When you invite Ed Keller to the table, you can expect his contributions to be enlightened and respected.
Particularly if the table is for your bank’s board of directors.
And, if you invite the long-time Oklahoma banker to be chairman.
With more than four decades of experience in the Oklahoma banking industry, starting in 1964 as a vice president at 1st National Bank – Bartlesville, there are few bankers with Keller’s level of experience still active in the industry.
The industry is not about to let Keller slip quietly into retirement.
He had just retired in September as the chairman and CEO of JPMorgan Chase in Oklahoma when he was asked by Summit Bank to join its board and was named chairman in June.
“We had thought for some time that we would like for him to join us, but he was always with another bank. So, he was untouchable,” said Wade Edmundson, CEO of Summit, which has a single location at 5314 S. Yale Ave. “When he retired, then it was an obvious time for us to make our request to see if he had an interest in doing it.”
“This is not unusual for Ed,” Edmundson said. “When we formed this bank in 2002, we had the kind of relationship where Ed helped and advised on how to structure it and who to get involved. That’s just the way Ed is. He is a coach and a mentor for a lot of people.”
A time of changes
Keller’s background has taken him through the introduction of branching and multi-bank holding companies in Oklahoma, the boom and the bust of the ‘80s and the mergers and acquisitions in the state banking industry.
He has served as chairman and CEO at Banc One, Bank IV and Fourth National Bank. Previously he was president and CEO at Mercantile Bank in Tulsa, executive vice president of First Oklahoma Bancorp in Oklahoma City, president and CEO of Rogers County Bank in Claremore and executive vice president and director of Security Bank & Trust in Blackwell.
Keller said he believes the approval of multi-bank holding companies in the ‘80s had the greatest impact on Oklahoma banking.
Banks could then “consolidate in one charter and really drive some cost savings into their operation. That’s been the biggest change,” he said.
“Part of what accelerated that change was the really difficult economic times we had in the ‘80s where part of the rescue process was the view that you could merge a bank that was having problems with a healthy one and you were going to create multiple locations,” Keller said. “That particular time really hastened what I call the modernization of the banking laws in Oklahoma, similar to what they are and were in many other states.”
As a result, Keller said the number of banks chartered in the state is “not nearly what it was 20 years ago,” he said. “The same thing has happened nationwide – which was predicted 30 years ago – that there was going to be consolidation. But the number of businesses that offer financial services has multiplied rapidly in a number of ways.”
There is “much greater competition than there was when I got in the business,” he said. “That’s for sure.”
Although he views competition as a benefit for consumers and the industry, “from the banking standpoint, it has significant impact on the spreads and margins in terms of how you do business,” Keller said. “Having come out of a really large company before, where there was an enormous amount of information, and they measured a lot of things, it was interesting for me to observe that … the margins in Tulsa and Oklahoma City were the lowest margins in that south central region that stretched from Phoenix to New Orleans.”
“It’s a very, very competitive state,” he said.
Different is Good
Keller cited the intersection of 81st and Yale Avenue as a “classic demonstration” of the kind of banking institution saturation and competition that has developed.
“There are five competitors in probably 300 feet of each other,” he said. “There are a lot of rooftops there.”
“I am sure they have done their analysis, but it would be hard to elbow your way in there and get any particular advantage because the products are similar,” Keller said.
As a result, banks need to differentiate themselves, he said.
Summit Bank’s specialization in business and professional banking “makes pretty good sense,” he said. “Otherwise it would be really hard to start from zero.”
Summit has grown to nearly $176 million in assets as of Dec. 31, 2006, according to FDIC reports. That is an increase of more than 22 percent from more than $143 million a year earlier.
Keller suggested that Summit’s growth may be limited by its single location.
“You probably can grow it,” he said. “I think you can always stay in one location and probably grow it at the rate of growth that this market experiences, maybe 3-4 percent.”
But he said that growth will not meet the expectations of the shareholders.
“Their expectation will be probably at least 10 percent growth,” he said. “I think management has to think about, ‘How do we add to what we have been doing?’ And, they have been doing it. They have done it for over four years now, but it is going to get increasingly difficult as the base gets bigger.”
Surviving the Bust
“Having gone through the ‘80s in Oklahoma” was the most significant period in his banking history, Keller said.
He had just become chairman of the Oklahoma Bankers Association when the oil and banking bust hit the state in 1982.
“I became chairman in May, and on July 5 Penn Square starts,” he said. “Man, that next year or two was exciting.”
The failure of Penn Square Bank NA in Oklahoma City still ranks as one of the FDIC’s most publicized, most difficult and most colorful bank resolutions. Penn Square became the largest bank failure in the FDIC’s history in which uninsured depositors suffered losses.
Keller was at Fourth National in Oklahoma City when the bust hit. Fourth National merged into Bank IV in 1992.
“We survived a few years,” he said. “Our client base didn’t seem to be as affected initially, and then by the mid-80s it seemed like the roof caved in on some developers and on the real estate portfolio.”
“I had some great people that all refused to allow the bank to fail,” he said. “We eliminated any unnecessary expense that we could find, but at the same time tried to continue to do business because we knew if we weren’t doing business and continued to try to grow there was no way we could save our way out of the dilemma we had to face.”
“We didn’t survive without having to work really closely with the regulators since we certainly had our share of problems,” Keller said.
He credited his directors and shareholders for saving the bank.
“We had to raise capital at a time when most of the banks were reporting losses and there were failures about once a week,” he said. “It took an enormous amount of faith in the bank and the management that this really could work and that they weren’t sending good money after bad.”
“To survive that may be my proudest moment in the banking industry,” Keller said.
As a result, bankers today are “a lot smarter than we probably were then because they are just smarter lenders,” he said. “I think that even today, if the price of oil were to plummet, I don’t think we would even come close to the problems that we had, mainly because lenders understand how they are going to get paid.”
It was an “experience you wouldn’t want to repeat.”
Keller is involved in a number of community and business organizations. He is a director of the St. Francis Health System, a trustee of the OKC Memorial Institute of the Prevention of Terrorism, a director of the Tulsa Metropolitan Chamber of Commerce, a trustee of Oklahoma State University-Tulsa, a director of the Oklahoma Foundation of Excellence and a director of the Southwestern Graduate School of Banking at SMU.
Previous activities include being chairman of the Metropolitan Tulsa Chamber of Commerce, the Tulsa Boys Home, the Tulsa Rogers County Port Authority and the Oklahoma Bankers Association. He has been involved as a director and/or fundraiser for Tulsa Community College, the Salvation Army, United Way and the Oklahoma Conference of Community and Justice.
Keller graduated from Oklahoma State University in 1963. He received the OSU Alumni Association’s Distinguished Alumnus Award and has been inducted into the Oklahoma State University Hall of Fame. He served on the Board of Regents for OSU and the A&M colleges and as its Chairman.
He has been a member of Southern Hills Country Club since 1985 and was chairman for the Corporate Hospitality Committee for the 2007 PGA Championship. ?