You could say Richard Ware took up banking at a very early age.

Ware was a fifth-grader at Wolflin Elementary in Amarillo, Texas, when he started making lunch-money loans to classmates. Lunch cost a quarter at that time, and Ware expected his borrowers to pay him back with a nickel in interest the next day. He reckons he made about $2 before the principal shut the operation down.

"I guess he thought it was usury or something," Ware said.

Decades later, and Ware, 71, has come full circle. As chairman and president of Amarillo National Bank, he is working to make sure children in his hometown have money for school lunches — minus the excessive interest rates — through charitable giving.

"We want to do a lot of good for the community and feel like we've made a difference," said Ware, who is the fourth generation of his family to run the bank. "Our legacy is the bank. If we pass it on, then we have fulfilled our obligation."

Richard Ware, chairman and president of Amarillo National Bank.
Just manage it
"We'll make some bad loans to get to some good loans," Richard Ware, 71, the chairman and president of Amarillo National Bank, says in discussing auto and other consumer loans. "You just price for risk."

Over roughly 35 years, Ware has helped transform Amarillo National from a small bank with less-than-spectacular returns into a dominant player in its hometown with nearly $4 billion in assets and performance metrics that top industry averages. Ware, who also stands out for his unique leadership style and unabashed love of banking, has kept the bank family-owned through turbulent times, including the commercial real estate crisis in Texas during the 1980s.

For all of this, American Banker is recognizing Ware for being a "Thriving Family Operator" as part of the 2017 Banker of the Year awards.

"I think the Ware family represents what's good about community banking," said Don Powell, a former chairman of the Federal Deposit Insurance Corp. who competed against Ware while running First National Bank of Amarillo. "They have a long history of serving the community, and they were a good competitor."

One of Ware’s triplet sons, William, who also happens to be an executive vice president at Amarillo National, said of his father: "He truly wrote the book on community banking. It is always about the big picture and not the next quarter."

A real family affair
It's easy to see how Ware's rich laugh and self-deprecating humor would put any client — from the wealthiest cattle rancher to a grandmother looking to buy a car — at ease. Over a lunch of tuna salad in Amarillo National's executive dining room, he is eager to share tales about his bank's history.

Ware describes how his ancestors moved from Georgia to west Texas during the Civil War to escape the advance of General Sherman. The family bought Amarillo National in 1909, and the Wares have maintained 100% ownership ever since.

Ware, who became president in 1982 and chairman in 2014, likes to joke that his family had to own a bank because no one else would hire them. (There is no chief executive. Nobody at the bank has a "chief" title, because Ware believes that would not suit a family business.)

Ware shifts to discuss his push in the early 1980s for an executive dining room in the bank's headquarters, a story that illustrates some of those family dynamics. The room is a marketing tool; bankers bring clients there to impress them. With dark, wood-paneled walls, delicate china place settings and a plush red carpet, it gives the sense of a powerhouse institution in London during the go-go '80s rather than a small bank in a town with a population just shy of 200,000.

All of the Texas banks had them back then, and Ware had wanted one too. But the Texas banking crisis was looming and his father, Tol, was reluctant to spend the money. Ware was able to get the higher-end look he wanted by calling his mother and asking her to do the decorating, forcing his father to relent.

Later, as Ware walks around the branch on the first floor of Amarillo National's headquarters, he points out different features on display. There are antique pistols once owned by a distant relative, Dick Ware, a Texas Ranger, and by the infamous outlaw he is known for shooting and killing in 1878, Sam Bass.

There is a picture of Amarillo National's first hot air balloon. Ware's brother, Bill, an executive at the bank until his death in 2012, insisted on buying and flying the balloon — until a crash convinced him to bring on a professional operator.

Amarillo National is in the midst of its 125th anniversary, and that milestone has Ware feeling more nostalgic than usual, he explains when asked about his love of history. "I guess I believe the old standard that if you don't learn from history you're doomed to repeat it," Ware said.

There's more to it than that. The stories and keepsakes show Ware's outsize love for his family history and the bank, and it is easy to see that the line between the two is often blurred.

"Dad lives and breathes the bank, the employees, the community," Ware’s son William said.

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Ware is willing to make 'good [commercial] loans no matter the pricing,' as long as it boosts market share.

As children, Richard Ware and his brother Bill ran their own "bank" out of their parents' basement. Ware National Bank had its own letterhead, deposit slips and checks. The brothers took in money from their parents and the family's gardener.

Years later, while completing his MBA at the Wharton School at the University of Pennsylvania, Ware wrote his thesis on how to improve Amarillo National's profitability. Its return on assets was hovering around 0.75% at the time.

Ware knew the bank could do better.

First, he saw the potential for making bigger loans. His grandfather, who grew up in the Great Depression, had been a cautious lender who held onto a conservative philosophy from the 1930s until the 1970s.

Ware also pressed for a cost accounting system that allowed branch managers and department heads to get involved with the budgeting process. In addition to added authority, those employees were given incentives to keep costs in check. Today, a quarter of their yearend bonus is tied to such efforts. As a result, the bank has been within 1% of its budget every year for the last 15 years, Ware said.

The final change involved gaining market share. The two brothers did the tedious work of calling potential prospects. Over time, they were able to chip away at the competition.

The bank also took advantage of disruption, like when Powell's First National Bank of Amarillo was sold in 1993. Ware, who hosted a party to celebrate his competitor's sale, still has the oar and life preserver — a cheeky nod to the buyer, Boatmen's Bancshares — that he carried around during the celebration. Those artifacts can be found in his office bathroom.

Slideshow
Would your bank go this far to help its customers?
A lot of lenders say they're dedicated to customer service, but here are six instances when Amarillo National Bank — whose CEO is one of our Banker of the Year award winners for 2017 — went above and beyond the normal call of duty.

Dominant market player
Amarillo National holds nearly half of the deposits in its hometown, or more than double the share of runner-up Happy State Bank, according to June 30 data from the Federal Deposit Insurance Corp. Bank of America, Wells Fargo and JPMorgan Chase collectively have 17%.

Ware isn't content, though.

After Bank of America, which has been rightsizing its branch network in recent years, closed an office across from Amarillo National's headquarters, Ware's team posted signs welcoming any of the banking giant's customers.

Market share is of utmost importance to Ware, who follows a simple credo to "get all the good business in town." Poaching business eventually translates into higher profit, so Ware is fine with sacrificing short-term gains for a longer-term relationship — especially in commercial lending, where he is willing to make "good loans no matter the pricing," as long as it boosts market share.

"Other banks are maybe worried that their earnings won't be up next quarter," Ware said. "We didn't worry about that. That gets back to market share and that focus."

Of course it is easier to take a longer-term view when your family owns the bank, eliminating the need to field questions from anxious analysts and investors.

Still, remaining privately held by a single family is a testament to Amarillo National's success, said Curtis Carpenter, managing director at Sheshunoff & Co. Investment Banking in Austin, Texas. The bank must rely on retained earnings to build capital, which it has been able to do by staying profitable.

Amarillo National's return on assets totaled 1.82% at June 30, compared with an average of 1.09% for institutions with $1 billion to $5 billion of assets, according to FDIC data. Return on equity of 15.07% is also higher than the 9.8% average for banks in that same size range.

"One of their hallmarks is just how profitable they are," Carpenter said. "When making as much as they have made, you can retain it rather than paying it all out in dividends. That has served them well."

Read more about Amarillo National:

The bank's success is especially noteworthy because of its choice to focus mostly on Amarillo and Lubbock. Growing Texas banks typically enter cities like Dallas, Austin or Houston to pursue bigger loans.

"Usually it slows a bank's growth rate if they don't expand into the bigger markets," said Dory Wiley, president and chief executive of Commerce Street Holdings. "The temptation is to move into these other markets. It is unusual to stay so highly focused, but it has worked well for them."

Amarillo National had considered big-city expansion, eventually shrugging it off. "We aren't smart enough" to make it in those cities, Ware joked before seriously adding that such a move could force his bank to take on business other banks might pass on just to gain market share.

Local knowledge and relationships are priceless in Amarillo. Ware recalled a recent hunting trip his executives took with about 20 bank clients. Why go elsewhere when the bank already knows everyone in west Texas so well?

"Here we're dealing with the top four guys in every industry," Ware said.

Big-bank ideas
Much of Ware's philosophy was influenced by Walter Wriston, a former chairman and CEO at Citicorp who was a pioneer in areas like ATMs and interstate banking. Ware met Wriston while playing tennis in California.

That match also introduced Ware to Wriston's tennis partner, Al Haig. The meeting sparked long friendships with Wriston and Haig, who had been a former chief of staff for Presidents Richard Nixon and Gerald Ford and secretary of state in the Reagan administration. (Wriston died in 2005, and Haig in 2010.)

Ware's personal ties to U.S. politics don't end there. Earlier this year, he married Katherine Harris, who, as Florida's secretary of state, certified George W. Bush's narrow victory over Al Gore, which all but determined the 2000 presidential election. A former state legislator, Harris served two terms in the U.S. House and unsuccessfully ran for the Senate in 2006.

Today, Ware is most interested in talking about the banking values he garnered from Wriston.

"Big-city philosophies can be translated and travel well," Ware said, noting that Amarillo National has adopted these ideas — with a "local touch."

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The bank’s focus on Amarillo and Lubbock instead of bigger cities ‘is unusual … but it has worked well for them,’ one observer says.

Wriston, for instance, believed that risk is inherent and must be taken into account when setting interest rates. Amarillo National has followed that philosophy in areas such as auto lending, where it refuses to automatically reject borrowers with credit issues.

"We'll make some bad loans to get to some good loans," Ware said. "You just price for risk."

The bank steers clear of other types of loans, like those for non-owner-occupied real estate, because of Ware's belief that an institution can't price for the risk tied to such credits.

Retail banking is a big part of Amarillo National's business plan. Credit cards, auto loans and other consumer credits make up roughly a fifth of total loans. The bank also originates mortgages.

"You have an obligation to the community to do it," Ware said. "If you're nimble, you can make money at it."

Ware's banking philosophy has contributed to Amarillo National's strong reputation in Texas banking. A loan from the bank is almost viewed as a strong endorsement for the borrower, Wiley said.

"Amarillo National is just a good operator," said Chris Williston, president and CEO of the Independent Bankers Association of Texas. "They block and tackle. They're just a very traditional community bank that reinvests ... and keeps their roots local. That has contributed to their success."

Making banking fun
While Ware might be a hard-charging competitor outside the office, he tries to foster an environment of levity within his bank. The employees like to say they take their customers' money seriously but not themselves.

Ware began cultivating a relaxed atmosphere more than two decades ago after meeting with Herb Kelleher, a former CEO of Southwest Airlines in Dallas, who encouraged his employees to inject fun into their workdays.

Amarillo National's headquarters boasts a bright decor with beautiful blue high wingback chairs, colorful wallpaper and canvasses displaying employees dressed up in costumes and sitting in dunking booths. Guests to the executive floor are offered a beverage by almost everyone they meet. During meetings, employees come out from behind their desks to sit next to their guests.

The bank is also known for perks such as bonuses, parties and charitable giving that have enticed some employees to stay on for decades. (It is on American Banker’s list of Best Banks to Work For.)

Tracy Hayhurst, a vice president, has been at the bank for 43 years, with all but six months of that time spent as Ware's assistant. She touts the camaraderie and family atmosphere that Ware, whom she considers among her best friends, has helped foster. "If you're happy and having fun all day, every day, you're a better employee," Hayhurst said.

Amarillo National strives to treat customers the same way. It has a simple philosophy: Be nice to everyone and don't steal.

One of the bank's clients was a single mom with two jobs who needed her bank statements before mediating her divorce. An employee took the papers to her so she wouldn't have to leave work to get them.

Another employee recalled helping an 89-year-old woman who was buying her granddaughter a car. The woman was concerned about getting the title and tags, so someone at the bank took her to the tax office to help her get the paperwork sorted out.

"We've always seen Richard leading by example," said Terri Boswell-Williams, senior vice president of operations. "He has shown us that it's much easier to handle any situation when you're treating people with respect. It just comes naturally for him, which makes it easy for us to mirror."

What the future holds
Despite Amarillo National's success, it faces many of the challenges plaguing other small banks. Amazon is moving into the grocery business, which is a core business segment for the bank, and the regulatory burden is a headache.

Then there's the question of succession. Roughly a third of bankers said succession was important or very important when considering offers to buy their banks, according to a recent survey conducted by the Federal Reserve and the Conference of State Bank Supervisors.

"There are plenty of people that would like to buy" Amarillo National, Wiley said. "It has a great deposit base and a great history."

While Ware has not publicly discussed his plans for the future, two of his sons, Patrick and William, are poised to eventually run the bank. (The other son is a cowboy, and an older daughter lives in Dallas.)

Like their father, the younger Wares have fond childhood memories at the bank that include playing with the copy machines and throwing things off the third-floor balcony. They have cleaned windows, painted stripes in the parking lot and have rolled $7 million in pennies as commercial tellers during a bank promotion.

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'He truly wrote the book on community banking. It is always about the big picture and not the next quarter.'

Patrick is more analytical, while William is more outgoing. They aren't planning any big changes when their father steps aside, though they will aim to keep up with changing technology.

"Dad has been a driving force for all of the bank's growth over the years," said Patrick Ware, an executive vice president. "Hopefully we're taking some queues from him. ... I think he's trained us well enough that we won't destroy his legacy."

Assuming the bank stays in the family, odds are that it will eventually be run by a woman for the first time. Six of Ware's seven grandchildren are girls. That could be a refreshing change for the bank.

"There's a personal touch and a warmth that's hard for some guys to generate," Ware said. "That's really important for what we're trying to do."

The biggest challenge might involve keeping the family interested in owning a bank instead of cashing out. Richard Ware's father once was the bank's only owner; now there are seven shareholders as ownership has been passed down through recent generations. That number could continue to rise.

Talking business around the dinner table, with the grandchildren present, helps keep the family interested and involved. Having kids visit the bank and eventually working in entry-level jobs is another way to instill a sense of duty and responsibility.

"We just try to run a good bank," Ware said. "Everyone in the family is on board with that. We're just trying to save it for the next generation."

Jackie Stewart

Jackie Stewart covers community banks and mergers and acquisitions for American Banker.