ABA Banking Journal 5/08 - (Page 31) “I was floored,” says Evans. “Not only did I never think about quitting, I didn’t think about thinking about it. I really felt responsible to help us fix things, to get us out of the ditch.” Some bankers today know little of that period, a maelstrom that chewed up big chunks of Texas banking. Many large native banks wound up being acquired, one way or another, and much of the Texas banking industry today is still controlled by out-of-state companies. So much so that an ongoing line in Frost advertising is: “We’re from here.” Frost was the only top-ten Texas bank of the 1980s to survive the period intact. “I believe the reason we didn’t go broke or have to sell out in the 1980s was because we had a relationship bank,” says Evans. “When you looked at the numbers, it said we would never make it. But we took it one day at a time and worked with our customers to work through these situations.” Reflecting on those days, Evans says that “we’re much better bankers today because of the pain we went through in the 1980s.” He pauses, and adds, “Don’t misunderstand me. I don’t want to travel that road again. It was more than I needed in one lifetime.” In contrast to the 1980s, Texas today is faring better than the economy as a whole in the current downturn. “I think we’ll continue to have job growth,” say Evans, and “I think we’ll have fewer residential real-estate problems than the rest of the nation. Because of the fundamentals of our state, Texas will do better than the rest of the country. But Texas will adjust, too.” The 1980s, and a period of commercial credit trouble in the early part of this decade, led to stronger credit discipline for the bank. Evans calls it a “concurrent system.” There is a credit officer and a relationship officer assigned to commercial accounts. As exposure rises, signoffs are required at different levels. At $10 million and above, the relationships come before the only credit committee the bank has, a group of senior credit officers. And Evans himself must sign off on anything over $10 million. Once again, in keeping with the bank’s “We’re not product peddlers. We’re in the business of building relationships with customers, helping them to be more successful in accomplishing their objectives” — Dick Evans, Cullen/Frost Bankers philosophy, “it’s about how you manage the relationship,” says Evans. “It’s not about the credit officer saying ‘no.’ The credit officer is participating with the relationship officer to make sure that we make better decisions.” There is no board-level involvement in individual credit decisions. “I believe that management should run the company,” says Evans. “And along with that comes responsibility. I’m not confused about that part.” Tied up in Evans’ references to Texas is the fact that Cullen/Frost is quite content sticking to its home state. Out-of-state acquisitions and forays for new customers, are not in the cards, according to Evans. Actually, there are some cities in Texas where Evans feels Cullen/Frost still needs to make a bigger dent. In April the company launched a major print advertising campaign—marking a shift from a strong TV effort—devoted to reaching out to Texans who still don’t have a touch of Frost. The aggressive campaign features headlines like: “Texas is the 10th largest economy in the world. We’re its bank”; “Nothing embarrassing to report for the 560th consecutive quarter”; and “There’s a reason your parents didn’t name you ‘Acct#2299046’. ” “It’s a big state, it’s growing, we’ve got a great brand, and we don’t need to go anywhere else,” says Evans. “We’ve got work beyond my lifetime to do right here.” Several timely exits The other, more direct aspect of survival and success lies in Cullen/Frost’s own strategies and choices, based to a great degree, again, on the belief in relationship banking. For example, in 2000, the company took a contrarian road. Even as many commercial banks were aggressively building up activity in residential mortgages, Cullen/Frost decided to stop making home mortgages, and let that business run off. (The company continues to make home equity lines and loans, which benefit from Texas laws barring overleveraging of equity borrowers, and it continues to finance home builders. There have been some nonperformers in the latter portfolio; the bank isn’t immune to broad trends.) Evans acknowledges that the 2000 move made management look prescient, but declines to take credit for a crystal ball. With the strong emphasis on secondary market sales, management felt Subscribe at www.ababj.com ABA BANKING JOURNAL/MAY 2008 31 http://www.ababj.com
For optimal viewing of this digital publication, please enable JavaScript and then refresh the page. If you would like to try to load the digital publication without using Flash Player detection, please click here.