Summit Bank in Arkadelphia, Ark., is entering a new era.
Founded 11 years ago, the now privately held Summit has grown into a $930 million-asset bank without making acquisitions, but it is currently looking to buy banks in neighboring states in an effort to roughly double its assets within five years.
And leading the expansion will be its youthful new chief executive officer, Conner Eldridge. Just 30, Mr. Eldridge, currently the bank's vice chairman, is to succeed his father-in-law, Ross Whipple, as CEO on July 1.
Summit has become the seventh-largest bank in Arkansas largely by branching in central and southwest parts of the state, but Mr. Whipple, who is to remain as chairman, said buying existing banks would accelerate its growth.
Summit is in good position to start buying banks, he said, because its asset quality is relatively strong and, unlike many banks hard-hit by the real estate downturn, it can put its capital toward acquisitions rather than applying it to loan-loss reserves.
Now feels like a good time to retire from directing day-to-day operations, he added, because he has found someone he trusts to run the bank.
Mr. Eldridge "is older and wiser than his years," said Mr. Whipple, who is 57. "He is talented and bright, and he has a lot of people to rely on here besides me. I know some people who think he is a little young, but with the tools and support he has here, he will do fine."
Mr. Eldridge started working at the bank four years ago with plans to go into management but no expectation of running it, he said. He worked in almost every job at the bank — from teller to loan officer — before becoming vice chairman.
"When I came on board, Ross said all I get is an opportunity — the rest was up to me," Mr. Eldridge said. "And I said, 'That is really all I want.' "
Mr. Eldridge is an attorney by trade — he has clerked for a federal judge and held posts on politicians' staffs — but he said the financial industry suits him well.
"Banking is a people business," he said. "What attracted me to litigation and what attracted me to politics … is working with people."
He also said he enjoys the intellectual challenge of developing strategies to return value to shareholders.
With the bank maturing to the point where it has become more difficult to add share in its existing markets as quickly as in the past, Summit needs to start moving into new markets to maintain earnings growth, Mr. Eldridge said.
"The de novo strategy will always be on the table as a model," he said. "But given the scale you can obtain through acquisition, acquisition seems the right strategy now."
Summit is targeting banks in the $300 million-asset range in growth markets in Louisiana, Texas, Tennessee, Missouri, and Arkansas' northwest corner.
Mr. Eldridge said that Summit has been keeping its eyes open for potential deals the last couple of years and has had preliminary talks with executives at banks in which it might be interested.
"We hope to continue to do that and that those conversations will bear fruit at some point," he said.
Privately held banks often look to expand with the intention of selling themselves or going public, but Summit intends to do neither.
The largely family-owned banking company is building for "long-term value," said Mr. Whipple, who bought the then 3-year-old bank in 2000, when it had $60 million of assets.
"We have a strong desire to remain a private company," Mr. Whipple said. "I grew up in the timber business. It takes 35 years to grow a tree … . We are going to operate this thing until we can find somebody who can operate it better than we can."
Still, Summit's privately held status could prove a hindrance as it looks to buy because sellers often want to merge with a publicly traded company, said Dan Bass, the managing director in the Houston office of Carson Medlin.
"It is easy to say I am going to do a deal, but it is hard to do deals," he said.
Mr. Bass said it is wise for Summit to start developing relationships with possible sellers and "tell them the merits of partnering with a community bank before it gets into a competitive situation.
"If they don't have current relationships with one of these targets, then a publicly traded bank can do a deal more easily because they can do a half-cash, half-stock deal. I think a publicly traded bank would win."
