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Navigating the Banking Industry with Ross M. Whipple
Episode 21522nd February 2023 • Be EPIC Podcast • Brent Williams
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This week on the podcast Matt wraps up the Arkansas Business Hall of Fame series with Ross M. Whipple, 2023 Arkansas Business Hall of Fame Inductee, President and CEO - Horizon Capital Partners, LLLP, President - Horizon Timber Services, Inc. and Chairman of the Board - The Ross Foundation. During the episode Ross dives into how he got his start in the banking and timber industry and highlights the importance of his early mentor, Jane Ross, on his career. Ross further discusses how he was able to turn around struggling banks to a positive ROA and they finish the discussion with Ross highlighting one of his favorite business books.

Transcripts

Ross Whipple:

In sharing these stories, and I just, you know,

Ross Whipple:

hope that someone can take a little piece of this and put

Ross Whipple:

toward their career and making them a better not only a better

Ross Whipple:

business person to woman, but just maybe a better person as a

Ross Whipple:

whole.

Matt Waller:

Excellence, professionalism, innovation and

Matt Waller:

collegiality. These are the values the Sam M. Walton College

Matt Waller:

of Business explores in education, business, and the

Matt Waller:

lives of people we meet every day. I'm Matt Waller, Dean of

Matt Waller:

the Walton College and welcome to the be epic podcast. I have

Matt Waller:

with me today, Ross Whipple, who is being inducted into the

Matt Waller:

Arkansas Business Hall of Fame in February. For those of you

Matt Waller:

most people are aware of Arkansas Business Hall of Fame,

Matt Waller:

but it includes pretty amazing people. We started doing this

Matt Waller:

back in 1999, every year for people are inducted. And if you

Matt Waller:

look at the list, if you Google Arkansas Business Hall of Fame

Matt Waller:

inductees, you'll see the list we have the list of all the

Matt Waller:

inductees plus movies about each of them if you want to learn

Matt Waller:

more about any person on there, but people like you know, Sam

Matt Waller:

Walton, Don Tyson, Murphy, JB Hunt, JB and Johnelle Hunt,

Matt Waller:

Warren Stephens. There's a long list, Bill Dillard, there's a

Matt Waller:

long list of people and the purpose of the Arkansas Business

Matt Waller:

Hall of Fame is to celebrate the business achievements of

Matt Waller:

business people, the achievements of business people

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who have done business with high ethics, who have contributed to

Matt Waller:

society, and in various ways, and we're really proud to have

Matt Waller:

Ross Whipple in the group now, and Ross got his undergraduate

Matt Waller:

degree from Henderson State and his MBA from the University of

Matt Waller:

Arkansas, we're proud to have another inductee into the

Matt Waller:

Arkansas Business Hall of Fame who's an alum of ours. He has

Matt Waller:

extensive experience. He is president of Horizon Timbers,

Matt Waller:

Inc, and many other things. He's also a member of the executive

Matt Waller:

committee, and chair of the risk committee for Bank OZK. We'll be

Matt Waller:

talking a little bit more about that. But Ross, thank you so

Matt Waller:

much for joining me.

Ross Whipple:

Well, Matt, thank you for having me. And, as you

Ross Whipple:

said, when when you look back at the roster of the inductees over

Ross Whipple:

the last 22, three years, I am so honored and so humbled to be

Ross Whipple:

included with these people. I mean, these are folks that I

Ross Whipple:

have admired. And to a great degree strive to be like for

Ross Whipple:

years. I'm not sure I've gotten there yet, but I keep working at

Ross Whipple:

it. But I've just was so surprised at this honor and so

Ross Whipple:

humbled. The list is phenomenal. And

Matt Waller:

It is

Ross Whipple:

and to be included in that is probably the high

Ross Whipple:

mark of my business background and business achievement really

Ross Whipple:

is.

Matt Waller:

So, Ross, you've had over 35 years of experience

Matt Waller:

in banking. Is that did you start your career in banking?

Ross Whipple:

No, sir, I did not. You know, I kind of fell

Ross Whipple:

into banking through the back door. I had a cousin name was

Ross Whipple:

Jane Ross. She was 35 years, my senior. I started to work with

Ross Whipple:

her when I came to college at Henderson and her family was

Ross Whipple:

primarily engaged in the land and timber business. Now there

Ross Whipple:

were some banking interests here than there but not anything that

Ross Whipple:

would lead to a majority control or anything like that. So like I

Ross Whipple:

say, I went to Henderson. After that I spent a little time in

Ross Whipple:

the military, which I'm very proud of, and then came to

Ross Whipple:

Fayetteville for my MBA.

Matt Waller:

What year did you get your MBA?

Ross Whipple:

1976

Matt Waller:

76 And during the bicentennial year?

Ross Whipple:

Oh, what? Yes.

Matt Waller:

And what did you do in the military?

Ross Whipple:

Well, I was I was commissioned as a Second

Ross Whipple:

Lieutenant right out of college, assigned to the First Cavalry

Ross Whipple:

Division in Fort Hood, Texas, which had just gotten back from

Ross Whipple:

Vietnam, I did miss that and I don't regret missing that. But

Ross Whipple:

were certainly prepared to go if need be, but and I spent you

Ross Whipple:

know a year, year and a half there, and then got out a little

Ross Whipple:

early so I could go to graduate school.

Matt Waller:

What made you decide to go to get your MBA?

Ross Whipple:

Well, I didn't think I was quite through,

Ross Whipple:

didn't think by education was quite where, you know, I would

Ross Whipple:

like for it to be. And I thought it offered me a great

Ross Whipple:

opportunity to grow and expand my knowledge and to field, you

Ross Whipple:

know, basically finance and economics for me.

Matt Waller:

So you were working with Jane Ross? And then did you

Matt Waller:

continue to work with her even up to that point?

Ross Whipple:

Somewhat, I'll be you know, I mean, we stayed in

Ross Whipple:

touch, of course you know during my four years of college, I went

Ross Whipple:

to school with what I call the Jane Ross work study. And, I

Ross Whipple:

mean, she did, she was a great lady, a great mentor to me. But

Ross Whipple:

she pushed hard. I mean, she wanted to make sure that I had

Ross Whipple:

seen every thing there was to do in the timber business first. I

Ross Whipple:

mean, from chainsaws to skidding to, you know, working in the

Ross Whipple:

sawmill to marking timber to painting lines, the whole bit,

Ross Whipple:

just so I would get a fairly basic understanding of what that

Ross Whipple:

business took. And we still haven't gotten around to

Ross Whipple:

answering your question about the banking business yet. But

Ross Whipple:

after I had been back for about three years about, she went down

Ross Whipple:

and purchased a controlling interest in what was merchants

Ross Whipple:

and planters bank in Arkadelphia. She had some

Ross Whipple:

interest in the bank. Well, I mean, probably the second

Ross Whipple:

largest shareholder. You know, I was acquiring some stock, but

Ross Whipple:

that like that, yeah, I didn't have much. So anyway, she went

Ross Whipple:

down and made the, there wasn't anyone who had absolute control,

Ross Whipple:

but made the largest shareholder an offer to buy the stock,

Ross Whipple:

basically, because he would not put me on the board. And she

Ross Whipple:

said, well, if you're not going to put the boy on the board,

Ross Whipple:

sell me the bank. And he did. And I had no idea of this. I

Ross Whipple:

mean, she came back as a surprise to me, said, you won't

Ross Whipple:

believe what I have just done. And I said, Oh, my gosh, you

Ross Whipple:

just did what? And you paid what? And I'm thinking, Oh, I

Ross Whipple:

don't know how we're gonna work our way out of this. But we did.

Ross Whipple:

I mean, it was a sleepy little bank in a free bank town in

Ross Whipple:

Arkadelphia back in the late 70s. You know, not only that she

Ross Whipple:

had given up, basically control through a voting trust. She had

Ross Whipple:

given the guy who was going to run the bank, a 10 year

Ross Whipple:

contract, and I said, I just can't believe you've done this.

Ross Whipple:

Well, to make a long story fit a page, we worked through some of

Ross Whipple:

those issues, and dissolved the voting trust, we didn't dissolve

Ross Whipple:

it, changed the trustee, and she made me the trustee. And anyway,

Ross Whipple:

we started working to try and improve the bank. In 1985, you

Ross Whipple:

know, I grew up in Malvern. So I had a couple of guys from

Ross Whipple:

Malvern, come down and pay us a visit about a potential merger,

Ross Whipple:

which sounded good to me cause I'm just trying to get Jane out

Ross Whipple:

of this bad investment that I think she's made, and just

Ross Whipple:

trying to figure out how we're going to do this. So we did

Ross Whipple:

affect a merger with the Bank of Malvern and formed Central

Ross Whipple:

Arkansas Bank Shares, it was a pretty creative transaction for

Ross Whipple:

her. And to some degree me. You know, the break even on the

Ross Whipple:

transaction. You know, I did learn something in graduate

Ross Whipple:

school, but the breakeven on the transaction for her given

Ross Whipple:

capital performance all ratios was like point five, two. And,

Ross Whipple:

you know, so the suggestion was, well, how do we do it? And I

Ross Whipple:

said, well, you know, well, I think book to book works very

Ross Whipple:

fine, they said whoa, we can't do that. And I said, well, how

Ross Whipple:

about point nine five a book. And they agree. So it was a

Ross Whipple:

relatively accretive transaction off the bat for her. Now, we

Ross Whipple:

went into that merger with equal ownership with another family.

Ross Whipple:

And they were again, they were kind of scared of Jane's money.

Ross Whipple:

I don't think they were too scared of me at the time.

Ross Whipple:

Although, funny story. The gentleman who was the attorney

Ross Whipple:

for the bank up there, went into the bank one day, and they were

Ross Whipple:

all talking about how they had just acquired merchants and

Ross Whipple:

planters bank and they were going to do this and they were

Ross Whipple:

going to do that. The attorney for the bank said, you don't

Ross Whipple:

know this yet but the guppy has just swallowed the whale. And in

Ross Whipple:

the end, that's what it turned out to be, you know, I mean it,

Ross Whipple:

it took a lot of maneuvering, I got a lot of scars on my back.

Ross Whipple:

But we did the right thing. We finally got control of the bank

Ross Whipple:

in the early 90s. I went to merchants and planters bank in

Ross Whipple:

1989 as the president CEO, probably the best year of my

Ross Whipple:

life professionally. You know, we fixed a lot of things, we

Ross Whipple:

changed a lot of things. And I'll never forget, you know,

Ross Whipple:

after we decided, well, what do we, what are we going to do? So

Ross Whipple:

well, you know, we need to fix this probably time for the other

Ross Whipple:

bank president to leave and who's going to do that? And I

Ross Whipple:

said, well, you know, if need be, I'll do it. And then the

Ross Whipple:

next question was, who in the hell is gonna run it? Okay, get

Ross Whipple:

rid of him? And I said, I don't know. They said, well, will you

Ross Whipple:

do it? I said, well, you know, I'll do it for 90 days. You

Ross Whipple:

know, I got plenty to do. I got lots of things. And I got a lot

Ross Whipple:

of balls in the air, but I'll do it for 90 days. So we did. And

Ross Whipple:

then they came back and said, hey, we didn't talk about your

Ross Whipple:

salary. And I said, well, that's fine. And he said, what do you

Ross Whipple:

think you should be paid. And I said well here's what I'll do. I

Ross Whipple:

will work I will work for half of what you repay in the former

Ross Whipple:

bank president. But I want everything over a 1% return on

Ross Whipple:

assets. And they were saying, I can't believe this guy's stupid

Ross Whipple:

I mean this bank's never made a 1% return on assets. And he said

Ross Whipple:

he was so anyway, to make a long story fit a page. They at the

Ross Whipple:

end of the year, they paid me about another $150,000 because

Ross Whipple:

we fight we owe we made over 1% return on assets. Now I did

Ross Whipple:

split a lot of that with with my senior staff at the time, which

Ross Whipple:

I've always felt very important to do. But no they did. The bank

Ross Whipple:

never made over a point six ROA and they didn't you know, and

Ross Whipple:

when I inherited the bank at the end of February, you know, the

Ross Whipple:

bank had lost $30,000 year to date. So they didn't see how we

Ross Whipple:

could do that. But we did. And there were just a lot of things

Ross Whipple:

that were easy to do. You know when you're running to a bank

Ross Whipple:

that's not making any money. Matt, you really don't need a

Ross Whipple:

large, tax exempt bond portfolio. And, you know, and

Ross Whipple:

the bank was carried about a million dollars in vault cash.

Ross Whipple:

Well, it's a $35 million bank at the time that we need about

Ross Whipple:

maybe $300,000 in vault cash maybe. And fed funds were like

Ross Whipple:

11% I mean you know, so I probably shouldn't have done

Ross Whipple:

this. But I got with my executive vice president on a

Ross Whipple:

Friday afternoon over a three, three day bank holiday. And we

Ross Whipple:

put $750,000 in the back of my car and drove it to the fed. So

Ross Whipple:

we could get credit for it over a three day weekend. You know,

Ross Whipple:

and those are there's the kinds of things you you have to do and

Ross Whipple:

it also shows your staff that you care and that you know you

Ross Whipple:

can do it and you know how to do it and they really stepped up

Ross Whipple:

stepped in line. And it was everything went very well. After

Ross Whipple:

that. We acquired we have acquired control. And I had a

Ross Whipple:

few people that were giving me problems. I was spending more

Ross Whipple:

time managing a certain group of directors, which was really

Ross Whipple:

pulling me back from, I think, doing what we should for the

Ross Whipple:

bank. And we solved that problem and really got to you know the

Ross Whipple:

bank was doing well. We had four charters, and they were in

Ross Whipple:

Malvern, Hot Springs, Arkadelphia and Sheridan, it's

Ross Whipple:

like driving across Dallas. So I'm thinking, you know, why do

Ross Whipple:

we need to operate four separate charters? Well, in Arkansas

Ross Whipple:

state bank department regulations only were, you know,

Ross Whipple:

the, you could only branch into a contiguous county. So, okay, I

Ross Whipple:

started looking at the map. And Hot Spring County was contiguous

Ross Whipple:

to Grant County, Clark County, and Garland County. So then we

Ross Whipple:

were able to consolidate the four charters into one I think

Ross Whipple:

we were the first to do it not because no one else wanted to,

Ross Whipple:

but because we had a geographic situation to be able to pull

Ross Whipple:

that off. And, and we did, it was, it was probably the hardest

Ross Whipple:

year of my life, you know, from a working relationship and get

Matt Waller:

What year was that?

Ross Whipple:

Still waste started in July of 1994, and

Ross Whipple:

completed the process. And late June, early July of 95. went

Ross Whipple:

from four charters to one. And that's interesting, because when

Ross Whipple:

you're having your meeting with your senior staff, and you're

Ross Whipple:

you're kind of outlining this for them, and they're going

Ross Whipple:

yeah, that's a pretty good idea. That makes a lot of sense. And

Ross Whipple:

then we had a little barbecue at my lake house at night, and you

Ross Whipple:

can see them all potting up. So we didn't have CFOs, back then

Ross Whipple:

that we had cashiers, and we had bank presidents, and we had for

Ross Whipple:

note departments and four of this and four of that, and you

Ross Whipple:

can see them kind of popping up. And they've got to figure it

Ross Whipple:

out. There are four of us now, there's only going to be one of

Ross Whipple:

us in the end, you know, but it worked out great. We, we kept

Ross Whipple:

everybody we needed to keep yeah, they may have had a new

Ross Whipple:

job alignment or whatever else. But yes, we did. We did sever

Ross Whipple:

about 30 people out of this. But it cost a million four to do all

Ross Whipple:

this between signage, excetera, you know, stationary the whole

Ross Whipple:

bit. And I was really concerned about FDIC insurance. Because

Ross Whipple:

see, previously, each bank had turned $50,000 worth of tension.

Ross Whipple:

And now we're just going to one 250,000 Not four. But anyway to

Ross Whipple:

make to finish this. It cost 1,000,004 We made $2.2 million

Ross Whipple:

in next year. You know, it doesn't sound like a very big

Ross Whipple:

bank, but back in the mid-90s, a $550 million bank is a pretty

Ross Whipple:

good sized bank. And all of a sudden, I got these people

Ross Whipple:

coming to visit me, you know, because I have not really

Ross Whipple:

thought about selling the bank. And, you know, they come and

Ross Whipple:

they go and I don't talk to them very seriously, then, you know,

Ross Whipple:

we've got a group but our St. Louis, Mercantile Bank came and

Ross Whipple:

talked to us on pretty serious level. We ended up selling the

Ross Whipple:

bank in February of 98. For bout right at 3.25 times book value

Ross Whipple:

and a 24 times earnings. Well, you know, I was beginning to get

Ross Whipple:

a reputation as a flipper. And I'm really not a flipper. And in

Ross Whipple:

my retort to these people was this. You know, if you have a

Ross Whipple:

house worth $100,000, and somebody offers you $325,000 for

Ross Whipple:

it, and you can build a new house for 100,000. What would

Ross Whipple:

you do? And the answer very quickly was we'll have sell it.

Ross Whipple:

So that's exactly what we did. You know, we sold horizon bank

Ross Whipple:

in February of 98. I had a one year mandatory with Mercantile

Ross Whipple:

and their board, I resigned at the year. Then I had a one year

Ross Whipple:

covenant not to compete. And we started back with Summit Bank in

Ross Whipple:

February of 2000. You know, we I don't know if you've ever seen

Ross Whipple:

the movie The Blues Brothers.

Matt Waller:

Yeah.

Ross Whipple:

Well, we just brought the band back together

Ross Whipple:

just kind of what we did, you know, just like and it worked

Ross Whipple:

out extremely well. I mean, we were a de novo bank. We never

Ross Whipple:

made an acquisition, which I can support because every time we

Ross Whipple:

went to a new market, we hired people who wanted to come to

Ross Whipple:

work for us, you know, we had just had not been acquired. And

Ross Whipple:

when you get acquired, it sometimes doesn't feel good. So

Ross Whipple:

anyway, all the people that we went, sought us we saw them and

Ross Whipple:

it was it really worked out well. And we had had a good bank

Ross Whipple:

performed well, did well. And, and that bank, which was summit

Ross Whipple:

by was sold to bank of the Ozarks now BankOZK in May of

Ross Whipple:

2014.

Matt Waller:

So Ross, has there been a book in your career that

Matt Waller:

you've really enjoyed and gone to frequently throughout your

Matt Waller:

career?

Ross Whipple:

Oh, yes, sir. You know, and I bought it in

Ross Whipple:

Fayetteville, Arkansas in 1974. And I used it in our Raymond

Ross Whipple:

Rebsamen portfolio class, and it's Security Analysis by

Ross Whipple:

Benjamin Graham. I have read it cover to cover a number of

Ross Whipple:

times, I still to this day, pull it out. And you know what, I get

Ross Whipple:

the feeling, you know, why I don't like preferred stocks or

Ross Whipple:

whatever else. I'll pull that book out and read about what

Ross Whipple:

Benjamin Graham Warren wrote. And, you know, as we all know,

Ross Whipple:

he is a man of value. And I've got the sentiment, the education

Ross Whipple:

from Bob Kennedy and Harold Doolin. When I was in

Ross Whipple:

Fayetteville, and I still use it today, you can ask my kids, you

Ross Whipple:

know, because they know where that book is.

Matt Waller:

On behalf of the Sam M Walton College of

Matt Waller:

Business, I want to thank everyone for spending time with

Matt Waller:

us for another engaging conversation. You can subscribe

Matt Waller:

by going to your favorite podcast service and searching Be

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