A small Texas bank is pinning its turnaround hopes on former big-bank executives.
San Antonio National Bank hired as chairman, president and chief executive Guy Bodine, best known for heading Wachovia Corp.'s expansion into Texas.
Wachovia had no branches in the state when Bodine started in 2004 and had more than 200 when the Federal Deposit Insurance Corp. compelled its sale to Wells Fargo & Co. in late 2008.
But before Bodine can try to match that sort of growth at the $250 million-asset San Antonio National, he and his team are seeking to make the bank profitable — something it hasn't been for the past 10 quarters.
"It's the quintessential turnaround," Bodine said in an interview last week. "That has a lot of challenges and a lot of opportunities."
It's a scenario playing out at community and regional banking companies across the country: Bankers formerly with large institutions are finding opportunities at smaller banks, particularly after their former employers failed or were merged into other companies.
Like San Antonio National's executives — who have years of experience creating business strategies for and operating significantly larger banks — these bankers will need to make adjustments.
For example, they won't have the financial means to implement plans and spend money like a larger institution would. Also, they will have to handle much more of the day-to-day work themselves.
But at the same time, they will likely find there are some benefits to being part of a smaller organization, industry observers said.
"The biggest thing is less bureaucracy," said Dan Bass, the managing director in the Houston office of Carson Medlin Co.
"You can really make a difference in the direction of the bank," Bass continued. "Your decisions at a community bank make a big difference in the direction of the bank. The negative side is you have to do more of the work. You have to roll up your sleeves and get down to the nitty-gritty of banking."
Bodine relishes the challenge, having never been an executive in a community bank before.
"It is different than anything I have ever done, and that is one of the reasons I wanted to do it," he said. "In my career I had not managed in a community banking environment like this. I saw it as a way to make a difference."
Still, regardless of a bank's size, the basic business of banking is essentially the same, said Stephen Skaggs, the president of Bank Advisory Group in Austin.
"It's not as glamorous as opening 200 branches with Wachovia shoveling money into Texas to allow him to do that as fast as he can," Skaggs said of Bodine. "But it is still the same nuts and bolts of building a franchise. He just has a smaller toolbox to work with."
Besides Bodine, who joined in late November, the team at San Antonio National includes Robert Greenwood, senior vice president of administration, who previously headed commercial banking operations for the failed $13 billion-asset Guaranty Bank in Austin. Chuck Eikenburg, who ran retail operations at Guaranty, is a senior vice president in charge of designing the company's retail network.
Doug Bready joined San Antonio National from BBVA Compass, where he ran its Lower Rio Grande Valley operations. Bready is regional president of the lower Rio Grande Valley.
"It sounds like they have brought in the big guns," said John Matheny, the director of sales and marketing at Brintech Inc., a consulting firm in Austin. "It's interesting. It's aggressive. They have brought in people with the right kind of experience."
Under Bodine's leadership, the majority of Wachovia's expansion was organic.
But some branches were acquired in deals for out-of-state companies.
Wachovia bought SouthTrust Corp. in Birmingham, Ala., in 2004. That deal boosted Wachovia's Texas franchise with 54 branches.
And it also acquired the parent company of World Savings Bank, Golden West Financial Corp. in Oakland, Calif., in 2006. World had 24 branches in Texas.
To start, San Antonio National executives are seeking a more solid growth platform.
They aim to slash expenses by closing some branches (reducing the number from 11 to five), working through bad assets and adding more capital to fuel growth. They then plan to open more branches or make acquisitions in new markets.
In 2006, San Antonio National, then known as First National Bank of Refugio, was acquired by a group of investors led by Kenneth Koncaba.
Koncaba, who still works with the bank as a consultant and is an investor in its parent, expanded the $49 million-asset company by branching into San Antonio, Edinburg and Laredo.
(According to the FDIC, San Antonio National still has its headquarters in Refugio, but the parent, Family Bancorp Inc., has its headquarters in San Antonio. Bodine is also the chairman and CEO of Family.)
At that time the company's strategy consisted of targeting the unbanked as a source of deposits and focusing on community bank lending.
Under Koncaba, San Antonio National expanded to 11 branches but never became profitable.
And like many banks with a heavy concentration of assets in real estate, its nonperforming assets piled up as the economy soured.
San Antonio National reported that on Sept. 30 its noncurrent loans were 4.23% of total loans. The average was 1.20% for Texas banks with assets of $100 million to $300 million, according to the FDIC.
San Antonio National has a deal on the table, for the $60 million-asset Medina Bankshares Inc. in Hondo, Texas, that would aid its near-term strategy.
Bodine said he is considering more acquisitions after his company tackles its more immediate problems. He plans to add operations in Houston, Austin, Dallas and Fort Worth.