] Okay.
[04:23] And that's one way for to to to to make it make it sense.
[04:27] There's this big huge guys.
[04:27] And we all hear their names or their CEOs.
[04:30] A lot of people may not place it, but you know, if you hear like Jamie Dimon, he runs JP Morgan, right?
[04:35] And you'd know who the guy at City was and the guy at Morgan Stanley and you know, Wells and Bank of America, all these big name institutions.
[04:42] Um and then we would all probably recognize some of the super regionals as well.
[04:50] Right.
[04:50] You know, like here in Arkansas, who who would be the people that you know regions as your Regions.
[04:55] And they're probably the smallest super regional in the country, but they are a super regional and that would be the that would be the dominant name in the state here.
[05:03] And if we go down to the smallest ones.
[05:03] And you know, I think when we talk about
[05:06] money and we say a billion dollars of this or billion dollars of that, just to put that into perspective though, if you're a billion dollar asset bank, you're a relatively small bank.
[05:15] You're operating at probably, you know, that's you're operating maybe in one town, right?
[05:19] Correct.
[05:20] Yeah.
[05:20] And if you're that size, is your predominant way that you make money, is that I make it on the difference between what I borrow money at and what I lend money at?
[05:32] Yeah, so the way I would think about all all of those banks.
[05:34] And and the money centers are a little different cuz they do have the investment banks and lots of other forms of finance, but all the other banks essentially are taking in deposits.
[05:41] So we are taking in customer deposits, whether that's a consumer customer or or commercial, like a company, right?
[05:50] An operating company.
[05:52] We're taking in those deposits.
[05:54] With those deposits, the banking system is then investing those lending that money out and making a spread between what the bank earns in interest on the loans that are invested versus the
[06:08] interest that's paid on the deposits that are are are put into the bank.
[06:12] And so and maybe and so so that's what that's what we're all That's 80% revenue for the system.
[06:17] That's That's what everybody's 80% of the revenue for the system comes from that.
[06:20] The residual 20% would be certain fees or fee wealth management businesses or just fees driven from ancillary services, etc.
[06:30] But I I think there's probably another piece of nuance to maybe think about versus just asset size that I that I would think about here.
[06:39] It it it it tends to go up and down that continuum.
[06:42] The smaller banks overwhelmingly are lending into commercial real estate.
[06:48] Overwhelm You'll see You'll see some some consumer.
[06:50] You'll certainly see some one to four family, you you know, housing type things.
[06:54] But but predominantly, the investment side of those deposits is investment investing in real estate development.
[07:03] And And so you think And that's important That's an important ligament of capital formation in in our
[07:09] economy, right?
[07:11] Across the country, right here in Arkansas, whatever it is.
[07:13] And so your your community banks are taking in deposits, being relevant in the communities they serve, and then and you know, investing that back in developing, typically through real estate, developing um you you know, those communities for for investors or companies that need to do real estate type growth.
[07:34] As you move up the ladder, Andy, as you get to the larger banks, um you start still seeing commercial real estate activity, but you get into kind of non real estate commercial activity.
[07:46] So, you're banking operating companies directly.
[07:48] You are you're banking you're you're providing the commercial payment services, so treasury management.
[07:55] You're you're the you are the lifeblood of the CFO of that business, right?
[08:00] And so, payables, receivables, all of the payments activities, and then of course, providing operating lines of credit or funding acquisitions or whatever those
[08:11] companies may be doing to grow their business from a lending perspective.
[08:17] And And so, that's where you kind of see the bank continuum evolve quite a bit.
[08:21] So, one way for me to frame it would be that if we went if we were to look across Arkansas, and you know, we've got lots and lots of community banks.
[08:31] They're predominantly lending into land and and and landish transactions, let's say.
[08:38] Asset-based lending.
[08:41] And they're predominantly within their community.
[08:42] So, if you're in Stuttgart, you're really tied to ag.
[08:46] If you're in you know, if you're here in Yell County where I live, you're probably to ag, but like not the same type of ag.
[08:52] Let's say.
[08:53] Yeah.
[08:53] You know, you're tied to something to Yeah, you're going from row crop to to cattle or whatever it might be.
[08:58] That's right.
[08:59] Yeah.
[08:59] So, so,
[09:00] in in Arkansas, what I would say is and you can tell me if you disagree with this, but as we look above the community banks, I look at it as four big players that are that are in
[09:12] the state.
[09:13] Yeah.
[09:13] And And I want to talk about how they became the big players, but just to tee it up here for a second.
[09:19] I think it's Simmons, Arvest, Home Banc, and OZK.
[09:23] Would you agree with that?
[09:26] Yeah, full fully agree.
[09:27] And those banks are not just Arkansas, but they're beyond Arkansas.
[09:32] They're not just real estate, but they're in businesses.
[09:34] They They also from a size perspective are what, 25 to 30 billion versus a community bank which might be 1 billion or or quite frankly a lot less than 1 billion, you know.
[09:49] Yeah, most of So, there's about I agree with everything that you're saying.
[09:51] I might help further tee it up.
[09:53] Just give you a couple of statistics.
[09:55] Um and I'm I'm pulling from rough numbers here, but I'll be close.
[09:59] I think there's about 70 banks in the state, 70 banks.
[10:05] That's call it you know, one-ish, little over 1% of the banks in the in the US.
[10:11] Four those top four banks in the
[10:15] the in the state are four of the top 100 banks in the US so by by size.
[10:20] So So, we have We represent here in Arkansas, you know, this would be I think a cool statistic to understand when you want to think about our banking industry here.
[10:29] Uh while making up only 1% or or a little more of total banks, we we represent 4% of the larger banks in the country.
[10:38] And that I think that points back to history and some of the things that we might unpack in the conversation of how these banks got where they are and why we sort of out-punch our weight here in the state of Arkansas on the national scene in terms of uh of what our banks have been able to do.
[10:52] Now, before we tell the Simmons story cuz I want to tell how they went from a small community bank in Pine Bluff, you know, and how they became one of these, you know, 100 regional banks.
[11:05] Um But before I do that, I want to sort of frame up and I don't know if this is This isn't We can have some fun with this, but I sort of try to think through if I was trying to describe to like my wife,
[11:16] uh you know, like how would I describe the difference between, without being technical, right?
[11:20] With being colloquial, you know, how would I So, I started thinking about like SEC football and like, okay, if I was trying to describe OZK versus Simmons, Home Bank versus Simmons, Arvest versus Simmons.
[11:34] And I had to say like which team they represent, you know?
[11:38] Do you have a view if you looked across the SEC and you said [laughter] OZK is which college?
[11:43] Which And and And by the way, we have to take some latitude here, but like, you know, because it it depends on what we mean.
[11:50] But like, what would you say because I tried to come up with my view of what I thought and I can So, and I can tell you mine, but I I want to let's see if you just take like who is who in in this And let's not say you can say Arkansas.
[12:06] Let's just say like Let's take Arkansas off the table so you can't be the Razorbacks.
[12:10] Who is Who is OZK in the in in you know, in the pantheon of the SEC?
[12:15] I'm I'm going to start with I have a ton
[12:17] of respect for all of the banks in the state of Arkansas.
[12:21] We're going to have fun with this.
[12:24] And I have a ton of respect for everybody in this conversation.
[12:29] So, I would say OZK I struggle to even put in the SEC.
[12:32] I think they [laughter] they may be a mid-Atlantic school.
[12:35] So, like that's really cool.
[12:36] Let's go Wake Forest, you know?
[12:39] I can't even I can't even really Maybe I'd go Missouri because I'm not sure Missouri belongs in the SEC.
[12:44] Something like that.
[12:46] So, what would you say What would you say Arvest would be?
[12:50] Oh man, let's see.
[12:53] Arvest Let's see.
[12:57] Arvest I would probably go um
[12:59] You know, I'm going to go to the state of Alabama.
[13:03] I'll probably just go Alabama.
[13:04] Oh really?
[13:05] Okay.
[13:05] The reason I The reason I say that is they are so state dominant.
[13:09] Yes.
[13:09] They've grown beyond Arkansas, but they are And and you wouldn't let me say Arkansas.
[13:14] So, with Arvest, you know, they're the Northwest Arkansas bank out of all the the four big ones, right?
[13:17] Um
[13:20] But I think I think of a of a you know,
[13:22] someone who's just sort of dominant in their you you in the league and in the state where they are in that in that local Northwest Arkansas geography.
[13:27] Um and so I one thing I like dominance in the SEC.
[13:32] I don't love to admit it, but it's it's hard not to look at Alabama and be like, okay, that's that's we're past the Saban era.
[13:38] Maybe things will change, but they haven't changed enough yet, right?
[13:40] So.
[13:42] Well, here's how I sort of thought about it and again, this is just pure for fun and I I'm actually pulling for all four banks.
[13:49] So we I mean I would love nothing better for you guys all four to absolutely crush it because that's in our best interest for the state.
[13:56] Um one of the things I like to say is like we're in a we're in a in an arms race for jobs and we can't do that without capital.
[14:02] You know, there's just no way to do that without capital.
[14:04] But I sort of thought about when I sort of think about Arvest, I view them as a little different in that one they're privately held and two it's really based it's really the Walton family that's in invested in that and so
[14:21] that amount of family capital should
[14:23] they ever choose to play it, you know,
[14:25] and the fact that they're private gives
[14:28] them, you know, ability to do things a
[14:30] little bit differently than everybody
[14:32] else. So I actually had trouble saying
[14:34] which team I would say they were, you
[14:36] know, like like like if I could pick one
[14:38] it would be like sort of like this
[14:41] you know, like somebody who's just not
[14:43] in the pack but sort of outside the
[14:45] pack.
[14:46] Yeah.
[14:46] And then I thought about, you know, I
[14:48] thought about the way that OZK has been.
[14:50] I've I think that they've been you know,
[14:53] an aggressive high-performing bank
[14:55] that's done really well. Um and I and I
[14:58] feel like they did it on the backs of
[14:59] some, you know,
[15:01] sort of specialty real estate that they
[15:03] did
[15:04] and not just here in Arkansas but all
[15:06] around the United States.
[15:07] Right.
[15:07] Um and then I so I sort of thought about
[15:10] them as like an Alabama or Georgia is
[15:13] the way I sort of thought about them.
[15:14] It's just sort of powerful in that way.
[15:16] But if you took my analogy started to
[15:19] pick it apart in other ways it wouldn't
[15:20] fit, but it just didn't that you know,
[15:22] and then I thought of Home Banc is also sort of a well-performing more traditional bank, I would say, you know, and then I sort of thought about, you know, Simmons as like LSU, very you know, powerful tradition, but I felt I felt like this because it's been through all this change and then you're like Lane Kiffin coming in, you know, that thing, you know, I don't know if you would think this analogy, honestly.
[15:48] know.
[15:49] But but [laughter] but you know, so so let's just tell the what I want to do is tell the Simmons story and then I want to talk tell the you know, tell your story and then I want to just ask you about, you know, a lot of questions about the bank and where it's heading and the state and stuff, but so let's tell the Simmons story.
[16:06] It starts in early 1900s?
[16:09] 1903.
[16:10] Okay.
[16:11] 1903. 123-year history this spring. And so just kind of celebrated that 123rd birthday. As you as you mentioned earlier, you know, our bank our deep roots of our history are in ag country,
[16:25] right? Like in that in that Delta kind of Southeast Arkansas area.
[16:31] And and you know, we've been we've been banking agriculture, farming for all 123 of those years and that continues to be something that is a you know, a key ingredient for our bank and you know, kind of like specialty real estate lending or you know, banking cash flows of operating companies requires some very unique specialty.
[16:51] Ag is the same way and so you know, we pride ourselves on having been having done that for over a century.
[16:59] You know, the bank has had some phenomenal leaders in its past.
[17:03] We've got really deep core values.
[17:07] So that that the culture of I feel really blessed to be a part of something that's been around for that long even though I've only been here 5 years.
[17:14] Um it's just there's some really cool tradition and and legacy.
[17:19] Uh but if you if you go back to tell maybe the more recent version of history, of course Tommy May, who is an Arkansas legend, uh
[17:27] Both as a leader and as a banker, um you know, he had ALS.
[17:30] I was with Tommy yesterday, by the way, still still doing incredibly well.
[17:35] Um but but Tommy decided to hand the reins over to George Makris.
[17:38] Um and that was in 2013.
[17:40] At that point in time, we're, you know, a hundred and almost 100 year old bank and um maybe all but just one or two locations were in the state of Arkansas.
[17:55] And so what what we woke up realizing is we're sort of post-financial crisis here at this point in time.
[17:57] This is 2013.
[17:59] We're five years removed.
[18:02] Banks are actually five years later starting to rebound.
[18:04] Markets are starting to rebound.
[18:06] We're beginning to recover.
[18:10] And and Simmons kind of had some really first world problems, but they were problems at that time.
[18:14] And the the the main first world problems were we had a lot of capital.
[18:16] We had a lot of liquidity.
[18:20] Um and we had very little asset quality issues that had plagued the the banking system for
[18:28] Most of that that era.
[18:30] What happened was that that that that Simmons didn't have was was no real access to organic growth.
[18:36] You know, Arkansas is a very stable economy.
[18:41] Um you know, Southeast Arkansas is is important as that is to our franchise is not a highly growing market.
[18:45] And so the bank strategically began to shift its focus to how can we, through acquisitions, begin to grow and expand our footprint and kind of take advantage of this really strong foundation that we have, not only in Arkansas, but across the region, right?
[19:03] And and and allow the the tentacles of of success to grow beyond Arkansas.
[19:09] We've been very successful in that over the last decade plus.
[19:13] So, we went from this, you know, two or three billion dollar bank to a 25 billion dollar or so bank.
[19:21] Um we went from mostly almost exclusively a one state bank to a six state bank.
[19:25] That footprint is all contiguous here to
[19:29] to Arkansas.
[19:30] Um and along the way we've really grown and expanded our capabilities very, very meaningfully.
[19:35] And so, um it's been a fun ride.
[19:38] Like I said, I joined five years ago and um it's pretty fascinating to see how our company is is evo- has evolved, is evolving, and sort of the opportunity for continued evolvement evolvement along the way.
[19:52] You know, one of the things I I think just because I I've I've had the opportunity to do this, as you build out a bigger company and a bigger platform, right?
[20:00] To to like you said, create more opportunities for organic growth.
[20:02] To Well, and it but it's even more than that.
[20:05] It's it's, you know, people within the in the the company have more opportunity to grow and expand.
[20:11] It brings more things to Arkansas.
[20:12] There's a whole There's a whole host of things that are really, really positive about that.
[20:17] Often times it's through acquisitions.
[20:18] And, you know, and so, which of course has a risk.
[20:21] You know, you got to integrate businesses.
[20:22] People have different cultures.
[20:26] Um you know, and sometimes you get it wrong.
[20:27] So, as we grew out Denali, we we
[20:30] bought dozens of companies. And you
[20:33] know, occasionally we got one wrong, you
[20:34] know? Um we try not to make that the big
[20:36] ones, you know? So, you know, so Um
[20:40] Simmons is in a basically a position of
[20:43] strength after after the the the
[20:45] recession in '08, '09. Finds themselves
[20:48] at this precipice and decides, "Hey, we
[20:51] can do more, be more, and we're going to
[20:53] start growth." So, they buy Delta,
[20:55] um which is French Hill's business. They
[20:57] buy They They buy Liberty.
[21:00] Um They buy what? Like 10 10 banks.
[21:03] Would that be kind of something like
[21:05] that?
[21:05] Yeah, I think it I think it might have
[21:06] actually done 13 or 14 acquisitions in 9
[21:08] years. So, it was It was It was a
[21:11] frantic pace. So, let me switch and kind
[21:13] of bring your story into the picture.
[21:15] So, you know, maybe you can tell it, but
[21:18] you know, what I'll say is a tee up for
[21:20] it is, you know, one you had this
[21:22] interesting seat as they did these
[21:24] acquisitions because you know, you were
[21:27] you know, you were adjacent you know,
[21:29] and I don't know if you were an actually
[21:30] direct advisor or not. I mean, I think
[21:32] you probably were. So, you just got to
[21:34] see it and really understand it. But
[21:36] maybe tell your story.
[21:38] Yeah, and you know, I'm I'm a lifelong
[21:40] Arkansan. I'm I won't give much of early
[21:42] history, but you know, born and raised
[21:44] in the state. Um I've been in Little
[21:46] Rock all my adult life. I actually
[21:47] played college basketball at Harding,
[21:49] had an accounting degree. Um you know,
[21:52] worked at Deloitte which right out of
[21:54] college which Deloitte, you know, was
[21:56] the largest accounting firm in the
[21:58] world. Um so, I'm at I'm at this global,
[22:00] you know, firm. Uh and here I am from,
[22:03] you know, little bitty town, Arkansas.
[22:05] And and so, um it was a great training
[22:08] ground for me. And And you know,
[22:11] I guess I've learned experience has
[22:13] taught me that you don't control as many
[22:14] things in life as you'd like to think
[22:16] that you do, right? And so, I um
[22:19] I just got I happened while I was at
[22:21] Deloitte to get involved in a number of
[22:23] banking client situations. I had this
[22:25] client in Texas that did an IPO. So, I
[22:28] got a little bit of taste of the capital
[22:29] markets.
[22:31] Um and then that bank turned around and
[22:33] sold to a company called BBVA. BBVA was
[22:37] a is one of the largest banks in the
[22:39] world. It's a Spanish bank. It's in
[22:41] Spain headquartered in Spain that at
[22:43] that time, this is 2007,
[22:46] had zero presence in the United States.
[22:49] Um and so, it it buys this little client
[22:52] of mine that had done this IPO. And so,
[22:54] now I'm now I've seen a capital markets
[22:56] deal.
[22:57] I've seen an M&A deal all in bank land.
[23:00] Um and I'm sitting here translating.
[23:03] BBVA happened also be a Deloitte Spain
[23:06] client. And so, I this kid from Arkansas
[23:09] is trying to like translate to Deloitte
[23:11] Spain what's going on, right? Um, and I
[23:15] guess I did a good enough job at that
[23:16] because what happened was BBVA's play
[23:19] was not to buy this little bank
[23:21] in Texas and be done. They then bought a
[23:24] bank called Compass Bank.
[23:26] Of course.
[23:26] Compass was based Yeah, based in
[23:28] Birmingham, but at the time um, was the
[23:30] 35th or 36th largest state in or largest
[23:34] bank in the United States.
[23:36] And [snorts] so, very big acquisition.
[23:39] And Deloitte Spain said, "Hey, we want
[23:42] we want this guy from Little Rock to
[23:44] come over to Birmingham and be part of
[23:48] kind of leading this transaction on
[23:50] behalf of Deloitte." And so, I I
[23:52] literally moved to Birmingham, like
[23:54] temporary housing, was there for 6
[23:56] months, was there for an entire SEC
[23:57] football season.
[23:58] Oh, you were Oh, interesting.
[23:59] See the Auburn-Alabama thing play out
[24:02] firsthand. Um,
[24:03] but um,
[24:05] you know, it was really formative for me
[24:07] to kind of see all of that through that
[24:10] lens and gain the foundation that I did.
[24:13] And all along the way while I was at
[24:15] Deloitte, I really wanted to go to work
[24:17] at Stephens. As again, as a as a
[24:18] lifelong Arkansan, um, and I really I
[24:21] really wanted to get into this thing
[24:23] called investment banking.
[24:25] Um, and I and I really wanted to work
[24:26] for a great Arkansas company. And so, I
[24:28] had an opportunity in 2008,
[24:31] um, to to join Stephens and they
[24:33] literally asked me to come in to the
[24:36] Depositories Investment Banking team to
[24:38] really help build out a investment
[24:41] banking team dedicated to uh, to banks,
[24:44] to community banks, commercial banks.
[24:46] And what you may not know, Andy, is that
[24:49] Stephens Jack Stephens had a long
[24:51] history as a principal investor in
[24:54] banks. He owned dozens of banks, owned
[24:57] like, you know, a lot of times 4 or 5%
[24:59] and, you know, kind of banks all
[25:01] throughout the region. And so, we had
[25:03] this history at Stephens as a principal
[25:05] investor before we had before we had any
[25:09] um you know,
[25:10] experience as an advisor to the
[25:12] industry. And it became such a great
[25:14] calling card for me to go into bank
[25:17] boardrooms
[25:19] and describe our our company as a as a
[25:22] privately owned company.
[25:24] Right.
[25:24] You know, we we we value our reputation
[25:27] more than we do the next deal that we're
[25:28] working on.
[25:30] Um and we we we think like you do. We
[25:32] think like you do around the board
[25:34] table. Like my boss is is is an investor
[25:36] in banks, too, and he comes from a
[25:38] lineage of principal investing in this
[25:41] industry.
[25:42] And so, that the effectiveness, I think,
[25:44] of that calling card um and then just
[25:47] the the good fortune of how
[25:49] post-financial crisis kind of like
[25:51] timing being everything, right? When you
[25:53] think about the the Southwest, the
[25:56] Midwest, and the Southeast, that area of
[25:58] the country recovered the fastest and
[26:01] the most
[26:02] Right.
[26:03] um economically coming out of the
[26:04] financial crisis. And so, I just started
[26:07] growing these relationships with banks
[26:09] all throughout the region. Those banks
[26:11] got very offensive in terms of their
[26:12] growth. And so, that crop of banks that
[26:15] we discussed earlier that went from 2 or
[26:17] 3 billion dollars to 20 and 30 and 50
[26:19] billion dollars.
[26:21] Many of those became close clients of
[26:23] mine. Stephens was one of those.
[26:25] That's a front row seat. I mean, I think
[26:26] a lot of people don't really sometimes
[26:28] understand how it works, but uh you
[26:30] know, when you buy and sell a company,
[26:32] often times,
[26:34] you know, you have help. You know, it's
[26:35] so
[26:36] you know, you in the form of an advisor,
[26:38] you know. And that advisor isn't like
[26:40] just coaching you at some high level.
[26:42] They're usually deep inside the numbers,
[26:45] deep inside the strategy. So, you had a
[26:48] front row seat to all of this, you know,
[26:50] so
[26:51] it it it it's it's almost
[26:55] you know, it makes
[26:56] although it's not traditional, I would
[26:58] say to go from you know, an investment
[27:01] banker to the you know, to the
[27:03] to running the bank, but it's also not
[27:06] you know, it's it's also there's plenty
[27:08] of examples of it just the same. So,
[27:11] what made you decide to to make the leap
[27:13] when you did in 2021?
[27:15] So, I'll actually back up to 2019. I
[27:19] tell this story. I love to tell the
[27:20] story. George called me into George
[27:22] Makris called me in 2019 and offered me
[27:24] the job. He said, "Look, we've got some
[27:26] succession planning we're doing at the
[27:27] bank.
[27:29] We're obviously very familiar with you.
[27:31] You've been on our board room all these
[27:32] times. You've advised us on
[27:33] transactions. We know you you're in
[27:35] you're in Little Rock, right? You're
[27:36] here where we are. We want you to come
[27:38] be a part of the team." And like
[27:39] literally sight unseen, I just said no.
[27:41] I mean very respectfully, but I I had no
[27:43] interest at that point in time.
[27:46] And
[27:47] flash forward to to January of 2021.
[27:50] And so you you we have a pandemic in
[27:52] between these things, right? But the
[27:53] world the world has changed a lot. But
[27:56] George called me back in January of 2021
[27:59] and said, "Jay, listen, you told me no
[28:01] once. I really don't like being told no
[28:04] twice. Will you will you at least just
[28:06] come have lunch with me next week?" And
[28:09] so I did and Andy I honestly I honestly
[28:11] started that whole discernment process.
[28:15] My my mindset was why would I ever do
[28:17] this? Lit- literally that was my
[28:19] mindset. I I was at Stephens. I was I
[28:21] had a niche carved out for myself, very
[28:23] successful, really had no itch to go do
[28:27] something different.
[28:29] But coming in listening to George and
[28:30] Bob Feldman and Marty Casteel and
[28:33] others, the one thing I always admired
[28:36] about about Simmons Bank was that that
[28:38] those core that history, just the
[28:40] integrity of the organization.
[28:43] Um and
[28:45] so that was a little intriguing to me,
[28:47] and then as those conversations
[28:48] unfolded,
[28:50] what I really began to understand more
[28:52] clearly was that there was an entire
[28:54] succession planning process underway in
[28:57] the boardroom.
[28:57] Okay.
[28:58] And and it it was you know, it was very
[29:01] thoughtful and intentional, and George
[29:03] made it clear to me that I could play a
[29:04] very key role in that coming in as the
[29:06] CFO, but would have ample opportunity to
[29:09] grow beyond that role. And and so that
[29:12] was also became intriguing to me. And
[29:15] then the last thing I'd say, and this
[29:16] was for sure this is kind of where it
[29:18] became a calling,
[29:20] um is
[29:22] having been an advisor to the banking
[29:24] space, like the industry is
[29:26] consolidating. There were 20,000 banks,
[29:29] and then there were 10,000, and now
[29:31] there are, you know, 4,500 or so, and
[29:34] we're going it will keep This is an
[29:36] unfortunate reality of our industry, but
[29:38] it will keep consolidating. And so I'm
[29:40] sitting here as a lifelong Arkansan
[29:44] going, "Okay, I can stay where I am at
[29:45] Stephens and can literally work my way
[29:48] to be the advisor of selling this
[29:50] company, this bank that I know and love,
[29:53] who doesn't have a a great path of
[29:55] succession, or I can go try to be a part
[29:58] of helping make sure that we've got,
[30:01] um you know, a future that stays beyond
[30:03] just the next handful of years or
[30:04] whatever." And so we have to earn that
[30:06] all day every day, but that really kind
[30:08] of became my calling in all of this to
[30:10] want to come over and make the jump.
[30:11] You know, so you jump, um and and I'm
[30:14] going to lay out what I think is going
[30:16] on at the bank, but I want to hear but I
[30:17] but I'm just curious about culture
[30:18] first.
[30:19] I'd love to hear the outside-in view of
[30:20] it. Yeah, that'd be great.
[30:21] Yeah, I'm I'm going to tell you what I
[30:22] think here in a second. Uh
[30:24] um you know, and but I may have it
[30:25] wrong. Like I just I'm just just just
[30:27] playing with it, and I'm and I'm
[30:29] triangulating things as I look at it,
[30:30] but um you know, I I can tell you that
[30:33] just for me, cuz I also was at I was at
[30:37] a large uh consulting firm and it
[30:41] throughout my 20s, and then and then I
[30:43] became this entrepreneur. I still
[30:44] remember, you know, at the consulting
[30:47] firm, management consulting firm, I
[30:49] would I remembered about it is is that
[30:51] everybody was this sort of individual.
[30:52] If you had an idea, whoever you were, if
[30:54] you could express that idea and sort of
[30:57] back it up, everybody listened. And I
[30:59] remember I remember getting in front of
[31:01] a bunch of truck drivers and and it's me
[31:03] and and and I sit in front of everybody
[31:05] and I start talking about strategy and I
[31:07] remember just like people like glaze
[31:09] over. And so like
[31:11] [laughter]
[31:11] and I remember the guys like after I
[31:12] finished they're like, uh hey boss man,
[31:14] uh
[31:15] I need another 25 cents an hour, you
[31:17] know. And I but my point is it it it I
[31:20] didn't connect perfectly at first, you
[31:22] know, I I learned that I had to change
[31:24] my I learned that in one culture it
[31:27] didn't translate perfectly over. What
[31:29] were the culture shocks for you?
[31:30] Yeah, really really similar. That's a
[31:33] great That's a great setup. So,
[31:36] um I had to learn to adapt when I came
[31:38] here, right? Coming from an investment
[31:40] banking landscape, which is very much an
[31:42] idea meritocracy as you described and um
[31:46] you know, basically going from owning a
[31:48] P&L as a producer
[31:51] um to a place where you're really taking
[31:53] on enterprise responsibilities.
[31:56] The probably the biggest culture shock
[31:57] for me or the biggest adaptation that I
[31:59] had to go through was like rolling up
[32:02] the sleeves and getting all the way down
[32:04] in the bowels of the business. As an
[32:06] advisor, you like success is getting to
[32:09] the point of some defined finish line.
[32:11] So, in an M&A context, that is
[32:13] successfully closing a merger
[32:15] transaction. But for the bank in this
[32:18] context, that's the starting line, not
[32:21] the finish line. And so,
[32:23] you know, getting into what I call the
[32:25] bowels of the business and really
[32:27] you know, understanding
[32:30] end to end how we are process designing.
[32:33] And I think you know, the other big the
[32:36] other big translation that we're going
[32:38] through is what we're sort of I call it
[32:39] transcending on duality, right? So you
[32:41] think about the paradox of duality, two
[32:43] things that are exactly opposite but
[32:45] also true at the same time. And and for
[32:48] Simmons today,
[32:50] you know, this is where you you have
[32:51] both the blessing and the curse of being
[32:53] a 123-year-old company. So I can walk
[32:56] down the hall at Simmons Bank
[32:58] and I can hear chatter that says, "Man,
[33:02] we're just we're change we're asking so
[33:03] many questions. We're changing so many
[33:06] things. There's so much change fatigue."
[33:09] And and at the same and it's true. That
[33:11] is very true and I'm deeply empathetic
[33:13] to that reality. But the duality is that
[33:16] I can go into any one of those offices
[33:17] where that is being said
[33:20] and I can say, "Hey, what are you
[33:21] working on right now?" And I can hear,
[33:24] "I'm doing X, Y, and Z." Well, tell me
[33:27] break that down for me. Why are you
[33:29] doing X and Y and Z? And inevitably, the
[33:32] ultimate answer to that is because
[33:34] that's how we've always done it. And so
[33:37] like we are we are really trying to, you
[33:40] know, champion the culture toward a more
[33:42] kind of continuous improvement mindset
[33:44] and that idea that the best idea should
[33:47] win, right? And it shouldn't always be
[33:49] this is how we've always done it.
[33:51] Well, it's it's it's hard. So here's how
[33:53] I would tee it up as you come into it.
[33:55] Um
[33:56] and I don't know if this is true or not.
[33:58] I like I have no inside like this is
[34:00] just an outside view. You've you've
[34:03] bought all these banks. It's sort of the
[34:05] go-go times of cheap capital even for a
[34:08] bank. It's cheap capital, right? And and
[34:11] and not only that, when there's cheap
[34:12] capital and especially when the
[34:14] economy's doing well and and I'm
[34:16] speaking for myself in this regard, you
[34:18] know, sometimes you may be move fast,
[34:20] you buy stuff maybe at a at a price that
[34:22] was, you know, that you wouldn't do it
[34:24] tomorrow but you did it today. And you
[34:27] know, and then you find yourself where
[34:28] you could integrate you know, the
[34:30] simplest things, right? Like the
[34:32] computer systems, but the cultures take
[34:34] a little bit longer, right? And so, the
[34:36] way I would say it is you come into a
[34:37] bank that
[34:39] I don't know this, but, you know, you
[34:41] still need to work on the culture, you
[34:43] know, you still have to kind of put all
[34:45] this together. And then you come into a
[34:47] time right after you get in, you land
[34:50] where you've got inflation and rising
[34:52] interest rates. And I think those things
[34:56] um
[34:57] uh basically hurt your balance sheet,
[34:58] you know, you get in a position where
[35:00] the cost of capital rises relative to
[35:03] your investments or your assets on the
[35:04] other side of the ledger, and that that
[35:06] requires a lot of management, a lot of
[35:09] uh uh
[35:10] I can speak for myself and our business
[35:11] is one of the things that that I would
[35:13] say is I wasn't used to doing uh dealing
[35:17] with inflation at that level. So, there
[35:20] was core processes that just didn't
[35:22] exist in our companies because,
[35:25] hey, we only we didn't we didn't need to
[35:27] talk about pricing changes all the time.
[35:29] Well, it was just every blue moon. But,
[35:32] as soon as you're in a high inflation
[35:33] environment, now we've got to do it.
[35:35] And, you know, and then I think I think
[35:37] the other thing I would say, this isn't
[35:39] when you come in, but I think that, you
[35:41] know, I I I think most people give you a
[35:43] lot of credit for this and and you know,
[35:46] is that, you know, the tough decisions
[35:48] that you guys made last year to reset
[35:51] your balance sheet, you know. And so,
[35:53] and so, I view I I think I view that as,
[35:57] you know, you're taking the medicine,
[35:59] positioning the bank for success, you
[36:02] know, it didn't impact your stock price.
[36:04] And so, did did I am I close at all? You
[36:06] know, I mean
[36:07] Yeah, you're you're Yeah, you're you're
[36:09] really close. And I I think that the the
[36:11] way that I would tell that story is that
[36:15] you used I I'm going to just pick on one
[36:16] word you
[36:17] Yeah, pick you can change my words.
[36:18] No, it's good. You You used the word
[36:20] cheap capital, and we did have cheap
[36:21] capital, but for our industry, for the
[36:23] banking industry, what was really cheap
[36:25] that kind of
[36:26] caused the whole industry to maybe lose
[36:28] some discipline was liquidity. The the
[36:31] funding was cheap. It was
[36:33] And so the the word I'm picking up So
[36:35] the the deposit funding what And and
[36:37] money was being injected into the system
[36:40] even through even through the pandemic
[36:41] cuz and it maybe especially through the
[36:43] pandemic we have this
[36:45] You have this 15-year period almost from
[36:48] the financial crisis through the
[36:50] pandemic
[36:52] where liquidity was just easy. Money was
[36:55] easy. And so forever forever in the
[36:59] continuum of the banking industry,
[37:02] um deposits and what I call the right
[37:04] side of the balance sheet, right? The
[37:06] assets being on the left side, um loans,
[37:09] deposits being on the right. The
[37:10] deposits have really always been the
[37:12] most valuable thing in banking.
[37:14] But we went through a like a generation
[37:17] of of bankers who became a lenders.
[37:20] Because what was hard to do post
[37:22] financial crisis was growing loans. It
[37:24] was hard to find good loans for a long
[37:26] period of time and money was easy. And
[37:29] so bank balance sheets were growing,
[37:31] kind of bloating up on easy to gain
[37:33] funding, but hard to find high-quality
[37:37] investments.
[37:38] So then that that like flipped overnight
[37:42] in 2022
[37:44] when we had this rampant inflation that
[37:46] was transitory transitory transitory
[37:48] until it wasn't.
[37:50] Right? And then and then and then the
[37:51] Fed starts, you know, doing kind of
[37:53] unprecedented things to increase rates
[37:56] and the entire industry woke up and
[37:58] said,
[38:00] "Oh my goodness, we forgot about how
[38:02] important deposits were."
[38:03] And and so that like that's kind of you
[38:07] know, that's basically what happened
[38:09] over the last few years. For Simmons'
[38:11] version of that story and kind of the
[38:13] medicine that we took last year, um you
[38:16] know, you go back to that growth through
[38:19] M&A. There were areas in the business
[38:22] that we invested heavily in to make sure
[38:24] that we were keeping up with that growth
[38:25] and did a great job of that. One of the
[38:28] areas that we didn't invest heavily on
[38:30] enough in is interest rate risk
[38:32] management. And so you saw like this
[38:34] this you know
[38:36] kind of once once in a generation kind
[38:39] of
[38:39] said interest rate kind of change in
[38:42] policy
[38:43] and and we were not set up well for
[38:46] that. And so we we operated as well as
[38:49] we could through that. It put a it put a
[38:51] overhang our ability to to generate
[38:53] earnings because of the mismatch between
[38:55] assets and liabilities and the rates
[38:57] there on. But what we were able to do
[38:59] last year Andy was
[39:02] we've been telling our story. Like this
[39:03] is straight Here's the succession plan
[39:06] we're going through. Here's the strategy
[39:08] that we're focused on. Here's the
[39:10] opportunity in front of us. And we had
[39:12] built a really good following on the buy
[39:15] side in in the public company investment
[39:17] community.
[39:18] And then we just had the perfect storm
[39:20] where you you know, in late summer last
[39:23] year rates got to a place where we could
[39:25] kind of tolerate kind of a one-time loss
[39:27] on those underwater low-rate assets. And
[39:31] investors came in, really really bought
[39:34] into our bank at that time. And to your
[39:36] point to that that the day after the the
[39:39] deal was done, stock price had more than
[39:41] fully recovered. So like no no
[39:43] no permanent impairment on the business.
[39:46] And since then our stock's really been
[39:47] outperforming the industry year to year
[39:49] to date, we're outperforming the KRX,
[39:52] outperforming the other publicly traded
[39:54] Arkansas banks
[39:56] because I think we we put some of those
[39:57] sins of the past fully behind us, are
[40:00] executing really really well toward a
[40:02] strategy that that is is value accretive
[40:04] into the future. Yeah, if I if I was
[40:05] trying to like if I was trying to like
[40:07] put that into like I don't know, pro
[40:09] football terms, you know, the way I
[40:11] would sort of say it is, you know, and
[40:12] this is this is not exactly fair in the
[40:14] way I'm I'm to say this, but it's it's
[40:16] like you've got all the good
[40:18] fundamentals of a good team.
[40:20] But one of your marquee players that you
[40:22] had isn't doing like like you thought.
[40:25] Exactly right.
[40:25] And and and but you've got all this
[40:27] capital that's allocated toward that one
[40:29] marquee player. You got a running back
[40:31] that you know can't run. And you know,
[40:33] and so you got to bite the bullet, you
[40:35] got to get you you got to take the you
[40:37] still got to pay his cop, but you kind
[40:38] of you get rid of him and you do
[40:39] something different. And so, you know,
[40:42] and so I think that's why, you know, I
[40:44] think people looked at it as you know,
[40:46] you know,
[40:47] a necessary smart move on the chessboard
[40:49] and it didn't and why investors were
[40:51] still willing to come in to to the
[40:53] structure because they look at it and
[40:55] say, "Hey, I think this is going in the
[40:56] right direction."
[40:57] Well, you look at it you look at it
[40:59] today and rates have gone up since then.
[41:01] Um and there's you you you know, like
[41:03] 10-year long rates have gone up. Uh
[41:06] there's a real threat that the Fed
[41:08] policy can absolutely do a 180 and go
[41:11] from rate cut to rate increase
[41:13] environment. You you know, had we not
[41:15] made that move last year, we that'd be a
[41:17] that would be a really bad situation
[41:19] right now. And so I mean, you you know,
[41:21] investors don't buy our stock because we
[41:23] can time the market well.
[41:25] Uh and you you you know, but but we
[41:27] timed the market really really well with
[41:29] that trade last year. So
[41:30] I made this list of things that I
[41:32] thought were the reasons why you were
[41:34] where where I I look at the decision to
[41:36] put you there and I'm like, "Okay, this
[41:38] is a good decision." I you know, I know
[41:40] that just using the example of my own
[41:41] company, the reality is is that, you
[41:43] know, all businesses need a succession,
[41:45] right? You know, you can have great
[41:46] leadership before, but there there comes
[41:48] a time to make a change. And cuz it took
[41:51] a lot of leadership to do the
[41:53] acquisitions before you get there,
[41:55] right? I mean, like because you'd sit
[41:56] there and say like, I I bet if we went
[41:58] back to 2012 and you said, "Hey, let's
[42:01] make a list of Arkansas banks that are
[42:04] whatever, $1 billion in assets. And
[42:06] let's just choose. Which one do you
[42:09] think is going to now be end up to be
[42:11] $25 billion. And that's not a simple
[42:13] thing to say, right?
[42:14] Yeah.
[42:14] You know, and it's the same way if we
[42:16] consider today and say you're 25, let's
[42:19] say all four of the banks we listed here
[42:20] in Arkansas. Well, the question is if we
[42:22] go out 10 years and we had a crystal
[42:23] ball and we looked back, which one will
[42:25] be 100? You know, and and what I would
[42:28] what I would argue and I don't know if
[42:29] you I'm just I'm just curious your view
[42:30] on this, but I would argue that the that
[42:33] the unlocking move is leadership. You
[42:35] know, I mean, you got to have other
[42:36] fundamentals, but do you have a view on
[42:38] that?
[42:39] Yeah, I think you know, our our I'll say
[42:42] it a little differently, the you know,
[42:43] for the banking industry, that
[42:45] consolidating industry that I mentioned
[42:47] earlier, um there's a few factors
[42:50] driving that consolidation, but the
[42:51] number one factor is lack of succession
[42:53] for the industry. The median age of CEOs
[42:57] for like the top 200 publicly traded
[42:59] banks in the country is mid-60s. And so,
[43:03] you know, there's just it is hard to go
[43:06] through you know, a succession planning
[43:08] process and it takes from it takes
[43:10] years. Having gone through it firsthand,
[43:12] it's a years-long process and it's it's
[43:16] even harder in a public company context,
[43:18] right? With all of those you know,
[43:19] public company responsibilities. And so,
[43:22] that was a real unlocking moment. Our
[43:24] board our board deserves a lot of credit
[43:26] for having shepherded through a process
[43:29] like that. Um and that that I think that
[43:31] unlocked a lot of things. My background
[43:34] and pedigree, Andy, you know, helped a
[43:36] lot. And you know, I'm I'm blessed with
[43:38] standing on the shoulder of giants here
[43:40] and a 120-year history of a company that
[43:43] I've only been at for 5 years. Tons of
[43:45] things that I'm you know, humbly am very
[43:47] appreciative of. But you know, you think
[43:49] about just like things happening at at
[43:52] the right time. What this bank needed in
[43:55] 2025
[43:57] was someone who was very very adept at
[43:59] the capital markets. And I had spent my
[44:01] career doing capital markets
[44:02] transactions for banks up until that
[44:04] point. And someone who had relationships
[44:07] on both the sell side and the buy side
[44:09] and you know stakeholders of the capital
[44:11] markets and then someone who could
[44:13] articulate a strategy that was a
[44:15] shareholder value creating strategy
[44:19] for a bank and and like those
[44:21] I don't I didn't know how to run the
[44:22] bowels of the business I get it get in
[44:24] the ops room or technology but those
[44:26] things that's my bailiwick right and so
[44:29] it just the timing was really really
[44:30] good for us to be able to take advantage
[44:32] of that and it really you know you
[44:35] talked about your
[44:36] list of reasons
[44:38] The the biggest reason in my mind is it
[44:41] if you if you think about just the the
[44:42] net present value of any future value of
[44:45] this bank it unlocked the strategic
[44:48] value of the bank going through that
[44:50] transaction really took the bank from
[44:53] playing defense to playing offense at a
[44:56] moment in time where the industry is
[44:58] ripe for offense and so we're in a we're
[45:01] in a great spot for that now.
[45:03] So I want to I want to ask about a
[45:04] couple different things about that um
[45:07] um cuz I I I I view it as now the
[45:11] it's set to go and
[45:14] um and I'm curious about a few things so
[45:16] let's just first talk about culture and
[45:18] and and uh
[45:20] so you know the roots as an Arkansas
[45:23] community bank right and you know and I
[45:25] realize it's as it's still headquartered
[45:27] in Pine Bluff is official headquarters
[45:30] the the technical headquarters is still
[45:31] Pine Bluff um our executives are pretty
[45:34] much all all in Little Rock so
[45:36] are in the old TCBY building right you
[45:37] know is that what it is?
[45:38] So it was we have a branch there and we
[45:41] have a sign on top but the the Simmons
[45:43] building that's over right by the I-30
[45:45] bridge it's got the lights around it
[45:46] Yeah yeah yeah yeah okay that's where
[45:48] yeah that's where yeah of course yeah
[45:49] That's where we that's where our
[45:50] headquarter office
[45:50] That's where you guys are yeah okay
[45:52] Correct
[45:52] Um so how do you how do you own a bank
[45:56] that's in the surrounding states as well
[45:59] how do you still maintain that if if
[46:02] this is important that community bank
[46:04] feel that you know that that you know
[46:06] especially here in the state how do you
[46:08] still kind of lean into that history
[46:12] and still
[46:14] be authentic in other places too.
[46:16] Yeah, I think that
[46:18] um
[46:19] I go back to like kind of consistent
[46:21] language around purpose core values you
[46:24] know those things fortunately have not
[46:25] had to change like if we were having to
[46:27] change that that would be getting into
[46:28] your identity right? Our identity has
[46:30] not really changed that much.
[46:35] Changing a process end to end redesign
[46:38] of a a new technology
[46:40] new people those things require some
[46:43] change management but we're fortunate
[46:45] here first and foremost to be in an
[46:47] environment where again I'll use that
[46:50] word identity made the identity isn't
[46:52] really changing that much. Now
[46:55] the manifestation of that identity is
[46:57] where I'm spending a lot of time from a
[46:58] culture perspective and what I'll give
[47:00] you an example of what I mean a a less
[47:01] nebulous example of what I mean by that
[47:05] you know a 120 year old company in
[47:08] Arkansas and what good performance looks
[47:11] like what organic growth expectations
[47:14] might look like compared to Dallas Texas
[47:17] or Nashville Tennessee those are
[47:19] different that's a different expectation
[47:21] and so
[47:23] you know we're
[47:24] today what we are focused on is really
[47:27] kind of upping what what is a what is a
[47:29] high performance expectation and and we
[47:32] don't have the same goals in Lake
[47:35] Village Arkansas as we do Nashville
[47:36] Tennessee but we also don't have the
[47:38] same market share in Nashville Tennessee
[47:40] that we have in Lake Village Arkansas
[47:42] right? And so
[47:43] the expectations can be managed
[47:46] differently based on the attributes of
[47:48] the markets and our presence in those
[47:50] markets but overall I would say we're
[47:53] really really focused on you know
[47:55] elevating the organic growth expectation
[47:58] of the business. Um the industry's going
[48:01] to still consolidate. We will be able,
[48:03] if we ever desire to to participate in
[48:06] that consolidation.
[48:08] Um
[48:09] but to me, I I go back to something I
[48:12] said earlier, investors value the value
[48:15] of a bank is on the right side of the
[48:16] balance sheet on that deposit franchise
[48:18] side. It's also and that's okay, they
[48:21] pay higher multiple for a bank that can
[48:24] grow organically
[48:26] than it does for one that has to take
[48:27] the care of risks of acquisitions,
[48:29] right? And so
[48:31] I want to build the bank to a place
[48:32] where we can do both very, very
[48:34] effectively. And we have all of the
[48:36] ingredients and raw materials for that.
[48:37] So those are those are like epicenter to
[48:39] our priorities right now.
[48:40] you So So Jay, when you look at your
[48:42] growth at a bank,
[48:44] um you know, I cuz I I know it how I
[48:46] think about the companies that I'm
[48:48] involved with, what I think a good
[48:49] amount of organic growth is. And I'll
[48:51] just preface this, you know, I know you
[48:53] you don't need this, but but but you
[48:55] know, the reality is growth takes the
[48:57] growth takes capital to do that. You
[48:59] need work Yeah, it's it's sweat equity.
[49:01] And and you know, there's this only a
[49:03] certain amount one can handle. I mean,
[49:05] you know, we're so used to in the world
[49:07] like seeing stuff like, you know, like
[49:09] like some of these hyperscalers, you
[49:11] know, I'll look at their growth, you
[49:12] know, year over year and it's just
[49:14] phenomenal. And I don't even know how
[49:15] they manage internally. But what do you
[49:17] guys feel like is a good target for you
[49:19] guys in an organic growth level?
[49:22] I'll give you a couple of statements on
[49:23] that. One in this banking industry, one
[49:25] of the common isms, phrases is if it
[49:29] grows like a weed, it's probably a weed.
[49:31] Yeah,
[49:32] it's probably a weed. You you know,
[49:34] we're it's a the banking we're not a
[49:36] technology company, and so we are in we
[49:38] manage risk. We sell risk and manage
[49:42] that risk. That's what banks do at the
[49:45] end of the day. And so um so that's why
[49:48] if it grows like a weed, it's probably a
[49:50] weed. It's not it's not managing a risk
[49:52] effectively. So, we try to stay really
[49:54] consistent in our guardrails. Sort of
[49:55] strategically, offensively, where are we
[49:58] going? Other guardrail, risk appetite.
[50:01] What risks are we willing to take and
[50:04] what risks are we not willing to take?
[50:06] And we we really keep it and keep a lot
[50:08] of discipline around those things. And
[50:09] what So, what that requires is managed
[50:12] growth that for us is probably mid to
[50:15] upper single digits. That's probably a
[50:16] sustain And and the macro backdrop,
[50:19] Andy, I
[50:20] obviously
[50:20] sometimes we'll be better than that,
[50:22] sometimes we'll be slower than that
[50:23] because the environment isn't always
[50:25] conducive. But, if you zoom out over any
[50:28] any period of time that's reasonable, um
[50:32] you know, I think mid to upper
[50:33] single-digit growth is is good growth
[50:35] for us. But, I'll let me juxtapose that
[50:38] to capital.
[50:39] We're generating a mid-teens return on
[50:41] capital today. So, if I can generate I
[50:44] can more than self-fund the growth of
[50:46] the balance sheet, which now gives me a
[50:49] war chest of capital to go play with to
[50:52] further create shareholder value. I
[50:53] might return that capital via dividend
[50:55] or share repurchases.
[50:57] Um but, I might invest in the business.
[50:59] I might I might acquire another I can do
[51:01] all these other things because a
[51:04] sustainable, valuable, high high
[51:07] multiple value growth rate for us in any
[51:10] environment is less than what I'm
[51:12] returning on capital through earnings
[51:14] any given year.
[51:15] Yeah. You know, what what I mean, it's
[51:17] just this is a blinding glimpse of the
[51:18] obvious, but I'll say it anyway. The you
[51:20] know, the reality is if you focus on
[51:22] profitability and cash, you'll generate
[51:24] the cash that you're talking about. And
[51:26] then you have this choice, do I do I
[51:29] reinvest it in the business? Do I buy
[51:32] shares back? Do I pay a dividend? And I
[51:34] I will mention, I think I read somewhere
[51:36] that you guys are on your
[51:38] 117th
[51:39] year of paying a dividend?
[51:41] Yep.
[51:41] Which is I I you know, which is pretty
[51:43] good, right? I mean, like it's
[51:45] outstanding.
[51:46] It's staggering.
[51:46] Yeah, it's staggering. It's staggering,
[51:48] you know.
[51:48] It's It is a I'll I'll give you that
[51:50] statistic a different way.
[51:53] Um there are 27 company not banks,
[51:56] companies 27
[51:59] in the entire country who have paid a
[52:01] dividend for over 100 years and we're
[52:03] one of them. We're the only bank on that
[52:05] list. And so that is a
[52:07] that is a phenomenal statistic for for
[52:11] our bank and something that we're really
[52:12] really proud of. But if you can pay a
[52:14] dividend you you think about 117 years
[52:16] of consecutive dividends, Great
[52:18] Depression, couple of World Wars, Great
[52:21] Recession, all these different things.
[52:24] And so you go back to like that risk
[52:26] appetite mindset. You pay a dividend
[52:28] because you've you're you're managing
[52:30] your balance sheet really well and
[52:32] you're focused on delivering cash flow
[52:34] as you said earlier. Like banks are
[52:35] wonky businesses cuz we're balance sheet
[52:37] businesses. We don't produce EBITDA.
[52:41] But you you know, but cash flow is still
[52:43] king for a bank the same way it is for
[52:45] any other industry out there. And you
[52:47] know, that's something that is is of
[52:50] great focus for us. And and it's what
[52:51] unlocks all the opportunity for our
[52:53] company um and for our shareholders.
[52:56] Yeah, cuz in my notes kind of thinking
[52:58] through like I sort of think that like
[53:00] okay, like what would I think about
[53:02] like what how if I was on your board,
[53:05] how I would think about what the focus
[53:07] should be. And I struggled a little bit
[53:09] with how to think about this, but I
[53:11] ultimately settled on that I think that
[53:13] the focus on the optimization of the
[53:15] bank itself and profitability would
[53:16] probably be the be the number one. And
[53:19] then I would probably opportunistically
[53:21] pursue acquisitions if they come around
[53:23] if they have a if they if they fit fit
[53:25] fit our mandate. And you know, I would I
[53:28] would maybe think about it that way. And
[53:29] then the other thing that I thought
[53:31] would also be there and I
[53:33] is is
[53:34] cuz I don't exactly know that how this
[53:35] will play in bank, but just just the
[53:39] I don't even know the right way to
[53:40] articulate this, but the the deployment
[53:43] of technology, you know,
[53:46] in your bank. So, can you say something
[53:48] about how you think about that, whether
[53:49] it's AI, whether it's apps, whatever it
[53:51] is, like what what you're excited about
[53:53] and maybe what you're scared about? And
[53:55] and and I'll So, I sort of yes, and I'll
[53:57] I'll sort of think of three things even
[53:59] before I get to technology and you you
[54:01] you were you were really close there
[54:03] with with with yours.
[54:04] Um but for for like priority one is
[54:08] total investment in running a very
[54:10] efficient bank. Like my thesis on this
[54:12] industry is you just got to So, I guess
[54:14] this is the most common sense thing
[54:15] ever, but you got to run run a really
[54:17] good bank, right? And so,
[54:20] um and that's that sustainable organic
[54:22] growth, efficiency of scale, all of
[54:24] those things. The number two thing in
[54:26] our industry is you got to you got to
[54:28] have a thick skin. When times are good
[54:31] in our industry, people lose their
[54:33] discipline.
[54:34] Yes.
[54:35] And and so, you see these Every time
[54:38] there's a cycle,
[54:39] uh there tend to be things like bank
[54:41] failures, etc. That's another reason why
[54:43] 117-year consecutive dividend is such an
[54:46] amazing thing in our industry. So, so
[54:48] you got run a great bank, have a thick
[54:50] skin when times are good, like take a
[54:52] really long-term view,
[54:55] um and then the third thing is it this
[54:58] industry will continue to consolidate.
[54:59] If you do those first two things well,
[55:01] then you are going to be in the best
[55:03] position to benefit from consolidation,
[55:05] whether that's directly as an acquirer
[55:08] or indirectly at taking advantage of the
[55:11] disruption that goes you know, goes on
[55:13] around you from acquisitions that happen
[55:15] around you. And so, like that's the
[55:16] thesis on the industry. You bring up an
[55:19] interesting point in that
[55:21] there's another
[55:22] quickly evolving like pace of change
[55:25] that's intersecting with the industry
[55:27] and it's a very steep steepening
[55:29] probably even pace of change and that's
[55:31] what technology is doing. And whether
[55:33] that's coin, whether that's uh you know,
[55:36] did digital um capabilities,
[55:39] uh uh uh AI obviously is going to
[55:41] disintermediate a lot of things I you
[55:43] know, potentially.
[55:45] Uh and so we're doing a lot around that.
[55:46] Well, here's what I'd say is our is our
[55:49] probably our number one focus right now
[55:51] around um innovation and technology is
[55:56] data hygiene. Like we are starting all
[55:59] the way with you know, find me an
[56:01] industry that's got better data than
[56:03] what a bank has.
[56:05] But it
[56:07] chronically not very good at leveraging
[56:09] the data. It using the data.
[56:11] Yeah.
[56:12] And and and AI automate automation with
[56:15] IA intelligent automation AI, right?
[56:18] Either either or both
[56:20] are only as good as the inputs that you
[56:23] can put into those systems, right? And
[56:26] so um you've got to be able to scale
[56:29] data very very effectively. And so we
[56:31] are
[56:33] um is is you know, it's not a it's not a
[56:34] fun conversation really, but it is it is
[56:37] the first principle in in all of this.
[56:40] And so major investments in our bank
[56:42] today and over the last several years,
[56:44] but but increasingly going in on on the
[56:47] data side. The other piece is just
[56:49] overall technology modernization. Like
[56:51] we are every industry is a technology
[56:54] company. Um it you know, um
[56:56] and and so we are we are a tech company.
[56:59] Uh our our services are our bank
[57:01] services. But we're doing we're doing a
[57:03] lot in terms of simplifying our
[57:06] technology infrastructure. So the same
[57:08] way there's power to um a healthy data
[57:13] ecosystem, there's also a lot of power
[57:15] to simplicity. And so over time what
[57:19] happens at every bank is you you develop
[57:21] these very complicated tech stacks. And
[57:24] you you know, you're a lot better at
[57:25] adding tech than you are decommissioning
[57:27] tech. And so we're kind of going through
[57:29] and really cleaning up the technology
[57:32] stack and being very selective around
[57:35] around vendors. The other thing I'd
[57:37] mention is we're putting more on our
[57:38] side of the fence. So so banks,
[57:40] especially banks our size, you get the
[57:42] big the the money centers, it's a
[57:43] different conversation, but all of the
[57:46] rest of us, we are really detrimentally
[57:49] reliant on vendors for everything that
[57:53] we need. So if I need to innovate
[57:54] something, I have to go to my vendor
[57:56] Uh-huh.
[57:56] and and you know, and draw that out and
[57:59] then rely on their timeline to get it
[58:01] there. The great thing about where we
[58:03] are at Simmons today is we're at a size
[58:05] where we can make those investments. We
[58:07] have enough scale and revenue and
[58:09] earnings to make investments on our side
[58:12] of the fence where we can bring in
[58:13] engineers and we can engineer our own
[58:15] things and leverage the technology much
[58:19] more efficiently and much more capably
[58:21] than we've ever been able to before.
[58:23] Yeah, that's that's super interesting.
[58:25] I've two more questions and then um so
[58:28] one is um
[58:30] you know, when we think about the state
[58:32] of Arkansas and
[58:35] you know, how we drive GDP, how we
[58:37] create jobs, um and of course there's a
[58:40] whole host of other things that have to
[58:41] have to happen, I think, to to continue
[58:43] our our our track. Do Do you feel like
[58:46] How do you feel like the bank's role,
[58:49] you know, I realize it's not a stated
[58:51] role, maybe on your you know, your
[58:52] corporate mandate or probably not in
[58:54] your you know, but how do you feel like
[58:56] the bank can help support and drive that
[58:59] growth?
[59:00] Well, I I think I think banks do sit at
[59:03] the center of that. Um I mean, we are at
[59:06] the
[59:07] the center of capital formation for the
[59:09] economy in any state and in any
[59:11] community, candidly. And so that is
[59:13] that's actually something that is driven
[59:14] deeply. We take ownership of that in our
[59:17] ethos at the bank and have for a long
[59:19] time and and we'll continue to.
[59:22] Um you know, there's a lot of ways I a
[59:24] lot of different routes we could go with
[59:26] that, Andy.
[59:27] What one that Here's what I would kind
[59:29] of go to on this. And and different
[59:31] banks do this differently. And I wish
[59:34] that the average kind of
[59:36] citizen what's citizen in the state of
[59:38] Arkansas appreciated the nuanced
[59:41] difference the the important nuanced
[59:43] difference of where you put in this case
[59:45] your Where are you a deposit customer?
[59:47] Right.
[59:48] Because the reality is
[59:50] um
[59:51] if you're one of the big banks in
[59:52] Arkansas By big banks, I don't mean one
[59:53] of the four Arkansas-based big I mean
[59:55] like Bank of America or whatever. Then
[59:58] you know, you're get you're taking
[01:00:00] deposits in this state, but you're not
[01:00:02] investing much back into this state.
[01:00:03] There's not a lot BofA's not doing any
[01:00:05] loans here.
[01:00:07] Um you you know, they're
[01:00:09] uh they didn't host the Simmons Bank
[01:00:10] Championship in Little Rock. How much
[01:00:12] How much economic value is that
[01:00:14] generating um you know, in the state and
[01:00:17] in and in central Arkansas specifically?
[01:00:20] And you you know, when when I think
[01:00:22] about what we do at Simmons and and why
[01:00:25] it's so important is I we are investing
[01:00:28] back whether that's through lending to
[01:00:31] help companies
[01:00:33] uh or developers grow and create jobs
[01:00:36] and foreign capital in communities um or
[01:00:39] whether it's through things like giving
[01:00:40] back either philanthropically here in
[01:00:43] the local communities where we are um or
[01:00:46] through activities like like a PGA event
[01:00:48] in Little Rock, right? Like those are
[01:00:50] the things that can drive the future of
[01:00:53] the economy in support of what all the
[01:00:56] other industries and things are doing
[01:00:59] uh in the state kind of working together
[01:01:01] uh to bring bring about GDP growth. And
[01:01:03] I'm excited about the future of Arkansas
[01:01:06] and the economy here, uh but it's going
[01:01:08] to be predicated on the handful of
[01:01:10] Fortune 500 companies we have continuing
[01:01:12] to be successful
[01:01:14] um and then companies like Simmons and
[01:01:16] others
[01:01:17] as you mentioned earlier, all four of
[01:01:18] the larger banks in the state and anyone
[01:01:21] else kind of thriving and growing and
[01:01:23] taking advantage of uh you know, of
[01:01:26] what's really ripe here in Arkansas.
[01:01:28] Yeah, I totally agree with that. I think
[01:01:30] that I think that
[01:01:31] that the interconnectivity and
[01:01:34] you know, systemic nature and even
[01:01:36] symbiotic nature of you know, capital,
[01:01:40] businesses, ideas, you know,
[01:01:42] Exactly.
[01:01:43] broadly be our state's economy can
[01:01:45] propel us forward in in in in really
[01:01:47] interesting ways and create you know,
[01:01:49] prosperity and
[01:01:51] increase quality of
[01:01:53] of life and standard of living and
[01:01:55] things things like that. So, last thing,
[01:01:58] I'm curious so, you know, you just said
[01:02:00] here a second ago like what you're
[01:02:01] excited about but within the bank, what
[01:02:03] are you excited about you know, in terms
[01:02:05] of just looking forward for the rest of
[01:02:07] this year?
[01:02:09] Well, I
[01:02:10] um I'm going to answer a question you
[01:02:12] asked earlier
[01:02:13] um which was who's you know, who would
[01:02:15] you pick that's going to be a hundred
[01:02:16] billion dollar bank in the future. I've
[01:02:18] said that I've said that statement
[01:02:20] inside the walls of the bank even
[01:02:22] recently and the the statement I said is
[01:02:23] I
[01:02:24] you know,
[01:02:25] laying out the case for Simmons and
[01:02:27] where we are
[01:02:28] and and I'm I I ask I sit around and ask
[01:02:30] myself questions, right? And the one of
[01:02:32] the questions I'm asking myself is how
[01:02:34] are we not going to be a hundred billion
[01:02:36] dollar bank? And our goal is not to be a
[01:02:38] hundred billion dollar. That's not
[01:02:39] that's not written on a on a whiteboard
[01:02:40] anywhere.
[01:02:42] Um you know, but I just look at the
[01:02:45] forces around the industry, that lack of
[01:02:48] succession, the consolidation momentum
[01:02:51] um you know, where we are in terms of
[01:02:53] size and scale and capability, some of
[01:02:55] those investments like technology that
[01:02:57] we're able to make that the smaller
[01:02:59] banks are unfortunately are just not
[01:03:00] going to be able to make into their into
[01:03:02] their businesses.
[01:03:04] Um and it's just math, right? Like the
[01:03:06] the the
[01:03:07] same amount of loans and deposits are
[01:03:09] going to be out there and fewer and
[01:03:10] fewer banks are going to be doing it and
[01:03:12] and Simmons is going to benefit from
[01:03:13] that meaningfully. And so I'm I'm really
[01:03:16] excited about the opportunity. I'm
[01:03:18] probably most excited about the talent
[01:03:20] war right now. Like we are winning the
[01:03:22] war on talent. We are
[01:03:24] um you know, we're retaining great
[01:03:27] talent, we're developing great talent,
[01:03:29] and we are we are bringing people in.
[01:03:31] People saw what we did last year. Um
[01:03:34] People are There've been 54 acquisitions
[01:03:36] in the last 12 months in the states that
[01:03:38] we operate in.
[01:03:40] 54 bank acquisitions in the states we
[01:03:42] operate in. People are looking up in
[01:03:44] their organizations and they're
[01:03:45] questioning how long the futures are. Um
[01:03:48] they're they're seeing banks just kind
[01:03:50] of like that insanity definition of why
[01:03:53] are we expecting any different results
[01:03:55] by doing the same thing over and over
[01:03:56] again? And then and then there's just
[01:03:58] like this there's this kind of different
[01:04:00] flashing light out there at Simmons Bank
[01:04:02] that is again staying fully true to
[01:04:04] identity and core values and purpose,
[01:04:07] but it's sort of tackling challenges
[01:04:09] head-on,
[01:04:10] um and just looks a little different,
[01:04:12] and the opportunity the shape of the
[01:04:14] opportunity curve looks really
[01:04:16] different, and that sales pitch is a
[01:04:18] really good pitch It's more than a
[01:04:20] pitch, but that pitch to talent out
[01:04:22] there to high-performing talent is an
[01:04:24] effective one cuz people want to go
[01:04:26] somewhere where they can
[01:04:27] where they make impact, and you can do
[01:04:29] that here right now. And and it's it's
[01:04:32] got me more excited than anything else.
[01:04:33] You know, and I think I think that's a
[01:04:35] huge point cuz you know, I said earlier
[01:04:36] like I think leadership's the unlocking
[01:04:38] move, but it's not just the CEO, it's
[01:04:40] just all the way down the rank and file.
[01:04:42] And and you know, funny I I remember
[01:04:45] earlier in my career uh we this there
[01:04:48] was this particular business, and it was
[01:04:50] I forget how much it was in revenue, but
[01:04:52] the CEO was in this group of executives,
[01:04:54] and he stood up and he said, "We're If
[01:04:56] if we're going to be a billion dollars,"
[01:04:58] which seemed huge at the time, okay? Cuz
[01:05:01] I remember being like, "A billion?" And
[01:05:02] I remember him saying that to everybody,
[01:05:04] "If you don't believe and you don't want
[01:05:05] to be here to help us get to a billion
[01:05:07] dollars, there is the door." And there
[01:05:09] was And and And so later on when I was
[01:05:12] building a company, one of the things I
[01:05:13] used I I did it a little differently but
[01:05:16] I walked around and I was using things
[01:05:17] from Kung Fu Panda the little kid movie
[01:05:20] and I would say like hey listen let's be
[01:05:23] bodacious and I
[01:05:26] because if we don't if we don't take the
[01:05:28] hell somebody else is going to take the
[01:05:30] hell and
[01:05:31] and why not us you know
[01:05:34] let us be the ones to do that and to do
[01:05:36] that we're going to have to take some
[01:05:37] risks we're going to have to but and we
[01:05:39] need the right people you know we can't
[01:05:41] do that without and we had to be really
[01:05:42] smart and so [laughter]
[01:05:45] Jay thank you very much for all your
[01:05:46] time and best of luck you know at the
[01:05:49] bank and I'm looking forward to watching
[01:05:51] you crush it.
[01:05:52] Andy I appreciate you man it's been a
[01:05:54] pleasure appreciate your support.