SpiritBank Reconsiders Future of Branching
(Tulsa, Okla.) – In an age when many
regional and national banks ramped up their branching activity, so that streets
seemingly offer as many lenders hawking their wares as convenience stores,
SpiritBank chose a different path.
The former American National Bank of Bristow enjoyed explosive
growth over the past decade, its assets jumping from $225.5 million at the
close of 1996 to $970 million last year. Its profits soared even higher, from
$1.8 million to $8 million at Dec. 31.
SpiritBank maintained its steady annual successes even during the
2001 downturn, its branch network expanding from eight to 17 over the decade as
its headquarters moved to Tulsa.
But Chief Executive Albert "Kell" Kelly said SpiritBank will add no
satellites this year, focusing instead on managing growth as the lender
reconsiders the future of branching.
"We're thinking our branching needs may have radically changed,"
he said, noting that electronic checking and deposit innovations have reduced physical
branch needs. "It could be our banking clients are served more by kiosks, phone
and direct deposit than by more brick and mortar at this time."
Kelly also intends to improve the efficiency of SpiritBank's 350
employees. Right now the bank averages $3 million in assets to every one
employee, a level he appreciates. But then he cited BOK Financial, which
averages $5 million to one.
"Now that's an efficient organization," he said. "I'm not saying
ours is not efficient, but they do an extremely good job."
The changing branch strategy more reflects SpiritBank's market
positioning than a reflection on industry trends. Kelly noted a Journal Record
report that BOKF intends to more than double the number of branches it will add
this year.
"I'm not saying they're wrong," he said. "Their numbers show that
they're as right as they can be. But I can't compete with their numbers.
"I get calls to put a branch in at least once a week, of all
shapes and sizes," he said. "But I'm only going to put a branch if it has a
long-term opportunity for success. For banks our size, we're going to have to
locate branches at sleek, nimble locations, and we're going to emphasize
electronic commerce to compete."
As one factor in that competition, this year SpiritBank will emphasize
the successful growth of its new, 3,000-square-foot Business Resource Center at 63rd and Harvey in Oklahoma City. Though not a
full-service branch, Kelly said Spirit audits the five-employee commercial
development center as if it were. He expects it to have the same success as the
year-old Business Resource Center in Tulsa, especially since the
cost in setting it up was "pretty minimal."
"It has really nice numbers," Kelly said of the eight-employee Tulsa center.
If the Oklahoma City center pans out as he
expects, Kelly said SpiritBank may consider adding a third business center in Stillwater.
Also under evaluation is SpiritBank's first in-store grocery
branch, opened last year in Perkins.
"We're just evolving that," he said. "It's really a very nice
little satellite for our Stillwater bank."
Kelly acknowledged the lender may reach the $1 billion asset level
this year, but he put little emphasis on that accomplishment. While the bank
targeted $9 million net income for this year, he said Spirit could have
exceeded last year's record $8 million in profits, but chose these good times
to take some planned bond losses.
"While we've enjoyed those past years of good growth, I would say
this year will be a year of building capital and managing growth," he said. "We
want to build our capital and be strong.
"We're happy with our
triangle footprint of Tulsa, Stillwater and Oklahoma City," he said. "I don't
envision us becoming multi-state. I don't envision us as a public bank. We try
not to kid ourselves. We see us doing this all around our own capital."