Case study, Summaries of Management Fundamentals

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Content - Introduction - The U.S. Banking Industry - Issues Affecting The Banking Industry - Trends Shaping The Future Of The Industry - Slow Economic Growth - Falling Low Cost Consumer Deposits - Noninterest Income - The Oklahoma Banking Industry - History Of Oklahoma National Bank - Oklahoma National Bank Operations Products - Financial Performance - Culture - Market Dynamics - Major Competitors Bank Of America - Bank of Oklahoma - Stillwater National Bank and Trust Company - The Future Introduction - The U.S. Banking Industry - The first - Spending by household and business is growing faster than Income (level of debt increase). - Recent growth in business indebtedness rise concerns about commercial credit quality. - The weakening of corporate credit quality began to appear during 1999. - Despite starting for very low levels, net C&I loan charge-off for all insured institutions totaled USD 3.6 billion during 1999- a 51% increase over 1998. 2. Second - Intense competition in banking is driving business strategies. more stable than traditional lending, and this revenue does not adhere to the typical loan growth cycle. This income also provides an offset to declining net interest margins. - The Oklahoma Banking Industry - Despite a nationwide earnings decline in 2001, the Oklahoma banking industry is growing faster than the national industry. In its Quarterly Banking Profile, the FDIC (Federal Deposit Insurance Corporation) reported that Oklahoma banks posted a net income of USD 487 million as of December 31, 2001. - History of Oklahoma National Bank - After retiring from 26 years in banking business and serving as president of Stillwater National Bank in Tulsa, Tom Bennett, Jr., Oklahoma National Bank (ONB) Chairman and Chief Executive Officer (CEO), go the idea for a start-up bank from his son, Tom III, during a family ski trip. His first call was and old friend from college, Garry Groom, who had been CFO at two other Oklahoma banks. In response to Bennett’s invitation to create a new bank in a way they had always dreamed that a bank should be run, he became ONB’s CFO. - History of Oklahoma National Bank (cont.) - A short time later, Bennett was introduced to Michael Bezanson through one of his potential investors. Bezanson had been president and CEO of Security National Bank of Sapulpa and had also been thinking about starting a bank. Bezason quickly became Oklahoma National Bank’s president, and the process of creating a dream to turn into reality began around the bennetts’s kitchen table with tree banking veterans (Bennett, Bezanson, and Groom) and one rookie (Tom Bennett III.) - History of Oklahoma National Bank (cont.) - Bennett pulled together a group of investors and board members that reflected the bank’s interest in small business, entrepreneurs, and local professionals. Among the board members are B.J. Dumond, chairman and chief executive officer of Simple Simon’s Pizza; Dr. Ben Johnson president of Tulsa dental products; and home builder Stephen Murphy of Murphy Resources Inc. It had been said that the bank’s investors and board members read like the who’s who of business in Tulsa. - History of Oklahoma National Bank (cont.) - In the bank employee include a mix of veteran bankers and industry relationships. Tom Bennett feels it is important to know the customer, big or small, and build long- lasting relationship that meet their needs. The bank’s founders describe ONB business model as a marriage of sound banking principles and dedication to building strong relationships. This model has allow the bank to effectively manage lending risks while serving the needs of the customers and community. “ Relationship building is one of the key ingredients in ONB’s risk mitigation strategy. - Market Dynamics - ONB has chosen one of the most successful economic regions in Oklahoma as its home. Tulsa, Oklahoma, accounts or 32% of all the gross domestic product in the state, but only 23.4 % of the population. The value of the goods and services produced in the Tulsa area is growing faster than in most cities nationwide. - Major Competitors - Bank of America - Bank of America reported operating earnings of $8.04 billion, or $4.95 per share (diluted), which excludes the charges incurred to exit the auto leasing and subprime real estate lending businesses. A year earlier, the company reported operating earnings of $7.86 billion, or $4.72 per share. Net income for 2001 was $6.79 billion, or $4.18 per share, compared to net income of $7.52 billion, or $4.52 per share a year ago. Bank of America currently operated 49 full service banking centers in the state of Oklahoma. - Major Competitors - Bank of Oklahoma - Bank of Oklahoma (BOK) is a multi-bank holding company based in Tulsa, Oklahoma. The assets of the organization exceed $11 billion, and Bank of Oklahoma enjoys market leadership throughout the state of Oklahoma. During the pass five years, the organization has sought acquisitions in high-growth markets in contiguous states to Oklahoma. BOK financial operates four principal lines of business under its BOK franchise: corporate banking, consumer banking, mortgage banking, and trust services. BOK’s operating philosophy embraces a “ community atmosphere” with local boards of directors with local decision making and marketing efforts. - Major Competitors - Stillwater National Bank and Trust Company - Stillwater National officers commercial and consumer lending and deposit services from offices in Stillwater, Tulsa, Oklahoma City, and Chickasha, Oklahoma. A substantial portion of current business and focus for the future are services for local businesses, their primary employees, and other managers and professionals living and working in its Oklahoma market areas. At December 31,2001, Stillwater had total assets of $1.2 billion, deposits of $905 million, and shareholders’ equity of $585.1 million. Stillwater’s philosophy is to provide a high level of quality customer service, a wide range of financial services, and products responsive to customer needs. - The Future