In lieu of an abstract, here is a brief excerpt of the content:

Chapter 5 from business to banking After my three-year contract with Gibson-CIT expired in 1965, I took the “MBA” I had earned during my sixteen years in business and sought to apply it to the challenge of banking. Armed with my observations as an outside director on the River Oaks Bank & Trust Company1 board since 1956, the opportunities in banking increasingly captured my imagination. Although I hoped I might become qualified one day to head a large downtown bank, I concluded that I should start at a smaller institution because my banking experience (other than serving on the board of River Oaks for nine years) was as a depositor and business borrower. In 1965, River Oaks was a $22 million institution owned by Jimmy Lyon, a friend who had joined YPO when he bought the bank in 1961. A very successful real estate developer, Jimmy left his bank in the hands of an executive vice president. Although he was both president and chairman, he showed up only for board meetings—and then usually came late. There were no pretenders for the job of chief executive officer. I remember quite well that day in November 1965 when I decided to approach Jimmy. I asked to be president of River Oaks Bank & Trust, with the understanding that I be given a free hand to run the bank for three years using the financial planning, management, and marketing principles I had learned in my own business and Gibson-CIT. Savoring the chance to make money if my ideas worked, I also proposed buying 10 percent of the bank’s stock from Jimmy with the agreement that I would sell it back to him at a discount to the then-market price if I left before three years. Jimmy was no banker, but he was a shrewd, able businessman. My proposals were not offensive to him, yet he did gulp once or twice before saying, “Fine.” That decision took an act of faith on his part, because running a bank like a business ran counter to the way banks were typically operated in those days, and Jimmy had invested a sizeable amount of his net worth in River Oaks Bank. Here he was, taking on somebody with no bank management experience and granting him total authority to implement entirely new ideas. My three-year Gibson-CIT contract was up thirty days later. I had given my friends Max Weaver and Walter Holmes (CEOs of Gibson and CIT, respectively ) proper notice, worked hard until my last day, led my Texas-based operation to record growth, and oriented my successor. And in December 1965, I joined River Oaks Bank & Trust Co., at 2119 Westheimer in Houston , as president and CEO with, I believe, the goodwill of my former employees , employer, suppliers, and customers. ★ past experience with river oaks bank & trust company At the time I joined the bank’s board of directors, I was working long hours trying to launch GIFT-RAPS’s products into the national market. I spent my days struggling with budgets, negotiating with suppliers, calculating product and labor costs to the penny, seeking new customers, and expanding production facilities. But when I stepped into the bank’s board meetings, time stopped. The hustle-and-bustle world of competitive business gave way to the slow-paced world of banking, which had become a tightly regulated environment during the Great Depression, when the watchword of banking was “safety.” There were no annual budgets, no apparent goals, no orientation toward profitability, no marketing or business development programs . Instead, meandering conversations went on and on about automobile loans or whether this borrower or that would repay his loan. I became increasingly curious about whether banking had a mystique that no mortal manufacturing businessman could understand or whether it could yield itself to the same principles that other businesses followed. As I learned more about banking, I came to understand that the industry continued to be shaped by the attitudes and reforms of the Great Depression. The devastation that had visited my own family with the failure of our local bank in Vernon had scarred Americans throughout the nation. Widespread bank failures had generated panic, and legislators reacted with a sweeping wave of reforms that heavily regulated commercial banking and also separatedcommercialbanks ,investmentbanks,andsavings-and-loaninstitutions into three distinct industries. The result was the “sedation and segmentation” of financial services, as regulators rebuilt a devastated banking system around the central concept of deposit security. This was...

Share