Ready for Change: Bill Turner

The banking business has changed a lot in the 50 years that Great Southern Bank Chairman Bill Turner has been in the business. In the old days, it was a highly-regulated business with most competition immune to regulatory oversight. Today, there is competition from all sides and the banks still in business have managed risk well as they adapted to a fast-evolving competitive landscape.

Few banks in the country have been more successful than Great Southern in adjusting to the changing world of finance. When Bill Turner took over Great Southern Savings and Loan in 1974, it had 12 employees and one branch. In 2019, the bank is operating 98 branches with 1,200 employees.

The Mansfield native had tried other pursuits before he settled on his banking career. There was always something about him that inspired confidence. His first job was a good example. After graduating with a business degree from the University of Missouri in 1956, he sent out resumes to prospective employers. One of them was Kraft Foods Company in Kansas City.

“I got a call from this guy from Kansas City, and he said that he noticed that I had worked at the Kraft cheese plant in Mansfield in high school,” says Turner. “He asked me if I would like to go to work for them with my territory being Jefferson City, Lake of the Ozarks and Columbia. He said we will give you a new car and $400 per month. I said, ‘That sounds pretty good to me,’ and he hired me over the phone.”

That wasn’t the last time Turner was offered a job on the spot.

The circumstances were odd though. After working at Kraft for four years, he and his wife Ann started a wholesale food business at Lake of the Ozarks selling Kraft products and frozen fish. A tenant in the same building asked him one day about the wisdom of keeping his accounts receivable in the office filing cabinet. Turned out later that evening, there was a fire in the building.

“The upshot was that night he set it on fire. I got down there and the firemen were shooting water hoses on the fire and I asked them if they would water down the filing cabinet and they did,” Turner recalled. “All the accounts receivables were intact.”

Needing a loan to reopen the business, Turner drove to the Small Business Administration (SBA) office in Kansas City. The SBA was more interested in hiring him than making a loan. “They said, ‘why don’t you just come work for us?’ So I did.”

It seemed like a good idea: Ann was pregnant, and he was interested in a steady paycheck.

Turner’s territory was eastern Kansas and southwest Missouri. “I really enjoyed the job,” he said.

Turner would interview the business owner and work with the local bank which would make the loan if it was guaranteed by the SBA. Observing how different banks in Kansas and Missouri made business loans during his five years at the SBA prepared him well for his next job.

That opportunity came in 1966 when Bill Barclay, who owned Auto Magic car washes, applied for an SBA loan through Citizens Bank, which was located on Boonville off of Commercial Street. Turner approved the loan for Barclay and in the process Tom Watkins, who ran the bank, became impressed with Turner. He offered him the number three job at the bank, behind him as chairman and James Jeffries as president.

Lending money was conducted out in the open in those days, Turner said. Watkins, Jeffries and Turner had their desks out in the lobby. If a customer wanted to borrow money, he would sit down and make his request for a loan while other customers cashed their paychecks at the teller windows.

Both Watkins and Jeffries were great mentors.

“Tom told me the day I went to work over there, ‘You don’t have any customers. You need some. My secretary is going to keep an eye out and when somebody comes in looking like they don’t know anybody, she will bring them to you. And pretty soon you will have some customers.’ It didn’t take me very long and pretty soon I had a bunch of customers,” Turner said.

The lending process was more informal than today. The underwriting criteria boiled down to reviewing a credit report and the banker’s judgment whether the borrower was a good risk. “Every six months, Watkins would look at credit reports and mark on them either ‘OK’ or ‘NG’ for no good.”

It was still a risky business. Turner says the number one quality a banker must have is good judgment. There is a career risk in making too many bad loans.

“One day this guy came in and wanted to borrow money to buy 200 Holstein steers,” Turner said. “I looked at his credit report and I told Tom that I did not think we should make the loan. He said, ’I don’t give a damn. I want you to make the loan.’ So I did. About six months later, an appraiser went to inspect our collateral and there were only 30 head there. We had to charge it off.”

But Watkins took responsibility for it, Turner learned later. He said that he was looking in the file after the event and found a handwritten note in which Watkins said that he had instructed Turner to make the loan and that it was Watkins’ fault that the bank lost the money. “I thought that was good because he never told me a word about it,” Turner remembered.

In those days banking was a conservative and highly-regulated business. The regulators did not permit banks to have branches as they do now and the interest rates that the banks could charge were regulated. That is where the old joke about the 3-6-3 rule comes from. Pay your depositors 3 percent, lend money at 6 percent, and be at the golf course at 3 o’clock to tee off.

However, banking was changing. In Springfield to circumvent the rule against a bank having branches, E.H. “Bud” Green came to Springfield and started opening separate banks with similar underlying ownership. His brother, Bob Green, and his sister, Irene Schweitzer, were regular investors. Banking charters were hard to get. But Green hired Gerald Lowther who was Governor Warren Hearnes law school classmate to apply for charters. With Lowther’s help, Green opened up American National Bank, First City Bank and Empire Bank in the early ‘70s.

Green wasn’t afraid to try something new. He hired Keith Davis as president of Empire Bank located at the corner of Glenstone and Sunshine. Davis shocked local bankers by staying open on Saturday, Turner remembers.

“I parked across the street and started counting the cars,” Turner said. “First week there were 50 cars that went through the drive-in, then 100 the next week, then 200, 300 and 400 and so on. So then I went back and talked to Jim and Tom. Tom said, ‘Oh my God, we would never do that.’ And I showed him the numbers and then he said, ‘Well, by God, we’re going to start opening on Saturdays.”

It wasn’t long before Frank Knox and Gene Everett with Union National Bank, the city’s largest bank, asked for a meeting with Watkins. “They said you are going to ruin banking in Springfield,” Turner remembered. “And Tom said, well that is what we’re going to do, and very quickly Saturday became our biggest day.”

In the next few years, Watkins and Jeffries slowed down. Citizens was purchased by Commerce Bank headquartered in Kansas City and run by James Kemper. Turner and Kemper hit it off and Turner was appointed president of the Commerce Bank in Springfield. In the space of eight years, Turner had advanced from the new loan officer at Citizens to president of the second largest bank in Springfield.

Also, he was becoming well known through his volunteer efforts. In 1972, he was elected to the Springfield school board. His longtime friend Bill Barclay was very supportive and provided excellent advice during his successful campaign.

“Bill would ask people if they would write 20 postcards to their friends asking them to vote for me for school board,” Bill said, “and they would say yes and then he would say that’s great, I will pick the postcards up on Tuesday.”

The strategy worked. They mailed out thousands of postcards and letters before the election, and Turner was the first-place winner in the four-member race in every precinct in the district.

His profile in the community continued to rise. During this same period, Turner had joined the Chamber of Commerce and was elected president of the Chamber in 1979. During his year as president, he made a push to recruit new members to the Chamber and challenge the old guard’s thinking.

While he pushed for leading the Chamber in a new direction, he also appreciated the successes of his predecessors. He specifically remembered Don Dailey and Tom Baird as standing out.

“Don Dailey was the best president the Chamber ever had at that point. He knew all about the city and could make a good speech. Tom Baird was really good, too,” Turner said. Dailey, who was in the television and radio business, and Baird, who operated Conco and was president of Southern Missouri Trust, are names frequently mentioned in connection with attracting large manufacturing companies to Springfield. They were instrumental in acquiring 3M, MD Pneumatics, Lily-Tulip, Zenith, GE, Fasco, R.T. French, and other major employers in Springfield.

Then in 1974, the position of president of Great Southern Savings and Loan Association (S&L) opened up unexpectedly.

The morning that longtime Great Southern president Russell Cather died, board member Bryan Van Hook dropped in on Turner. Van Hook made Turner an attractive offer, telling him he wanted him to take over Great Southern.

Just as when he had been offered his first job at Kraft, then the SBA, and then Citizens, Turner was decisive. That night, Turner talked it over with Ann and the kids, Julie and Joe, and the next morning decided to accept the offer.

But running a bank with 100 employees was much different than an S&L with 12.

As an S&L, it was regulated differently than banks. S&Ls could only make home loans and were permitted to charge a quarter percent more than banks for CDs. Also, S&Ls could have more branches than banks.

In those days, the regulators were more tolerant of potential conflicts of interest. For example, Russell Cather owned Great Southern Insurance, so the premiums went to him rather than the S&L. If Great Southern made a home loan, the borrower was encouraged to buy property insurance from Great Southern Insurance. In his will, Cather had included a provision suggesting that Great Southern would pay “two- and one-half percent” for the insurance company. That was interpreted to mean two- and one-half times annual billings.

Turner told Cather’s attorney John Hulston that was too much. He said Great Southern would pay only one year’s billings. Hulston accepted, and Great Southern acquired the company. Unlike his predecessor, Turner did not try to acquire the insurance company as a perk for his job, but made sure that the institution itself would benefit by owning the captive insurance company.

In his new job at Great Southern, Turner was creative and willing to try new things. Pioneering new and better financial services and greater convenience for customers, Great Southern was among the first financial institutions in the area to offer drive-through teller service, adjustable-rate mortgages, interest bearing checking accounts, tax-sheltered retirement plans and night-time and Sunday banking hours.

Turner’s inventiveness didn’t stop there. Over the next several years, Great Southern opened other lines of business to complement the insurance sideline. The bank started Great Southern Travel, Great Southern Investments, and Great Southern Real Estate.

While selling real estate was successful, it hurt the lending business. Realtors did not like the competition and started steering home buyers to different S&Ls. So that business was shut down after a few months.

The travel business was not successful initially. Turner who has always enjoyed traveling with his family said the travel agency struggled for two years before his wife Ann took it over.

Although Ann had never had a paying job since they got married in 1959, she demonstrated a talent for management as an active volunteer, serving as president of Springfield’s Junior League, as president of the CoxHealth Auxiliary, and later, as president of the state association of hospital auxiliaries. She liked challenges.

“I told her that the travel agency was struggling, and I asked her if she would want to work in it. She did and worked for free the next two years until it turned around,” Turner remembers. He said she loved working with 100 or so employees in the travel agency and would take their calls at all times of the night.

“She would leave at seven in the morning and get home at six at night,” he said. “She would ask me what I wanted for dinner and I would say something, and she would say, ‘Well, how about an egg sandwich?’’

Turner remembers those days fondly, and says the greatest success in his life was convincing Ann to marry him.

Turner has always been his own man even if it ruffled feathers. Other S&Ls in town didn’t know what to think about Turner’s innovations. Some thought Turner would flame out early. It didn’t help when he came to the monthly S&L association meetings.

Turner remembers that it was held in the basement of one of the S&Ls downtown. One time the conversation drifted toward what they were going to charge on home loans, which is pretty close to illegal price fixing, Turner remembers. “I said, ‘Guys, you can’t be doing that,’ and they said, ‘We always have.’ I quit going to the meetings after that.”

Things were going well in his new job until interest rates skyrocketed in the early 1980s. Unlike the banks, S&Ls made 30-year fixed-rate home loans. Banks would make fixed-rate loans, too -- but if interest rates rose substantially, they reserved the right to adjust the rate. S&Ls did not do that, and that practice led to an enormous number of S&L failures in the 1980s.

The S&L business model was simple in those days: borrow money at one rate and lend it out at a higher rate. It had worked for years, but then everything changed: Short-term rates shot through the roof as inflation raged during the administrations of U.S. Presidents Gerald Ford and Jimmy Carter. S&Ls were having to pay more for their money than they could receive on their home loans. They were quickly going broke.

Each month, the S&Ls finances were deteriorating. “The examiners would come in and look at our books and rather than concentrate on the quality of our loans, they would tell us how many more months we would be in business if nothing changed. They said at the current rate, we might last two or three more years. That will get your attention,” he said, reminding one of Samuel Johnson’s quote:

“Depend upon it, sir, when a man knows he is to be hanged in a fortnight, it concentrates his mind wonderfully.”

Fortunately, Federal Reserve Chairman Paul Volker was able to break the back on inflation but none too soon.

Turner said his failure to consider the possibility of runaway inflation was probably the biggest mistake of his career. He certainly wasn’t alone in that regard, but that is little comfort if the business fails under your watch. He learned that just because things had worked well in the past, it is no guarantee that it will in the future.

The business model for banks for years has been to open up branches to draw in customers and their deposits. Today, however, an increasing number of people are not using cash or writing checks. They are doing business electronically. The new environment must be monitored closely to determine whether more branches is really profitable. Similarly, protecting customers’ money from internet hacking is a constant concern – a non-issue 50 years ago.

Some things haven’t changed though.

Banking is still about judgment and managing risk. One person's failure is another’s opportunity. Because of the S&L crisis, Great Southern was able to acquire S&Ls that failed during this time and convert them into branches throughout southwest Missouri. During this time period, the board decided to convert Great Southern from an S&L to a bank and take it public in 1989. At that time, it had 30 branches with a total of $489 million in assets.

Following the conversion, the bank continued to grow through the early 2000s. Turner turned over the job of President to his son Joe in 1997, but remained Chairman of the board. (He says Joe has done a better job operating the bank than he did.)

Just as Great Southern had profited during the S&L crisis in the ‘80s, it had a similar opportunity when the financial crisis hit in 2008.

Like every bank in the country, Great Southern’s stock price tumbled, but the bank weathered the crisis better than most. Similar to twenty years earlier, many weaker banks were closed by the FDIC and then resold to stronger banks. Because it had maintained a strong financial position, Great Southern was approved by the FDIC to acquire five of these banks at favorable prices.

As a result, the bank has grown and shareholders have reaped the benefit. In fact, Great Southern was recently featured in a Bank Director article -- “A Valuable Lesson from the Best Bank You’ve Never Heard of” -- citing that the bank has produced the fifth best total all-time shareholder return among every publicly traded bank in the U.S., a return of nearly 15,000%.

Each share of Great Southern stock purchased at $9 in the initial public offering in 1989 now has a value of approximately $682 per share, based on the August 13, 2019, closing stock price.

The bank has done well, and has shared its success with the communities it serves. Great Southern’s name is associated with many not-for-profits in those communities. Similarly, the Turner Family Foundation continues to support a community center named after Ann in Mansfield, as well as many other local non-profit organizations.

Turner, who served on the CoxHealth board of directors for 35 years (Joe serves on the board now), donated money through the Foundation to fund The Turner Center at Cox South which provides a variety of health services. Turner says that when he dies, much of his estate will pass to the foundation and that he expects it will continue to support causes in the community that has been so good to him.

Today, Great Southern is a much different institution than the 12-employee S&L at the corner of Walnut and South Avenue in Downtown Springfield. But it is still run by the same principles as it was 45 years ago when Bill Turner took it over.